PICOP Resources, Inc. vs. Tañeca

The mere signing of an authorization to file a petition for certification election, even if done before the freedom period, is not sufficient ground to terminate an employee under a union security clause where the actual petition was filed during the freedom period, and where the employees did not resign or withdraw their membership from the union, continued paying their dues, and never joined the rival union.

Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang Mamumuo sa PICOP Resources, Inc.-Southern Philippines Federation of Labor (NAMAPRI-SPFL), the collective bargaining agent for PRI's rank-and-file employees. PRI and NAMAPRI-SPFL had a collective bargaining agreement (CBA) for five years from May 22, 1995 until May 22, 2000, which contained a union security clause under Article II, Section 6, specifically a maintenance of membership provision requiring employees to maintain union membership in good standing as a condition of continued employment.

Respondents were regular rank-and-file employees of petitioner PICOP Resources, Incorporated (PRI) and bona fide members of Nagkahiusang Mamumuo sa PICOP Resources, Inc.-Southern Philippines Federation of Labor (NAMAPRI-SPFL), the collective bargaining agent for PRI's rank-and-file employees. PRI and NAMAPRI-SPFL had a collective bargaining agreement (CBA) for five years from May 22, 1995 until May 22, 2000, which contained a union security clause under Article II, Section 6, specifically a maintenance of membership provision requiring employees to maintain union membership in good standing as a condition of continued employment.

On May 16, 2000, Atty. Proculo P. Fuentes sent a letter to PRI's management demanding the termination of employees who allegedly campaigned for, supported, and signed the Petition for Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL considered such acts as disloyalty and a valid basis for termination under the CBA's Union Security Clause. In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested PRI to investigate those union members who signed the petition, furnishing PRI with machine copies of authorization letters dated March 19, 20, and 21, 2000, containing the names and signatures of employees.

Acting on these letters, Atty. Romero A. Boniel issued memoranda to the concerned employees to explain in writing within 72 hours why their employment should not be terminated due to acts of disloyalty. Between May 26 and June 2, 2000, some employees submitted explanations while others did not. On June 2, 2000, Atty. Boniel endorsed the explanation letters to Atty. Fuentes for evaluation. After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised PRI that the Union found the members' explanations unsatisfactory and reiterated the demand for termination of 46 member-employees, including respondents.

On October 16, 2000, PRI served notices of termination to 31 of the 46 employees on the ground of "acts of disloyalty" for supporting and signing the Petition for Certification Election of FFW before the "freedom period" during the effectivity of the CBA. A notice dated October 21, 2000 was also served on the DOLE, Caraga Region.

Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted any union dues and check-off disauthorizations. They claimed that mere affixation of signature on an authorization to file a petition for certification election was not per se an act of disloyalty. While they signed the authorization before the start of the freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period. Respondents maintained that their acts were prompted by their desire to have a certification election among the rank-and-file employees, not to cause the downfall of NAMAPRI-SPFL. They also contended that there was lack of procedural due process, as the letters demanding termination did not mention their names, and that at the time NAMAPRI-SPFL demanded their termination, the CBA had already expired on May 22, 2000.

• Propriety of Certiorari under Rule 65: PRI argued that assuming the NLRC erred in its judgment on legal issues, such error was not tantamount to abuse of discretion falling within the ambit of Rule 65, and thus the Court of Appeals should not have taken cognizance of respondents' petition for certiorari.

• Validity of Dismissal under Union Security Clause: PRI argued that the dismissal of respondents was valid and legal, claiming it acted in good faith at the instance of the incumbent union pursuant to the Union Security Clause of the CBA.

• Application of Article 253 (Status Quo): PRI contended that citing Article 253 of the Labor Code, the parties to the CBA are enjoined to keep the status quo and continue in full force and effect the terms and conditions of the existing CBA during the 60-day period and/or until a new agreement is reached, thus the union security clause remained binding even after the CBA's expiration.

• No Act of Disloyalty: Respondents argued that none of them withdrew their membership from NAMAPRI-SPFL or submitted any union dues and check-off disauthorizations, and that mere affixation of signature on an authorization to file a petition for certification election was not per se an act of disloyalty.

• Petition Filed Within Freedom Period: Respondents claimed that while they signed the authorization before the start of the freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period, making it within the freedom period.

