labor cases week 13

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325 F.2d 746

2 A.L.R.3d 868

The TIMKEN ROLLER BEARING COMPANY, Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 15097.

United States Court of Appeals Sixth Circuit.

Dec. 21, 1963.

John G. Ketterer, Canton, Ohio (Day, Cope, Ketterer, Raley & Wright, R. M. Rybolt, Canton, Ohio, on the

brief), for petitioner.

Melvin J. Welles, Atty., N.L.R.B., Washington, D.C. (Stuart Rothman, Gen. Counsel, Dominick L. Manoli,

Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Vivian Asplund, Atty., N.L.R.B.,

Washington, D.C., on the brief), for respondent.

David E. Feller, Elliot Bredhoff, Jerry D. Anker, Michael H. Gottesman, Washington, D.C., Herschel

Kriger, Canton, Ohio, on the brief amicus curiae for United Steelworkers of America, AFL-CIO.

Before MILLER and WEICK, Circuit Judges, and WILLIAM E. MILLER, District Judge.

SHACKELFORD MILLER, Jr., Circuit Judge.

1

The petitioner, The Timken Roller Bearing Company, hereinafter referred to as the 'Company,' seeks

to set aside an order of the National Labor Relations Board issued on August 3, 1962, which held that

petitioner violated Section 8(a)(5) and (1) of the National Labor Relations Act, Section 158(a)(5) and

(1), Title 29 United States Code. The Board in its answer to the petition has requested enforcement of

its order. It is agreed by the parties that the court has jurisdiction of the proceeding.

2This is a so-called 'wage data' case, in which the Company is charged with having illegally refused to

comply with the Union's request for information relating to the method used to establish the wages

received by its employees. The Company's refusal to comply with this request is alleged to have been

a refusal to bargain in good faith, thereby constituting an unfair labor practice, in violation of Section

8(a)(5). The violation of this section of the Act in turn results in the Company engaging in an unfair

labor practice within the meaning of Section 8(a)(1) of the Act.


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3

The Company, an Ohio corporation, maintains its principal office and place of business in Canton,

Ohio, where it is engaged in the manufacture, sale and distribution of roller bearings. For many years

the Union1has been the bargaining representative of the production and maintenance workers at the

Company's plant at Canton, Ohio. Each product and operation performed in the plant carries a fixed

wage rate, which is determined by a very complex system of detailed time studies, operation

observations, person motions recordings, and a myriad set of detailed evaluations of every separate

element and aspect of the production process. The basic and precise elemental factors considered

were all reduced to writings called time-study sheets. As the changing needs of the Company develop,

old methods are reevaluated, new products are conceived, improved and more efficient methods are

evolved, and, in consequence of successive studies and evaluations of work effort by the individual

employee operators, changed basic time studies are produced and new and different wage rates

established.

4

The Company's practice of using this complex technique for establishing the wage structure of the

employee has been recognized in bargaining contracts between the parties prior to the contractinvolved in the present case, which was executed February 21, 1960. The 1960 contract provides that

the wage structure in existence at the moment the current contract is signed shall be frozen for the

duration of the agreement except as changed during its life pursuant to the contract provisions

themselves. Article V, paragraph B, provides with respect to new rates:

5

'It is recognized that the Company at its discretion may find it necessary or desirable from time to time

to establish new wage rates or to adjust existing wage rates because of any of the following

circumstances: * * *.'

6

The contract thereafter lists six 'circumstances,' such as changes or improvements made in

equipment, new or changed standards of manufacture, establishment of changed or new occupations

in the plant, and the introduction of new products and additions to the present line of products in the

plant. Under Article V, paragraph C, the Company agrees that when it deems it necessary or desirable

to establish a new wage rate, it shall develop and install the new rate in accordance with the

Company's practice in effect on the date of the agreement. Article V, paragraph C, also provides that a

grievance may be filed by any employee who is affected by such new rate. Article IX sets forth the

procedure for adjustment of grievances, which includes four successive steps, the last of which is

arbitration.

7

In the summer of 1960, among the pending grievances, there were five directly arising from newly

established wage rats, which the employees contended were a reduction of rates and improperly

established under the contract. These five pending grievances had proceeded beyond the third step of

the grievance procedure as far back as the summer of 1959 and awaited hearings before a chosen

arbitrator in each instance. They were held in abeyance as the parties met in negotiation sessions
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aimed at a renewal of the 1956 contract due to expire on August 24, 1959. A new two-year contract

was signed on February 21, 1960. There is no substantial difference, in terms of wage provisions or

grievance procedures, between the two agreements.

8

On July 18, 1960, the Union wrote a letter to the Company in which it requested wage rate information

relating to the grievances involved in all five of the pending arbitration cases referred to above. This

request included the original time study sheets and other documents relative to both the prior rates

and the new rates, all other data and information which was used to determine the rate of pay for each

job, and all documents, studies and other information that were used to evaluate such job, both prior

to the change and thereafter, including full information as to the weights given to each factor used to

arrive at a final decision on the established rate and what factors were considered in making such

decision. It explained that this information was needed because 'each of these cases protest the

institution of new reduced rates in place of rates theretofore in effect and/or the adequacy, fairness

and method of establishment of new rates in their stead.' The letter further requested the Company to

supply time study manuals, instructions and procedures used in the making of time studies of jobs inthe plants. The letter stated that the information requested was necessary to the Union so that it might

intelligently evaluate the various rates of pay in the plants, especially as they may be changed from

time to time, and 'to properly administer the contract.'

9

The Company responded to the Union's request by letter of August 1, 1960, in which it stated that it

would not comply with the request. The Union repeated its demand by letter of August 29. The

Company again denied the request by letter of September 15. The Company's position was that its

obligation to bargain with the representative of its employees, once the contract had been entered

into, was to bargain on matters covered by the contract in the manner of bargaining prescribed by thecontract; that it had no obligation to agree to any modification of the terms and conditions contained in

the contract as long as it remained in effect; that the contract contained adequate provisions for the

discussion and settlement of any and all grievances arising under the contract that dealt with the

establishment of new rates; that if there was any information that the Union needed for the proper

disposition of the listed rate grievances, it was its obligation to secure this information in accordance

with the grievance provisions of the contract; and that under the contract, employees working under a

new rate might choose to either file a grievance or not to do so, and that it was only when a grievance

was filed that the Union had any responsibility with regard to the new rate, and then its interest was

confined to the newly established specific rate and not to the rate structure in general. The Company

stated that it was willing to proceed with respect to rate grievances strictly in conformity with the 1956and 1960 agreements whichever was applicable, but it was not interested in negotiating a new

contract dealing with the subject of rate establishment. In two grievances which went to arbitration the

Company's action was consistent with this position, in that it declined to furnish requested wage

information unless the arbitrator ruled that it was required to do so. In one of these matters the

arbitrator ruled that the Company was not required to furnish the information requested. In the other

matter the arbitrator asked the Company to deliver some of the requested wage data to the Union and

the Company complied with this direction.


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10

Following a charge by the Union on November 25, 1960, a complaint was issued on January 5, 1961,

by the Regional Director of the National Labor Relations Board alleging that the Company had

committed an unfair labor practice affecting commerce within the meaning of Section 8(a)(1) and (5) of

the Act. Following the filing of an answer by the Company and a hearing, the Board concurred in the

findings and rulings of the Trial Examiner and issued its order of August 3, 1962, directing the

Company to cease and desist from refusing to bargain collectively with the Union by refusing to

furnish to the Union information and data concerning time studies and methods used for establishing

wage rates, the affirmatively directing the Company to furnish such time studies, wage data and

information to the Union upon request. This is the order which is before us on review.

