la suerte cigar and cigarette factory

8/10/2019 La Suerte Cigar and Cigarette Factory

1/18

La Suerte Cigar and Cigarette Factory

v. Dir. of BLR

Facts:

La Suerte Cigar and Cigarette Factory Provincial (the Company) and Metro Manila Sales Force

Association (the local union) applied for and was granted chapter status by the National Association of

Trade Unions (NATU).

Sometime later, 31 local union members signed a joint letter withdrawing their membership in NATU.

The local union and NATU filed a petition for certification election which alleged that 48 of the 60 sales

personnel of the company were members of the local union. The petition is supported by no less than

75% of the sales force.

Moreover, there is no existing recognized labor union in the company representing the said sales

personnel. Likewise, there is no existing CBA and no certification election in the last 12 months preceding

the filing of the petition.

The company opposed on the ground that it was n o t s u p p o r t e d b y a t l e a s t 3 0 % ( n o w 2 5 % )

o f t h e proposed bargaining unit because:

(a)of the alleged 48 members of the local union, 31 had withdrawn prior to the filing of the

petition, and

(b)14 of th e alleged members of the union were not employees of the company but were independent

contractors. The BLR (Bureau of Labor Relations) director denied the companys objection

Issue:

WON the withdrawal of 31 union members from NATU af fected the pe ti ti on fo r ce rt if icat ion

elec ti on (i nsofar as the 30% requirement is concerned)

Held:

YES

The SC reversed the decision of BLR, it appearing that the 31 union mem bers has wi thdr awn th ei r

support to the petition BEFORE the fi l ing of said petition.

It would be otherwise if the withdrawal was made AFTER the filing of the petition for it would then bepresumed that the said withdrawal was not free and voluntary (may be procured through duress, coercion

or for valuable consideration).

In other words, distinction must be made whether the withdrawals were made before or after filing of the

petition. Before= presumed to be voluntary. After=involuntary


2/18

Reason for distinction is that if the withdrawal was made before filing of the petition, the names of

employees supporting the petition are supposed to be held secret to the opposite party. Logically, any

such withdrawal or retraction shows voluntariness in the absence of proof to the contrary.

Moreover, it becomes apparent that such employees had not given consent to the filing of the petition;

hence the subscription requirement has not been met.

SC held that 14 members of the respondent local union are dealers and independent contractors, thus

they are not employees of the Company.

With the withdrawal by 31 members of their support to the petition before the filing thereof, making a total

of 45, the remainder of 3 out of 48 alleged to have supported the petition. Such number can hardly be

said to represent the union.


3/18


4/18

023 TUNAY NA PAGKAKAISA NG MANGGAGAWA

SA ASIA BREWERY, vs. ASIA BREWERY, INC.,

G.R. No. 162025 August 3, 2010

TOPIC: Confidential Employees

PONENTE: VILLARAMA, JR., J.

Respondent insisted they fall under the "Confidential and

Executive Secretaries" expressly excluded by the CBA from

the rank-and-file bargaining unit. However, perusal of the job

descriptions of these secretaries/clerks reveals that thei

assigned duties and responsibilities involve routine activities orecording and monitoring, and other paper works for thei

respective departments while secretarial tasks such as receivin

telephone calls and filing of office correspondence appear tohave been commonly imposed as additional duties.


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FACTS:

1. Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer, shandy, bottled water andglass products. ABI entered into a Collective Bargaining Agreement (CBA), effective for five (5) years with Bisig at Lakas ng

mga Manggagawa sa Asia-Independent (BLMA), the exclusive bargaining representative of ABIs rank-and-file employees

Under the CBA, 12 jobs were defined to be excluded from the bargaining agreement.2. Subsequently, a dispute arose when ABIs management stopped deducting union dues from eighty-one (81) employees

believing that their membership in BLMA violated the CBA.3. BLMA claimed that ABIs actions restrained the employees right to self-organization and brought the matter to th

grievance machinery. As the parties failed to amicably settle the controversy, BLMA lodged a complaint before the Nationa

Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit the case for arbitration to resolve the issuof "whether or not there is restraint to employees in the exercise of their right to self-organization."

