KNITJOY MANUFACTURING, INC., PETITIONER, VS. PURA FERRER-CALLEJA, DIRECTOR OF BUREAU OF LABOR RELATIONS, AND KNITJOY MONTHLY EMPLOYEES UNION, RESPONDENTS.

These petitions have a
common origin and raise identical issues. They were ordered consolidated on 23 November 1988.

In G.R. No. 81883, the 1 December 1987 Decision of respondent
Director of the Bureau of Labor
Relations in BLR Case No. A-10-315-87, which reversed the Order of Med-Arbiter?Designate
Rolando S. dela Cruz dated 4 September 1987 and ordered the holding of a certification election among the
regular rank?and-file monthly-paid employees of Knitjoy Manufacturing,
Inc. (KNITJOY), is assailed by the
latter.

The Med-Arbiter’s order dismissed the petition of private
respondent Knitjoy Monthly Employees Union (KMEU) for such certification
election and directed the parties “to work out (sic) towards the formation
of a single union in the company.”

The antecedent material operative facts in these petitions are as
follows:

Petitioner KNITJOY had a collective bargaining agreement (CBA)
with the Federation of Filipino Workers (FFW). The bargaining unit covered only the regular rank-and-file employees of
KNITJOY paid on a daily or piece-rate basis. It did not include regular rank-and-file office and production employees
paid on a monthly basis. The CBA
expired on 15 June 1987. Prior to its
expiration, the FFW was split into two (2) factions -? the Johnny Tan and
the Aranzamendez factions. The latter
eventually became the Confederation of Filipino Workers (CFW), herein
petitioner in G.R. No. 82111.

Also prior to the expiration of the CBA, the Trade Union of the
Philippines and Allied Services (TUPAS) filed a petition for the holding of a
certification election among KNITJOY’s regular rank-and-file employees paid on
a daily and piece-rate basis. Excluded
were the regular rank-and-file employees paid on a monthly basis. In the certification election conducted on
10 June 1987, CFW emerged as the winner; thereafter, negotiations for a new CBA
between CFW and KNITJOY commenced.

On 24 June 1987, during the pendency of the said negotiations,
private respondent KMEU filed a petition for certification election among
KNITJOY’s regular rank-and-file monthly–paid employees with Regional Office No.
IV of the Department of Labor and Employment (DOLE) which docketed the same as
R-04-OD-M-6-75-87. The Knitjoy Monthly
Employees Association and Confederation of Citizens Labor Union (KMEA-CCLU),
another union existing in the said company, and petitioner CFW intervened
therein.

The petition was dismissed in the Order of 4 September 1987 of
Med-Arbiter Rolando S. de la Cruz, the dispositive portion of which reads:

“WHEREFORE,
premises considered, the petition is hereby Dismissed, but the parties are
instructed to work out (sic) towards the formation of a single union in the
company.”^[1]

KMEU filed a motion to reconsider this order, which was treated
as an appeal by the Bureau of Labor Relations (BLR).

On 1 December 1987, public respondent Pura Ferrer-Calleja,
Director of the BLR, handed down a Decision^[2]
reversing the order of Med-Arbiter de la Cruz. The dispositive portion of the Decision reads:

“WHEREFORE,
premises considered, the Appeal of Knitjoy Monthly Employees is hereby granted
subject to the exclusion of the monthly paid employees who are deemed
managerial.

Let, therefore, the
certification election proceed without delay, with the following as choices:

1. Knitjoy Monthly
Employees Union (KMEU); and

2. No Union.

The company’s latest
payroll shall be the basis in determining the list of eligible voters.

SO ORDERED.”

Respondent Director brushed aside KNITJOY’s arguments that the
monthly-paid employees have the same working incentives as their counterparts,
the daily-paid workers; that the existing collective bargaining agent (CFW) is
willing to include the monthly-paid employees; and that out of the 212 monthly-paid
employees, 116 qualify as managerial employees while the rest who are holding
confidential or technical positions should likewise be excluded. In finding for KMEU, said Director declared
that:

