number of votes, defeating BBWU, and accordingly, the Court of

Industrial Relations, on August 18, 1962, certified UNION as the

sole and exclusive collective bargaining agent of all BENGUET
employees as regards rates of pay, wages, hours of work and
G.R. No. L-24711 April 30, 1968 such other terms and conditions of employment allowed them
by law or contract.
BENGUET CONSOLIDATED, INC., plaintiff-appellant,
vs. Subsequently, separate meetings were conducted on November
BCI EMPLOYEES and WORKERS UNION-PAFLU, 22, 23 and 24, 1962 at Antamok, Balatoc and Acupan Mines
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS, respectively by UNION. The result thereof was the approval by
CIPRIANO CID and JUANITO GARCIA, defendants- UNION members of a resolution 2directing its president to file a
appellees. notice of strike against BENGUET for:

Ross, Selph, Del Rosario, Bito and Misa for plaintiff-appellant. 1. [Refusal] to grant any amount as monthly living
Cipriano Cid and Associates for defendants-appellees. allowance for the workers;

BENGZON, J.P., J.: 2. Violation of Agreements reached in conciliation

meetings among which is the taking down of
The contending parties in this case —Benguet Consolidated, Inc., investigation [sic] and statements of employees without
("BENGUET") on the one hand, and on the other, BCI the presence of union representative;
Employees & Workers Union ("UNION") and the Philippine
Association of Free Labor Unions ("PAFLU") —do not dispute 3. Refusal to dismiss erring executive after affidavits had
the following factual settings established by the lower court. been presented, thereby company showing [sic] bias and
partiality to company personnel;
On June 23, 1959, the Benguet-Balatoc Workers Union
("BBWU"), for and in behalf of all BENGUET employees in its 4. Discrimination against union members in the
mines and milling establishment located at Balatoc, Antamok enforcement of disciplinary actions.
and Acupan, Municipality of Itogon, Mt. Province, entered into a
Collective Bargaining Contract, Exh. "Z" ("CONTRACT") with The Notice of Strike 3 was filed on December 28, 1962. Three
BENGUET. Pursuant to its very terms, said CONTRACT became months later, in the evening of March 2, 1963, UNION members
effective for a period of four and a half (4-½) years, or from who were BENGUET employees in the mining camps at Acupan,
June 23, 1959 to December 23, 1963. It likewise embodied a No- Antamok and Balatoc, went on strike. Regarding the conduct of
Strike, No-Lockout clause. 1 the strike, the trial court reports: 4

About three years later, or on April 6, 1962, a certification ... Picket lines were formed at strategic points within the
election was conducted by the Department of Labor among all premises of the plaintiff. The picketers, by means of
the rank and file employees of BENGUET in the same collective threats and intimidation, and in some instances by the
bargaining units. UNION obtained more than 50% of the total use of force and violence, prevented passage thru the

1
 picket lines by personnel of the plaintiff who were AGREEMENT, Exh. 1. PAFLU placed its conformity thereto and
reporting for work. Human blocks were formed on said agreement was attested to by the Director of the Bureau of
points of entrance to working areas so that even vehicles Labor Relations. About a year later or on January 29, 1964, a
could not pass thru, while the officers of the plaintiff collective bargaining contract was finally executed between
were not allowed for sometime to leave the "staff" area. UNION-PAFLU and BENGUET. 5

The strikers forming picket lines bore placards with the Meanwhile, as a result, allegedly, of the strike staged by UNION
letters BBWU-PAFLU written thereon. As a general rule, and its members, BENGUET had to incur expenses for the
the picketers were unruly, aggressive and uttered rehabilitation of mine openings, repair of mechanical equipment,
threatening remarks to staff members and non-strikers cost of pumping water out of the mines, value of explosives,
who desire to pass thru the picket lines. On some tools and supplies lost and/or destroyed, and other
occasions, the picketers resorted to violence by pushing miscellaneous expenses, all amounting to P1,911,363.83. So,
back the car wherein staff officers were riding who BENGUET sued UNION, PAFLU and their respective Presidents
would like to enter the mine working area. The picketers to recover said amount in the Court of First Instance of
lifted one side of the vehicle and were in the act of Manila, on the sole premise that said defendants breached their
overturning it when they were prevented from doing so undertaking in the existing CONTRACT not to strike during the
by the timely intervention of PC soldiers, who threw tear effectivity thereof .
gas bombs to make the crowd disperse. Many of the
picketers were apprehended by the PC soldiers and In answer to BENGUET's complaint, defendants unions and
criminal charges for grave coercion were filed against their respective presidents put up the following defenses: (1)
them before the Court of First Instance of Baguio. Two they were not bound by the CONTRACT which BBWU, the
of the strike leaders and twenty-two picketers, however, defeated union, had executed with BENGUET; (2) the strike was
were found guilty of light coercion while nineteen other due, inter alia, to unfair labor practices of BENGUET; and (3)
accused were acquitted. the strike was lawful and in the exercise of the legitimate rights
of UNION-PAFLU under Republic Act 875.
There was a complete stoppage of work during the strike
in all the mines. After two weeks elapsed, repair and Issues having been joined, trial commenced. On February 23,
maintenance of the water pump was allowed by the 1965, the trial court rendered judgment dismissing the
strikers and some of the staff members were permitted complaint on the ground that the CONTRACT, particularly the
to enter the mines, who inspected the premises in the No-Strike clause, did not bind defendants. The latters'
company of PC soldiers to ascertain the extent of the counterclaim was likewise denied. Failing to get a
damage to the equipment and losses of company reconsideration of said decision, BENGUET interposed the
property. present appeal.

xxx xxx xxx The several errors assigned by BENGUET basically ask three
questions:
On May 2, 1963, the parties agreed to end the raging dispute.
Accordingly, BENGUET and UNION executed the

2
 (1) Did the Collective Bargaining Contract executed The submission utterly fails to persuade Us. The above-quoted
between BENGUET and BBWU on June 23, 1959 and pronouncement was obiter dictum. The only issue in
effective until December 23, 1963 automatically the General Maritime Stevedores' Union case was whether a
bind UNION-PAFLU upon its certification, on August 18, collective bargaining agreement which had practically run for 5
1962, as sole bargaining representative of all BENGUET years constituted a bar to certification proceedings. We held it
employees? did not and accordingly directed the court a quo to order
certification elections. With that, nothing more was necessary
(2) Are defendants labor unions and their respective for the disposition of the case. Moreover, the pronouncement
presidents liable for the illegal acts committed during adverted to was rather premature. The possible certification of a
the course of the strike and picketing by some union union different from that which signed the bargaining contract
members? was a mere contingency then since the elections were still to be
held. Clearly, the Court was not called upon to rule on possible
(3) Are defendants liable to pay the damages claimed by effects of such proceedings on the bargaining agreement. 6
BENGUET?
But worse, BENGUET's reliance upon the Principle of
In support of an affirmative answer to the first question, Substitution is totally misplaced. This principle, formulated by
BENGUET first invokes the so-called "Doctrine of Substitution" the NLRB 7 as its initial compromise solution to the problem
referred to in General Maritime Stevedores' Union v. South Sea facing it when there occurs a shift in employees' union allegiance
Shipping Lines, L-14689, July 26, 1960. There it was remarked: after the execution of a bargaining contract with their employer,
merely states that even during the effectivity of a collective
bargaining agreement executed between employer and
xxx xxx xxx
employees thru their agent, the employees can change said
agent but the contract continues to bind them up to its
We also hold that where the bargaining contract is to run expiration date. They may bargain however for the shortening
for more than two years, the principle of substitution of said expiration date. 8
may well be adopted and enforced by the CIR to the
effect that after two years of the life of a bargaining
In formulating the "substitutionary" doctrine, the only
agreement, a certification election may be allowed by the
consideration involved was the employees' interest in the
CIR; that if a bargaining agent other than the union or
existing bargaining agreement. The agent's interest never
organization that executed the contract, is elected, said
entered the picture. In fact, the justification 9 for said doctrine
new agent would have to respect said contract, but that
was:
it may bargain with the management for the shortening
of the life of the contract if it considers it too long, or
refuse to renew the contract pursuant to an automatic ... that the majority of the employees, as an entity under
renewal clause. (Emphasis supplied) the statute, is the true party in interest to the contract,
holding rights through the agency of the union
representative. Thus, any exclusive interest claimed by
xxx xxx xxx
the agent is defeasible at the will of the principal....
(Emphasis supplied)

