Coastal Subic Bay Terminal, Inc. vs. Department of Labor and Employment – Office of the Secretary, et al.

A labor organization’s registration by the DOLE Regional Office under the 1989 Implementing Rules is valid, and its legal personality cannot be collaterally attacked but may be questioned only in an independent cancellation proceeding; however, a supervisory union and a rank-and-file union cannot separately petition for certification election where their respective mother federations share common officers and actively participate in the locals, because such commingling creates conflicts of interest and bars them from attaining legitimate labor organization status for separate certification election purposes.

Coastal Subic Bay Terminal, Inc. (CSBTI) is the employer; the Coastal Subic Bay Terminal, Inc. Rank-and-File Union (CSBTI-RFU) and the Coastal Subic Bay Terminal, Inc. Supervisory Union (CSBTI-SU) are the labor organizations seeking to represent its rank-and-file and supervisory employees, respectively. CSBTI-RFU was chartered by the Associated Labor Union (ALU), while CSBTI-SU was chartered by the Associated Professional, Supervisory, Office and Technical Employees Union (APSOTEU). The Labor Code and its implementing rules govern registration, acquisition of legitimate status, and certification elections, while Article 245 separately regulates supervisory employees and prohibits their membership in rank-and-file unions. The statutory framework distinguishes supervisory from rank-and-file employees and governs whether a labor organization may act as a legitimate bargaining representative.

On July 8, 1998, CSBTI-RFU and CSBTI-SU filed separate petitions for certification election before Med-Arbiter Eladio de Jesus of Regional Office No. III. CSBTI-RFU asserted that it was a legitimate labor organization by virtue of a charter certificate issued by ALU, while CSBTI-SU asserted the same by virtue of a charter certificate issued by APSOTEU. Both alleged that the establishment in which they sought to operate was unorganized.

CSBTI opposed both petitions. It alleged that the rank-and-file and supervisory unions were not legitimate labor organizations and that the proposed bargaining units were not particularly described. The Med-Arbiter consolidated the petitions and, without ruling on the legitimacy of the respondent unions, dismissed both without prejudice to refiling. The Med-Arbiter found that ALU and APSOTEU were one and the same federation with a common set of officers, so the supervisory and rank-and-file unions were in effect affiliated with only one federation; the simultaneous filing was therefore invalid and unwarranted.

Both parties appealed to the Secretary of Labor and Employment. The Secretary, through Undersecretary R. Baldoz, reversed the Med-Arbiter. The Secretary ruled that CSBTI-SU and CSBTI-RFU had separate legal personalities to file their separate petitions. APSOTEU was a legitimate labor organization because it was properly registered under the 1989 Revised Rules implementing Republic Act No. 6715, the rule applicable at the time of its registration. ALU and APSOTEU were separate and distinct labor unions with separate certificates of registration from the DOLE and different sets of locals. CSBTI-RFU and CSBTI-SU were declared legitimate labor organizations, having been chartered respectively by ALU and APSOTEU after submitting all requirements with the Bureau of Labor Relations. The Secretary ordered separate certification elections among the appropriate employees of CSBTI, with the choices of each union or no union, using the latest payroll as the basis for the qualified list of voters.

The Secretary denied reconsideration. On appeal, the Court of Appeals affirmed, holding that the Secretary did not commit grave abuse of discretion, that the findings were supported by evidence, and that they should be accorded respect and finality. The Court of Appeals likewise denied reconsideration. The company then filed the present petition for review on certiorari.

In the Supreme Court, the records showed that APSOTEU was registered on March 1, 1991; its principal office was in Diliman, Quezon City, and its registration was filed with the NCR Regional Office. The national federations to which the rank-and-file and supervisory unions were separately affiliated had a common set of officers. APSOTEU, the supervisory federation, actively participated in CSBTI-SU, while ALU, the rank-and-file federation, actively participated in CSBTI-RFU. These commonalities and active participation gave occasion to possible conflicts of interest among the common officers of the federation of rank-and-file and the federation of supervisory unions.

