GENERAL MARITIME STEVEDORES’ UNION OF THE PHILIPPINES, ET AL., PETITIONERS, VS. SOUTH SEA SHIPPING LINE, ET AL., RESPONDENTS.

This is a petition for certiorari to review an order of the Court of
Industrial Relations (CIR), dated September 23, 1958, dismissing the
petition for certification election filed by the General Maritime
Stevedores’ Union, later referred to as GMSU, and its co-petitioners,
as well as the order of the court en banc denying the motion
for reconsideration. The purpose of the petition to review is to set
aside the order of dismissal and to give due course to GMSU petition
for certification election.

Acting on a petition dated
October 23, 1953 of the United Seamen’s Union of the Philippines, later
referred to as USUP, in case No. 43-MC, the CIR issued an order dated
February 28, 1955, directing that an election be held among the
unlicensed members and crew of the respondent South Sea Shipping Lines,
later referred to as Shipping Lines. In said order, the USUP and GMSU
were considered eligible to be voted for. The certification election
was held on April 15 and June 10, 1955, after which the CIR issued
another order dated June 17, 1955, certifying USUP as the exclusive
bargaining representative of the laborers and employees of the Shipping
Lines. On June 28, 1957, a collective bargaining agreement was entered
into between the Shipping Line and the USUP. Art. 10 of the agreement
provided as follows:

“This Agreement shall
take effect on July 21, 1957, to continue in full force and effect for
two (2) years until July 20, 1959 and thereafter for another period of
two (2) years, unless either party shall notify the other in writing
not less than sixty (60) days prior to the expiration date hereof of
its intention or election to terminate the agreement as of the end of
the current term.”

GMSU insists that the
agreement entered into was but a renewal of an agreement between the
USUP and Shipping Line entered into sometime in 1955. This statement
seems to have been confirmed by the Shipping Line in its answer where
it stated that “after the above-mentioned order (referring to the order
dated June 17, 1955) or to be specific, on June 28, 1955, a collective
bargaining agreement * * * was entered into between the respondent.”

On April 30, 1958, that is a little more than two years after the
holding of the last certification election, GMSU and its co-petitioners
filed with the CIR a petition for certification election, Case No.
546-MC, later numbered as Case No. 547-MC, alleging that there were two
labor unions, to which were affiliated unlicensed crew members of the
Shipping Line, namely, the GMSU and the USUP; that as members of the
GMSU petitioners constituted 10% of all the unlicensed crew members of
the Shipping Line; and that there had not been a certification election
within twelve months before the filing of the petition.

The
Shipping Line in its answer, expressed its attitude of strict
neutrality and its willingness to abide by the order of the CIR
although in its amended answer, it also alleged that it considered the
existing collective bargaining agreement between itself and the USUP as
binding until annulled.

The USUP intervened and filed a
motion for dismissal of the petition claiming that there was an
existing collective bargaining agreement between itself and the
Shipping Line entered into on June 28, 1957, for a period of two years
up to July 26, 1959, which period was reasonable, and which agreement
contained reasonable conditions of employment, and that the existence
of such agreement barred another certification election. As already
stated, the CIR granted the motion to dismiss and refused to give due
course to the GMSU’s petition for certification election.

To
support its order, the CIR invoked the “contract-bar rule”, explaining
that the then existing contract between the Shipping Line and the USUP,
which was for a period of two years, up to July 20, 1959, contained
provisions regarding, wages, closed shops, check off, grievances,
machinery and other conditions regarding employment relationships.
According to the CIR, these circumstances plus the fact that there was
no showing that the contracting union was company dominated support the
validity and reasonableness of the agreement between the Shipping Line
and the USUP, the duly certified bargaining representative, and that
the existence of such contract barred the holding of a certification
election. The CIR further stated:

“The ‘contract-bar rule’ is procedural which this Court in its discretion may apply
or waive as the facts of any given case may demand in the interest of
stability and fairness in collective bargaining agreements. (Case No.
54 MC-Cebu, PCLUE vs. Caltex, June 25, 1957). The facts of the
present case considered, it is the opinion of this Court that the
policies of the Industrial Peace Act of promoting stable, sound
employer-employee relations is effectuated by collective bargaining
agreement of reasonable duration. The contract between the intervenor
and the company falls under this criterion.”

The GMSU, however, equally maintains that it is mandatory for the CIR
to order a certification election once a petition is signed and
submitted by at least 10% of all the workers in a bargaining unit; and
it is also shown that no certification election had been held within
twelve months prior to the filing of such petition pursuant to the
provisions of Section 12 (b) and (c), Republic Act No. 875, the
pertinent portions of which read:

“(b)
Whenever a question arising 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. * * * Such a balloting
shall be known as ‘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 votes casts 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 percent 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.”