3
Stated otherwise, the "substitutionary" doctrine only provides In that case, the CIR transfered the contactual rights of
that the employees cannot revoke the validly executed collective the BBWU to the defendant union. One of such rights
bargaining contract with their employer by the simple expedient transferred was the right to the modified union-shop —
of changing their bargaining agent. And it is in the light of this checked off union dues arrangement now under
that the phrase "said new agent would have to respect said injunction.
contract" must be understood. It only means that the employees,
thru their new bargaining agent, cannot renege on their The collective bargaining contract mentioned in the
collective bargaining contract, except of course to negotiate with plaintiff's complaint did not expire by the mere fact that
management for the shortening thereof. the defendant union was certified as bargaining agent in
place of the BBWU. The Court of Industrial Relations in
The "substitutionary" doctrine, therefore, cannot be invoked to the case above mentioned made it clear that the
support the contention that a newly certified collective collective bargaining contract would be respected unless
bargaining agent automatically assumes all the personal and until the parties act otherwise. In effect, the
undertakings — like the no-strike stipulation here — in the defendant union by act of subrogation took the place of
collective bargaining agreement made by the deposed union. the BBWU as the UNION referred to in the contract.
When BBWU bound itself and its officers not to strike, it could (Emphasis supplied)
not have validly bound also all the other rival unions existing in
the bargaining units in question. BBWU was the agent of the There is no estoppel. UNION did not assert the above statement
employees, not of the other unions which possess distinct against BENGUET to force it to rely upon the same to effect the
personalities. To consider UNION contractually bound to the union check-off in its favor. UNION and BENGUET were
no-strike stipulation would therefore violate the legal maxim together as co-defendants in said Civil Case No. 1150. Rather,
that res inter alios nec prodest nec nocet. 10 the statement was directed against Bobok Lumber Jack Ass'n.,
plaintiff therein, to weaken its cause of action. Moreover,
Of course, UNION, as the newly certified bargaining agent, BENGUET did not rely upon said statement. What prompted
could always voluntarily assume all the personal undertakings Bobok Lumber Jack Ass'n. to file the complaint for declaratory
made by the displaced agent. But as the lower court found, there relief was the fact that "... the defendants [UNION and
was no showing at all that, prior to the strike, 11 UNION formally BENGUET] are planning to agree to the continuation of a
adopted the existing CONTRACT as its own and assumed all the modified union shop in the three camps mentioned above
liability ties imposed by the same upon BBWU. without giving the employees concerned the opportunity to
express their wishes on the matter ..." BENGUET even went
BENGUET also alleges that UNION is now in estoppel to claim further in its answer filed on October 18, 1962, by asserting that
that it is not contractually bound by the CONTRACT for having "... defendants have already agreed to the continuation of the
filed on September 28, 1962, in Civil Case No. 1150 of the Court modified union shop provision in the collective bargaining
of First Instance of Baguio, entitled "Bobok Lumber Jack Ass'n. agreement...." 13
vs. Benguet Consolidated, Inc. and BCI Employees Workers
Union-PAFLU" 12 a motion praying for the dissolution of the ex Neither can we accept BENGUET's contention that the inclusion
parte writ of preliminary injunction issued therein, wherein the of said aforequoted motion in the record on appeal filed in said
following appears: Civil Case No. 1150, now on appeal before Us docketed as case

4
No. L-24729, refutes UNION's allegation that it has Here, it was the previous agent who expressly bound itself to the
subsequently abandoned its stand against Bobok Lumber Jack other party, BENGUET. UNION, the new agent, did not assume
Ass'n., in said case. The mere appearance of such motion in the this undertaking of BBWU.
record on appeal is but a compliance with the procedural
requirement of Rule 41, Sec. 6, of the Rules of Court, that all In view of all the foregoing, We see no further necessity of
matters necessary for a proper understanding of the issues delving further into the other less important points raised by
involved be included in the record on appeal. This therefore BENGUET in connection with the first question.
cannot be taken as a rebuttal of the UNION's explanation.
On the second question, it suffices to consider, in answer thereto,
There is nothing then, in law as well as in fact, to support that the rule of vicarious liability has, since the passage of
plaintiff BENGUET's contention that defendants are Republic Act 875, been expressly legislated out. 15 The standing
contractually bound by the CONTRACT. And the stand taken by rule now is that for a labor union and/or its officials and
the trial court all the more becomes unassailable in the light of members to be liable, there must be clear proof of actual
Art. 1704 of the Civil Code providing that: participation in, or authorization or ratification of the illegal
acts. 16 While the lower court found that some strikers and
In the collective bargaining, the labor union or members picketers resorted to intimidation and actual violence, it also
of the board or committee signing the contract shall be found that defendants presented uncontradicted evidence that
liable for non-fulfillment thereof. (Emphasis supplied) before and during the strike, the strike leaders had time and
again warned the strikers not to resort to violence but to conduct
There is no question, defendants were not signatories nor peaceful picketing only. 17 Assuming that the strikers did not
participants in the CONTRACT. heed these admonitions coming from their leaders, the failure of
the union officials to go against the erring union members
Lastly, BENGUET contends, citing Clause II in connection with pursuant to the UNION and PAFLU constitutions and by-laws
Clause XVIII of the CONTRACT, that since all the employees, as exposes, at the most, only a flaw or weakness in the defense
principals, continue being bound by the no-strike stipulation which, however, cannot be the basis for plaintiff BENGUET to
until the CONTRACT's expiration, UNION, as their agent, must recover.
necessarily be bound also pursuant to the Law on Agency. This
is untenable. The way We understand it, everything binding on a Lastly, paragraph VI of the Answer 18 sufficiently traverses the
duly authorized agent, acting as such, is binding on the material allegations in paragraph VI of the Complaint, 19 thus
principal; not vice-versa, unless there is a mutual agency, or precluding a fatal admission on defendants' part. The purpose
unless the agent expressly binds himself to the party with whom behind the rule requiring specific denial is obtained: defendants
he contracts. As the Civil Code decrees it: 14 have set forth the matters relied upon in support of their denial.
Paragraph VI of the Answer may not be a model pleading, but it
The agent who acts as such is not personally liable to suffices for purposes of the rule. Pleadings should, after all, be
the party with whom he contracts, unless he expressly liberally construed. 20
binds himself or exceeds the limits of his authority
without giving such party sufficient notice of his powers. Since defendants were not contractually bound by the no-strike
(Emphasis supplied) 1äwphï1.ñët
clause in the CONTRACT, for the simple reason that they were

5
not parties thereto, they could not be liable for breach of Medical Center Employees Association-Alliance of Filipino
contract to plaintiff. The lower court therefore correctly Workers.
absolved them from liability.
The antecedent facts are undisputed.
WHEREFORE, the judgment of the lower court appealed from is
hereby affirmed. No costs. So ordered On February 17, 1992, Med-Arbiter Rasidali C. Abdullah
issued an Order which granted respondent union's petition
---------------------------------------------------------------------- for certification election among the rank-and-file employees
of the Capitol Medical Center.2 Respondent CMC appealed
the Order to the Office of the Secretary by questioning the
legal status of respondent union's affiliation with the Alliance
G.R. No. 118915 February 4, 1997
of Filipino Workers (AFW). To correct any supposed
CAPITOL MEDICAL CENTER OF CONCERNED infirmity in its legal status, respondent union registered itself
EMPLOYEES-UNIFIED FILIPINO SERVICE independently and withdrew the petition which had earlier
WORKERS, (CMC-ACE-UFSW), petitioners, been granted. Thereafter, it filed another petition for
vs. certification election.
HON. BIENVENIDO E. LAGUESMA, Undersecretary
On May 29, 1992, Med-Arbiter Manases T. Cruz issued an
of the Department of Labor and Employment;
order granting the petition for certification
CAPITOL MEDICAL CENTER EMPLOYEES
election.3Respondent CMC again appealed to the Office of the
ASSOCIATION-ALLIANCE OF FILIPINO WORKERS
Secretary which affirmed4 the Order of the Med-Arbiter
AND CAPITOL MEDICAL CENTER INCORPORATED
granting the certification election.
AND DRA. THELMA CLEMENTE,
President, respondents. On December 9, 1992, elections were finally held with
respondent union garnering 204 votes, 168 in favor of no
union and 8 spoiled ballots out of a total of 380 votes cast.
HERMOSISIMA, JR., J.: Thereafter, on January 4, 1993, Med-Arbiter Cruz issued an
Order certifying respondent union as the sole and exclusive
This petition for certiorari and prohibition seeks to reserves bargaining representative of the rank and file employees at
and set aside the Order dated November 18, 1994 of public CMC. 5
respondent Bienvenido E. Laguesma, Undersecretary of the
Department of Labor and Employment in Case No. OS.-A- Unsatisfied with the outcome of the elections, respondent
136-94 1 which dismissed the petition for certification CMC again appealed to the Office of the Secretary of Labor
election filed by petitioner for lack of merit and further which appeal was denied on February 26, 1993.6 A
directed private respondent hospital to negotiate a collective subsequent motion for reconsideration filed by respondent
bargaining agreement with respondent union, Capitol CMC was likewise denied on March 23, 1993.7

