G.R. No. L-9003. December 21, 1956

This is a.petition for  review of a decision  of the Court of Industrial Relations holding that the collective bargaining  and closed shop agreement entered into  between the Bacolod-Murcia Milling  Co., Inc. and the Allied Workers Association of the Philippines is null and void and finding the former guilty of unfair labor practice as a result  of which  it was ordered to desist from  such practice  and to reinstate all the  laborers and employees  it dismissed from the service with back pay from the  time  of their discharge to the  time of their reinstatement.

In the month  of July  or  August, 1953, a good number of laborers  of the Bacolod-Murcia Milling Co., Inc., hereinafter referred to as Company for  short, most of them affiliated with the Allied Workers Association of the Philippines,  hereinafter referred to as Allied Workers Association  (AWA), organized the National Employees-Workers Security Union (NEWSUN), which was registered in the Department of Labor on January 123, 1954.  On December 24,1953, the president of the NEWSUN, one Humberto M. Tutaan, sent a letter to the management of the Company containing  several labor demands.  The Company, through its manager, on January 7, 1954, acknowledged said letter stating in substance that the Company is not opposed to the formation or  organization of any labor union as in fact it  has already  recognized the Allied Workers Association with which it has concluded a collective bargaining and closed shop agreement, for which reason it has to decline the., demands contained in the letter. In said  agreement, it was covenanted that during the life of the agreement, no member of the labor union shall join another labor organization and any member who violates this condition, or ceases to be a member thereof, shall be dropped from the  service by the employer.

On February 5,  1954,  the Allied Workers Association addressed a letter to the employer stating  that some of its members had been  expelled  from the association and requesting that they be dropped from the service in line with the closed shop  agreement.  Finding no other alternative,  the management dropped  these members  from the service  after giving them a notice to that effect and paying  them a salary equivalent to one month.  As a result, these  members  filed charges  of unfair labor practice against the employer which initiated these proceedings before the Court of Industrial Relations.

The questions to be determined are:  (1)  Is the closed shop  agreement entered into between the Company and the Allied Workers Association null and  void?   (2)  Can the Company be  held guilty of  unfair labor practice for having  dismissed from the service  the complaining members in  line with said closed shop agreement?

It appears that  the Bacolod-Murcia Milling Co.,  Inc. is a corporation operating a sugar central at Bacolod City, Occidental Negros.   It has many laborers and employees. Right  from the start these  laborers organized a labor union known as Allied Wokers Association  of the Philippines which  since 1947  entered  into a collective bargaining and closed shop agreement with said Company. Said agreement has been renewed from time  to time, that is, in 1949, 1950 and 1953.  During the milling season of 1953-1954, there were a total of 1,198 laborers and employees in that Company, both permanent and temporary, and about 736 thereof were members of said  union, which shows that at least 2/3 of the total number  of employees and laborers were affiliated with said union  and as such it has  the requisite number to conclude a collective bargaining contract under the law [section 12,  subsection (a), Republic Act  875].  On  the other hand,  it appears that it was only as late as July or August, 1953, that another union was formed, under the leadership  of Humberto M. Tiitaan, most 6f whom were members of  the  Allied Workers Association, which union  was registered in the Department of Labor only on January 23,  1954.  The new collective bargaining agreement was signed on December 19, 1953.

Considering this  factual background, can  we say that the Court of Industrial Relations was correct  in holding that this  agreement is illegal because, in its opinion,  it violates section  12, subsection (d)  of Republic Act 875, which permits  an employer to petition the court for an election “if there has  been no certification  election held during the twelve months prior to the date of the request of the employees, and if the employer has reasonable doubt as to the bargaining representative of the employees in the appropriate unit,”  Let us analyze the provisions of the law concerning the conclusion of collective bargaining agreements.

There are four  different ways under which a collective bargaining  agreement may be  entered  into  between the employer and his employees.  These are the ones specified in subdivisions (a),  (b),  (c)  and  (d) of section  12  of Republic Act 875 which,  for purposes of reference,  we quote: 

“(a) The labor organization  designated or selected for the purpose of  collective bargaining’by the majority of the employees in an  appropriate collective bargaining unit shall be  the  exclusive representative of all the employees  in  such  unit for the purpose of collective bargaining iii respect to rates of  pay, wages, hours of employment, or other  conditions of employment: Provided,  That any individual employee or group of  employees, shall  have  the right at any time to present grievances to their employer. 

“(b) Whenever a  question arises  concerning  the  representation of employees, the Court may investigate such controversy and certify to the parties in writing the name of the  labor organization that has been designated or selected for the appropriate bargaining unit.  In any such  investigation,  the  Court  shall  provide for a speedy and  appropriate hearing upon  due  notice  and  if there is  any reasonable doubt as to whom  the employees have choosen as their representative for purposes of collective bargaining, the Court shall order a secret  ballot election to be conducted by the Department of Labor, to ascertain who is the freely chosen representative of the employees, under such rules  and regulations as the Court may prescribe, at which balloting representatives of  the contending parties shall  have the  right to attend as inspectors.  Such a balloting shall be known as a ‘certification election’ and the Court shall not order certifications in the same  unit  more often than once in twelve months.  The organization  receiving the majority of Votes cast.in such  election shall be  certified as the exclusive bargaining representative of such employees. 

