NUWHRAIN-MPHC vs. Secretary of Labor and Employment

Probationary employees are entitled to vote in certification elections as part of the appropriate bargaining unit, and the reckoning date for determining voter eligibility—where a timely appeal from the Med-Arbiter's order has been filed—is the date when the Secretary of Labor and Employment's resolution on the appeal becomes final and executory. A CBA provision disqualifying probationary employees from voting cannot override the constitutional right to self-organization and the Labor Code's provisions on certification elections.

Two labor organizations—petitioner NUWHRAIN-MPHC and respondent HIMPHLU—contested representation of the rank-and-file employees of Holiday Inn Manila Pavilion Hotel (the Hotel), owned by respondent Acesite Philippines Hotel Corporation. Certification elections under the Labor Code are the mechanism for determining the sole and exclusive bargaining agent of employees in an appropriate bargaining unit. Department Order No. 40-03, series of 2003, amended the Omnibus Rules Implementing the Labor Code and governs the conduct of certification elections, including voter qualifications and the inclusion-exclusion process. The dispute centered on whether certain segregated ballots—cast by dismissed, supervisory, and probationary employees—should be opened and tallied, and whether either union had obtained the majority required for certification.

A certification election was conducted on June 16, 2006 among the rank-and-file employees of Holiday Inn Manila Pavilion Hotel, with petitioner NUWHRAIN-MPHC and respondent HIMPHLU as the contending unions. The results showed 353 employees in the voters' list, 346 total votes cast, with NUWHRAIN-MPHC garnering 151 votes, HIMPHLU garnering 169 votes, 1 vote for "No Union," 3 spoiled ballots, and 22 segregated ballots. The significant number of segregated votes prompted the contending unions to refer the matter back to Med-Arbiter Ma. Simonette Calabocal to determine which of those votes should be opened and tallied.

Eleven of the segregated votes were cast by dismissed employees, although the legality of their dismissal was still pending before the Court of Appeals at the time. Six other votes were segregated because the employees who cast them were already occupying supervisory positions at the time of the election. Still five other votes were segregated on the ground that they were cast by probationary employees and, pursuant to the existing Collective Bargaining Agreement (CBA), such employees could not vote. Notably, however, the vote of one Jose Gatbonton, also a probationary employee, had been counted.

By Order dated August 22, 2006, Med-Arbiter Calabocal ruled for the opening of 17 of the 22 segregated votes—specifically those cast by the 11 dismissed employees and the 6 supposedly supervisory employees—while excluding the 5 probationary employees' votes. Petitioner appealed to the Secretary of Labor and Employment, arguing that the votes of the probationary employees should have been opened given that Gatbonton's vote had been tallied, and that HIMPHLU should not be immediately certified as the bargaining agent because the opening of the 17 segregated ballots would increase the total valid votes to 338, rendering HIMPHLU's 169 votes one short of the majority.

The SOLE, through then Acting Secretary Luzviminda Padilla, affirmed the Med-Arbiter's Order by Resolution dated January 22, 2007. The SOLE held that under Section 5, Rule IX of the Omnibus Rules Implementing the Labor Code, the probationary employees could not vote because they were not yet hired at the time the Med-Arbiter issued the August 9, 2005 Order granting the certification election. The SOLE ruled that the 11 dismissed employees' votes could be counted since their dismissal was still pending appeal, and that the 6 alleged supervisory employees' votes should be counted since their promotion took effect months after the August 9, 2005 Order, meaning they were still rank-and-file at the relevant time. As for Gatbonton's vote, the SOLE ruled it could not serve as basis to include the other probationary employees' votes because it was not timely challenged during the pre-election conferences or on election day. The SOLE further held that even if the 17 votes were presumed in favor of petitioner, they would not suffice to overturn HIMPHLU's 169 votes, and accordingly certified HIMPHLU as the exclusive bargaining agent.