6
Respondent CMC's basic contention was the supposed bargaining agent of the rank-and-file employees of the
pendency of its petition for cancellation of respondent hospital.
union's certificate of registration in Case No. NCR-OD-M-
92211-028. In the said case, Med-Arbiter Paterno Adap Due to respondent CMC's refusal to bargain collectively,
issued an Order dated February 4, 1993 which declared respondent union filed a notice of strike on March 1, 1993.
respondent union's certificate of registration as null and After complying with the other legal requirements,
void.8 However, this order was reversed on appeal by the respondent union staged a strike on April 15, 1993. On April
Officer-in-Charge of the Bureau of Labor Relations in her 16, 1993, the Secretary of Labor assumed jurisdiction over the
case and issued an order certifying the same to the National
Order issued on April 13, 1993. The said Order dismissed the
Labor Relations Commission for compulsory arbitration
motion for cancellation of the certificate of registration of
where the said case is still pending. 12
respondent union and declared that it was not only a bona
fide affiliate or local of a federation (AFW), but a duly It is at this juncture that petitioner union, on March 24, 1994,
registered union as well. Subsequently, this case reached this filed a petition for certification election among the regular
Court in Capitol Medical Center, Inc. v. Hon. Perlita Velasco, rank-and-file employees of the Capitol Medical Center Inc. It
G.R. No. 110718, where we issued a Resolution dated alleged in its petition that: 1) three hundred thirty one (331)
December 13, 1993, dismissing the petition of CMC for failure out of the four hundred (400) total rank-and-file employees
to sufficiently show that public respondent committed grave of respondent CMC signed a petition to conduct a
abuse of discretion.9 The motion for reconsideration filed by certification election; and 2) that the said employees are
CMC was likewise denied in our Resolution dated February 2, withdrawing their authorization for the said union to
1994. 10 Thereafter, on March 23, 1994, we issued an entry of represent them as they have joined and formed the union
judgment certifying that the Resolution dated December 13, Capitol Medical Center Alliance of Concerned Employees
1993 has become final and executory. 11 (CMC-ACE). They also alleged that a certification election can
Respondent union, after being declared as the certified now be conducted as more that 12 months have lapsed since
bargaining agent of the rank-and-file employees of the last certification election was held. Moreover, no
respondent CMC by Med-Arbiter Cruz, presented economic certification election was conducted during the twelve (12)
proposals for the negotiation of a collective bargaining months prior to the petition, and no collective bargaining
agreement has as yet been concluded between respondent
agreement (CBA). However, respondent CMC contended that
CBA negotiations should be suspended in view of the Order union and respondent CMC despite the lapse of twelve
issued on February 4, 1993 by Med-Arbiter Adap declaring months from the time the said union was voted as the
the registration of respondent union as null and void. In spite collective bargaining representative.
of the refusal of respondent CMC, respondent union still On April 12, 1994, respondent union opposed the petition
persisted in its demand for CBA negotiations, claiming that it and moved for its dismissal. It contended that it is the
has already been declared as the sole and exclusive certified bargaining agent of the rank-and-file employees of

7
the Hospital, which was confirmed by the Secretary of Labor within one year from the date of issuance of a final
and Employment and by this Court. It also alleged that it was certification election result and there was no bargaining
not remiss in asserting its right as the certified bargaining deadlock between respondent union and the employees that
agent for it continuously demanded the negotiation of a CBA had been submitted to conciliation or had become the subject
with the hospital despite the latter's avoidance to bargain of a valid notice of strike or lock out, there is no bar to the
collectively. Respondent union was even constrained to strike holding of a certification election. 14
on April 15, 1993, where the Secretary of Labor intervened
and certified the dispute for compulsory arbitration. Respondent union appeared from the said Order, alleging
that the Med-Arbiter erred in granting the petition for
Furthermore, it alleged that majority of the signatories who
certification election and in holding that this case falls under
supported the petition were managerial and confidential
Section 3, Rule V Book V of the Rules Implementing the
employees and not members of the rank-and-file, and that
there was no valid disaffiliation of its members, contrary to Labor Code. 15 It also prayed that the said provision must not
be applied strictly in view of the facts in this case.
petitioner's allegations.
Petitioner, in its rejoinder, claimed that there is no legal Petitioner union did not file any opposition to the appeal.
impediment to the conduct of a certification election as more On November 18, 1994, public respondent rendered a
than twelve (12) months had lapsed since respondent union Resolution granting the appeal. 16 He ratiocinated that while
was certified as the exclusive bargaining agent and no CBA the petition was indeed filed after the lapse of one year form
was as yet concluded. It also claimed that the other issues the time of declaration of a final certification result, and that
raised could only be resolved by conducting another no bargaining deadlock had been submitted for conciliation
certification election. or arbitration, respondent union was not remiss on its right
In its surrejoinder, respondent union alleged that the petition to enter into a CBA for it was the CMC which refused to
bargain collectively. 17
to conduct a certification election was improper, immoral and
in manifest disregard of the decisions rendered by the CMC and petitioner union separately filed motions for
Secretary of Labor and by this Court. It claimed that CMC reconsideration of the said Order.
employed "legal obstructionism's" in order to let twelve
months pass without a CBA having been concluded between CMC contended that in certification election proceedings, the
them so as to pave the way for the entry of petitioner union. employer cannot be ordered to bargain collectively with a
union since the only issue involved is the determination of
On May 12, 1994, Med-Arbiter Brigida Fadrigon, issued an the bargaining agent of the employees.
Order granting the petition for certification election among
the rank and file Petitioner union claimed that to completely disregard the will
employees. 13 It ruled that the issue was the majority status of of the 331 rank-and-file employees for a certification election
respondent union. Since no certification election was held would result in the denial of their substantial rights and
interests. Moreover,it contended that public respondent's

8
"indictment" that petitioner "capitalize (sic) on the ensuing Petitioner also assails public respondents' findings that the
delay which was caused by the Hospital, . . ." was former "capitalize (sic) on the ensuing delay which was
unsupported by the facts and the records. caused by the hospital and which resulted in the non-
conclusion of a CBA within the certification year.'' 20 It
On January 11, 1995, public respondent issued a Resolution further argues that the denial of its motion fro a fair hearing
which denied the two motions for reconsideration hence this was clear case of denial of its right to due process.
petition. 18
Such contention of petitioner deserves scant consideration.
The pivotal issue in this case is whether or not public
respondent committed grave abuse of discretion in A perusal of the record shows that petitioner failed to file its
dismissing the petition for certification election, and in opposition to oppose the grounds for respondent union's
directing the hospital to negotiate a collective bargaining appeal.
agreement with the said respondent union.
It was given an opportunity to be heard but lost it when it
Petitioner alleges that public respondent Undersecretary refused to file an appellee's memorandum.
Laguesma denied it due process when it ruled against the
holding of a certification election. It further claims that the Petitioner insists that the circumstances prescribed in Section
3, Rule V, Book V Of the Rules Implementing the Labor Code
denial of due process can be gleaned from the manner by
which the assailed resolution was written, i.e., instead of the where a certification election should be conducted, viz: (1)
correct name of the mother federation UNIFIED, it was that one year had lapsed since the issuance of a final
certification result; and (2) that there is no bargaining
referred to as UNITED; and that the respondent union's
deadlock to which the incumbent or certified bargaining
name CMCEA-AFW was referred to as CMCEA-AFLO.
agent is a party has been submitted to conciliation or
Petitioner maintains that such errors indicate that the
assailed resolution was prepared with "indecent haste." arbitration, or had become the subject of a valid notice of
strike or lockout, are present in this case. It further claims
We do not subscribe to petitioner's contention. that since there is no evidence on record that there exists a
CBA deadlock, the law allowing the conduct of a certification
The errors pointed to by petitioner can be classified as mere election after twelve months must be given effect in the
typographical errors which cannot materially alter the interest of the right of the workers to freely choose their sole
substance and merit of the assailed resolution.
and exclusive bargaining agent.
Petitioner cannot merely anchor its position on the While it is true that, in the case at bench, one year had lapsed
aforementioned erroneous' names just to attain a reversal of
since the time of declaration of a final certification result, and
the questioned resolution. As correctly observed by the that there is no collective bargaining deadlock, public
Solicitor General, petitioner is merely "nit-picking vainly respondent did not commit grave abuse of discretion when it
trying to make a monumental issue out of a negligible error of ruled in respondent union's favor since the delay in the
the public respondent." 19

