LABOR LAW REVIEW

ATTY. MARLON MANUEL

I. GENERAL PRINCIPLES
CONSTITUTION Art. XIII, 3.The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to selforganizations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth. Art. II, 18.The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. Art. III, 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. LABOR CODE Art. 1. Name of Decree. This Decree shall be known as the Labor Code of the Philippines.

Art. 2. Date of effectivity. This Code shall take effect six (6) months after its promulgation. (P.D. 442 was made effective on November 1, 1974) Art. 3. Declaration of basic policy. The State shall: afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to: a) self-organization, b) collective bargaining, c) security of tenure, and d) just and humane conditions of work. Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. Art. 5. Rules and regulations. The Department of Labor and Employment, and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation. Art. 6. Applicability. All rights and benefits granted to workers under this Code shall, except as may otherwise be provided herein, apply alike to all workers, whether agricultural or non-agricultural. Art. 211. Declaration of policy. A. (a) It is the policy of the State: To promote and emphasize: the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;

(b)

To promote: free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development; To foster: the free and voluntary organization of a strong and united labor movement; To promote: the enlightenment of workers concerning their rights and obligations as union members and as employees; To provide: an adequate administrative machinery for the expeditious settlement of labor or industrial disputes; To ensure: a stable but dynamic and just industrial peace; and To ensure: the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code. Tripartism and tripartite conferences.

practicable, be represented in decision and policy-making bodies of the government. (b) The Secretary of Labor and Employment or authorized representatives may from time to time his duly

(c)

(d)

(e)

call a national, regional, or industrial tripartite conference of representatives of government, workers and employers for the consideration and adoption of voluntary codes of principles designed to promote industrial peace based on social justice or to align labor movement relations with established priorities in economic and social development. In calling such conference, the Secretary of Labor and Employment may consult with accredited representatives of workers and employers. CIVIL CODE Art. 1700. The relation between capital and labor are not merely contractual. They are co impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects. Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public. Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Art. 1703. No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall be valid. CASES Phil. Blooming Mills Employees Assoc. vs. PBM, 51 SCRA 189

(f) (g)

B.

Art. 275. (a)

Tripartism in labor relations is hereby declared a State policy. Towards this end, workers and employers shall, as far as

PBMEO wanted to stage a mass demonstration at Malacanang, against alleged police abuses. PBMEO informed the employer PBM, and told PBM that PBMEO did not intend to prejudice PBM. PBM disagreed saying it would prejudice operations, and said that at least one shift should be present on the day of the rally. PBM warned that should they fail to report, they would be dismissed because of the no lockout-no strike clause in the CBA. PBMEO went ahead with the rally and was thus charged with violation of the CBA. The CIR ruled in favor of PBM. Held: The CIR as an agency of the State is under obligation at all times to give meaning and substance to these constitutional guarantees in favor of the working man; for otherwise these constitutional safeguards would be merely a lot of meaningless constitutional patter. Under the Industrial Peace Act, the CIR is enjoined to effect the policy of the law. to eliminate the causes of industrial unrest by encouraging and protecting the exercise by employees of their right to self-organization for the purpose of collective bargaining and for the promotion of their moral, social and economic well-being. The demonstration held by the employees was against alleged abuses of some Pasig policemen, not against their employer. Said demonstration was completely an exercise of their freedom of expression in general and of their right of assembly and petition for redress of grievances in particular before the appropriate government agency. They exercised their civil and political rights for their mutual aid and protection from what they believed were police excesses. It was to the interest of the firm to protect the employees to rally to the defense of and to take up the cudgels for its employees so that they can report to work free from harassment, vexation or peril and as a consequence perform more efficiently their respective tasks to enhance its productivity as well as profits. The primacy of human rights-freedom of expression, of peaceful assembly and of petition for redress of grievances-over property rights, has been sustained. Philippine Airlines vs. NLRC, 225 SCRA 301 In March 1985, PAL completely revised its Code of Discipline, which was circulated, immediately implemented and caused the imposition of disciplinary sanctions on some employees. PALEA filed a complaint with the NLRC for unfair labor practice, because the Code was arbitrarily implemented without prior notice and discussion of

such with the union. PAL posits that it has the prerogative to prescribe rules and regulations regarding employees conduct in carrying out their functions. Labor Arbiter ruled not guilty of ULP, but must provide all employees with the new Code to discuss any objectionable items. On appeal, NLRC said though adopting Rules of Conduct is a mgt. prerogative, it can no longer exclude labor, and so must let them participate in the review of the Code. Held: The exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, the CBA, or general principles of fair play and justice. Al line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of employees. In treating the latter, mgt. should see to it that its employees are at least properly informed of its decisions and modes of action. PAL says that by signing the CBA, PALEA in effect recognized PALs exclusive right to make and enforce company rules and regulations to carry out the functions of management without having to discuss the same with PALEA, and much less, the latters conformity thereto. Such provision in the CBA may not be interpreted as a cession of employees rights to participate in the deliberation of matters which may affect their right s and the formulation of policies relative thereto. And one such matter is the formulation of a Code of Discipline. Industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. The attainment of a harmonious labor-mgt relationship and the then already existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees rights. Cebu Royal Plant vs. Deputy Minister of Labor, 153 SCRA 38 Ramon Pilones handled ingredients in the processing of soft drinks. Later he was removed due to pulmonary tuberculosis minimal. He filed for illegal dismissal. Regional Director found in favor of employer. However on appeal, the Minister ordered reinstatement, as it was found that he was a permanent employee, and that the ailment was not certified as incurable within six months as to justify separation. Also, the Minister said that the employer should have first obtained a clearance for termination of employment, as required by the regulations then in force.

Employer insists he was a probationary employee at the time he was dismissed. It is also argued that the regional directors findings should not be disturbed on appeal, since he had direct access to the facts. Held: Employee should be reinstated. It is shown that employee continued working as usual way beyond the six-month period of probation. Hence he was on permanent status at the time he was dismissed. Also, the record does not contain the certification as required by the Rules. The medical certificate offered by the employer came from its own physician who was not a competent public health authority, and merely stated the employees disease without more. We may surmise that if the required certification was not presented, it was because the disease was not of such a nature or seriousness that it could not be cured within a period of six months even with proper treatment. The court reaffirms its concern for the lowly worker who, often at the mercy of his employers, must look up to the law for his protection. LECTURE The management and labor relationship is like a bicycle with a third wheel. The third wheel is the government, which does not convert the bicycle into a tricycle, because it does not intervene in the management-labor relationship. The government allows management and labor to negotiate and determine the terms of the contractual relationship that is, the fixing of wages, et.al. but government sets the minimum standards. This is the only means by which the government intervenes. However, the relationship between management and labor is not merely contractual. Check the Civil Code Arts. 1700-1703. This emphasizes that the relationship is so impressed with public interest. As such, the third wheel only supports and assists the relationship, not to change the relationship but only to balance a relationship that is inherently imbalanced. An example is the government fixes wage rates in order to avoid abuses against the weaker party. Although in some aspects of labor relations, the government has no power of intervention at all. Check the Constitutional provisions on voluntary modes of settling disputes. In this case the governments policy of regulation is not equivalent to policy of

intervention. An example of this is drawing up the CBA and modes of dispute resolution. In contrast, the government intervenes through issuance of permits to strike, cease and desist orders or return to work orders. II. EMPLOYER-EMPLOYEE RELATIONSHIP LABOR CODE [You can skip these provisions as according to Atty. Manuel, theyre stupid definitions, but in case you want to check it: Art. 97 (b, c, e); Art. 167 (f, g) Art. 212 (e, f)*]

Art. 97. Definitions. or indirectly in the and shall include the instrumentalities, all and institutions, or

(b) Employer includes any person acting directly interest of an employer in relation to an employee Government and all its branches, subdivision and government-owned or controlled corporations organizations. (e) Employ includes to suffer or permit to work. Art. 167. Definition of terms.

(c) Employee includes any individual employed by an employer.

(f) Employer means any person, natural or juridical, employing the services of the employee. (g) Employee means any person compulsorily covered by the GSIS under Commonwealth Act numbered one hundred eighty-six, as amended, including members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual; or any person compulsorily covered by SSS under Republic Act numbered eleven hundred sixty-one as amended. Art. 212. Definitions. (e) Employer includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. (f) Employee includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless this Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.

Art. 106. Contractor or sub-contractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters sub-contractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or sub-contractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or sub-contractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting as well as differentiations within these types of contracting, and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Art. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Art. 108. Posting of bond. An employer or indirect employer may require the contractor or sub-contractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or sub-contractor, as the case may be, fail to pay the same.

Art. 109. Solidary liability. - The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. DEPARTMENT ORDER NO. 3, SERIES OF 2001 Revoked D.O. No. 10 Series of 1997 which liberalizes labor-only contracting in certain situations. CASES Aurora Land Projects Corp. v. NLRC, 266 SCRA 48 Jurisprudence is firmly settled that whenever the existence of an employer-employee relationship is in dispute, four elements constitute the reliable yard stick: (a) selection and engagement of the employee; (b) the payment of wages; (c) power of dismissal; (d) the employers power of control over the employees conduct. It is the so-called control test, that is whether the employer controls or has reserved the right to control the employee, not only as to the result of the work to be done, but the means and methods by which the same is to be accomplished, that is the most important index of the existence of the employer-employee relationship. Algon Engineering v. NLRC, 280 SCRA 188 Employer-Employee relationship question of fact. Liability for loss of materials in employees custody and subsequent transfer is indicative of employers power of control. Filipinas Broadcasting v. NLRC, 287 SCRA 348 Power of control regulate or control employees activities or input, subject to employers supervision. Insular Life v. NLRC, 287 SCRA 476 It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the employee is an independent contractor when the terms of the agreement clearly shows otherwise.

Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA 401 (case where the SC uses Art. 280 to prove er-ee relationship) Paid wages directly to employee, wielded power of dismissal, and members of union did not possess substantial capital which belies claim that they were independent contractors. Maraguinot v. NLRC, 284 SCRA 539 It is settled that contracting out of labor is allowed only in case of job-contracting. For a contactor to be job-contactor, must have tools, equipment, machinery, work premises, and other materials necessary to his business, or substantial capital or investment. As labor-only contracting is prohibited, the law considers the person or entity engaged in the same, a mere agent or intermediary of the direct employer. Coca-Cola v. NLRC, May 17, 1999 Although janitorial services may be deemed directly related to the principal business of employer, as with every business, it is deemed unnecessary in the conduct of the employers principal business. But this rests on the presumption that the contractor is a legitimate jobcontractor such that the employer-employee relationship between him and the employee cannot be doubted. Corporal v. NLRC, Oct. 2, 2000; GR 129315 (again SC uses Art. 280 of Labor Code in determining er-ee relationship) Control- required to report daily and observe definite hours of work, not free to accept employment elsewhere. No longer true that membership in SSS is predicated on the existence of employer-employee relationship as the policy now is to encourage even the self-employed to become members. AFP Mutual Benefit v. NLRC, 267 SCRA 47 Not all that glitters is control. In insurance, exclusivity is not indicative of control as the Insurance Commission prohibits serving in more than one insurance company. Also, the mere fact that an employee is subject to company rules is not indicative of control if it is not shown that it relates to the means and methods of service rendered and not merely to the end result. The significant factor in determining the relationship of

parties is the presence or absence of supervisory authority to control the method and details of performance of the service being rendered, and to the degree to which the principal may intervene to exercise such control. Not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an ee-er relationship. Neri v. NLRC, 224 SCRA 717 The law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction or. If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction and should have been used. While these services (These services range from janitorial, security and even technical or other specific services.) may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer. Phil. Fuji Xerox v. NLRC, 254 SCRA 294 It is wrong to say that if a task is not directly related to the employers business, or it falls under what may be considered housekeeping activities, the one performing the task is a job contractor. The determination of the existence of an employeremployee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved. Not substantial capital or investment alone which makes one a job contractor, but also presence of four-fold test in relation to contractor and employee. Also the fact that the contractor was providing specific special services (radio/telex operator and janitor) to the employer. Vinoya v. NLRC, Feb. 2, 2000, GR 126586 From the two aforementioned decisions, it may be inferred that it is not enough to show substantial capitalization or investment in the form of tools, equipment, machineries and work premises, among others, to be considered as an independent contractor. In fact, jurisprudential holdings are to the effect that in determining the existence of an independent contractor relationship, several factors might be considered such as, but not necessarily confined to, whether the contractor is carrying on an independent business; the

nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the workers; the power of the employer with respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. Lapanday v. CA, Jan 31, 2000; GR 112139 It will be seen from the above provisions that the principal (petitioner) and the contractor (respondent) are jointly and severally liable to the employees for their wages. The joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance with the provisions therein including the minimum wage. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractors employees to secure payment of their wages should the contractor be unable to pay them. Even in the absence of an employer-employee relationship, the law itself establishes one between the principal and the employees of the agency for a limited purpose i.e. in order to ensure that the employees are paid the wages due them. It is clear also from the foregoing that it is only when contractor pays the increases mandated that it can claim an adjustment from the principal to cover the increases payable to the security guards. The conclusion that the right of the contractor (as principal debtor) to recover from the principal as solidary co-debtor) arises only if he has paid the amounts for which both of them are jointly and severally liable. Rosewood Processing v. NLRC, 290 SCRA 408 As to wages, the indirect employers liability to the contractors employees extends only to the period during which they were working for the petitioner, and the fact that they were reassigned to another principal ends such responsibility. The same rule applies to back wages and separation pay, with the added qualification that to make the indirect employer liable, there must be a finding of fault or conspiracy in the illegal dismissal. LECTURE

It is important to determine the employer-employee relationship in order to ascertain what rights and obligations of the parties accrue in such a situation. The Labor Code attempts to define who is an employer and an employee, but miserably fails to do so! Thus, in determining existence of employer-employee relationship the Code cannot be the basis! As such, jurisprudence is essential and must be resorted to, in order to determine the existence of such relationship. Jurisprudence provides a FOUR-WAY or FOUR-FOLD TEST to determine the existence of employer-employee relationship:

1)

Hiring a written agreement is not necessary, and is not a conclusive test because it can be avoided and confused by the use of subcontracting agreements or other contracts other than employment contracts. Firing termination and disciplinary measures; however, it is not conclusive because the question of employeremployee relationship may arise even before the firing occurs. In cases other than an employment contract, such as a managment contract, the fact that an employer has not fired does not negate the existence of employeremployee relationship. Wages as defined in Art. 97 (f) of the Labor Code, it must be remuneration capable of being expressed in terms of money, payable by an employer to an employee for work or services to be done or rendered Control -

2)

3)

4)

The element of control pertains not only to the result of the work to be done but also control over the manner or method to be employed. There is no need for the employer to have actually exercised control, as long as he had the opportunity to do so. Consequently, proof must be given reflecting a manifestation of control, such as monitoring the work, letting the employee work in the employers premises, as long as the company or employer had the ability or power to intervene in the work. Control is the primary test. This is because hiring, firing, wages may be done by an entity separate from the entity that controls the employee. For example, hiring done by head hunters or transfer of ownership of a company. Thus, although the other

factors may be absent, as long as there is control there is an employer-employee relationship. In the AFP case, the Court emphasized that not all that glitters is control! This case was very good in qualifying the principle that rules per se are not equivalent to control all the time, for control should be over the means and conduct of the work, not merely over the result. This case ruled that if the rules pertain only to the end result, this is not tantamount to control. It must be borne in mind however that there are some situations, mutations if you could call it, where the control principle is not applicable, for instance, in a taxi-operator and taxidriver relationship. However, the three other indicators may be used to determine that there is an employer-employee rel. Also, exclusivity of service is not conclusive in determining control. That is, when the employee is prohibited to work, for instance, insurance agents are required to maintain exclusive company as required by law. Must all 4 be passed? No. Not all elements need be present. Hence, the best term to use is the FOUR INDICATORS, because FOUR-FOLD TEST connotes the need for all four elements to be present. Now, Art. 280 of the Labor Code provides that an employee is deemed regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer (UNOD in UTOB). Remember that UNOD in UTOB cannot be used to determine the existence of employer-employee relationship. It is used only to determine whether an employee is regular or not, and hence it necessarily presupposes that an employer-employee relationship already exists. There is also such a thing as economic condition test, where the employee may successfully establish an employer-employee relationship by showing documents like the SSS list and payroll. Now let us go to contracting. Article 106 of the LC defines Labor-only contracting. Labor-only contracting is illegal as compared to job contracting which is allowed. How do we determine whether contracting is labor only or job? JOB CONTRACTING - Has sufficient capital OR investment in LABOR ONLY CONTRACTING - Has no substantial capital

machinery or equipment (must be substantial, and machinery/equipment must be directly or intended to be related to the job contracted ) - Carries on an independent business different from the employers - Undertakes to perform the job under its own account and responsibility, free from the principals control (principal intervenes only with the end result)

investment

- Has no independent business

- Performs activities directly related to the main business of the principal

Must all three elements be present in order to be considered a labor-only contractor? According to Court decisions, the primary determination is if one is a Job contractor or not. Hence, the test to determine whether one is a job or labor only contractor is to look into the elements of a job contractor. If ALL elements of a job contractor is present AND the contractor qualifies as a job contractor then he is a job contractor. Otherwise he is a labor-only contractor. In many cases the Court looks into the control factor to determine if one is a job contractor or not. For instance, if the first two elements are present (sufficient capital and independent business), but control is exercised by the principal, he is not considered a legitimate job contractor and as such is considered labor-only. Read the Vinoya case to elucidate the matter, particularly p. 481, second paragraph. [ 2nd paragraph of p. 481: From the two aforementioned decisions (referring to the Phil. Fuji Xerox and Neri cases), it may be inferred that it is not enough to show substantial capitalization or investment in the form of tools, equipment, machineries and work premises, among others, to be considered as an independent contractor. In fact, jurisprudential holdings are to the effect that in determining the existence of an independent contractor relationship, several factors might be considered such as, but not necessarily confined to, whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; AND

the control and supervision of the workers; the power of the employer with respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.] What is the liability of the principal to the employee in cases of illegal dismissal? Joint and several with the employer, but with the right to reimbursement from the employer contractor Wage differentials only to the extent where the employee performed the work under the principal Separation pay and backwages, only when the principal has some relation to the termination (such as when he conspired to terminate) The ruling in Rosewood Processing is an obiter and made an unjustified interpretation of Art. 109 of the LC. Rosewood held that monetary awards given in relation to illegal dismissal is the direct liability of the contractor alone unless the principal conspired with the contractor. However, Art. 109 makes the principal liable in illegal dismissal whether or not there was fault on his part.

has been determined at the time of the engagement of the employee

or where the work or service to be performed is SEASONAL in nature and the employment is for the duration of the season.

An employment shall be deemed to be CASUAL if it is not covered by the preceding paragraph; provided, that any employee who has rendered at least one year of service, whether such service is continuous or broken,

shall be considered a REGULAR employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Probationary employment.

Art. 281.

Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee a) in accordance with reasonable standards b) made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. CASES De Leon V. NLRC, 176 SCRA 615 De Leon was employed by La Tondena as a painter and on the agreement that he is considered a casual employee. He was made to clean and oil machines and other odd jobs when he had no painting job. After more than a year of service, he requested to be included in the payroll of regular workers. La Tondena responded by dismissing him.

III.

CLASSES OF EMPLOYEES

LABOR CODE
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be:

where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer
REGULAR

except where the employment has been fixed for a specific PROJECT or undertaking, the completion or termination of which

The Labor Arbiter found that de Leon was illegally dismissed and, in light of the facts, is considered a regular employee. NLRC reversed. Petition for review with the Supreme Court. Held: Petition granted, employer must reinstate De Leon as a regular maintenance man. Contrary agreements notwithstanding, an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer. Not considered regular are the so-called project employment the completion or termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project, and seasonal employment which by its nature is only desirable for a limited period of time. However, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity he performed and while such activity actually exists. The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. What determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence.

Aurora Land vs. NLRC, 266 SCRA 48 Honorio Dagui was hired by Dona Aurora Suntay Tanjangco in 1953 to take charge of the maintenance and repair of the Tanjangco apartments and residential buildings. He was to perform carpentry, plumbing, electrical and masonry work. Upon the death of Dona Aurora Tanjangco in 1982, her daughter, petitioner Teresita Tanjangco Quazon, took over the administration of all the Tanjangco properties. On June 8, 1991, his services was terminated. He filed a complaint for illegal dismissal with the Labor Arbiter. Petitioners insist that Dagui had never been their employee. Since the establishment of Aurora Plaza, Dagui served therein only as a job contractor. Dagui had control and supervision of whoever he would take to perform a contracted job. On occasion, Dagui was hired only as a tubero or plumber as the need arises in order to unclog sewerage pipes. Every time his services were needed, he was paid accordingly. It was understood that his job was limited to the specific undertaking of unclogging the pipes. In effect, petitioners would like the Court to believe that Dagui was an independent contractor, particularly a job contractor, and not an employee of Aurora Plaza. Held: An employer-employee relationship exists. Section 8, RuleVIII, Book III of the Implementing Rules and Regulations of the Labor Code provide the essential requisites before one is considered a job contractor. Honorio Dagui earns a measly sum of P180.00 a day (latest salary). Ostensibly, and by no stretch of the imagination can Dagui qualify as a job contractor. Whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: the selection and engagement of the employee (hiring); the payment of wages (wages); the power of dismissal (firing); and the employers power to control the employees conduct (control). It is the so-called control test, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished, which constitute the most important index of the existence of the employeremployee relationship. An employer-employee relationship exists where the person for whom the services are performed reserves the

10

right to control not only the end to be achieved but also the means to be used in reaching such end. Brent School vs. Zamora, 181 SCRA 702 Brent School, Inc. (BS) employed Doroteo R. Alegre (DA) as athletic director. The employment contract fixed a specific term for its existence: 5 years (18 July 1971 to 17 July 1976). 3 subsequent subsidiary agreements reiterated the same terms and conditions stipulated in the original contract. 20 April 1976. DA received copy of report filed by BS with DOLE advising of the termination of his services effective 16 July1976. The ground: completion of contract, expiration of the definite period of employment. DA protested, arguing that he had acquired regular employment status and could not be removed except for valid cause because his services were UNOD in UTOB and his employment had lasted for 5 years. DOLE Regional Director ruled in favor of DA. Secretary of Labor sustained. Office of the President dismissed BS appeal and affirmed SOL decision. Held: Since the entire purpose behind the development of legislation culminating in the present Art. 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employees right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.

There was a valid fixed term employment contract. DAs employment was terminated upon the expiration of his last contract with BS on 16 July 1976 without necessity of any notice. Concurring and dissenting opinion (J. Sarmiento): I cannot liken employment contracts to ordinary civil contracts in which the relationship is established by stipulations agreed upon. International Catholic Migration Commission v. NLRC, 169 SCRA 606 Petitioner engaged the services of private respondent Galang as a probationary cultural orientation teacher for a probationary period of 6 months. Three months thereafter, she was informed, orally and in writing , that her services were being terminated for her failure to meet the prescribed standards of petitioner as reflected in the performance evaluation of her supervisors during the teacher evaluation program she underwent along with other newly-hired personnel. She subsequently filed a complaint for illegal dismissal, unfair labor practice and unpaid wages against petitioner with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral damages. The labor arbiter dismissed the complaint, but awarded payment for the unexpired portion of the agreed period. NLRC affirmed. Petitioner questions the award. Held: For the petitioner. A probationary employee, as understood under Art 281 of the Labor Code, is one who is on trial by an employer, during which the employer determines whether or not he is qualified for permanent employment. A probationary employment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. The word probationary, as used to describe the period of employment, implies the PURPOSE of the term or period, but not its length. Being in the nature of a trial period, the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial to determining correlative rights of both in dealing with each other during said period. While the employer observes the

11

fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment. The employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. Art 281 of the LC gives ample authority to the employer to terminate a probationary employee for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. There is nothing under Art 281 of the LC that would preclude the employer from extending a regular or permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, Art 281 does not likewise preclude the employer from terminating the probationary employment on justifiable causes. The dissatisfaction of the petitioner over the performance of private respondent Galang is a legitimate exercise of its prerogative to select whom to hire or refuse employment for the success of its program or undertaking. More importantly, Galang failed to show that there was unlawful discrimination in the dismissal. Mercado vs. NLRC, 201 SCRA 332 Petitioners are farm workers who are contending that they are regular farm workers of Cruz and other respondents and thus, are entitled to benefits like overtime pay, holiday pay, service incentive leave, ECOLA, 13th month pay, etc. They claim that they have been working for 12 hours a day the whole year round for almost 19 years (others, for 30 years). Respondents deny that petitioners are regular workers since they are only hired to work for six months (during the harvesting of

sugar canes) a year and for the rest of the year, petitioners are allowed to seek employment elsewhere. Petitioners contend that the proviso in the second paragraph of Art. 280 is applicable to their case, and that the Labor Arbiter should have considered them regular by virtue of said proviso. Held: They are seasonal workers.

The first paragraph of Art 280 answers the question of who are regular employees. It states that regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. The second paragraph demarcates as casual employees, all other employees who do not fall under the definition of the preceding paragraph. Policy Instruction No 12 discloses that the concept of regular and casual employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers to prevent so-called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph was not designed to stifle small scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small scale businesses from engaging in legitimate methods to realize profits. Hence the proviso is applicable only to the employees who are deemed casuals but not to the project employees nor the regular employees treated in paragraph one of Art 280. Labor Congress vs. NLRC, 290 SCRA 509 Three factors lead the Court to conclude that petitioners, although piece-rate workers, were regular employees of respondent Empire Foods Corp. First, as to the nature of petitioners tasks, their job of

12

repacking snack food was necessary or desirable in the usual business of respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for respondents throughout the year, their employment not having been dependent on a specific project or season; and third, the length of time that petitioners worked. Thus, while petitioners mode of compensation was on a per piece basis, the status and nature of their employment was that of regular employees. Not only did petitioners labor under the control of the respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA 401 Petitioner union has 92 members working as cargadores of Corfarm. They are paid on a piece rate basis. They unload, load and pile sacks of palay from the warehouse to the cargo trucks and from the truck to the place delivered. Union filed a petition for certification election, which Corfarm opposed on the ground that there is no e-e relationship, and that there is only a contractual relationship. Held: The workers are regular employees. To determine the existence of an e-e relation. The four fold test is to be applied: (1) the power to hire, (2) payment of wages, (3) the power to dismiss, (4) the power of controlthe last being the most important element. Prior to his ruling on Corfarms motion for reconsideration, Laguesma ruled as follows: the existence of an independent contractor relationship is generally established criteria: (1) whether the contractor is carrying on an independent business; (2) the nature and extent of the work; (3) the skill required; (4) the term and duration of the relationship; (5) the right to assign the performance of a specified piece of work; (6) the control and supervision over the workers; (7) the payment of the contractors workers; (8) the control of premises; (9) the duty to supply the premises, tools and appliances, materials and laborers, and the mode and manner and terms of payment. Corfarm, failed to show by clear and convincing proof that the union has the substantial capital or investment to qualify as an independent contractor under the law. The premises, equipment, and paraphernalia are all supplied by Corfarm. It is only the manpower or labor force which the alleged contractor supplies,

suggesting the existence of a labor only contracting scheme, which is prohibited by law. The petitioners members worked as cargadores, which is directly related, necessary and vital to the operations of Corfarm. Their tasks were essential in the usual business of Corfarm. The lack of control or the existence of waiting time (for the next batch of sacks to load/unload) does not denigrate the regular employment of these workers. The continuity of employment is not the determining factor, but rather whether the work of the laborer is part of the regular business or occupation of the employer. Maraguinot vs. NLRC, 284 SCRA 539 VIVA insists that the petitioners, who are cameramen, are project employees of associate producers who, in turn, act as independent contractors. It is settled that the contracting out of labor is allowed only in the case of job contracting. Assuming that the associate producers are job contractors, they then must be engaged in the business of making motion pictures. As such to be a job contractor under the preceding description, associate producers must have tools, equipment, machinery, work premises and other necessary materials to make motion pictures. However the associate producers have none of these. The associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. The employer-employee relationship between petitioners and VIVA can be further established by the control test i.e. the employers power to control the employees conduct, the most important element is the employers control of the employees conduct, not only as the result of the work to be done, but also as to the means and methods to accomplish the same. VIVAs control is evident in its mandate that the end result must be quality acceptable to the company. The means and methods to accomplish the result are likewise controlled by VIVA. International Pharmaceuticals, Inc. vs. NLRC, 287 SCRA 213 Quinta was employed as Medical Director for the development of the companys herbal medicine department. Their contract had a period of one year. After the contract, she was allowed to continue work until she was terminated.

13

Held: Quinta became a regular employee. The SC held that although their contract was valid, the fact that after its expiration, petitioner decided to continue her services, she is now entitled to security of tenure. Moreover the SC agreed with the labor arbiter that the fact the employee was not required to report at a fixed hour or to keep fixed hours of work does not detract from her status as a regular employee. As petitioner itself, admits, Quinta was a managerial employee and therefore not covered by the Labor Code provisions on hours of work. Whether ones employment is regular is not determined by the number of hours one works, but by the nature of the work and by the length of time one has been in that particular job. Highway Copra Traders vs. NLRC, 293 SCRA 350 [A]n employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer. The nature of his work as a general utility man was definitely necessary and desirable to petitioners business of trading copra and charcoal and regardless of the length of time. The argument of the respondent was only engaged for a specific task, the completion of which is resulted in the cessation of his employment is untenable. By specific project or undertaking, Article 280 of the Labor Code contemplates an activity which is not commonly or habitually performed or such type of work which is not done on a daily basis but only for a specific duration of time or until completion in which case the services of an employee are necessary and desirable in the employers usual business only for the period of time it takes to complete the project. Philippine Federation of Credit Cooperatives vs. NLRC, Dec. 11, 1998 A probationary employee who is engaged to work beyond the probationary period of 6 months or for any length of time set forth by the employer, shall be considered a regular employee. Villa vs. NLRC, 284 SCRA 105 By entering into such contract of project employment, an employee is deemed to understand that his employment is coterminous with the project. Project employment contracts are not lopsided agreements in favor of one party. Thus, the fact that workers work

under different project employment contracts for several years cannot be made a basis to consider them as regular employees, for they remain project employees regardless of the number of projects in which they have worked. Length of service is not the controlling determinant of the employment tenure of a project employee. San Miguel Corporation vs. NLRC, 297 SCRA 277 An employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual trade or business of the employer even if the parties enter into an agreement stating otherwise. But considered not regular are the project employment the termination of which is more or less determinable at the time of employment, and seasonal employment which by its nature is only for one season of the year the employment is limited for the duration of the season. Nevertheless, an exception to the exception is made: any employee who has rendered at least one year of service whether continuous or intermittent with respect to the activity he performed and while such activity actually exists, must be deemed regular. It must be noted that the respondent was employed only for seven months. First he was employed for repair and upgrading of furnaces, upon completion of such , he was terminated. A few days after, two other furnaces required draining/cooling down and emergency repair. Thus he was hired again. Upon completion of such second undertaking, he was likewise terminated. He was not hired for a third time and his two engagements taken together did not total one full year. Clearly, he was hired for a specific project that was not within the regular business of the corporation. Romares vs. NLRC, 294 SCRA 411 There are two kinds of regular employees: those who are engaged to perform activities which are UNOD in UTOB, and those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The scheme of rehiring him for a two to three month contract on a temporary job as a mason is a clear circumvention of the employees right to security of tenure and to other benefits. Despite the provisions of the contract of employment, as long as the activities are UNOD in UTOB, such employee is already regular.

14

PAL vs. NLRC, 298 SCRA 430 The janitorial service agreement is not a labor-only contracting. There is labor only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machinery, work premises, among others and the workers recruited and placed by such persons are performing activities that are directly related to the principal business of such employer. Stellar was not engaged in labor only contracting because it has sufficient capital form of tools and equipment, like vacuum cleaners, polishers, and substantial capitalization as proven by its financial statements. STELLAR even has other clients like San Miguel Corporation and etc. Thus PAL is not the employer of the janitors. Philippine Tobacco Flue-Curing Corp. vs. NLRC, 300 SCRA 37 They are entitled to separation pay. Seasonal workers who work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until re-employed. Since they are repeatedly rehired, such is sufficient evidence of the necessity and indispensability of services, and is equated to a regular employee. On the contrary, when an employee is rehired every year but may work with another, one is not seasonal but a project employee and would naturally end upon the completion of each project. The doctrine in Mercado vs. NLRC is inapplicable to the case at bar because in Mercado, the seasonal employees were not in the employers regular employ. They performed different phases of agricultural work in a given year, and during such periods they could work for others, which they did. They were free to contract with others even if they were presently working for the employer. Rather, the case at bar is pretty much similar to the case of Gaco vs. NLRC, where the Court likewise ruled that Gaco was a regular employee, due to his repeated rehiring every season, spanning over fifteen years. Bernardo vs. NLRC, July 12, 1999 Those who have worked beyond worked beyond 6 months and whose contracts have been renewed are already regularized.

The accommodation argument does not change the nature of their employment. An employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them. The character of employment is determined not by stipulations in the contract but by the nature of the work performed. Otherwise no employee can become regular by the simple expedient of incorporating this condition in the contract of employment. Where an employee has been engaged to perform activities which are usually necessary or desirable in the usual business of the employer, such employee is deemed a regular employee and is entitled to security of tenure notwithstanding the contrary provisions of his contract of employment. Imbuido vs. NLRC, GR 114734, 329 SCRA 357 The principal test for determining whether an employee is a project employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee was engaged for that project. A project employee is one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. In the recent case of Maraguinot, Jr. v. NLRC, we held that [a] project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after [the] cessation of a project; and 2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business or trade of the emplyer.

LECTURE (PART ONE) It is important to distinguish the classes in order to apply the proper rules in labor standards, or apply the security of tenure provisions (illegal termination). It is also important in labor relations, because in a certification election, the definition of a bargaining unit depends on the classes of employee agreed upon by the parties allowed to join.

15

The general rule is that all employees are regular employees. The standard test is that there must be a reasonable connection between the job and the employers business. Regular employee: 1. Performs tasks which are UNOD in UTOB; and the word usually is used because it does not mean they always have to perform tasks which are necessary or desirable. It also refers to casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activity they are employed. Probationary or term employees are also considered regular once they are allowed to work beyond the term or duration of the project. Project employee who has been continuously rehired (Maraguinot case) becomes regular for the specific job continuously rehired for a. b. c. The employee is continuously rehired from project to project even with gaps of time in between Task is UNOD in UTOB, or else the project ee is considered only a casual ee Rehired for the same task or nature of task.

c.