11

It appears to be well settled that an employer is guilty of an unfair labor practice in refusing to bargain

collectively as required by Sections 8(a)(5) and 8(d) of the Act, by refusing to furnish relevant wage

information and data requested by a union as the certified representative of the employees in

connection with negotiations for a collective bargaining agreement. N.L.R.B. v. J. H. Allison & Co., 165F.2d 766, 3 A.L.R.2d 990, C.A.6th, cert. denied, 335 U.S. 814, 69 S.Ct. 31, 93 L.Ed. 369; N.L.R.B. v.

Hekman Furniture Co.,207 F.2d 561,C.A.6th; N.L.R.B. v. John S. Swift Co.,277 F.2d 641,645,

C.A.7th; N.L.R.B. v. Leland-Gifford Co.,200 F.2d 620,624, C.A.1st; N.L.R.B. v. Yawman & Erbe Mfg.

Co.,187 F.2d 947,C.A.2nd. See also: N.L.R.B. v. Truitt Mfg. Co.,351 U.S. 149,76 S.Ct. 753, 100

L.Ed. 1027.

12

The cases also hold that this right to relevant wage information and data is not limited to the period

during which the employer and the union are engaged in negotiations for a collective bargaining

agreement, but includes the processing of a grievance under the bargaining agreement and the

union's bona fide actions in administering the bargaining agreement during the period of its existence.J. I. Case Company v. N.L.R.B.,253 F.2d 149,155, C.A.7th; N.L.R.B. v. F. W. Woolworth Co., 352

U.S. 938, 77 S.Ct. 261, 1 L.Ed.2d 235, reversing N.L.R.B. v. F. W. Woolworth co.,235 F.2d 319,

C.A.9th; N.L.R.B. v. Otis Elevator Co.,208 F.2d 176,C.A.2nd; N.L.R.B. v. Whiting Machine

Works,217 F.2d 593,594, C.A.4th, cert. denied, 349 U.S. 905, 75 S.Ct. 583, 99 L.Ed. 1242; N.L.R.B.

v. Item Company,220 F.2d 956,958, C.A.5th, cert. denied, 350 U.S. 836, 76 S.Ct. 73, 100 L.Ed. 746,

rehearing denied, 350 U.S. 905, 76 S.Ct. 177, 100 L.Ed. 795; Boston Herald-Trav. Corp. v.

N.L.R.B.,223 F.2d 58,63, C.A.1st.

13

The Company contends that although the Union may have the right to such wage information, such

right can be waived, and, in fact, was waived by the Union in the negotiations leading up to theexecution of the collective bargaining agreement on February 21, 1960.

14

In the negotiations preceding the execution of that agreement the Union submitted a proposal which

required the Company to furnish the kind of information now sought by it. This proposal was rejected

by the Company. The Union, however, continued unsuccessfully to press this proposal. It was not

included in the bargaining agreement as finally executed. The Company contends that this constituted
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a waiver of the right of the Union to demand and obtain such data. N.L.R.B. v. Jacobs Mfg. Co.,196

F.2d 680,C.A.2nd; N.L.R.B. v. Nash-Finch Co.,211 F.2d 622,626, 45 A.L.R.2d 683, C.A.8th;

International News Service Div. of the Hearst Corp., 113 N.L.R.B. 1067.

15

This reasoning would probably be applicable if the right or benefit sought by the Union was a right or

benefit which could only be acquired by virtue of the bargaining agreement. Under such

circumstances a failure to include it in the agreement necessarily results in a failure to acquire it.

United States Steel Corp. v. Nichols,229 F.2d 396,399-400, 56 A.L.R.2d 980, C.A.6th, cert. denied,

351 U.S. 950, 76 S.Ct. 846, 100 L.Ed. 1474.

16

However, in this case we agree with the Board that the Union's right to wage information it needed to

administer the bargaining agreement was a right which it had under Section 8(d) of the National Labor

Relations Act, Section 158(d), Title 29 United States Code, and the existence of this right was not

dependent upon it being included in the bargaining agreement. It was not a right obtained by contract,

such as would be the case in increased wages, longer vacations, pension rights, and certain so-called

fringe benefits. The failure to have the right recognized by the Company in the bargaining agreement,which would probably eliminate the necessity of possible litigation over it later, does not mean that it

does not exist by virtue of the statute.

17

The Company challenges the characterization of this right as a statutory right in that no statute

expressly so provides. Although Section 8(d) of the Labor Relations Act does not expressly so

provide, it has been construed by the cases hereinabove referred to as providing such a right, and we

find no error in characterizing it as a statutory right. It was so characterized in N.L.R.B. v. Yawman &

Erbe Mfg. Co., supra,187 F.2d 947,949, C.A.2nd. See also: California Portland Cement Co., 101

N.L.R.B. 1436.18

Even so, we recognize that the Union could have relinquished this right under the provisions of the

bargaining agreement if it, as a part of the bargaining process, elected to do so. But such a

relinquishment must be in 'clear and unmistakable' language. Tide Water Associated Oil Company, 85

N.L.R.B. 1096; N.L.R.B. v. Item Company, supra,220 F.2d 956,958-959, C.A.5th, cert. denied, 350

U.S. 836, 76 S.Ct. 73, 100 L.Ed. 746, rehearing denied, 350 U.S. 905, 76 S.Ct. 177, 100 L.Ed. 795.

Silence in the bargaining agreement on such an issue does not meet this test. This Court said in

N.L.R.B. v. J. H. Allison & Co., supra, 165 F.2d 766, 768, 3 A.L.R.2d 990, C.A.6th, cert denied, 335

U.S. 814, 69 S.Ct. 31, 93 L.Ed. 369, 'Nor do we see logical justification in the view that an entering

into a collective bargaining agreement for a new year, even though the contract was silent upon acontroverted matter, the union should be held to have waived any rights secured under the Act,

including its right to have a say-so as to so-called merit increases.' We are of the opinion that the

execution of the 1960 bargaining agreement, which was silent on this controversial question did not

constitute a relinquishment of the Union's statutory right to the wage information which it now seeks.

N.L.R.B. v. Hekman Furniture Co., supra,207 F.2d 561,C.A.6th; N.L.R.B. v. Otis Elevator Co.,

supra,208 F.2d 176,179, C.A.2nd; N.L.R.B. v. Yawman & Erbe Mfg. Co., supra, 187 F.2d 917, 949,

C.A.2nd.
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19

The Company further contends that although the Union may have the right to certain relevant and

material wage information, it does not have an unlimited right to information generally from the

Company's books, and in the event the Company refuses to honor the Union's demand, the

enforcement of the claimed right must be through the grievance procedure provided by the bargaining

agreement, which terminates with arbitration. In other words, it is for the arbitrator to decide whether

the Company's refusal to furnish the information is justified under the particular circumstances

involved, and that neither the Board nor the Court has the authority to decide this issue. It is argued

that the demand by the Union, the refusal of the Company to comply with the demand, and the

Union's attempt to enforce its claimed right is a 'complaint,' which under the provisions of the

bargaining agreement must be channeled through Article IX of the bargaining agreement, which

provides the procedure for the adjustment of 'complaints or grievances.' United Steelworkers of

America v. American Manufacturing Co.,363 U.S. 564,80 S.Ct. 1343, 4 L.Ed.2d 1403; United

Steelworkers of America v. Enterprise Wheel & Car Corp.,363 U.S. 593,80 S.Ct. 1358, 4 L.Ed.2d

1424; United Steelworkers of America v. Warrier & Gulf Navigation Co.,363 U.S. 574,80 S.Ct. 1347,

4 L.Ed.2d 1409, frequently referred to as the trilogy of cases. In this connection it is pointed out thatalthough the Company contends the Union is not entitled to the information, it is willing to submit the

matter to arbitration under Section IX of the bargaining agreement and to comply with the arbitrator's

ruling. It takes the position that it is an intrinsic contradiction for the Court to say that although the

employer is required by his contract to arbitrate complaints and grievances, his 'willingness to abide

by, and faithfully carry out, the terms of his contract becomes itself a failure to bargain.' Sinclair

Refining Co. v. N.L.R.B.,306 F.2d 569,575, C.A.5th. As the Court said in N.L.R.B. v. Nash-Finch Co.,

supra,211 F.2d 622,627, C.A.8th, 'The respondent, we think, may not be convicted of an unfair labor

practice for doing no more and no less for its union employees than its collective bargaining

agreement with them called for.'

