BENGUET ELECTRIC COOPERATIVE, INC., PETITIONER, VS. HON. PURA FERRER-CALLEJA, DIRECTOR OF THE BUREAU OF LABOR RELATIONS, AND BENECO EMPLOYEES LABOR UNION, RESPONDENTS.

On June 21, 1985 Beneco Worker’s Labor
Union-Association of Democratic Labor Organizations (hereinafter referred to as
BWLU-ADLO) filed a petition for direct certification as the sole and exclusive
bargaining representative of all the rank and file employees of Benguet Electric Cooperative, Inc. (hereinafter referred to
as BENECO) at Alapang, La Trinidad, Benguet alleging, inter alia, that BENECO has in its employ two hundred and fourteen (214)
rank and file employees; that one hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of the petition; that
no certification election has been conducted for the last 12 months; that there
is no existing collective bargaining representative of the rank and file
employees sought to be represented by BWLU-ADLO; and, that there is no
collective bargaining agreement in the cooperative.

An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to as
BELU) contending that it was certified as the sole and exclusive bargaining
representative of the subject workers pursuant to an order issued by the
med-arbiter on October 20, 1980; that pending resolution by the National Labor
Relations Commission are two cases it filed against BENECO involving bargaining
deadlock and unfair labor practice; and, that the pendency
of these cases bars any representation question.

BENECO, on the other hand, filed a motion to dismiss the petition
claiming that it is a non-profit electric cooperative engaged in providing
electric services to its members and patron-consumers in the City of Baguio and Benguet Province; and,
that the employees sought to be represented by BWLU-ADLO are not eligible to
form, join or assist labor organizations of their own choosing because they are
members and joint owners of the cooperative.

On September 2, 1985
the med-arbiter issued an order giving due course to the petition for
certification election.  However, the
med-arbiter limited the election among the rank and file employees of
petitioner who are non-members
thereof and without any involvement in the actual ownership of the
cooperative.  Based on the evidence
during the hearing the med-arbiter found that there are thirty-seven (37)
employees who are not members and without any involvement in the actual
ownership of the cooperative.  The dispositive portion of the med-arbiter’s order is as
follows:

WHEREFORE, premises considered, a certification election should be
as it is hereby ordered to be conducted at the premises of Benguet
Electric Cooperative, Inc., at Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among all the rank and file employees (non-members/consumers
and without any involvement in the actual ownership of the cooperative) with
the following choices:

1. 
BENECO WORKERS LABOR UNION-ADLO

2. 
BENECO EMPLOYEES LABOR UNION

3. 
NO UNION

The payroll for the month of June 1985 shall be the basis in
determining the qualified voters who may participate in the certification
election to be conducted.

SO ORDERED.  [Rollo, pp. 22-23.]

BELU and BENECO appealed from this order but the same was
dismissed for lack of merit on March
25, 1986.  Whereupon BENECO
filed with this Court a petition for certiorari with prayer for
preliminary injunction and or restraining order, docketed as G.R. No. 74209,
which the Supreme Court dismissed for lack of merit in a minute resolution
dated April 28, 1986.

The ordered certification election was held on October 1, 1986.  Prior to the conduct thereof BENECO’s counsel verbally manifested that “the
cooperative is protesting that employees who are members-consumers are being
allowed to vote when … they are not eligible to be members of any labor union
for purposes of collective bargaining; much less, to vote in this certification
election.” [Rollo, p. 28.] Petitioner submitted
a certification showing that only four (4) employees are not members of BENECO
and insisted that only these employees are
eligible to vote in the certification election.  Canvass of the votes showed that BELU
garnered forty-nine (49) of the eighty-three (83) “valid” votes cast.

Thereafter BENECO formalized its verbal manifestation by filing a
Protest.  Finding, among others, that the
issue as to
whether or not members-consumers who are employees of BENECO could form, assist
or join a labor union has been answered in the affirmative by the Supreme Court
in G.R. No. 74209, the med-arbiter dismissed the protest on February 17, 1987.  On June
23, 1987, Bureau of Labor Relations (BLR) director Pura Ferrer-Calleja affirmed the
med-arbiter’s order and certified BELU as the sole and exclusive bargaining
agent of all the rank and file employees of BENECO.

Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of
jurisdiction BENECO filed the instant petition for certiorari.  In his Comment the Solicitor General agreed
with BENECO’s stance and prayed that the petition be
given due course.  In view of this
respondent director herself was required by the Court
to file a Comment.  On April 19, 1989 the Court gave due
course to the petition and required the parties to submit their respective
memoranda.

The main issue in this case is whether or not respondent director
committed grave abuse of discretion in certifying respondent BELU as the sole and exclusive bargaining representative of the rank and file
employees of BENECO.

Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification election,
“at least a majority of all eligible voters in the unit must
have cast their votes.  The labor union receiving the majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all workers in the unit.” Petitioner BENECO asserts
that the certification election held on October
1, 1986 was null and void since members-employees of petitioner
cooperative who are not eligible to form and join a labor union for purposes of
collective bargaining were allowed to vote therein.

Respondent director and private respondent BELU on the other hand
submit that members of a cooperative who are also rank and file employees are eligible
to form, assist or join a labor union [Comment of Respondent Director, p. 4; Rollo, p.
125; Comment of BELU, pp. 9-10; Rollo, pp. 99-100.]

The Court finds the present petition meritorious.

The issue of whether or not employees of a cooperative are
qualified to form or join a labor organization for purposes of collective
bargaining had already been resolved and clarified in the case of Cooperative
Rural Bank of Davao City,
Inc. v. Ferrer?Calleja, et
al. [G.R. No. 77951, September 26, 1988] and reiterated in the cases of Batangas-I Electric Cooperative
Labor Union v. Young, et al. [G.R.
Nos. 62386, 70880 and 74560, November 9, 1988] and San Jose City
Electric Service Cooperative, Inc. v.
Ministry of Labor and Employment, et al.
[G.R. No. 77231, May 31, 1989] wherein the Court had stated that the right to
collective bargaining is not available to an employee of a cooperative who at
the same time is a member and
co-owner thereof.  With respect, however,
to employees who are neither members nor co-owners of the cooperative they are
entitled to exercise the rights to self-organization, collective bargaining and
negotiation as mandated by the 1987 Constitution and applicable statutes.

Respondent director argues that to deny the members of petitioner
cooperative the right to form, assist or join a labor union of their own choice
for purposes of collective bargaining would amount to a patent violation of their right to self-organization.  She points out that:

“albeit a person assumes a dual capacity as rank and file
employee and as member of a certain cooperative does not militate, as in the instant case, against
his/her exercise of the right to self-organization and to collective bargaining
guaranteed by the Constitution and Labor Code because, while so doing, he/she is acting in his/her capacity as rank
and file employee thereof.  It may be added that while the employees
concerned became members of petitioner cooperative, their status of
employment as rank and filers who are hired for fixed compensation had not
changed.  They still do not actually
participate in the management of the
cooperative as said function is entrusted to the Board of Directors and
to the elected or appointed officers thereof. 
They are not vested with the powers and prerogatives to lay down and
execute managerial policies; to hire, transfer, suspend, lay-off, recall
discharge, assign or discipline employees; and/or to effectively recommend such
managerial functions [Comment of Respondent Director, p. 4; Rollo,
p. 125.]

Private respondent BELU concurs with the above contention of
respondent director and, additionally, claims that since membership in
petitioner cooperative is only nominal, the rank and file employees who are
members thereof should not be deprived of their right to self-organization.

The above contentions are untenable.  Contrary to respondents’ claim, the fact that
the members-employees of petitioner do not participate in the actual management
of the cooperative does not make them eligible to form, assist or join a labor
organization for the purpose of collective bargaining with petitioner.  The Court’s ruling in the Davao City case that members of
cooperative cannot join a labor union for purposes of collective bargaining was
based on the fact that as members of the cooperative they are co-owners
thereof.  As such, they cannot invoke the
right to collective bargaining for “certainly an owner cannot bargain with
himself or his co-owners.” [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja,
et al., supra.] It is the fact of ownership of the cooperative, and not
involvement in the management thereof, which disqualifies a member
from joining any labor organization within the cooperative.  Thus, irrespective of the degree of their
participation in the actual management of the cooperative, all members thereof
cannot form, assist or join a labor organization for the purpose of collective
bargaining.