• Registration of APSOTEU: Petitioner argued that APSOTEU improperly secured its registration from the DOLE Regional Director rather than the BLR; that the BLR is authorized to process applications and issue certificates of registration under Philippine Association of Free Labor Unions vs. Secretary of Labor; and that certificates issued by the DOLE Regional Director under the rules were questionable and possibly void ab initio for being ultra vires.
• Applicable Implementing Rules: Petitioner maintained that the Court of Appeals erred in ruling that the law applicable at the time of APSOTEU’s registration was the 1989 Revised Implementing Rules and Regulations of Republic Act No. 6715.
• Lack of Legal Personality: Petitioner insisted that APSOTEU lacked legal personality and that its chartered affiliate, CSBTI-SU, could not attain the status of a legitimate labor organization to file a petition for certification election, relying on Villar vs. Inciong.
• Stare Decisis: Petitioner argued that the Court of Appeals erred in affirming the Secretary’s application of the principle of stare decisis to hastily dispose of the legal personality issue of APSOTEU.
• Union Autonomy: Petitioner argued that the Court of Appeals did not decide in accord with law and jurisprudence when it affirmed the Secretary’s application of the “union autonomy” theory.
• Separate Federations and Commingling: Petitioner contended that, in affirming the finding that private respondents were “separate federations,” the Court of Appeals ignored jurisprudence recognizing the binding nature of a Med-Arbiter’s factual findings and disregarded evidence on record of illegal commingling; applying the doctrine of piercing the veil of corporate fiction by analogy, APSOTEU and ALU were the same federation.

• Unorganized Establishment: Private respondents alleged that the establishment in which they sought to operate was unorganized.
• Legitimate Labor Organizations: Private respondents maintained that CSBTI-RFU and CSBTI-SU were legitimate labor organizations by virtue of charter certificates issued by ALU and APSOTEU, respectively.
• No Commingling: Private respondents disagreed with petitioner’s contention that APSOTEU and ALU were the same federation under the doctrine of piercing the veil of corporate fiction.

• Separate Certification Election Petitions: Whether the supervisory and rank-and-file unions can file separate petitions for certification election, considering the status of APSOTEU and CSBTI-SU.
• Stare Decisis: Whether the Secretary’s decision based on stare decisis was correct.
• Commingling: Whether private respondents were engaged in commingling.

• Separate Certification Election Petitions: No. For as long as the supervisory and rank-and-file unions are affiliated with APSOTEU and ALU, whose federations have common officers and actively participate in the locals, they do not meet the criteria to attain the status of legitimate labor organizations and cannot separately petition for certification elections.
• Stare Decisis: Yes. The Secretary correctly applied the rule that a registered labor organization’s legal personality cannot be collaterally attacked but may be questioned only in an independent petition for cancellation.
• Commingling: Yes. The national federations had a common set of officers and actively participated in the locals, creating possible conflicts of interest; this commingling barred the unions from separately petitioning for certification election.