Employment terminates with the project, regardless of the period

A Workpool is not necessary in order to convert the project ee into regular. But its existence may signify that the proj. ee has become regular if there is continuous rehiring. Fixed Term: The job is assigned a specific date of expiration even if the job is considered UNOD in UTOB. The important aspect is that the job is time bound. Brent School ruling: requirements for a valid FT employment: a. b. c. d. e. The parties dealt on equal footing (bargaining position) The contract is reasonable, not oppressive The employee entered into it voluntarily There is no intent to circumvent labor laws Usually apply to teachers; sadly, it is used in other types of jobs and has been subject of abuse

2.

3.

4.

Seasonal Employee: Hired for a specific period of time during the year, and may be UNOD in UTOB Rehired whenever their services are required (e.g. farmworkers) At the arrival of the season must be rehired, or else the er is guilty of illegal termination Allowed to seek work elsewhere while off-season (Mercado case is clarified by the Phil Tobacco case).

A project employee converted to regular employee is still not paid for the period he does not work. But the employer is required to hire him when the next project requires he particular job he does, or else, the employer is guilty of illegal termination. Project employee: Those employed for a fixed project or specific task, the completion of which has been determined and made known to the ee at the time of engagement. Two kinds: 1. 2. Tasks which are UNOD in UTOB Tasks which are not UNOD in UTOB a. b. The job must be distinct from the totality of the ers business The project must be definite as to its completion

Probationary Employee: Hired for 6 months to determine qualification, or capacity as a regular employee, though an ee can become regular right away without going through probation The employee is given the standards at the time of engagement (employer must explain, not merely giving document) General rule is that it is limited to 6 months, except

16

a. b.

When the qualifications cannot be determined during the 6 months, as part of company policy When the ee is the one who asked for the extension

Project employment: Project employee is one who works for a specific project or undertaking which is separate and distinct from the main business of the employer. E.g. the Ateneo Law School wants to computerize its records. The employees hired to do such are project employees. But remember the project or undertaking MAY be within the regular business of the employer. That is, it may be necessary or desirable to the main business. But it is considered a project because it is distinguishable as separate from the main business. There are three instances when the project employee is converted into a regular employee. 1. A project employee may be converted to regular status when he was employed for a specific project, the completion of which is determined, but despite the termination of the project, he is still made to work. It negates the essence of project employment. It shows the employees work is needed not only in the specific project. Within the project itself, and before the completion of the project, the employee is given tasks not related at all to the project. Giving the employee additional work negates again the essence of project employment. It shows again the need of his services is not limited to the project. Even if the extra work is not UNOD in UTOB to the main business, he is converted to a regular employee. The case of Maraguinot. Under multiple succeeding projects, can you have gaps between each project, and the employee still be converted to regular status? YES. But only when the project employee is rehired continuously, and for the same nature of task. There is a pattern showing that UNOD in UTOB.

Casual Employee: One who does not fall under the definition of a regular, project, seasonal or fixed employee The job is not UNOD in UTOB Casual converted to regular after rendering more than a year of service with respect to that activity employed, whether continuous or broken If broken but has served more than one year already, during the intervals he does not have work due to temporary lay-off, he can look for another job, but not during the times the er needs him.

- Any doubts must be resolved in favor of regular employment (PFCCI case) Lecture (Part Two) Types of employment Remember that the presumption is in favor of regular employment. It may be shown that one is not a regular employee, but proof must be given to show this. How to determine regular employment? The nature of the work is UNOD in UTOB of the employer, and if a casual is employed for more than one year, he is considered an employee. Probationary employment: probe period is 6 months for the employer to determine the eligibility of the employee. But the period may be shortened or extended. Probe converts to regular after the period imposed has lapsed, and the employee continues to work. It implies that the employee has passed and is eligible for regular employment. Also, if the terms and conditions of employment are not clearly provided by the employer, the standards are not clear then the employee is deemed a regular employee. This is because the employee has no knowledge of what standards he or she must meet, and so this should not work to his or her prejudice.

2.

3.

Remember that the one year rule in the Code applies only to casual employment, not to project nor seasonal employees. If a project employee is converted to a regular employee, when can he reckon his conversion to regular employment? At the start of the project? According to Sir, there is no clear answer to that. Two possible options: One is to say that regular employment starts from day one, because it can be analogous to the ground of psychological incapacity under the Family Code. Theoretically it

17

should have existed from the very start, even if it manifests much later. Hence, one theory is that from day one, the work done is UNOD in UTOB, thus regular employee from day one. The second option is after showing a series of rehiring, a pattern, only then will conversion occur. But it is hard to determine what exact date the regular employment will be counted should it be counted from the start of the third project? Or from the second project? Etc. etc. Again, there is no clear-cut formula. Casual Employment: A casual employee is one whose employment is not UNOD in UTOB, but his term of employment is not made known at the time of the employment, unlike a project ee. A casual converts to regular ee if after one year of service, whether continuous or broken, he still works for the employer. The length of time is an indication that his job is UNOD in UTOB. Now what if this scenario happens:
hired 6 months vacancy hired again 7 months 6 months regular

guilty of illegal termination illegally terminating the employee converted to regular employee. During the period that he is temporarily laid off, the worker may seek work elsewhere. This will not negate his conversion to a regular employee in the first company. After the one year, the employee has the right to demand that he be rehired for succeeding undertakings. Conversely, management can demand and compel the employee to report for work for the next undertaking. If the employee is working elsewhere, then the employer can deem the employee as refusing to work, a ground for disciplinary action and termination. REMEMBER: A casual employee becomes regular after completion of service of one year for the SAME task or nature of tasks. He must complete the one year period for the SAME tasks/nature of tasks. So lets say for the second undertaking he was hired as a driver, but in the first undertaking he was hired as a waiter, then there is no conversion. The Principle in project or seasonal employment that once a project/seasonal employee is made to do tasks other than or outside of the work for which he was hired makes him a regular employee, DOES NOT apply to hired again casual employment. * The codal provisions are very important especially for bar purposes. The cases are interpretations of the provisions. You must know the provisions first before the cases. Seasonal Employment: In this case, conversion occurs similar to project employees. When they are continuously rehired for the same task/nature of task, they become regular employees. During off-season, they are temporarily laid off, without pay, but they are still considered regular employees. So during off-season, the relationship is still continuous. Regular seasonal employees. Sir uses this term only because the Court used it. But the correct term should be seasonal employees converted to regular employees. Anyway, the hiring must be for the same task/nature of task. If not, there is no pattern for UNOD in UTOB. Except in cases where the employer hires an all around person. Obviously, not the same nature of task. But there is still that pattern showing his services are UNOD in UTOB. So he

vacancy

In this case, the employee becomes regular after one year, that is, under the second undertaking. Hence he is deemed a regular employee, and so he may demand to be rehired when there is another available undertaking, even though the intervals between jobs may stretch to months. During the second vacancy, the employee is still considered a regular employee, but since there is no job to do, the Court considers this a temporary lay-off without pay. Hence he is still a regular employee who follows the no work, no pay rule. The same principle temporary lay off applies to a project and seasonal employee/employment, who acquires regular employment. Such employee can demand that he be rehired for the next casual work. If the company hires someone else, then it is

18

becomes regular as well. In the Phil. Tobacco case, the workers were hired season after season after season. So obviously they were regular employees. Remember our discussion awhile ago, regarding project employees, as to when to reckon an employee to be regular once there is conversion? The same two scenarios apply to seasonal employees. There is also no clear-cut answer to seasonal employees. But it is easier to defend the first scenario that from day one they were regular, it became manifest only after some time. Use the principle of resolving all doubts in favor of labor. Otherwise it will be difficult to defend the time of conversion. Remember that once an employee is converted to a regular employee, he should enjoy or derive all benefits covered by the CBA that is given to regular employees. Now, look at the codal provision. In effect, it says that if one is not regular, he is project/seasonal. If he is not project/seasonal, he is casual. But there is another type of employment created by jurisprudential rule: Fixed Term employment: Unlike project, where what is fixed is the term of completion of the project, in Fixed Term, the PERIOD of employment is fixed. The Court clarified that Fixed term is allowed only if: it was entered into by both parties negotiating on a more-orless equal bargaining position the worker should not be coerced the worker should not be deprived of his workers rights as an employee it must be a good faith agreement, not entered into by the employer to circumvent the law on regular employment

Is the Brent doctrine applicable to any situation? No. It will NOT apply to a factory and a factory worker. Remember that the people involved in Brent were the school and an athletic director. Similar to a probationary/project/seasonal employee being made to work beyond the period/project/season, a fixed term employee made to work beyond the fixed term should be considered regular, because it negates the essence of fixed term employment. Even if the parties bargained on equal footing. Second, is repeatedly rehiring the fixed term employee through fixed term employment contracts. The element of circumvention in this case is clearly shown. It lacks one of the conditions under the Brent doctrine that the fixed term employment must be done in good faith. Hence in the second situation the employee should be deemed regular as well. Remember that it is not a general rule that you can fix the term of employment. It is an exceptional case that must be applied in exceptional circumstances. The general rule is one is a regular employee. Remember the rule in statutory construction that exceptions to the general rule must be construed strictly. So if you are not sure whether the employee falls under one of the exceptional circumstances, then he should be deemed regular. Is there a problem with that? There is none because an employer can hire an employee as regular starting from day one.

IV. RIGHT TO SELF-ORGANIZATION

A. CONCEPT LABOR CODE
Art. 243. Coverage and employees right to selforganization. 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 - self organization and to
AND

SCOPE

This is the Brent ruling. The Court upheld this pursuant to provisions on the Civil Code, that one must respect the terms of a contract entered into by the parties. Is this correct? Partly yes, essentially no. Yes the CC contains the provisions recognizing the parties rights to fix the terms of a contract. But the CC itself says that for employment relationship it is not the CC that applies but rather the Labor Code. For a contract of employment is not an ordinary contract-it is so vested with public interest that it should be covered by special provisions. Even the CC points us back to special laws.

19

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. Art. 246. Non-abridgement of right to selforganization. IT shall be unlawful to - restrain, - coerce, - discriminate against or - unduly interfere with employees and workers in their exercise of the right to self-organization. Such right shall include the right to - form, join, or assist labor organization for the purpose of collective bargaining through representatives of their own choosing, and - to engage in lawful concerted activities for the same purpose, or for their mutual aid and protection, subject to the provisions of Art. 264 of this Code. Art. 277(c). Miscellaneous provisions. ANY employee, - whether employed for a definite period or not, - shall, beginning on his first day of service, - be considered an employee - for purposes of membership in any labor union. Art. 212. Definitions. (e) Employer includes - any person

- acting in the interest of an employer, - directly or indirectly. The term shall not include - any labor organization - or any of its officers or agents EXCEPT when acting as employer. (f) Employee includes - any person - in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless this Code so explicitly states. It shall include - any individual whose work has ceased - as a result of or in connection with - any current labor dispute - or because of any unfair labor practice - IF he has not obtained any other substantially equivalent and regular employment.

OMNIBUS RULES, BOOK V RULE I-RULE II, 40, SERIES OF 2003.

RULE I Definition of Terms SECTION 1. Definition of terms. (r)

AS

AMENDED BY D.O.

"Employees" includes any person in the employ of a particular employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.

20

(s)

"Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.

permits issued by the Department may exercise the right to self-organization and join or assist labor unions for purposes of collective bargaining if they are nationals of a country which grants the same or similar rights to Filipino workers, as certified by the Department of Foreign Affairs. For purposes of this section, any employee, whether employed for a definite period or not, shall beginning on the first day of his/her service, be eligible for membership in any labor organization. All other workers, including ambulant, intermittent and other workers, the self-employed, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection and other legitimate purposes except collective bargaining.

RULE II COVERAGE OF THE RIGHT TO SELF-ORGANIZATION Section 1. Policy. - It is the policy of the State to promote the free and responsible exercise of the right to selforganization through the establishment of a simplified mechanism for the speedy registration of labor unions and workers associations, determination of representation status and resolution of inter/intra-union and other related labor relations disputes. Only legitimate or registered labor unions shall have the right to represent their members for collective bargaining and other purposes. Workers' associations shall have the right to represent their members for purposes other than collective bargaining. Section 2. Who may join labor unions and workers' associations. - All persons employed in commercial, industrial and agricultural enterprises, including employees of government owned or controlled corporations without original charters established under the Corporation Code, as well as employees of religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join or assist labor unions for purposes of collective bargaining: provided, however, that supervisory employees shall not be eligible for membership in a labor union of the rank-and-file employees but may form, join or assist separate labor unions of their own. Managerial employees shall not be eligible to form, join or assist any labor unions for purposes of collective bargaining. Alien employees with valid working

B. SPECIAL GROUPS LABOR CODE

OF

EMPLOYEES

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-andfile employees - but may join, assist or form separate labor organizations of their own. 212. Definitions. (m) Managerial employee is one who is vested with the powers or prerogatives to lay down and execute management policies

21

and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgement. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book.

is not merely routinary or clerical but requires the use of independent judgment.

CASES MANAGERIAL AND SUPERVISORY EMPLOYEES: Franklin Baker vs. Trajano, 157 SCRA 416 (1988) A union representing 90 workers of the company filed for a certification election. The company opposed saying that 76 of the workers were managerial employees, citing instances wherein these workers recommended the dismissal and hiring of several workers. Held: The test of supervisory or managerial status depends on whether a person possesses authority to act in the interest of his employer in the matter specified in Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing Rules and whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment. Thus, where such recommendatory powers as in the case at bar, are subject to evaluation, review and final action by the department heads and other higher executives of the company, the same, although present, are not effective and not an exercise of independent judgment as required by law. Subject employees are not managerial employees because as borne by the records, they do not participate in policy making but are given ready policies to execute and standard practices to observe, thus having little freedom of action.

OMNIBUS RULES, BOOK V, RULE 1, SEC. 1 (hh), (nn), (xx), AS AMENDED BY D.O. 40
RULE I Definition of Terms SECTION 1. Definition of terms. (hh) "Managerial Employee" vested with powers or execute management suspend, layoff, recall, employees. refers to an employee who is prerogatives to lay down and policies or to hire, transfer, discharge, assign or discipline

(nn) "Rank-and-File Employee" refers to an employee whose functions are neither managerial nor supervisory in nature. (xx) "Supervisory Employee" refers to an employee who, in the interest of the employer, effectively recommends managerial actions and the exercise of such authority

Pagkakaisa ng mga Mangagawa vs. Ferrer-Calleja, 181 SCRA 449

While the functions and the titles of the personnel sought to be organized appear on paper to involve an apparent exercise of managerial authority, the fact remains that none of them discharge said functions.

22

Rules in determining rank-and-file employees: 1.) They do not have the power to lay down and execute management policies; 2.) They do not have power to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees but only to recommend such actions; and 3.) They do not have the power to recommend any managerial actions as their recommendations have to pass through the department manager for review.

United Pepsi-Cola Supervisory Union vs. Laguesma, 288 SCRA 15

The company opposed the inclusion of its route managers in the list of members of the union claiming said employees are managerial employees and should be excluded. Held: A distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such rank-and-file employees. Designations or titles of positions are not controlling. And neither should it be presumed that just because they are given set benchmarks to observe, they are ipso facto supervisors. Adequate control methods which require a delineation of the functions and responsibilities of managers by means of ready reference cards as here, have long been recognized in management as effective tools for keeping businesses competitive. University of the Philippines Corp. vs. Ferrer-Calleja, 211 SCRA 451 UP protested the inclusion of the academic staff in a labor union composed of other non-academic rank and file, claiming that they are high level-employees or at the least, should comprise a separate collective bargaining unit.

Held: Even assuming arguendo that UP professors discharge policydetermining function through the University Council, still such exercise would not qualify them as high-level employees within the context of E.O. 180. Policy-determining refers to policydetermination in university matters that affect those same matters that may be the subject of negotiation between public sector management and labor. The reason why policy-determining has been laid down as a test in segregating rank-and-file from management is to ensure that those who lay down policies in areas that are still negotiable in public sector collective bargaining do not themselves become part of those employees who seek to change these policies for their collective welfare. The policy-determining functions of the University Council refer to academic matters, i.e., those governing the relationship between the University and its students, and not the University as an employer and the professors as employees. It is thus evident that no conflict of interest results in the professors being members of the University Council and being classified as rank-and-file employees. 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. The test of the grouping is community or mutuality of interests. And this is so because the basic test of an asserted bargaining units acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Labor Union, 268 SCRA 573 The company opposed the holding of a certification election because the union has both rank and file employees and supervisory employees. Held: A labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being
23

one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. (The Court held that the union cannot, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election.) Toyota Motor Philippines Labor Union vs. Toyota Motor Philippines; GR 135806 August 8, 2002 In this case, it was held that if a labor organizations application for registration is vitiated by falsification and serious irregularities, a labor organization should be denied recognition as a legitimate labor organization. SPI Technologies vs. DOLE (Minute Resolution), March 8, 1999 The company opposed the petition for certification filed by the union alleging that the union is not a legitimate labor organization as it represents both supervisory and rank and file employees, and submitting the names of 19 alleged supervisory employees. Held: The record shows that the union is a legitimate labor organization having been issued a certificate of registration. Under prevailing rules, once a union acquires legitimate status as a labor organization, it continues as such until its certificate of registration is cancelled or revoked in an independent action for cancellation Article 245 merely prescribes the requirements for eligibility in joining a union and does not prescribe the grounds for the cancellation of union registration. In the absence of any independent petition for cancellation of registration filed against the respondent labor union, it continues to be possessed with legal personality of a legitimate labor organization.

(Note: The SPI and Toyota ruling are two irreconcilable decisions. The case Tagaytay Highlands vs. Tagaytay Highlands Union, January 22, 2003, which upholds the SPI Doctrine, reconciles the conflict in the two cases.) Atlas Lithographic Services vs. Laguesma, 205 SCRA 12 A local union comprised of supervisory employees filed a petition for certification election which was opposed by the company because such union was affiliated with a national federation which has as one of its members the union of the companys rank-and-file employees. Held: These supervisory employees are allowed to form their own union but they are not allowed to join the rank-and-file union because of conflict of interest. The peculiar role of supervisors is such that while they are not managers, when they recommend action implementing management policy or ask for the discipline or dismissal of subordinates, they identify with the interests of the employer and may act contrary to the interests of the rank-and-file. A conflict of interest nay arise in the areas of discipline, collective bargaining and strikes. Members of the supervisory union might refuse to carry out disciplinary measure against their co-member rank-and-file employees. In the area of bargaining, their interests cannot be considered identical. The needs of one are different from those of the other. Moreover, in the event of a strikes the national federation might influence the supervisors union to conduct a sympathy strike on the sole basis of affiliation. De La Salle University Medical Center vs. Laguesma, 294 SCRA 141 The company opposed the petition for certification election on the ground that the federation representing the supervisors union also represents its rank-and-file employees union. Held: The reason for the segregation of supervisory and rank-andfile employees of a company with respect to the exercise of the right

24

to self-organization is the difference in their interests. Supervisory employees are more closely identified with the employer than with the rank-and-file employees. If supervisory and rank-and-file employees in a company are allowed to form a single union, the conflicting interests of these groups impair their relationship and adversely affect discipline, collective bargaining, and strikes. These consequences can obtain not only in cases where supervisory and rank-and-file employees in the same company belong to a single union but also where unions formed independently by supervisory and rank-and-file employees of a company are allowed to affiliate with the same national federation. However, such a situation would obtain only where two conditions concur: First, the rank-and-file employees are directly under the authority of supervisory employees. Second, the national federation is actively involved in union activities in the company. The affiliation of two local unions in a company with the same national federation is not by itself a negation of their independence since in relation to the employer, the local unions are considered as the principals, while the federation is deemed to be merely their agent. This conclusion is in accord with the policy that any limitation on the exercise by employees of the right to selforganization guaranteed in the Constitution must be construed strictly. Workers should be allowed the practice of this freedom to the extent recognized in the fundamental law. CONFIDENTIAL EMPLOYEES: National Association of Trade Unions (NATU) vs. NLRC, 239 SCRA 546 The petition for certification election of the union was opposed by the company on the ground that some of the employees included in the list of members were either managerial or confidential employees. Held: It is the nature of the employees functions, and not the nomenclature or title given to his job, which determines whether he has rank and file, supervisory, or managerial status.

The grave abuse of discretion committed by public respondent is at once apparent. Art. 212, par. (m), of the Labor Code is explicit. A managerial employee is (a) one who is vested with powers or prerogatives to lay down and execute management policies, or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees; or (b) one who is vested with both powers or prerogatives. A supervisory employee is different from a managerial employee in the sense that the supervisory employee, in the interest of the employer, effectively recommends such managerial actions, if the exercise of such managerial authority is not routinary in nature but requires the use of independent judgment. It is the nature of the employees functions, and not the nomenclature or title given to his job, which determines whether he has rank and file, supervisory, or managerial status. A confidential employee is one entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employers property. While Art. 245 of the Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of necessary implication, confidential employees are similarly disqualified. In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act in the interest of the employers. It is not farfetched that in the course of collective

25

bargaining, they might jeopardize that interest which they are dutybound to protect. Metrolab Industries vs. Confesor, 254 SCRA 182 The company asked for the exclusion from the closed shop provision and bargaining unit of the rank and file employees of the executive secretaries of its managers since such secretaries are confidential employees having access to vital labor information. Held: Although Article 245 of the Labor Code 20 limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records. The dangers sought to be prevented, particularly the threat of conflict of interest and espionage, are not eliminated by nonmembership of Metrolabs executive secretaries or confidential employees in the Union. Forming part of the bargaining unit, the executive secretaries stand to benefit from any agreement executed between the Union and Metrolab. Such a scenario, thus, gives rise to a potential conflict between personal interests and their duty as confidential employees to act for and in behalf of Metrolab. They do not have to be union members to affect or influence either side. Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature of employment of confidential employees is quite distinct from the rank and file, thus, warranting a separate category. Excluding confidential employees from the rank and file bargaining unit, therefore, is not tantamount to discrimination. San Miguel Corp. Supervisors and Exempt Union vs. Laguesma, 277 SCRA 370 The company petitioned for the exclusion of several supervisors from the bargaining unit on the ground that they were confidential employees. These employees handle confidential information which

relate to product formulation, product standards and product specifications. Held: Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. An important element of the confidential employee rule is the employees need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key question frequently considered is the employees necessary access to confidential labor relations information. Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such duties, said access does not render the employee a confidential employee. If access to confidential labor relations information is to be a factor in the determination of an employees confidential status, such information must relate to the employers labor relations policies. Thus, an employee of a labor union, or of a management association, must have access to confidential labor relations information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not cause an employee to be excluded from the bargaining unit representing employees of the union or association. Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information or technical trade secrets, will not render an employee a confidential employee.

26

In the case at bar, the employees in question may not be considered confidential employees merely because they handle confidential data as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union. Sugbuanon Rural Bank vs. Laguesma, 324 SCRA 425 The company opposed the unions petition for certification election on the ground that the members of the union were confidential employees. Held: Article 245 of the Labor Code does not directly prohibit confidential employees from engaging in union activities. However, under the doctrine of necessary implication, the disqualification of managerial employees usually applies to confidential employees. The confidential employee rule justifies exclusion of confidential employees because in the normal course of their duties they become aware of management policies relating to labor relations. It must be stressed, however, that when the employee does not have access to confidential labor relations information, there is no legal prohibition against confidential employees from forming, assisting, or joining a union. SECURITY GUARDS: Manila Electric Co. vs. Secretary of Labor and Employment, 197 SCRA 275

The issue in this case is whether security guards have the right to join either the rank-and-file or supervisory union. Held: Under the new rules, the security guards are not barred from membership in a labor organization of the rank-and-file employees. However, in dismissing the case, the SC also express its concern on the consequence of this decision. Under the new rules, only the supervisory employees are prohibited and not security guards (Art. 245). The possible consequence is divided loyalties in the faithful performance of their duties. Thus, in the event of a strike declared by their union, security personnel may neglect or abandon their duties, such as protection of the properties of their employer, the control of access to employers premises, and the maintenance of order in the even of emergencies and untoward incidents. MEMBERS OF COOPERATIVES: Benguet Electric Cooperative vs. Ferrer-Calleja, 180 SCRA 740 The right to collective bargaining is not available to an employee of a cooperative who at the same time is a member and co-owner thereof. However, employees who are neither members nor coowners of the cooperative are entitiled to exercise the rights to selforganization, collective bargaining and negotiations. The rationale is that as cooperative members they are co-owners of cooperative even if they dont exercise the actual management of cooperative. TEACHERS: Jacinto vs. CA, 281 SCRA 657 Several public school teachers incurred unauthorized absences when they participated in mass actions. They were preventively suspended and later on dismissed by the DECS Secretary. The teachers claimed they were merely exercising their right to peaceful assembly and petition for redress of grievances. Held: As regards the right to strike, the Constitution itself qualifies its exercise with the proviso in accordance with law. This is a clear

27

manifestation that the state may, by law, regulate the use of this right, or even deny certain sectors such right. Executive Order 180 which provides guidelines for the exercise of the right of government workers to organize, for instance, implicitly endorsed an earlier CSC circular which enjoins under pain of administrative sanctions, all government officers and employees from staging strikes, demonstrations, mass leaves, walkouts and other forms of mass action which will result in temporary stoppage or disruption of public service, by stating that the Civil Service law and rules governing concerted activities and strikes in the government service shall be observed. It is also settled in jurisprudence that, in general, workers in the public sector do not enjoy the right to strike. Acosta vs. CA, 334 SCRA 486 Teachers from different public schools in Metro Manila were administratively charged with grave misconduct and gross neglect of duty when they did not report for work and instead, participated in mass actions. They claimed that they never went on strike because they never sought to secure changes or modification of the terms and conditions of their employment. Held: The character and legality of the mass actions which they participated in have been passed upon by this Court as early as 1990 wherein it held that these mass actions were to all intents and purposes a strike; they constituted a concerted and unauthorized stoppage of, or absence from, work which it was the teachers sworn duty to perform, undertaken for essentially economic reasons. MEMBERS OF THE IGLESIA NI CRISTO: Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54 It is clear that the right to join a union includes the right to abstain from joining any union. The legal protection granted to such right to refrain from joining is withdrawn by operation of law. Where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only members of the collective

bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on freedom of association, upholds and reinforces it. It does prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do so, the law does not coerce them to join; neither does the law prohibit them from joining, and neither may the employer or labor union compel them to join. It is the employee who should decide for himself whether to join such union or not but the law does not prohibit anyone from joining unions or it does not favor anuy religion. Kapatiran sa Meat and Canning Division vs. Ferrer-Calleja, 162 SCRA 367 This Courts decision in Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union. The public respondent correctly observed that the recognition of the tenets of the sect . . . should not infringe on the basic right of self-organization granted by the constitution to workers, regardless of religious affiliation. The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS claim to majority status, by filing a timely petition for certification election on October 13, 1987 before TUPAS old CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3, 1987. As

28

pointed out by Med-Arbiter Abdullah, a certification election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can freely choose their bargaining representative thru secret ballot. Since it has not been shown that this order is tainted with unfairness, this Court will not thwart the holding of a certification election. EMPLOYEES OF INTERNATIONAL ORGANIZATIONS: International Catholic Migration Commission vs. Calleja, 190 SCRA 130 ICMC employees applied for a certification of election which was opposed by ICMC on the fround that the Dept. of Foreign Affairs granted ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, thus, the principle of nonsuability of states or diplomatic immunity. The SC held that although the certificate of election is not a suit against ICMC, it would nonetheless trigger a series of events in the collective bargaining process which could inevitably lead to legal process which includes any penal, civil and administrative proceedings. LECTURE Is the right to self organization a constitutional right? Can it be taken away by statute? The right to self organization is a constitutional right. And it cannot be taken away by statute. The right to self organization per se is a right of ALL employees, not just rankand-file or supervisory but even managerial employees. It is the right to organization for purposes of collective bargaining which is limited by the Labor Code. Hence, only rank and file and supervisory employees may join, assist, or form labor organizations for purposes of collective bargaining. Art. 243 cannot be read in isolation. It must be read in conjunction with Art. 245. What is the right to self-organization? It does not only cover the right to organize for purposes of collective bargaining and for mutual aid and protection, but also pursuant to Art. 246. Look at Art.

246, it defines what is the right of self-organization.. It extends to the employees right to assert peaceful, concerted means. Hence, to picket peacefully is part of the right to self-organization through peaceful, concerted means, and it is beyond the jurisdiction of the regular courts. Who are managerial employees? Look at Art. 82. If one is a member of a managerial staff by virtue of Art. 82 you are a managerial employee? Insofar as one is entitled to certain benefits, one can be considered a managerial employee excluding him from such benefits, and in this case, managerial employee as defined by Art. 82. But insofar as the right to self-organization is concerned, he may be considered NOT a managerial employee because of the other definition of a managerial employee under Art. 245. Because the definition of a managerial employee should be applied strictly. Theres a prohibition against managerial employees joining or assisting in union organizing activities, because it is considered interference by management. Because they lay down policies. Now as for supervisory employees, they are allowed to form or join labor organizations because their power is recommendatory. However it must be effective recommendation. What does that mean? Since all recommendations of supervisors go up to the manager for a final signature at the very least, it can be said it will always be subject to review. So when can a recommendation be considered effective? In the case of a disciplinary action, a supervisor conducted an investigation, and he exercised discretion and recommended termination after deciding the case, if the manager conducts another investigation, and again evaluate the evidence submitted by the supervisor, then the supervisors recommendation is not effective. He should be considered rank-and- file. On the other hand, if the manager merely reviews the supervisors findings and recommendations, and determine if the supervisor exercised due discretion, then the recommendation was effective recommendation. The supervisor holds a supervisory position. Now a supervisor cannot join the organization of rank-andfile employees, and vice versa. There is a prohibition on

29

commingling. Does it matter how many prohibited employees happened to join the union? No. The legitimacy of the union is invalidated by even a single employee who commingles with that certain union. Such issue will come up in a petition for certification election proceeding. Remember the case of Toyota. The Court said the legitimacy of a union is nullified the moment there is commingling. What is the legal basis for this ruling? Art. 245? But Art. 245 does not mention the effect of nullification in case of commingling. Remember the Toyota case and Justice Kapunan . SPI Technologies is a clarification of the Toyota case. It says that Art. 245 relates to the eligibility of the employees to join. It does not relate to the issue of illegitimacy. In fact, the Labor Code does not include as one of the grounds for cancellation of a unions registration the commingling of employees in such union. Toyota places a burden on labor unions to determine with exactness who are supervisory or rank-and-file employees. Instead of Toyota, SPI is a more reasonable interpretation of Art. 245. Art. 245 bars an employee , and the effect of the violation is for the member to be expelled. In the case of a petition for certification election, the employee is excluded from voting through inclusion/exclusion proceedings. We do not know how the Court will reconcile Toyota and SPI. They are irreconcilable. I suggest for the bar purposes, cite Toyota, then cite SPI. We will not know why the examiner asks the question-if he is relying on Toyota or is testing if you know SPI. So I suggest cite both Toyota then say that there is a recent contrary decision in the case of SPI. The Toyota doctrine says that commingling is a violation of Art. 245, and results in the nullification of a unions registration. This fatally affects a pending petition for certification election because it can be filed only by a legitimate labor organization. Now in the Atlas case, using Art. 245 of the Code, says that a supervisory union cannot join the federation of the companys rankand-file union. Hence it extends the prohibition to the federation or conglomerate level. Applying Toyota again, will this affect the

federations legitimacy? Yes. This is again not provided in Art. 245. Go to the last paragraph of the decision, prior to the dispositive portion. The company withdrew its opposition to the commingling in the federation. There was no genuine issue left! That is how doctrines in labor are made year in and year out. Now in the succeeding case of De La Salle, the commingling per se is not disallowed. It said the Atlas doctrine is applicable only when: The rank-and-file union members are directly under the supervisors comprising the supervisory union The federation is actively involved in the negotiations for CBA (which is stupid because this is the primary purpose of a federation)

It is possible that there are supervisors in the union who are not supervising the rank-and-file members of the union in the same federation. They are not really working with each other. For instance, they belong to different departments. Or a union can be organized in such a way where not all rank-and-file employees comprise only one union. You can divide them into as many bargaining units as possible depending on the rules in determining the appropriate bargaining unit. Confidential employees- are those who assist managerial employees and by the doctrine of necessary implication are not allowed to join or assist labor organizations. They are akin to managerial employees. Three elements that must be applied strictly:

The confidential employees necessary or primary function entails he must have access to vital confidential information or matter related to labor relations. He also must have fiduciary relationship of a confidential nature with the management employee. And the manager must have the power to lay down policies relating to labor relations.

30

Hence a Xerox operator cannot be considered a confidential employee, because although he may photocopy vital labor relations documents, he does not enjoy the fiduciary relation. I suggest you try to know the rules on public sector unionism. You can find that in any book. Im not sure if it is included in the bar exams though. A union security agreement is a valid compulsion as a condition for employment. In compelling him to join a labor organization you are working for his own good. It is done for collective action for labor. It is good for labor. This is an exception to the right to association, such as lawyers are compelled to join the IBP. But who cannot be compelled to be members of the labor union? Those who are already members of another union. The compulsion to join the union applies to those who are not yet members of another union and are not religious objectors. Religious Objectors applies to people who claim that it is prohibited by their religious belief. They can maintain their employment despite the union security clause. But religious objectors are not prohibited from joining if they want to , nor are they prohibited from forming their own union. No state policy or law prohibits this, it is only usually an internal prohibition by the religious group. This is exemplified in the Kapatiran case. The workers were allowed to form their own union if they wanted to, and even if it would be against their religious belief, the State would still not prohibit them from doing the same. C. ACQUISITION AND RETENTION AGREEMENTS LABOR CODE
Art. 277 (c). Miscellaneous Provisions. ANY employee,
OF

whether employed for a definite period or not, shall, beginning his first day of service, be considered an employee for purposes of membership in any labor union.

Art. 248 (e). Unfair Labor Practices of Employers. - To discriminate in regard to a) wages, b) hours of work, c) and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law ~ shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, ~ except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate collective bargaining unit a) who are not members of the recognized collective bargaining agent b) may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, c) if such non-union members accept the benefits under the collective agreement: d) Provided, That the individual authorization required under Art. 242, paragraph (o), of this Code shall not apply to the non-members of the recognized collective bargaining agent.

