San Jose City Electric Service Cooperative, Inc. vs. Ministry of Labor and Employment

Employees of an electric cooperative who are themselves members-consumers and co-owners cannot form, join, or assist labor organizations for purposes of collective bargaining because an owner cannot bargain with himself, while rank-and-file employees who are not members-consumers retain the constitutional and statutory right to self-organization and collective bargaining.

San Jose City Electric Service Cooperative, Inc. (SAJELCO) is an electric cooperative organized under Presidential Decree No. 269, owned and operated by its member-consumers through a General Assembly and Board. Manggagawang Nagkakaisa ng SAJELCO-Association of Democratic Labor Organization (MAGKAISA-ADLO) is a legitimate labor organization seeking to represent SAJELCO's rank-and-file employees. Section 17(18) of SAJELCO's By-laws provides for subordinate employees and limits employment to member-consumers or members of their immediate families.

On July 29, 1986, Manggagawang Nagkakaisa ng SAJELCO-Association of Democratic Labor Organization (MAGKAISA-ADLO) filed a petition for direct certification election with Regional Office No. III of the Department of Labor and Employment in San Fernando, Pampanga. The petition alleged that it is a legitimate labor organization duly registered with the Ministry of Labor and Employment, that SAJELCO has more or less 54 rank-and-file employees, that almost 62% supported the petition, that no valid certification election had been held in the 12 months prior to filing, and that no other union existed in the bargaining unit.

SAJELCO opposed the petition in its answer, contending that the employees sought to be represented are member-consumers of the cooperative and at the same time compose the General Assembly which, under the By-laws, is the final arbiter of any dispute in the cooperative. According to SAJELCO, such supporters possess two personalities as employees and as members of the General Assembly that cannot fairly represent opposing interests, cannot obtain valid representation without injustice to non-employee member-consumers, remain bound by the Articles of Incorporation, By-laws, and pertinent decrees and laws to support government policies on electric cooperatives, and cannot be divided from their status as consumer-members who finally decide disputes.

On September 5, 1986, the Med-Arbiter granted the petition on the basis of the pleadings, reasoning that while some union members are cooperative members, they are also employees within the contemplation of the Labor Code and therefore entitled to all benefits of employees including self-organization. SAJELCO appealed to the Bureau of Labor Relations, reiterating its merger theory that consumer-members composing the assembly and rank-and-file petitioners had merged into one juridical status, rendering a collective bargaining agent ineffective and uncalled for in light of the By-laws' grievance machinery as built-in arbiter. On January 5, 1987, the BLR Director dismissed the appeal and sustained the Med-Arbiter.

Thereafter, SAJELCO filed the instant petition for certiorari on February 19, 1987. While the case was pending and absent any restraining order, a direct certification election was held on April 13, 1987, in which 43 employees voted, with 30 voting for respondent union and 13 for no union, prompting private respondent's counsel to manifest on June 20, 1987 that the petition had become moot and academic. The Solicitor General filed a comment dated October 30, 1987 taking a position contrary to the BLR Director, while the BLR Director filed a comment reiterating eligibility under Article 244 of the Labor Code. The trial-level factual premise material to review was SAJELCO's invocation of Section 17(18) of its By-laws that only member-consumers or members of their immediate family shall be employed, establishing two types of employees.

• Merger of Personalities: Petitioner argued that in an electric cooperative there is a merger of consumer-members composing the assembly and rank-and-file union members into one person or juridical status, rendering the proposed collective bargaining agent ineffective and uncalled for.
• Built-in Grievance Machinery: Petitioner maintained that a grievance machinery for employees and member-consumers had been provided by the By-laws as a built-in overall arbiter of disputes affecting the cooperative, making collective bargaining unnecessary.
• Dual Personality and Equity: Petitioner argued that supporters who are member-consumers enjoy two personalities as employees and General Assembly members, cannot fairly represent opposing personalities merged in one person, and cannot be represented without injustice and unfair advantage over member-consumers who are not employees.
• Bound by Cooperative Charter and Policy: Petitioner maintained that no valid representation could be obtained for supporters who as member-consumers are bound by the Articles of Incorporation, By-laws, and pertinent decrees and laws to support and defend basic government policies on electric cooperatives.

• Mootness by Supervening Election: Private respondent manifested that a direct certification election had already been conducted on April 13, 1987 with 30 votes for the union and 13 for no union, and opined that the petition had thereby become moot and academic.
• General Qualification under Article 244: Respondent BLR Director countered that union members fall under the general provision of Article 244 of the Labor Code on who may form, join, or assist unions, as they are neither managerial employees nor persons belonging to subversive organizations.
• Solicitor General's Contrary Position — Fusion of Personalities: The Solicitor General, though counsel for the public respondent, argued that union members seeking representation are themselves cooperative members, resulting in fusion of two personalities inconsistent with bargaining with themselves.
• Solicitor General's Contrary Position — Employer-Employee Requirement and Managerial Status: The Solicitor General argued that under Article 243 of the Labor Code one must be employed under hire with no ownership involvement to form or join a union since the duty to bargain exists only between employer and employees and not co-owners, and that under Presidential Decree No. 269 cooperative members participate in management with powers of managerial employees ineligible to join labor organizations.