“As pointed out
by the Supreme Court in the similar case of General Rubber
and Footwear Corporation
vs. Bureau of Labor Relations, et al.,
G.R. No. 74262, it is perhaps unusual for management to have to deal
with two (2) collective bargaining unions but there is no one to blame except
management for creating the situation it is in. From the beginning of the existence of the CBA, management had
sought to indiscriminately suppress the members of the petitioners’ right (sic)
to self-organization. Respondents’
argument that the incumbent collective bargaining agent is willing to
accommodate herein petitioner is of no moment since the option now rests upon
the petitioner as to whether or not they desire to join the existing collective
bargaining agent or remain as separate (sic) union.”^[3]

KNITJOY and CFW separately moved to reconsider the said decision
alleging, as principal underpinning therefor, the conclusion and signing
between them, allegedly on 27 November 1987 — before the rendition of the
challenged decision — of a CBA which includes in its coverage the monthly-paid
rank-and-­file employees. It is averred
that said CBA has rendered the case moot and academic; moreover, to remove the
monthly-paid employees from their present bargaining unit would lead to the
fragmentation thereof, contrary to existing labor policies favoring larger
units.

In her Decision of 8 February 1988, respondent Director denied
for lack of merit the motion for reconsideration on the principal ground that
although the monthly-paid rank-and-file employees were allegedly included
within the scope of the new CBA, they are not barred from forming a separate
bargaining unit considering that: (a)
since the petition for certification election was filed as early as 24 June
1987, there already existed a pending representation issue when KNITJOY and CFW
commenced negotiations for a new CBA; nevertheless, KMEU was not brought into
the said negotiations and was therefore not a privy to the CBA; (b) members of
KMEU did not participate in the ratification of the CBA; contrary to KNITJOY’s
claim that the same was unanimously ratified by the members of the bargaining
unit, the CBA failed to mention even one monthly-paid employee who participated
in the ratification process; and (c) while it is true that the policy of the
DOLE is to favor a one company-one union scenario which finds basis in Section
2, Rule V, Book V of the Rules Implementing the Labor Code, there are,
nonetheless, some exceptions thereto,
as where the bargaining history requires the formation of another bargaining
unit. Besides, such a policy must yield
to an employee’s Constitutional right to form unions which includes the freedom
to join a union of one’s choice.^[4]

The new CBA, which KMEU claims to have been signed on 12 December
1987, and not on 27 November 1987 as both KNITJOY and CFW boldly assert, defines the bargaining unit covered as
follows:

“SEC. 2. The bargaining unit covered by this
Agreement consists of all regular and permanent rank-and-file employees of the
COMPANY employed in its production plants and paid on a daily or piece-rate
basis and regular, rank-and-file monthly paid office employees, excluding
managerial, supervisory, casual, temporary and probationary employees, and
security guards.”^[5]

Unfazed by their defeat before the BLR, KNITJOY and CFW
separately filed the instant petitions. The former imputes upon respondent Director grave abuse of discretion in
holding that (a) the scope of the bargaining unit agreed upon in the new CBA
does not bind KMEU because it is not a party thereto, (b) the acceptance by all
the members of KMEU of all benefits of the CBA did not constitute an overt act
of ratification and (c) the CBA was concluded on 12 December 1987 and not on 27
November 1987. It further contends that
respondent Director contumaciously violated the one company-one union policy of
the Labor Code and disregarded the ruling of this Court in Bulletin
Publishing Corp. vs. Hon. Sanchez,^[6] reiterated
in part in General Rubber and Footwear Corp. vs. Bureau of Labor Relations.^[7]
Upon the other hand, CFW contends that respondent Director committed grave
abuse of discretion in (a) allowing the creation
of a unit separate from the existing bargaining unit defined in the new
CBA thus abetting the proliferation of unions, (b) disregarding the CBA
provisions which consider the CFW as the sole and exclusive bargaining agent of
all rank-and-file employees and (c) excluding CFW from the choices of unions to
be voted upon.^[8]

On 24 August 1988,^[9] this
Court gave due course to the petition in G.R. No. 81883 after both the public
and private respondents filed their separate comments and the petitioner filed
its consolidated reply thereto.^[10]

On 23 November 1988, G.R. No. 82111 was consolidated with G.R.
No. 81883 and the petitioner in the former was ordered to file a consolidated
reply to the separate comments of both respondents.^[11]

The principal issues raised in these petitions are:

1. Whether or not
petitioner KNITJOY’S monthly-paid regular rank-and-file employees can
constitute an appropriate bargaining unit separate and distinct from the
existing unit composed of daily or piece-rate paid regular rank-and-file
employees, and

2. Whether or not the
inclusion in the coverage of the new CBA between KNITJOY and CFW of the
monthly-paid rank-and-file employees bars the holding of a certification
election among the said monthly paid employees.