• Separate Certification Election Petitions: The status of CSBTI-SU depended on APSOTEU. Article 235 of the Labor Code provides that applications for registration shall be acted upon by the Bureau, and Article 212(b) defines “Bureau” as the BLR and/or the Labor Relations Division in the Regional Offices. Section 2, Rule II, Book V of the 1989 Revised Implementing Rules allowed any national labor organization, labor federation, or local union to file an application with the Bureau or the Regional Office where the applicant’s principal office was located; the Bureau or Regional Office was to process and approve or deny the application and issue the certificate. Section 1, Rule III, Book V, as amended by Department Order No. 9, required federation applications to be filed with the Bureau, but that amendment took effect only on June 21, 1997. APSOTEU was registered on March 1, 1991, so the 1989 rules applied. Its principal office was in Diliman, Quezon City, and its registration was filed with the NCR Regional Office; the certificate of registration was therefore valid. Petitioner’s reliance on Villar vs. Inciong was misplaced because in that case there was no record in the BLR that the Amigo Employees Union was registered. Under Section 5, Rule V, Book V, a labor organization’s legal personality vests upon issuance of its certificate and cannot be collaterally attacked; it may be questioned only in an independent petition for cancellation. APSOTEU was thus a legitimate labor organization with authority to issue a charter to CSBTI-SU, making CSBTI-SU legitimate. However, Article 245 prohibits supervisory employees from membership in a rank-and-file union and allows them to form their own; to avoid supervisors merging with the rank-and-file or representing conflicting interests, a local supervisors’ union should not affiliate with a national federation of rank-and-file employees where that federation actively participates in union activity within the company. The prohibition extends to a supervisors’ local union applying for membership in a national federation whose members include local unions of rank-and-file employees. In De La Salle University Medical Center and College of Medicine vs. Laguesma, the Court reiterated that for the prohibition to apply, it is not enough that the supervisory and rank-and-file unions are affiliated with a single federation; the supervisors must also have direct authority over the rank-and-file employees. In this case, the federations had a common set of officers, and APSOTEU actively participated in CSBTI-SU while ALU actively participated in CSBTI-RFU, creating possible conflicts of interest. For as long as they were affiliated with APSOTEU and ALU, the supervisory and rank-and-file unions did not meet the criteria to attain the status of legitimate labor organizations and could not separately petition for certification elections.
• Stare Decisis: The Secretary’s reliance on the rule that APSOTEU’s legal personality could not be collaterally attacked was correct. Section 5, Rule V, Book V of the Implementing Rules provides that a labor organization is deemed registered and vested with legal personality on the date of issuance of its certificate, and such legal personality cannot thereafter be subject to collateral attack but may be questioned only in an independent petition for cancellation. Once a labor union attains the status of a legitimate labor organization, it continues as such until its certificate of registration is cancelled or revoked in an independent action. Because no independent action for cancellation had been filed against APSOTEU or ALU, their registrations remained effective and their separate legal personalities could not be collaterally attacked in the certification election proceedings.
• Commingling: The petitioner’s analogy to piercing the veil of corporate fiction did not, by itself, convert APSOTEU and ALU into a single federation. When the personality of a labor organization is questioned in the same manner as the corporate veil is pierced, the action partakes of the nature of a collateral attack; absent an independent action for cancellation, each federation continues to possess a separate legal personality. Thus, CSBTI-RFU and CSBTI-SU were affiliated with distinct and separate federations despite the commonalities between APSOTEU and ALU. A chartered local union acquires legal personality through a charter certificate issued by a duly registered federation or national union and reported to the Regional Office. A local union does not owe its existence to the federation; it is a separate and distinct voluntary association owing its creation to the will of its members. Mere affiliation does not divest the local union of its personality, nor does it give the mother federation license to act independently of the local union; it gives rise to a contract of agency, with local unions as principals and the federation as agent. As principals, the unions are entitled to exercise the rights and privileges of a legitimate labor organization, including the right to seek certification as the sole and exclusive bargaining agent. Nevertheless, Article 245 and the rules on supervisory employees prohibit commingling. The national federations here had a common set of officers, and APSOTEU actively participated in CSBTI-SU while ALU actively participated in CSBTI-RFU, giving occasion to possible conflicts of interest among the common officers. For as long as they were affiliated with APSOTEU and ALU, the supervisory and rank-and-file unions did not meet the criteria to attain the status of legitimate labor organizations and could not separately petition for certification elections. When there is commingling of officers of a rank-and-file union with a supervisory union, the constitutional policy on labor is circumvented. Labor organizations should ensure the freedom of employees to organize themselves for the purpose of leveling the bargaining process but also to ensure the freedom of workingmen and to keep open the corridor of opportunity to enable them to do it for themselves.