20The soundness of this reasoning, of course, depends upon whether the demand by the Union and the

Company's refusal to honor it constitutes a complaint or grievance within the provisions of Section IX

of the bargaining agreement. If it is not within the provisions of Section IX, arbitration of the issue is

not required and the Company's insistence upon arbitration is unjustified. Atkinson v. Sinclair Refining

Co.,370 U.S. 238,241-243, 82 S.Ct. 1318, 8 L.Ed.2d 462.

21

Article IX of the bargaining agreement deals with 'Adjustment of Grievances.' Paragraph E thereof

states:

22'The parties agree that the provisions of this Article IX provide adequate means, if followed, for the

adjustment and disposition, of any complaints or grievances.'

It then provides:

23
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'Any employee wh has a complaint concerning wages, hours and working conditions that directly

affect him at the time of such complaint, may discuss the alleged complaint with his immediate

supervisor in an attempt to adjust it and if such complaint is not adjusted to his satisfaction shall be

entitled to file and process a grievance as provided in this Artaicle, 'Adjustment of Grievances'.'

24

The grievance procedure consists of three successive steps, followed by a fourth step consisting of

arbitration if the grievance is not adjusted in the prior proceedings. Each of these steps refers to a

'grievance' of an 'employee.' It is provided in Step 3 of the Agreement, 'Only grievances involving the

interpretation or application of this agreement or disciplinary action are eligible for appeal to

arbitration. * * *'

25

The Company's contention that the request of the Union for wage information and the refusal of the

Company to supply it is the absence of an order to do so constitutes a complaint or a grievance which

is subject to arbitration under the terms of the collective bargaining agreement is, in our opinion,unsound for the following reasons.

26

First, Article IX provides that only grievances involing the interpreation or application of the agreement

(or disciplinary action, which is not applicable here) is eligible for appeal to arbitration. As hereinabove

pointed out, the right of the Union to wage information was not acquired through the bargaining

agreement. Whether the demand of the Union should be honored, accordingly, does not involve the

interpretation or application of the agreement, which is necessary in order to be eligible for arbitration,

but, on the contrary, involves the interpretation and application of the National Labor Relations Act.

27

Secondly, Step 1 of the grievance procedure provided by Section IX is expressly limited to 'An

employee who has not been able to adjust his grievance with his immediate supervisor.' Thereafter,

Steps 2, 3 and 4 (arbitration) deal with this same employee grievance. We do not construe the claim

of the Union in the present case as being such an employee grievance. Local Union No. 998, Intern.

Union, United Auto, Aircraft and Agr. Implement Workers of America, A.F.L.-C.I.O. v. B. & T. Metals

Co.,315 F.2d 432,437, C.A.6th. It was not limited to the settlement of pending grievances. It was also

for the purpose of enabling it to 'intelligently evaluate the various rates of pay in the plants' and 'to

properly administer the contract.' Without this information it would be difficult, if not impossible, as a

practical matter to evaluate a new rate, to check on the fairness of the Company's determination, andto determine whether an employee had a valid grievance which should be asserted. With such

information the Union is in a better position to advise an employee about his rights, to reject those

employee claims which are not supported by the facts, and to protect the rights of employees

generally in properly administering the contract. Sinclair Refining Co. v. N.L.R.B., supra,306 F.2d 569,

571, C.A.5th. As stated in Conley v. Gibson,355 U.S. 41,45, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80, the

bargaining representative's duty does not come to an abrupt end with the making of an agreement

between the union and the employer, but collective bargaining is a continuous process involving both
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matters not covered by the existing agreement and the protection of employee rights already secured

by contract.

28

The Company, in support of its contention, relies strongly upon Timken Roller Bearing Co. v. N.L.R.B.,

161 F.2d 949, C.A.6th, and Sinclair Refining Co. v. N.L.R.B., supra,306 F.2d 569,C.A.5th.

29

In the Timken Roller Bearing Co. case it was held that the company had not refused to bargain in

insisting that the dispute over its right to subcontract, which it claimed was a function of management

over which the union had no jurisdiction, be handled through the grievance procedure provided by the

contract. This ruling was based upon the fact that the bargaining agreement contained a provision that

should 'differences arise between the Company and the Union as to the meaning and application of

the provisions of this agreement' such 'differences' should be settled within the grievance procedure. It

was held in that case that the dispute over the company's right to subcontract was such a 'difference'

and that the company, accordingly, had the right to insist on that procedure being followed. In the

present case, although the dispute between the Company and the Union over the right to wage

information and data is a 'difference,' it is not a difference or a grievance 'involving the interpretationand application of the provisions of' the bargaining agreement, and, accordingly, the Company did not

have the right to insist on use of the grievance procedure. We find no conflict between the cases.

30

In the Sinclair Refining Co. case the employer demoted two employees 'because of lack of work,'

which, under the bargaining agreement, was not subject to arbitration. The union filed a grievance

which claimed that the alleged ' lack of work' was the result of contracturally wrongful assignment or

allocation of work. The employer conceded that since a dispute existed between it and the union, it

was subject to arbitration under the provisions of the bargaining agreement, but insisted that on the

merits the union had no right to challenge or question its action in any way. While the grievance was inthe first two steps the union demanded certain wage information and data. The employer refused to

furnish this data on the ground that since the demotion was exclusively a management function not

subject to challenge by the union, the data sought, even if otherwise relevant, was wholly immaterial.

This resulted in the institution of an unfair labor practice proceeding. The Labor Board ruled that the

employer had failed to bargain in good faith in refusing to furnish the information demanded. However,

the Court of Appeals denied enforcement of its cease-and-desist order. The Court held that the Board

proceeding could not be used to secure data for use in a grievance proceeding where determination of

relevance and pertinency required determination of the critical substantive issue of the grievance

itself, which issue was under the bargaining agreement for the arbitrator not the Board or the Court.

This is but another example of the now established law that where a dispute or 'difference' is subjectto grievance procedure and arbitration by reason of the provisions of the bargaining agreement, that

procedure is exclusive and will be enforced. In the present case, as we have pointed out, the dispute

or 'difference' is not subject to the grievance procedure and arbitration provided by the bargaining

agreement. This distinction was recognized and applied by the same court and the same opinion

writer in Local Union No. 787, Intern. Union of Elec. Radio and Mach. Workers A.F.L.-C.I.O. v. Collins

Radio Co.,317 F.2d 214,219-220, C.A.5th. The opinion in the Collins Radio Co. case also answers
http://openjurist.org/306/f2d/569http://openjurist.org/306/f2d/569http://openjurist.org/306/f2d/569http://openjurist.org/317/f2d/214http://openjurist.org/317/f2d/214http://openjurist.org/317/f2d/214http://openjurist.org/317/f2d/214http://openjurist.org/306/f2d/569


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the company's contention that the Supreme Court's recent trilogy opinions, hereinabove referred to,

require a different ruling from what we have reached.

31

It is for the Court, not the arbitrator, to decide whether a claim is an arbitrable one under the

bargaining agreement. Atkinson v. Sinclair Refining Co., supra,370 U.S. 238,241, 82 S.Ct. 1318, 8

L.Ed.2d 462; Local Union No. 998, Intern. Union, United Auto, Aircraft and Agr. Implement Workers of

American, A.F.L.-C.I.O. v. B. & T. Metals Co., supra,315 F.2d 432,436, C.A.6th. We are of the

opinion that the claim of the Union for wage information and data was not an arbitrable one and that

the Company was not justified in refusing to give the Union wage information on that ground.