MEMBERSHIP, UNION SECURITY

CASES Liberty Flour Mills Employees vs. Liberty Flou Mills, Inc., December 29, 1989
31

The petitioners, after organizing another union filed a certification election among the rank-in-file employees, are terminated because o a union shop clause1 in the CBA. The SC affirmed the decision that such dismissal was valid since the purpose of self-organization, collective bargaining, negotiation, and peaceful assembly including the right to strike in accordance with the law will not work if every worker were to choose his own separate way instead of joining hi co-employees. Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54 It is clear that the right to join a union includes the right to abstain from joining any union. The legal protection granted to such right to refrain from joining is withdrawn by operation of law. Where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only members of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on freedom of association, upholds and reinforces it. It does prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do so, the law does not coerce them to join; neither does the law prohibit them from joining, and neither may the employer or labor union compel them to join. Santos-Juat vs. CIR, 15 SCRA 391 Petitioner charged respondent company of Unfair Labor Practice because he was suspended after he refused to join a labor union. The
1

CBA contains a closed shop proviso.2 He was suspended but later ordered to report to work, however, he did not go to work. The main contention of the petitioner is that he is an old employee of the company even before the union was formed, thus, he is not included in the requirement. The SC held that it is an established doctrine that the CBA entered into by the employer and a duly authorizewd labor union applies also to old employees or workers who are non-0members of any labor union at the time of the CBA. Thus, the basis for his dismissal is valid. Manila Cordage Co. vs. CIR, 78 SCRA 398 The respondent union declared a strike. However, the certificate of strike was cancelled and a return to work order was given. The pivotoal issue in this case is due representation of the Union in the CBA in question. The issue will be resolved if the question of whether or no Juanito Tabuyan and he others who signed the agreements relied upo the petitioner as officers of respondent union. Thus, the case is remanded to respondent court. Kapatiran sa Meat and Canning Division vs. Ferrer-Calleja, 162 SCRA 367 This Courts decision in Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union. The public respondent correctly observed that the recognition of the tenets of the sect . . . should not infringe on the basic right of self-organization granted by the constitution to workers, regardless of religious affiliation. The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA,
2

A Union Shop Claus in CBA is a clause that requires union membership in good standing as a requirement for continued employment.

Similar to a Union Shop Clause (see Liberty)

32

does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS claim to majority status, by filing a timely petition for certification election on October 13, 1987 before TUPAS old CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a certification election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can freely choose their bargaining representative thru secret ballot. Since it has not been shown that this order is tainted with unfairness, this Court will not thwart the holding of a certification election. D. LABOR ORGANIZATIONS LABOR CODE
Art. 212. Definitions. (g) Labor organization means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. Legitimate labor organization means any labor organization duly registered with the Department of Labor and Employment and includes any branch or local thereof.
AS

(h) "Certification Election" or "Consent Election" refers to the process of determining through secret ballot the sole and exclusive representative of the employees in an appropriate bargaining unit for purposes of collective bargaining or negotiation. A certification election is ordered by the Department, while a consent election is voluntarily agreed upon by the parties, with or without the intervention by the Department. (i) "Chartered Local" refers to a labor organization in the private sector operating at the enterprise level that acquired legal personality through the issuance of a charter certificate by a duly registered federation or national union, and reported to the Regional Office in accordance with Rule III, Section 2-E of these Rules. (j) "Collective Bargaining Agreement" or "CBA" refers to the contract between a legitimate labor union and the employer concerning wages, hours of work, and all other terms and conditions of employment in a bargaining unit. (k) "Conciliator Mediator" refers to an officer of the Board whose principal function is to assist in the settlement and disposition of labor-management disputes through conciliation and preventive mediation, including the promotion and encouragement of voluntary approaches to labor disputes prevention and settlement. (l) "Consolidation" refers to the creation or formation of a new union arising from the unification of two or more unions. (m) "Deregistration of Agreement" refers to the legal process leading to the revocation of CBA registration. (n) "Department" refers to the Department of Labor and Employment.

(h)

OMNIBUS RULES BOOK V

AMENDED

BY

D.O. 40, RULE I, SEC. 1

(a) "Affiliate" refers to an independent union affiliated with a federation, national union or a chartered local which was subsequently granted independent registration but did not disaffiliate from its federation, reported to the Regional Office and the Bureau in accordance with Rule III, Sections 6 and 7 of these Rules.

33

(o) "Election Officer" refers to an officer of the Bureau or Labor Relations Division in the Regional Office authorized to conduct certification elections, election of union officers and other forms of elections and referenda in accordance with Rule XII, Sections 2-5 of these Rules. (p) "Election Proceedings" refer to the period during a certification election, consent or run-off election and election of union officers, starting from the opening to the closing of the polls, including the counting, tabulation and consolidation of votes, but excluding the period for the final determination of the challenged votes and the canvass thereof. (w) "Independent Union" refers to a labor organization operating at the enterprise level that acquired legal personality through independent registration under Article 234 of the Labor Code and Rule III, Section 2-A of these Rules. (cc) "Labor Organization" refers to any union or association of employees in the private sector which exists in whole or in part for the purpose of collective bargaining, mutual aid, interest, cooperation, protection, or other lawful purposes. (ee) "Legitimate Labor Organization" refers to any labor organization in the private sector registered or reported with the Department in accordance with Rules III and IV of these Rules. (ff) "Legitimate Workers' Association" refers to an association of workers organized for mutual aid and protection of its members or for any legitimate purpose other than collective bargaining registered with the Department in accordance with Rule III, Sections 2-C and 2-D of these Rules.

(kk) "National Union" or "Federation" refers to a group of legitimate labor unions in a private establishment organized for collective bargaining or for dealing with employers concerning terms and conditions of employment for their member unions or for participating in the formulation of social and employment policies, standards and programs, registered with the Bureau in accordance with Rule III, Section 2-B of these Rules. (zz) "Union" refers to any labor organization in the private sector organized for collective bargaining and for other legitimate purposes. (ccc) "Workers' Association" refers to an association of workers organized for the mutual aid and protection of its members or for any legitimate purpose other than collective bargaining.

ART. 231. Registry of unions and file of collective agreements. The Bureau shall keep a registry of - legitimate labor organizations. The Bureau shall also maintain a file of - all collective bargaining agreements - and other related agreements - and records of settlement of labor disputes, - and copies of orders, and decisions of voluntary arbitrators. The file shall be open and accessible (a) to interested parties (b) under conditions prescribed by the Secretary of Labor and Employment, (c) provided that no specific information submitted in confidence shall be disclosed unless: - authorized by the Secretary, - or when it is at issue in any judicial litigation

34

1. (a)

-or when public interest or national security so requires.

Within thirty (30) days from the execution of a collective bargaining agreement, (b) the parties shall submit copies of the same directly to the Bureau or the Regional Offices of the Department of Labor and Employment for registration , (c) accompanied with verified proofs of its posting in two conspicuous places in the place of work and ratification by the majority of all the workers in the bargaining unit. 2. The Bureau or Regional Offices shall (a) act upon the application for registration of such collective bargaining agreement within five (5) calendar days from receipt thereof. (b) The Regional Offices shall furnish the Bureau with a copy of the collective bargaining agreement within five (5) days from its submission. (c) The Bureau or Regional Office shall assess the employer for every collective bargaining agreement a registration fee of not less than one thousand pesos (P1,000.00) or in any other amount as may be deemed appropriate and necessary by the Secretary of Labor and Employment for the effective and efficient administration of the voluntary arbitration program. Any amount collected under this provision shall accrue to the Special Voluntary Arbitration Fund. The Bureau shall also maintain a file, and shall undertake or assist in the publication, of all final decisions, orders and awards of the Secretary of Labor and Employment, Regional Directors and the Commission.

ART. 234. Requirements of registration. Any applicant labor organization, association or group of unions or workers - shall acquire legal personality - and shall be entitled to the rights and privileges granted by law to legitimate labor organizations - upon issuance of the certificate of registration - based on the following requirements: a. Fifty-pesos (P50.00) registration fee; b. The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings; c. The names of all its members comprising at least twenty 20% percent of all the employees in the bargaining unit where it seeks to operate; d. If the applicant has been in existence for one or more years, copies of its annual financial reports; and e. Four copies of the constitution and by-laws of the applicant union, the minutes of its adoption or ratification and the list of the members who participated in it. ART. 235. Action on application. The Bureau shall act on all applications for registration within thirty (30) days from filing. All requisite documents and papers shall be - certified under oath by the Secretary or the treasurer of the organization, as the case may be, - and attested to by its president. ART. 236. Denial of registration; appeal. The decision of the Labor Relations Division in the regional office denying registration may be appealed by the applicant union to the Bureau within ten days from receipt of notice thereof.

35

ART. 237. Additional requirements for federations or national unions. Subject to Art. 238, if the applicant for registration is a federation or a national union, it shall, in addition to the requirements of the preceding Articles, submit the following: (a) Proof of the affiliation of at least ten locals or chapters, each of which must be a duly recognized collective bargaining agent in the establishment or industry in which it operates, supporting the registration of such applicant federation or national union; The names and addresses of the companies where the locals or chapters operate and the list of all the members in each company involved.

adoption or ratification of the constitution and by-laws or amendments thereto; (c) Misrepresentation, false statement or fraud in connection with the election of officers, minutes of the election of officers and the list of voters, or failure to submit these documents together with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days from election; Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; Acting as a labor contractor or engaging in the cabo system, or otherwise engaging in any activity prohibited by law; Entering into collective bargaining agreements which provide terms and conditions of employment below minimum standard established by law; Asking for or accepting attorneys fees or negotiation fees from employers; Other than for mandatory activities under this Code, checking off special assessments or any other fees without duly signed individual written authorizations of the members;

(b)

ART. 238. Cancellation of registration, appeal. The certificate of registration of any legitimate labor organization, whether national or local, - shall be cancelled by the Bureau - if it has reason to believe, - after due hearing, - that the said labor organization no longer meets one or more of the requirements herein prescribed. ART. 239. Grounds for cancellation of union registration. The following shall constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the - adoption or ratification of the constitution and by-laws or amendments thereto, - the minutes of ratification, - and the list of members who took part in the ratification; (b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from

(d)

(e)

(f)

(g) (h)

36

(i)

Failure to submit a list of individual members to the Bureau once a year or whenever required by the Bureau; and Failure to comply with requirements under Articles 237 and 238.

Section 2. Requirements for application. - A. The application for registration of an independent labor union shall be accompanied by the following documents: 1) the name of the applicant labor union, its principal address, the name of its officers and their respective addresses, approximate number of employees in the bargaining unit where it seeks to operate, with a statement that it is not reported as a chartered local of any federation or national union; 2) the minutes of the organizational meeting(s) and the list of employees who participated in the said meeting(s); 3) the name of all its members comprising at least 20% of the employees in the bargaining unit; 4) the annual financial reports if the applicant has been in existence for one or more years, unless it has not collected any amount from the members, in which case a statement to this effect shall be included in the application; 5) the applicant's constitution and by-laws, minutes of its adoption or ratification, and the list of the members who participated in it. The list of ratifying members shall be dispensed with where the constitution and by-laws was ratified or adopted during the organizational meeting. In such a case, the factual circumstances of the ratification shall be recorded in the minutes of the organizational meeting(s). B. The application for registration of federations and national unions shall be accompanied by the following documents:

(j)

ART. 240. Equity of the incumbent. All existing federations and national unions - which meet the qualifications of a legitimate labor organization - and none of the grounds for cancellation shall continue to maintain their existing affiliates regardless of the nature of the industry and the location of the affiliates.

OMNIBUS RULES BOOK V AS AMENDED BY D.O. 40 RULE III REGISTRATION OF LABOR ORGANIZATIONS Section 1. Where to file. - Applications for registration of independent labor unions, chartered locals, workers' associations shall be filed with the Regional Office where the applicant principally operates. It shall be processed by the Labor Relations Division at the Regional Office in accordance with Sections 2-A, 2-C, and 2-E of this Rule. Applications for registration of federations, national unions or workers' associations operating in more than one region shall be filed with the Bureau or the Regional Offices, but shall be processed by the Bureau in accordance with Sections 2-B and 2-D of this Rule.

37

1) a statement indicating the name of the applicant labor union, its principal address, the name of its officers and their respective addresses; 2) the minutes of the organizational meeting(s) and the list of employees who participated in the said meeting(s); 3) the annual financial reports if the applicant union has been in existence for one or more years, unless it has not collected any amount from the members, in which case a statement to this effect shall be included in the application; 4) the applicant union's constitution and by-laws, minutes of its adoption or ratification, and the list of the members who participated in it. The list of ratifying members shall be dispensed with where the constitution and by-laws was ratified or adopted during the organizational meeting(s). In such a case, the factual circumstances of the ratification shall be recorded in the minutes of the organizational meeting(s); 5) the resolution of affiliation of at least ten (10) legitimate labor organizations, whether independent unions or chartered locals, each of which must be a duly certified or recognized bargaining agent in the establishment where it seeks to operate; and 6) the name and addresses of the companies where the affiliates operate and the list of all the members in each company involved. Labor organizations operating within an identified industry may also apply for registration as a federation or national union within the specified industry by submitting to the Bureau the same set of documents.

C. The application for registration of a workers' association shall be accompanied by the following documents: 1) the name of the applicant association, its principal address, the name of its officers and their respective addresses; 2) the minutes of the organizational meeting(s) and the list of members who participated therein; 3) the financial reports of the applicant association if it has been in existence for one or more years, unless it has not collected any amount from the members, in which case a statement to this effect shall be included in the application; 4) the applicant's constitution and by-laws to which must be attached the names of ratifying members, the minutes of adoption or ratification of the constitution and by-laws and the date when ratification was made, unless ratification was done in the organizational meeting(s), in which case such fact shall be reflected in the minutes of the organizational meeting(s). D. Application for registration of a workers' association operating in more than one region shall be accompanied, in addition to the requirements in the preceding subsection, by a resolution of membership of each member association, duly approved by its board of directors. E. The report of creation of a chartered local shall be accompanied by a charter certificate issued by the federation or national union indicating the creation or establishment of the chartered local.

Section 3. Notice of change of name of labor organizations; Where to file. - The notice for change of

38

name of a registered labor organization shall be filed with the Bureau or the Regional Office where the concerned labor organization's certificate of registration or certificate of creation of a chartered local was issued. Section 4. Requirements for notice of change of name. - The notice for change of name of a labor organization shall be accompanied by the following documents: (a) proof of approval or ratification of change of name; and (b) the amended constitution and by-laws. Section 5. Certificate of Registration/Certificate of Creation of Chartered Local for change of name. - The certificate of registration and the certificate of creation of a chartered local issued to the labor organization for change of name shall bear the same registration number as the original certificate issued in its favor and shall indicate the following: (a) the new name of the labor organization; (b) its former name; (c) its office or business address; and (d) the date when the labor organization acquired legitimate personality as stated in its original certificate of registration/certificate of creation of chartered local. Section 6. Report of Affiliation with federations or national unions; Where to file. - The report of affiliation of an independently registered labor union with a federation or national union shall be filed with the Regional Office that issued its certificate of registration. Section 7. Requirements of affiliation. - The report of affiliation of independently registered labor unions with a federation or national union shall be accompanied by the following documents: (a) resolution of the labor union's board of directors approving the affiliation;

(b) minutes of the general membership meeting approving the affiliation; (c) the total number of members comprising the labor union and the names of members who approved the affiliation; (d) the certificate of affiliation issued by the federation in favor of the independently registered labor union; and (e) written notice to the employer concerned if the affiliating union is the incumbent bargaining agent.

Section 8. Notice of Merger/Consolidation of labor organizations; Where to file. - Notice of merger or consolidation of independent labor unions, chartered locals and workers' associations shall be filed with and recorded by the Regional Office that issued the certificate of registration/certificate of creation of chartered local of either the merging or consolidating labor organization. Notice of merger or consolidation of federations or national unions shall be filed with and recorded by the Bureau. Section 9. Requirements of notice of merger. - The notice of merger of labor organizations shall be accompanied by the following documents: (a) the minutes of merger convention or general membership meeting(s) of all the merging labor organizations, with the list of their respective members who approved the same; and (b) the amended constitution and by-laws and minutes of its ratification, unless ratification transpired in the merger convention, which fact shall be indicated accordingly.

39

Section 10. Certificate of Registration. - The certificate of registration issued to merged labor organizations shall bear the registration number of one of the merging labor organizations as agreed upon by the parties to the merger. The certificate of registration shall indicate the following: (a) the new name of the merged labor organization; (b) the fact that it is a merger of two or more labor organizations; (c) the name of the labor organizations that were merged; (d) its office or business address; and (e) the date when each of the merging labor organizations acquired legitimate personality as stated in their respective original certificate of registration. Section 11. Requirements of notice of consolidation. The notice of consolidation of labor organizations shall be accompanied by the following documents: (a) the minutes of consolidation convention of all the consolidating labor organizations, with the list of their respective members who approved the same; and (b) the amended constitution and by-laws, minutes of its ratification transpired in the consolidation convention or in the same general membership meeting(s), which fact shall be indicated accordingly. Section 12. Certificate of Registration. - The certificate of registration issued to a consolidated labor organization shall bear the registration number of one of the consolidating labor organizations as agreed upon by the parties to the consolidation. The certificate of registration shall indicate the following (a) the new name of the consolidated labor organization; (b) the fact that it is a consolidation of two or more labor organizations; (c) the name of the labor organizations that

were consolidated; (d) (e) the date when organizations acquired their respective original RULE IV

its office or business address; and each of the consolidating labor legitimate personality as stated in certificates of registration.

PROVISIONS COMMON TO THE REGISTRATION OF LABOR ORGANIZATIONS AND WORKERS ASSOCIATION Section 1. Attestation requirements. - The application for registration of labor unions and workers' associations, notice for change of name, merger, consolidation and affiliation including all the accompanying documents, shall be certified under oath by its Secretary or Treasurer, as the case may be, and attested to by its President. Section 2. Payment of registration fee. - A labor union and workers' association shall be issued a certificate of registration upon payment of the prescribed registration fee. Section 3. Accompanying documents. - One (1) original copy and two (2) duplicate copies of all documents accompanying the application or notice shall be submitted to the Regional Office or the Bureau. Section 4. Action on the application/notice. - The Regional Office or the Bureau, as the case may be, shall act on all applications for registration or notice of change of name, affiliation, merger and consolidation within ten (10) days from receipt either by: (a) approving the application and issuing the certificate of registration/acknowledging the notice/report; or (b) denying the application/notice for failure of the applicant to comply with the requirements for registration/notice.

40

Section 5. Denial of Application/Return of Notice. Where the documents supporting the application for registration/notice of change of name, affiliation, merger and consolidation are incomplete or do not contain the required certification and attestation, the Regional Office or the Bureau shall, within five (5) days from receipt of the application/notice, notify the applicant/labor organization concerned in writing of the necessary requirements and complete the same within thirty (30) days from receipt of notice. Where the applicant/labor organization concerned fails to complete the requirements within the time prescribed, the application for registration shall be denied, or the notice of change of name, affiliation, merger and consolidation returned, without prejudice to filing a new application or notice. Section 6. Form of Denial of Application/Return of Notice; Appeal. - The notice of the Regional Office or the Bureau denying the application for registration/returning the notice of change of name, affiliation, merger or consolidation shall be in writing stating in clear terms the reasons for the denial or return. The denial may be appealed to the Bureau if denial is made by the Regional Office or to the Secretary if denial is made by the Bureau, within ten (10) days from receipt of such notice, on the ground of grave abuse of discretion or violation of these Rules. Section 7. Procedure on appeal. - The memorandum of appeal shall be filed with the Regional Office or the Bureau that issued the denial/return of notice. The memorandum of appeal together with the complete records of the application for registration/notice of change of name, affiliation, merger or consolidation, shall be transmitted by the Regional Office to the Bureau or by the Bureau to the Office of the Secretary, within twenty-four (24) hours from receipt of the memorandum of appeal.

The Bureau or the Office of the Secretary shall decide the appeal within twenty (20) days from receipt of the records of the case. Section 8. Effect of registration. - The labor union or workers' association shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration or certificate of creation of chartered local. Such legal personality may be questioned only through an independent petition for cancellation of union registration in accordance with Rule XIV of these Rules, and not by way of collateral attack in petition for certification election proceedings under Rule VIII. Section 9. Effect of change of name. - The change of name of a labor organization shall not affect its legal personality. All the rights and obligations of a labor organization under its old name shall continue to be exercised by the labor organization under its new name. Section 10. Effect of merger or consolidation. - Where there is a merger of labor organizations, the legal existence of the absorbed labor organization(s) ceases, while the legal existence of the absorbing labor organization subsists. All the rights, interests and obligations of the absorbed labor organizations are transferred to the absorbing organization. Where there is consolidation, the legal existence of the consolidating labor organizations shall cease and a new labor organization is created. The newly created labor organization shall acquire all the rights, interests and obligations of the consolidating labor organizations. RULE V

41

REPORTING REQUIREMENTS OF AND WORKERS ASSOCIATIONS

LABOR

UNIONS

Section 1. Reporting requirements. - It shall be the duty of every legitimate labor unions and workers associations to submit to the Regional Office or the Bureau which issued its certificate of registration or certificate of creation of chartered local, as the case may be, two (2) copies of each of the following documents: (a) any amendment to its constitution and by-laws and the minutes of adoption or ratification of such amendments, within thirty (30) days from its adoption or ratification; (b) annual financial reports within thirty (30) days after the close of each fiscal year or calendar year; (c) updated list of newly-elected officers, together with the appointive officers or agents who are entrusted with the handling of funds, within thirty (30) days after each regular or special election of officers, or from the occurrence of any change in the officers of agents of the labor organization or workers association; (d) updated list of individual members of chartered locals, independent unions and workers' associations within thirty (30) days after the close of each fiscal year; and (e) updated list of its chartered locals and affiliates or member organizations, collective bargaining agreements executed and their effectivity period, in the case of federations or national unions, within thirty (30) days after the close of each fiscal year, as well as the updated list of their authorized representatives, agents or signatories in the different regions of the country.

As understood in these Rules, the fiscal year of a labor organization shall coincide with the calendar year, unless a different period is prescribed in the constitution and bylaws.

CASES
Registration of Unions:

Progressive Development Corp. v Secretary of Labor, 271 SCRA 593 1. The propriety of a labor organizations registration could be assailed directly through cancellation proceedings in accordance with Articles 238 ad 239 of the Labor Code, or indirectly by challenging its petition for the issuance of an order for certification election. 2. The Med-Arbiter should look into the merits of the petition for cancellation of a unions registration before issuing an order calling for certification elections. Where the legal personality of a union is seriously challenged, it would be more prudent for the Med-Arbiter to grant the request for suspension of the proceedings in the certification election case until the issue of legality of the unions registration shall have been resolved. Protection Technology, Inc. vs. Sec., 242 SCRA 99 Non-submission of such books of account certified by and attested to by the appropriate officer is a ground which the employer can invoke legitimately to oppose a petition for certification election filed by the local or chapter concerned. Although the federation with which the Union is affiliated submitted documents purporting to show that the latter had offered books of account to support its (the Unions) application for registration as a legitimate labor organization, what had been actually submitted to the BLR by the Union was a mere financial

42

statement, a generous description considering the sheet of paper in fact submitted by the Union. Books of account are quite different in their essential nature from financial statements. In generally accepted accounting practice, the former consist of journals, ledgers and other accounting books (which are registered with the Bureau of Internal Revenue) containing a record of individual transactions wherein monies are received and disbursed by an establishment or entity; entries are made on such books on a day-to-day basis (or as close thereto as is possible). Statements of accounts or financial reports, upon the other hand, merely summarize such individual transactions as have been set out in the books of account and are usually prepared at the end of an accounting period, commonly corresponding to the fiscal year of the establishment or entity concerned. Statements of account and financial reports do not set out or repeat the basic data (i.e., the individual transactions) on which they are based and are, therefore, much less informative sources of cash flow information. Books of account are kept and handled by bookkeepers (employees) of the company or agency; financial statements may be audited statements, i.e., prepared by external independent auditors (certified public accountants). It is immaterial that the Union, having been organized for less than a year before its application for registration with the BLR, would have had no real opportunity to levy and collect dues and fees from its members which need to be recorded in the books of account. Such accounting books can and must be submitted to the BLR, even if they contain no detailed or extensive entries as yet. The point to be stressed is that the applicant local or chapter must demonstrate to the BLR that it is entitled to registered status because it has in place a system for accounting for members contributions to its fund even before it actually receives dues or fees from its members. The controlling intention is to minimize the risk of fraud and diversion in the course of the subsequent formation and growth of the Union fund. Pagpalain Haulers vs. Trajano, 310 SCRA 354

The Labor Code does not require the submission of books of account on order for a labor organization to be registered as a legitimate labor organization. This requirement is found only in the Omnibus Rules (Book V) implementing the Labor Code, which subsequently was amended by DO9. Department Order No. 9, Series of 1997, reduced the requirements needed to be submitted, and has done away with the submission of books of account as a requisite of registration. But as provided by Arts. 241 (h) and (j), a labor organization must still maintain books of account, but it need not submit them as a requisite for registration.
Local Unions and Federations:

Pambansang Kapatiran vs. Secretary of Labor, 253 SCRA 96 It is further argued that the CBA has no binding force since it was entered into by KAMAPI as a federation and not by the local union. Perusal of the agreement proves the signatories for KAMAPI consisted of its national president and of the duly elected officers of the local union. Thus the fact that KAMAPI was particularly mentioned as the bargaining party without specifying the local union cannot strip it of its authority to participate in the bargaining process. The local union maintains its separate personality despite affiliation with a larger national federation. The doctrine laid down in Progressive Development Corporation 21 is a mere clarification of the principle enunciated in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc. 22 Both cases have provided that the mother union acting for and in behalf of its affiliate ha(s) the status of an agent while the local union remained the basic unit of the association free to serve the common interest of all its members subject only to the restraints imposed by the Constitution and By-Laws of the association. Tropical Hut Employees Union vs. Tropical Hut, 181 SCRA 173 The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and voluntary association, is free to serve the interest of all its members including

43

the freedom to disaffiliate when circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association. All employees enjoy the right to self-organization and to form and join labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for their mutual aid or protection. This is a fundamental light of labor that derives its existence from the Constitution. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or rules or regulations, We have always adopted the liberal approach which favors the exercise of labor rights. The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members in the economic struggle for the fruits of the joint productive effort of labor and capital; and the association of the locals into the national union (PAFLU) was in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their members. The essential purpose was the affiliation of the local unions into a common enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints imposed by the Constitution and By Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it into existence. The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of Labor is merely to stress that the THEU is NATUs affiliate at the time of the registration. It does not mean that the said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests independently of the federation. A local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs.

When the local union withdrew from the old federation to join a new federation, it was merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. In the absence of enforceable provisions in the federations constitution preventing disaffiliation of a local union, a local may sever its relationship with its parent. There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly forbidden to disaffiliate from the federation. The alleged noncompliance of the local union with the provision in the NATU Constitution requiring the service of three months notice of intention to withdraw did not produce the effect of nullifying the disaffiliation for the following grounds: firstly, NATU was not even a legitimate labor organization, it appearing that it was not registered at that time with the Department of Labor, and therefore did not possess and acquire, in the first place, the legal personality to enforce its constitution and laws, much less the right and privilege under the Labor Code to organize and affiliate chapters or locals within its group, and secondly, the act of non-compliance with the procedure on withdrawal is premised on purely technical grounds which cannot rise above the fundamental right of self-organization. Volkschel Labor Union vs. BLR, 137 SCRA 42 [1985] Petitioner was affiliated with ALUMETAL. Both unions, using the name Volkschel Labor Union-ALUMETAL, jointly entered into a CBA with respondent companies. One of the subjects dealt with was the payment of union dues (made through check-off). Later on, a majority of petitioners members decided to disaffiliate from respondent federation in order to operate on its own as an independent labor group. Accordingly, a resolution was adopted and signed by petitioners members revoking their check-off authorization in favor of ALUMETAL and notices thereof were served on ALUMETAL and respondent companies. The Bureau, on the other hand, recognized the continued affiliation of Volkschel with ALUMETAL and the NLRC Sheriff enforced the implemented Order, as a result of which respondent

44

companies turned over and handed to respondent federation the union dues and other assessments in accordance with the check-off provisions of the CBA. Issue: whether or not petitioners disaffiliation from the federation is valid. Held: YES. The right of a local union to disaffiliate from its mother union is well-settled. A LOCAL UNION, BEING A SEPARATE AND VOLUNTARY ASSOCIATION, IS FREE TO SERVE THE INTEREST OF ALL ITS MEMBERS INCLUDING THE FREEDOM TO DISAFFILIATE WHEN CIRCUMSTANCES WARRANT. This right is consistent with the Constitution guarantee of freedom of association. Petitioner contends that he disaffiliation was prompted by the federations deliberate and habitual dereliction of duties as mother federation. Employees grievances were allegedly left unattended to by the federation. To the detriment of the employees rights and interests. NOTE: A disaffiliation does not disturb the enforceability and administration of a collective agreement; it does not occasion a change in administrators of the contract nor even an amendment to the provisions thereof. As regards the check-off dues, respondent is not entitled to union dues payments from petitioners members. A local union which has validly withdrawn from its affiliation with the parent association and which continued to represent the employees of an employer is entitled to the check-off dues under a CBA. ANGLO-KMU vs. Samahan ng mga Manggagawa, 258 SCRA 371 ANGLOs local chapter disaffiliated from ANGLO on the ground that the latter has committed acts inimical to the interests of the chapter. ANGLO refused to honor the disaffiliation on the ground that the CBA is still existing, and the freedom period had not yet set in.

Held: Pursuant to the right to self-organization, the chapter may disaffiliate any time from the mother union. This right may not be defeated on the ground that there was noncompliance with the procedural rules to disaffiliate. Also, it was clearly shown that majority of the union members in the chapter supported such decision. The charge that ANGLO is guilty of acts inimical to the chapters interests is not rebutted. MSMG-UWP vs. Ramos, GR 113907, February 28, 2000 An intra-union dispute arose out of disputes from the election of union officers. Several officers were dismissed from the union for acts of disloyalty and inimical to the interest and violative of the constitution and by-laws of the union. Since the union has a closedshop agreement in the CBA, the company terminated the ousted union members. Held: While a company may validly dismiss employees expelled by the union for disloyalty under the union security clause of the CBA, the dismissal should not be done hastily and summarily thereby eroding the employees right to due process, self-organization and security of tenure. The enforcement of union-security clauses is authorized by law provided such enforcement is not characterized by arbitrariness and always with due process. There must always be a separate hearing conducted by the company before the expelled union members are dismissed by the company. Phil. Skylanders vs. NLRC, GR 127374, 31 January 2002
CANCELLATION
OF

REGISTRATION

ART. 238. Cancellation of registration, appeal. The certificate of registration of any legitimate labor organization, whether national or local, - shall be cancelled by the Bureau - if it has reason to believe, - after due hearing,

45

that the said labor organization no longer meets one or more of the requirements herein prescribed.

(e)

Acting as a labor contractor or engaging in the cabo system, or otherwise engaging in any activity prohibited by law; Entering into collective bargaining agreements which provide terms and conditions of employment below minimum standard established by law; Asking for or accepting attorneys fees or negotiation fees from employers; Other than for mandatory activities under this Code, checking off special assessments or any other fees without duly signed individual written authorizations of the members; Failure to submit a list of individual members to the Bureau once a year or whenever required by the Bureau; and (j) Failure to comply with requirements under Articles 237 and 238.

ART. 239. Grounds for cancellation of union registration. The following shall constitute grounds for cancellation of union registration: (b) Misrepresentation, false statement or fraud in connection with the - adoption or ratification of the constitution and by-laws or amendments thereto, - the minutes of ratification, - and the list of members who took part in the ratification; (b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; Misrepresentation, false statement or fraud in connection with the election of officers, minutes of the election of officers and the list of voters, or failure to submit these documents together with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days from election; Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself;

(f)

(g) (h)

(i)

(c)

OMNIBUS RULES, as AMENDED BY D.O. 40 RULE XIV CANCELLATION OF ORGANIZATIONS

REGISTRATION

OF

LABOR

(d)

Section 1. Where to file. - Subject to the requirements of notice and due process, the registration of any legitimate independent labor union, chartered local and workers' association may be cancelled by the Regional Director, or in the case of federations, national or industry unions and trade union centers, by the Bureau Director, upon the filing of an independent complaint or petition for cancellation.

46

Section 2. Who may file. - Any party-in-interest may commence a petition for cancellation of registration, except in actions involving violations of Article 241, which can only be commenced by members of the labor organization concerned. Section 3. Grounds for cancellation. - The following shall constitute grounds for cancellation of registration of labor organizations: (a) misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who took part in the ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who took part in the ratification; (b) failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (c) misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, the list of voters, failure to submit these documents together with the list of the newly elected or appointed officers and their postal address within thirty (30) days from election; (d) failure to submit the annual financial report to the Bureau within thirty (30) days after the close of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report; (e) acting as a labor contractor or engaging in the "cabo" system, or otherwise engaging in any activity prohibited by law; (f) entering into collective bargaining agreements which provide for terms and conditions of employment below minimum standards established by law;

(g) commission of any of the acts enumerated under Article 241 of the Labor Code; provided that no petition for cancellation based on this ground may be granted unless supported by at least thirty (30%) percent of all the members of the respondent labor organization; (h) asking for or accepting attorney's fees or negotiation fees from the employer; (i) other than for mandatory activities under the Labor Code, checking off special assessments or any other fees without duly signed individual written authorizations of the members; (j) failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau; (k) failure to comply with the requirements of registration prescribed under Rules III and IV. Section 4. Action on the petition. - The petition shall be resolved by the Regional Director in accordance with Rule XI, unless the petition is based on paragraphs (d) and (j) of the foregoing section or non-compliance with the labor organization's reportorial obligations, in which case the petition shall be acted upon pursuant to the following Rule. RULE XV CANCELLATION OF REGISTRATION OF LABOR ORGANIZATIONS DUE TO NON-COMPLIANCE WITH THE REPORTORIAL REQUIREMENTS Section 1. When proper. - Where a registered labor organization in the private sector failed to submit the reports required under Rule V for five (5) consecutive years despite notices for compliance sent by the Labor Relations Division or the Bureau, the latter may cause the institution of the administrative process for cancellation of its registration, upon its own initiative or upon complaint filed by any party-in-interest. Section 2. Procedure. - The Labor Relations Division of the

47

Regional Office shall make a report of the labor organization's non-compliance and submit the same to the Bureau for verification with its records. The Bureau shall send by registered mail with return card to the labor organization concerned, a notice for compliance indicating the documents it failed to submit and the corresponding period in which they were required, with notice to comply with the said reportorial requirements and to submit proof thereof to the Bureau within ten (10) days from receipt thereof. Where no response is received by the Bureau within thirty (30) days from the release of the first notice, another notice for compliance shall be made by the Bureau, with warning that failure on its part to comply with the reportorial requirements within the time specified shall cause the continuation of the proceedings for the administrative cancellation of its registration. Section 3. Publication of notice of cancellation of registration . - Where no response is again received by the Bureau within thirty (30) days from release of the second notice, the Bureau shall cause the publication of the notice of cancellation of registration of the labor organization in two (2) newspapers of general circulation. The Bureau may conduct an investigation within the employer's premises and at the labor organization's last known address to verify the latter's existence. Section 4. Cancellation of registration. - Where no response is received by the Bureau within thirty (30) days from date of publication, or where the Bureau has verified the dissolution of the labor organization, it shall order the cancellation of registration of the labor organization and cause its de-listing from the roster of legitimate labor organizations. Section 5. Conditions for administrative cancellation of certificate of registration. No registration of labor

organization shall be cancelled administratively by the Bureau due to non-compliance with the reportorial requirements unless: (a) non-compliance is for a continuous period of five (5) years; (b) the procedures laid down in this Rule were complied with; and (c) the labor organization concerned has not responded to any of the notices sent by the Bureau, or its notices were returned unclaimed.