9
forging of the CBA could not be attributed to the fault of the complete blocking or stoppage resulting from the action of
latter. equal and opposed forces . . . . The word is synonymous with
the word impasse, which . . "presupposes reasonable effort at
A scrutiny of the records will further reveal that after good faith bargaining which, despite noble intentions, does
respondent union was certified as the bargaining agent of not conclude in agreement between the parties."
CMC, it invited the employer hospital to the bargaining table
by submitting its economic proposal for a CBA. However, Although there is no "deadlock" in its strict sense as there is
CMC refused to negotiate with respondent union and instead no "counteraction" of forces present in this case nor
challenged the latter's legal personality through a petition for "reasonable effort at good faith bargaining," such can be
cancellation of the certificate of registration which eventually attributed to CMC's fault as the bargaining proposals of
reached this Court. The decision affirming the legal status of respondent union were never answered by CMC. In fact, what
respondent union should have left CMC with no other happened in this case is worse than a bargaining deadlock for
recourse but to bargain collectively; but still it did not. CMC employed all legal means to block the certification of
Respondent union was left with no other recourse but to file a respondent union as the bargaining agent of the rank-and-file;
notice of strike against CMC for unfair labor practice with the and use it as its leverage for its failure to bargain with
National Conciliation and Mediation Board. This eventually respondent union. Thus, we can only conclude that CMC was
led to a strike on April 15, 1993. unwilling to negotiate and reach an agreement with
respondent union. CMC has not at any instance shown
Petitioner union on the other hand, after this Court issued an willingness to discuss the economic proposals given by
entry of judgment on March 23, 1994, filed the subject respondent union. 22
petition for certification election on March 24, 1994, claiming
that twelve months had lapsed since the last certification As correctly ratiocinated by public respondent, to wit:
election.
For herein petitioner to capitalize on the ensuing delay which
Was there a bargaining deadlock between CMC and was caused by the hospital and which resulted in the non-
respondent union, before the filing of petitioner of a petition conclusion of a CBA within the certification year, would be to
for certification election, which had been submitted to negate and render a mockery of the proceedings undertaken
conciliation or had become the subject of a valid notice of before this Department and to put an unjustified premium on
strike or lockout? the failure of the respondent hospital to perform its duty to
bargain collectively as mandated in Article 252 of the Labor
In the case of Divine Word University of Tacloban Code, as amended, which states".
v. Secretary of Labor and Employment, 21 we had the
occasion to define what a deadlock is, viz:\ "Article 252. Meaning of duty to bargain collectively — the
duty to bargain collectively means the performance of a
A "deadlock" is . . . the counteraction of things producing mutual obligation to meet and convene promptly and
entire stoppage; . . . . There is a deadlock when there is a
expeditiously in good faith for the purpose of negotiating an

10
agreement with respect to wages, hours of work and all other tiny action to legally coerce VIRON to comply with its
terms and conditions of employment including proposals for statutory duty to bargain collectively. It could have charged
adjusting any grievance or questions arising under such VIRON with unfair labor practice; but it did not. It could
agreement and executing a contract incorporating such have gone on a legitimate strike in protest against VIRON's
agreements if requested by either party but such duty does refusal to bargain collectively and compel it to do so; but it
not compel any party to agree to a proposal or to make any did not. There are assertions by NAFLU, too, that its
concession." attempts to bargain collectively had been delayed by
continuing challenges to the resolution pronouncing it the
The duly certified bargaining agent, CMCEA-AFW, should
sole bargaining representative in VIRON; but there is no
not be made to further bear the brunt flowing from the
adequate substantiation thereof, or of how it did in fact
respondent hospital's reluctance and thinly disguised refusal
prevent initiation of the bargaining process between it and
to bargain. 23 VIRON. 24
If the law proscribes the conduct of a certification election Although the statements pertinent to this case are merely
when there is a bargaining deadlock submitted to conciliation obiter, still the fact remains that in the Kaisahan case,
or arbitration, with more reason should it not be conducted if, NAFLU was counselled by this Court on the steps that it
despite attempts to bring an employer to the negotiation should have undertaken to protect its interest, but which it
table by the "no reasonable effort in good faith" on the failed to do so.
employer certified bargaining agent, there was to bargain
collectively. This is what is strikingly different between the Kaisahan case
and the case at bench for in the latter case, there was proof
In the case of Kaisahan ng Manggagawang Pilipino that the certified bargaining agent, respondent union, had
vs. Trajano 201 SCRA 453 (1991), penned by Chief Justice taken an action to legally coerce the employer to comply with
Andres R. Narvasa, the factual milieu of which is similar to
its statutory duty to bargain collectively, i.e., charging the
this case, this Court allowed the holding of a certification employer with unfair labor practice and conducting a strike
election and ruled that the one year period known as the
in protest against the employer's refusal to bargain. 25 It is
"certification year" has long since expired. We also ruled, that: only just and equitable that the circumstances in this case
. . . prior to the filing of the petition for election in this case, should be considered as similar in nature to a "bargaining
there was no such "bargaining deadlock . . (which) had been deadlock" when no certification election could be held. This is
submitted to conciliation or arbitration or had become the also to make sure that no floodgates will be opened for the
subject of a valid notice of strike or lockout." To be sure, there circumvention of the law by unscrupulous employers to
are in the record assertions by NAFLU that its attempts to prevent any certified bargaining agent from negotiating a
bring VIRON to the negotiation table had been unsuccessful CBA. Thus, Section 3, Rule V, Book V of the Implement Rules
because of the latter's recalcitrance, and unfulfilled promises should be interpreted liberally so as to include a
to bargain collectively; but there is no proof that it had taken circumstance, e.g. where a CBA could not be concluded due

11
to the failure of one party to willingly perform its duty to orders and resolutions are based neither on definitive shades
bargain collectively. of black or white, nor on what is legally right or wrong.
Rather, they are grounded largely on what is possible, fair
The order for the hospital to bargain is based on its failure to and reasonable under the peculiar circumstances of each case.
bargain collectively with respondent union.
Statement of the Case
WHEREFORE, the Resolution dated November 18, 1994 of
public respondent Laguesma is AFFIRMED and the instant Petitioner Caltex Refinery Employees Association (CREA)
petition is hereby DISMISSED. seeks through Rule 65 of the Rules of Court "reversal or
modification" of three orders of public respondent, then
SO ORDERED. Acting Secretary of Labor and Employment Jose S. Brillantes,
in Case No. OS-AJ-0044-951 entitled "In re: Labor Dispute at
Caltex (Phils.), Inc." The disposition of the first assailed
------------------------------------------------------------------ Order2 of public respondent dated October 9, 1995 reads:3
WHEREFORE, ON THE BASIS OF THE FOREGOING, the
G.R. No. 123782 September 16, 1997 Caltex Refinery Employees Association and Caltex
Philippines, Inc. are hereby directed to execute a new
CALTEX REFINERY EMPLOYEES ASSOCIATION collective bargaining agreement embodying therein the
(CREA), petitioner, appropriate dispositions above spelled out including those
vs. subject of previous agreements.
HON. JOSE S. BRILLANTES, in his capacity as
Acting Secretary of the Department of Labor and Provisions in the old CBA, or existing benefits subject of
Employment, and CALTEX (PHILIPPINES), Company policy or practice not otherwise modified or
Inc., respondents. improved herein are deemed maintained.