The GMSU has expressed fear that if a certification election was not
held as per its petition, the agreement between the respondent under
its renewal clause, may again be renewed with or without modification
by the parties as a result of which, the existence of the contract as
renewed may again be utilized as an argument for barring a subsequent
petition for certification election, thereby completely depriving
petitioners of the right and opportunity to prove that they constituted
the majority of the workers and employees of the Shipping Line.

What is meant by the “Contract-Bar Policy”? When ever a substantial
number of employees in an appropriate bargaining agreement desires to
be represented by a union or organization other than that which had
negotiated a collective bargaining contract with the management, the
CIR is faced with the dilemma of the right of contract or the right of
representation:

“Whenever a contract is
urged as a bar, the Board is faced with the problem of balancing two
separate interests of employees and society which the act was designed
to protect: the interest in such stability is as essential to encourage
the effective collective bargaining, and the sometimes conflicting
interest in the freedom of employees to select and change their
representatives. In furtherance of the purpose of the act, we have
repeatedly held that employees are entitled to change their
representatives, if they so desire, at reasonable intervals; or
conversely, that a collective bargaining contract may preclude a
determination of representatives for a reasonable period.” (Reed Roller
Bit Co., 72 NLRB 927).

“It sometimes occurs that representation petitions are brought when a bargaining contract already exists. There
is then a question of whether the Board shall respect the contract and
let it constitute a bar or institute proceedings despite the contract.” (Bowman, Public Control of Labor Relations, p. 135.)

As a solution to this problem, there are three possibilities:

“One
solution of the problem would be to hold that a collective bargaining
agreement valid when made is a bar to a new certification throughout
its existence, regardless of the length of its term. * * *

“A
second solution is to hold that employees may shift their allegiance
during the term of the agreement but that the contract continues in
force with the new union simply replacing the old. * * *

“The solution to the problem which the National Labor-Relations Board has adopted, lies between the extremes: ‘The
board has normally refused to proceed to an election, in the presence
of a collective bargaining contract where the contract granted
exclusive recognition is to be effective only for a reasonable period
and was negotiated by a union representing at the time a majority of
the employees (in an appropriate unit) prior to any claim by a rival labor organization‘.” (Cox, Cases on Labor Law, pp. 497-498).

The National Labor Relations Board, later referred to as the Board,
which is the counterpart of our CIR, regards the conflict as one which
requires it to strike a balance between the desirability of achieving
stability in industrial relations secured through bargaining, on the
one hand, and the benefits flowing from the grant to employee, full
freedom in their choice of representative, on the other.

“But
the conflict implicit in the situation is so clear that the Board has
recognized the necessity for some solution. While it is apparent that
the Board will not allow the existence of an agreement to preclude all
change, on the other hand it has not suggested absolute abrogation of
the contract.” (51 Yale Law Journal p. 470, Change of Bargaining
Representative).

In resolving this conflict, the Board “initially took the unqualified view that the existence of agreements was no bar to certification
of bargaining representatives.” (Teller, Labor Disputes and Collective
Bargaining, Vol. 2, p. 901). So, in the Matter of New England
Transportation Co. (1936) 1 NLRB 130, the Board directed an election
despite existing contracts between the company and an employees’
association:

“The whole process of
collective bargaining and unrestricted choice of representatives
assumes the freedom of the employees to change their representatives,
while at the same time continuing the existing agreements under which
the representatives must function. * * * These representatives are, of
course, free to bargain with respect to the termination of an existing
contract.

The above ruling gave support to
the doctrine of substitution whereby a change of representatives would
alter an existing contract only by “substituting the new union for the
old under its substantive terms” (51 Yale Law Journal, Change of
Bargaining Representatives, p. 466). However, the Board subsequently
took the position that a collective bargaining agreement of reasonable
duration is “in the interest of the stability of industrial relations”,
a bar to, certification elections. (Vol. 2, Teller, Labor Disputes and
Collective Bargaining, p. 902). Thus, evolved the “contract-bar policy”.

In adopting the “contract-bar policy”, the Board, however, was careful
in refusing to announce an inflexible rule as to its authority, and
whenever possible, it avoided a determination of the contract’s effect
on its power of certification election:

“*
* * Again the Board is bounded by no stereotyped procedure; rather, the
Board exercises discretion to let the circumstances determine whether
proceedings shall go on. * * *

“This Board action was not
charted by Congress, but the dilemma of right of contract or right of
representation is real. The resolution of the dilemma is not to decide
whether the primary purpose of the Act is to insure employee freedom to
choose representatives, or to encourage collective contracts, for
either choice leaves an unsatisfactory situation. Hence the Board’s
compromise seems wise, even though it is in a sense contradictory. Such
Board flexibility and the refusal to draw sharp rules open the door to
criticism, but the dilemma demonstrated the necessity of giving broad
discretionary power to an administrative agency. (Public Control of
Labor Relations, Bowman, p. 135, 137).