32

We are also of the opinion that the good faith belief of the Company that it was not required to bargain

with the Union is no defense to a refusal to bargain. N.L.R.B. v. Wooster Div. of Borg-Warner

Corp.,356 U.S. 342,349, 78 S.Ct. 718, 2 L.Ed.2d 823; International Ladies' Garment Workers' Union,

A.F.L.-C.I.O. v. N.L.R.B.,366 U.S. 731,739, 81 S.Ct. 1603, 6 L.Ed.2d 762; Old King Cole, Inc. v.

N.L.R.B.,260 F.2d 530,532, C.A.6th.

33The petition to set aside the order of the Board is denied and enforcement of said order is decreed.

G.R. No. 96490 February 3, 1992

INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO, petitioner,vs.VOLUNTARY ARBITRATOR TEODORICO P. CALICA and INDOPHIL TEXTILE MILLS,INC., respondents.

Romeo C. Lagman for petitioner.

Borreta, Gutierrez & Leogardo for respondent Indophil Textile Mills, Inc.

MEDIALDEA, J.:

This is a petition for certiorari seeking the nullification of the award issued by the respondentVoluntary Arbitrator Teodorico P. Calica dated December 8, 1990 finding that Section 1 (c), Article Iof the Collective Bargaining Agreement between Indophil Textile Mills, Inc. and Indophil Textile MillWorkers Union-PTGWO does not extend to the employees of Indophil Acrylic ManufacturingCorporation as an extension or expansion of Indophil Textile Mills, Incorporated.

The antecedent facts are as follows:

Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization dulyregistered with the Department of Labor and Employment and the exclusive bargaining agent of allthe rank-and-file employees of Indophil Textile Mills, Incorporated. Respondent Teodorico P. Calicais impleaded in his official capacity as the Voluntary Arbitrator of the National Conciliation andMediation Board of the Department of Labor and Employment, while private respondent IndophilTextile Mills, Inc. is a corporation engaged in the manufacture, sale and export of yarns of various
http://openjurist.org/370/us/238http://openjurist.org/370/us/238http://openjurist.org/370/us/238http://openjurist.org/315/f2d/432http://openjurist.org/315/f2d/432http://openjurist.org/315/f2d/432http://openjurist.org/356/us/342http://openjurist.org/356/us/342http://openjurist.org/356/us/342http://openjurist.org/366/us/731http://openjurist.org/366/us/731http://openjurist.org/366/us/731http://openjurist.org/260/f2d/530http://openjurist.org/260/f2d/530http://openjurist.org/260/f2d/530http://openjurist.org/260/f2d/530http://openjurist.org/366/us/731http://openjurist.org/356/us/342http://openjurist.org/315/f2d/432http://openjurist.org/370/us/238


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counts and kinds and of materials of kindred character and has its plants at Barrio Lambakin.Marilao, Bulacan.

In April, 1987, petitioner Indophil Textile Mill Workers Union-PTGWO and private respondentIndophil Textile Mills, Inc. executed a collective bargaining agreement effective from April 1, 1987 toMarch 31, 1990.

On November 3, 1967 Indophil Acrylic Manufacturing Corporation was formed and registered withthe Securities and Exchange Commission. Subsequently, Acrylic applied for registration with theBoard of Investments for incentives under the 1987 Omnibus Investments Code. The applicationwas approved on a preferred non-pioneer status.

In 1988, Acrylic became operational and hired workers according to its own criteria and standards.Sometime in July, 1989, the workers of Acrylic unionized and a duly certified collective bargainingagreement was executed.

In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed, thepetitioner union claimed that the plant facilities built and set up by Acrylic should be considered as

an extension or expansion of the facilities of private respondent Company pursuant to Section 1(c),Article I of the CBA, to wit,.

c) This Agreement shall apply to the Company's plant facilities andinstallations and to any extension and expansion thereat. (Rollo, p.4)

In other words, it is the petitioner's contention that Acrylic is part of the Indophil bargainingunit.

The petitioner's contention was opposed by private respondent which submits that it is a juridicalentity separate and distinct from Acrylic.

The existing impasse led the petitioner and private respondent to enter into a submission agreementon September 6, 1990. The parties jointly requested the public respondent to act as voluntaryarbitrator in the resolution of the pending labor dispute pertaining to the proper interpretation of theCBA provision.

After the parties submitted their respective position papers and replies, the public respondentVoluntary Arbitrator rendered its award on December 8, 1990, the dispositive portion of whichprovides as follows:

PREMISES CONSIDERED, it would be a strained interpretation and application ofthe questioned CBA provision if we would extend to the employees of Acrylic thecoverage clause of Indophil Textile Mills CBA. Wherefore, an award is made to theeffect that the proper interpretation and application of Sec. l, (c), Art. I, of the 1987CBA do (sic) not extend to the employees of Acrylic as an extension or expansion ofIndophil Textile Mills, Inc. (Rollo, p.21)

Hence, this petition raising four (4) issues, to wit:

1. WHETHER OR NOT THE RESPONDENT ARBITRATOR ERREDIN INTERPRETING SECTION 1(c), ART I OF THE CBA BETWEENPETITIONER UNION AND RESPONDENT COMPANY.


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2. WHETHER OR NOT INDOPHIL ACRYLIC IS A SEPARATE ANDDISTINCT ENTITY FROM RESPONDENT COMPANY FORPURPOSES OF UNION REPRESENTATION.

3. WHETHER OR NOT THE RESPONDENT ARBITRATORGRAVELY ABUSED HIS DISCRETION AMOUNTING TO LACK OR

IN EXCESS OF HIS JURISDICTION.

4. WHETHER OR NOT THE RESPONDENT ARBITRATORVIOLATED PETITIONER UNION'S CARDINAL PRIMARY RIGHT TODUE PROCESS. (Rollo, pp. 6-7)

The central issue submitted for arbitration is whether or not the operations in Indophil AcrylicCorporation are an extension or expansion of private respondent Company. Corollary to theaforementioned issue is the question of whether or not the rank-and-file employees working atIndophil Acrylic should be recognized as part of, and/or within the scope of the bargaining unit.

Petitioner maintains that public respondent Arbitrator gravely erred in interpreting Section l(c), Article

I of the CBA in its literal meaning without taking cognizance of the facts adduced that the creation ofthe aforesaid Indophil Acrylic is but a devise of respondent Company to evade the application of theCBA between petitioner Union and respondent Company.

Petitioner stresses that the articles of incorporation of the two corporations establish that the twoentities are engaged in the same kind of business, which is the manufacture and sale of yarns ofvarious counts and kinds and of other materials of kindred character or nature.

Contrary to petitioner's assertion, the public respondent through the Solicitor General argues that theIndophil Acrylic Manufacturing Corporation is not an alter ego or an adjunct or business conduit ofprivate respondent because it has a separate legitimate business purpose. In addition, the SolicitorGeneral alleges that the primary purpose of private respondent is to engage in the business ofmanufacturing yarns of various counts and kinds and textiles. On the other hand, the primarypurpose of Indophil Acrylic is to manufacture, buy, sell at wholesale basis, barter, import, export andotherwise deal in yarns of various counts and kinds. Hence, unlike private respondent, Indophil

Acrylic cannot manufacture textiles while private respondent cannot buy or import yarns.

Furthermore, petitioner emphasizes that the two corporations have practically the sameincorporators, directors and officers. In fact, of the total stock subscription of Indophil Acrylic,P1,749,970.00 which represents seventy percent (70%) of the total subscription of P2,500,000.00was subscribed to by respondent Company.