RESOLUTION New demands not otherwise touched upon or disposed of are

hereby denied.
The motions for reconsideration and clarification of the
PANGANIBAN, J.: above Order filed by both petitioner and private respondent
were denied in the second assailed Order dated November 21,
Unless shown to be clearly whimsical, capricious or arbitrary,
1995, which disposed:4
the orders or resolutions of the secretary of labor and
employment resolving conflicts on what should be the WHEREFORE, except the modifications hereinabove set
contents of a collective bargaining agreement will be forth, the Order dated 9 October 1995 is hereby affirmed.
respected by this Court. We realize that, oftentimes, such

12
Moreover, pursuant to the Agreement reached by the parties new CBA were amicably arrived at and agreed upon, but
on 13 September 1995 for this Office to commence the others were unresolved.
proceedings concerning the legality of strike and the
termination of the union officers, after the resolution of the To settle the unresolved issues, eight meetings between the
CBA issues, both parties are hereby directed to submit their parties were conducted. Because the parties failed to reach
position papers and evidence within ten (10) days from any significant progress in these meetings, petitioner
receipt of a copy of this Order. For this purpose, Atty. Tito F. declared a deadlock. On July 24, 1995, petitioner filed a
Genilo is hereby designated as Hearing Officer and notice of strike. Six (6) conciliation meetings conducted by
the NCMB failed to settle the parties' differences. Then, the
authorized as such, to immediately conduct hearings and
parties held marathon meetings at the plant level, but this
receive evidence and, thereafter, submit his report and
remedy proved also unavailing.
recommendations thereon.
Petitioner's second motion for reconsideration of the above During a strike vote on August 16, 1995, the members of
Order was likewise denied by the third assailed Order dated petitioner opted for a walkout. Private respondent then filed
January 9, 1996, as follows:5 with the Department of Labor and Employment (DOLE) a
petition for assumption of jurisdiction in accordance with
WHEREFORE, PREMISES CONSIDERED, our Order of 21 Article 263 (g) of the Labor Code.
November 1995 is hereby affirmed en toto, subject to the
In an Order dated August 22, 1995, public respondent
afore-mentioned clarification on the issue of Sunday work.
assumed jurisdiction "over the entire labor dispute at Caltex
No further motions of this nature shall be entertained by this (Philippines) Inc.," with the following disposition: 6
Office.
WHEREFORE ABOVE PREMISES CONSIDERED, this
The parties are given another ten (10) days from receipt Office hereby assumes jurisdiction over the entire labor
hereof to submit their respective position papers and dispute at Caltex (Philippines) Inc. pursuant to Article 263 (g)
evidences (sic) relative to the issue of the legality of strike and of the Labor Code, as amended.
termination of the union officers.
Accordingly, any strike or lockout, whether actual or
The Facts intended, is hereby enjoined.
Anticipating the expiration of their Collective Bargaining The parties are further directed to cease and desist from
Agreement on July 31, 1995, petitioner and private committing any and all acts which might exacerbate the
respondent negotiated the terms and conditions of situation.
employment to be contained in a new CBA. The negotiation
between the two parties was participated in by the National To expedite the resolution of the instant dispute, the parties
Conciliation and Mediation Board (NCMB) and the Office of are further directed to submit their respective position papers
the Secretary of Labor and Employment. Some items in the and evidence within ten (10) days from receipt hereof.

13
In defiance of the above Order expressly restraining any The proceedings concerning the legal issues involving the
strike or lockout, petitioner began a strike and set up a picket legality of strike and the termination of the Union officers
in the premises of private respondent on August 25, 1995. will be commenced by the Office of the Secretary after the
Thereafter, several company notices directing the striking resolution of the CBA issues.
employees to return to work were issued, but the members of
petitioner defied them and continued their mass action. As already stated, public respondent issued as scheduled on
October 9, 1995 the assailed Order resolving the deadlock,
In the course of the strike, DOLE Undersecretary Bienvenido followed by two more assailed Orders on November 21, 1995
Laguesma interceded and conducted several conciliation and January 16, 1996 disposing of the motions for
meetings between the contending parties. He was able to reconsideration/clarification of both parties. Dissatisfied with
convince the members of the union to return to work and to these Orders issued by public respondent, petitioner sought
enter into a memorandum of agreement with private remedy from this Court.
respondent. On September 9, 1995, the picket lines were
finally lifted. Thereafter, the contending parties filed their After realizing the urgency of the case and after meticulously
position papers pertaining to unresolved issues.7 reviewing the Petition dated February 23, 1996; Comment by
the private respondent dated April 16, 1996 which was
Because of the strike, private respondent terminated the adopted as its own by the public respondent; Reply by the
employment of some officers of petitioner union. The legality petitioner dated September 7, 1996; Rejoinder dated October
of these dismissals brought additional contentious issues.8 3, 1996 and Sur-Rejoinder dated November 12, 1996, the
Court resolved to give due course to the petition and to
Again, the parties tried to resolve their differences through consider the case submitted for resolution without requiring
conciliation. Failing to come to any substantial agreement, memoranda from the parties.
the parties stopped further negotiation and, on September 13,
1995, decided to refer the problem to the secretary of labor The Issues
and employment:9
Petitioner does not specifically pinpoint the issues it wants
It appearing that the possibility of an amicable settlement the Court to rule upon. It appears, however, that petitioner
appears remote, the parties agreed to submit their respective questions public respondent's resolution of five issues in the
position paper and evidence simultaneously on 27 September CBA, specifically on wage increase, union security clause,
1995 at the Office of the Secretary. The parties further agreed retirement benefits or application of the new retirement plan,
that there will be no extension of time for filing and no signing bonus and grievance and arbitration machineries.
further pleading will be filed.
Private respondent, on the other hand, submits this lone
The decision of the Secretary of Labor and Employment will issue: 10
be rendered on or before October 9, 1995.

14
Whether or not the Honorable Secretary of Labor and discretion amounting to lack or excess of jurisdiction. It does
Employment committed grave abuse of discretion in not include correction of public respondent NLRC's
resolving the instant labor dispute. evaluation of the evidence and factual findings based thereon,
which are generally accorded not only great respect but even
The Court's Ruling finality.
The petition is partly meritorious.
No question of jurisdiction whatsoever is being raised and/or
Preliminary Matter: Certiorari in Labor Cases pleaded in the case at bench. Instead, what is being sought is
a judicial re-evaluation of the adequacy or inadequacy of the
At the outset, we must reiterate several settled rules in a evidence on record, which is certainly beyond the province of
petition for certiorari involving labor cases. the extraordinary writ of certiorari. Such demand is
First, the factual findings of quasi-judicial agencies (such as impermissible for it would involve this Court in determining
the Department of Labor and Employment), when supported what evidence is entitled to belief and the weight to be
by substantial evidence, are binding on this Court and assigned it. As we have reiterated countless times, judicial
entitled to great respect, considering the expertise of these review by this Court in labor cases does not go so far as to
agencies in their respective fields. 11 It is well-established that evaluate the sufficiency of the evidence upon which the
findings of these administrative agencies are generally proper labor officer or office based his or its determination
accorded not only respect but even finality. 12 but is limited only to issues of jurisdiction or grave abuse of
discretion amounting to lack of jurisdiction.
Second, substantial evidence in labor cases is such amount of
relevant evidence which a reasonable mind will accept as We shall thus use the foregoing time-tested standards in
adequate to justify a conclusion. 13 deciding this petition.