Respondent union further claims that if nominal ownership in a
cooperative is “enough to take away the constitutional protections
afforded to labor, then there would be no hindrance for employers to grant, on
a scheme of generous profit sharing, stock bonuses to their employees and
thereafter claim that since their employees are now stockholders [of the
corporation], albeit in a minimal and involuntary manner, they are now also
co-owners and thus disqualified to form unions.” To allow this, BELU
argues, would be “to allow the floodgates of
destruction to be opened upon the rights of labor which the Constitution
endeavors to protect and which welfare it promises to promote.” [Comment
of BELU, p. 10; Rollo, p. 100.]

The above contention of respondent union is based on the
erroneous presumption that membership in a
cooperative is the same as ownership of stocks in ordinary corporations. 
While cooperatives may exercise some of the rights and privileges
given to ordinary corporations provided under existing laws, such cooperatives
enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres. Decree No. 175;
Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra.] Similarly, members of cooperatives
have rights and obligations different from those of stockholders of ordinary
corporations.  It was precisely because
of the special nature of cooperatives, that the Court held in the Davao City case that members-employees thereof
cannot form or join a labor union for purposes of collective bargaining.  The Court held that:

A cooperative . . . is by its nature different from an ordinary
business concern being run either by persons, partnerships, or corporations.  Its owners and/or
members are the ones who run and operate the business while the others are its
employees.  As above stated, irrespective
of the number of shares owned by each member they are entitled to cast one vote
each in deciding upon the affairs of the cooperative.  Their share capital earn
limited interest.  They enjoy special
privileges as – exemption from income tax and sales taxes, preferential right
to supply their products to State agencies and even exemption from the minimum
wage laws.

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.

It is important to note that, in her order dated September 2,
1985, med-arbiter Elnora V. Balleras made a specific
finding that there are only thirty-seven (37) employees of petitioner who are
not members of the cooperative and who are, therefore, the only employees of
petitioner cooperative eligible to form or join a labor union for purposes of
collective bargaining [Annex “A” of the Petition, p. 12; Rollo, p. 22.]  However, the minutes of the certification
election [Annex “C” of the Petition; Rollo,
p. 28] show that a total of eighty-three (83) employees were allowed to vote
and of these, forty-nine (49) voted for respondent union.  Thus, even if We agree with respondent
union’s contention that the thirty seven (37) employees who were originally
non-members of the cooperative can still vote in the certification election
since they were only “forced and compelled to join the cooperative on pain of disciplinary
action,” the certification election held on October 1, 1986 is still null
and void since even those who were already members of the cooperative at the
time of the issuance of the med-arbiter’s order, and therefore cannot claim
that they were forced to join the union, were allowed to vote in the election.

Article 256 of the Labor Code provides, among others, that:

To have a valid election, at least a majority of all eligible voters in the unit must have cast their
votes.  The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive bargaining agent of
all workers in the unit . . .
[Underscoring supplied.]

In this case it cannot be determined whether or not respondent
union was duly elected by the eligible voters of the bargaining unit since even
employees who are ineligible to join a labor union within the cooperative
because of their membership therein were allowed to vote in the certification election.

Considering the foregoing, the Court finds that respondent
director committed grave abuse of discretion in certifying respondent union as
the sole and exclusive bargaining representative of the rank and file employees
of petitioner cooperative.

WHEREFORE, the petition is hereby GRANTED and the assailed resolution of
respondent director is ANNULLED.  The certification election conducted
on October 1, 1986 is SET ASIDE. 
The Regional Office No. I of San Fernando, La Union is
hereby directed to immediately conduct new certification election proceedings among the rank and file
employees of the petitioner who are not members of the cooperative.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., and Bidin, JJ., concur.

Feliciano, J., on leave.