Cases: Progressive Development Corp. v Secretary of Labor, 271 SCRA 593 3. The propriety of a labor organizations registration could be assailed directly through cancellation proceedings in accordance with Articles 238 ad 239 of the Labor Code, or indirectly by challenging its petition for the issuance of an order for certification election. 4. The Med-Arbiter should look into the merits of the petition for cancellation of a unions registration before issuing an order calling for certification elections. Where the legal personality of a union is seriously challenged, it would be more prudent for the Med-Arbiter to grant the request for suspension of the proceedings in the certification election case until the issue of legality of the unions registration shall have been resolved.
Rights of Labor Organization: Art. 242. Rights of Legitimate Labor Organizations. A legitimate labor organization shall have the right: a) to act as representative of its members for the purpose of collective bargaining;

48

b)

to be certified as exclusive representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining; 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 bargaining negotiation; d) to own property, real or personal, for the use and benefit or the labor organization and its members; e) to sue and be sued in its registered name; f) to undertake all other activities designed to benefit the organization and its members including cooperative, housing welfare and other projects not contrary to law. Notwithstanding any provision of a general or special law to the contrary, the income and properties of legitimate labor organization, including grants, endowments, gifts, donations and contributions they may receive from fraternal and similar organizations, local or foreign, which are actually, directly and exclusively used for their lawful purposes, shall be free from taxes, duties and other assessments. The exemptions provided herein may be withdrawn only by a special law expressly repealing this provision. Art. 277. Miscellaneous Provisions. (a) All unions are authorized to collect reasonable membership fees, union dues, assessments and fines and other contributions for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund, and credit and cooperative undertakings.

LECTURE Labor Organizations: Workers associations are a type of organization for the purpose of self-organization but not for the purpose of collective bargaining. Only for mutual aid and protection. So we have workers association on the one hand, and labor organizations on the other hand. Now we concentrate on labor organizations. What are the different types? Plant level organizations:

Independent unions Affiliates Local/Chapters

Conglomerate of plant level organizations:

National Unions/Federations Trade Union Centers Industry Unions

How does one become a legitimate labor organization? Under the law, Article 212 it is one which is registered with the Department. Article 234 says that it acquires rights once it is issued a certificate of registration. Now, an independent union becomes an LLO and acquires legal personality once it is issued a certificate of registration with the Bureau of Labor Relations. How about a local or chapter? Under the Omnibus Rules, such acquires legal personality upon issuance of a charter by the federation. It is the federation who submits the documents to the Bureau. Hence, without

49

need of registration or issuance of a certificate by the Bureau, the local or chapter becomes an LLO. Does this violate the codal provisions Arts. 212 and 234? No, but once the federation loses its legal personality, the local or chapter loses its legal personality as well, because its legal personality is hinged on the federations. There is no conflict between the Code and Rules. A local or chapter is not covered by the registration requirement. It does not violate the definition of a legitimate labor organization, because a local does acquire legal personality and does become an LLO through the issuance of a charter. So, when an independent labor organization becomes an affiliate of a federation, and the federation loses its legal personality (through cancellation of its registration), the independent labor organization still retains its legal personality, because it acquired such through registration with the Bureau. When an independent union affiliates, it informs the Bureau of such through submission of resolutions of affiliation and acceptance. A local or chapter may independently register as an organization subsequent to its becoming a local or chapter. This converts the chapter into an independent union. The local or chapter is not barred from doing that, but a federation may usually stipulate against that and would cause revocation of the local/chapters charter. However, remember the exception that when the federations registration is cancelled, it does not affect the local or chapter if the chapter has an existing CBA with the company. They are given the chance to register as an independent union and if this is not done, as long as the CBA exists, the chapters legitimacy exists. It expires only upon expiration of the CBA. This is done to protect the employees of the collective bargaining unit. Now remember the Liberty case is one decided under very peculiar circumstances. The Court ruled as such because of the special circumstances. It does not apply as a general rule. Remember the general rule that it is only upon issuance of a certificate when the union acquires legal personality. The nunc pro tunc doctrine was

applied in the Liberty case because of the peculiarity of the case. Only in this case did the Court rule that the union acquired legal personality upon the submission of the required documents and so the issuance of certificate of registration should retroact to the filing of the petition of a certification election. This decision was crucial because a petition for certification election can only be filed by an LLO. Noticeably the number of required documents to be submitted by independent unions is much more than those required by a chapter. Obviously, the State favors the creation of locals/chapters. It encourages affiliations for more productivity or greater protection in the workers action. And also, a chapter does not have to repeat the process of submitting the required documents, because the federation has already done so. If the DOLE erroneously submits a certificate to an organization that has not submitted all the required documents, a person in interest (such as management) can file a petition for cancellation of the certificate. Management can also oppose the petition for certification election because of the lack of required documents. Why is it required to submit all these documents? To protect the workers from fly-by-night unions, or unions that are purely moneymaking unions. Thats why all the documents must be attested to by the Secretary and President and must be notarized. Remember, what has to be submitted are Financial Statements, not Books of Account. The two are different. Financial statements are prepared by an accountant and embody detailed financial transactions. Books of Account are the day to day expenses, journals, ledgers. Only in the Rules are Books of Account required to be submitted. The Code does not require it. But by virtue of D.O. 9, Books of Account were not required to be submitted anymore. But books of Account are still subject to inspection by the Department when warranted. Article 237 requires proof of affiliation of at least ten chapters for a federation. Whats wrong with this? In the first place, no federation can become a federation without locals or chapters. The only way to interpret this provision is it refers to independently registered unions who decide to form a federation as affiliates. You
50

cannot have locals/chapters that create a federation, you can only have a federation creating a local/chapter. The only situation also where a federation can be created by a local/chapter is when two federations merge or form one federation. E. CONDITIONS LABOR CODE
ART. 241. Rights and conditions of membership in a labor organization. The following are the rights and conditions of membership in a labor organization: (a) - No arbitrary or excessive initiation fees - shall be required of the members of a legitimate labor organization nor - shall arbitrary, excessive or oppressive fine and forfeiture be imposed; (c) The members shall be entitled: to full and detailed reports from their officers and representatives of all financial transactions as provided for in the constitution and bylaws of the organization; (d) The members shall: directly elect their officers, including those of the national union or federation, trade center or any similar aggrupation to which their union is affiliated, by secret ballot at intervals of five (5) years. No qualification requirement for candidacy to any position shall be imposed other than membership in good standing in subject labor organization.
OF

MEMBERSHIP

AND

RIGHTS

OF

MEMBERS

The secretary or any other responsible union officer shall furnish the Secretary of Labor and Employment with a list of the newly-elected officers, together with the appointive officers or agents who are entrusted with the handling of funds within thirty (30) calendar days after the election of officers or from the occurrence of any change in the list of officers of the labor organization. (e) The members shall determine by secret ballot, after due deliberation, any question of major policy affecting the entire membership of the organization, unless the nature of the organization or force majeure renders such secret ballot impractical, in which case the board of directors of the organization may make the decision in behalf of the general membership. (e) No labor organization shall knowingly admit as member or continue in membership any individual who: belongs to a subversive organization or who is engaged directly or indirectly in any subversive activity;

(d) No person who has been convicted of a crime involving moral turpitude shall be eligible for election as a union officer or for appointment to any position in the union; (g) No officer, agent or member of a labor organization shall

51

collect any fees, dues, or other contributions in its behalf or make any disbursement of its moneys or funds unless he is duly authorized pursuant to its constitution and by-laws; (h) Every payment of fees, dues or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for the purpose; The funds of the organization shall not be applied for any purpose or object other than those: expressly provided by its constitution and bylaws or those expressly authorized by - written resolution, - adopted by the majority of the members, - at a general meeting duly called for the purpose; Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is made, which shall state the date, place and purpose of such payment. Such record or receipt shall form part of the financial records of the organization. Any action involving the funds of the organization shall prescribe after three (3) years from the

(i)

date of submission of the annual financial report to the Department of Labor and Employment or from the date the same should have been submitted as required by law, whichever comes earlier: Provided, That this provision shall apply only to a legitimate labor organization which has submitted the financial report requirements under this Code: Provided, further, That failure of any labor organization to comply with the periodic financial reports required by law and such rules and regulations promulgated thereunder six (6) months after the effectivity of this Act shall automatically result in the cancellation of union registration of such labor organization. (k) The officers of any labor organization shall not be paid any compensation other than the salaries and expenses due to their positions as specifically provided for in its constitution and by-laws or in a written resolution duly authorized by a majority of all the members at a general membership meeting duly called for the purpose. The minutes of the meeting and the list of participants and ballots cast shall be subject to inspection by the Secretary of Labor and Employment or his duly authorized representatives. Any irregularities in the approval of the resolutions shall be a ground for impeachment or expulsion from the organization; The treasurer of any labor organization and every officer thereof who is responsible for the accounts of such organization or for the collection, management, disbursement, custody or control of the funds, moneys

(j)

(l)

52

and other properties of the organization, shall render to the organization and to its members a true and correct account of all moneys received and paid by him since he assumed office or since the last date on which he rendered such account and of the balance remaining in his hands at the time of rendering such account, and of all bonds, securities and other properties of the organization entrusted to his custody or under his control. The rendering of such account shall be made: (1) (2) At least once a year within thirty (30) days after the close of its fiscal year; At such other times as may be required by a resolution of the majority of the members of the organization; and Upon vacating his office.

The record shall president. (o)

be attested to by the

Other than for mandatory activities under the Code, no special assessment, attorneys fees, negotiation fees or any other extraordinary fees may be checked off from any amount due an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction. It shall be the duty of any labor organization and its officers to inform its members on the provisions of its constitution and by-laws, collective bargaining agreement, the prevailing labor relations system and all their rights and obligations under existing labor laws. For this purpose, registered labor organizations may assess reasonable dues to finance labor relations seminars and other labor education activities. Any violation of the above rights and conditions of membership shall be a ground for cancellation of union registration or expulsion of an officer from office, whichever is appropriate. At least thirty (30%) per cent of all the members of a union or any member or members specifically concerned may report such violation to the Bureau. The Bureau shall have the power to hear and decide any reported violation and to mete appropriate penalty.

(p)

(3)

The account shall be duly audited and verified by affidavit and a copy thereof shall be furnished the Secretary of Labor and Employment; (m) The books of accounts and other records of the financial activities of any labor organization shall be opened to inspection by any officer or member thereof during office hours. (n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless: authorized by a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees.

Art. 274. Visitorial power. The Secretary of Labor and Employment or his duly authorized representative is hereby empowered a) to inquire into the financial activities of legitimate labor organizations upon the filing of a complainant under oath

53

and duly supported by the written consent of at least twenty percent (20%) of the total membership of the labor organization concerned and b) to examine their books of accounts and other records to determine compliance or non-compliance with the law c) to prosecute any violations of the law and the union constitution and by-laws: Provided, That such inquiry or examination shall not be conducted during the - sixty (60) day freedom period - nor within thirty (30) days immediately preceding the date of election of union officials. Art. 222. Appearances and fees. (b) No attorneys fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, That attorneys fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void.

officers/nullification of election of union and workers' association officers; (c) audit/accounts examination of union or workers' association funds; (d) deregistration of collective bargaining agreements; (e) validity/invalidity of union affiliation or disaffiliation; (f) validity/invalidity of acceptance/non-acceptance for union membership; (g) validity/invalidity of impeachment/expulsion of union and workers association officers and members; (h) validity/invalidity of voluntary recognition; (i) opposition to application for union and CBA registration; (j) violations of or disagreements over any provision in a union or workers' association constitution and by-laws; (k) disagreements over chartering or registration of labor organizations and collective bargaining agreements; (l) violations of the rights and conditions of union or workers' association membership; (m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements; (n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining (1) between and among legitimate labor organizations; (2) between and among members of a union or workers' association. Section 2. Coverage. - Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers' association. This includes: (1) cancellation of registration of unions and workers associations; and (2) a petition for interpleader. Section 3. Effects of the filing/pendency of inter/intraunion and other related labor relations disputes. - The rights, relationships and obligations of the parties litigants against each other and other parties-in-interest prior to the

OMNIBUS RULES AS AMENDED BY D.O. 40:

RULE XI INTER/INTRA-UNION DISPUTES AND OTHER RELATED LABOR RELATIONS DISPUTES Section 1. Coverage. - Inter/intra-union disputes shall include: (a) cancellation of registration of a labor organization filed by its members or by another labor organization; (b) conduct of election of union and workers' association

54

institution of the petition shall continue to remain during the pendency of the petition and until the date of finality of the decision rendered therein. Thereafter, the rights, relationships and obligations of the parties litigants against each other and other parties-in-interest shall be governed by the decision so ordered. The filing or pendency of any inter/intra-union dispute and other related labor relations dispute is not a prejudicial question to any petition for certification election and shall not be a ground for the dismissal of a petition for certification election or suspension of proceedings for certification election. Section 4. Who may file. - Any legitimate labor organization or member(s) thereof specially concerned may file a complaint or petition involving disputes or issues enumerated in Section 1 hereof. Any party-in-interest may file a complaint or petition involving disputes or issues enumerated in Section 2 hereof. Where the issue involves the entire membership of the labor organization, the complaint or petition shall be supported by at least thirty percent (30%) of its members. Section 5. Where to file. - Complaints or petitions involving labor unions with independent registrations, chartered locals, workers' associations, its officers or members shall be filed with the Regional Office that issued its certificate of registration or certificate of creation of chartered local. Complaints involving federations, national unions, industry unions, its officers or member organizations shall be filed with the Bureau. Petitions for cancellation of registration of labor unions with independent registration, chartered locals and workers association and petitions for deregistration of collective bargaining agreements shall be resolved by the Regional Director. He/She may appoint a Hearing Officer from the Labor Relations Division.

Other inter/intra-union disputes and related labor relations disputes shall be heard and resolved by the Med-Arbiter in the Regional Office. Complaints or petitions involving federations, national or industry unions, trade union centers and their chartered locals, affiliates or member organizations shall be filed either with the Regional Office or the Bureau. The complaint or petition shall be heard and resolved by the Bureau. When two or more petitions involving the same parties and the same causes of action are filed, the same shall be automatically consolidated. Section 6. Formal requirements of the complaint or petition. - The complaint or petition shall be in writing, verified under oath and shall, among others, contain the following: (a) name, address and other personal circumstances of the complainant(s) or petitioner(s); (b) name, address and other personal circumstances of the respondent(s) or person(s) charged; (c) nature of the complaint or petition; (d) facts and circumstances surrounding the complaint or petition; (e) cause(s) of action or specific violation(s) committed; (f) a statement that the administrative remedies provided for in the constitution and by-laws have been exhausted or such remedies are not readily available to the complainant(s) or petitioner(s) through no fault of his/her/their own, or compliance with such administrative remedies does not apply to complainant(s) or petitioner(s); (g) relief(s) prayed for; (h) certificate of non-forum shopping; and (i) other relevant matters. Section 7. Raffle of the case. -Upon the filing of the complaint or petition, the Regional Director or any of his/her authorized representative in the Regional Office and the

55

Docket Section of the Bureau shall allow the party filing the complaint or petition to determine the Med-Arbiter or Hearing Officer assigned to the case by means of a raffle. Where there is only one Med-Arbiter or Hearing Officer in the region, the raffle shall be dispensed with and the complaint or petition shall be assigned to him/her. Section 8. Notice of preliminary conference. Immediately after the raffle of the case or receipt of the complaint or petition, the same shall be transmitted to the Med-Arbiter or Hearing Officer, as the case may be, who shall in the same instance prepare the notice for preliminary conference and cause the service thereof upon the party filing the petition. The preliminary conference shall be scheduled within ten (10) days from receipt of the complaint or petition. Within three (3) days from receipt of the complaint or petition, the Med-Arbiter or Hearing Officer, as the case may be, shall cause the service of summons upon the respondent(s) named therein, directing him/her to file his/her answer/comment on the complaint or petition on or before the scheduled preliminary conference and to appear before the Med-Arbiter or Hearing Officer on the scheduled preliminary conference. Section 9. Conduct of preliminary conference. - The Med-Arbiter or Hearing Officer, as the case may be, shall conduct a preliminary conference and hearing within ten (10) days from receipt of the complaint or petition. He/She shall exert every effort to effect an amicable settlement of the dispute. Where the parties agree to settle amicably, their agreements shall be specified in the minutes of the conference and a decision based on compromise shall be issued by the Med-Arbiter or the Regional Director, as the case may be, within five (5) days from the date of the mandatory conference.

Where no amicable settlement is reached, the Med-Arbiter or Hearing Officer, as the case may be, shall proceed with the stipulation of facts, limitation or definition of the issues, clarificatory questioning and submission of laws and jurisprudence relied upon in support of each other's claims and defenses. Section 10. Conduct of Hearing(s). - The Med-Arbiter or Hearing Officer, as the case may be, shall determine whether to call further hearing(s) on the complaint or petition. Where the Med-Arbiter or Hearing Officer, as the case may be, decides to conduct further hearing(s), he/she shall require the parties to submit the affidavits of their witnesses and such documentary evidence material to prove each other's claims and defenses. The hearing(s) shall be limited to clarificatory questions by the Med-Arbiter or Hearing Officer and must be completed within twenty-five (25) days from the date of preliminary conference. The complaint or petition shall be considered submitted for decision after the date of the last hearing or upon expiration of twenty-five (25) days from date of preliminary conference, whichever comes first. Section 11. Affirmation of testimonial evidence. - Any affidavit submitted by a party to prove his/her claims or defenses shall be re-affirmed by the presentation of the affiant before the Med-Arbiter or Hearing Officer, as the case may be. Any affidavit submitted without the reaffirmation of the affiant during a scheduled hearing shall not be admitted in evidence, except when the party against whom the affidavit is being offered admits all allegations therein and waives the examination of the affiant. Section 12. Filing of pleadings. - The parties may file his/her pleadings, including their respective position papers, within the twenty-five (25) day period prescribed for the conduct of hearing(s). No other pleading shall be considered

56

or entertained after the case is considered submitted for decision. Section 13. Hearing and resolution of the complaint or petition in the Bureau. - The Bureau shall observe the same process and have the same period within which to hear and resolve the complaints or petitions filed before it. Section 14. Decision. - The Bureau and the Med-Arbiter or Regional Director, as the case may be, shall have twenty (20) days from the date of the last hearing within which to decide the complaint or petition. The decision shall state the facts, findings, conclusion, and reliefs granted. Section 15. Release of Decision. - The notice of decision shall be signed by the Records Officer in the Bureau and by the Med-Arbiter or Hearing Officer in the Regional Office. Within twenty (20) days from date of last hearing, the decision shall be released to the parties personally on a date and time agreed upon during the last hearing. Section 16. Appeal. - The decision of the Med-Arbiter and Regional Director may be appealed to the Bureau by any of the parties within ten (10) days from receipt thereof, copy furnished the opposing party. The decision of the Bureau Director in the exercise of his/her original jurisdiction may be appealed to the Office of the Secretary by any party within the same period, copy furnished the opposing party. The appeal shall be verified under oath and shall consist of a memorandum of appeal specifically stating the grounds relied upon by the appellant, with supporting arguments and evidence. Section 17. Where to file appeal. - The memorandum of appeal shall be filed in the Regional Office or Bureau where the complaint or petition originated. Within twenty-four (24) hours from receipt of the memorandum of appeal, the Bureau or Regional Director shall cause the transmittal

thereof together with the entire records of the case to the Office of the Secretary or the Bureau, as the case may be. Section 18. Finality of Decision. - Where no appeal is filed within the ten-day period, the Bureau and Regional Director or Med-Arbiter, as the case may be, shall enter the finality of the decision in the records of the case and cause the immediate implementation thereof. Section 19. Period to reply. - A reply to the appeal may be filed by any party to the complaint or petition within ten (10) days from receipt of the memorandum of appeal. The reply shall be filed directly with the Bureau or the Office of the Secretary, as the case may be. Section 20. Decision of the Bureau/Office of the Secretary. - The Bureau Director or the Secretary, as the case may be, shall have twenty (20) days from receipt of the entire records of the case within which to decide the appeal. The filing of the memorandum of appeal from the decision of the Med-Arbiter or Regional Director and Bureau Director stays the implementation of the assailed decision. The Bureau or Office of the Secretary may call the parties to a clarificatory hearing in aid of its appellate jurisdiction. Section 21. Finality of Decision of Bureau/Office of the Secretary. - The decision of the Bureau or the Office of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties, unless a motion for its reconsideration is filed by any party therein within the same period. Only one (1) motion for reconsideration of the decision of the Bureau or the Office of the Secretary in the exercise of their appellate jurisdiction shall be allowed. Section 22. Execution of decision. - The decision of the Med-Arbiter and Regional Director shall automatically be stayed pending appeal with the Bureau. The decision of the Bureau in the exercise of its appellate jurisdiction shall be

57

immediately executory upon issuance of entry of final judgment. The decision of the Bureau in the exercise of its original jurisdiction shall automatically be stayed pending appeal with the Office of the Secretary. The decision of the Office of the Secretary shall be immediately executory upon issuance of entry of final judgment. Section 23. Transmittal of records to the Regional Office/Bureau. - Within forty-eight (48) hours from notice of receipt of decision by the parties and finality of the decision, the entire records of the case shall be remanded to the Bureau or Regional Office of origin for implementation. The implementation of the decision shall not be stayed unless restrained by the appropriate court. RULE XII ELECTION OF OFFICERS OF LABOR UNIONS AND WORKERS ASSOCIATIONS Section 1. Conduct of election of union officers; procedure in the absence of provisions in the constitution and by-laws. - In the absence of any agreement among the members or any provision in the constitution and by-laws of a labor union or workers' association, the following guidelines may be adopted in the election of officers. (a) within sixty (60) days before the expiration of the term of the incumbent officers, the president of the labor organization shall constitute a committee on election to be composed of at least three (3) members who are not running for any position in the election, provided that if there are identifiable parties within the labor organization, each party shall have equal representation in the committee;

(b) upon constitution, the members shall elect the chairman of the committee from among themselves, and case of disagreement, the president shall designate the chairman; (c) within ten (10) days from its constitution, the committee shall, among others, exercise the following powers and duties: 1) set the date, time and venue of the election; 2) prescribe the rules on the qualification and eligibility of candidates and voters; 3) prepare and post the voters' list and the list of qualified candidates; 4) accredit the authorized representatives of the contending parties; 5) supervise the actual conduct of the election and canvass the votes to ensure the sanctity of the ballot; 6) keep minutes of the proceedings; 7) be the final arbiter of all election protests; 8) proclaim the winners; and 9) prescribe such other rules as may facilitate the orderly conduct of election. Section 2. Dispute over conduct of election of officers. - Where the terms of the officers of a labor organization have expired and its officers failed or neglected to do so call for an election of new officers, or where the labor organization's constitution and by-laws do not provide for the manner by which the said election can be called or conducted and the intervention of the Department is necessary, at least thirty percent (30%) of the members of the labor organization may file a petition for the conduct of election of their officers with the Regional Office that issued its certificate of registration or certificate of creation of chartered local. In the case of federations, national or industry unions and trade union centers, the petition shall be filed with the Bureau or the Regional Office but shall be heard and resolved by the Bureau.

58

This rule shall also apply where a conduct of election of officers is an alternative relief or necessary consequence of a petition for nullification of election of officers, impeachment/expulsion of officers, or such other petitions. Section 3. Formal requirements and proceedings. - The formal requirements, processes and periods of disposition of this petition stated in Rule XI shall be followed in the determination of the merits of the petition and appeal. Section 4. Pre-election conference and conduct of election. - The appointment of an election officer and the procedures and periods in the conduct of the pre-election conference and election proceedings prescribed in Rule IX shall also apply in the conduct of a pre-election conference and election of officers in any labor organization. Section 5. Applicability of the provisions of the labor organization's constitution and by-laws. - Where the conduct of election of officers is ordered by the Med-Arbiter, the Bureau or Office of the Secretary, the rules and regulations governing the filing of candidacies and conduct of election under the constitution and by-laws of the labor organization may be applied in the implementation of the decision, or new and additional rules may be adopted as agreed upon by the parties. The entire proceedings shall be presided by the Election Officer from the Labor Relations Division of the Regional Office or the Bureau. He/She shall act as the COMELEC referred to in the labor organization's constitution and bylaws and obligate himself/herself to comply with his/her mandate under the decision to be implemented and the constitution and by-laws. RULE XIII ADMINISTRATION OF TRADE ACTIONS ARISING THEREFROM UNION FUNDS AND

Section 1. Right of union to collect dues and agency fees. - The incumbent bargaining agent shall continue to be entitled to check-off and collect dues and agency fees despite the pendency of a representation case, other inter/intra-union disputes or related labor relations disputes. Section 2. Visitorial power under Article 274. - The Regional or Bureau Director may inquire into the financial activities of any legitimate labor organization and examine their books of accounts and other records to determine compliance with the law and the organization's constitution and by-laws. Such examination shall be made upon the filing of a request or complaint for the conduct of an accounts examination by any member of the labor organization, supported by the written consent of at least twenty (20%) percent of its total membership. Section 3. Where to file. - A request for examination of books of accounts of independent labor unions, chartered locals and workers associations pursuant to Article 274 shall be filed with the Regional Office that issued its certificate of registration or certificate of creation of chartered local. A request for examination of books of accounts of federations or national unions and trade union centers pursuant to Article 274 shall be filed with the Bureau. Such request or complaint, in the absence of allegations pertaining to a violation of Article 241, shall not be treated as an intra-union dispute and the appointment of an Audit Examiner by the Regional or Bureau Director shall not be appealable. Section 4. Actions arising from Article 241. - Any complaint or petition with allegations of mishandling, misappropriation or non-accounting of funds in violation of Article 241 shall be treated as an intra-union dispute. It shall be heard and resolved by the Med-Arbiter pursuant to the provisions of Rule XI.

59

Section 5. Prescription. - The complaint or petition for audit or examination of funds and book of accounts shall prescribe within three (3) years from the date of submission of the annual financial report to the Department or from the date the same should have been submitted as required by law, whichever comes earlier. Section 6. Decision. - A decision granting the conduct of audit shall include the appointment of the Audit Examiner and a directive upon him/her to submit his/her report and recommendations within ten (10) days from termination of audit. The decision granting the conduct of audit is interlocutory and shall not be appealable. The decision denying or dismissing the complaint or petition for audit may be appealed within ten (10) days from receipt thereof pursuant to the provisions prescribed in Rule XI. Section 7. Pre-audit conference. - Within twenty-four (24) hours from receipt of the decision granting the conduct of audit, the Regional Director shall summon the parties to a pre-audit conference conducted by the Audit Examiner to determine and obtain the following: (a) sources of funds covered by the audit; (b) the banks and financial institutions where the labor organization maintains its account; (c) union books of accounts and financial statements; (d) disbursement vouchers with supporting receipts, invoices and other documents; (e) income and revenue receipts; (f) cash books; (g) minutes of general membership meeting and board meetings; (h) other relevant matters and documents. The first pre-audit conference shall be scheduled within ten (10) days from receipt by the Audit Examiner of the decision granting the conduct of an audit.

Section 8. Issuance of subpoena. - The Regional Director may compel any party to appear or bring the required financial documents in a conference or hearing through the issuance of a subpoena ad testificandum or subpoena duces tecum. He/She may also require the employer concerned to issue certifications of union dues and other assessments remitted to the union during the period of audit. Section 9. Conduct of audit examination. - Where book of accounts are submitted by the parties, the Audit Examiner shall: (a) examine the transactions reflected in the disbursement vouchers; (b) determine the validity of the supporting documents attached to the vouchers consistent with the union's constitution and by-laws, relevant resolutions of the union and the Labor Code; (c) trace recording and posting in the disbursement book; (d) record observations or findings of all financial transactions. Where no book of accounts are maintained by the officers of the labor organization, the Audit Examiner shall: (a) examine the transactions reflected in the disbursement vouchers; (b) determine the validity of the supporting documents attached to the vouchers consistent with the labor organization's constitution and by-laws, relevant board resolutions, and the Labor Code; (c) prepare working papers or worksheet/s; (d) record and post all financial transactions reflected in the cash vouchers in the working papers or worksheet/s; and (e) record observations or findings of all financial transactions. The Audit Examiner shall conduct an inventory of all physical assets acquired by the labor organization, if any, and on the basis of his/her findings prepare his/her audited

60

financial report or statement reflecting the true and correct financial accounts and balances of the labor organization with relevant annexes attached. Section 10. Period of audit. - The Audit Examiner shall have sixty (60) days from the date of first pre-audit conference within which to complete the conduct of audit, unless the volume of financial records, the period covered by the audit and other circumstances warrant the extension thereof. In such a case, the Audit Examiner shall notify the Med-Arbiter or the Bureau Director, as the case may be, of such fact at least ten (10) days before the expiration of the sixty (60) day period. Section 11. Audit Report. - The Audit Examiner shall make a report of his/her findings to the parties involved and the same shall include the following: (a) name of the labor organization; (b) name of complainant(s) or petitioner(s) and respondent(s); (c) name of officers of the labor organization during the period covered by the audit report; (d) scope of the audit; (e) list of documents examined; (f) audit methods and procedures adopted; and (g) findings and recommendations. Section 12. Completion of audit. - A copy of the audit report shall be forwarded by the Audit Examiner to the MedArbiter or the Bureau Director, as the case may be, within ten (10) days from termination of the audit, together with the entire records of the case and all documents relative to the conduct of the audit. Section 13. Decision after audit. - The Med-Arbiter or the Bureau Director shall render a decision within twenty (20) days from receipt of the audit report. All issues raised by the parties during the conduct of the audit shall be resolved

by the Med-Arbiter. The decision shall be released in the same manner prescribed in Section 15, Rule XI. When warranted, the Med-Arbiter or Bureau Director shall order the restitution of union funds by the responsible officer(s) in the same decision. Section 14. Appeal. - Appeal from the decision of the MedArbiter denying the conduct of audit and from the results of the audit may be filed by any of the parties with the Bureau. Decisions rendered by the Bureau after the conduct of audit in the exercise of its original jurisdiction may be appealed to the Office of the Secretary. Both shall be resolved in accordance with the provisions of Section 16, Rule XI. Section 15. Period of inquiry or examination. - No complaint for inquiry or examination of the financial and book of accounts as well as other records of any legitimate labor organization shall be entertained during the sixty (60) day freedom period or within thirty (30) days immediately preceding the date of election of union officers. Any complaint or petition so filed shall be dismissed. RULE XVIII CENTRAL REGISTRY OF LABOR ORGANIZATIONS AND COLLECTIVE BARGAINING AGREEMENTS Section 1. Forms for registration. - Consistent with the policy of the State to promote unionism, the Bureau shall devise or prescribe such forms as are necessary to facilitate the process of registration of labor organizations and collective bargaining agreements or of compliance with all documentary or reporting requirements prescribed in these Rules. Section 2. Transmittal of records; central registry. The Labor Relations Division of the Regional Offices shall,

61

within forty-eight (48) hours from issuance of a certificate of creation of chartered locals or certificate of registration of labor organizations and collective bargaining, transmit to the Bureau a copy of such certificates accompanied by a copy of the documents supporting registration. The Labor Relations Division of the Regional Office shall also transmit to the Bureau a copy of every final decision canceling or revoking the legitimate status of a labor organization or collective bargaining agreement, indicating therein the date when the decision became final. In cases of chartering and affiliation or compliance with the reporting requirements under Rule V, the Regional Office shall transmit within two (2) days from receipt thereof the original set of documents to the Bureau, retaining one set of documents for its file. RULE XX LABOR EDUCATION AND RESEARCH Section 1. Labor education of workers and employees. - The Department shall develop, promote and implement appropriate labor education and research programs on the rights and responsibilities of workers and employers. It shall be the duty of every legitimate labor organization to implement a labor education program for its members on their rights and obligations as unionists and as employees. Section 2. Mandatory conduct of seminars. - Subject to the provisions of Article 241, it shall be mandatory for every legitimate labor organization to conduct seminars and similar activities on existing labor laws, collective agreements, company rules and regulations and other relevant matters. The union seminars and similar activities may be conducted independently of or in cooperation with the Department and other labor education institutions. Section 3. Special fund for labor education and research. - Every legitimate labor organization shall, for

the above purpose, maintain a special fund for labor education and research. Existing strike funds may, in whole or in part, be transformed into labor education and research funds. The labor organization may also periodically assess and collect reasonable amounts from its members for such funds.