Petitioner's motion for reconsideration was denied by the SOLE on March 22, 2007. Petitioner then appealed to the Court of Appeals, which affirmed the SOLE's ruling on November 8, 2007. The appellate court held that the ruling in Airtime Specialists, Inc. vs. Ferrer-Calleja—that all rank-and-file employees, whether probationary or permanent, are entitled to vote—was inapplicable because the six probationary employees were not yet employed at the time the August 9, 2005 Order was issued, and that Airtime Specialists applies only where probationary employees were already employed as of the date of filing the petition for certification election. The Court of Appeals also upheld the SOLE's finding that Gatbonton's vote, having been unchallenged, could not be made the basis for including the other probationary employees' votes, and that the "majority" contemplated in certification elections refers to the majority of valid votes cast. Petitioner's motion for reconsideration was denied by the Court of Appeals on January 25, 2008, prompting the present petition.

• Equal Protection: Petitioner maintained that the inclusion of Jose Gatbonton's vote while excluding the votes of the six other probationary employees violated the principle of equal protection and was inconsistent with the ruling in Airtime Specialists, Inc. vs. Ferrer-Calleja, which holds that all rank-and-file employees, whether probationary or permanent, are entitled to vote in a certification election.
• Reckoning Date for Voter Eligibility: Petitioner argued that the proper reckoning date for determining when probationary employees may vote is not August 9, 2005—the date the Med-Arbiter issued the Order granting the certification election—but March 10, 2006, the date the SOLE Order affirmed the Med-Arbiter's Order. Petitioner posited that the word "order" in Section 5, Rule 9 of Department Order No. 40-03 refers to an order which has already become final and executory.
• Insufficiency of Majority: Petitioner contended that even if the votes of the six probationary employees were included, HIMPHLU could not be considered as having obtained a majority of the valid votes cast, because the opening of the 17 segregated ballots would increase the number of valid votes from 321 to 338, requiring at least 170 votes for certification—making HIMPHLU's 169 votes one short of the majority.
• Justification for Not Challenging Gatbonton's Vote: Petitioner justified its failure to challenge Gatbonton's vote on the ground that its position was precisely that probationary employees should be allowed to vote, and that justice and equity dictate that since Gatbonton's vote was counted, the votes of the six other probationary employees should likewise be included.

• Right of Probationary Employees to Vote: Whether employees on probationary status at the time of the certification election should be allowed to vote.
• Reckoning Date for Voter Eligibility: Whether the reckoning date for determining voter eligibility is the date of the Med-Arbiter's Order granting the certification election or the date when the SOLE's resolution on appeal becomes final and executory.
• Certification as Exclusive Bargaining Agent: Whether HIMPHLU obtained the required majority of valid votes cast to be certified as the exclusive bargaining agent.

• Right of Probationary Employees to Vote: Yes. Probationary employees have the right to vote in a certification election, as Article 255 of the Labor Code makes no distinction based on employment status, and all rank-and-file employees in the appropriate bargaining unit are entitled to vote.
• Reckoning Date for Voter Eligibility: The reckoning date is the date when the SOLE's resolution on appeal becomes final and executory, not the date of the Med-Arbiter's Order, because the filing of an appeal stays the execution of the Med-Arbiter's Order pursuant to Section 21 of Department Order No. 40-03.
• Certification as Exclusive Bargaining Agent: No. HIMPHLU did not obtain the required majority. With the probationary employees' votes included and the supervisory employees' votes excluded, the valid votes cast totaled 337, requiring at least 170 votes for certification; HIMPHLU garnered only 169, one vote short of the majority.

• Right of Probationary Employees to Vote: The Court relied on Airtime Specialists, Inc. vs. Ferrer-Calleja, which held that in a certification election, all rank-and-file employees in the appropriate bargaining unit, whether probationary or permanent, are entitled to vote. Article 255 of the Labor Code refers to "all" the employees in the bargaining unit and makes no distinction based on employment status. Since collective bargaining covers all aspects of the employment relation and the resulting CBA binds all employees in the bargaining unit, all rank-and-file employees have a substantial interest in the selection of the bargaining representative. Rule II, Section 2 of Department Order No. 40-03 further provides that any employee, whether employed for a definite period or not, shall, beginning on the first day of service, be eligible for membership in any labor organization. The CBA provision disqualifying probationary employees from voting cannot override the constitutionally protected right to self-organization, as well as the provisions of the Labor Code and its Implementing Rules. A law is read into and forms part of a contract, and provisions in a contract are valid only if not contrary to law, morals, good customs, public order, or public policy. The inclusion of Gatbonton's vote was proper not because it was unchallenged but because probationary employees have the right to vote; the votes of the six other probationary employees should thus also have been counted.