We decide for the respondents.

1. The suggested bias of the Labor Code in favor of the one
company-one union policy, anchored on the greater mutual benefits which the
parties could derive, especially in the case of employees whose bargaining
strength could undeniably be enhanced by their unity and solidarity but
diminished by their disunity, division and dissension, is not without
exceptions.

The present Article 245 of the Labor Code expressly allows
supervisory employees who are not performing managerial functions to join,
assist or form their separate union but bars them from membership in a labor organization of the
rank-and-file employees. It reads:

“ART. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory
employees. — Managerial
employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible
for membership in a labor organization of the rank-and-file employees but may
join, assist or form separate labor
organizations of their own.”

This provision obviously allows more than
one union in a company.

Even Section 2(c), Rule V, Book V of the Implementing Rules and
Regulations of the Labor Code, which seeks to implement the policy, also
recognizes exceptions. It reads:

“SEC. 2. Who
may file. — Any legitimate
labor organization or the employer, when requested to bargain collectively, may
file the petition.

The petition, when
filed by a legitimate labor organization shall contain, among others:

x x x

(c) description of the
bargaining unit which shall be the employer unit unless circumstances
otherwise require; x x x.” (Emphasis supplied)

The usual exception, of course, is where the employer unit has to give way to the other units like the craft
unit, plant unit, or a subdivision thereof; the recognition of these exceptions
takes into account the policy to assure employees of the fullest freedom in
exercising their rights.^[12]
Otherwise stated, the one company-one union policy must yield to the right of
the employees to form unions or associations for purposes not contrary to law,
to self-organization and to enter into collective bargaining negotiations,
among others, which the Constitution guarantees.^[13]

The right to form a union
or association or to self?organization comprehends two (2) broad notions,
to wit: (a) the liberty or freedom, i.e., the absence of restraint which
guarantees that the employee may act for himself without being prevented by law,
and (b) the power, by virtue of which an employee may, as he pleases, join or
refrain from joining an association. In
Victoriano vs. Elizalde Rope Workers’
Union,^[14]
this Court stated:

“x x x
Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a ‘right’, it can be safely
said that whatever theory one subscribes to, a right comprehends at least two
broad notions, namely: first, liberty
or freedom, i.e., the absence of legal restraint, whereby an employee may act
for himself without being prevented by law; and second, power, whereby an
employee may, as he pleases, join or refrain from joining an association. It is, therefore, the employee who should
decide for himself whether he should join or not an association; and should he
choose to join, he himself makes up his mind as to which association he would
join; and even after he has joined, he still retains the liberty and the power
to leave and cancel his membership with said organization at any time
[Pagkakaisa Samahang Manggagawa ng San Miguel Brewery vs. Enriquez, et al., 108
Phil., 1010, 1019]. It is clear,
therefore, that the right to join a union includes the right to abstain from
joining any union [Abo, et al. vs. PHILAME (KG) Employees Union, et al.,
L-19912, January 30, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor
Relations]. Inasmuch as what both the
Constitution and the Industrial Peace Act have recognized, and guaranteed to the
employee, is the ‘right’ to join associations of his choice, it would be absurd
to say that the law also imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin an employee to sign up with any
association.”