GOVERNING LAW Oca vs. Trajano, 200 SCRA 399 It is a rule that the Constitution and By-laws of an organization serve as a contract that binds its members. The presence of a quorum during petitioner Oca's and respondent Dinglasan's respective Board meetings is questionable. Moreover, petitioner Oca's Board Meeting and subsequent Convention were tainted with invalidity. The call for "a special Board meeting to fix the special convention" made by the National Secretary, Johnny Oca, was anomalous since only the National President of the Union was empowered to call a special Board Meeting, "at his own initiative or upon petition of at least one fourth (1/4) of the Board members." Considering the anomalous "call" for a special meeting made by the National Secretary, matters taken up during said special meeting, such as the calling of a national convention, are likewise tainted. RIGHTS
AND

OBLIGATIONS

OF

MEMBERS:

Ferrer vs. NLRC, 224 SCRA 410

Tancinco vs. Ferrer-Calleja, 157 SCRA 203 Submission of the employees names with the BLR as qualified members of the union is not a condition sine qua non to enable said members to vote in the election of unions officers. It finds no support in fact and in law. Per public respondents findings, the April

62

24, 1986 list consists of 158 union members only wherein 51 of the 56 challenged voters names do not appear. Adopting however a rough estimate of a total number of union members who cast their votes of some 333 and excluding therefrom the 56 challenged votes, if the list is to be the basis as to who the union members are then public respondent should have also disqualified some 175 of the 333 voters. It is true that under Article 242(c) of the Labor Code, as amended, only members of the union can participate in the election of union officers. The question however of eligibility to vote may be determined through the use of the applicable payroll period and employees status during the applicable payroll period. The payroll of the month next preceding the labor dispute in case of regular employees and the payroll period at or near the peak of operations in case of employees in seasonal industries. In the case before Us, considering that none of the parties insisted on the use of the payroll period-list as voting list and considering further that the 51 remaining employees were correctly ruled to be qualified for membership, their act of joining the election by casting their votes on May 26, 1986 after the May 10, 1986 agreement is a clear manifestation of their intention to join the union. They must therefore be considered ipso facto members thereof Halili vs. CIR, 136 SCRA 112 On August 20, 1958, the union filed with the Court of Industrial Relations a petition docketed as Case No. 1099-V, which it subsequently amended on December 9, 1958, charging violation by Halili of Commonwealth Act No. 444 (the Eight-Hour Law) in that he deducted from, and did not include in, the hours of work of the drivers and conductors the time consumed for filling gas or for taking the bus from the 'carbarn' and vice-versa, the time for trip intervals when the bus is waiting for passengers, and the time consumed on minor repairs of the engine and other parts of the bus. It therefore prayed the court to fix the compensable hours of work of the drivers and conductors, members of said union, according to the provisions of Commonwealth Act No. 444, and to order Halili to pay

the drivers and conductors the compensable hours of work previously rendered by them from October 1, 1956 up to the filing of the petition. The SC held that there can be no disagreement here that what the members of the respondent union claim is the payment of overtime wages for work rendered by them during the hours deducted by the predecessor of herein petitioner from their daily compensable working time in the company's payrolls, in violation of the Eight-Hour Labor Law he deducted from the working hours of the drivers and conductors, members of respondent union, the time spent for taking the buses from the carbarn and filling it with gas, oil or water; the interval for waiting for passengers; and the repair of the engine and other parts of the bus in case of breakdown. REMEDIES FOR VIOLATION OF RIGHTS Litton Mills Employees vs. Ferrer-Calleja, 167 SCRA 804 As to the impeachment of a union officer, Section 2, Article XV of the petitioner-union's Constitution and By-Laws provides the procedures to be followed. It clearly appears that the procedure was not followed by the petitioners when they impeached Umali. To be sure, there was difficulty on the part of the petitioners in complying with the required procedure for impeachment, considering that the petition to impeach had to be addressed to the Chairman of the Executive Board of the Union, and that the majority membership which would decide on the impeachment had to be convened only upon call of the Chairman of the Executive Board who, in the case at bar, happened to be respondent Umali himself. Nevertheless, despite the practical difficulties in complying with the said procedure, petitioners should have shown substantial compliance with said impeachment procedure, by giving Umali ample opportunity to defend himself, as contrasted to an outright impeachment, right after he failed to appear before the first and only investigation scheduled on 27 August 1986 in the Litton Canteen.

63

The union-members themselves know what is best for them, i.e., whether they still want respondent Umali as their Union President, and whether they wish to affiliate their union with GATCORD. And, the best and most appropriate means of ascertaining the will of the union members is through a certification election. Villaor vs. Trajano, 144 SCRA 245 The May 4, 1984 special election in Cebu and Mactan is without factual and legal justification. As aptly observed by the Solicitor General, the same was resorted to only to accommodate the herein other private respondents "There is absolutely no justification for calling the said May 4, 1984 elections. Obviously, such move was resorted by the PALEA Comelec to accommodate defeated candidates for president and vice-president in the February 20, 1984 election, Mario and Carlos Bandalan (respondent herein), and enable them to overcome the winning margin of winning candidates therein, Villaor and Bautista (herein petitioners), who won by only 145 and 44 votes respectively. Special election could be resorted to when some members of a union are deprived of their right to vote. In this case, there is no justification for special election because the union members were not deprived of their right to vote.

levied, following certain requirements, and collected following certain requirements. Remember also that levy is different from collection. There cannot be a valid collection without a valid levy. Requirements of a valid levy: general membership resolution, in a general meeting called for the purpose, approving the special assessment. A levy is a special assessment, hence it cannot be imposed without the required resolution. It cannot be imposed by the officers, even if it is approved by management. Only after a valid levy, then comes in the collection. Collection may be done in two ways: direct collection from each member, but that is a tedious process. The other way is by check-off. Managements cooperation is needed here. The union submits a document to management, reflecting the list of collection, the members of the union, and each members authorization to collect. Mgt. will deduct such amounts from each salary and remit the same to the union. You can levy only upon resolution, and you can collect via check-off only upon individual valid authorization from each member. Check-off is not a matter of right. It is something that must be embodied in the CBA in order to obligate management to cooperate. F. UNFAIR LABOR PRACTICES LABOR CODE
Art 247. Concept of unfair labor practice and procedure for prosecution thereof . Unfair labor practices: - violate the constitutional right of workers and employees to self-organization, - are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, - disrupt industrial peace - and hinder the promotion of healthy and stable labormanagement relations.

LECTURE Remember in terms and conditions of membership, the basic rule is that internal matters should be resolved first by the internal rules, the by-laws, before it can be resolved elsewhere (doctrine of exhaustion). Under Art. 241, (n) and (o), special assessment can be

64

Consequently, unfair labor practices are not only violations of the civil rights of both labor and management but are also criminal offenses against the State which shall be subject to prosecution and punishment as herein provided. Subject to the exercise by the President or by the Secretary of Labor and Employment of the powers vested in them by Articles 263 and 264 of this Code, the civil aspects of all cases involving unfair labor practices, which may include claims for actual, moral, exemplary and other forms of damages, attorneys fees and other affirmative relief, shall be under the jurisdiction of the Labor Arbiters. The Labor Arbiters shall give utmost priority to the hearing and resolution of all cases involving unfair labor practices. They shall resolve such cases within thirty (30) calendar days from the time they are submitted for decision.

Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) (b) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or officers; To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent: may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective agreement: Provided, That the individual authorization required under Article 242, paragraph (o), of this

(c)

(d)

(e)

Recovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code. No criminal prosecution under this Title may be instituted: - without a final judgment, finding that an unfair labor practice was committed, having been first obtained in the administrative proceeding referred to in the preceding paragraph. - During the pendency of such administrative proceeding, the running of the period of prescription of the criminal offense herein penalized shall be considered interrupted: - Provided, however, That the final judgment in the administrative proceedings shall not be binding in the criminal case nor be considered as evidence of guilt but merely as proof of compliance with the requirements herein set forth.

65

Code shall not apply to the non-members of the recognized collective bargaining agent; (f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; To violate the duty to bargain collectively as prescribed by this Code; To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or To violate a collective bargaining agreement.

(c)

To violate the duty or refuse to bargain collectively with the employer, provided that it is the representative of the employees; To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value, in the nature of an exaction, for services which are not performed or not to be performed, including the demand for a fee for union negotiations; To ask for or accept negotiation or attorneys fees from employers as part of the settlement of any issue in collective bargaining or any other dispute; or To violate a collective bargaining agreement.

(d)

(g) (h)

(e)

(i)

The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations, associations, or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. Art. 249. Unfair labor practices of labor organizations. It shall be unfair labor practice for a labor organization, its officers, agents, or representatives: (a) To restrain or coerce employees in the exercise of their right to self-organization. However, a labor organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership; To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an employee with respect to whom membership in such organization has been denied, or to terminate an employee on any ground other than the usual terms and conditions under which membership or continuation of membership is made available to other members;

(f)

The provisions of the preceding paragraph notwithstanding, only the officers, members of governing boards, representatives or agents or members of labor associations or organizations who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. Art. 261. Jurisdiction of voluntary arbitrators and panel of voluntary arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have - original and exclusive jurisdiction to hear and decide all unresolved grievances - arising from the interpretation or implementation of the Collective Bargaining Agreement - and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding Article. - Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this Article, gross violations of a Collective Bargaining Agreement

(b)

66

shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators and shall immediately dispose and refer the same to the grievance machinery or voluntary arbitration provided in the collective bargaining agreement.

any other plan of coercion and interference.

Philippine Steam Navigation vs. Philippine Marine Officers Guild, 15 SCRA 174 The SC held that the subjection by the company of its employees to a series of questioning regarding their membership in the union or their union activities, in such a way as to hamper the exercise of free choice on their part, constitutes unfair labor practice Visayan Bicyle Manufacturig Co. vs. National Labor Union, 14 SCRA 5 Two employees were dismissed for violation of a company rule against fights in the premises or during working hours. It appears, however, that said employees, who were union officers, were provoked into a prearranged fight by two recently hired employees pursuant to a strategy of the company designed to provide an apparently lawful cause for their dismissal, and said dismissed employees had not figured in similar incidents before or violated company rules in their many years with the company. Thus, the company is guilty of unfair labor practice. Judric Canning Corp. vs. Inciong, 115 SCRA 887

CASES Insular Life Assurance Co. Employees Association vs. Insular Life Assurance Co., 37 SCRA 244 The company sent letters to each striker stating its recognition of the employees right to strike, but should the latter wish to return to work, they may do so. The letter listed benefits for those who wished to work. Some were persuaded by the letter, but others continued with the strike. There were also occasions where management personnel tried to break through the picket lines. The company also offered free coffee as bribe to abandon the strike. There was also discrimination in selecting which employees were rehired. The employers are guilty of ULP. The seemingly innocent letters, when taken together with all the other acts clearly show the intent to interfere with the right to collective bargaining. The incentives in the letters as well as threats of reprisals upon failure to comply cannot be read otherwise than union busting. Such acts undermine all that the union wishes to do for the benefit of the employees. The test applied to determine whether the individual acts constitute ULP was totality of conduct. Factors to be taken into consideration are: - history of relations between employees and employer; - anti-union bias;

Manila Hotel Co. vs. Pines Hotel Employees, 47 SCRA 88 Whether or not the Pines Hotel incurred losses is of no moment. The fact that management granted Christmas bonus to its employees, the same should have been divided equally as it has been done before. Aside from the Christmas bonus of 50% that was allocated to the Manila Hotel employees, some of them were granted year-end bonus

67

while the Pines Hotel employees did not receive any. This is a clear case of discrimination it appearing that there is no union at the Manila Hotel of Taal Vista Hotel and considering further that lately respondents had always been beset with demands for better living conditions from the complainant union as well as strikes being staged by the union. Circumstances showing unfair discrimination of union members where a company contrary to previous practice of dividing equally to all employees a certain percentage of its net profits as Christmas bonus, allocated 50% only to its Manila Hotel employees, while Pines Hotel employees, where there exists a labor union, did not receive any year end bonus. Wise and Co., Inc. October 13, 1989 vs. Wise and Co., Inc. Employees Union,

discipline, dismissal and recall of workers. Further, management retains the prerogative whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith and for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of employees under special laws or under valid agreements, this Court will uphold such exercise. Alhambra Industries vs. CIR, 35 SCRA 550 The petitioner is the successor-in-interest of the old company Alhambra Cigar & Cigarette Manufacturing Co, that was found guilty of ULP, and was ordered by the Court to reinstate the workers and pay backwages. The petitioner refuses to comply with the said order (which has never been executed) on the ground that it made innovations in some of the working organizations formerly under the Alhambra Cigar & Cigarette Manufacturing Co., which affected the former positions by abolishing them for, legitimate business reasons as explained in said pleading, Annex L hereof, and there are no substantially equivalent positions for them to occupy, and praying that the Honorable Court conduct hearings at which the petitioner will introduce evidence in support of these allegations, and that after such hearings, the petitioner be declared exempted from reinstating and paying the back wages of the aforesaid employees. Held: The basic theory of the Industrial Peace Act is to recognize the right of self-organization to enable labor unions to bargain collectively and to avoid unfair labor practices on the part of labor and management in order to attain industrial democracy. The sooner then an inquiry is made into alleged unfair labor practices and the sooner it is stopped, the better for harmonious labor-management relations. To discourage each party from committing such unfair labor practices, sanctions are provided for. Here, management was at fault, and petitioner, as the successor, can be compelled to reinstate and to pay back wages. That has not been complied with. If we reopen the case to allow petitioner to introduce evidence with respondent Court to show why it has not complied with the order of

Sime Darby Pilipinas Inc. vs. NLRC, 289 SCRA 86 The change effected by management with regard to working time is made to apply to all factory employees engaged in the same line of work whether or not they are members of a union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of respondent to self-organization. Management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision, lay off of workers, and

68

reinstatement, we shall in effect be rendering futile the rights of labor and frustrating the policies of the Industrial Peace Act. Considering the circumstances disclosed, we cannot and should not do so. Balmar Farms vs. NLRC, 271 SCRA 670

cooperate with the employers scheme constitutes ULP. The first act clearly preempts the right of the hotels workers to seek better terms and conditions of employment through concerted action.
UNFAIR LABOR PRACTICES
OF

LABOR ORGANIZATIONS:

De Leon vs. NLRC, May 30, 2001

Salunga v. CIR, 21 SCRA 216 It is well settled that such unions are not entitled to arbitrarily exclude qualified applicants for membership, and a closed -shop provision would not justify the employer in discharging, or a union in insisting upon the discharge of; an employee whom the union thus refuses to admit to membership, without any reasonable ground therefor (31 Am. Jur. 432). Needless to say, if said unions may be compelled to admit new members, who have the requisite qualifications, with more reason may the law and the courts exercise the coercive power when the employee involved is a long standing union member who, owing to provocations of union officers, was impelled to tender his resignation, which he forthwith withdrew or revoked. Surely, he may at least, invoke the rights of those who seek admission for the first time, and cannot arbitrarily be denied readmission. In the case at bar, the company was not guilty of unfair labor practice. It was reluctant-if not unwilling-to discharge petitioner. when the union first informed it of petitioner's resignation and urged implementation of Section 3 of the bargaining contract, the company advised petitioner of its provisions, thereby intimating that he had to withdraw his resignation in order to keep his employment. Besides, the company notified the union that it would not take any action on the case and would consider petitioner still a member of the union. When the latter, thereafter, insisted on petitioner's discharge, the company still demurred and explained it was not taking sides and that its stand was prompted merely by "humane" considerations, springing from the belief that petitioner had resigned from the union without realizing its effect upon his employment. And, as the union reiterated its demand, the company notified petitioner that it had no other alternative but to terminate his employment, and dismissed him
69

Mabeza vs. NLRC, 271 SCRA 670 A pivotal question in any case where ULP on the part of the employer is alleged, is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employees right to institute concerted action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to

from the service, although with "regret". Under the circumstances, the company was not "unfair" to petitioner. United Restaurors Employees and Labor Union vs. Torres, 26 SCRA 435 When the Union struck and picketed on January 16, 1965, it might have been true that the Union commanded a majority of Sulo's employees. Without need of certification, it could, under such circumstances, conclude a collective bargaining agreement with Sulo. But it is not disputed that on, October 4, 1965, i.e., shortly after this case was filed on September 18, 1965, a consent election was held. Not controverted, too, is the fact that, in that consent election, SELU defeated the Union, petitioner herein. Because of this SELU was certified to the Sulo management as the "collective bargaining representative of the employees . . . for collective bargaining purposes as regards wages, hours of work, rates of pay and/or such other terms and conditions of employment allowed them by law." Under the circumstances, the issue as to the propriety of the injunction issued to restrain picketing has become moot and academic. The SC held that the Union which has become a minority union can no longer demand collective bargaining. Said right properly belongs to SELU, which commands the majority. By law, the right to be exclusive representative of all the employees in an appropriate collective bargaining unit is vested in the labor union "designated or selected" for such purpose "by the majority of the employees" in the unit concerned. SELU has the right as well as the obligation to hear, voice out and seek remedies for the grievances of all Sulo employees, including employees who are members of petitioner Union, regarding the rates of pay, wages, hours of employment or other conditions of employment.

What is ULP? It is a violation of the right to selforganization. Item (a) of Art. 248 is an all-encompassing provisionto interfere, restrain or coerce the right to self-organization. Does that mean we can do away with subparagraphs (b) to (i)? Are all discriminations ULP? How can discrimination refer to the right to self-organization? ULP may be done whether one is a union member or is not a union member. But remember violation of a CBA is ULP only if it is a gross violation of the economic provisions. For management to be guilty of ULP it is not necessary that the interference, coercion or restraint be a successful attempt. Remember the Insular case. Management was not successful. What is the test of ULP? Some acts may in fact be innocent in nature. Like in the Insular case. Remember the doctrine TOTALITY OF CONDUCT. Look at the acts and circumstances as a whole, not just the single act. In order to show managements intention, one must establish that there is a tendency to restrain, coerce or interfere with the right to self-organization, in the absence of any clear case of actual interference, restrain or coerce. That management intended to R/I/C. By looking at the totality of the situation and the circumstances, it may be shown that ULP is committed. So, in order to establish ULP, show the totality of the situation and show the link between the act itself and the employees right to self-organization. If the act has a tendency to R/I/C, then in all probability, considering all the circumstances, management wanted to R/I/C. The act is ULP. It may seem that the test is quite subjective. This is because ULP must be intended to R/I/C and is deliberate. So in many cases it is difficult to prove that the act is intended by management to R/I/C. So the Court has said that, applying the totality of conduct doctrine it may be shown that mgt. is guilty of ULP even if the attempt was unsuccessful. But what if management was really in good faith in doing such act? The good faith defense is available to mgt. and it is

LECTURE

70

incumbent upon management to establish this. Also, the good faith defense is available whether or not the act created an adverse effect. For example, there is a declaration of strike. Then management announces an across the board wage increase to be released a day before the strike. The act of releasing the bonus will produce an evil effect many employees will not go to the strike. A happy employee will not do such a thing! On the outset it seems that management is guilty of ULP. But management may show that it is in good faith. For instance, that the bonus was actually approved and specific date for release was set in a Board Resolution a year ago, and that it was coincidental that the intended date of release was the day before the strike. Hence, the good faith or bad faith of the employer should be considered. Since ULP is illegal, no management employee will do it blatantly, thats why it is usually subjective. Thats why we must consider all possible aspects, and even go into managements mind to determine whether ULP or not.. Now, if the closure of a company is questioned whether it is done in good faith or bad faith, the issue is usually resolved in favor of labor. For purposes of the bar, the theoretical principle of resolving all doubts in favor of labor is a good theory to be applied, even though the opposite is what happens in reality. But since the bar is a theoretical exam, then apply the theory . ULP is a violation of the right to self-organization. There is no doubt about that. But looking at the subparagraphs of Art. 248, specifically subpar. (f), can it apply to non-union members? Can it apply when it is not related to union activity issues? The case of Mabeza clarifies that. As the Court held there, even without any union or union-organizing activity, the employer CAN commit ULP. For instance, is when an employee is dismissed because he asserts his rights. Art. 248 aims to cover any threat of preventing the start of self-organizing activities, specifically when the employees are on the start of a consciousness as to their rights and take initial steps to assert these rights. The Court considered these ULP, because these

were acts of nipping the bud. The Mabeza case harmonizes/relates Art. 248 (f) with 248 (a). Hence, (a) also encompasses (f) = ULP. Now, Art 248 (f) applies only when the employee testifies against the employer, unless he is dismissed for refusing to testify in favor of management. Is the enumeration under Art. 248 exclusive? Actually, it is immaterial to say so. Because of the all-encompassing proviso of 248 (a). Can (a) then be left alone as a definition of ULP? Yes! The other subparagraphs are illustrations of (a). However, the other subparagraphs are good illustrations, to give us a basis for conclusion that the specifically stated act is ULP, which is hard to determine looking at (a) alone. (a) is too broad. So if the act does not fall under (b) (i), but may still fall under (a), it is considered an act of ULP.

POST-MIDTERMS
REVIEW OF THE MIDTERMS QUESTIONS: Last question The CBA is not registered hence the legal personality of the union is extinguished. But the CBA is effective even without the exclusive bargaining agent. The legal personality of the unionexclusive bargaining agent has nothing to do with the effectivity of the CBA. The provision in the Omnibus Rules must be followed strictly. So, in this case, since there is no exclusive bargaining agent/representative to act in behalf of the employees, the employees must take into their own hands the necessary measures to enact the CBA provisions. For instance, when they seek to file a ULP case against the employer for nonobservance of the CBAs economic provisions, they must do so through a class suit with each employee in the bargaining unit made a party. They cannot use the employers act as a ground for strike either, because only a legitimate labor union may conduct a strike.

71

What can the local/chapter do once the mother union loses its personality? They can register as an independent union to acquire legitimate personality. But prior to issuance of the certificate of registration, the union has no legitimate personality. Thats why the Rules give that leeway period for the local/chapter to register as an independent union when the mother union loses its legal personality. Question 1 My intended answer is its not ULP. It is merely a correction of an unjust situation. Can you take it to punish the employer for that? The intention may have been clear that employer wanted to avoid the formation of a union. From a business perspective, the formation of a union is costly. The only question at this point is should the employer be punished for the correction of a wrong situation, even though the deepest intent was to avoid any possibility of formation of a union. Essentially ULP is a factual question. The more defensible position in this case is that the employers act was an act done in good faith. It is not a clear interference of the right to selforganization. In Mabeza, the employer committed something wrong against the employee. In this question, nothing wrong was done against the employees. So I am not saying that Mabeza is not applicable. Its an entirely different factual situation. What is looked into is the act complained of as ULP, not the general business desire not to have a union, which is most often the sentiment of any employer. In this question, there is no clear cut case for ULP if what is used is the act in question. Question 3 By denying the employee the existence of the er-ee relationship, the employer excludes them from the coverage of the CBA on such pretext, that makes a case for ULP. So the labor-only contracting issue will make a case for ULP. Thats Alhambra Industries vs. CIR. Even if the contractor exercises full control but it does not have enough capital or equipment, there is still labor-only

contracting. The contractor is merely an agent of the principal, thus the control of the contractor should be considered as exercising control in behalf of the principal. Is the question of labor-only contracting material to order payment of wages in a case for illegal dismissal? No because the principal is always liable for nonpayment of wages. Question 4 The Vanessa case The contract is an ambiguous contract, hence she should be considered a regular employee. The project ee turned into an accounting clerk under a prob. Contract There is no rehiring. She is not considered a regular employee. The rehiring is not for another project but for a regular position under a probationary contract. Maraguinot does not apply.

72

V. RIGHT TO COLLECTIVE BARGAINING

A. DUTY
TO

BARGAIN COLLECTIVELY

LABOR CODE
ART. 250. Procedure in collective bargaining. The following procedures shall be observed in collective bargaining: (a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice; Should differences arise on the basis of such notice and reply, either party may request for a conference which shall begin not later than ten (10) calendar days from the date of request; If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its own initiative and immediately call the parties to conciliation meetings. The Board shall have the power to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the parties to participate fully and promptly in the conciliation meetings the Board may call; During the conciliation proceedings in the Board, the parties are prohibited from doing any act which may disrupt or impede the early settlement of the disputes; and The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their case to a voluntary arbitrator.

(b)

an agreement or other voluntary arrangement providing for a more expeditious manner of collective bargaining, it shall be the duty of the employer and the representatives of the employees to bargain collectively in accordance with the provisions of this Code. ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means: the performance of a mutual obligation 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 grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party, but such duty does not compel any party to agree to a proposal or to make any concession. ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the term and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. ART. 253-A. Terms of a collective bargaining agreement. Any collective bargaining agreement that the parties may enter into shall, insofar as the

(c)

(d)

(e)

ART. 251. Duty to bargain collectively in the absence of collective bargaining agreements. In the absence of

73

representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agewhall 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. ART. 254. Injunction prohibited. No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Art.s 218 and 264 of this Code.

Within thirty (30) days from the execution of a collective bargaining agreement, the parties shall submit copies of the same directly to the Bureau or the Regional Offices of the Department of Labor and Employment for registration , accompanied with - verified proofs of its posting in two conspicuous places in the place of work - and ratification by the majority of all the workers in the bargaining unit. The Bureau or Regional Offices shall act upon the application for registration of such collective bargaining agreement within five (5) calendar days from receipt thereof. The Regional Offices shall furnish the Bureau with a copy of the collective bargaining agreement within five (5) days from its submission. The Bureau or Regional Office shall assess the employer for every collective bargaining agreement a - registration fee of not less than one thousand pesos (P1,000.00) - or in any other amount as may be deemed appropriate and necessary by the Secretary of Labor and Employment - for the effective and efficient administration of the voluntary arbitration program. - Any amount collected under this provision shall accrue to the Special Voluntary Arbitration Fund. The Bureau shall also maintain a file, and shall undertake or assist in the publication, of all final decisions, orders and awards of the Secretary of Labor and Employment, Regional Directors and the Commission.

LABOR CODE ART. 231. Registry of unions and file of collective agreements. The Bureau shall keep a registry of - legitimate labor organizations. The Bureau shall also maintain a file of - all collective bargaining agreements - and other related agreements - and records of settlement of labor disputes, - and copies of orders, and decisions of voluntary arbitrators. The file shall be open and accessible to interested parties under conditions prescribed by the Secretary of Labor and Employment, provided that no specific information submitted in confidence shall be disclosed unless: - authorized by the Secretary, - or when it is at issue in any judicial litigation -or when public int\erest or national security so requires.

74

OMNIBUS RULES, BOOK V

AS

AMENDED BY D.O. 40

agent in a bargaining unit, reported with the Regional Office in accordance with Rule VII, Section 2 of these Rules.

RULE I DEFINITION OF TERMS Section 1. Definition of Terms.

CASES
Duty to Bargain Collectively:

(d) "Bargaining Unit" refers to a group of employees sharing mutual interests within a given employer unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within such employer unit. (h) "Certification Election" or "Consent Election" refers to the process of determining through secret ballot the sole and exclusive representative of the employees in an appropriate bargaining unit for purposes of collective bargaining or negotiation. A certification election is ordered by the Department, while a consent election is voluntarily agreed upon by the parties, with or without the intervention by the Department. (j) "Collective Bargaining Agreement" or "CBA" refers to the contract between a legitimate labor union and the employer concerning wages, hours of work, and all other terms and conditions of employment in a bargaining unit. (t) "Exclusive Bargaining Representative" refers to a legitimate labor union duly recognized or certified as the sole and exclusive bargaining representative or agent of all the employees in a bargaining unit. (bbb) "Voluntary Recognition" refers to the process by which a legitimate labor union is recognized by the employer as the exclusive bargaining representative or

Lakas ng Manggagawang Makabayan v Marcelo Enterprises, 118 SCRA 422 This case involves several issues: When the CBA was about to reach its expiration date, LAKAS requested for renegotiation with the company and submitted its proposal. It turns out however that several unions were likewise demanding for renegotiation. The company, instead of submitting a counter proposal to LAKAS, informed the union of the existence of the conflicting demands from the other unions and suggested that the unions file the necessary complaint in court to finally determine who is the authorized representative. LAKAS claims that management refused to bargain with it when it did not submit a counter proposal. Held: Management did not ignore the demand for collective bargaining although it did not submit a counter proposal. There exists in this case a real issue as to representation and managements suggestion that the unions file the necessary complaint in view of the fact that there are several unions claiming to represent the employees does not constitute failure or refusal to bargain. Because of the companys alleged refusal to bargain, LAKAS staged a strike. Held: Where there exists a legitimate issue as to which of several unions is the legitimate representative of employees, it is ULP for one of the contending unions to stage a strike and demand that the employer sit down with it for collective bargaining.

75

The company asked the striking workers to fill up forms on when they are available for work. The union says this is ULP. The company says it merely wanted to know when the workers would show up for work so it can come up with a reasonable working schedule. It reasons that the two strikes staged by the employees resulted in the complete paralysis of the companys business and it cannot just readmit all returning workers in one big force or as each demanded readmission. Held: An employer may be justified in requiring a reasonable scheduling of working hours of returning striking employees and inquiring into their time availabilities. The Court took judicial cognizance of the fact that companies whose businesses were completely paralyzed by major strikes cannot resume full operation at once. Not all the striking workers were allowed to return to work. Held: It should be noted that only those who refused to fill up the questionnaire were not readmitted. All those who filled up their respective forms were scheduled for work and were readmitted. The stoppage of the employees work was not the direct consequence of the companys act. Their economic loss should not be shifted to the employer. LAKAS brought this action in behalf of all employees who were not allowed to return to work, whether or not they are members of LAKAS. Held: A labor union cannot bring an action I behalf of employees who are members of another union even if said employees signed the complaint. The proper remedy is to drop the union as party to the action and place the individual names of the employees instead. National Union of Restaurant Workers (PTUC) vs. CIR, 10 SCRA 843 On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres Hermanas Restaurant, particularly Mrs. Felisa Herrera, on the ground, among others, that respondents

refused to bargain collectively with the complaining union; respondents made a counter-proposal in the sense that they would bargain with said union and would accept its demands if the same would become a company union, and one Martin Briones, and employee, was separated from the service because he was found to be the organizer and adviser of the complaining union. Held: There was no refusal to bargain collectively. The letter sent by the union to respondents contains certain marks, opposite each demand, such as a check for those demands to which Mrs. Felisa Herrera was agreeable, a cross signifying the disapproval of Mrs. Herrera, and a circle regarding those demands which were left open for discussion on some future occasion that the parties may deem convenient. Such markings were made during the discussion of the demands in the meeting called by respondents on May 3, 1960 at their restaurant in Quezon City. The court a quo concluded that the fact that respondent Herrera had agreed to some of the demands shows that she did not refuse to bargain collectively with the complaining union. 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. The fact is that respondents did not ignore the letter sent by the union so much so that they called a meeting to discuss its demands, as already stated elsewhere. Liberty Flour Mills Employees vs. Liberty Flou Mills, Inc., December 29, 1989 The petitioners, after organizing another union filed a certification election among the rank-in-file employees, are terminated because o a union shop clause3 in the CBA. The SC affirmed the decision that such dismissal was valid since the purpose of self-organization, collective bargaining, negotiation, and peaceful assembly including the right to strike in
3

A Union Shop Claus in CBA is a clause that requires union membership in good standing as a requirement for continued employment.

76

accordance with the law will not work if every worker were to choose his own separate way instead of joining hi co-employees. Colegio de San Juan de Letran vs. Associatio of Employees and Faculty of Letran, 340 SCRA 587 Petitioner accused the union officers of bargaining in bad faith before the National Labor Relations Commission (NLRC). The issue in this case is whether petitioner is guilty of unfair labor practice by refusing to bargain with the union when it unilaterally suspended the ongoing negotiations for a new Collective Bargaining Agreement (CBA) upon mere information that a petition for certification has been filed by another legitimate labor organization. Held: It is noteworthy in Art. 255, it is required that both parties of the performance of the mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. Undoubtedly, respondent Association of Employees and Faculty of Letran (AEFL) (hereinafter, "union") lived up to this requisite when it presented its proposals for the CBA to petitioner. On the other hand, petitioner devised ways and means in order to prevent the negotiation. Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to make a timely reply to the proposals presented by the latter. More than a month after the proposals were submitted by the union, petitioner still had not made any counterproposals. This inaction on the part of petitioner prompted the union to file its second notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that the Board of Trustees had not yet convened to discuss the matter as its excuse for failing to file its reply. This is a clear violation of Article 250 of the Labor Code governing the procedure in collective bargaining San Miguel Corp. Employees Union-PTGWO v Confesor, 262 SCRA 81

SMC was restructured. Two of its divisions were turned into separate distinct corporations. The union insists on uniting the employees of the 2 new corporations into one bargaining unit. The Court ruled that the employees from the new corporations constituted separate bargaining units for the following reasons: 1. The workers are employed by two different employers as a consequence of incorporation (separate juridical personality) 2. The members of a bargaining unit must have mutual interests. Considering the spin-off, the companies will consequently have their respective and distinctive concerns in terms of nature of work, wages, hours of work and other conditions of employment. MERALCO Cases Facts: A CBA was entered into with a term of 5 years. Nearing its 3rd year of effectivity, the parties met to renegotiate. The remaining 2 years of the CBA, which is the subject of the renegotiation in this case, was for the period 1 December 1995 to 30 November 1997. MERALCO v Quisumbing, 302 SCRA 173 Nearing the 3rd year of the effectivity of the CBA, the parties met to renegotiate. Unable to come to an agreement during the renegotiation, and there existing the imminence of a strike, the Secretary of Labor assumed jurisdiction over the labor dispute. The Secretary resolved the issue through an order setting forth the approved economic demands. The effective date of the Secretarys order is in question. Held: The date of effectivity shall be as agreed upon by the parties. The law requires that a CBA be renegotiated within 3 years from its execution. If there is no agreement reached within 6 months from the expiry of the 3 years that follow the execution of the CBA, the law expressly gives the parties, and not anybody else, the discretion to fix the effectivity of the agreement. In the absence of a new CBA, the parties must maintain the status quo and must continue in full force
77

and effect the terms and conditions of the existing agreement until a new agreement is reached. MERALCO v Quisumbing, 326 SCRA 172 This is a Motion for Reconsideration of the decision in the immediately preceding case. Held: CBA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their union. In the absence of such agreement, the award shall retroact to the first day after the 6month period following the last day of the CBA, should there be one, or, in the absence of a CBA, the Secretarys determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall control. MERALCO v Quisumbing, 326 SCRA 172 This is a Motion for Partial Modification of the decision in the immediately preceding case. Held: The arbitral award shall retroact to the first day after the 6month period following the expiration of the last day of the CBA. The CBA in this case expired on 1 December 1997. The first day after the 6-month period is 1 June 1996. The CBA shall be effective from 1 June 1996 to 31 May 1998 (effective for 2 years). New Pacific Timber & Supply Co. Inc. v NLRC, 328 SCRA 404 Until a new CBA has been executed by and between the parties, they are duty bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. The law does not provide for any exception or qualification as to which of the economic provisions of the existing agreement are to retain force and effect. Therefore, it must be understood as encompassing all the terms and conditions in said agreement. Further, when a CBA is entered into by a union representing the employees and the employer, even non-member employees are entitled to the benefits of the agreement.