• Registration of labor organizations; where to file — Under Article 235 of the Labor Code, applications for registration are acted upon by the Bureau, which under Article 212(b) means the Bureau of Labor Relations and/or the Labor Relations Division in the Regional Offices. Section 2, Rule II, Book V of the 1989 Revised Implementing Rules allowed any national labor organization, labor federation, or local union to file with the Bureau or the Regional Office where the applicant’s principal office was located, and the Bureau or Regional Office could process and issue the certificate. APSOTEU’s registration on March 1, 1991, filed with the NCR Regional Office where its principal office was located, was valid under these rules; the later Department Order No. 9, effective June 21, 1997, did not apply retroactively.
• Non-collateral attack on labor organization’s legal personality — Once a labor organization is registered and vested with legal personality on the date of issuance of its certificate, that personality cannot be collaterally attacked; it may be questioned only in an independent petition for cancellation. Applied: APSOTEU’s legal personality could not be assailed in the certification election proceedings, and it could issue a charter to CSBTI-SU.
• Local union autonomy and agency relationship with federation — A chartered local union acquires legal personality through a charter certificate issued by a duly registered federation or national union and reported to the Regional Office. A local union does not owe its existence to the federation; it is a separate and distinct voluntary association owing its creation to the will of its members. Mere affiliation does not divest the local union of its personality, nor does it give the mother federation license to act independently of the local union; it gives rise to a contract of agency, with local unions as principals and the federation as agent. Applied: CSBTI-RFU and CSBTI-SU were affiliated with distinct and separate federations despite commonalities between ALU and APSOTEU.
• Prohibition against supervisory-rank-and-file commingling — Article 245 of the Labor Code provides that supervisory employees are not eligible for membership in a labor organization of rank-and-file employees but may form separate labor organizations of their own. To avoid supervisors merging with the rank-and-file or representing conflicting interests, a local supervisors’ union should not affiliate with a national federation of rank-and-file employees where that federation actively participates in union activity within the company; the prohibition extends to a supervisors’ local union applying for membership in a national federation whose members include local unions of rank-and-file employees. For the prohibition to apply, it is not enough that the supervisory and rank-and-file unions are affiliated with a single federation; the supervisors must also have direct authority over the rank-and-file employees. In this case, the federations had common officers and actively participated in the locals, creating possible conflicts of interest; for as long as the unions were affiliated with APSOTEU and ALU, they did not meet the criteria to attain legitimate labor organization status and could not separately petition for certification election.

• "For as long as they are affiliated with the APSOTEU and ALU, the supervisory and rank-and-file unions both do not meet the criteria to attain the status of legitimate labor organizations, and thus could not separately petition for certification elections." — This is the core holding on commingling: the unions’ continued affiliation with federations sharing common officers and actively participating in the locals barred their separate certification election petitions.
• "Such legal personality cannot thereafter be subject to collateral attack, but maybe questioned only in an independent petition for cancellation in accordance with these Rules." — This states the rule on the effect of registration and the non-collateral attackability of a labor organization’s legal personality, which the Court applied to APSOTEU.
• "Thus, considering further that APSOTEU’s principal office is located in Diliman, Quezon City, and its registration was filed with the NCR Regional Office, the certificate of registration is valid." — This is the Court’s application of the 1989 Implementing Rules to uphold APSOTEU’s registration by the DOLE Regional Office.
• "When there is commingling of officers of a rank-and-file union with a supervisory union, the constitutional policy on labor is circumvented." — This articulates the constitutional labor policy underlying the prohibition on commingling between supervisory and rank-and-file unions.