The
United States Circuit Court of Appeals, recognizing the Board’s power
to promulgate rules and regulations to carry out the purpose of the
Act, gave the Board broad discretion to apply the “contract-bar
policy”, as it saw fit, thus:

“The Board’s
rule that the existence of a valid written and signed bargaining
agreement between an employer and1 an appropriate bargaining
representative is a bar to a certification proceedings for a different
representation, if applicable to the facts in this case, is a
procedural rule which the Board in its discretion may apply or waive as
the facts of the given case may demand in the interest of stability and
fairness in collective bargaining agreements. The Board is not the
slave of its rules.” National Labor Relations Board vs. Grace Co. 184 Fed. 2nd p. 126 (U. S. Circuit Ct. of App., 8th Circuit)

“Where
‘contract bar policy’ of National Labor Relations Board, along with
exceptions thereto, as applicable to representation proceedings, were
solely of board’s creation, board could reasonably expand or restrict
such policy as it saw fit.” (Syllabus) Kearney & Trecker Corp. vs. National Labor Relations Board, 210 Fed. 2nd p. 852 (U.S. Circuit Ct. of App., 7th Circuit)

During the period “when the techniques and potentialities of collective
bargaining were first being slowly developed under the encouragement
and protection of Federal Legislation”, the Board laid greater emphasis
upon the right of laborers to select their representatives frequently
than upon prolonged adherence to the bargaining agreement. (General
Motors Corporation, 102 NLRB 1140). As a result, when the contract-bar
policy was first initiated, only one-year contracts were held to be a
bar to certification election. (e.g., M & J Tracy, Inc. 12 NLRB 936
(1939); Columbia Broadcasting System, Inc. 8 NLRB 508 (1938) Hubinger
Company, 3 NLRB 802)

“The net result of the
Board’s viewpoint that collective bargaining agreements of reasonable
duration will constitute a bar to certification, but that agreements
unduly long which have been in effect for at least a year will not
constitute a bar is, when read in connection with the cases, equivalent
to the rule that collective bargaining agreements prevent certification
proceedings for a period of one year from the time of their execution.”
(2 Teller, Labor Disputes and Collective Bargaining, p. 905).

Thus, in the case of Superior Electric Products Co., NLRB (1948), the
collective bargaining agreement of one year duration entered into at
the time when the contracting union represented a majority of the
respondent-employees was held to be a bar to certification election.
And in the Metro Goldwyn Mayer case, 7 NLRB 662, involving collective
bargaining agreement of five years duration, the Board granted the
petition for election filed after the agreement had run one year with a
reiteration of its belief that employees’ “choice of their
representatives could not be shackled for an unduly long period just
because of the existence of a contract.” However, in 1947, the Board
held that thereafter, it would regard a two year contract as a bar to
an election until its expiration, because collective bargaining had:

“So
emerged from a stage of trial and error (that) the time has come when
stability of industrial relations can better be served, without
unreasonably restricting employees in their right to change
representatives, by refusing to interfere with bargaining relations
secured by collective agreements for two years’ duration.” (Matter of
Reed Roller Bit Co. 72 NLRB 927 (1947).

“In the light of
our experience in administering the Act, we believe that a contract for
a term of 2 years cannot be said to be of unreasonable duration. * * *
For large masses of employees collective bargaining has but recently
emerged from a stage of trial and error, during which its techniques
and full potentialities were being slowly developed under the
encouragement and protection of the Act. To have insisted in the past
upon prolonged adherence to a bargaining agent, once chosen, would have
been wholly incompatible with this experimental and transitional
period. It was especially necessary, therefore to lay emphasis upon the
right of workers to select and change their representatives. Now,
however, the emphasis can better be placed elsewhere.

However, in 1953, the same Board announced that:

“The
time has arrived when stability of labor relations can be better
served, without unreasonably restricting employees in their right to
change representatives, by holding as a bar collective bargaining
agreements even for 5 years’ duration (when) a substantial part of the
industry concerned is covered by contracts with a similar term.”

In the case of General Motors Corporation, 102 NLRB 1140 (1953),
involving a five year contract, the Board refused to order a
certification election despite the lapse of more than 2½ years since
the agreement became effective. From all this, it may be seen that the
National Labor Relations Board has not adopted an iron-clad policy,
rigid and fixed, but rather one to be applied according to the changing
conditions and industrial practices.