Third, in Flores vs. National Labor 1. Wage Increase

Relations Commission 14 we explained the role and function The main assailed Order dated October 9, 1995 resolved the
of Rule 65 as an extraordinary remedy: ticklish demand for wage increase as follows: 15
It should be noted, in the first place, that the instant petition With this in mind and taking into view similar factors as
is a special civil action for certiorari under Rule 65 of the financial capacity, position in the industry, package of
Revised Rules of Court. An extraordinary remedy, its use is existing benefits, inflation rate, seniority, and maintenance of
available only and restrictively in truly exceptional cases — the wage differentiation between and among the various
those wherein the action of an inferior court, board or officer classes of employees within the entire Company, this Office
performing judicial or quasi-judicial acts is challenged for hereby finds the following improved benefits fair, reasonable
being wholly void on grounds of jurisdiction. The sole office and equitable:
of the writ of certiorari is the correction of errors of
jurisdiction including the commission of grave abuse of

15
1. Wage increases between the [u]nion and the [c]ompany; and (d) the
traditional parity in wages between Caltex and Shell Refinery
Effective August 1, 1995 — 14% Employees." 17
Effective August 1, 1996 — 14%
Effective August 1, 1997 — 13% Petitioner contends that the "inflation rate rose to 11.8% in
September [1995], rose further in October, and is still a
2. meal subsidy — P 15.00
double-digit figure at the time of this writing." Therefore,
In denying the motions for reconsideration/clarification of public respondent's so-called "improved benefits" are in
the above award, public respondent ruled in the challenged reality "retrogressive." 18
Order dated November 21, 1995: 16 Petitioner tries to show private respondent's "immense
First, on the matter of wages, we find no compelling reasons financial capacity" by citing Caltex's "Banaba Housing Up-
to alter or modify our award after having sufficiently passed grading" which would cost "not less than
upon the same arguments raised by both parties in our P200,000,000.00" 19 Petitioner does "not begrudge" private
previous Order. The subsequent agreement on a package of respondent's "pampering of its [r]efinery [m]anagers and
wage increases at Shell Company, adverted to by the Union as supervisors," but asks that the rank and file employees be
the usual yardstick for purposes of developing its own "not left too far behind." 20
package of improved wage increases, would not be sufficient Petitioner maintains that the salaries of Shell Refinery
basis to grant the same increases to the Union members employees be used as a "reference point" in upgrading the
herein considering that other factors, among which is
compensation of private respondent's employees because
employment size, were carefully taken into account. While it
these two companies are in the "same industry and their
is true that inflation has direct impact on wage increases, it is
refineries are both in Batangas." Thus, the wage increase of
not quite accurate to state that inflation "as of September petitioner's members should be "15%/15%/15%." 21
1995" is already registered at 11.8%. The truth of the matter is
that the average inflation for the first ten (10) months was Private respondent counters with a "proposed 9% 7% 7%
only 7.496% and Central Bank projections indicate that it will increase for the same period with automatic adjustment
take a 13.5% inflation for November and December to record should the increase fall short of the inflation rate." Hence, the
an average inflation of 8.5% for the year. We, therefore, Secretary's award of "14% 14% 13%" increase really comes
maintain the reasonableness of the package of wage increases "closer to the Union's position." 22
that we awarded.
Petitioner's arguments fail to impress us. First, the matter of
Petitioner belittles the awarded increases. It insists that the inflation rate was clearly addressed in public respondent's
increase should be ruled on the basis of four factors: "(a) the Order dated November 21, 1995. Contrary to petitioners
economic needs of the [u]nion's members; (b) the undocumented claim of 11.8% inflation in September of 1995,
[c]ompany's financial capacity; (c) the bargaining history the "truth of the matter is that the average inflation for the

16
first ten (10) months was only 7.496%, and Central Bank company's financial standing is its financial statements duly
projections indicate that it will take a 13.5% inflation for audited by independent and credible external
November and December to record an average inflation of auditors. Third, the traditional parity in wages used by
25

8.5% for the year." 23 Second, private respondent's financial petitioner to justify its proposal is flimsy and trivial. Aside
capacity has been insufficiently explained in its Comment from its bare allegation of "similarity" in salaries and
dated April 16, 1996 in which it stated that the Banaba locations, petitioner did not proffer any substantial reason to
"upgrading" should not be construed as a yardstick of its impute grave abuse of discretion on the part of the public
financial standing: 24 respondent. On the other hand, we find private respondent's
discussion of this matter reasonable, as the following
It is equally amazing how the Union (petitioner) desperately
shows: 26
justifies their demands by comparing the "upgrading cost" of
the Company's (private respondent) Banaba Housing It is further amazing that the Union continues to use an
Facilities, a matter totally unrelated to the case, to the cost of outmoded concept of the "Shell yardstick" and "relative
their demands. The Union not only errs in its choice of parities in wages" to justify an imperative need for them to
yardstick of the Company's capacity to pay, it likewise keep their traditional edge in pay over their industry
displays its ignorance of the Banaba Housing Program . counterparts. It is not just a matter of being above the rest.
Sound compensation principle of higher productivity equals
The Banaba Housing Facility is not a benefit. It is an integral higher pay, as well as, recent developments in the industry
part of an indispensable requirement for smooth Plant have negated this argument. Both Shell and Petron continue
operations and assurance of an emergency response crew in to benefit from increasing manpower productivity. Shell, for
times of calamities and accidents. Employees who are instance, produces 155,000 barrels per day on a 120
required to stay in the housing facility are members of the manpower complement of operatives and rank and file; while
Refinery's emergency response organization. It is also not a the Company only produces 65,000 barrels per day with its
case of "upgrading." The Banaba Housing Facility was built in 221 manpower complement. In addition, the counterpart
1954. A significant number of its structure are dilapidated union at Shell incurs an average overtime rate of 37%, as a
and in dire need of rehabilitation and preservation. Finally, percentage of base pay; the Union's overtime rate is 102%.
Banaba is not a yardstick of the Company's capacity to pay,
but rather, an eloquent demonstration of the Company's will Thus, the issue is productivity, not sales, and so far, the
to survive and remain globally competitive. Company's Refinery is not as productive as Shell's or Petron's.
To ask for relative parity in the face of this reality is not only
The above reasoning convinces us that such upgrading unreasonable, it is likewise illogical.
should not be equated with private respondent's financial
capacity to pay the proposed wage increase, but should be As it is, the wage increase of 14%, 14% and 13% will result in
evaluated as a business judgment "to survive and remain an average basic salary of P23,510,00 at the end of the three-
globally competitive." We believe that the standard proof of a year cycle. The resulting pay is excessive and

17
disproportionately high compared with the value of the jobs the ground that they were as productive as the Shell
within the bargaining unit. Stated differently, this average employees. Thus, we cannot attribute grave abuse of
salary will be unreasonably high for the skills and discretion to public respondent.
qualifications needed for the job.
2. Union Security Clause
Even now, with an average monthly salary (prior to the DOLE
In the impugned Order dated October 9, 1995, public
awarded CBA increases) of P16,010 plusovertime, holiday
respondent's contested resolution on the "union [security]
and other premiums way above those mandated by law, the
Union members are already the highest paid in the clause" reads: 28
Philippines, in terms of gross income. The relevant provisions found in Article III of the CBA, which
The alleged "similarity" in the situation of Caltex and Shell hereby read, thus:
cannot be considered a valid ground for a demand of wage Sec. 1. Employees of the COMPANY who at the signing of this
increase, in the absence of a showing that the two companies Agreement are members of the UNION and those who
are also similar in "substantial aspects," as discussed above. subsequently become members thereof shall maintain their
Private respondent is merely asking that an employee should membership with the UNION for the duration of this
be paid on the basis of work done. If such employee is absent Agreement as a condition of employment.
on a certain day, he should not, as a rule, be paid wages for
that day. And if the employee has worked only for a portion Sec. 2. Members of the UNION who cease to be members of
of a day, he is not entitled to the pay corresponding to a full the UNION in good standing by reason of resignation or
day. A contrary precept would ultimately result in the expulsion shall not be retained in the employment of the
financial ruin of the employer. The age-old general rule COMPANY.
governing relations between labor and capital, or xxx xxx xxx
management and employee, is "a fair day's wage for a fair
day's work." If no work is performed by the employee, there are sought to be amended by the Union, to read as follows:
can be no wage or pay unless, of course, the laborer was ready,
Sec. 1. Employees of the Company who at the signing of this
willing and able to work but was locked out, dismissed,
Agreement are members of the Union and those who
suspended or otherwise illegally prevented from
subsequently become members thereof shall maintain their
working. 27 True, union members have the right to demand
membership in GOOD STANDING with the Union for the
wage increases through their collective force; but it is equally
duration of this Agreement as a condition of CONTINUOUS
cogent that they should also be able to justify an appreciable
employment.
increase in wages. We observe that private respondent's
detailed allegations on productivity are unrebutted. It is Sec. 2. PURSUANT TO THE FOREGOING, ANY UNION
noteworthy that petitioner ignored this argument of private MEMBER WHO CEASES TO BE SUCH MEMBER ON
respondent and based its demand for wage increase not on GROUNDS PROVIDED IN ITS CONSTITUTION AND BY-