• Philippine Association of Free Labor Unions vs. Secretary of Labor, No. L-22228, February 27, 1969, 27 SCRA 40 — Cited by petitioner for the proposition that the BLR is authorized to process registration applications; the Court did not adopt petitioner’s reliance because Article 235 and the 1989 Implementing Rules allowed the Regional Office to act at the time of APSOTEU’s registration.
• Villar vs. Inciong, Nos. L-50283-84, April 20, 1983, 121 SCRA 444 — Cited by petitioner to argue that APSOTEU lacked registration; distinguished because in Villar there was no record in the BLR that the Amigo Employees Union was registered, whereas APSOTEU’s registration was valid.
• Tagaytay Highlands International Golf Club, Incorporated vs. Tagaytay Highlands Employees Union-PTGWO, G.R. No. 142000, January 22, 2003, 395 SCRA 699, 707 — Cited for the rule that a labor organization’s legal personality cannot be collaterally attacked.
• Alliance of Nationalist and Genuine Labor Org. vs. Samahan ng mga Manggagawang Nagkakaisa sa Manila Bay Spinning Mills, G.R. No. 118562, July 5, 1996, 258 SCRA 371, 377 — Cited for the rule that affiliation gives rise to a contract of agency and does not divest the local union of its personality.
• De La Salle University Medical Center and College of Medicine vs. Laguesma, G.R. No. 102084, August 12, 1998, 294 SCRA 141, 149 — Cited for the rule that local unions are principals and federations agents, and for the requirement that supervisors must have direct authority over rank-and-file employees for the prohibition on affiliation to apply.
• Atlas Lithographic Services, Inc. vs. Laguesma, G.R. No. 96566, January 6, 1992, 205 SCRA 12, 17 — Cited for the rule that supervisory employees cannot join rank-and-file unions and that a local supervisors’ union should not affiliate with a national federation of rank-and-file employees where the federation actively participates in the company.
• Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc., No. L-33987, September 4, 1975, 66 SCRA 512, 519 — Cited for the purpose of affiliation of local unions to increase collective bargaining power.

• Article 235, Labor Code — Provides that the Bureau shall act on all applications for registration within thirty days from filing. The Court used it with Article 212(b) to hold that the Regional Office could act on APSOTEU’s registration under the applicable rules.
• Article 212(b), Labor Code — Defines “Bureau” as the Bureau of Labor Relations and/or the Labor Relations Division in the Regional Offices. This definition supported the validity of registration filed with and acted upon by the NCR Regional Office.
• Article 245, Labor Code — Provides that managerial employees are not eligible to join, assist, or form any labor organization; supervisory employees are not eligible for membership in a labor organization of rank-and-file employees but may join, assist, or form separate labor organizations of their own. The Court applied this to prohibit commingling between supervisory and rank-and-file unions and to bar separate certification election petitions under the circumstances.
• Section 2, Rule II, Book V, 1989 Revised Implementing Rules of the Labor Code — Allows any national labor organization, labor federation, or local union to file an application for registration with the Bureau or the Regional Office where the applicant’s principal office is located; the Bureau or Regional Office shall process and approve or deny the application and issue the certificate. The Court applied this to APSOTEU’s March 1, 1991 registration.
• Section 1, Rule III, Book V, as amended by Department Order No. 9 — Requires federation, national or industry union, or trade union center applications to be filed with the Bureau and forwarded there if filed with the Regional Office; independent union applications are filed with and acted upon by the Regional Office. The Court held this amendment took effect only on June 21, 1997 and did not govern APSOTEU’s earlier registration.
• Department Order No. 40-03 — Took effect on March 15, 2003 and further amended Book V, providing that applications for registration may be filed either with the Regional Office or the BLR. The Court noted that even after the amendments, the Regional Office and BLR were not divested of jurisdiction.
• Section 5, Rule V, Book V, Implementing Rules of the Labor Code — Provides that a labor organization or workers’ association is deemed registered and vested with legal personality on the date of issuance of its certificate; such legal personality cannot thereafter be subject to collateral attack but may be questioned only in an independent petition for cancellation. The Court applied this to APSOTEU and to the non-collateral attack issue.
• Section 1(i), Rule I, Book V, Implementing Rules of the Labor Code — Provides that a chartered local union acquires legal personality through a charter certificate issued by a duly registered federation or national union and reported to the Regional Office. The Court used this to recognize CSBTI-RFU and CSBTI-SU as chartered locals, subject to the commingling prohibition.
• Section 1, Rule VI, Book V, Implementing Rules of the Labor Code — Cited by the Court for the authority of a legitimate labor organization to issue charters to its affiliates. The Court used it to hold that APSOTEU could issue a local charter certificate to CSBTI-SU.

Antonio T. Carpio, Conchita Carpio Morales, Dante O. Tinga, and Presbitero J. Velasco, Jr. concurred.