In this jurisdiction,
we have had occasion to apply the “contract-bar policy”. In the case of
Philippine Long Distance Employees’ Union vs. PLDT and Free
Telephone Workers Union, 97 Phil., 424; 51 Off. Gaz. [9] 4519, through
Mr. Justice Bengzon, we made the following observation:

“It
is interesting to note in this regard that in the United States, where
we copied the present Industrial Peace Act, an existing collective
bargaining contract with a union is a bar to subsequent certification
election when * * * it has a definite and reasonable period to run and
has not been in existence for too long a period (history, industry and
customs may affect reasonableness of the contract term * * *). Werne
Law of Labor Relations, p. 27 citing U.S. Finishing Co. 63 NLRB 575).
Normally, the National Labor Relations Board have been in existence for
more than two years, as no obstacle to determining bargaining
representatives. Werne op cit. pp. 28-29, citing several cases.)”

“* * * as this contract between the Company and the petitioner was signed December 1, 1951, it had been in operation more than two years in August, 1954 when the certification election was ordered. It is therefore no bar to the certification even under American Labor Laws.”

In a subsequent case, Acoje Mines and Acoje United Workers Union vs.
Acoje Labor Union and Acoje Mining Co. Inc., 105 Phil. 814; 56 Off.
Gaz. (6) 1157, on the issue of whether or not upon submission of a
petition for certification election by at least 10% of all the workers
in a bargaining union, it is mandatory for the CIR to order a
certification election—with no exceptions, pursuant to Section 12 (c),
Republic Act No. 875, through the same Justice, we made the following
statement:

“The above command of the Court
is not so absolute as it may appear at first glance. The statute itself
expressly recognizes one exception: When a certification election had
occurred within one year. And the judicial administrative agencies have
found two exceptions: where there is an unexpired bargaining agreement not exceeding two years and when there is a pending charge of company domination of one of the labor unions intending to participate in the election.”

After reviewing the cases decided by the NLRB of the United States and
our own cases, we have arrived at the conclusion that it is reasonable
and proper that when there is a bargaining contract for more than a
year, it is too early to hold a certification election within a year
from the effectivity of said bargaining agreement; also that a two year
bargaining contract is not too long for the purpose of barring a
certification election. For this purpose, a bargaining agreement may
run for three, even four years, but in such case, it is equally
advisable that to decide whether or not within those three or four
years, a certification election should not be held, may well be left to
the sound discretion of the CIR, considering the conditions involved in
the case, particularly, the terms and conditions of the bargaining
contract.

We also hold that where the bargaining contract is
to run for more than two years, the principle of substitution may well
be adopted and enforced by the CIR to the effect that after two years
of the life of bargaining agreement, a certification election may be
allowed by the CIR; that if a bargaining agent other than the union or
organization that executed the contract, is elected, said new agent
would have to respect said contract, but that it may bargain with the
management for the shortening of the life of the contract if it
considers it too long, or refuse to renew the contract pursuant to an
automatic renewal clause.

On September 15, 1959, while this
case was still pending in this Tribunal, petitioner filed a
manifestation to the effect that the contract between the USUP and the
Shipping Line had expired on June 28, 1959, and that the same had not
been renewed. We asked for the comment of the other party. The
respondent United Seamen’s Union in its counter manifestation dated
July 6, 1960, stated that the collective bargaining agreement involved,
executed on July 28, 1957, was automatically renewed for a period of
two years from July 28, 1959 to July 28 1961, pursuant to the automatic
renewal clause, for the reason that neither party notified the other in
writing not less than sixty days prior to the expiration date, of its
desire to terminate the agreement. So, it would appear that the
contract will still be effective up to July 28, 1961, that is to say,
about a year from today.

According to the claim or
contention of the petitioners the bargaining agreement of July 28, 1957
was but a renewal of the same or similar agreement of July 1955, so
that the bargaining agreement has been in existence for about five
years, which is too long a period within which a certification election
has not been held.

In view of the foregoing, we believe and
hold that the appealed order of the CIR dismissing the petition for
certification election and refusing to allow the selection of a new
bargaining agent, was valid under the circumstances obtaining at the
time. However, inasmuch as there has been a renewal of the bargaining
agreement for another two years and because it seems that the present
agreement is but a renewal of the one entered into way back in 1955, so
that until the expiration of the present agreement, about six years
shall have passed, it is advisable that a new certification election be
held. For this purpose, this case is hereby remanded to the CIR, so
that the petition for certification can be entertained, admitted and
given due course, and that a certification election be held, with the
understanding that if a bargaining agent other than the one that
negotiated and executed the present bargaining contract, is elected,
said new agent would have to respect the present bargaining agreement,
but without prejudice to its negotiating with the company for a
shortening of the period of the life of the contract, refuse to renew
it when it expires, if it so desires, and otherwise represent and
protect the interest of the members of the bargaining unit, all of
course, within the terms and purview of the bargaining contract. No
costs.

Paras, C. J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Barrera, JJ., concur.