Mindanao Terminal and Brokerage Service Inc. v Roldan-Confesor, 272 SCRA 161 The signing of the agreement is not determinative of the question whether the agreement was entered into within the 6 months from the expiry of the previous agreement. The point of reckoning is the meeting of the minds. (Marlon: prove meeting of the minds through the minutes) Samahang Manggagawa sa Top Form Manufacturing-UWP vs. NLRC, 7 September 1998 The union claims the benefits of an agreement allegedly entered into during the negotiation, as per the minutes, but was not incorporated in the CBA as written. Held: The union may not validly claim that the proposal embodied in the minutes of the negotiation forms part of the CBA. The CBA is the law between the parties and compliance therewith is mandated by the law. Note: The minutes is determinative only of the moment when there was a meeting of the minds. As to what was particularly agreed upon, it is the CBA as written which shall control. Rivera vs. Espiritu, 374 SCRA 351

B. Jurisdictional Requirements:

Kiok Loy vs. NLRC, 141 SCRA 179

78

While it is the mutual obligation of labor and management to bargain collectively, the employer is not under any legal duty to initiate negotiation. The mechanics of collective bargaining is set in motion only when the following jurisdictional pre-conditions are present: 1. Possession of status of majority representation of the employees representative in accordance with any means of selection or designation as provided in the Labor Code; 2. Proof of majority representation; and 3. Demand to bargain. When these requisites are present and the company still refuses to submit a counter-proposal, such refusal, if considered in relation to the entire bargaining process, may indicate bad faith and be regarded as ULP. In this case, the court found the company guilty of ULP where it was shown that it refused to make a counter proposal, stalled the negotiation by a series of postponements and non-appearance at the hearings conducted, and unduly delayed the submission of its financial statements. ALU vs. Ferrer-Calleja, 173 SCRA 178 Collective bargaining are set in motion only when the following jurisdictional preconditions are present, namely: (1) possession of the status of majority representation by the employees' representative in accordance with any of the means of selection and/or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to bargain under Article 251, paragraph (a), of the New Labor Code. LECTURE

It is the mutual obligation both of the employer and employee to: meet and convene promptly and expeditiously in good faith negotiate the TACOE/ grievance machinery execute a written document (CBA) respect the CBAnot to terminate or modify the CBA during its lifetime; contract bar rule

It is an obligation because it is mandatory-it must be done, otherwise, nonperformance will merit a sanction. A CBA made by labor may be imposed on management even without negotiations. Aside from that, management may be found guilty of ULP. Also, the LLO may exercise its right to strike. Meet and convene. What does that mean? Meet in person and face-to-face. The bargaining representative has the primary obligation to start the bargaining process. How is it started? The bargaining representative submits a proposal, management submits a counter-proposal, and then they meet and bargain at the bargaining table. How does a proposal look like? It is in the form of a draft CBA containing all the provisions labor wants in the CBA. Management replies usually by giving a letter saying labors request cannot be granted. That starts the bargaining process. Each side is represented by a panel, one for the bargaining agent, and for management, to bargain collectively. If they fail to meet within ten days, is that a violation of the right? The law says to meet promptly and expeditiously. If not, it will be a violation of the duty. It depends on the circumstances for delay. If management failed to submit a counter-proposal on time, or meet on time, and has no good reason to do so, then it may be a violation. Now, if they have met promptly and expeditiously, but not in good faith, it may be a violation. For instance, it manifests bad faith

DUTY TO BARGAIN COLLECTIVELY

You must know the elements of the duty to bargain collectively by heart! What is the duty to bargain collectively?

79

when the management sends as panel people who dont know anything about bargaining, not the usual people who represent management in collective bargaining. Thats why the union usually asks for authorization from the management, that will ensure the union that whatever the panel says will bind management. Example of bad faith management comes to the bargaining table and announces deadlock na tayo on the first day of negotiations. Convening promptly and expeditiously in good faith to negotiate. On the first day, the union usually asks for the moon. Management usually digs deep deep down. Then each panel adjusts its demands and try to meet in the middle. Hopefully they end up both happy, because they get into a position which is better than the minimum demand they were willing to settle on. Sometimes they do, oftentimes they dont-which leads to a deadlock. Thats how negotiations happen. A lot has to do with psychological warfare. Remember the Labor Code states that there is no compulsion to agree to a proposal or submit to a concession. The obligation to negotiate is merely an obligation to be flexible and not to give in always to the demand of the other parties. The Code states the negotiations must be as to the TACOE and grievance machinery. These two factors are the coverage of the obligations. These are the mandatory negotiable provisions. Matters over and above that is no longer an obligation but the parties may negotiate on such matters if they wish to do so, though it wouldnt be a violation of the duty if not tackled. Written agreement. Negotiations must end with a written agreement which should be registered. Registration is necessary to protect the local/chapters legal personality. Also, it is to protect the status of the union as the sole and exclusive bargaining agent which status cannot be challenged until after the lapse of 4 years and 300 days. It may be challenged only within the 60-day freedom period. Otherwise, rival unions may file a petition for certification election anytime. Actually, management itself may ask for registration for the CBA. In fact, it is mgt. who pays the filing fees. It is also for mgt.s

protection, because it will ensure industrial peace for at least five years. What is the term of a CBA? Five years as to representation and three years as to non-representation provisions are concerned. The three-year period may be shortened by agreement of the parties. For example: CBA entered into on January 25, 2002. It will be effective until January 24, 2007 (representation) and January 24, 2005 (non-representation provisions). However, the parties may validly agree that the non-representation provisions be negotiated on January 24, 2004. The law says the other provisions shall be renegotiated not later than three years. Hence, they may negotiate on the second year. *Keep in mind that the duty to renegotiate is different from the effectivity of the economic provisions of the CBA. The law does not limit its effectivity, unlike the representation status which the law says it must be for a term of five years. So, the CBA may say the economic provisions shall be valid for 5 years, or any number of years, but the union has to demand renegotiation within the three years, anytime within the three year period. Now, as long as management can comply with the three-year deadline, then they are not forced to negotiate earlier than three years. What is the practical implication of that? If the union makes a demand one year after CBAs effectivity, management can ignore that and such act is not ULP. Management still has the remaining two years to comply and mgt. can opt not to renegotiate at that point. It would be reasonable however to demand renegotiation when nearing the end of the third year. It is difficult to peg a cut-off point. It depends on the circumstances and the possible reasons of management. But if the parties choose to renegotiate one year after, they may do so - there is no prohibition, but neither is it a duty. There is no ULP at this point. But can the parties renegotiate one year after the effectivity of the CBA? Yes. There is no prohibition. Can they renegotiate every year after that? Yes, there is no prohibition. Assuming they renegotiated the non-representation CBA provisions on Jan. 24,

80

2003- the first year of the CBA. Will that be good until January 24, 2007? Since it is a renegotiation, it is a new agreement. It will be up to the parties if they choose to make the new agreement subsist up to January 24, 2007. It is entirely up to them to decide the term of effectivity of the CBAs non-representation provisions. BUT despite whatever term they agree upon, they have to renegotiate in by January 25, 2006 within three years from the last renegotiation and execution of the CBA. The overlapping of the terms in representation and nonrepresentation is quite complicated. In the end of the fifth year, there may be a new bargaining representative, but the non-representation provisions may have been extended beyond the fifth year. The overlapping according to jurisprudence is to promote industrial peace. The new representative must respect the non-representation provisions. So, from 1997 to 1998, it is considered the trial period, an adjustment period. The new agent cannot demand negotiations kasi may one year pa. Mgt. wont negotiate as well. But this scenario does not promote industrial peace. The new agent of course is a rival union and wont be happy with the CBA entered into between management and the old agent who is a rival union. In fact the CBA is always an issue in certification electionsPalpak naman ang CBA na yan. Thats why unions/bargaining agents seek to avoid this scenario-sinasabay nila ang effectivity ng non-representation provisions sa representation aspect ng CBA. Ginagawang parehong 5 years. In fact I have not seen a CBA that has extended its nonrepresentation aspects beyond five years. On managements side, why will they agree to extend the term of the CBA beyond the authority of the bargaining agent? Now, the parties may agree that the modified provisions take effect until 2009-even beyond the period of representation. Then the bargaining agents status is challenged by a rival union. Such CBA will still be effective, and if the rival union wins as the new bargaining agent, they have to respect the CBA. The new agent can demand renegotiation but it may take effect only after 2009.

The reckoning point for the three year period for renegotiation is the last day of the last negotiations. That should be the interpretiation of execution of the CBA. Because when you renegotiate, you are executing new provisions. My interpretation of renegotiation is that the parties have to reopen negotiations within three years, not that they have to agree on new provisions within three years. What is the reason for the three year rule? Many economic developments can occur within three years. That makes a need to revisit the positions of the parties, and to fix the CBA to favor labor. I doubt the CBA can ever be adjusted to something lower than what labor is already receiving. That would be a violation of the non-diminution rule. Such benefits already enjoyed can only be improved, not diminished in the CBA. Many CBAs have annual wage increase plans. So for instance, year 1=P100, year 2=P200, year 3=P300, year 4=P400 and year 5=P500. By the third year, they entered into negotiations, they can modify the agreement as to the fourth and fifth year since it has not yet been given. For instance, the company was hit with the economic recession, and so the parties agree year four and five=P100 and P200 instead of the original agreement. Its a valid agreement. It does not go against the non-diminution of benefits rule because it has not yet been given to the workers. It is something the workers do not yet enjoy. When the parties enter into a binding agreement to renegotiate one year after, but both mutually agree to defer it to another year, that would be a valid agreement. On the other hand, if one of the parties refuse to meet one year later as originally agreed upon, the other party may declare deadlock. Now, when the parties renegotiate, then they agree not to change anything, that is a valid renegotiation. The three years to next renegotiate shall be reckoned from the execution of the CBA agreeing not to change anything in the old CBA. If there is no renegotiation within the three years, there is no duty to negotiate anymore. The three year period lapses the union loses the right to demand renegotiation. This is much like the rule in

81

Obligations and Contracts. As soon as one party demands, the other incurs in delay. Hence if there is no demand, there is no delay. Management is not incurring in delay if Labor does not demand. there is no duty If it is not demanded, and the three year period lapsed, there is no duty to negotiate anymore. And such act is not ULP Now for example January 24, 2002, expiration of the CBA. The union/bargaining agent was not changed. Starting February 1, negotiations started, and ended September 1, 2002. When is the agreement of the parties reckoned? From the meeting of the minds, not at the time of signing. Meeting of the minds is when the parties come to an agreement. In the absence of formal signing, this is proven by the very provisions of the CBA. Remember too that only the written provisions of the CBA may be enforced. If the agreed provisions (while at the negotiating table) are not in the written CBA, sorry na lang!! So the panel must read the written CBA before agreeing to be bound by it. But what usually happens is minamadali ang signing para makuha agad ng union ang signing bonus. Management takes advantage of that by removing some provisions in the CBA formerly agreed upon. When is the effectivity of the new CBA? Two scenarios: 1. If the meeting of the minds happened within 6 months from expiration of the old CBA. So if they entered into the agreement by July 24, 2002 the new CBA will take effect, will retroact to January 25, 2002. This is automatically operative by law. No agreement between the parties is needed. 2. If the meeting of the minds happened beyond 6 months, like the above scenario, then the parties will determine when the new CBA will take effect. There is no automatic retroactivity. Such will happen only if the parties agree to it. Now, in the absence of any agreement, For instance, nag-deadlock. Nag-strike. The Sec. Of Labor assumed jurisdiction and imposed a decision-a CBA, on the parties. He did not state a date when the new CBA shall be effective. As ruled in the three Meralco cases:

1. For example the decision became final June 12, 2002-within the 6 month period. In this case the law automatically operates so the new CBA retroacts to the date of the old CBAs expiry. 2. If the decision became final beyond the six month period, it retroacts automatically to the end of the six month period. Generally, the Secretary of Labor can decree retroactivity. But the Court said the retroactivity should only operate the day after the six month period. So the Secretary can make it retroact only starting July 25, 2002 or beyond such date. This ruling of the Court misinterpreted Art. 253-A, thinking that when the law talks of such date in the last phrase of the Code, refers to the six month period. Erroneous! Such date refers to the date of expiry of the old CBA. So I believe there is no reason for the Court to limit the Secretarys power. The first decision was the good decision-it was congruent with the codal provision stating that only the parties can agree to retroactivity, so the Secretary cannot decree retroactivity if the parties do not as well. But this was reversed in the second Meralco case. This case has no basis to say that the decision retroacts automatically to the end of the six month period. The hard part is an arbitral award can supplant the parties agreement insofar as retroactivity is concerned. So the Secretary can decree retroactivity but his freedom to choose the period when it retroacts is limited by the decision. C. BARGAINING UNIT OMNIBUS RULES, BOOK V AS AMENDED BY D.O. 40
(d) "Bargaining Unit" refers to a group of employees sharing mutual interests within a given employer unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within such employer unit.

82

(t) "Exclusive Bargaining Representative" refers to a legitimate labor union duly recognized or certified as the sole and exclusive bargaining representative or agent of all the employees in a bargaining unit.

CASES San Miguel Corporation v Laguesma, 236 SCRA 595 The regular sales personnel (55 in all) of Magnolia Dairy Products, employed in different sales offices in the North Luzon Area, wish to form one bargaining unit. The company insists that each of the sales offices in should be considered as a separate bargaining unit so that negotiations would be more expeditious. Held: The Court allowed all the employees to be part of a single bargaining unit saying that it is not the convenience of the employer that constituted the determinative factor in forming an appropriate bargaining unit (and 55 na nga lang sila). The fundamental factors in determining the appropriate collective bargaining unit are: 1. The will of the employees (Globe Doctrine) 2. Affinity and unity of the employees interest (Substantial Mutual Interest Rule) 3. 4. Prior collective bargaining history Similarity of employment status

consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. Our labor laws do not however provide the criteria for determining the proper collective bargaining unit. Apart from the single descriptive word "appropriate," in Section 12 of the Industrial Peace Act which was subsequently incorporated into the Labor Code with minor changes, no specific guide for determining the proper collective bargaining unit can be found in the statutes. Case law fortunately furnishes some guidelines. 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. The Court further explained that "(t)he test of the grouping is community or mutuality of interests. And this is so because the basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. Golden Farms vs. Secretary, 234 SCRA 517 In the case at bench, the evidence established that the monthly paid rank-and-file employees of petitioner primarily perform administrative or clerical work. In contradistinction, the petitioner's daily paid rank-and-file employees mainly work in the cultivation of bananas in the fields. It is crystal clear the monthly paid rank-andfile employees of petitioner have very little in common with its daily paid rank-and-file employees in terms of duties and obligations, working conditions, salary rates, and skills. To be sure, the said monthly paid rank-and-file employees have even been excluded from the bargaining unit of the daily paid rank-and-file employees. This dissimilarity of interests warrants the formation of a separate and distinct bargaining unit for the monthly paid rank-and-file employees of the petitioner. To rule otherwise would deny this distinct class of employees the right to self-organization for purposes of collective bargaining. Without the shield of an organization, it will also expose

However, the court has ruled that prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. The test of grouping is commonality or mutuality of interest. University of the Philippines vs. Ferrer-Calleja, 211 SCRA 451 A "bargaining unit" has been defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees,

83

them to the exploitations of management. So we held in University of the Philippines vs. Ferrer-Calleja, where we sanctioned the formation of two (2) separate bargaining units within the establishment, viz: "[T]he dichotomy of interests, the dissimilarity in the nature of the work and duties as well as in the compensation and working conditions of the academic and non-academic personal dictate the separation of these two categories of employees for purposes of collective bargaining. The formation of two separate bargaining units, the first consisting of the rank-and-file nonacademic employees, and the second, of the rank-and-file academic employees, is the set-up that will best assure to all the employees the exercise of their collective bargaining rights. Mechanical Department Labor Union Sa PNR vs. CIR, 24 SCRA 925 Under the "Globe doctrine" (Globe Machine & Stamping Co., 3 NLRB 294) applied in Democratic Labor Union vs. Cebu Stevedoring Co., L-10321, 28 February 1958, bargaining units may be formed through separation of new units from existing ones whenever plebiscites had shown the workers' desire to have their own representatives. In the case at bar, the appeal of the Mechanical Department Labor Union, questioning the applicability under the circumstances of the Globe doctrine of considering the will of the employees in determining what union should represent them, is premature, since the result of the ordered plebiscite among the workers of the Caloocan Shops (who desire to form a new bargaining unit) may be adverse to the formation of a separate unit, in which event, all questions raised in this case would be rendered moot and academic. Held: Appellant contends that the application of the "Globe doctrine" is not warranted because the workers of the Caloocan Shops (one of the four main divisions or units of the Mechanical Department of the PNR) do not require different skills from the rest of the workers in the Mechanical Department of the Railway Company. This question is primarily one of fact. The Industrial Court has found that there is a basic difference, in that those in the

Caloocan shops not only have a community of interest and working conditions but perform major repairs of railway rolling stock, using heavy equipment and machineries found in said ships, while the others only perform minor repairs. It is easy to understand, therefore, that the workers in the Caloocan shops require special skill in the use of heavy equipment and machinery sufficient to set them apart from the rest of the workers. In addition, the record shows that the collective bargaining agreements negotiated by the appellant union have been in existence for more than two (2) years; hence, such agreements can not constitute a bar to the determination, by proper elections, of a new bargaining representative. Philippine Scout Veterans Security and Investigation Agency vs. Secretary, 224 SCRA 682 Under the amendment of Art. 287 by R.A. 7641 on 7 January 1993, respondent Federico appears to be entitled to retirement pay. But can he avail himself of this provision considering that it took effect subsequent to his filing of the complaint? This brings to mind the principle reiterated in Allied that police power legislation intended to promote public welfare applies to existing contracts and can therefore be given retroactive effect. Actually, the case at bench no longer presents a novel issue. The issue that had to be resolved next was whether to grant retirement benefits by applying retroactively Art. 287 as amended by R.A. 7641. At this point we emphasized the circumstances, based on Oro, that must concur before the law could be given retroactive effect: (a) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and, (b) the claimant was in compliance with the requirements for eligibility under the statute for such retirement benefits. It was quite clear in CJC, as held by the Labor Arbiter and the NLRC, that private respondents had ceased to be employees of petitioner by reason of their voluntary resignation before the statute went into effect. Moreover, at the time they stopped working for petitioner, they had not yet reached the age of sixty (60) years. The end result was that they were neither entitled to retirement benefits. Nevertheless, the

84

Court stressed that there was nothing to prevent the employer from voluntarily giving the employees some financial assistance on an ex gratia basis. Returning to the present case, although the second circumstance exists, respondent Federico severed his employment relationship with petitioners when he tendered his "letter of resignation" on 16 September 1991 or prior to the effectivity of R.A. 7641. In fact, the issue before public respondents was not the existence of employee-employer relationship between the parties; rather, considering the cessation of his service, whether he was entitled to monetary awards. On the authority of CJC, private respondent therefore cannot seek the beneficial provision of R.A. 7641 and must settle for the financial assistance of P10,000.00 offered by petitioners and directed to be released to him by the Labor Arbiter. International School Alliance of Educators v Quisumbing, 333 SCRA 13 The International School employs 2 kinds of teachers: foreign hires and local hires. The foreign hires enjoy greater benefits than local hires. The issue is whether local hires and foreign hires could be part of a single bargaining unit. Held: Foreign hires do not belong to the same bargaining unit as local hires. It does not appear that foreign hires have indicated their intention to be grouped with local hires. The collective bargaining history of the school also shows that these groups were always treated separately. Foreign hires have limited tenure; local hires have security of tenure. Although foreign hires perform similar functions under the same working conditions as the local hires, they are accorded certain benefits not accorded to local hires. These benefits, such as housing, transportation, shipping costs, taxes and home leave travel allowance, are reasonably related to their status as foreign hires, and justify their exclusion from the bargaining unit. De La Salle University v De La Salle University Employees Association, 330 SCRA 363

The employees of DLSU and the College of St. Benilde wish to form one bargaining unit. Held: DLSU and CSB, although affiliated, are two separate juridical personalities. The employees of the two schools are effectively employees of two different employers and thus cannot form one bargaining unit. There is no evidence in this case to justify the piercing of the veil of corporate fiction. D. BARGAINING UNIT, BARGAINING AGENT ELECTION PROCEEDINGS LABOR CODE
ART. 255. Exclusive bargaining representation and workers participation in policy and decision-making. The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employee in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have the right at any time to present grievances to their employer. Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment.
AND

CERTIFICATION

85

ART. 256. Representation issue in organized establishments. In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement: the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by: 1) the written consent 2) of at least twenty-five percent (25%) 3) of all the employees in the appropriate bargaining unit, to ascertain the will of the employees in the appropriate bargaining unit. 4) To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election 1) which provides for three or more choices 2) results in no choice receiving a majority of the valid votes cast, 3) a run-off election shall be conducted between the labor unions receiving the two highest number of votes: 4) Provided, That the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification is filed. ART. 257. Petitions in unorganized establishments. In any establishment where there is no certified

bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization. ART. 258. When an employer may file petition. When requested to bargain collectively, an employer may petition the Bureau for an election. If there is no existing certified collective bargaining agreement in the unit, the Bureau shall, after hearing, order a certification election. All certification cases shall be decided within 20 working days. The Bureau shall conduct a certification election within 20 days in accordance with the rules and regulations prescribed by the Secretary of Labor and Employment. ART. 259. Appeal from certification election orders. Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the conduct of the election have been violated. Such appeal shall be decided within fifteen (15) calendar days.

OMNIBUS RULES, BOOK V AS AMENDED BY D.O. 40 RULE 1 SEC. 1. Definition of Terms

(d) "Bargaining Unit" refers to a group of employees sharing mutual interests within a given employer unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within such employer unit. (h) "Certification Election" or "Consent Election" refers to the process of determining through secret ballot the sole and exclusive representative of the employees in an

86

appropriate bargaining unit for purposes of collective bargaining or negotiation. A certification election is ordered by the Department, while a consent election is voluntarily agreed upon by the parties, with or without the intervention by the Department. (j) "Collective Bargaining Agreement" or "CBA" refers to the contract between a legitimate labor union and the employer concerning wages, hours of work, and all other terms and conditions of employment in a bargaining unit. (o) "Election Officer" refers to an officer of the Bureau or Labor Relations Division in the Regional Office authorized to conduct certification elections, election of union officers and other forms of elections and referenda in accordance with Rule XII, Sections 2-5 of these Rules. (p) "Election Proceedings" refer to the period during a certification election, consent or run-off election and election of union officers, starting from the opening to the closing of the polls, including the counting, tabulation and consolidation of votes, but excluding the period for the final determination of the challenged votes and the canvass thereof. (q) "Eligible Voter" refers to a voter belonging to the appropriate bargaining unit that is the subject of a petition for certification election. (t) "Exclusive Bargaining Representative" refers to a legitimate labor union duly recognized or certified as the sole and exclusive bargaining representative or agent of all the employees in a bargaining unit. (ll) "Organized Establishment" refers to an enterprise where there exists a recognized or certified sole and exclusive bargaining agent.

(ss) "Run-off Election" refers to an election between the labor unions receiving the two (2) highest number of votes in a certification or consent election with three (3) or more choices, where such a certified or consent results in none of the three (3) or more choices receiving the majority of the valid votes cast; provided that the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast. (bbb) "Voluntary Recognition" refers to the process by which a legitimate labor union is recognized by the employer as the exclusive bargaining representative or agent in a bargaining unit, reported with the Regional Office in accordance with Rule VII, Section 2 of these Rules.

RULE VI DETERMINATION OF REPRESENTATION STATUS Section 1. Policy. - It is the policy of the State to promote free trade unionism through expeditious procedures governing the choice of an exclusive bargaining agent. The determination of such exclusive bargaining agent is a non-litigious proceeding and, as far as practicable, shall be free from technicalities of law and procedure, provided only that in every case, the exclusive bargaining agent enjoys the majority support of all the employees in the bargaining unit. Section 2. Determination of representation status; modes. - The determination of an exclusive bargaining agent shall be through voluntary recognition in cases where there is only one legitimate labor organization operating within the bargaining unit, or through certification, run-off or consent election as provided in these Rules.

RULE VII

87

VOLUNTARY RECOGNITION Section 1. When and where to file. - In unorganized establishments with only one legitimate labor organization, the employer may voluntarily recognize the representation status of such a union. Within thirty (30) days from such recognition, the employer and union shall submit a notice of voluntary recognition with the Regional Office which issued the recognized labor union's certificate of registration or certificate of creation of a chartered local. Section 2. Requirements for voluntary recognition. - The notice of voluntary recognition shall be accompanied by the original copy and two (2) duplicate copies of the following documents: (a) a joint statement under oath of voluntary recognition attesting to the fact of voluntary recognition; (b) certificate of posting of the joint statement of voluntary recognition for fifteen (15) consecutive days in at least two (2) conspicuous places in the establishment or bargaining unit where the union seeks to operate; (c) the approximate number of employees in the bargaining unit, accompanied by the names of those who support the voluntary recognition comprising at least a majority of the members of the bargaining unit; and (d) a statement that the labor union is the only legitimate labor organization operating within the bargaining unit. All accompanying documents of the notice for voluntary recognition shall be certified under oath by the employer representative and president of the recognized labor union. Section 3. Action on the Notice. - Where the notice of voluntary recognition is sufficient in form, number and substance and where there is no other registered labor union operating within the bargaining unit concerned, the Regional Office, through the Labor Relations

Division shall, within ten (10) days from receipt of the notice, record the fact of voluntary recognition in its roster of legitimate labor unions and notify the labor union concerned. Where the notice of voluntary recognition is insufficient in form, number and substance, the Regional Office shall, within the same period, notify the labor union of its findings and advise it to comply with the necessary requirements. Where neither the employer nor the labor union failed to complete the requirements for voluntary recognition under Section 2 of this Rule within thirty (30) days from receipt of the advisory, the Regional Office shall return the notice for voluntary recognition together with all its accompanying documents without prejudice to its re-submission. Section 4. Effect of recording of fact of voluntary recognition. From the time of recording of voluntary recognition, the recognized labor union shall enjoy the rights, privileges and obligations of an existing bargaining agent of all the employees in the bargaining unit. Entry of voluntary recognition shall bar the filing of a petition for certification election by any labor organization for a period of one (1) year from the date of entry of voluntary recognition. Upon expiration of this one-year period, any legitimate labor organization may file a petition for certification election in the same bargaining unit represented by the voluntarily recognized union, unless a collective bargaining agreement between the employer and voluntarily recognized labor union was executed and registered with the Regional Office in accordance with Rule XVII of these Rules.

RULE VIII CERTIFICATION ELECTION

Section 1. Who may file. -Any legitimate labor organization may file a petition for certification election.

88

When requested to bargain collectively, an employer may file a petition for certification election with the Regional Office. If there is no existing registered collective bargaining agreement in the bargaining unit, the Regional Office shall, after hearing, order the conduct of a certification election. Section 2. Where to file. - A petition for certification election shall be filed with the Regional Office which issued the petitioning union's certificate of registration/certificate of creation of chartered local. The petition shall be heard and resolved by the Med-Arbiter. Where two or more petitions involving the same bargaining unit are filed in one Regional Office, the same shall be automatically consolidated with the Med-Arbiter who first acquired jurisdiction. Where the petitions are filed in different Regional Offices, the Regional Office in which the petition was first filed shall exclude all others; in which case, the latter shall indorse the petition to the former for consolidation. Section 3. When to file. - A petition for certification election may be filed anytime, except: (a) when a fact of voluntary recognition has been entered or a valid certification, consent or run-off election has been conducted within the bargaining unit within one (1) year prior to the filing of the petition for certification election. Where an appeal has been filed from the order of the Med-Arbiter certifying the results of the election, the running of the one year period shall be suspended until the decision on the appeal has become final and executory; (b) when the duly certified union has commenced and sustained negotiations in good faith with the employer in accordance with Article 250 of the Labor Code within the one year period referred to in the immediately preceding paragraph; (c) when a bargaining deadlock to which an incumbent or certified bargaining agent is a party had been submitted to conciliation or

arbitration or had become the subject of a valid notice of strike or lockout; (d) when a collective bargaining agreement between the employer and a duly recognized or certified bargaining agent has been registered in accordance with Article 231 of the Labor Code. Where such collective bargaining agreement is registered, the petition may be filed only within sixty (60) days prior to its expiry. Section 4. Form and contents of petition. - The petition shall be in writing, verified under oath by the president of petitioning labor organization. Where the petition is filed by a federation or national union, it shall verified under oath by the president or its duly authorized representative. The petition shall contain the following: (a) the name of petitioner, its address, and affiliation if appropriate, the date and number of its certificate of registration. If the petition is filed by a federation or national union, the date and number of the certificate of registration or certificate of creation of chartered local; (b) the name, address and nature of employer's business; (c) the description of the bargaining unit; (d) the approximate number of employees in the bargaining unit; (e) the names and addresses of other legitimate labor unions in the bargaining unit; (f) a statement indicating any of the following circumstances: 1) that the bargaining unit is unorganized or that there is no registered collective bargaining agreement covering the employees in the bargaining unit; 2) if there exists a duly registered collective bargaining agreement, that the petition is filed within the sixty-day freedom period of such agreement; or

89

3) if another union had been previously recognized voluntarily or certified in a valid certification, consent or run-off election, that the petition is filed outside the one-year period from entry of voluntary recognition or conduct of certification or run-off election and no appeal is pending thereon. (g) in an organized establishment, the signature of at least twenty-five percent (25%) of all employees in the appropriate bargaining unit shall be attached to the petition at the time of its filing; and (h) other relevant facts. Section 5. Raffle of the case. - Upon the filing of the petition, the Regional Director or any of his/her authorized representative shall allow the party filing the petition to personally determine the MedArbiter assigned to the case by means of a raffle. Where there is only one Med-Arbiter in the region, the raffle shall be dispensed with and the petition shall be assigned to him/her. Section 6. Notice of preliminary conference. - Immediately after the raffle of the case or receipt of the petition, the same shall be transmitted to the Med-Arbiter, who shall in the same instance prepare and serve upon the petitioning party a notice for preliminary conference. The first preliminary conference shall be scheduled within ten (10) days from receipt of the petition. Within three (3) days from receipt of the petition, the Med-Arbiter shall cause the service of notice for preliminary conference upon the employer and incumbent bargaining agent in the subject bargaining unit directing them to appear before him/her on a date, time and place specified. A copy of the notice of preliminary conference and petition for certification election shall be posted in at least two conspicuous places in the establishment. Section 7. Forced Intervenor. - The incumbent bargaining agent shall automatically be one of the choices in the certification election as forced intervenor. Section 8. Motion for Intervention. - When a petition for certification election was filed in an organized establishment, any legitimate labor

union other than the incumbent bargaining agent operating within the bargaining unit may file a motion for intervention with the Med-Arbiter during the freedom period of the collective bargaining agreement. The form and contents of the motion shall be the same as that of a petition for certification election. In an unorganized establishment, the motion shall be filed at any time prior to the decision of the Med-Arbiter. The form and contents of the motion shall likewise be the same as that of a petition for certification election. The motion for intervention shall be resolved in the same decision issued in the petition for certification election. Section 9. Preliminary Conference; Hearing. - The Med-Arbiter shall conduct a preliminary conference and hearing within ten (10) days from receipt of the petition to determine the following: (a) the bargaining unit to be represented; (b) contending labor unions; (c) possibility of a consent election; (d) existence of any of the bars to certification election under Section 3 of this Rule; and (e) such other matters as may be relevant for the final disposition of the case.

Section 10. Consent Election; Agreement. - In case the contending unions agree to a consent election, the Med-Arbiter shall not issue a formal order calling for the conduct of certification election, but shall enter the fact of the agreement in the minutes of the hearing. The minutes of the hearing shall be signed by the parties and attested to by the Med-Arbiter. The Med-Arbiter shall, immediately thereafter, forward the records of the petition to the Regional Director or his/her authorized representative for the determination of the Election Officer by the contending unions through raffle. The first pre-election conference shall be scheduled within ten (10) days from the date of entry of agreement to conduct consent election.