• Reckoning Date for Voter Eligibility: Section 5, Rule XI of Department Order No. 40-03—which provides that all employees who are members of the appropriate bargaining unit at the time of the issuance of the order granting the certification election shall be eligible to vote—should not be read in isolation and must be harmonized with other provisions of the same order. Section 21 provides that the filing of an appeal to the SOLE from the Med-Arbiter's Order stays the holding of any certification election, and the decision of the Secretary becomes final and executory after ten days from receipt. Rationally, the Med-Arbiter cannot direct the employer to furnish the list of eligible voters pending the resolution of the appeal. During the pendency of the appeal, the employer may hire additional employees, and to exclude employees hired after the Med-Arbiter's Order but before the appeal is resolved would violate the guarantee that every employee has the right to be part of a labor organization from the first day of service. The reckoning period for determining eligible voters, where a timely appeal has been filed, is the date when the SOLE's resolution—whether affirming or denying the appeal—becomes final and executory. In the present case, the probationary employees, including Gatbonton, were included in the list of employees submitted by the Hotel on May 25, 2006, after the appeal and motion for reconsideration were denied, rendering the Med-Arbiter's Order final and executory. To rule that only employees hired as of the Med-Arbiter's Order are qualified would effectively disenfranchise employees hired during the pendency of the appeal and render inutile the remedy of appeal to the SOLE. However, the votes of the six supervisory employees were excluded because at the time the certification election was conducted, they had ceased to be part of the rank-and-file, their promotion having taken effect two months before the election.

• Certification as Exclusive Bargaining Agent: Under the "double majority rule," for a valid certification election, majority of the bargaining unit must have voted and the winning union must have garnered majority of the valid votes cast. With the probationary employees' votes deemed valid and the supervisory employees' votes excluded, the number of valid votes cast increased from 321 to 337. Under Article 256 of the Labor Code, the union obtaining the majority of the valid votes cast shall be certified as the sole and exclusive bargaining agent; this majority is 50% + 1, or at least 170. HIMPHLU obtained 169 votes—one short of the required majority. The true importance of ascertaining the number of valid votes cast is to serve as the basis for computing the required majority, not merely to determine which union won. Since no choice obtained the required majority, a run-off election between HIMPHLU and petitioner was in order, as provided under Department Order No. 40-03, which defines a run-off election as an election between the labor unions receiving the two highest numbers of votes where none receives the majority, provided the total votes for all contending unions is at least 50% of the votes cast.

• Right of Probationary Employees to Vote in Certification Elections — All rank-and-file employees in the appropriate bargaining unit, whether probationary or permanent, are entitled to vote in a certification election. The Labor Code makes no distinction based on employment status; the law refers to "all" employees in the bargaining unit. This principle flows from Article 255 of the Labor Code and is reinforced by Rule II, Section 2 of Department Order No. 40-03, which provides that any employee, whether employed for a definite period or not, shall, beginning on the first day of service, be eligible for membership in any labor organization. A CBA provision disqualifying probationary employees from voting cannot override this constitutionally protected right.

• Reckoning Date for Voter Eligibility in Certification Elections — Where a timely appeal has been filed from the Med-Arbiter's Order granting the conduct of a certification election, the reckoning date for determining who shall be included in the list of eligible voters is the date when the SOLE's resolution—whether affirming or denying the appeal—becomes final and executory. This is because the filing of an appeal stays the execution of the Med-Arbiter's Order pursuant to Section 21, Rule XI of Department Order No. 40-03, and excluding employees hired during the pendency of the appeal would violate their right to self-organization from the first day of service.

• Double Majority Rule in Certification Elections — For a valid certification election, two conditions must be met: (1) majority of the bargaining unit must have voted, and (2) the winning union must have garnered majority of the valid votes cast. The majority required is 50% + 1 of the valid votes cast. The purpose of ascertaining the number of valid votes cast is to serve as the basis for computing the required majority, not merely to determine which union won.

• Run-Off Election — A run-off election refers to an election between the labor unions receiving the two highest numbers of votes in a certification or consent election with three or more choices, where none of the choices receives the majority of the valid votes cast, provided that the total number of votes for all contending unions is at least 50% of the number of votes cast.