• Lack of Procedural Due Process: Respondents contended that both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trugillo did not mention their names, and that they should have been summoned individually, confronted with the accusation, and investigated accordingly.

• Expiration of CBA: Respondents argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the bargaining representative of the rank-and-file workers because the CBA had already expired on May 22, 2000.

• Unfair Labor Practice: Respondents asserted that PRI's act of giving in to the Union's wishes in discharging them amounted to interference with, restraint, or coercion of their exercise of the right to self-organization, constituting unfair labor practice.

• Propriety of Certiorari under Rule 65: Whether an honest error in the interpretation and/or conclusion of law falls within the ambit of the extraordinary remedy of certiorari under Rule 65 of the Revised Rules of Court.

• Effect of CBA Beyond Its Term: Whether an existing collective bargaining agreement can be given its full force and effect in all its terms and conditions, including its union security clause, even beyond the 5-year period when no new CBA has yet been entered into.

• Sufficiency of Ground for Termination: Whether the respondents' act of signing an authorization for a petition for certification election before the freedom period constitutes sufficient ground for termination under the union security clause of the CBA.

• Propriety of Certiorari under Rule 65: Yes. The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled in St. Martin Funeral Home vs. National Labor Relations Commission, and under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902, the Court of Appeals is specifically given the power to pass upon the evidence to resolve factual issues.

• Effect of CBA Beyond Its Term: No. The provision for status quo under Article 253 is conditioned on the fact that no certification election was filed during the freedom period. The last sentence of Article 253 providing for automatic renewal pertains only to the economic provisions of the CBA, not the representational aspect.

• Sufficiency of Ground for Termination: No. The mere signing of an authorization in support of the Petition for Certification Election of FFW is not sufficient ground to terminate the employment of respondents, as the petition itself was actually filed during the freedom period, and nothing in the records shows that respondents failed to maintain their membership in good standing in the Union.

• Propriety of Certiorari under Rule 65: The Court held that the proper vehicle for reviewing NLRC decisions is a Special Civil Action for Certiorari under Rule 65, filed in the Court of Appeals in strict observance of the doctrine of hierarchy of courts. Under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902, the Court of Appeals, pursuant to its original jurisdiction over Petitions for Certiorari, is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues.

• Effect of CBA Beyond Its Term: The Court found that PRI's reliance on Article 253 was misplaced. Applying Article 256 of the Labor Code, while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, this obligation holds only when no petition for certification election is filed. In the instant case, four petitions were filed as early as May 12, 2000, and a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000. The last sentence of Article 253 providing for automatic renewal pertains only to the economic provisions of the CBA, not the representational aspect. Otherwise, it would create an absurd situation where union members would be forced to maintain membership by virtue of the union security clause and then support another union when filing a petition for certification election, making disloyalty an issue whenever employees exercise their right to self-organization.

• Sufficiency of Ground for Termination: The Court applied the three requisites for valid termination under a union security clause: (1) the union security clause is applicable; (2) the union is requesting enforcement of the union security provision; and (3) there is sufficient evidence to support the decision of the union to expel the employee. While the first two requisites were satisfied, the third was not. The Court held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20, and 21, or before the "freedom period," is not sufficient ground to terminate respondents' employment, inasmuch as the petition itself was actually filed during the freedom period on May 18, 2000. An "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period. The signing of the authorization was merely preparatory to the filing of the petition, or an exercise of respondents' right to self-organization. Respondents did not resign or withdraw their membership from the Union, continued to pay their union dues, and never joined the FFW.

• Union Security Clause Requisites for Termination — In terminating an employee by enforcing a union security clause, the employer must determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA. In this case, the third requisite was not satisfied because the mere signing of an authorization to file a petition for certification election, where the actual petition was filed during the freedom period, does not constitute sufficient evidence of disloyalty.

• Status Quo Clause Limited to Economic Provisions — The last sentence of Article 253 of the Labor Code, which provides for automatic renewal and the duty to keep the status quo, pertains only to the economic provisions of the CBA and does not include the representational aspect. When there is a representational issue, the status quo provision, insofar as the need to await the creation of a new agreement, will not apply. Otherwise, it would create an absurd situation where union members would be forced to maintain membership by virtue of the union security clause and then support another union when filing a petition for certification election.