On this point, private respondent cited the case of Diatagon Labor Federation v.Ople, G.R. No. L-44493-94, December 3, 1980, 10l SCRA 534, which ruled that two corporations cannot be treated asa single bargaining unit even if their businesses are related. It submits that the fact that there are as

many bargaining units as there are companies in a conglomeration of companies is a positive proofthat a corporation is endowed with a legal personality distinctly its own, independent and separatefrom other corporations (seeRollo, pp. 160-161).

Petitioner notes that the foregoing evidence sufficiently establish that Acrylic is but an extension orexpansion of private respondent, to wit:


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(a) the two corporations have their physical plants, offices andfacilities situated in the same compound, at Barrio Lambakin, Marilao,Bulacan;

(b) many of private respondent's own machineries, such as dyeingmachines, reeling, boiler, Kamitsus among others, were transferred to

and are now installed and being used in the Acrylic plant;

(c) the services of a number of units, departments or sections ofprivate respondent are provided to Acrylic; and

(d) the employees of private respondent are the same personsmanning and servicing the units of Acrylic. (seeRollo, pp. 12-13)

Private respondent insists that the existence of a bonafide business relationship between Acrylic andprivate respondent is not a proof of being a single corporate entity because the services which aresupposedly provided by it to Acrylic are auxiliary services or activities which are not really essentialin the actual production of Acrylic. It also pointed out that the essential services are discharged

exclusively by Acrylic personnel under the control and supervision of Acrylic managers andsupervisors.

In sum, petitioner insists that the public respondent committed grave abuse of discretion amountingto lack or in excess of jurisdiction in erroneously interpreting the CBA provision and in failing todisregard the corporate entity of Acrylic.

We find the petition devoid of merit.

Time and again, We stress that the decisions of voluntary arbitrators are to be given the highestrespect and a certain measure of finality, but this is not a hard and fast rule, it does not preclude

judicial review thereof where want of jurisdiction, grave abuse of discretion, violation of due process,

denial of substantial justice, or erroneous interpretation of the law were brought to our attention.(seeOcampo, et al. v. National Labor Relations Commission, G.R. No. 81677, 25 July 1990, FirstDivision Minute Resolution citingOceanic Bic Division (FFW) v. Romero, G.R. No. L-43890, July 16,1984, 130 SCRA 392)

It should be emphasized that in rendering the subject arbitral award, the voluntary arbitratorTeodorico Calica, a professor of the U.P. Asian Labor Education Center, now the Institute forIndustrial Relations, found that the existing law and jurisprudence on the matter, supported theprivate respondent's contentions. Contrary to petitioner's assertion, public respondent cited facts andthe law upon which he based the award. Hence, public respondent did not abuse his discretion.

Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist, thelegal fiction that a corporation is an entity with a juridical personality separate and distinct from its

members or stockholders may be disregarded. In such cases, the corporation will be considered asa mere association of persons. The members or stockholders of the corporation will be consideredas the corporation, that is liability will attach directly to the officers and stockholders. The doctrineapplies when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud,or defend crime, or when it is made as a shield to confuse the legitimate issues, or where acorporation is the mere alter ego or business conduit of a person, or where the corporation is soorganized and controlled and its affairs are so conducted as to make it merely an instrumentality,agency, conduit or adjunct of another corporation. (Umali et al. v. Court of Appeals, G.R. No. 89561,September 13, 1990, 189 SCRA 529, 542)


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In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that thecreation of the corporation is a devise to evade the application of the CBA between petitioner Unionand private respondent Company. While we do not discount the possibility of the similarities of thebusinesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invokedby petitioner in granting the relief sought. The fact that the businesses of private respondent and

Acrylic are related, that some of the employees of the private respondent are the same persons

manning and providing for auxilliary services to the units of Acrylic, and that the physical plants,offices and facilities are situated in the same compound, it is our considered opinion that these factsare not sufficient to justify the piercing of the corporate veil of Acrylic.

In the same case of Umali, et al.v.Court of Appeals(supra), We already emphasized that "the legalcorporate entity is disregarded only if it is sought to hold the officers and stockholders directly liablefor a corporate debt or obligation." In the instant case, petitioner does not seek to impose a claimagainst the members of the Acrylic.

Furthermore, We already ruled in the case of Diatagon Labor Federation Local 110 of the ULGWPv.Ople(supra) that it is grave abuse of discretion to treat two companies as a single bargaining unitwhen these companies are indubitably distinct entities with separate juridical personalities.

Hence, the Acrylic not being an extension or expansion of private respondent, the rank-and-fileemployees working at Acrylic should not be recognized as part of, and/or within the scope of thepetitioner, as the bargaining representative of private respondent.

All premises considered, the Court is convinced that the public respondent Voluntary Arbitrator didnot commit grave abuse of discretion in its interpretation of Section l(c), Article I of the CBA that the

Acrylic is not an extension or expansion of private respondent.

ACCORDINGLY, the petition is DENIED and the award of the respondent Voluntary Arbitrator arehereby AFFIRMED.

SO ORDERED.

2. G.R. No. 85985 August 13, 1993

PHILIPPINE AIRLINES, INC. (PAL), petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRAand PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents.

Solon Garcia for petitioner.

Adolpho M. Guerzon for respondent PALEA.

MELO, J .:

In the instant petition for certiorari, the Court is presented the issue of whether or not the formulationof a Code of Discipline among employees is a shared responsibility of the employer and theemployees.


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On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code ofDiscipline. The Code was circulated among the employees and was immediately implemented, andsome employees were forthwith subjected to the disciplinary measures embodied therein.

Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaintbefore the National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7-

2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of Disciplinewithout notice and prior discussion with Union by Management" (Rollo, p. 41). In its position paper,PALEA contended that PAL, by its unilateral implementation of the Code, was guilty of unfair laborpractice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor Code. PALEAalleged that copies of the Code had been circulated in limited numbers; that being penal in naturethe Code must conform with the requirements of sufficient publication, and that the Code wasarbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation ofthe Code be held in abeyance; that PAL should discuss the substance of the Code with PALEA; thatemployees dismissed under the Code be reinstated and their cases subjected to further hearing; andthat PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14,Record.)

PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to presciberules and regulations regarding employess' conduct in carrying out their duties and functions, andalleging that by implementing the Code, it had not violated the collective bargaining agreement(CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence, PALmaintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements fornegotiating a CBA which was inapplicable as indeed the current CBA had been negotiated.

In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code wasviolated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I ofChapter II of the Code as defective for, respectively, running counter to the construction of penallaws and making punishable any offense within PAL's contemplation. These provisions are thefollowing:

Sec. 2. Non-exclusivity.

This Code does not contain the entirety of the rules andregulations of the company. Every employee is bound to comply with all applicablerules, regulations, policies, procedures and standards, including standards of quality,productivity and behaviour, as issued and promulgated by the company through itsduly authorized officials. Any violations thereof shall be punishable with a penalty tobe determined by the gravity and/or frequency of the offense.

Sec. 7. Cumulative Record.An employee's record of offenses shall be cumulative.The penalty for an offense shall be determined on the basis of his past record ofoffenses of any nature or the absence thereof. The more habitual an offender hasbeen, the greater shall be the penalty for the latest offense. Thus, an employee maybe dismissed if the number of his past offenses warrants such penalty in the

judgment of management even if each offense considered separately may notwarrant dismissal. Habitual offenders or recidivists have no place in PAL. On theother hand, due regard shall be given to the length of time between commission ofindividual offenses to determine whether the employee's conduct may indicateoccasional lapses (which may nevertheless require sterner disciplinary action) or apattern of incorrigibility.

Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failedto appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present


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evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, adecision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling thatno unfair labor practice had been committed. However, the arbiter held that PAL was "not totally faultfree" considering that while the issuance of rules and regulations governing the conduct ofemployees is a "legitimate management prerogative" such rules and regulations must meet the testof "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all

embracing and all encompassing provision that makes punishable any offense one can think of inthe company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule againstdouble jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp. 38-39, Rollo.)

The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated."Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupportedby documentary evidence, she stated that such "failure" on the part of PAL resulted in the impositionof penalties on employees who thought all the while that the 1966 Code was still being followed.Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from compliance. . . finds application only after it has been conclusively shown that the law was circulated to all theparties concerned and efforts to disseminate information regarding the new law have been exerted.(p. 39, Rollo.) She thereupon disposed:

WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:

1. Furnish all employees with the new Code of Discipline;

2. Reconsider the cases of employees meted with penalties under the New Code ofDiscipline and remand the same for further hearing; and

3. Discuss with PALEA the objectionable provisions specifically tackled in the body ofthe decision.

All other claims of the complainant union (is) [are] hereby, dismissed for lack of merit.

SO ORDERED. (p. 40, Rollo.)

PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion,with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found noevidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge.Nonetheless, the NLRC made the following observations:

Indeed, failure of management to discuss the provisions of a contemplated code ofdiscipline which shall govern the conduct of its employees would result in the erosionand deterioration of an otherwise harmonious and smooth relationship between themas did happen in the instant case. There is no dispute that adoption of rules of

conduct or discipline is a prerogative of management and is imperative and essentialif an industry, has to survive in a competitive world. But labor climate hasprogressed, too. In the Philippine scene, at no time in our contemporary history is theneed for a cooperative, supportive and smooth relationship between labor andmanagement more keenly felt if we are to survive economically. Management can nolonger exclude labor in the deliberation and adoption of rules and regulations that willaffect them.


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The complainant union in this case has the right to feel isolated in the adoption of theNew Code of Discipline. The Code of Discipline involves security of tenure and lossof employmenta property right! It is time that management realizes that to attaineffectiveness in its conduct rules, there should be candidness and openness byManagement and participation by the union, representing its members. In fact, ourConstitution has recognized the principle of "shared responsibility" between

employers and workers and has likewise recognized the right of workers toparticipate in "policy and decision-making process affecting their rights . . ." The latterprovision was interpreted by the Constitutional Commissioners to mean participationin "management"' (Record of the Constitutional Commission, Vol. II).

In a sense, participation by the union in the adoption of the code if conduct couldhave accelerated and enhanced their feelings of belonging and would have resultedin cooperation rather than resistance to the Code. In fact, labor-managementcooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.)

Respondent Commission thereupon disposed:

WHEREFORE, premises considered, we modify the appealed decision in the sensethat the New Code of Discipline should be reviewed and discussed with complainantunion, particularly the disputed provisions [.] (T)hereafter, respondent is directed tofurnish each employee with a copy of the appealed Code of Discipline. The pendingcases adverted to in the appealed decision if still in the arbitral level, should bereconsidered by the respondent Philippine Air Lines. Other dispositions of the Labor

Arbiter are sustained.

SO ORDERED. (p. 5, NLRC Decision.)

PAL then filed the instant petition for certiorari charging public respondents with grave abuse ofdiscretion in: (a) directing PAL "to share its management prerogative of formulating a Code ofDiscipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with

the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsiderpending cases still in the arbitral level (p. 7, Petition; p. 8,Rollo.)

As stated above, the Principal issue submitted for resolution in the instant petition is whethermanagement may be compelled to share with the union or its employees its prerogative offormulating a code of discipline.

PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated thesharing of responsibility therefor between employer and employee.

Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the

participation of workers in decision and policy-making processes affecting the rights, duties andwelfare." However, even in the absence of said clear provision of law, the exercise of managementprerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) itwas held that management's prerogatives must be without abuse of discretion.

In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld thecompany's right to implement a new system of distributing its products, but gave the followingcaveat:


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So long as a company's management prerogatives are exercised in good faith for theadvancement of the employer's interest and not for the purpose of defeating orcircumventing the rights of the employees under special laws or under validagreements, this Court will uphold them.(at p. 28.)

All this points to the conclusion that the exercise of managerial prerogatives is notunlimited. It iscircumscribed by limitations found in law, a collective bargaining agreement, or the generalprinciples of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).Moreover, as enunciated inAbbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be dulyestablished that the prerogative being invoked is clearly a managerial one.

A close scrutiny of the objectionable provisions of the Code reveals that they are not purelybusiness-oriented nor do they concern the management aspect of the business of the company as inthe San Miguelcase. The provisions of the Code clearly have repercusions on the employee's rightto security of tenure. The implementation of the provisions may result in the deprivation of anemployee's means of livelihood which, as correctly pointed out by the NLRC, is a property right(Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the casewhich border on infringement of constitutional rights, we must uphold the constitutional requirementsfor the protection of labor and the promotion of social justice, for these factors, according to JusticeIsagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker" (Employees

Association of the Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991]635).

Verily, a line must be drawn between management prerogatives regarding business operations perse and those which affect the rights of the employees. In treating the latter, management should seeto it that its employees are at least properly informed of its decisions or modes action. PAL assertsthat all its employees have been furnished copies of the Code. Public respondents found to thecontrary, which finding, to say the least is entitled to great respect.

PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27,

1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules andregulations to carry out the functions of management without having to discuss the same withPALEA and much less, obtain the latter'sconformity thereto" (pp. 11-12, Petitioner's Memorandum;pp 180-181, Rollo.) Petitioner's view is based on the following provision of the agreement:

The Association recognizes the right of the Company to determine matters ofmanagement it policy and Company operations and to direct its manpower.Management of the Company includes the right to organize, plan, direct and controloperations, to hire, assign employees to work, transfer employees from onedepartment, to another, to promote, demote, discipline, suspend or dischargeemployees for just cause; to lay-off employees for valid and legal causes, tointroduce new or improved methods or facilities or to change existing methods or

facilities and the right to make and enforce Company rules and regulations to carryout the functions of management.

The exercise by management of its prerogative shall be done in a just reasonable,humane and/or lawful manner.

Such provision in the collective bargaining agreement may not be interpreted as cession ofemployees' rights to participate in the deliberation of matters which may affect their rights and theformulation of policies relative thereto. And one such mater is the formulation of a code of discipline.


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Indeed, industrial peace cannot be achieved if the employees are denied their just participation inthe discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D.442) was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) Topromote the enlightenment of workers concerning their rights and obligations . . . as employees."This was, of course, amplified by Republic Act No 6715 when it decreed the "participation of workersin decision and policy making processes affecting their rights, duties and welfare." PAL's position

that it cannot be saddled with the "obligation" of sharing management prerogatives as during theformulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner'sMemorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yetfounded in law when the Code was formulated, the attainment of a harmonious labor-managementrelationship and the then already existing state policy of enlightening workers concerning their rightsas employees demand no less than the observance of transparency in managerial moves affectingemployees' rights.

Petitioner's assertion that it needed the implementation of a new Code of Discipline considering thenature of its business cannot be overemphasized. In fact, its being a local monopoly in the businessdemands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whateverdisciplinary measures are adopted cannot be properly implemented in the absence of fullcooperation of the employees. Such cooperation cannot be attained if the employees are restive onaccount, of their being left out in the determination of cardinal and fundamental matters affectingtheir employment.

WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No specialpronouncement is made as to costs.

SO ORDERED.

