Cooperative Rural Bank of Davao City, Inc. vs. Pura Ferrer-Calleja

Employees of a cooperative who are simultaneously members and co-owners thereof are disqualified from forming, joining, or assisting labor organizations for purposes of collective bargaining, as an owner cannot bargain with himself or his co-owners; however, employees of a cooperative who are not members or co-owners retain the full constitutional and statutory right to self-organization, collective bargaining, and negotiations.

The case arises from the intersection of labor law and cooperative law, specifically involving the unique character of cooperatives as defined under Presidential Decree No. 175. Cooperatives are organizations composed primarily of small producers and consumers who voluntarily join together to form business enterprises which they themselves own, control, and patronize, operating under principles of open membership, democratic control (one vote per member regardless of shares), limited interest on capital, and patronage refunds. The controversy questions whether the statutory right to collective bargaining extends to workers who simultaneously hold ownership interests and participate in the democratic control of their employer-entity.

• Petitioner Cooperative Rural Bank of Davao City, Inc. is a cooperative banking corporation operating in Davao City, owned partly by the Government and partly by its employees who are members and co-owners of the same enterprise.
• As of August 1986, the petitioner employed approximately 16 rank-and-file employees and had no existing collective bargaining agreement.
• Private respondent Federation of Free Workers is a legitimate labor organization registered with the Department of Labor and Employment, interested in representing the petitioner's employees for collective bargaining purposes.
• On August 27, 1986, the Federation of Free Workers filed a verified Petition for certification election among the rank-and-file employees of the petitioner, including those who were members and co-owners of the cooperative.
• The petitioner opposed the petition, arguing that cooperatives are not covered by certification election rules because they are not institutions operating for profit, and that employees who are members and co-owners cannot organize for collective bargaining as they would be bargaining with themselves.
• The petitioner also alleged that two of the signatories to the petition were managerial employees disqualified from joining concerted labor activities under Article 245 of the Labor Code.
• The Med-Arbiter granted the petition, and the Bureau of Labor Relations Director affirmed this decision, ruling that membership in a cooperative does not preclude employees from forming or joining labor unions.
• The petitioner cited a 1981 Opinion by then Solicitor General Estelito P. Mendoza regarding electric cooperatives, which stated that employees who are members/co-owners cannot form or join labor organizations for collective bargaining purposes.

• Cooperatives are not covered by the Rules governing certification elections because they are not institutions operating for profit, and the Labor Code provisions on collective bargaining do not apply to them.
• Employees who are simultaneously members and co-owners of a cooperative are disqualified from forming labor organizations for collective bargaining purposes because an owner cannot bargain with himself or his co-owners, and no duty to bargain exists between an employer and his co-owners who are also employees.
• Two of the alleged rank-and-file employees seeking certification election are actually managerial employees who are disqualified from joining concerted labor activities under Article 245 of the Labor Code.
• The Bureau of Labor Relations acted without jurisdiction or in excess thereof, or with grave abuse of discretion amounting to lack of jurisdiction, in allowing the certification election despite these objections.
• The Opinion of the Solicitor General dated August 14, 1981 regarding electric cooperatives should be applied by analogy to cooperative rural banks, as both involve employees who are members and co-owners of the enterprise.

• The petitioner falls within the purview of Article 212(c) of the Labor Code as an employer, and to argue otherwise would ignore the realities of cooperative banking institutions.
• Every worker in any establishment, whether operated for profit or not, has the basic right to self-organization and to engage in concerted activity mutually beneficial to their interests, as sacredly enshrined and protected in the Constitution.
• Being a member of a cooperative organization does not preclude one from forming or joining a labor union provided that such person is not among those disqualified by law, and nowhere in the records is there evidence showing that the signatories are disqualified.
• No persuasive evidence was presented to show that two of the signatories were managerial employees disqualified from pursuing union activities.
• The Solicitor General argued that the petition was rendered moot and academic because the certification election sought to be enjoined had already been conducted, and that the public respondents did not commit any jurisdictional error.

• Procedural Issues:
  • Whether the case has become moot and academic because the certification election proceeded despite the temporary restraining order issued by the Supreme Court.
  • Whether the Bureau of Labor Relations committed grave abuse of discretion or acted without/excess of jurisdiction in ordering the certification election.
• Substantive Issues:
  • Whether employees of a cooperative who are simultaneously members and co-owners thereof have the right to form, join, or assist labor organizations for purposes of collective bargaining.
  • Whether cooperatives are covered by the Labor Code provisions on certification elections and collective bargaining.
  • Whether the two signatories in the petition were managerial employees disqualified from union activities under Article 245 of the Labor Code.