90

Section 11. Number of Hearings; Pleadings. - If the contending unions fail to agree to a consent election during the preliminary conference, the Med-Arbiter may conduct as many hearings as he/she may deem necessary, but in no case shall the conduct thereof exceed fifteen (15) days from the date of the scheduled preliminary conference/hearing, after which time the petition shall be considered submitted for decision. The Med-Arbiter shall have control of the proceedings. Postponements or continuances shall be discouraged. Within the same 15-day period within which the petition is heard, the contending labor unions may file such pleadings as they may deem necessary for the immediate resolution of the petition. Extensions of time shall not be entertained. All motions shall be resolved by the Med-Arbiter in the same order or decision granting or denying the petition. Section 12. Failure to appear despite notice. - The failure of any party to appear in the hearing(s) when notified or to file its pleadings shall be deemed a waiver of its right to be heard. The Med-Arbiter, however, when agreed upon by the parties for meritorious reasons may allow the cancellation of scheduled hearing(s). The cancellation of any scheduled hearing(s) shall not be used as a basis for extending the 15-day period within which to terminate the same. Section 13. Order/Decision on the petition. - Within ten (10) days from the date of the last hearing, the Med-Arbiter shall issue a formal order granting the petition or a decision denying the same. In organized establishments, however, no order or decision shall be issued by the Med-Arbiter during the freedom period. The order granting the conduct of a certification election shall state the following: (a) the name of the employer or establishment; (b) the description of the bargaining unit; (c) a statement that none of the grounds for dismissal enumerated in the succeeding paragraph exists; (d) the names of contending labor unions which shall appear as follows: petitioner union/s in the order in which their petitions were filed, forced intervenor, and no union; and (e) a directive upon the employer and the contending union(s) to submit within ten (10) days from receipt of the order, the certified list of

employees in the bargaining unit, or where necessary, the payrolls covering the members of the bargaining unit for the last three (3) months prior to the issuance of the order. Section 14. Denial of the petition; Grounds. - The Med-Arbiter may dismiss the petition on any of the following grounds: (a) the petitioner is not listed in the Department's registry of legitimate labor unions or that its legal personality has been revoked or cancelled with finality in accordance with Rule XIV of these Rules; (b) the petition was filed before or after the freedom period of a duly registered collective bargaining agreement; provided that the sixty-day period based on the original collective bargaining agreement shall not be affected by any amendment, extension or renewal of the collective bargaining agreement; (c) the petition was filed within one (1) year from entry of voluntary recognition or a valid certification, consent or run-off election and no appeal on the results of the certification, consent or run-off election is pending; (d) a duly certified union has commenced and sustained negotiations with the employer in accordance with Article 250 of the Labor Code within the one-year period referred to in Section 14.c of this Rule, or there exists a bargaining deadlock which had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout to which an incumbent or certified bargaining agent is a party; (e) in case of an organized establishment, failure to submit the twentyfive percent (25%) support requirement for the filing of the petition for certification election. Section 15. Prohibited grounds for the denial/suspension of the petition. - All issues pertaining to the existence of employer-employee relationship, eligibility or mixture in union membership raised before the Med-Arbiter during the hearing(s) and in the pleadings shall be resolved in the same order or decision granting or denying the petition for certification election. Any question pertaining to the validity of petitioning union's certificate of registration or its legal personality as a labor organization, validity of registration and execution of collective bargaining agreements shall be heard and resolved by the Regional Director in an independent petition for cancellation of its registration and not by the Med-Arbiter in the petition for certification election,

91

unless the petitioning union is not found in the Department's roster of legitimate labor organizations or an existing collective bargaining agreement is unregistered with the Department. Section 16. Release of Order/Decision within ten (10) days from the last hearing, - The Med-Arbiter shall release his/her order or decision granting or denying the petition personally to the parties on an agreed date and time. Section 17. Appeal. - The order granting the conduct of a certification election in an unorganized establishment shall not be subject to appeal. Any issue arising therefrom may be raised by means of protest on the conduct and results of the certification election. The order granting the conduct of a certification election in an organized establishment and the decision dismissing or denying the petition, whether in an organized or unorganized establishment, may be appealed to the Office of the Secretary within ten (10) days from receipt thereof. The appeal shall be verified under oath and shall consist of a memorandum of appeal, specifically stating the grounds relied upon by the appellant with the supporting arguments and evidence. Section 18. Where to file appeal. - The memorandum of appeal shall be filed in the Regional Office where the petition originated, copy furnished the contending unions and the employer, as the case may be. Within twenty-four (24) hours from receipt of the appeal, the Regional Director shall cause the transmittal thereof together with the entire records of the case to the Office of the Secretary. Section 19. Finality of Order/Decision. - Where no appeal is filed within the ten-day period, the Med-Arbiter shall enter the finality of the order/decision in the records of the case and cause the transmittal of the records of the petition to the Regional Director. Section 20. Period to Reply. - A reply to the appeal may be filed by any party to the petition within ten (10) days from receipt of the memorandum of appeal. The reply shall be filed directly with the Office of the Secretary. Section 21. Decision of the Secretary. - The Secretary shall have

fifteen (15) days from receipt of the entire records of the petition within which to decide the appeal. The filing of the memorandum of appeal from the order or decision of the Med-Arbiter stays the holding of any certification election. The decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the decision shall be entertained. Section 22. Transmittal of records to the Regional Office. - Within forty-eight (48) hours from notice of receipt of decision by the parties and finality of the decision, the entire records of the case shall be remanded to the Regional Office of origin for implementation. Implementation of the decision shall not be stayed unless restrained by the appropriate court. Section 23. Effects of consent election. - Where a petition for certification election had been filed, and upon the intercession of the Med-Arbiter, the parties agree to hold a consent election, the results thereof shall constitute a bar to the holding of a certification election for one (1) year from the holding of such consent election. Where an appeal has been filed from the results of the consent election, the running of the one-year period shall be suspended until the decision on appeal has become final and executory. Where no petition for certification election was filed but the parties themselves agreed to hold a consent election with the intercession of the Regional Office, the results thereof shall constitute a bar to another petition for certification election. Section 24. Effects of early agreements. - The representation case shall not be adversely affected by a collective bargaining agreement registered before or during the last sixty (60) days of a subsisting agreement or during the pendency of the representation case. Section 25. Non-availability of Med-Arbiter. - Where there is no Med-Arbiter available in the Regional Office by reason of vacancy, prolonged absence, or excessive workload as determined by the Regional Director, he/she shall transmit the entire records of the case to the Bureau, which shall within forty-eight (48) hours from receipt assign the case to any Med-Arbiter from any of the Regional Offices or from the Bureau.

92

RULE IX CONDUCT OF CERTIFICATION ELECTION Section 1. Raffle of the case. - Within twenty-four (24) hours from receipt of the notice of entry of final judgment granting the conduct of a certification election, the Regional Director shall cause the raffle of the case to an Election Officer who shall have control of the preelection conference and election proceedings. Section 2. Pre-election conference. - Within twenty-four (24) hours from receipt of the assignment for the conduct of a certification election, the Election Officer shall cause the issuance of notice of preelection conference upon the contending unions and the employer, which shall be scheduled within ten (10) days from receipt of the assignment. The pre-election conference shall set the mechanics for the election and shall determine, among others, the following: (a) date, time and place of the election, which shall not be later than forty-five (45) days from the date of the first pre-election conference, and shall be on a regular working day and within the employer's premises, unless circumstances require otherwise; (b) list of eligible and challenged voters; (c) number and location of polling places or booths and the number of ballots to be prepared with appropriate translations, if necessary; (d) name of watchers or representatives and their alternates for each of the parties during election; (e) mechanics and guidelines of the election.

considered as a waiver to be present and to question or object to any of the agreements reached in said pre-election conference. Nothing herein, however, shall deprive the non-appearing party or the employer of its right to be furnished notices of subsequent pre-election conferences and to attend the same. Section 4. Minutes of pre-election conference. - The Election Officer shall keep the minutes of matters raised and agreed upon during the pre-election conference. The parties shall acknowledge the completeness and correctness of the entries in the minutes by affixing their signatures thereon. Where any of the parties refuse to sign the minutes, the Election Officer shall note such fact in the minutes, including the reason for refusal to sign the same. In all cases, the parties shall be furnished a copy of the minutes. The pre-election conference shall be completed within thirty (30) days from the date of the first hearing. Section 5. Qualification of voters; inclusion-exclusion. - All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order granting the conduct of a certification election shall be eligible to vote. An employee who has been dismissed from work but has contested the legality of the dismissal in a forum of appropriate jurisdiction at the time of the issuance of the order for the conduct of a certification election shall be considered a qualified voter, unless his/her dismissal was declared valid in a final judgment at the time of the conduct of the certification election. In case of disagreement over the voters' list or over the eligibility of voters, all contested voters shall be allowed to vote. But their votes shall be segregated and sealed in individual envelopes in accordance with Sections 10 and 11 of this Rule. Section 6. Posting of Notices. - The Election Officer shall cause the posting of notice of election at least ten (10) days before the actual date of the election in two (2) most conspicuous places in the company premises. The notice shall contain: (a) the date and time of the election; (b) names of all contending unions;

Section 3. Waiver of right to be heard. - Failure of any party to appear during the pre-election conference despite notice shall be

93

(c) the description of the bargaining unit and the list of eligible and challenged voters. The posting of the notice of election, the information required to be included therein and the duration of posting cannot be waived by the contending unions or the employer. Section 7. Secrecy and sanctity of the ballot. - To ensure secrecy of the ballot, the Election Officer, together with the authorized representatives of the contending unions and the employer, shall before the start of the actual voting, inspect the polling place, the ballot boxes and the polling booths. Section 8. Preparation of ballots. - The Election Officer shall prepare the ballots in English and Filipino or the local dialect, corresponding to the number of voters and a reasonable number of extra ballots. All ballots shall be signed at the back by the Election Officer and authorized representative of each of the contending unions and employer. Failure or refusal to sign the ballots shall be considered a waiver thereof and the Election Officer shall enter the fact of such refusal or failure in the records of the case as well as the reason for the refusal or failure to sign. Section 9. Marking of votes. - The voter must put a cross ( x ) or check ( ) mark in the square opposite the name of the union of his choice or "No Union" if he/she does not want to be represented by any union If a ballot is torn, defaced or left unfilled in such a manner as to create doubt or confusion or to identify the voter, it shall be considered spoiled. If the voter inadvertently spoils a ballot, he/she shall return it to the Election Officer who shall destroy it and give him/her another ballot. Section 10. Challenging of votes. - An authorized representative of any of the contending unions and employer may challenge a vote before it is deposited in the ballot box only on any of the following grounds: (a) that there is no employer-employee relationship between the voter and the company; (b) that the voter is not a member of the appropriate bargaining unit which petitioner seeks to represent.

Section 11. Procedure in the challenge of votes. - When a vote is properly challenged, the Election Officer shall place the ballot in an envelope which shall be sealed in the presence of the voter and the representatives of the contending unions and employer. The Election Officer shall indicate on the envelope the voter's name, the union or employer challenging the voter, and the ground for the challenge. The sealed envelope shall then be signed by the Election Officer and the representatives of the contending unions and employer. The Election Officer shall note all challenges in the minutes of the election and shall be responsible for consolidating all envelopes containing the challenged votes. The envelopes shall be opened and the question of eligibility shall be passed upon only if the number of segregated voters will materially alter the results of the election. Section 12. On-the-spot questions. - The Election Officer shall rule on any question relating to and raised during the conduct of the election. In no case, however, shall the election officer rule on any of the grounds for challenge specified in the immediately preceding section. Section 13. Protest; when perfected. - Any party-in-interest may file a protest based on the conduct or mechanics of the election. Such protests shall be recorded in the minutes of the election proceedings. Protests not so raised are deemed waived. The protesting party must formalize its protest with the Med-Arbiter, with specific grounds, arguments and evidence, within five (5) days after the close of the election proceedings. If not recorded in the minutes and formalized within the prescribed period, the protest shall be deemed dropped. Section 14. Canvassing of votes. - The votes shall be counted and tabulated by the Election Officer in the presence of the representatives of the contending unions. Upon completion of the canvass, the Election Officer shall give each representative a copy of the minutes of the election proceedings and results of the election. The ballots and the tally sheets shall be sealed in an envelope and signed by the Election Officer and the representatives of the contending unions and transmitted to the Med-Arbiter, together with the minutes and results

94

of the election, within twenty-four (24) hours from the completion of the canvass. Where the election is conducted in more than one region, consolidation of results shall be made within fifteen (15) days from the conduct thereof. Section 15. Conduct of election and canvass of votes. - The election precincts shall open and close on the date and time agreed upon during the pre-election conference. The opening and canvass shall proceed immediately after the precincts have closed. Failure of any party or the employer or his/her/their representative to appear during the election proceedings shall be considered a waiver to be present and to question the conduct thereof. Section 16. Certification of Collective Bargaining Agent. - The union which obtained a majority of the valid votes cast shall be certified as the sole and exclusive bargaining agent of all the employees in the appropriate bargaining unit within five (5) days from the day of the election, provided no protest is recorded in the minutes of the election. Section 17. Failure of election. - Where the number of votes cast in a certification or consent election is less than the majority of the number of eligible voters and there are no material challenged votes, the Election Officer shall declare a failure of election in the minutes of the election proceedings. Section 18. Effect of failure of election. - A failure of election shall not bar the filing of a motion for the immediate holding of another certification or consent election within six (6) months from date of declaration of failure of election. Section 19. Action on the motion. - Within twenty-four (24) hours from receipt of the motion, the Election Officer shall immediately schedule the conduct of another certification or consent election within fifteen (15) days from receipt of the motion and cause the posting of the notice of certification election at least ten (10) days prior to the scheduled date of election in two (2) most conspicuous places in the

establishment. The same guidelines and list of voters shall be used in the election. Section 20. Proclamation and certification of the result of the election. - Within twenty-four (24) hours from final canvass of votes, there being a valid election, the Election Officer shall transmit the records of the case to the Med-Arbiter who shall, within the same period from receipt of the minutes and results of election, issue an order proclaiming the results of the election and certifying the union which obtained a majority of the valid votes cast as the sole and exclusive bargaining agent in the subject bargaining unit, under any of the following conditions: (a) no protest was filed or, even if one was filed, the same was not perfected within the five-day period for perfection of the protest; (b) no challenge or eligibility issue was raised or, even if one was raised, the resolution of the same will not materially change the results of the elections. The winning union shall have the rights, privileges and obligations of a duly certified collective bargaining agent from the time the certification is issued. Where majority of the valid votes cast results in "No Union" obtaining the majority, the Med-Arbiter shall declare such fact in the order. RULE X RUN-OFF ELECTIONS Section 1. When proper. - When an election which provides for three (3) or more choices results in none of the contending unions receiving a majority of the valid votes cast, and there are no objections or challenges which if sustained can materially alter the results, the Election Officer shall motu propio conduct a run-off election within ten (10) days from the close of the election proceedings between the labor unions receiving the two highest number of votes; provided, that the total number of votes for all contending unions is at least fifty (50%) percent of the number of votes cast. "No Union" shall not be a choice in the run-off election. Notice of run-off elections shall be posted by the Election Officer at least five (5) days before the actual date of run-off election.

95

Section 2. Qualification of voters. - The same voters' list used in the certification election shall be used in the run-off election. The ballots in the run-off election shall provide as choices the unions receiving the highest and second highest number of the votes cast. The labor union receiving the greater number of valid votes cast shall be certified as the winner, subject to Section 20, Rule IX.

CASES Philippine Telegraph and Telephone Corp. v Laguesma, 223 SCRA 454 PT&Ts rank and file employees are already represented by a certified bargaining agent. The supervisory employees seek to be represented. Held: Since no certified bargaining agent represents the supervisory employees, PT&T is deemed an unorganized establishment with respect to such supervisory employees even if the company is already deemed and organized establishment with respect to ots rank and file employees are already organized. An employer has no standing to question a certification election since it is the sole concern of the workers, unless the former filed the certification election itself pursuant to Art. 258 of the Labor Code. Alu vs. Trajano, 172 SCRA 49 The sole issue is whether or not public respondent committed a grave abuse of discretion amounting to lack of jurisdiction in ordering a certification election considering that at the time the petition for certification election was filed there was a bargaining deadlock between company and the petitioner union, as a result of which petitioner union filed a notice of strike.

Held: Undoubtedly, the petition for certification election was filed during the 60-day freedom period. The fact that petitioner was able to negotiate a new CBA with respondent company on December 4, 1986 within the freedom period of the existing CBA, does not foreclose the right of a rival union, which in this instant case is the respondent union, to challenge petitioner's claim to majority status, by filing earlier on November 4, 1986, a timely petition for certification election before the old CBA expired on December 31, 1986 and before petitioner signed a new CBA with respondent company. There should be no obstacle to the right of the employees to petition for a certification election at the proper time, that is, within sixty (60) days prior to the expiration of the life of a certified collective bargaining agreement, not even by a collective agreement submitted during the pendency of a representation case. Port Workers Union of the Philippines v Laguesma, 207 SCRA 329 Union 1 is the certified bargaining representative. During the freedom period, Union 2 and Union 3 filed their respective petitions for certification election. Union 2 submitted the consent signatures (25% of the employees in the bargaining unit) 11 days after it filed its petition. Union 3 submitted its consent signatures 35 days after it filed its own petition. Union 1 filed a motion to dismiss both petitions for failing to comply with the IRR which states that (t)he 25% requirement shall be satisfied upon the filing of the petition, otherwise the petition shall be dismissed. Held: Motion denied. The Labor Code does not require the consent signatures to be filed simultaneously with the petition for certification election. A new CBA was ratified before any certification election was held. Union 1 claims that the overwhelming ratification of the CBA is an affirmation of their membership (?) in the bargaining agent, rendering the representation issue moot and academic and conclusively barring the holding of a certification election. Held: The IRR provides that the representation case shall not be adversely affected by a collective agreement submitted before or during the last 60 days of a subsisting agreement or during the pendency of the representation case. As the new CBA was entered

96

into at the time when the representation case was still pending, it follows that it cannot be recognized as the final agreement between the employer and its employees. NAFTU vs. BLR, 164 SCRA 12 This rule precisely called for the holding of a certification election whenever there appeared to be a reasonable doubt as to whether or not the union directly certified had really been chosen by the majority of the workers as their exclusive bargaining representative. Such was the situation in the case at bar. Moreover, a certification election is a more acceptable method than direct certification, which under the provisions of the aforementioned article, should be resorted to only where there was no doubt that the union so certified had the full or at least the majority support of the workers. By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct certification originally allowed in this article has apparently been discontinued as a method of selecting the exclusive bargaining agent of the workers. This amendment affirms the superiority of the certification election over the direct certification which, assuming it was validly made in favor of the petitioner in 1986, is no longer available to it now under the change in the said provision. The new rule as amended by the executive order now reads as follows: "ART. 256. Representation issues on organized establishments. In organized establishments, when a petition questioning the majority status of the incumbent bargaining agent is filed before the Ministry within the sixty-day period before the expiration of the collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid cast, a run-off election shall be

conducted between the choices receiving the two highest number of votes." Philippine Fruits and Vegetables Industries, Inc. v Torres, 211 SCRA 95 A certification election was conducted in the PFVII. Employees who were already dismissed, albeit illegally, took part in the elections. Held: Employees who have been improperly laid off but who have a present, unabandoned rights to or expectation of re-employment, are eligible to vote in the certification elections. Thus, if the dismissal is under question, the employees concerned are still qualified to vote. PVFII filed a protest with the Med-Arbiter. It is argued that the protest was filed beyond the reglamentary. To determine the timeliness of the filing of the protest, it must be determined when the close of election proceedings occur. Held: The close of election proceedings refers to that period from the closing of the polls to the counting of the ballots and the tabulation of the votes. It does not include the period for the final determination of challenged votes and canvass thereof which could take a very long period. Samahang Manggagawa ng Permex v Secretary of Labor, 286 SCRA 692 An employer does not have the power to declare a union as the exclusive representative of its workers for the purpose of collective bargaining. Direct certification (by the employer) has been discontinued as a method of selecting the exclusive bargaining agents of workers. Oriental Tin Can Labor Union v Secretary of Labor and Employment, 294 SCRA 640 Union 1 is the certified bargaining representative. Union 2 filed a petition for certification election during the freedom period. A protest was filed by the employer alleging that some of the

97

employees who originally signed the petition had already withdrawn in writing their membership from the union. Held: Once the required percentage requirement is has been reached, the employees withdrawal from union membership taking place after the filing of the petition for certification election does not affect the petition. The protest was filed by the employer. Held: Certification elections are exclusively the concern of employees, hence, the employer lacks the legal personality to challenge the same. A new CBA was entered into between the employer and Union 1 during the freedom period and was registered 3 days after the expiration of the old CBA. Held: If a CBA has been registered, a petition for certification election or a motion for intervention can only be entertained within 60 days prior to the expiry of the agreement. However, when the CBA was prematurely signed during the freedom period and a petition for certification election was filed during the aforesaid freedom period, the petition gives rise to a representation case that must be resolved even though a new CBA has been entered into. Samahan ng mga Manggagawa sa Filsystems v Secretary of Labor and Employment, 290 SCRA 680 SAMAFIL-NAFLU-KMU is a registered labor union It filed a petition for certification election. Filsystems, the employer, filed a protest questioning the status of SAMAFIL as a legitimate labor organization for lack of proof of affiliation with NAFLU-KMU. Held: The failure of an independently registered labor union to prove its affiliation with a labor federation cannot affect its right to file a petition for certification election as an independent union. (independent nga e) The petition for certification election was dismissed by the medarbiter and an appeal was filed. Meanwhile, FWU, another union in

the company, filed its own petition for certification election. The petition was granted. FWU won and a CBA was entered into. Filsystems now claims that the existence of a CBA bars the holding of a certification election. Held: An appeal seasonably filed stays the decision of the medarbiter, therefore the appeal filed by SAMAFIL stops the holding the any certification election. Accordingly, there exists an unresolved representation case (SAMAFILs petition which was pending appeal) at the time the CBA was entered into between FWU and Filsystem. Such CBA cannot and will not prejudice SAMAFILs pending representation case or render it moot. National Federation of Labor v Secretary of Labor (287 SCRA 599) The company and 3 labor unions filed a protest against the results of a certification election due to irregularities in the conduct of the elections (no notice, flying voters, disfranchisement, etc. parang national elections). The protests were dismissed for being filed more 5 days after the election was conducted. Held: The complaint in this case was that a sufficient number of employees were not able to vote because they were not properly notified of the date of the elections. They could not therefore have filed their protests within 5 days for the reason that they did know that an election took place. The company filed a protest. Held: It is not improper for the employer to show interest in the conduct of the election. The manner in which the election was held could make the difference between industrial strife and industrial harmony in the company. What the employer is prohibited from doing is to interfere with the conduct of the certification election for the purpose of influencing its outcome. But certainly, an employer has an abiding interest in seeing to it that the election is clean, peaceful, orderly and credible.

98

Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Corp. Labor Union, 268 SCRA 573 Under Art. 245 of the Labor Code, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. Toyota Motor Phils. Labor Union vs. Toyota Motor Phils., GR 135806, August 8, 2002 The issue in this case is whether the petitioner is a legitimate labor organization and was granted a certificate of registration, thereby granting it authority to intervene in the petition for certification election. Held: NO. The earlier ruling sustained the factual findings of the med-arbiter which divested legitimacy from the petitioner union, in violation of Art. 245, a unin consisting of supervisory and rank-andfile employees. Therefore, following the earlier rulings, at the time where motion of intervention was filed, the petitioner-union did not have legitimate status. Tagaytay Highlands vs. Tagaytay Highlands Employees UnionPTGWO, GR 142000, January 22, 2003

Negros Oriental Electric Cooperative vs. Secretary, May 9, 2001

99

C. BARS

TO

CERTIFICATION ELECTION

LABOR CODE
ART. 232. PROHIBITION ON CERTIFICATION ELECTION. The Bureau shall not entertain any petition for certification election or any other action which may disturb the administration of duly registered existing collective bargaining agreements affecting the parties except under aArticles 253, 253-A of this Code.

strike or lockout to which an incumbent or certified bargaining agent is a party; (e) in case of an organized establishment, failure to submit the twenty-five percent (25%) support requirement for the filing of the petition for certification election. Section 15. Prohibited grounds for the denial/suspension of the petition. - All issues pertaining to the existence of employer-employee relationship, eligibility or mixture in union membership raised before the Med-Arbiter during the hearing(s) and in the pleadings shall be resolved in the same order or decision granting or denying the petition for certification election. Any question pertaining to the validity of petitioning union's certificate of registration or its legal personality as a labor organization, validity of registration and execution of collective bargaining agreements shall be heard and resolved by the Regional Director in an independent petition for cancellation of its registration and not by the Med-Arbiter in the petition for certification election, unless the petitioning union is not found in the Department's roster of legitimate labor organizations or an existing collective bargaining agreement is unregistered with the Department. RULE XVII REGISTRATION OF COLLECTIVE BARGAINING AGREEMENTS Section 7. Term of representation status; contract bar rule. - The representation status of the incumbent exclusive bargaining agent which is a party to a duly registered collective bargaining agreement shall be for a term of five (5) years from the date of the effectivity of the collective bargaining agreement. No petition questioning the majority status of the incumbent exclusive bargaining agent or petition for certification election filed outside of the sixtyday period immediately preceding the expiry date of such five-year term shall be entertained by the Department.

OMNIBUS RULES, BOOK V, AS AMENDED BY D.O. 40

RULE VIII Section 14. Denial of the petition; Grounds. - The MedArbiter may dismiss the petition on any of the following grounds: (a) the petitioner is not listed in the Department's registry of legitimate labor unions or that its legal personality has been revoked or cancelled with finality in accordance with Rule XIV of these Rules; (b) the petition was filed before or after the freedom period of a duly registered collective bargaining agreement; provided that the sixty-day period based on the original collective bargaining agreement shall not be affected by any amendment, extension or renewal of the collective bargaining agreement; (c) the petition was filed within one (1) year from entry of voluntary recognition or a valid certification, consent or runoff election and no appeal on the results of the certification, consent or run-off election is pending; (d) a duly certified union has commenced and sustained negotiations with the employer in accordance with Article 250 of the Labor Code within the one-year period referred to in Section 14.c of this Rule, or there exists a bargaining deadlock which had been submitted to conciliation or arbitration or had become the subject of a valid notice of

100

The five-year representation status acquired by an incumbent bargaining agent either through single enterprise collective bargaining or multi-employer bargaining shall not be affected by a subsequent collective bargaining agreement executed between the same bargaining agent and the employer during the same five-year period.

CASES NACUSIP-TUCP vs. Trajano, 208 SCRA 18 The issue in this case is whether or not a petition for certification election may be filed during the pendency of a bargining deadlock submitted to arbitration or conciliation. Held: NO. The law is clear on the matter. The DEADLOCK BAR RULE simply provides that a petition for certification election can only be entertained IF THERE IS NO PENDING BARGAINING DEADLOCK SUBMITTED TO CONCILIATION OR ARBITRATION OR HAD BECOME THE SUBJECT OF A VALID NOTICE OR STRIKE OR LOCKOUT. The principal purpose is to ensure stability in the relationship of workers and management. The law demands that the petition for certification election should fail in the presence of a then pending bargaining deadlock. Capitol Medical Center Alliance of Concerned Employees v Laguesma, 267 SCRA 503 In January 1993, Union 1 was the certified as the exclusive bargaining agent of the rank and file employees of Capitol Medical Center (CMC). CMC questioned the validity of Union 1s certification through a series of petitions and a number of judicial and administrative proceedings. This had the effect of delaying the commencement of negotiations for a CBA. Due to the continued refusal of CMC to negotiate, Union 1 filed a notice of strike and subsequently staged a strike. Meanwhile, in March 1994, Union 2 filed a petition for certification election, claiming that Union 1 has not commenced the negotiations for a CBA and 1 year has already elapsed since the last certification election.

Held: Even if one year has already elapsed since the time of declaration of a final certification result, no certification election may be had where the delay in forging a CBA could not be attributed to the fault of the union which won the earlier certification election. The SC held that a situation where a CBA could not be concluded due to the failure of one party to willingly perform its duty to bargain collectively is similar in nature to a bargaining deadlock for which no certification election could be held. NACUSIP-TUCP vs. Ferrer-Calleja, 205 SCRA 478 The controversy boils down to the sole issue of whether or not a petition for certification election may be filed after the 60-day freedom period. Held: The clear mandate of the rules state that the petition for certification election filed by the petitioner NACUSIP-TUCP should be dismissed outright, having been filed outside the 60-day freedom period or a period of more than one (1 ) year after the CBA expired. ALU v Ferrer-Calleja, 173 SCRA 178 The employer, upon the representation of Union 1 that it is the exclusive bargaining agent, entered into negotiations with the said union. Six days before a CBA was to be signed by Union 1 and the employer, Union 2 staged a strike. The strike was staged after Union 2 failed to convince the employer to recognize it as the real exclusive bargaining agent. Union 2 then filed a petition for certification election. Union 1 opposed on the ground that there is an existing CBA, hence the contract bar rule applies. Held: Contract bar rule does not apply for the following reasons: 1. In the case at bar, the court found that the ratification of the CBA was irregular for 2 reasons: (1) the failure to post the same in at least 2 conspicuous places, and (2) the lack of any showing that it was actually ratified by a majority of the employees in the bargaining unit. For the contract based rule to apply, the CBA must not only be registered but also validly ratified.

101

2. The prompt recognition by the employer of Union 1s standing

as the exclusive bargaining agent was misplaced and the failure to properly determine with legal certainty whether the union enjoyed majority representation may be a ground to nullify the certification of that union as the sole bargaining agent. (I think this is merely an obiter ) Firestone Tire & Rubber Co. Employees Union vs. Estrella, 81 SCRA 49 The three-year collective bargaining agreement between respondents Associated Labor Unions (ALU) and Firestone Tire & Rubber Co. of the Philippines (Firestone) was to expire on January 31, 1976; but prior to its expiration, respondents entered in a "Supplemental Agreement" extending its life for another year. The extension was neither ratified by the covered employees nor submitted to the Department of Labor for its certification. Within the sixty-day period before the original expiry date of the agreement and upon request of 276 of the 400 employees of respondent Firestone who disaffiliated from the ALU, a certificate of registration was issued by the Bureau of Labor Relations in favor of petitioner. Petitioner then filed a petition for direct certification or certification election on the tenth day after the original expiration date of the agreement, with the written consent of 77% of the 400-man bargaining unit. Respondent ALU petitioned the Bureau of Labor Relations for the cancellation of petitioner's certificate of registration on the grounds that its collective bargaining agreement was not due to expire until the following year constituted a bar to the holding of a certification election. Held: Basic to the CONTRACT BAR RULE is the proposition that the delay of the right to select representatives can be justified only where stability is deemed paramount. Excepted from the contract bar rule are certain types of contracts which do not foster industrial stability, such as contracts where the identity of the representative is in doubt. Any stability derived from such contracts must be subordinated to the employees' freedom of choice because it does not establish the type of industrial peace contemplated by law.

Where, therefore, the fact of disaffiliation has been demonstrated beyond doubt, a certification election is the most expeditious way of determining which labor organization is to be the exclusive bargaining representative. Also, an amendment extending the life of a collective bargaining agreement must be certified by the Bureau of Labor Relations, otherwise, it may not bar the holding of a certification election or the registration of other labor organizations. Vassar Industries Employees Uniuon vs. Estrella, 82 SCRA 280 The petitioner disaffiliated with the old union and formed another union. The issue in this case is whether certification of election could be denied on the ground that there is already a registered collectiuve bargaining agent in the company. Held: Certification election should be granted. The fact that the company already has a recognized bargaining agent does not operate as a bar for new unions to be granted certification election. United CMC Textile Workers Union v BLR, 128 SCRA 316 The Med-Arbiter granted a petition for certification election filed by Union 2 despite the pendency of a ULP case filed against Union 1, the certified bargaining agent, for being company-dominated. Held: The pendency of a formal charge of company domination is a prejudicial question that bars proceedings for a certification election. National Union of Bank Employees v Minister of Labor, 110 SCRA 274 The med-arbiter granted Unions petition for certification election. The employer filed a motion to suspend the holding of the certification election on the ground that there is a pending proceeding for the cancellation of the registration of the Union for allegedly engaging in prohibited and unlawful activities in violation of the Labor Code. Held: Motion to suspend denied for the following reasons:

102

1. A certification election may be ordered despite the pendency of a petition to cancel the unions registration certificate. (Doctrine: Registration certificate valid until nullified) 2. The petition to cancel Unions registration certificate was evidently intended to delay the holding of the certification election. In this case, the petition was filed only after the MedArbiter has granted Unions petition for certification election. Progressive Development Corp. v Secretary of Labor, 271 SCRA 593 5. The propriety of a labor organizations registration could be assailed directly through cancellation proceedings in accordance with Articles 238 ad 239 of the Labor Code, or indirectly by challenging its petition for the issuance of an order for certification election. 6. The Med-Arbiter should look into the merits of the petition for cancellation of a unions registration before issuing an order calling for certification elections. Where the legal personality of a union is seriously challenged, it would be more prudent for the Med-Arbiter to grant the request for suspension of the proceedings in the certification election case until the issue of legality of the unions registration shall have been resolved. TUPAS-WFTU vs. Laguesma, 233 SCRA 565 In this case, there is doubt as to whether a particular union represents the majority of the rank-and-file employees. During the pendency of the case, the undersecretary Laguesma granted the certification of election. The issue is whether Laguesma acted with grave abuse of discretion in granting the certification election. Held: No. Under the law, the Med-Arbiter shall automatically order a certification election by secret ballot in an organized establishment such as PDIC, provided the following requisites are met: (1) that a petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE within the sixty-day freedom period;

(2) that such petition is verified; and (3) that the petition is supported by the written consent of at least twenty-five (25%) per cent of all employees in the bargaining unit. It is undisputed that all these requirements were met by private respondent NAFLU in its petition. Also, It bears stressing that no obstacle must be placed to the holding of certification elections, for it is a statutory policy that should not be circumvented. We have held that whenever there is doubt as to whether a particular union represents the majority of the rank-and-file employees, in the absence of a legal impediment, the holding of a certification election is the most democratic method of determining the employees' choice of their bargaining representative. It is the appropriate means whereby controversies and disputes on representation may be laid to rest, by the unequivocal vote of the employees themselves. Samahang Manggagawa sa Permex v Secretary, 286 SCRA 692 An employer does not have the power to declare a union as the exclusive bargaining agent of its workers for the purpose of collective bargaining. Direct certification previously allowed under the Labor Code had been discontinued as a method of selecting the exclusive bargaining agent of workers. Certification election has been found to be the most effective method for determining representation in a bargaining unit for the reason that it is not enough that a union has the support of majority of the employees. It is equally important that everyone in the bargaining unit be given the opportunity to express himself. LECTURE What is a bargaining unit and what is a bargaining agent? You must know the difference. How should the proper bargaining unit be determined? By mutuality of interests - thats the major consideration to determine the appropriate unit. It is the set of employees that can be served by bargaining negotiations and can be covered by collective bargaining activities. The set of employees that have mutual interest should be included in the same bargaining unit.