• Eligibility for Collective Bargaining in Cooperatives: Whether the employees-members of an electric cooperative can organize themselves for purposes of collective bargaining.

• Eligibility for Collective Bargaining in Cooperatives: No as to member-consumers, yes as to non-members. Member-consumer employees who are co-owners cannot invoke collective bargaining, while rank-and-file employees who are not member-consumers retain the right to self-organization under the Constitution and Labor Code.

• Eligibility for Collective Bargaining in Cooperatives: A cooperative is by nature different from an ordinary business concern run by persons, partnerships, or corporations, since its owners-members run and operate the business, each cast one vote irrespective of shares, share capital earns limited interest, and they enjoy special privileges such as tax exemptions and exemption from minimum wage laws. Applied to SAJELCO, employees who are members-consumers are members and co-owners; an owner cannot bargain with himself or his co-owners, so withholding collective bargaining from them was required, consistent with the August 14, 1981 Solicitor General opinion and the consolidated rulings in Batangas I-Electric Cooperative Labor Union vs. Romeo Young, et al., Bulacan II-Electric Cooperative, Inc. vs. Hon. Eliseo A. Penaflor, et al., Albay Electric Cooperative vs. Crescencio B. Trajano, et al., and Cooperative Rural Bank of Davao City, Inc. vs. Pura Ferrer-Calleja. By contrast, Section 17(18) of SAJELCO's By-laws discloses two types of employees — member-consumers and members of their immediate families — and employees in the latter category, though hired only because of family relationship, are not themselves member-consumers; as such, their rights to organization, collective bargaining, and negotiations under Section 8, Article III and Section 3, Article XIII of the 1987 Constitution and the Labor Code remain intact, necessitating remand to determine their number, verify Article 257 compliance, and conduct a new election limited to them while setting aside the April 13, 1987 election.

• Co-owner Cannot Bargain with Himself — An employee of a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining because an owner cannot bargain with himself or his co-owners. The doctrine was applied to disqualify SAJELCO rank-and-file employees who are member-consumers from forming, joining, or assisting labor organizations for collective bargaining purposes.
• Distinct Treatment of Non-Member Cooperative Employees — Insofar as cooperatives employ persons who are not members or co-owners, such employees are entitled to exercise the rights of all workers to organization, collective bargaining, and negotiations enshrined in the Constitution and existing laws. The distinction was applied to preserve bargaining rights for SAJELCO employees who are merely members of the immediate family of member-consumers and not member-consumers themselves.
• Nature of Cooperatives vs. Ordinary Business Concerns — A cooperative differs from an ordinary business concern in that its owners-members run and operate the business, vote on a one-member-one-vote basis irrespective of shares, earn limited interest on share capital, and enjoy special privileges including income and sales tax exemptions, preferential supply rights to State agencies, and exemption from minimum wage laws. This characterization supplied the basis for denying bargaining rights to member-co-owners.

• "A cooperative, therefore, is by its nature different from an ordinary business concern being run either, by persons, partnerships or corporations." — Defines the juridical nature of cooperatives that justifies different treatment of member-employees for collective bargaining purposes.
• "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." — States the controlling ratio disqualifying member-consumer employees from collective bargaining.
• "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." — Preserves the constitutional labor rights of non-member cooperative employees and grounds the limited remand for a new certification election.

• Batangas I-Electric Cooperative Labor Union vs. Romeo Young, et al., G.R. No. 62386; Bulacan II-Electric Cooperative, Inc. vs. Hon. Eliseo A. Penaflor, et al., G.R. No. 70880; Albay Electric Cooperative vs. Crescencio B. Trajano, et al., G.R. No. 74560 (November 9, 1988) — Followed as consolidated rulings that had already resolved that cooperative member-employees cannot organize for collective bargaining, while non-member employees can.
• Cooperative Rural Bank of Davao City, Inc. vs. Pura Ferrer-Calleja, G.R. No. 77951, September 26, 1988 — Followed as the source of the quoted cooperative-distinction and owner-cannot-bargain-with-himself rules applied to SAJELCO's member-consumers and non-member employees.

• Article 243, Labor Code — Invoked by the Solicitor General to argue that only one who is employed under hire with no ownership involvement may form, join, or assist a labor union, since the duty to bargain exists only between employer and employees.
• Article 244, Labor Code — Relied upon by the BLR Director to sustain eligibility, on the theory that union members are neither managerial employees nor members of subversive organizations and thus fall under the general qualification to form or join unions.
• Article 257, Labor Code — Identified as the requirements to be verified on remand before conducting a new direct certification election among non-member-consumer rank-and-file employees.
• Section 8, Article III and Section 3, Article XIII, 1987 Constitution — Cited as the constitutional guarantee of organization, collective bargaining, and negotiations preserved for cooperative employees who are not members-consumers.
• Presidential Decree No. 269 (National Electrification Decree), August 6, 1973 — Invoked by the Solicitor General for the proposition that electric cooperative members contribute financially and participate in management with powers of managerial employees ineligible for union membership.
• Section 17(18), SAJELCO By-laws — Provides that the Board shall create positions for subordinate employees and that only member-consumers or members of their immediate family shall be employed; construed to establish two employee classes with different bargaining eligibility.

Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.