• Procedural:
  • The case is not moot and academic despite the conduct of the certification election. As a special civil action for certiorari alleging errors of jurisdiction, if the public respondents committed jurisdictional errors, their actions would be deemed null and void ab initio, rendering the certification election without legal justification.
  • The arguments raised in the petition strike at the very heart of the validity of the certification election itself, necessitating judicial review of the jurisdictional questions.
• Substantive:
  • While Article 243 of the Labor Code grants the right to self-organization to all employees in commercial, industrial, and agricultural enterprises, including non-profit institutions, the unique nature of cooperatives under P.D. No. 175 creates a distinct legal relationship.
  • Cooperatives operate under principles of democratic control where members are entitled to only one vote regardless of shares owned, receive limited interest on capital, and enjoy special privileges such as tax exemptions and potential exemption from minimum wage laws.
  • An employee who is simultaneously a member and co-owner of a cooperative cannot invoke the right to collective bargaining because an owner cannot bargain with himself or his co-owners; no duty to bargain exists between co-owners.
  • However, employees of a cooperative who are not members or co-owners are entitled to exercise the full rights to organization, collective bargaining, and negotiations as enshrined in the Constitution and the Labor Code.
  • The Resolution of the Bureau of Labor Relations is modified to exclude member-employees from the certification election while upholding the rights of non-member employees to self-organization.
  • The finding that no persuasive evidence was presented to show that two signatories were managerial employees is upheld.

• Right to Self-Organization — The constitutional and statutory right of workers to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining, subject only to limitations provided by law. Applied to distinguish between member-employees (who cannot bargain with themselves) and non-member employees (who retain full rights) in a cooperative setting.
• Nature of Cooperatives — Cooperatives are organizations composed primarily of small producers and consumers who voluntarily join together to form business enterprises which they themselves own, control, and patronize, operating under principles of open membership, democratic control, limited interest to capital, and patronage refund. This distinct nature creates a unique relationship where member-employees simultaneously represent both labor and ownership interests.
• Identity of Interest/Owner Cannot Bargain with Himself — The principle that an owner cannot bargain with himself or his co-owners, which disqualifies member-employees of cooperatives from engaging in collective bargaining since they simultaneously represent both management (as owners with voting rights) and labor.

• "An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners."
• "However, in so far as it involves cooperatives with employees who are not members or co-owners thereof, certainly such employees are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as are enshrined in the Constitution and existing laws of the country."
• "If the public respondents had indeed committed jurisdictional errors, the action taken by both the Med-Arbiter and the Bureau Director will be deemed null and void ab initio."
• "It is beyond doubt that respondent-appellant, Cooperative Rural Bank of Davao City falls within the purview of Article 212, paragraph C of the Labor Code, acting as such in the interest of an employer."

• Ang Lam v. Rosillosa, 86 Phil. 447 (1950) — Cited for the principle that if public respondents committed jurisdictional errors, their actions would be null and void ab initio, and therefore subject to correction by certiorari.

• Article 243 of the Labor Code — Enumerates the coverage and employees' right to self-organization in commercial, industrial, and agricultural enterprises and in religious, charitable, medical, or educational institutions whether operating for profit or not.
• Article 245 of the Labor Code — Provides for the ineligibility of managerial employees to join, assist, or form any labor organization.
• P.D. No. 175 — Defines cooperatives and declares state policy for their creation and growth, enumerating principles of open membership, democratic control, limited interest to capital, and patronage refund.
• P.D. No. 501 — Places electric cooperatives under the regulation and supervision of the National Electrification Administration.
• P.D. No. 1283 — Grants the Monetary Board of the Central Bank exclusive responsibility and authority over the banking functions and operations of cooperative banks.
• Rule 65 of the Rules of Court — Basis for the Petition for Certiorari alleging lack or excess of jurisdiction or grave abuse of discretion by public respondents.
• Section 8, Article II and Section 3, Article XIII of the 1987 Constitution — Constitutional provisions guaranteeing the rights of workers to self-organization, collective bargaining, and negotiations.