18
LAWS SHALL, UPON PRIOR WRITTEN NOTICE BY THE On the other hand, private respondent argues that nothing
UNION TO THE COMPANY, BUT SUBJECT TO THE prevents petitioner from expelling its members; however,
OBSERVANCE OF DUE PROCESS AND THE EXPRESS termination of employment should be based only on these
RATIFICATION OF THE MAJORITY OF THE UNION three grounds agreed upon in the existing CBA. Further,
MEMBERSHIP, BE DISMISSED FROM EMPLOYMENT BY private respondent explains that petitioner's citation of
THE COMPANY; PROVIDED, HOWEVER, THAT THE Article 249 (a) 31 of the Labor Code is out of context. It adds
UNION SHALL HOLD THE COMPANY FREE AND that the cited section provides only for the right of a union to
BLAMELESS FROM ANY LIABILITY IN THE EVENT THAT prescribe its own rules with respect to the acquisition and
THE EMPLOYEE IN ANY MANNER QUESTIONS HIS retention of membership, and that upholding the arguments
DISMISSAL. of petitioner would make the private respondent a policeman
of the union. 32
The proposed amendment of the Union gives the same
substantial effect as the existing provision. Rather, the same We agree with petitioner. The disagreement between
tackles more on procedure which, to our belief, is already petitioner and private respondent on the union security
sufficiently provided under its constitution and by-laws. clause should have been definitively resolved by public
Insofar as Union security is concerned, this is sufficiently respondent. The labor secretary should take cognizance of an
addressed by the present provisions in the CBA. Hence, we issue which is not merely incidental to but essentially
find we are not competent to arbitrarily incorporate any involved in the labor dispute itself, or which is otherwise
modification thereof. We are convinced that any amendment submitted to him for resolution. 33 In this case, the parties
on this matter should be a product of mutual concern and have submitted the issue of the union security clause for
agreement. 29 public respondent's disposition. But the secretary of labor has
given no valid reason for avoiding the said issue; he merely
Petitioner contends that the foregoing disposition leaving to points out that this issue is a procedural matter. Such
the parties the decision on the union security clause issue is vacillation clearly sidesteps the nature of the union security
"contrary to the whole idea of assumption of jurisdiction." clause as one intended to strengthen the contracting union
Petitioner argues that in spite of the provisions on the "union and to protect it from the fickleness or perfidy of its own
security clause," it may expel a member only on any of three members. Without such safeguard, group solidarity becomes
grounds: non-payment of dues, subversion, or conviction for
uncertain; the union becomes gradually weakened and
a crime involving moral turpitude. If the employee's act does increasingly vulnerable to company machinations. In this
not constitute any of these three grounds, the member would security clause lies the strength of the union during the
continue to be employed by private respondent. Thus, the enforcement of the collective bargaining agreement. It is this
disagreement between petitioner and private respondent on clause that provides labor with substantial power in collective
this issue is not only "procedural" but also "substantial." 30
bargaining. The secretary of labor assumed jurisdiction over
this labor dispute in an industry indispensable to national
interest, precisely to settle once and for all the disputes over

19
which he has jurisdiction at his level. In not performing his Private respondent counters that "these 40 or so employees
duty, the secretary of labor committed a grave abuse of have opted to remain covered by the old plan despite
discretion. opportunities given them in 1985 to shift to the New Plan." 36
3. New Retirement Plan We hold that public respondent did not commit grave abuse
of discretion in respecting the free and voluntary decision of
Public respondent's contested resolution on "retirement
the employees in regard to the Provident Plan and the
benefits (application of the new retirement plan)" in the
irrevocable one-time option provided for in the New
Order dated November 21, 1995 reads: 34 Retirement Plan. Although the union has every right to
Third, the matter of retirement benefits deserves a second represent its members in the negotiation regarding the terms
look considering that the concerned employees were already and conditions of their employment, it cannot negate their
previously granted the option to choose between the old and wishes on matters which are purely personal and individual
the new plan at the time the latter was initiated and they to them. In this case, the forty employees freely opted to be
chose to be covered under the Old Plan. To accede to the covered by the Old Plan; their decision should be respected.
Union's demand to cover them under the new plan entails a The company gave them every opportunity to choose, and
different arrangement under a new scheme and likewise they voluntarily exercised their choice. The union cannot
requires the approval of a Board of Trustees. It is, therefore, pretend to know better; it cannot impose its will on them.
understood that the new Retirement Plan does not apply to
4. Grievance Machinery and Arbitration
the more or less 40 employees being sought by the Union to
be covered under the New Plan. The public respondent's contested resolution on "grievance
and arbitration machineries" in the Order dated November 21,
Petitioner contends that "40 of its members who are still
1995 reads: 37
covered by the Old Retirement Plan because they were not
able to exercise the option to shift to the New Retirement Seventh, we are constrained to take a closer look at the
Plan, for one reason or another, when such option was given existing procedure concerning grievance in relation to the
in the past" are included in the New Retirement Plan. modifications being proposed by the Union. In this regard,
Petitioner argues that the exclusion of forty employees from we affirm our resolution to shorten the periods to
the New Plan constitutes grave abuse of discretion for three process/resolve grievances based on existing practice from
reasons. First, "it is a case of the left hand taking away, so to (45) days to (30) days at the first step and (10) days to seven
speak, what the right hand had given." Second, the change (7) days at the second step which is the level of the VP for
"was done for a very shallow reason." The new scheme was no Manufacturing. We further reviewed the steps through which
longer new, "as the New Retirement Plan had been in place a grievance may be processed and in line with the principle to
for at least two years." Third, in not applying the New expedite the early resolution of grievances, we find that the
Retirement Plan to the 40 employees, public respondent was establishment of a joint Council as an additional step in the
perpetrating his department's discriminatory practice. 35 grievance procedure, may only serve to protract the

20
proceeding and, therefore, no longer necessary. Instead, the the company to settle problems arising from "interpretation
unresolved grievance, if, not settled within (7) days at the or implementation of their collective bargaining agreement
level of the VP for Manufacturing, shall automatically be and those arising from the interpretation or enforcement of
referred by both parties to voluntary arbitration in company personnel policies." Article 260, as amended, reads:
accordance with R.A. 6715. As to the number of Arbitrators
for which the Union proposes to employ only one instead of a Art. 260. Grievance Machinery and Voluntary Arbitration.
panel of three Arbitrators, we find it best to leave the matter The parties to a Collective Bargaining Agreement shall
to the agreement of both parties. Finally, we hereby advise include therein provisions that will ensure the mutual
observance of its terms and conditions. They shall establish a
the parties that the list of accredited voluntary arbitrators is
machinery for the adjustment and resolution of grievances
now being maintained and disseminated by the National
arising from the interpretation or implementation of their
Conciliation and Mediation Board and no longer by the
Bureau of Labor Relations. Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies.
Petitioner contends that public respondent "derailed the
grievance and arbitration scheme proposed by the All grievances submitted to the grievance machinery which
Union." 38 Petitioner argues that the proposed "Grievance are not settled within seven (7) calendar days from the date of
Settlement Council" is intended to "supplement the effort of its submission shall automatically be referred to voluntary
the Vice President for Manufacturing in reviewing the arbitration prescribed in the Collective Bargaining
grievance elevated to him, so that instead of acting alone . . . Agreement.
he will be obliged to convoke a conference of the Council to For this purpose, parties to a Collective Bargaining
afford the grievant a thorough hearing." Petitioner's Agreement shall name and designate in advance a Voluntary
recommendation for a "single arbitrator is based on the Arbitrator or panel of Voluntary Arbitrators, or include in the
proposition that if voluntary arbitration should be resorted to agreement a procedure for the selection of such Voluntary
at all, this recourse should entail the least possible Arbitrator or panel of Voluntary Arbitrators, preferably from
expense." 39 the listing of qualified Voluntary Arbitrators duly accredited
Private respondent counters that the disposition on the by the Board. In case the parties fail to select a Voluntary
grievance machinery is likewise "fair and reasonable under Arbitrator or panel of Voluntary Arbitrators, the Board shall
the circumstances and in fact was merely a reiteration of the designate the Voluntary Arbitrator or panel of Voluntary
Arbitrators, as may be necessary, pursuant to the selection
(u)nion's position during the conciliation meetings conducted
by Undersecretary Bienvenido Laguesma." 40 procedure agreed upon in the Collective Bargaining
Agreement, which shall act with same force and effect as if
No particular setup for a grievance machinery is mandated by the Arbitrator or panel of Arbitrators has been selected by the
law. Rather, Article 260 of the Labor Code, as incorporated parties as described above.
by RA 6715, provides for only a single grievance machinery in