4. Voluntary Arbitrator (VA) ruled in favor of BLMA. Accordingly, the subject employees were declared eligible for inclusion

within the bargaining unit represented by BLMA. On appeal by ABI to the CA, it reversed the VA, ruling that the 81 employeeare excluded from and are not eligible for inclusion in the bargaining unit as defined in Section 2, Article I of the CBA; the 8

employees cannot validly become members of respondent and/or if already members, that their membership is violative of theCBA and that they should disaffiliate from respondent; and petitioner has not committed any act that restrained or tended t

restrain its employees in the exercise of their right to self-organization.

5. In the meantime, a certification election was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ngManggagawa sa Asia (TPMA) won. As the incumbent bargaining representative of ABIs rank-and-file employees claiming

interest in the outcome of the case, petitioner filed with the CA an omnibus motion for reconsideration of the decision andintervention, with attached petition signed by the union officers. Both motions were denied by the CA

ISSUE:

Whether or not the workers were confidential employees

HELD:No. We hold that the secretaries/clerks, numbering about forty (40), are rank-and-file employees and not confidentia

employees.

RATIO

Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to manageriaemployees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or

nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to

sensitive and highly confidential records. Confidential employees are thus excluded from the rank-and-file bargaining unit. Thrationale for their separate category and disqualification to join any labor organization is similar to the inhibition for manageria

employees because if allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view of evidenconflict of interests and the Union can also become company-denominated with the presence of managerial employees in the

Union membership. Having access to confidential information, confidential employees may also become the source of undu

advantage. Said employees may act as a spy or spies of either party to a collective bargaining agreement.

In the present case, the CBA expressly excluded "Confidential and Executive Secretaries" from the rank-and-file bargaining unit

for which reason ABI seeks their disaffiliation from petitioner. Respondent failed to indicate who among these numerouworkers have access to confidential data relating to management policies that could give rise to potential conflict of interest with

their Union membership. Clearly, the rationale under our previous rulings for the exclusion of executive secretaries or divisionsecretaries would have little or no significance considering the lack of or very limited access to confidential information of thes

secretaries/clerks. It is not even farfetched that the job category may exist only on paper since they are all daily-paid workers

Quite understandably, petitioner had earlier expressed the view that the positions were just being "reclassified" as theseemployees actually discharged routine functions. We thus hold that the secretaries/clerks, numbering about forty (40), are rank

and-file employees and not confidential employees.

Sub Issue:

Whether or not the company committed unfair labor practice by restraining to employees in the exercise of their right to self-organization.

Held:No. Considering that the herein dispute arose from a simple disagreement in the interpretation of the CBA provision on

excluded employees from the bargaining unit, respondent cannot be said to have committed unfair labor practice that restrained


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its employees in the exercise of their right to self-organization, nor have thereby demonstrated an anti-union stance.

CASE LAW/ DOCTRINE:

Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to persons who formulate

determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be

met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the

employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. In thepresent case, there is no showing that the secretaries/clerks and checkers assisted or acted in a confidential capacity tomanagerial employees and obtained confidential information relating to labor relations policies. And even assuming that they

had exposure to internal business operations of the company, as respondent claims, this is not per se ground for their exclusion in

the bargaining unit of the rank-and-file employees.


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PEPSI COLA case

Facts: Pepsi-Cola Employees Organization-UOEF(PCEU) filed a petition for certification election with theMed-Arbiter seeking to be the exclusive bargaining agent

of supervisors of Pepsi-Cola Philippines (Pepsi). Thepetition was granted, but with the explicitstatement thatPCEU was affiliated with Union de Obreros Estivadores deFilipinas (UOEF) and 2 other rank-and-file unions, thePCLU and the PEUP.

Pepsi then filed a petition for cancellation with the BLRagainst PCEU, on the grounds that: (a) the members ofPCEU were managers and (b) a supervisors' union cannotaffiliate with a federation whose members include the rankand file union of the same company. It also filed an urgentex-parte motion to suspend the certification election.

