Asian Institute of Management vs. Asian Institute of Management Faculty Association

The grounds for cancellation of union registration under Article 239 of the Labor Code are exclusive and limited to misrepresentation or fraud in the adoption of the constitution and by-laws, misrepresentation or fraud in the election of officers, and voluntary dissolution; the ineligibility of members under Article 245 (managerial employees) is not an independent ground for cancellation, though it may constitute misrepresentation if fraudulently asserted during registration, and where such status is contested in a pending related case between the same parties, the petition for cancellation must be consolidated with that case to avoid conflicting decisions.

Asian Institute of Management (AIM) is a non-stock, non-profit educational institution employing faculty members organized as the Asian Institute of Management Faculty Association (AFA). The dispute originated when AFA filed a petition for certification election seeking to represent approximately forty faculty members, prompting AIM to contend that the faculty constituted managerial employees ineligible for union membership under Article 245 of the Labor Code. AIM simultaneously filed a petition for cancellation of AFA's certificate of registration on the ground that its members were managerial employees, creating parallel proceedings before the Department of Labor and Employment (DOLE) and the Bureau of Labor Relations (BLR).

• Nature of Parties: Petitioner AIM is a duly registered non-stock, non-profit educational institution. Respondent AFA is a labor organization composed of AIM faculty members, registered under Certificate of Registration No. NCR-UR-12-4076-2004.
• Certification Election Proceeding: On May 16, 2007, AFA filed a petition for certification election (DOLE Case No. NCR-OD-M-0705-007) to represent a bargaining unit of forty faculty members. AIM opposed, alleging the faculty were managerial employees under Article 212(m) of the Labor Code.
• Cancellation Proceeding: On July 11, 2007, AIM filed a petition for cancellation of AFA's certificate of registration (DOLE Case No. NCR-OD-0707-001-LRD), alleging misrepresentation in registration and that AFA was composed of managerial employees prohibited from organizing under Article 245.
• Med-Arbiter Ruling: On August 30, 2007, the Med-Arbiter denied the certification election petition, ruling that AIM's faculty members were managerial employees.
• DOLE Secretary Reversal: On February 20, 2009, the DOLE Secretary (acting through an Undersecretary) reversed the Med-Arbiter and ordered a certification election, finding the faculty were not managerial employees because their policy-making authority was merely recommendatory and subject to Board of Trustees approval.
• Regional Director Order: On February 16, 2009, the DOLE-NCR Regional Director issued an Order granting AIM's petition for cancellation and ordering AFA's delisting from the roster of legitimate labor organizations.
• BLR Reversal: On December 29, 2009, the Bureau of Labor Relations (BLR) reversed the Regional Director, holding that the grounds relied upon were not among those authorized under Article 239 of the Labor Code, and that the determination of managerial status required factual findings by the labor agency.
• Certification Election Appeal: In CA-G.R. SP No. 109487, the Court of Appeals granted AIM's petition regarding the certification election, reversed the DOLE Secretary, and reinstated the Med-Arbiter's order finding the faculty were managerial employees. AFA filed G.R. No. 197089 (pending) to review this decision.
• Cancellation Appeal: In CA-G.R. SP No. 114122 (the instant case), the Court of Appeals denied AIM's petition regarding the cancellation, affirming the BLR's retention of AFA's registration. The CA held that Article 239 provides exclusive grounds for cancellation and that managerial status is not among them; the CA also noted that Article 245-A provides that inclusion of employees outside the bargaining unit is not a ground for cancellation.
• Current Petition: AIM filed the instant petition for review on certiorari (G.R. No. 207971) assailing the CA's January 8, 2013 Decision and June 27, 2013 Resolution in CA-G.R. SP No. 114122.

• Managerial Status: Petitioner maintained that AFA members were managerial employees under Article 212(m) of the Labor Code, vested with powers to lay down and execute management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline employees; petitioner cited the Court of Appeals decision in CA-G.R. SP No. 109487 which found the faculty were managerial.
• Exclusive Grounds Not Absolute: Petitioner argued that the CA erred in declaring that the enumeration of grounds for cancellation under Article 239 is exclusive, contending that the registration of a union composed entirely of managerial employees is a patent nullity that may be collaterally attacked.
• Misrepresentation: Petitioner asserted that AFA's declaration in its registration documents that its members were eligible to join, assist, or form a labor organization constituted misrepresentation under Article 239(a), given the alleged managerial status of the faculty.
• Appropriate Remedy: Petitioner maintained that the proper remedy was the cancellation of AFA's certificate of registration rather than mere exclusion of individual members under Article 245-A, arguing that all AFA members were allegedly managerial employees.