21
We believe that the procedure described by public respondent erred in removing the award of a signing bonus
respondent sufficiently complies with the minimum which is "given not only as an incentive for peaceful
requirement of the law. Public respondent even provided for negotiations and amicable settlement of disputes but also as
two steps in hearing grievances prior to their referral to an extra award to the workers following the settlement of a
arbitration. The parties will decide on the number of CBA dispute by whatever means." 43
arbitrators who may hear a dispute only when the need for it
arises. Even the law itself does not specify the number of Private respondent disagrees, contending that a signing
arbitrators. Their alternatives — whether to have one or three bonus is not awarded when CBA negotiations "result in a
strike." There are two reasons therefor: First, "the grant of a
arbitrators — have their respective advantages and
signing bonus is a matter of discretion and cannot be
disadvantages. In this matter, cost is not the only
demanded as a matter of right;" and second the signing
consideration; full deliberation on the issues is another, and
it is best accomplished in a hearing conducted by three bonus is meant as an incentive for a peaceful negotiation.
Once these negotiations result in a strike, an illegal one at
arbitrators. In effect, the parties are afforded the latitude to
decide for themselves the composition of the grievance that, the basis or rationale for such an award is lost." 44
machinery as they find appropriate to a particular situation. Although proposed by petitioner, 45 the signing bonus was
At bottom, we cannot really impute grave abuse of discretion not accepted by private respondent. 46 Besides, a signing
to public respondent on this issue. bonus is not a benefit which may be demanded under the law.
5. Signing Bonus Rather, it is now claimed by petitioner under the principle of
"maintenance of existing benefits" of the old CBA. However,
The public respondent's contested resolution on the "signing as clearly explained by private respondent, a signing bonus
bonus" in the Order dated November 21, 1995 reads: 41 may not be demanded as a matter of right. If it is not agreed
upon by the parties or unilaterally offered as an additional
Fifth, specifically on the issue of whether the signing bonus is
incentive by private respondent, the condition for awarding it
covered under the "maintenance of existing benefits" clause, must be duly satisfied. In the present case, the condition sine
we find that a clarification is indeed imperative. Despite the
qua non for its grant — a non-strike — was not complied with.
expressed provision for a signing bonus in the previous CBA, In fact, private respondent categorically sated in its counter-
we uphold the principle that the award for a signing bonus proposal — to the exclusion of those agreed upon before —
should partake the nature of an incentive and premium for that the new collective bargaining agreement would
peaceful negotiations and amicable resolution of disputes
constitute the only agreement between the parties, as follows:
which apparently are not present in the instant case. Thus,
we are constrained to rule that the award of signing bonus is Sec. 4. Scope of Agreement. — The terms and conditions of
not covered by the "maintenance of existing benefits" clause. employment of the employees within the appropriate
bargaining unit are embodied in this Agreement. On the
Petitioner asseverates that the "signing bonus is an existing other hand, all such benefits which are not expressly
benefit embodied in the old CBA." 42 It explains that public

22
provided for in this Agreement, but which are now being of labor cannot be indicted for grave abuse of discretion
accorded, may in the future be accorded, or might have been amounting to want or excess of jurisdiction.
previously accorded to employees, by the COMPANY shall be
deemed as purely discretionary or pure acts of grace and Basically, there is grave abuse of discretion amounting to lack
magnanimity on the part of the COMPANY in each particular of jurisdiction where the respondent board, tribunal or officer
case, and the continuance or repetition thereof now or in the exercising judicial functions exercised its judgment in a
future, no matter how long or how often, shall not be capricious, whimsical, arbitrary or despotic manner.
construed as establishing a right for the employee and/or However, it has also been said that grave abuse is committed
when "the lower court acted capriciously, and whimsically or
obligation on the part of the COMPANY. 47
the petitioner's contention appears td be clearly tenable or
This provision on the scope of the agreement is further the broader interest of justice or public policy [so]
buttressed by the clause on waiver: 48 require . . . ." Also, grave abuse of discretion is committed
when the board, tribunal or officer exercising judicial
The parties acknowledge that during the negotiations which function fails to consider evidence adduced by the parties. 49
resulted in the execution of this Agreement, each of them had
the unlimited opportunity to make demands and proposals In Saballa vs. National Labor Relations Commission, 50 we
with respect to any and all subjects and matters proper for ruled on how a decision of an administrative body must be
collective bargaining and not prohibited by law; and the drawn:
parties further acknowledge that the understandings and
agreements arrived at by them after the exercise of that right The Court has previously held that judges and arbiters should
and unlimited opportunity are fully set forth in this draw up their decisions and resolutions with due care, and
Agreement. Therefore, the COMPANY and the UNION make certain that
during the life of this Agreement, each voluntarily and they truly and accurately reflect their conclusions and their
final dispositions. . . . The same thing goes for the findings of
unqualifiedly waives the right and each agrees that the other
shall not be obligated to bargain collectively with respect to fact made by the NLRC, as it is a settled rule that such
findings are entitled to great respect and even finality when
any subject or matter referred to or covered in this
Agreement or with respect to any subject or matter not supported by substantial evidence, otherwise, they shall be
specifically referred to or covered in this Agreement even struck down for being whimsical and capricious and arrived
though such subject or matter may not have been within the at with grave abuse of discretion. It is a requirement of due
process and fair play that the parties to a litigation be
knowledge or contemplation of either or both parties at the
time they negotiated or signed this Agreement. informed of how it was decided, with an explanation of the
factual and legal reasons that led to the conclusions of the
Epilogue court. A decision that does not clearly and distinctly state the
facts and the law of which it is based leaves the parties in the
We have carefully reviewed the assailed Orders. Other than dark as to how it was reached and is especially prejudicial to
his failure to rule on the issue of union security, the secretary

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the losing party, who is unable to pinpoint the possible errors modification that the issue on the union security clause be
of the court for review by a higher tribunal. REMANDED to the Department of Labor and Employment
for definite resolution within one month from the finality of
In the present case, the foregoing requirement has been this Decision. No costs.
sufficiently met. Petitioner's claim of grave abuse of
discretion is anchored on the simple fact that public SO ORDERED
respondent adopted largely the proposals of private
respondent. It should be understood that bargaining is not
equivalent to an adversarial litigation where rights and
obligations are delineated and remedies applied. It is simply
a process of finding a reasonable solution to a conflict and
harmonizing opposite positions into a fair and reasonable
compromise. When parties agree to submit unresolved issues
to the secretary of labor for his resolution, they should not
expect their positions to be adopted in toto. It is understood
that they defer to his wisdom and objectivity in insuring
industrial peace. And unless they can clearly demonstrate
bias, arbitrariness, capriciousness or personal hostility on the
part of such public officer, the Court will not interfere or
substitute the said officer's judgment with its own. In this
case, it is possible that this Court, or some its members at
least, may even agree with the wisdom of petitioner's claims.
But unless grave abuse of discretion is cogently shown, this
Court will refrain from using its extraordinary power
of certiorari to strike down decisions and orders of quasi-
judicial officers specially tasked by law to settle
administrative questions and disputes. This is particularly
true in the resolution of controversies in collective bargaining
agreements where the question is rarely one of legal right or
wrong — nay, of black and white — but one of wisdom,
cogency and compromise as to what is possible, fair and
reasonable under the circumstances.
WHEREFORE, premises considered, the petition is partly
GRANTED. The assailed Orders are AFFIRMED with the

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