PCEU argued that Art. 245 of the Labor Code, asamended by RA 6715, did not prohibit a local union

composed of supervisory employees from being affiliatedto a federation which has local unions with rank-and-filemembers as affiliates. Furthermore, Book V, Rule II,Section 7 of the Omnibus Rules Implementing the LaborCode provides the grounds for cancellation of theregistration certificate of a labor organization, and theinclusion of managerial employees is not one ofthe grounds.

However, on 1992, or before the SC decision, the PCEUissued a resolution withdrawing from the UOEF.


8/18

Issue: Whether or not PCEU may be affiliated with therank-and-file unions.

Held:PCEU's withdrawal from the affiliation made thecase moot and academic. But for the guidance of otherssimilarly situated, the Court ruled No.

If the intent of the law is to avoid a situation wheresupervisors would merge with the rank and file or wherethe supervisors' labor organization would representconflicting interests, then a local supervisors' union should

not be allowed to affiliate with the national federation ofunion of rank-and-file employees where that federationactively participates in union activity in the company.

The limitation is not confined to a case of supervisors'wanting to join a rank-and-file union. The prohibitionextends to a supervisors' local union applying formembership in a national federation the members of which

include local unions of rank and file employees. The intentof the law is clear especially where, as in this case at bar,the supervisors will be co-mingling with those employeeswhom they directly supervise in their own bargaining unit.

In the collective bargaining process, managerialemployees are supposed to be on the side of theemployer, to act as its representatives, and to see to it thatits interests are well protected. The employer is notassured of such protection if these employees themselvesare union members. It is the same reason that impelledthis Court to consider the position of confidentialemployees as included in the disqualification found in Art.


9/18

245 as if the disqualification of confidential employeeswere written in theprovision. Said employees may act asspies of either party to a collective bargaining agreement.


10/18

NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I) EMPLOYEES ASSOCIATION, VS. NLRC

Justice Quisumbing, 24 January 2000

Facts:

Reynaldo Fajardo, Ernesto Marin, Ever Guevarra, Petronilo Baguisa, Victorino Carillo, and Erdie Javate were permanent

employees of Nueva Ecija I Electric Cooperative (NEECO I). They were members of NEECO I Employees Association, a labor

organization established for the mutual aid and protection of its members. Rodolfo Jimenez was the president of the association.

NEECO I is an electric cooperative under the general supervision and control of the National Electrification Administration(NEA). The management of NEECO I is vested on the Board of Directors. Patricio dela Pea was NEECOs general manager on

detail from NEA.

On 7 February 1987, the Board of Directors adopted Policy No. 3-33, which set the guidelines for NEECO Is retirement

benefits. All regular employees were ordered by NEECO I to accomplish Form 87, which were applications for either retirement,

resignation, or separation from service. The applications of Petronilo Baguisa and Ever Guevarra, respectively, were then approved.

They were paid the appropriate separation pay.

These successive events, followed by the promotion of certain union officers to supervisory rank, caused apprehension in

the labor association. They were considered as harassment threatening the union members, and circumventing the employees

security of tenure. On 29 February 1992, to strengthen and neutralize managements arbitrary moves, the union held a "snap

election" of officers. Fajardo was elected Treasurer, while Guevarra, Carillo and Marin were elected Public Relations Officers.

On March 3, 1992, the Union passed a resolution withdrawing the applications for retirement of all its members. However,

petitioners Marin, Fajardo andCarillo were compulsorily retired by management. They received their separation pay under protest.

Erdie Javate was also terminated from employment allegedly due to misappropriation of funds and dishonesty. He was not however

paid separation or retirement benefits.

On March 29, 1992, petitioners and Javate instituted a complaint for illegal dismissal and damages with the NLRC

Regional Arbitration Branch in San Fernando.

Petitioners Arguments:

They were purposely singled out for retirement from a listing of employees who were made to submit retirement forms, even ifthey were not on top of the list because they were union officers, past officers or active members of the association.

Their acceptance of the money offered by NEECO I did not constitute estoppel nor waiver, since their acceptances were withvehement objections and without prejudice to all their rights resulting from an illegal dismissal.