• Exclusive Enumeration: Respondent countered that Article 239 of the Labor Code provides the exclusive grounds for cancellation of union registration—misrepresentation in the adoption of the constitution and by-laws, misrepresentation in the election of officers, or voluntary dissolution—and that the ineligibility of members under Article 245 is not among them.
• Lack of Misrepresentation: Respondent argued that petitioner failed to substantiate specific acts of fraud or misrepresentation with particularity as required by jurisprudence; the bare fact that some signatures appeared twice on the list of participants in the organizational meeting did not vitiate the consent of the majority.
• Automatic Removal: Respondent cited Article 245-A, which provides that the inclusion of employees outside the bargaining unit (such as managerial employees) is not a ground for cancellation and that such employees are automatically deemed removed from the list of membership.
• Harassment: Respondent characterized petitioner's opposition as harassment, oppression, and a violation of constitutional and statutory rights to self-organization.
• Factual Determination: Respondent maintained that the determination of whether faculty members were managerial employees involved factual questions requiring expertise of labor agencies, and that such findings were entitled to respect.

• Grounds for Cancellation: Whether the ineligibility of union members under Article 245 (managerial employees) constitutes a ground for cancellation of union registration under Article 239 of the Labor Code.
• Consolidation: Whether the petition for cancellation should be consolidated with the pending certification election case (G.R. No. 197089) where the same issue of managerial status is determinative.

• Exclusive Grounds: The grounds for cancellation of union registration under Article 239 of the Labor Code are exclusive and limited to: (a) misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws; (b) misrepresentation, false statements or fraud in connection with the election of officers; and (c) voluntary dissolution by the members. The ineligibility of members under Article 245 is not an independent ground for cancellation.
• Misrepresentation Standard: For fraud and misrepresentation to constitute grounds for cancellation under Article 239, the nature of the fraud must be grave and compelling enough to vitiate the consent of a majority of union members; mere technical irregularities or the bare fact of duplicate signatures do not meet this standard.
• Effect of Article 245-A: Under Article 245-A, the inclusion as union members of employees outside the bargaining unit (such as managerial employees) shall not be a ground for the cancellation of the registration of the union; said employees are automatically deemed removed from the list of membership of said union.
• Consolidation Required: Because the issue of whether AFA members are managerial employees is pending final resolution in G.R. No. 197089 (the certification election case), and the outcome of the cancellation petition depends on that determination, the cases involve identity of parties and issues. The resolution of the issue in G.R. No. 197089 cannot be pre-empted; until it is determined with finality, the petition for cancellation cannot be resolved.

• Exclusive Grounds for Cancellation of Union Registration — Article 239 of the Labor Code enumerates exclusively the grounds for cancellation of union registration: (a) misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; and (c) voluntary dissolution by the members. Article 238 provides that this enumeration is exclusive; no other grounds are acceptable.
• Effect of Inclusion of Disqualified Employees — Article 245-A of the Labor Code provides that the inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union. This provision applies to managerial employees who are ineligible to join unions under Article 245.
• Standard for Misrepresentation — For fraud and misrepresentation to be grounds for cancellation of union registration under the Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union members. Specific acts of fraud must be alleged with particularity, showing how, when, and where the union perpetrated the alleged fraud on each member.
• Identity of Issues and Res Judicata — Where a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity of cause of action is not required, but merely identity of issues.

• "Article 238 of the Labor Code provides that the enumeration of the grounds for cancellation of union registration, is exclusive; in other words, no other grounds for cancellation is acceptable, except for the three (3) grounds stated in Article 239."
• "For fraud and misrepresentation to be grounds for cancellation of union registration under the Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union members."
• "Article 245-A. Effect of inclusion as members of employees outside the bargaining unit. - The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union."
• "The resolution of this issue cannot be pre-empted; until it is determined with finality in G.R. No. 197089, the petition for cancellation of respondent's certificate of registration on the grounds alleged by petitioner cannot be resolved."
• "If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit."

• Holy Child Catholic School v. Hon. Sto. Tomas, 714 Phil. 427 (2013) — Cited for the procedure that in case of alleged inclusion of disqualified employees in a union, the employer may file a petition for cancellation based on misrepresentation, false statement or fraud under Article 239 of the Labor Code.
• Mariwasa Siam Ceramics, Inc. v. The Secretary of Department of Labor and Employment, 623 Phil. 603 (2009) — Cited regarding the standard that fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union members.
• Heirs of Parasac v. Republic, 523 Phil. 164 (2006) — Cited for the principle of identity of issues and the doctrine of res judicata (conclusiveness of judgment).

• Article 212(m), Labor Code — Defines managerial employees as those vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.
• Article 238, Labor Code — Provides that the grounds for cancellation of union registration enumerated in Article 239 are exclusive.
• Article 239, Labor Code — Enumerates the three exclusive grounds for cancellation of union registration: (a) misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws; (b) misrepresentation, false statements or fraud in connection with the election of officers; (c) voluntary dissolution by the members.
• Article 245, Labor Code — Declares that managerial employees are not eligible to join, assist or form any labor organization.
• Article 245-A, Labor Code — Provides that the inclusion as union members of employees outside the bargaining unit shall not be a ground for cancellation of the union's registration, and such employees are automatically deemed removed from the list of membership.

Maria Lourdes P.A. Sereno (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Estela M. Perlas-Bernabe, Alfredo Benjamin S. Caguioa.