103

Who makes the initial determination as to who shall comprise the bargaining unit, and when is that determination made? It is made by the employees themselves at the time of organization of a labor organization. You have to make the determination of the bargaining unit that the union intends to represent in the future. If it is a big company, in organizing the union, one has to determine first if for purposes of collective bargaining, the bargaining unit wants to represent a particular geographical unit, or a particular group of employees belonging to the same geographical unit because it will be needed in the registration procedure. The Supreme Court in the case of International School vs. Quisumbing said that giving foreign employees a salary rate higher than or different from the basic salary rate of Filipino employees doing the same job, having the same skills, having the same seniority level, is discriminatory. After saying that, however, the Court said they should belong to different bargaining units! Why is that odd? After saying that it is discriminatory, the Court allowed the company or the union to commit discriminatory acts by saying that the foreigners should not be included in the same bargaining unit as the Filipino employees, then management in effect is given the permission to give a set of benefits to the foreign employees different from the benefits given to the Filipino employees covered in the bargaining unit. Voluntary Recognition How is the bargaining agent determined? Through certification election and voluntary recognition. Is voluntary recognition in the law? It is not found in the law. It is only provided in the rules. It is of doubtful validity, to say the least. Why, because it is akin to a direct certification made by the DOLE. We have cases saying that direct certification cannot be done even if there is only one union and there is no rival union asking for direct certification. The Court said that it is not the democratic way of selecting the representative for purposes of collective bargaining in the bargaining unit. The most democratic way, according to the Court, is to select the bargaining agent through secret ballot in a certification election supervised by the DOLE. That is not the case in direct certification

where the decision is done not by the employees themselves but by the DOLE. That decision on direct certification can be applied to voluntary recognition mode now contained in the rules, as amended in 1997. It was only in 1997 that that mode was introduced. Whats the basic problem with that? Its very transparent insofar as the decision of the employees are concerned. It is not done by secret ballot. It is done by signature campaign, by openly asking employees to sign the document of voluntary recognition which is initiated by the union and the employer. So it is totally different from the certification election provided in the law and rules. As far as Im concerned, I will challenge the validity of that mode of selecting the bargaining agent. But as far as the RULES are concerned, we have two modes of selecting the sole and exclusive bargaining representative. Certification Election 1. Petition for Certification Election How is a certification election proceeding started? By filing a petition for certification election with the Med-Arbiter, through the Regional Office where the bargaining unit is located. Who can file the petition? The legitimate labor organization. Also the employer, when he is asked to bargain collectively, and the union is not the exclusive bargaining agent. When the employer is not the petitioner, he is merely a bystander to the certification election proceedings, meaning that he cannot intervene in the proceedings. HE cannot oppose the petition. He cannot participate in the conferences leading to the decision of the Med-Arbiter. He can only intervene in the inclusion/exclusion of voters, that such person is not a member of the bargaining unit. But the principle that he is merely a bystander is more theoretical than practical. His intervention is usually honored, not only by the Med-Arbiter or by the Secretary of Labor but even by the Supreme Court. You have read many cases where the Court allowed the employer to question all sorts of things. And that is a variation of the principle laid down by the SC itself against undue intervention by the employer in certification election proceedings. What is the reason for the rule or principle that the employer be regarded as a mere bystander? Because the certification election is a
104

procedure for the employees alone and it is pursuant to the rule that favors establishments to be unionized. Procedure. When can a petition be filed? At any time if there is no existing CBA. But if there is an existing CBA, it must be filed within 60 days prior to the expiration of such CBA, called the freedom period. Remember that the representation issue has a set period pegged/fixed by law at 5 years. It cannot be advanced or changed by the parties. Any attempt to do so will be a direct violation of the Labor Code, which has a categorical provision that the representation aspect shall be good for 5 years. What are the requirements for filing the petition? Names, addresses of the union, its members, the 25% signature requirement, description of the union, the number of members, description of the bargaining unit which is done by stating the set of employees (r&f/supervisory), statement of jurisdictional facts to show that the petition is not barred by anything that will effectively bar a petition for certification election. The 25% signature support is NOT mandatory in the sense that the Med-Arbiter may hold the election even without such, but the labor organization must submit it later. This is according to jurisprudence. Does this have a basis in law? The Labor Code in Art. 256 makes the role of the Med-Arbiter merely ministerial when the petition is complete-he must grant the petition. Meaning that when it is not complete such as when there is no 25% signature, the Med-Arbiters role becomes discretionary-he may choose to grant the petition or not. Is there a conflict between the LC and the Rules? The Rules make it mandatory to dismiss the petition lacking requirements. On the surface the LC and the Rules do not seem conflicting. But the tenor of the LC the law gives the Med-Arbiter the discretion to still grant the petition despite the lack of requirement. The Rules do not give the Med-Arbiter the discretion. So we follow the LC of course. And the LC view is the one supported by jurisprudence. This is one of the defects of the 1997 Department Order. If there is a union in a company is the company automatically organized? No because what makes a company

unorganized is the absence of a certified bargaining agent. Now a company may be organized with respect to its rank-and-file employees, for example, and at the same time be unorganized with respect to its supervisory employees. Just because there is a union that is a certified bargaining agent in that company then the company is organized. Is it material to determine if the company is organized? Yes, because of the difference in procedure and the treatment of organized and unorganized establishments. From the moment of the petition there is already a difference. An organized establishment must respect the freedom period. In unorganized establishments, there is no mention of the 25% signature support requirement. After the petition is filed, the Med-Arbiter may either grant or deny the petition. There cannot be a case where the Med-Arbiter will not decide the petition, except in consent elections. Before, there was a clear difference between a certification election and a consent election. In one case the Court said (and this was asked in the bar exams a few years ago) that in a certification election, what is being decided is the issue of who among the contending unions will be the sole and exclusive bargaining representative of the employees covered in the bargaining unit while in the consent election the only issue is majority representation-who has majority support. The rules however now give us a confused definition of consent election. It will call an election conducted because of the parties agreement to the conduct of the election, a consent election. Which should not be the case because that election will still be for the sole purpose of determining the sole and exclusive bargaining representative, and will be equivalent to a certification election. In short, the consent election as per the rules call it should not be consent election, following the distinction earlier made by the Court. The Rules will now give us two types of consent election one with the supervision of the DOLE and without the supervision of the DOLE. We dont know how the SC will later on rule on this definition, again it is another innovation of the 1997 Department Order. Who is an intervenor? ORGANIZED ESTABLISHMENTS UNORGANIZED ESTABLISHMENTS

105

The incumbent bargaining Any LLO in the bargaining unit agent or any other LLO in the BU Motion for intervention must Anytime before finality of the be filed within freedom period decision (this only applies to other LLOs, not to the incumbent representative who is considered a forced intervenor) 2. Hearing and Conference

employees, and this would be used to attack the eligibility of voters, going through the same vicious cycle over again. That happened in one case I handled. There are other possibilities of delaying the process before the Med-Arbiter decides the case. And when the Med-Arbiter does, counting the steps before the decision is final, will give you an idea of how management can delay the proceedings. It may be appealed to the Secretary, then up to the CA and then to the SC. Assuming that each step takes one year, then it goes to the SC and is given to the Med-Arbiter, there are at least 3 years before the decision is given back to the Med-Arbiter before the election proceedings can start. Now as to the issue of inclusion/exclusion of voters, the procedure provided by the law solves the problem only if management is in good faith, but not if management is in bad faith. If management questions the eligibility of a substantial number of employees, for instance 80 employees, such votes which will be segregated may materially alter the results of the election, but the issue of eligibility will takes 3-5 years to be resolved by the M-A, Secretary, CA and SC. The challenge of voters may be done in pre-election and even during election day itself. If management challenges practically all active union members votes, then management validly prevents the finality of the elections. Bars to Certification Election A petition for certification election may be filed anytime except when there exists the following: 1. Contract bar when a CBA has been registered in accordance with Art. 231, a petition for certification election can be entertained only within 60 days before expiration of such CBA. 2. One-Year bar a petition may not be filed within one year from the date of a valid certification, consent or run-off election or voluntary recognition. The one-year period shall be suspended

Certification election proceedings are not supposed to be adversarial in nature. They are honesty proceedings, even in the Rules, in order to determine the will of the bargaining unit. What should be resolved in the pre-election proceedings? A determination/stipulation of facts to determine who the parties are, and if the Med-Arbiter could get the parties to agree to a consent election, clarificatory questions and a final list of voters. But how is a list of voters finalized? The Med-Arbiter shall order the employer to get a list of voters and usually it is based on the payroll three months prior to the order granting the certification election. When there is a disagreement on the exclusion or inclusion of voters, they will still be allowed to vote but their votes shall be segregated. Each vote shall be placed in a separate envelope. Why is there a need for them in a separate envelope? Because it may be necessary to determine if each challenged voter, is eligible to vote. And it cannot be done if all the segregated votes are placed in one ballot box and are mixed or collected in only one box. It will be hard to determine which vote was cast by which voter. This issue of eligibility is one that will delay the case for years. In my experience if there is an issue on the list of voters, the representation officer is not a lawyer, and he would give the case back to the Med-Arbiter, who will rule on the issue. And that decision can take years, and it goes to the Secretary of Labor, then to the CA and the SC, and back again to the Med-Arbiter. By that time you have a new set of

106

when an appeal has been filed with the Med-Arbiter regarding the results of the election. 3. Deadlock bar when there occurs a bargaining deadlock wherein the certified bargaining has become the subject of a strike or lockout, or which has been submitted to conciliation or arbitration. 4. Negotiation bar may not be filed if before such petition is filed, negotiations have already commenced between the employer and the duly registered/certified union in accordance with Art. 250) A CBA is valid even if it is not registered with the DOLE. But it is required to protect the union from a challenge. Unless the CBA is registered with the DOLE, other rival unions are not barred from challenging the bargaining agent-union anytime. Thus, the existence of a CBA does not necessarily mean a bar unless such CBA is registered. Now, the right of an exclusive bargaining agent to file a petition for certification election, that right is suspended by a third party in a petition for cancellation. But what deprives it of its right to file a petition for certification election is a final decision canceling its registration not the filing, not the pendency of the petition for cancellation. This goes against many Supreme Court decisions which say that the union retains its legitimate personality unless there is a final decision canceling its registration. For instance, the election are conducted, a winner emerges. But there is a protest. How is a protest made? If it pertains to the conduct of the elections, it is placed in the minutes, and formalized by filing a protest with the Med-Arbiter. So it is ascertained in the minutes if a protest was filed. Under the Rules, if there are no protests in the minutes, there is nothing that will prevent the certification of the winner. The Rules authorize the representation officer, the head of the election committee, before whom the preelection conference and election proceedings were conducted, to immediately certify the winner as the sole and exclusive bargaining representative. But in reality that is not done, instead binabalik sa Med-Arbiter. They let the Med-Arbiter issue the certification. Kasi

daw baka may magprotesta. Eh wala ngang nagprotesta eh. Its so frustrating to see the Department not following the very rules it issues!!! What is meant by termination of election proceedings? This is important for purposes of protest, because it should be filed, it should be formalized within five days from the termination of the election. But before this may be done it must be in the minutes. What is the reckoning point of termination? IT is the end of canvassing of votes, which happens end of election day itself. Not the end of the decision on the segregated votes that will alter the results of the election. It does not include the time the challenged votes are resolved. When there is a challenge on the inclusion of a voter, the challenge is merely formalized. I need not formalize the challenge in five days it is not considered an election protest. In the nature of a challenge, and in the nature of an election protest, the Rules do not say that the challenge is in the nature of an election protest. The periods given in the Rules for the Med-Arbiter to follow when an issue is decided upon are hardly followed. If a deadlock occurs but the union does not do anything, does not act upon it, it cannot be a bar for a certification election. You are not covered by the one-year bar to certification election, because there is no CBA yet. A petition for certification election can be filed if the union has not acted upon the deadlock, meaning walang notice of strike submitted, or has not been submitted to compulsory arbitration proceedings. What are the other bars to a certification election? The negotiation bar. This is a problematic provision. It says that as long as negotiations started, then that bars a petition for certification election. Basta nagsimula ang negotiations within the first year that serves as a bar. What if negotiations are delayed? For instance, three years have passed they are still negotiating. It still serves as a bar because negotiations commenced on the first year. It is an absurd situation.

107

Now the Certification Election Day itself. What are the requirements? 1. Must be on a regular business day 2. Within company premises *There is no prohibition to conducting a certification election during a strike, outside the premises of the company and near a picket line. Failure of election happens when the votes cast are less than majority of the number of eligible voters in the bargaining unit. This will not bar another petition for certification election. An election bar presumes there was a valid election. A failure of election can prompt a petition for another election. Does it go through the same process of the original petition for certification election again? The Rules state that they can ask an immediate holding of another election. Immediate should be construed to mean a reasonable time. Personally, I think this should not extend beyond six months. So all they have to do is file a petition for immediate holding of another election, which does not go through the steps followed in a petition for certification election. And the Med-Arbiter does not have discretion to deny the petition for immediate holding, since he already previously ruled in favor of conducting an election. The Rules does not say who should file the petition for immediate holding, so that means even an intervenor can be the one to file it. The problem is the Rules do not bar the filing of a petition for certification election prior to filing of a petition for immediate holding. To my mind, the petition for certification election should not be entertained, because the first certification election has not yet been resolved with finality. The second petition for certification election should be considered as a motion for intervention which is filed out of time. Look at Rule 11 Section 17. The first sentence of Section 17 must be ignored!!! Its a totally erroneous statement!! The issue of the validity of votes cast is NOT material in the failure of election. Only the number of votes cast is material it does not matter whether these are valid or not. For instance out of one hundred eligible

voters, 60 cast their votes but only 30 are valid, there is NO failure of elections. It is a valid election. Are there grounds to suspend a petition for certification election? The Progressive Development case. That is if the legal personality of a labor union is questioned, it is a prejudicial question which warrants suspension of the election. Run-Off Election Now, when is there a run-off election? 1. There is a valid election meaning at least majority of the eligible voters must have cast their votes 2. There are at least 2 contending unions the Rules state there must be at least 3 choices, meaning one of the choices is no union 3. No choice got majority of the valid votes cast hence no winner emerged 4. The contending unions collectively got at least 50% of the total votes cast *Keep in mind, that in order to WIN the election, the union must get MAJORITY OF THE VALID VOTES cast. Hence the basis is the votes cast, minus the spoiled votes. In order to have a RUN-OFF election on the other hand, the basis is that the unions must collectively get AT LEAST 50% of ALL VOTES CAST. Hence, include the spoiled votes in the tally. For example: 100 eligible voters, 3 contending unions SCENARIO 1: Union A 5 Union B 20 Union C 35 No Union 0 Union C got majority of valid votes cast, so C wins, no run-off election

108

spoiled - 40 SCENARIO 2: Union A 5 Union B 0 Union C 34 No Union 41 spoiled 20 SCENARIO 3: Union A 4 Union B 1 Union C 35 No Union 40 Spoiled 20 Not one of the choices won because none got majority of the valid votes cast. No run-off because 100 votes were cast, and the unions got only 40. No union got majority of the valid votes cast. No union wins.

Spoiled=0 SCENARIO 6 A=15 B=15 C=10 No Union=40 Run-off election between A and B only. According to Atty. Manuel, the objective is to get the 2 highest unions, which in this case is A and B.

*What if there are segregated votes? The determination of result may be affected by the segregated votes, whether to have a run-off or not. *The objective of the run-off election is to eliminate no union as a choice, since it did not win anyway, and there is favored partiality towards organization and having a bargaining agent. *If there is failure of run-off election, get an immediate holding for run-off again. Take note of the Sanyo case. It explains Benguet substitutionality doctrine.

*But in this scenario, there was a valid election! This is a valid certification election which bars a petition for certification for one year. ** No choice is not tantamount to No Union. Keep that in mind!!! SCENARIO 4: Union A 4 Union B 1 Union C 35 No Union 40 Spoiled 0 SCENARIO 5: A=20 B=10 C=10 No Union=40 Run-off will happen between A, B and C.

Total votes cast = 80 out of 100. No winner, because no one got 41 votes. Run-off will happen between A anc C because the total votes for the union is at least 50% of the votes cast

109

D. ADMINISTRATION ARBITRATION LABOR CODE

OF

AGREEMENT; GRIEVANCE

AND

VOLUNTARY

Art. 212. Definitions. (n) Voluntary Arbitrator means any person accredited by the Board as such, or any person named or designated in the Collective Bargaining Agreement by the parties to act as their Voluntary Arbitrator or one chosen, with or without the assistance of the National Conciliation and Mediation Board, purauant to a selection procedure agreed upon in the Collective Bargaining Agreement, or any official that may be authorized by the Secretary of Labor and Employment to act as Voluntary Arbitrator upon the written request and agreement of the parties to a labor dispute. TITLE VII-A Grievance Machinery and Voluntary Arbitration Art. 260. Grievance machinery and voluntary arbitration. The parties to a collective bargaining agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies. All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the collective bargaining agreement. For this purpose, parties to a collective bargaining agreement shall name and designate in advance a voluntary arbitrator or panel of voluntary arbitrators, or include in the

agreement a procedure for the selection of such voluntary arbitrator or panel of voluntary arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the collective bargaining agreement, which shall act with the same force and effect as if the voluntary arbitrator or panel of voluntary arbitrators have been selected by the parties as described above. (As added by RA 6715) Art. 261. Jurisdiction of voluntary arbitrators and panel of voluntary arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding Article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this Article, gross violations of a Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators and shall immediately dispose and refer the same to the grievance machinery or voluntary arbitration provided in the collective bargaining agreement. (As added by RA 6715)

110

Art. 262. Jurisdiction over other labor disputes. The voluntary arbitrator or panel of voluntary arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. (As added by RA 6715) Art. 262-B. Cost of Voluntary Arbitration and Voluntary Arbitrators fee. The parties to a Collective Bargaining Agreement shall provide therein a proportionate sharing scheme on the cost of Voluntary Arbitration including the Voluntary Arbitrators fee. The fixing of fee of Voluntary Arbitrators or panel of Voluntary Arbitrators, whether shouldered wholly by the parties or subsidized by the Special Voluntary Arbitration Fund, shall take into account the following factors: (a) (b) (c) (d) (e) Nature of the case; Time consumed in hearing the case; Professional standing of the voluntary arbitrator; Capacity to pay of the parties; and Fees provided for in the Revised Rules of Court. (As added by RA 6715)

labor-management cooperation programs at appropriate levels of the enterprise baed on shared responsibility and mutual respect in order to ensure industrial peace and improvement in productively, working conditions and the quality of working life. (h) In establishments where no labor organization exists, labor-management committees may be formed voluntarily by workes and employers for the purpose of promoting industrial peace. The Department of Labor and employment shall endeavor to enlighten and educate the workers and employers on their rights and responsibilities through labor education with emphasis on the policiy thrusts of this Code.

OMNIBUS RULES, AS AMENED

BY

DO 40

RULE XIX GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION Section 1. Establishment of grievance machinery. - The parties to a collective bargaining agreement shall establish a machinery for the expeditious resolution of grievances arising from the interpretation or implementation of the collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies. Unresolved grievances will be referred to voluntary arbitration and for this purpose, parties to a collective bargaining agreement shall name and designate in advance a voluntary arbitrator or panel of voluntary arbitrators, or include in the agreement a procedure for the selection of such voluntary arbitrator or panel of voluntary arbitrators, preferably from the listing of qualified voluntary arbitrators duly accredited by the Board. In the absence of applicable provision in the collective bargaining agreement, a grievance committee shall be created within ten (10) days from signing of the collective bargaining agreement. The committee shall be composed of at least two (2) representatives each from the members of the bargaining unit and the employer, unless otherwise agreed upon by the parties. The representatives from

Art. 277. Miscellaneous Provisions. (f) A special Voluntary Fund is hereby established in the Board to so subsidize the cost of voluntary arbitration in cases involving the interpretation and implementation of the Collective Bargaining Agreement, including the Arbitrators fees, and for such other related purposes to promote and develop voluntary arbitration. The Board shall administer the Special Voluntary Arbitration Fund in accordance with the guidelines it may adopt upon the recommendation of the Council, which guidelines shall be subject ti the approval of the Secretary of Labor and Employment. (g) The Ministry shall help promote and gradually develop, with the agreement of labor organizations and employers,

111

among the members of the bargaining unit shall be designated by the union. Section 2. Procedure in handling grievances. - In the absence of a specific provision in the collective bargaining agreement or existing company practice prescribing for the procedures in handling grievance, the following shall apply: (a) An employee shall present this grievance or complaint orally or in writing to the shop steward. Upon receipt thereof, the shop steward shall verify the facts and determine whether or not the grievance is valid. (b) If the grievance is valid, the shop steward shall immediately bring the complaint to the employee's immediate supervisor. The shop steward, the employee and his immediate supervisor shall exert efforts to settle the grievance at their level. (c) If no settlement is reached, the grievance shall be referred to the grievance committee which shall have ten (10) days to decide the case. Where the issue involves or arises from the interpretation or implementation of a provision in the collective bargaining agreement, or from any order, memorandum, circular or assignment issued by the appropriate authority in the establishment, and such issue cannot be resolved at the level of the shop steward or the supervisor, the same may be referred immediately to the grievance committee. Section 3. Submission to voluntary arbitration. - Where grievance remains unresolved, either party may serve notice upon the other of its decision to submit the issue to voluntary arbitration. The notice shall state the issue or issues to be arbitrated, copy thereof furnished the board or the voluntary arbitrator or panel of voluntary arbitrators named or designated in the collective bargaining agreement. If the party upon whom the notice is served fails or refuses to respond favorably within seven (7) days from receipt thereof, the voluntary arbitrator or panel of voluntary arbitrators designated in the collective bargaining agreement shall commence voluntary arbitration proceedings. Where the collective bargaining agreement does not so designate, the board shall call the parties and appoint a voluntary arbitrator or panel of voluntary arbitrators, who shall thereafter commence arbitration proceedings in accordance with the proceeding

paragraph. In instances where parties fail to select a voluntary arbitrator or panel of voluntary arbitrators, the regional branch of the Board shall designate the voluntary arbitrator or panel of voluntary arbitrators, as may be necessary, which shall have the same force and effect as if the parties have selected the arbitrator. Section 4. Jurisdiction of voluntary arbitrator or panel of voluntary arbitrators. - The voluntary arbitrator or panel of voluntary arbitrators shall have exclusive and original jurisdiction to hear and decide all grievances arising from the implementation or interpretation of the collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies which remain unresolved after exhaustion of the grievance procedure. They shall also have exclusive and original jurisdiction, to hear and decide wage distortion issues arising from the application of any wage orders in organized establishments, as well as unresolved grievances arising from the interpretation and implementation of the productivity incentive programs under RA 6971. The National Labor Relations Commission, its regional branches and Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators and shall immediately dispose and refer the same to the appropriate grievance machinery or voluntary arbitration provided in the collective bargaining agreement. Upon agreement of the parties, any other labor dispute may be submitted to a voluntary arbitrator or panel of voluntary arbitrators. Before or at any stage of the compulsory arbitration process, the parties may opt to submit their dispute to voluntary arbitration. Section 5. Powers of voluntary arbitrator or panel of voluntary arbitrators. - The voluntary arbitrator or panel of voluntary arbitrators shall have the power to hold hearings, receive evidence and take whatever action is necessary to resolve the issue/s subject of the dispute. The voluntary arbitrator or panel of voluntary arbitrators may conciliate

112

or mediate to aid the parties in reaching a voluntary settlement of the dispute. Section 6. Procedure. - All parties to the dispute shall be entitled to attend the arbitration proceedings. The attendance of any third party or the exclusion of any witness from the proceedings shall be determined by the voluntary arbitrator or panel of voluntary arbitrators. Hearing may be adjourned for cause or upon agreement by the parties. Unless the parties agree otherwise, it shall be mandatory for the voluntary arbitrator or panel of voluntary arbitrators to render an award or decision within twenty (20) calendar days from the date of submission for resolution. Failure on the part of the voluntary arbitrator to render a decision, resolution, order or award within the prescribed period, shall upon complaint of a party, be sufficient ground for the Board to discipline said voluntary arbitrator, pursuant to the guidelines issued by the Secretary. In cases that the recommended sanction is de-listing, it shall be unlawful for the voluntary arbitrator to refuse or fail to turn over to the board, for its further disposition, the records of the case within ten (10) calendar days from demand thereof. Section 7. Finality of Award/Decision. - The decision, order, resolution or award of the voluntary arbitrator or panel of voluntary arbitrators shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties and it shall not be subject of a motion for reconsideration. Section 8. Execution of Award/Decision. - Upon motion of any interested party, the voluntary arbitrator or panel of voluntary arbitrators or the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity for any reason of the voluntary arbitrator or panel of voluntary arbitrators who issued the award or decision, may issue a writ of execution requiring either the Sheriff of the Commission or regular courts or any public official whom the parties may designate in the submission agreement to execute the final decision, order or award.

Section 9. Cost of voluntary arbitration and voluntary arbitrator's fee. - The parties to a collective bargaining agreement shall provide therein a proportionate sharing scheme on the cost of voluntary arbitration including the voluntary arbitrator's fee. The fixing of fee of voluntary arbitrators or panel of voluntary arbitrators, whether shouldered wholly by the parties or subsidized by the Special Voluntary Arbitration Fund, shall take into account the following factors: (a) (b) (c) (d) (e) Nature of the case; Time consumed in hearing the case; Professional standing of the voluntary arbitrator; Capacity to pay of the parties; and Fees provided for in the Revised Rules of Court.

Unless the parties agree otherwise, the cost of voluntary arbitration proceedings and voluntary arbitrator's fee shall be shared equally by the parties Parties are encouraged to set aside funds to answer for the cost of voluntary arbitration proceedings including voluntary arbitrator's fee. In the event the said funds are not sufficient to cover such expenses, an amount by way of subsidy taken out of the Special Voluntary Arbitration fund may be availed of by either or both parties subject to the guidelines on voluntary arbitration to be issued by the Secretary. Section 10. Maintenance of case records by the Board. - The Board shall maintain all records pertaining to a voluntary arbitration case. In all cases, the Board shall be furnished a copy of all pleadings and submitted to the voluntary arbitrator as well as the orders, awards and decisions issued by the voluntary arbitrator. The records of a case shall be turned over by the voluntary arbitrator or panel of voluntary arbitrators to the concerned regional branch of the Board within ten (10) days upon satisfaction of the final arbitral award/order/decision. RULE XXI LABOR-MANAGEMENT AND OTHER COUNCILS

113

Section 1. Creation of labor-management and other councils. The Department shall promote the formation of labor-management councils in organized and unorganized establishments to enable the workers to participate in policy and decision-making processes in the establishment, insofar as said processes will directly affect their rights, benefits and welfare, except those which are covered by collective bargaining agreements or are traditional areas of bargaining. The Department shall promote other labor-management cooperation schemes and, upon its own initiative or upon the request of both parties, may assist in the formulation and development of programs and projects on productivity, occupational safety and health, improvement of quality of work life, product quality improvement, and other similar scheme. In line with the foregoing, the Department shall render, among others, the following services: (a) Conduct awareness campaigns; (b) Assist the parties in setting up labor-management structures, functions and procedures; (c) Provide process facilitators upon request of the parties; and (d) Monitor the activities of labor-management structures as may be necessary and conduct studies on best practices aimed at promoting harmonious labor-management relations. Section 2. Selection of representatives. - In organized establishments, the workers' representatives to the council shall be nominated by the exclusive bargaining representative. In establishments where no legitimate labor organization exists, the workers representative shall be elected directly by the employees at large.

It is a well-settled doctrine that the benefits of a collective bargaining agreement extend to the laborers and employees in the collective bargaining unit, including those who do not belong to the chosen collective bargaining labor organization. Any other view would be a discrimination on which the law frowns. If the benefits of a collective bargaining agreement would not extend to the nonmembers of a chosen collective bargaining labor union, the highly salutary purpose and objective of the collective bargaining scheme to enable labor to secure better terms in employment condition as well as rates of pay would be frustrated insofar as non-members are concerned, deprived as they are of participation in whatever advantages could thereby be gained. The labor union that gets the majority vote as the exclusive bargaining representative does not act for its members alone. It represents all the employees in such bargaining unit. It is not to be indulged in any attempt on its part to disregard the rights of non-members. Benguet Consolodated v BCI Employees and Workers Union, 23 SCRA 465 Union 1 forged a CBA with the employer with a no-strike, nolockout clause. Subsequently, but during the effectivity of the CBA, Union 2 was certified as the new bargaining agent. Union 2 filed a notice of strike and did stage a strike. The employer invokes the nostrike clause in the CBA against Union 2. Held: The clause does not bind Union 2 on the basis of the substitutionary doctrine. Although the substitutionary doctrine provides that the employees cannot revoke a validly executed CBA by the simple expedient of changing their bargaining agent, this is subject to certain exceptions, to wit: 1. To negotiate with management for the shortening of the CBA 2. Personal undertakings The undertaking of Union 1 not to strike is personal in nature and does not bind any union other than Union 1. A new collective

CASES Mactan Workers Union vs. Aboitiz, 45 SCRA 577 The terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress.

114

bargaining agent does not automatically assume the personal undertakings of the deposed union. SUBSTITUTIONARY DOCTRINE Where there occurs a shift in the employees union allegiance after the execution of a CBA, the employees may change their agent, but the CBA, which is still subsisting, continues to bind the employees up to its expiration date

Held: NLRC has jurisdiction. The parties to the CBA are the union and the company, hence, only disputes involving the union and the company against each other shall be referred to the grievance machinery or voluntary arbitrators. In this case, the union and the employer are united as to the dismissal of the employees. There exists no grievance between them that could be brought to a grievance machinery. PRINCIPLE OF HOLD OVER In the absence of a new CBA, the parties must maintain the status quo and must continue in full force and effect the terms and conditions of the existing agreement until a new agreement is reached.

Sanyo Philippines Workers Union-PSSLU Local Chapter No. 109 v Cazinares, 211 SCRA 361 The CBA between Union and Sanyo contained a union security clause. Subsequently, Union cancelled the membership of a number of employees for various reasons. The union then submitted the names these employees to the employer recommending their dismissal, claiming that the said employees refused to submit themselves to the unions grievance investigation committee. Sanyo ordered the preventive suspension of the employees following this recommendation. The company received no further information on whether or not said employees appealed the cancellation of their respective memberships. Hence it considered them dismissed. The dismissed employees filed a complaint for illegal dismissal. Held: There is illegal dismissal. The law authorizes the enforcement of a union security clause in the CBA provided that such enforcement is not characterized by arbitrariness and always with due process. Sanyo failed in these two aspects. The employees in this case filed the complaint for illegal dismissal with the NLRC. Union claims that the NLRC has no jurisdiction because the dispute relates to implementation of the CBA (specifically the union security clause) and is subject to grievance machinery and voluntary arbitration.

Maneja vs. NLRC, 290 SCRA 603 The issue is whether illegal dismissal cases are within the jurisdiction of labor arbiters. Held: Article, 217 (c) should be read in conjunction with Article 261 of the Labor Code which grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies. Note the phrase "unresolved grievances." In the case at bar, the termination of petitioner is not an unresolved grievance. the dismissal of petitioner does not fall within the phrase "grievances arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies," the jurisdiction of which pertains to the grievance machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators. In the case at bar, the union does not come into the picture, not having objected or voiced any dissent to the dismissal of the herein petitioner.

115

Sime Darby Pilipinas vs. Magsalin, 180 SCRA 177 The award of a Voluntary Arbitrator is final and executory after ten (10) calendar days from receipt of the award by the parties and the decision can only be challenge based on the ground of grave abuse of discretion only. Imperial Textile Mills vs. Sampang, 219 SCRA 651 When the parties submitted their grievance to arbitration, they expressly agreed that the decision of the Voluntary Arbitrator would be final, executory and unappealable. In fact, even without this stipulation, the first decision had already become so by virtue of Article 263 of the Labor Code making voluntary arbitration awards or decisions final and executory. The Voluntary Arbitrator lost jurisdiction over the case submitted to him the moment he rendered his decision. Therefore, he could no longer entertain a motion for reconsideration of the decision for its reversal or modification. It is true that the present rule makes the voluntary arbitration award final and executory after ten calendar days from receipt of the copy of the award or decision by the parties. Presumably, the decision may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for reconsideration duly filed during that period. Such a provision, being procedural, may be applied retroactively to pending actions as we have held in a number of cases. However, it cannot be applied to a case in which the decision had become final before the new provision took effect, as in the case at bar. R.A. 6715, which introduced amended Article 262-A of the Labor Code, became effective on March 21, 1989. The first decision of the Voluntary Arbitrator was rendered on July 12, 1988, when the law in force was Article 263 of the Labor Code, which provided that: Voluntary arbitration awards or decisions shall be final, unappealable, and executory. Continental Marble Corporation vs. NLRC, 161 SCRA 151 The Supreme Court can review the decisions of voluntary arbitrators inspite of statutory provisions making 'final' the decisions of certain administrative agencies, we have taken cognizance of petitions

questioning these decisions 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. A voluntary arbitrator by the nature of her functions acts in a quasijudicial capacity. There is no reason why her decisions involving interpretation of law should be beyond this Court's review. Administrative officials are presumed to act in accordance with law and yet we do not hesitate to pass upon their work where a question of law is involved or where a showing of abuse of authority or discretion in their official acts is properly raised in petitions for certiorari. Luzon Development Bank vs. Association of Luzon Development Bank Employees, 249 SCRA 162 Arbitration may be classified as either compulsory or voluntary. Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government to forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a disinterested third party normally appointed by the government, and whose decision is final and binding on the parties. Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third person who is mutually acceptable, for a final and binding resolution. Article 261 of the Labor Code provides for exclusive original jurisdiction of voluntary arbitrator or panel of arbitrators. Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over other labor disputes. On the other hand, a labor arbiter has jurisdiction on cases enumerated under Article 217 of the Labor Code. The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the National Labor Relations Commission (NLRC) for that matter. The state of our present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary Arbitrator . . . shall be final and executory after ten (10)

116

calendar days from receipt of the copy of the award or decision by the parties," while the "(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders." Hence, while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator. Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not, elevated to the Supreme Court itself on a petition for certiorari, in effect equating the voluntary arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an unnecessary burden upon it. Sundowner Development Corp. v Drilon, 180 SCRA 14 Hotel Mabuhay, Inc., due to financial difficulties, sold all its assets and personal properties to Sundowner. (blablabla, strike, complaint, strike, dispute a lot of events immaterial to the issue) This case was subsequently filed by the Union representing the rank and file employees of Mabuhay. This case involves several issues, all of which revolve about the singular issue of whether or not Sundowner may be compelled to absorb the employees of Mabuhay. Held: NO. As a general rule, there is no law requiring a bona fide purchaser of assets of an ongoing concern to absorb in its employ the employees of the latter. The rule is that, unless expressly assumed, labor contracts such as employment contracts and CBAs are not enforceable against the transferee of an enterprise, labor contracts being in personam and thus binding only the parties thereto. (Implied from the obiter in the last sentence that when there is a bone fide transfer of interest over an enterprise the CBA entered into with the transferor does not bind the transferee: there exists no contract bar to the filing of a petition for certification election since there is actually no CBA with respect to the transferee/new employer.)
Art. 277

(h) In establishments where no legitimate labor organization exists, labor-management committees may be formed voluntarily by workers and employers for the purpose of promoting industrial peace. The Department of Labor and Employment shall endeavor to enlighten and educate the workers and employers on their rights and responsibilities through labor education with emphasis on the policy thrusts of this Code.

OMNIBUS RULES, AS AMENED

RULE XXI

BY

DO 40

LABOR-MANAGEMENT AND OTHER COUNCILS

Section 1. Creation of labor-management and other councils. The Department shall promote the formation of labor-management councils in organized and unorganized establishments to enable the workers to participate in policy and decision-making processes in the establishment, insofar as said processes will directly affect their rights, benefits and welfare, except those which are covered by collective bargaining agreements or are traditional areas of bargaining. The Department shall promote other labor-management cooperation schemes and, upon its own initiative or upon the request of both parties, may assist in the formulation and development of programs and projects on productivity, occupational safety and health, improvement of quality of work life, product quality improvement, and other similar scheme. In line with the foregoing, the Department shall render, among others, the following services: (a) Conduct awareness campaigns; (b) Assist the parties in setting up labor-management structures, functions and procedures; (c) Provide process facilitators upon request of the parties; and (d) Monitor the activities of labor-management structures as may be necessary and conduct studies on best practices aimed at promoting harmonious labor-management relations. Section 2. Selection of representatives. - In organized establishments, the workers' representatives to the council shall be nominated by the exclusive bargaining representative. In

117

establishments where no legitimate labor organization exists, the workers representative shall be elected directly by the employees at large.

118