[G.R. No. 131235. November 16, 1999]

UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON QUI,NORMA CALAGUAS, IRMA POTENCIANO, LUZ DE GUZMAN,REMEDIOS GARCIA, RENE ARNEJO, EDITHA OCAMPO, CESARREYES, CELSO NIERRA, GLICERIA BALDRES, MA. LOURDESMEDINA, HIDELITA GABO, MAFEL YSRAEL, LAURA ABARA,NATIVIDAD SANTOS, FERDINAND LIMOS, CARMELITAESPINA, ZENAIDA FAMORCA, PHILIP AGUINALDO,BENEDICTA ALAVA and LEONCIO CASAL, petitioners vs.Dir.BENEDICTO ERNESTO R. BITONIO JR. of the Bureau of LaborRelations, Med-Arbiter TOMAS F. FALCONITIN of The NationalCapital Region, Department of Labor and Employment (DOLE),EDUARDO J. MARIO JR., MA. MELVYN ALAMIS, NORMACOLLANTES, URBANO ALABAGIA, RONALDO ASUNCION,ZENAIDA BURGOS, ANTHONY CURA, FULVIO M. GUERRERO,


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MYRNA HILARIO, TERESITA MEER, FERNANDO PEDROSA,NILDA REDOBLADO, RENE SISON, EVELYN TIROL and ROSIEALCANTARA, respondents.

D E C I S I O N

PANGANIBAN, J.:

There is a right way to do the right thing at the right time for the right

reasons,[1]and in the present case, in the right forum by the right parties. While

grievances against union leaders constitute legitimate complaints deserving

appropriate redress, action thereon should be made in the proper forum at the proper

time and after observance of proper procedures. Similarly, the election of union

officers should be conducted in accordance with the provisions of the unions

constitution and bylaws, as well as the Philippine Constitution and the Labor

Code. Specifically, while all legitimate faculty members of the University of SantoTomas (UST) belonging to a collective bargaining unit may take part in a duly

convened certification election, only bona fide members of the UST Faculty Union

(USTFU) may participate and vote in a legally called election for union officers. Mob

hysteria, however well-intentioned, is not a substitute for the rule of law.

The Case

The Petition for Certioraribefore us assails the August 15, 1997 Resolution[2]of

Director Benedicto Ernesto R. Bitonio Jr. of the Bureau of Labor Relations (BLR) inBLR Case No. A-8-49-97, which affirmed the February 11, 1997 Decision of Med-

Arbiter Tomas F. Falconitin. The med-arbiters Decision disposed as follows:

WHEREFORE, premises considered, judgment is hereby rendered declaring the

election of USTFU officers conducted on October 4, 1996 and its election results as

null and void ab initio.

Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and desist

from acting and performing the duties and functions of the legitimate officers of [the]

University of Santo Tomas Faculty Union (USTFU) pursuant to [the] unionsconstitution and by-laws (CBL).

The Temporary Restraining Order (TRO ) issued by this Office on December 11,

1996 in connection with the instant petition, is hereby made and declared

permanent.[3]
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Likewise challenged is the October 30, 1997 Resolution [4]of Director Bitonio,

which denied petitioners Motion for Reconsideration.

The Facts

The factual antecedents of the case are summarized in the assailed Resolution as

follows:

Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees) are duly

elected officers of the UST Faculty Union (USTFU). The union has a subsisting five-

year Collective Bargaining Agreement with its employer, the University of Santo

Tomas (UST). The CBA was registered with the Industrial Relations Division,

DOLE-NCR, on 20 February 1995. It is set to expire on 31 May 1998.

On 21 September 1996, appellee Collantes, in her capacity as Secretary General of

USTFU, posted a notice addressed to all USTFU members announcing a general

assembly to be held on 05 October 1996. Among others, the general assembly was

called to elect USTFUs next set of officers. Through the notice, the members were

also informed of the constitution of a Committee on Elections (COMELEC) to

oversee the elections. (Annex B, petition)

On 01 October 1996, some of herein appellants filed a separate petition with the

Med-Arbiter, DOLE-NCR, directed against herein appellees and the members of the

COMELEC. Docketed as Case No. NCR-OD-M-9610-001, the petition alleged thatthe COMELEC was not constituted in accordance with USTFUs constitution and by-

laws (CBL) and that no rules had been issued to govern the conduct of the 05 October

1996 election.

On 02 October 1996, the secretary general of UST, upon the request of the various

UST faculty club presidents (See paragraph VI, Respondents Comment and Motion

to Dismiss), issued notices allowing all faculty members to hold a convocation on 04

October 1996 (See Annex C Petition;Annexes 4 to 10, Appeal). Denominated

as [a] general faculty assembly, the convocation was supposed to discuss the state of

the unratified UST-USTFU CBA and status and election of USTFU officers(Annex 11, Appeal)

On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a

temporary restraining order against herein appellees enjoining them from conducting

the election scheduled on 05 October 1996.
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Also on 04 October 1996, and as earlier announced by the UST secretary general, the

general faculty assembly was held as scheduled. The general assembly was attended

by members of the USTFU and, as admitted by the appellants, also by 'non-USTFU

members [who] are members in good standing of the UST Academic Community

Collective Bargaining Unit' (See paragraph XI, Respondents Comment and Motion to

Dismiss). On this occasion, appellants were elected as USTFUs new set of officersby acclamation and clapping of hands (See paragraphs 40 to 50, Annex '12', Appeal).

The election of the appellants came about upon a motion of one Atty. Lopez,

admittedly not a member of USTFU, that the USTFU CBL and 'the rules of the

election be suspended and that the election be held [on] that day' (See --paragraph 39,

Idem.)

On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and

the nullification of the results of the 04 October 1996 election. Appellees alleged that

the holding of the same violated the temporary restraining order issued in Case No.NCR-OD-M-9610-001. Accusing appellants of usurpation, appellees characterized

the election as spurious for being violative of USTFUs CBL, specifically because the

general assembly resulting in the election of appellants was not called by the Board of

Officers of the USTFU; there was no compliance with the ten-day notice rule required

by Section 1, Article VIII of the CBL; the supposed elections were conducted without

a COMELEC being constituted by the Board of Officers in accordance with Section 1,

Article IX of the CBL; the elections were not by secret balloting as required by

Section 1, Article V and Section 6, Article IX of the CBL, and, the general assembly

was convened by faculty members some of whom were not members of USTFU, so

much so that non-USTFU members were allowed to vote in violation of Section 1,

Article V of the CBL.

On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary

restraining order, this time alleging that appellants had served the former a notice to

vacate the union office. For their part, appellants moved to dismiss the original

petition and the subsequent motion on jurisdictional grounds. Both the petition and

the motion were captioned to be for Prohibition, Injunction with Prayer for

Preliminary Injunction and Temporary Restraining Order. According to the

appellants, the med-arbiter has no jurisdiction over petitions for prohibition, 'including

the ancillary remedies of restraining order and/or preliminary injunction, which are

merely incidental to the main petition for PROHIBITION' (Paragraph XVIII3,

Respondents Comment and Motion to Dismiss). Appellants also averred that they

now constituted the new set of union officers having been elected in accordance with

law after the term of office of appellees had expired. They further maintained that

appellees scheduling of the 5 October 1996 elections was illegal because no rules and

regulations governing the elections were promulgated as required by USTFUs CBL


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and that one of the members of the COMELEC was not a registered member of

USTFU. Appellants likewise noted that the elections called by the appellees should

have been postponed to allow the promulgation of rules and regulations and to 'insure

a free, clean, honest and orderly elections and to afford at the same time the greater

majority of the general membership to participate' (See paragraph V, Idem). Finally,

appellants contended that the holding of the general faculty assembly on 04 October1996 was under the control of the Council of College/Faculty Club Presidents in

cooperation with the USTFU Reformist Alliance and that they received the

Temporary Restraining Order issued in Case No. NCR-OD-M-9610-001 only on 07

October 1996 and were not aware of the same on 04 October 1996.

On 03 December 1996, appellants and UST allegedly entered into another CBA

covering the period from 01 June 1996 to 31 May 2001 (Annex 11, appellants

Rejoinder to the Reply and Opposition).