“(c) In an instance where a  petition  is  filed by at least  ten per cent of the employees in the appropriate unit requesting  an election,  it shall be mandatory  on  the  Court  to  order an  election for the purpose of  determining the representative of the employees for the appropriate bargaining unit.

” (d) When  requested  to bargain  collectively, an  employer may petition the Court for an election if there has been no certification election  held during the  twelve months prior to the date of the requests of the employees,  and if the employer  has reasonable doubt as to the bargaining representative of the employees in  the appropriate unit.”

Note  that  under the “first method, a majority of the employees may  designate the labor organization it may choose to act as its representative for the purpose of collective bargaining, which it can do without court intervention, and the organization so designated may immediately conclude a collective bargaining  agreement  with its employer,   [subsection  (a)].   The  second method, on  the other hand,  requires judicial investigation  to  determine which labor organization has.been designated as the representative of the employees whenever a  question  arises concerning such representation.   And if the court should find  reasonable  doubt as  to whom the employees have chosen  after such investigation, it shall order a certification election [subsection (b)].  The third method authorizes at least 10 per cent of the employees in the appropriate unit to request an election,  which shall be mandatory  on the court whenever a petition is filed requesting such election to determine the representation of the employees [subsection   (c)].   And the fourth method is  the one which permits  an employer to petition the court for an election if there has been no certification election held during the twelve months prior to the date of the request of the employees,  and if the employer has reasonable doubt  as  to the bargaining representative of the employees in the appropriate unit [subsection  (d)].

In the case at bar, the method pursued “by the Bacolod-Murcia  Milling Co., Inc. and  its employees is that provided for in subsection (a).  This they did when in 1947 they entered into a collective bargaining and closed shop agreement, which was renewed in 1949,  1950 and 1953.  And this was made possible because of the organization of the Allied Workers Association.  Considering  that  this was the only  labor union then organized among said employees, for the other union was validly organized only on January 23, 1954, when it  was registered  in the Department of Labor, there was therefore no reason for the application of the other three  methods of collective bargaining,  and so it was a mistake to hold that the agreement  concluded between them on December 19, 1953 has not been.entered into in accordance with law.   Nor can it be said that the fourth method prescribed  in subsection (d) is applicable, as found by the court,  for neither the employer  has asked for  any certification  election, nor  has it any  doubt as to the bargaining representative of the employees.

“* *  * labor organization la not considered legitimate in contemplation of law unless  that requirement has been complied with. Thus, the law postulates  that ‘a  legitimate labor  organization is an  organization, association or union, of  laborers duly registered and permitted to operate by the Department of Labor’, and that ‘the registration of, and the issuance of a permit to, any legitimate labor organization shall entitle it  to  all the rights and privileges granted by law/ (Sections 1  and  2, Commonwealth Act No. 213.) To be  considered a legitimate labor organization with the  right to enjoy all the rights and  privileges recognized by law,  it is therefore necessary that it be registered and  permitted to  operate  as required by law.”  (Philippine Land-Air-Sea Labor Union (PLASLU), Inc. vs. Court of Industrial  Relations, 93 Phil., 747; 49 Off. Gaz.f [9] 3859.)

Another ground  on  which the  Court of Industrial Relations predicates the invalidity  of the agreement in question is that some of its stipulations contravene the  provisions of the law which  prohibits unfair labor practices.  The court  expressed  the opinion  that said  stipulations tend to impair the right of the employees to self-organization for they have the  effect of forcing the employees  to become or remain a member of a labor organization on pain of losing  their employment if they join any other  labor union.  And  this,  it   contains,  constitutes  unfair  labor practice.

With the finding we disagree, for it ignores the  specific provision of our  law which precisely recognizes the conclusion of  a  closed shop agreement  Thus, in section 4, subsection  (a), paragraph 4, of Republic Act No. 875, it is expressly provided “That nothing in this Act or in any other Act or statute of the Republic  of the Philippines shall preclude an  employer from making an agreement with a labor organization to require  as a  condition of employement membership therein, if such labor organization is the representative of the  employees * *  *  And in a similar case where the dismissed employees raised the validity of ah agreement of this  nature, this Court made the following comment: ‘”The  closed-up contract.  it  is said ‘is the most prized achievement  of unionism. It adds membership and compulsory dues.  By holding put to loyal members a  promise of employment  in  the  closed-shop,  it welds  group solidarity.’   (Handler,  Notes, 48 Yale Law Journal  1053, 1059;  Francisco,  Labor  Laws  p.  186.)” Then, after stating the arguments pro and  con, the Court concluded:

“‘Closed-shop  agreement is  an agreement whereby an employer binds himself to hire only members of the contracting  union who must continue to remain, members in  good standing to keep their jobs. While  there are arguments in favor of,  and  against  the closed-shop agreement, Congress, in  the  exercise of  its  policy-making power,  has  approved the closed shop,  in section 4, subsection (a) paragraph 4 of Republic Act  No. 875.”  (National Labor Union, vs. Aguinaldo’s Echague, Inc., Off. Gaz., No. 6, p. 2899.)

Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

Paras, C. J.,  Bengzon, Padilla, Montemayor, Labrador, Reyes, J. B., L., Endencia  and Felix, JJ., concur.