Furthermore, it is not denied that in the bargaining history of
KNITJOY, the CBA has been consistently limited to the regular rank-and-file
employees paid on a daily or piece-rate basis. On the other hand, the rank-and-file employees paid on a monthly basis
were never included within its scope. Respondent KMEU’s membership is limited to the latter class of
employees; KMEU does not seek to dislodge CFW as the exclusive bargaining
representative for the former. The records
further disclose that in the certification solicited by TUPAS and during the
elections which followed thereafter, resulting in the certification of CFW as
the exclusive bargaining representative, the monthly-paid employees were
expressly excluded. Thus, the
negotiations between CFW and KNITJOY following such a certification could only
logically refer to the rank-and-file employees paid on a daily or piece-rate
basis. Clearly therefore, KNITJOY and
CFW recognize that insofar as the monthly-paid employees are concerned, the
latter’s constituting a separate bargaining unit with the appropriate union as
sole bargaining representative, can neither be prevented nor avoided without
infringing on these employees’ rights to form a union and to enter into
collective bargaining negotiations. Stated differently, KNITJOY and CFW recognize the fact that the existing
bargaining unit in the former is not — ­and has never been — the employer
unit. Given this historical and factual setting, KMEU had the
unquestioned and undisputed right to seek certification as the exclusive
bargaining representative for the monthly-paid rank-and-file employees; both
KNITJOY and CFW cannot block the same on the basis of this Court’s declaration
in Bulletin Publishing Corp. vs.
Hon. Sanchez^[15] and General Rubber and Footwear Corp. vs. Bureau of Labor Relations^[16]
regarding the one company-one union concept. Petitioners have obviously misread these cases. In the first, We stated that “[t]he
crux of the dispute x x x is whether or not supervisors in petitioner company
therein may, for purposes of collective bargaining, form a union separate and
distinct from the existing union organized by the rank-and-file employees of
the same company,”^[17] and
ruled that the members of the Bulletin Supervisory Union, wholly composed of
supervisors, are not qualified
to form a union of their own under the law and rules then existing, considering
that “[a] perusal of the job descriptions corresponding to the private
respondents as outlined in the petition, clearly reveals the private
respondents to be managers, purchasing
officers, personnel officers,
property officers, supervisors, cashiers, heads of various sections and
the like. The nature of their duties gives rise
to the irresistible conclusion that most of the herein private respondents are
performing managerial functions;“^[18] hence, under Article 246^[19]
of the Labor Code, they cannot form, join and assist labor organizations. It should be stressed that the statement
therein that supervisors “who do not assume any managerial function may
join or assist an existing rank-and-file union or if none exists, to join or
assist in the formation of such rank-and-file organization”^[20]
is no longer legally feasible under existing laws. As earlier noted, the present Article 245 of the Labor Code
allows supervisory employees who are not exercising managerial functions to
join, assist or form separate labor organizations of their own but prohibits
them from joining a labor organization composed of the rank-and-file employees.

The second case, on the other hand, demolishes the stand of KNITJOY
and CFW for, as correctly contended by the respondents, it in fact recognizes
an exception to the one company-one union concept. Thus:

“Perhaps it is
unusual for the petitioner to have to deal with two (2) collective bargaining
unions but there is no one to blame except petitioner itself for creating the
situation it is in. From the beginning
of the existence in 1963 of a bargaining unit for the employees up to the
present, petitioner had sought to indiscriminately suppress the members of the
private respondent’s right (sic) to self-organization provided for by law. Petitioner, in justification of its action,
maintained that the exclusion of the members of the private respondent from the
bargaining union of the rank-and-file or from forming their own union was
agreed upon by petitioner corporation with the previous bargaining
representatives x x x. Such posture has
no leg to stand on. It has not been
shown that private respondent was privy to this agreement. And even if it were so, it can never bind
subsequent federations and unions particularly private respondent-union because
it is a curtailment of the right to self-organization guaranteed by the labor
laws. However, to prevent any
difficulty and to avoid confusion to all concerned and, more importantly, to
fulfill the policy of the New Labor Code as well as to be consistent with Our
ruling in the Bulletin case, supra, the monthly-paid
rank-and-file employees should be allowed
to join the union of the daily-paid­-rank-and-file employees of petitioner so
that they can also avail of the CBA benefits or to form their own
rank-and-file union, without prejudice
to the certification election that has
been ordered.”^[21] (Emphasis supplied)

2. Regardless of the date when the new CBA was executed -­- whether
on 27 November 1987 as contended by KNITJOY and CFW or 12 December 1987 as
claimed by the respondents — the fact remains that it was executed before the
resolution of KMEU’s petition for certification election among the monthly paid
employees became final. This Court,
however, sustains the respondents’ claim for indeed if it was executed by the
parties on 27 November 1987, both KNITJOY and CFW would have immediately filed
the appropriate pleading with the BLR informing it of such execution and moving
for the dismissal of the appeal on the ground that it has been rendered moot
and academic. Moreover, public
respondent’s finding on this point is supported by substantial evidence, thus:

“The parties
could not have signed the said CBA on 27 November 1987, contrary to their
allegation, because from 4:00 – 10:00 p.m. on the same day, 27 November 1987,
the parties still attended a conciliation conference before Assistant Director
Maximo L. Lim of the NCR (see Annex
“F” of respondent’s Supplemental Motion for Reconsideration) and
agreed in principle on nine (9) items or provisions to be included in said
CBA. Said minutes do not state that
these nine items are the remaining unresolved issues in the negotiation of the
CBA.”^[22]

It was only in their motion for the reconsideration
of public respondent’s decision of 1 December 1987 that the existence of the
new CBA was made known.