Consequently, appellees again moved for the issuance of a temporary restrainingorder to prevent appellants from making further representations that [they] had

entered into a new agreement with UST. Appellees also reiterated their earlier stand

that appellants were usurping the formers duties and functions and should be stopped

from continuing such acts.

On 11 December 1996, over appellants insistence that the issue of jurisdiction

should first be resolved, the med-arbiter issued a temporary restraining order directing

the respondents to cease and desist from performing any and all acts pertaining to the

duties and functions of the officers and directors of USTFU.

In the meantime, appellants claimed that the new CBA was purportedly ratified by an

overwhelming majority of USTs academic community on 12 December 1996

(Annexes 1 to 10, Idem). For this reason, appellants moved for the dismissal of what

it denominated as appellees petition for prohibition on the ground that this had

become moot and academic.[5]

Petitioners appealed the med-arbiters Decision to the labor secretary,[6]who

transmitted the records of the case to the Bureau of Labor Relations which, under

Department Order No. 9, was authorized to resolve appeals of intra-union cases,

consistent with the last paragraph of Article 241 of the Labor Code.[7]

The Assailed Ruling
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Agreeing with the med-arbiter that the USTFU officers purported election held

on October 4, 1994 was void for having been conducted in violation of the unions

Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners

contention that it was a legitimate exercise of their right to self-organization. He ruled

that the CBL, which constituted the covenant between the union and its members,

could not be suspended during the October 4, 1996 general assembly of all facultymembers, since that assembly had not been convened or authorized by the USTFU.

Director Bitonio likewise held that the October 4, 1996 election could not be

legitimized by the recognition of the newly elected set of officers by UST or by the

alleged ratification of the new CBA by the general membership of the USTFU. Ruled

Respondent Bitonio:

"This submission is flawed. The issue at hand is not collective bargaining

representation but union leadership, a matter that should concern only the members of

USTFU. As pointed out by the appellees, the privilege of determining who the unionofficers will be belongs exclusively to the members of the union. Said privilege is

exercised in an election proceeding in accordance with the union's CBL and

applicable law.

To accept appellants' claim to legitimacy on the foregoing grounds is to invest in

appellants the position, duties, responsibilities, rights and privileges of USTFU

officers without the benefit of a lawful electoral exercise as defined in USTFU's CBL

and Article 241(c) of the Labor Code. Not to mention the fact that labor laws prohibit

the employer from interfering with the employees in the latter' exercise of their right

to self-organization. To allow appellants to become USTFU officers on the strengthof management's recognition of them is to concede to the employer the power of

determining who should be USTFU's leaders. This is a clear case of interference in

the exercise by USTFU members of their right to self-organization.[8]

Hence, this Petition.[9]

The Issues

The main issue in this case is whether the public respondent committed graveabuse of discretion in refusing to recognize the officers elected during the October

4, 1996 general assembly. Specifically, petitioners in their Memorandum urge the

Court to resolve the following questions:[10]

(1) Whether the Collective Bargaining Unit of all the faculty members in that

General Faculty Assembly had the right in that General Faculty Assembly to suspend


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the provisions of the Constitution and By-Laws of the USTFU regarding the elections

of officers of the union[.]

(2) Whether the suspension of the provisions of the Constitution and By-Laws of the

USTFU in that General Faculty Assembly is valid pursuant to the constitutional right

of the Collective Bargaining Unit to engage in peaceful concerted activities for thepurpose of ousting the corrupt regime of the private respondents[.]

(3) Whether the overwhelming ratification of the Collective Bargaining Agreement

executed by the petitioners in behalf of the USTFU with the University of Santo

Tomas has rendered moot and academic the issue as to the validity of the suspension

of the Constitution and By-Laws and the elections of October 4, 1996 in the General

Faculty Assembly[.]

The Courts Ruling

The petition is not meritorious. Petitioners fail to convince this Court that

Director Bitonio gravely abused his discretion in affirming the med-arbiter and in

refusing to recognize the binding effect of the October 4, 1996 general assembly

called by the UST administration.

First Issue: Right to Self -Organization and Uni on Membership

At the outset, the Court stresses thatNational Federation of Labor (NFL) v.

Laguesma[11]has held that challenges against rulings of the labor secretary and those

acting on his behalf, like the director of labor relations, shall be acted upon by the

Court of Appeals, which has concurrent jurisdiction with this Court over petitions

for certiorari. However, inasmuch as the memoranda in the instant case have been

filed prior to the promulgation and finality of our Decision inNFL, we deem it proper

to resolve the present controversy directly, instead of remanding it to the Court of

Appeals. Having disposed of the foregoing procedural matter, we now tackle the

issues in the present caseseriatim.

Self-organization is a fundamental right guaranteed by the Philippine Constitution

and the Labor Code. Employees have the right to form, join or assist labor

organizations for the purpose of collective bargaining or for their mutual aid and

protection.[12]Whether employed for a definite period or not, any employee shall be

considered as such, beginning on his first day of service, for purposes of membership

in a labor union.[13]


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Corollary to this right is the prerogative not to join, affiliate with or assist a labor

union.[14]Therefore, to become a union member, an employee must, as a rule, not only

signify the intent to become one, but also take some positive steps to realize that

intent. The procedure for union membership is usually embodied in the unions

constitution and bylaws.[15]An employee who becomes a union member acquires the

rights and the concomitant obligations that go with this new status and becomesbound by the unions rules and regulations.

When a manjoins a labor union (or almost any other democratically controlled

group), necessarily a portion of his individual freedom is surrendered for the benefit

of all members. He accepts the will of the majority of the members in order that he

may derive the advantages to be gained from the concerted action of all. Just as the

enactments of the legislature bind all of us, to the constitution and by-laws of the

union (unless contrary to good morals or public policy, or otherwise illegal), which

are duly enacted through democratic processes, bind all of the members. If a member

of a union dislikes the provisions of the by-laws, he may seek to have them amended

or may withdraw from the union; otherwise, he must abide by them. It is not the

function of courts to decide the wisdom or propriety of legitimate by-laws of a trade

union.

On joining a labor union, the constitution and by-laws become a part of the

members contract of membership under which he agrees to become bound by the

constitution and governing rules of the union so far as it is not inconsistent with

controlling principles of law. The constitution and by-laws of an unincorporated trade

union express the terms of a contract, which define the privileges and rights secured

to, and duties assumed by, those who have become members. The agreement of a

member on joining a union to abide by its laws and comply with the will of the

lawfully constituted majority does not require a member to submit to the

determination of the union any question involving his personal rights.[16]

Petitioners claim that the numerous anomalies allegedly committed by the private

respondents during the latters incumbency impelled the October 4, 1996 election of

the new set of USTFU officers. They assert that such exercise was pursuant to their

right to self-organization.

Petitioners frustration over the performance of private respondents, as well astheir fears of a fraudulent election to be held under the latters supervision, could

not justify the method they chose to impose their will on the union. Director Bitonio

aptly elucidated:[17]

The constitutional right to self-organization is better understood in the context of

ILO Convention No. 87 (Freedom of Association and Protection of Right to
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Organize), to which the Philippines is signatory. Article 3 of the Convention provides

that workers organizations shall have the right to draw up their constitution and rules

and to elect their representatives in full freedom, free from any interference from

public authorities. The freedom conferred by the provision is expansive; the

responsibility imposed on union members to respect the constitution and rules they

themselves draw up equally so. The point to be stressed is that the unions CBL is thefundamental law that governs the relationship between and among the members of the

union. It is where the rights, duties and obligations, powers, functions and authority

of the officers as well as the members are defined. It is the organic law that

determines the validity of acts done by any officer or member of the union. Without

respect for the CBL, a union as a demo

labor cases week 13

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