• Freedom Period and Certification Election — Under Article 253-A of the Labor Code, no petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted outside the sixty-day period immediately before the date of expiry of the five-year term of the CBA. What is prohibited is the filing of a petition for certification election outside the 60-day freedom period. An authorization letter to file a petition for certification election is different from an actual petition for certification election; the signing of an authorization is merely preparatory to the filing of the petition and constitutes an exercise of the employees' right to self-organization.

• "We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the 'freedom period,' is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period." — This passage states the core ratio decidendi: the timing of the actual petition filing, not the signing of the authorization, is what matters for determining compliance with the freedom period requirement.

• "Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period. This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents' right to self-organization." — This passage clarifies the distinction between the preparatory act of signing an authorization and the actual filing of a petition, framing the former as an exercise of the constitutional right to self-organization.

• "The provision for status quo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them." — This passage articulates the Court's interpretation of the status quo provision under Article 253, limiting its application to situations where no certification election petition was filed.

• "If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or compromised." — This passage explains the policy rationale against applying the union security clause to penalize employees for exercising their right to self-organization through certification election petitions.

• St. Martin Funeral Home vs. National Labor Relations Commission, 356 Phil. 811 (1998) — Controlling precedent establishing that the proper vehicle for reviewing NLRC decisions is a Special Civil Action for Certiorari under Rule 65, filed in the Court of Appeals in strict observance of the doctrine of hierarchy of courts.

• Alabang Country Club, Inc. vs. National Labor Relations Commission, G.R. No. 170287, February 14, 2008, 545 SCRA 351 — Cited as authority for the three requisites constituting just cause for terminating an employee based on the union security provision of the CBA.

• Inguillo vs. First Philippine Scales, Inc., G.R. No. 165407, June 5, 2009, 588 SCRA 471 — Cited for the definitions of "union security," "union shop," "maintenance of membership shop," and "closed shop."

• Vassar Industries Employees Union [VIEU] vs. Estrella, 172 Phil. 272 (1978) — Cited for the proposition that with a pending petition for certification, any agreement entered into by management with a labor organization is fraught with the risk that such union may not be chosen thereafter as the collective bargaining representative.

• Associated Labor Unions (ALU) vs. Ferrer-Calleja, G.R. No. 85085, November 6, 1989, 179 SCRA 127 — Cited for the principle that the holding of a certification election is a statutory policy that should not be circumvented or compromised.

• Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc., 179 Phil. 317 (1979) — Cited for the principle that dismissals must not be arbitrary and capricious, and due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood.

• Article 253, Labor Code — Duty to bargain collectively when there exists a collective bargaining agreement; requires parties to keep the status quo and continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached. The Court held that the last sentence of this provision pertaining to automatic renewal applies only to economic provisions, not the representational aspect of the CBA.

• Article 253-A, Labor Code — Terms of a collective bargaining agreement; provides that the representation aspect of a CBA is for a term of five years, and no petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted outside the sixty-day period immediately before the date of expiry of such five-year term. This provision defines the "freedom period" within which certification election petitions may be filed.

• Article 256, Labor Code — Representation issue in organized establishments; provides that when a verified petition questioning the majority status of the incumbent bargaining agent is filed within the sixty-day period before the expiration of a CBA, the Med-Arbiter shall automatically order an election by secret ballot when supported by the written consent of at least twenty-five percent of all employees in the bargaining unit. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent only where no petition for certification election is filed.

• Article 248 (a), (b), (c), (d), and (e), Labor Code — Unfair labor practice provisions cited by respondents in their complaint against PRI and the union officers.

• Article 279, Labor Code — Governing the computation of full backwages due to illegally dismissed employees, inclusive of allowances and other benefits, computed from the time their actual compensation was withheld up to the time of actual reinstatement.

• Section 9, Batas Pambansa Blg. 129, as amended by Republic Act No. 7902 — Judiciary Reorganization Act of 1980; grants the Court of Appeals the power, pursuant to its original jurisdiction over Petitions for Certiorari, to pass upon the evidence, if and when necessary, to resolve factual issues.

• Republic Act No. 6715 — Provides that employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement.

• Carpio, J. (Chairperson)
• Nachura, J.
• Abad, J.
• Mendoza, J.