• "In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or permanent are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the 'labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for purposes of collective bargaining.'" — This passage, quoting Airtime Specialists, Inc. vs. Ferrer-Calleja, articulates the foundational rule that employment status is irrelevant to voter eligibility in certification elections, and that the Labor Code's reference to "all" employees admits no distinction between probationary and permanent workers.

• "The provision in the CBA disqualifying probationary employees from voting cannot override the Constitutionally-protected right of workers to self-organization, as well as the provisions of the Labor Code and its Implementing Rules on certification elections and jurisprudence thereon." — This statement establishes the hierarchy between collective bargaining agreements and statutory/constitutional rights, confirming that CBA provisions contrary to labor law and the right to self-organization are void.

• "the period of reckoning in determining who shall be included in the list of eligible voters is, in cases where a timely appeal has been filed from the Order of the Med-Arbiter, the date when the Order of the Secretary of Labor and Employment, whether affirming or denying the appeal, becomes final and executory." — This passage defines the controlling rule for determining the cut-off date for voter eligibility when an appeal has been filed, resolving the ambiguity in Section 5, Rule XI of Department Order No. 40-03 by harmonizing it with the appeal-stay provision in Section 21.

• "the true importance of ascertaining the number of valid votes cast is for it to serve as basis for computing the required majority, and not just to determine which union won the elections." — This statement clarifies the purpose of counting valid votes in certification elections, emphasizing that the majority threshold is a substantive requirement for valid certification, not merely a comparative exercise between contending unions.

• Airtime Specialists, Inc. vs. Ferrer-Calleja, 180 SCRA 749 — Controlling precedent followed and applied. The Court relied on this case for the proposition that all rank-and-file employees in the appropriate bargaining unit, whether probationary or permanent, are entitled to vote in a certification election. The Court rejected the Court of Appeals' narrow reading limiting the ruling's applicability to situations where probationary employees were already employed as of the date of filing the petition.

• Honda Phils., Inc. vs. Samahan ng Malayang Manggagawa sa Honda, G.R. No. 145561, June 15, 2005, 460 SCRA 186 — Cited for the definition of collective bargaining as the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work, and all other terms and conditions of employment in a bargaining unit, underscoring the substantial interest of all employees in the selection of the bargaining representative.

• Article 255, Labor Code — Provides that the labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for purposes of collective bargaining. The Court applied this provision to establish that the law refers to "all" employees in the bargaining unit without distinction as to employment status, thereby entitling probationary employees to vote.

• Article 256, Labor Code — Provides that the union obtaining the majority of the valid votes cast by the eligible voters shall be certified as the sole and exclusive bargaining agent. The Court applied this provision to determine that the required majority is 50% + 1 of the valid votes cast, and that HIMPHLU's 169 votes fell one short of the required 170.

• Article 1306, Civil Code — Provides that contracts are valid only if not contrary to law, morals, good customs, public order, or public policy. The Court applied this provision to invalidate the CBA provision disqualifying probationary employees from voting, holding that a law is read into and forms part of a contract.

• Rule II, Section 2, Department Order No. 40-03, series of 2003 — Provides that any employee, whether employed for a definite period or not, shall, beginning on the first day of service, be eligible for membership in any labor organization. The Court relied on this provision to support the eligibility of probationary employees to vote from the first day of their employment.

• Rule XI, Section 5, Department Order No. 40-03, series of 2003 — Provides that all employees who are members of the appropriate bargaining unit at the time of the issuance of the order granting the certification election shall be eligible to vote. The Court interpreted this provision not in isolation but in harmony with Section 21, holding that where a timely appeal has been filed, the reckoning date is when the SOLE's resolution becomes final and executory.

• Rule XI, Section 21, Department Order No. 40-03, series of 2003 — Provides that the filing of an appeal from the Med-Arbiter's order stays the holding of any certification election, and that the decision of the Secretary becomes final and executory after ten days from receipt. The Court relied on this provision to establish that the Med-Arbiter's Order does not become operative for purposes of voter eligibility until the appeal is resolved and the SOLE's decision becomes final.

Leonardo A. Quisumbing (Chairperson), Minita V. Chico Nazario, Teresita J. Leonardo-De Castro, and Diosdado M. Peralta concurred.