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

Knitjoy Manufacturing versus Ferrer-Calleja

The Case

This is a labor relations case about the boundaries of a bargaining unit. Knitjoy Manufacturing, Incorporated, the employer, together with the Confederation of Filipino Workers, the incumbent bargaining agent, asks the Supreme Court to stop a certification election among the company's monthly-paid rank-and-file employees. The petition challenges the decision of the Director of the Bureau of Labor Relations, Pura Ferrer-Calleja, who ordered that election. The case matters because it tells us when the one company, one union policy must give way to the constitutional right of employees to self-organization, and when a collective bargaining agreement can block a representation case.

Procedural History

The petition for certification election was filed by the Knitjoy Monthly Employees Union with the Regional Office of the Department of Labor and Employment. The Med-Arbiter, Rolando de la Cruz, dismissed the petition and instead instructed the parties to work toward the formation of a single union in the company. The union moved for reconsideration, and the Bureau of Labor Relations treated the motion as an appeal. The Director of the Bureau, Pura Ferrer-Calleja, reversed the Med-Arbiter and ordered a certification election among the regular rank-and-file monthly-paid employees, excluding those deemed managerial, with only the union and no union as choices. The employer's motion for reconsideration was denied. Knitjoy and the Confederation of Filipino Workers then filed separate petitions before the Supreme Court, which were consolidated and given due course.

Facts

Knitjoy had a collective bargaining agreement with the Federation of Filipino Workers covering only regular rank-and-file employees paid on a daily or piece-rate basis. Monthly-paid office and production employees were not included. That agreement expired on 15 June 1987. Before its expiration, the Federation split into two factions, and one of them became the Confederation of Filipino Workers.

Also before the agreement expired, the Trade Union of the Philippines and Allied Services filed a petition for certification election among the daily and piece-rate paid employees, expressly excluding the monthly-paid ones. The Confederation won that election in June 1987, and negotiations for a new agreement began. On 24 June 1987, while those negotiations were pending, the Knitjoy Monthly Employees Union filed its own petition for certification election among the monthly-paid rank-and-file employees. Two other groups intervened.

The Med-Arbiter dismissed the petition, but the Director of the Bureau reversed him. Knitjoy and the Confederation then claimed that a new collective bargaining agreement, allegedly signed on 27 November 1987, already covered the monthly-paid employees, making the case moot. The Director denied reconsideration, finding that the petition was already pending when the new agreement was negotiated, that the monthly-paid employees were never brought into the negotiations, and that they did not ratify it. The Court found that the agreement was in fact signed on 12 December 1987, after the challenged decision.

Issues

• Whether or not the monthly-paid regular rank-and-file employees of Knitjoy may constitute an appropriate bargaining unit separate and distinct from the existing unit of daily or piece-rate paid employees.
• Whether or not the inclusion of the monthly-paid rank-and-file employees in the new collective bargaining agreement bars the holding of a certification election among them.

Applicable Provisions

Article 245 of the Labor Code provides:

Article 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 shows that the law itself allows more than one union in a company.

Section 2, Rule V, Book V of the Implementing Rules provides:

Section 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: (c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require.

The phrase unless circumstances otherwise require is the textual opening for exceptions to the employer unit.

Section 4, Rule V, Book V of the Implementing Rules provides:

Section 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.

This provision directly answers whether a new agreement can defeat a pending representation case.

Ruling

On the first issue, the Court ruled for the respondents. The one company, one union policy is not absolute. Article 245 itself permits separate unions, and the implementing rules recognize that the employer unit yields where circumstances otherwise require, such as craft or plant units. The policy must yield to the constitutional right to self-organization. The Court explained that this right has two notions: liberty, the absence of restraint, and power, the employee's freedom to join or refrain from joining an association. Here, bargaining history showed the unit had always been limited to daily and piece-rate paid employees, and the monthly-paid employees were expressly excluded from the earlier election. The union did not seek to dislodge the incumbent. The employer and the Confederation had misread the Bulletin and General Rubber cases.

On the second issue, the Court also ruled for the respondents. Regardless of the date of the new agreement, it was executed before the resolution of the petition became final. The Court found palpable bad faith in including the monthly-paid employees in an agreement they never negotiated or ratified, a conspiracy to defeat their right to bargain collectively. Citing Section 4, Rule V, Book V, the Court held that a representation case is not adversely affected by an agreement during its pendency. The new agreement cannot validly cover the monthly-paid employees and does not bar the election.

Doctrine

The one company, one union policy is not absolute and must yield to the constitutional right to self-organization. A bargaining unit other than the employer unit may be appropriate where circumstances otherwise require, as shown by bargaining history. A collective bargaining agreement executed during the pendency of a representation case does not bar a certification election, and an agreement cannot bind employees who were not parties to its negotiation or ratification.

Disposition

The petitions were dismissed, and the decision of the Director was modified to include the Confederation of Filipino Workers and the Knitjoy Monthly Employees Association and Confederation of Citizens Labor Unions as choices in the certification election, with costs against the petitioners.

Remember This

Memorize this line: the one company, one union policy yields to the employees' right to self-organization, and a collective bargaining agreement signed during the pendency of a representation case cannot block a certification election. Examiners use this case to test bargaining unit appropriateness and the effect of early agreements on representation cases.