Considering that (a) the TUPAS solicited certification election
was strictly confined to the rank-and-file employees who are paid on a daily or
piece-rate basis, (b) the results of the election must also necessarily confine
the certified union’s representation to the group it represents and (c) the
issue of the plight of the monthly-paid employees was still pending, KNITJOY
and CFW clearly acted with palpable bad faith and malice in including within
the scope of the new CBA these monthly-paid employees. Thus was effected a conspiracy to defeat and
suppress the right of the KMEU and its members to bargain collectively and
negotiate for themselves, to impose upon the latter a contract the negotiation
for which they were not even given notice of, consulted or allowed to
participate in, and to oust from the BLR the pending appeal on the
certification issue. In the latter
case, KNITJOY and CFW are guilty of contumacious conduct. It goes without saying then that the new CBA
cannot validly include in its scope or coverage the monthly-paid rank-and-file
employees of KNITJOY. It does not bar
the holding of a certification election to determine their sole bargaining
agent and the negotiation for and the execution of a subsequent CBA between
KNITJOY and the eventual winner in said election. Section 4, Rule V, Book V of the Rules Implementing the Labor
Code expressly provides:

“SEC. 4. Effects
of early agreements. — The
representation case shall not, however, be adversely affected by a collective
bargaining agreement registered before or during the last 60 days of a subsisting agreement or during the pendency of the representation case.” (Emphasis supplied)

The public respondent then committed no abuse of discretion in
ordering a certification election among the monthly-paid rank-and-file
employees, except managerial employees, of KNITJOY. The choice however, should not be, as correctly contended by CFW,
limited to merely (a) KMEU and (b) no union. The records disclose that the intervenors in the petition for
certification are the KMEA-CCLU and CFW. They should be included as among the choices in the certification
election.

WHEREFORE, the instant petitions are DISMISSED. However, the challenged decision of public
respondent of 1 December 1987 is modified to include in the choices for the
certification election petitioner Confederation of Filipino Workers (CFW) and
the Knitjoy Monthly Employees Association and Confederation of Citizens Labor
Unions (KMEU-CCLU).

Costs against petitioners.

SO ORDERED.

Bidin, Romero, and Melo,
JJ., concur.

Gutierrez, Jr., J., (Chairman),
on official leave.

^[1]
Rollo, G.R. No. 81883, 31-39.

^[2]
Id., 21-24.

^[3]
Rollo, G.R. No. 81883, 23.

^[4]
Rollo, G.R. No. 81883, 28-29.

^[5]
Annex “F” of Petition; Id., 44.

^[6]
144 SCRA 628 [1986].

^[7]
155 SCRA 283 [1987].

^[8]
Rollo, G.R. No. 82111, 8-9.

^[9]
Id., G.R. No. 81883, 144.

^[10]
Id., 92, 41, 129.

^[11]
Id., G.R. No. 82111, op. cit., 106.

^[12]
PASCUAL, C., Labor Relations Law, 1986 ed., 109.

^[13]
Section 8, Article III and Section 3, Article XIII, 1987 Constitution.

^[14]
59 SCRA 54, 66-67 [1974]. See also Anucension vs. National
Labor Union, 80 SCRA 350 [1977]; Vassar Industries Employees Union vs. Estrella,
82 SCRA 280 [1978]; Philips
Industrial Development, Inc. vs. NLRC, G.R. No. 88957, 25 June 1992.

^[15]
Supra.

^[16]
Supra.

^[17]
At page 631.

^[18]
At page 634.

^[19]
Now Article 245 by reason of subsequent amendments.

^[20]
At page 635.

^[21]
At pages 288-289.

^[22]
Rollo, G.R. No. 81883, 30.