LA: Ruled in favor of petitioner employees

NLRC: Modified LA decision by deleting the award of moral and exemplary damages

Issue and Holding:

Whether or not the petitioners are entitled to an award of moral and exemplary damages. YES

Ratio:

To warrant an award of moral damages, it must be shown that the dismissal of the employee was attended to by bad faith,

or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. The Labor

Arbiter ruled that there was unfair labor practice.

Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are inimical to the

legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in

an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the promotion of healthy and stable labor-

management relations. As the conscience of the government, it is the Courts sworn duty to ensure that none trifles with labor rights.

For this reason, the Court finds it proper in this case to impose moral and exemplary damages on private respondent.

However, the damages awarded by the labor arbiter, to our mind, are excessive. In determining the amount of damages

recoverable, the business, social and financial position of the offended parties and the business and financial position of the

offender are taken into account. It is our view that herein private respondents had not fully acted in good faith. However, the Court is

cognizant that a cooperative promotes the welfare of its own members. The economic benefits filter to the cooperative members.

Either equally or proportionally, they are distributed among members in correlation with the resources of the association utilized.

Cooperatives help promote economic democracy and support community development. Under these circumstances, the Courtdeem it proper to reduce moral damages to only P10,000.00 payable by private respondent NEECO I to each individual petitioner.

The Court also deem it sufficient for private respondent NEECO I to pay each individual petitioner P5,000.00 to answer for

exemplary damages, based on the provisions of Articles 2229 and 2232 of the Civil Code


11/18

Republic vs Asiapro Cooperative (2007) G.R. 172101

Facts:

Respondent Asiapro, as a cooperative, is composed of owners-members.Under its by-laws, owners-members are of

two categories, to wit: (1) regular member, who is entitled to all the rights and privileges of membership; and (2)

associate member, who has no right to vote and be voted upon and shall be entitled only to such rights and privilegesprovided in its by-laws, Its primary objectives are to provide savings and credit facilities and to develop other

livelihood services for its owners-members.In the discharge of the aforesaid primary objectives, respondent

cooperative entered into several Service Contracts with Stanfilco - a division of DOLE Philippines, Inc. and a

company based in Bukidnon.The owners-members do not receive compensation or wages from the respondent

cooperative.Instead, they receive a share in the service surplus which the respondent cooperative earns from different

areas of trade it engages in, such as the income derived from the said Service Contracts with Stanfilco. The owners-

members get their income from the service surplus generated by the quality and amount of services they rendered,

which is determined by the Board of Directors of the respondent cooperative.

In order to enjoy the benefits under the Social Security Law of 1997, the owners-members of the respondent

cooperative, who were assigned to Stanfilco requested the services of the latter to register them with petitioner SSS asself-employed and to remit their contributions as such. Also, to comply with Section 19-A of Republic Act No. 1161,

as amended by Republic Act No. 8282, the SSS contributions of the said owners-members were equal to the share of

both the employer and the employee.

On 26 September 2002, however, petitioner SSS through its Vice-President for Mindanao Division, Atty. Eddie A.

Jara, sent a letter to the respondent cooperative, addressed to its Chief Executive Officer (CEO) and General Manager

Leo G. Parma, informing the latter that based on the Service Contracts it executed with Stanfilco, respondent

cooperative is actually a manpower contractor supplying employees to Stanfilco and for that reason, it is an employer

of its owners-members working with Stanfilco.Thus, respondent cooperative should register itself with petitioner SSS

as an employer and make the corresponding report and remittance of premium contributions in accordance with the

Social Security Law of 1997.On 9 October 2002, respondent cooperative, through its counsel, sent a reply to petitionerSSSs letter asserting that it is not an employer because its owners-members are the cooperative itself; hence, it cannot

be its own employer.Again, on 21 October 2002 petitioner SSS sent a letter to respondent cooperative ordering the

latter to register as an employer and report its owners-members as employees for compulsory coverage with the

petitioner SSS.Respondent cooperative continuously ignored the demand of petitioner SSS.

Accordingly, petitioner SSS, on 12 June 2003, filed a Petition before petitioner SSC against the respondent cooperative

and Stanfilco praying that the respondent cooperative or, in the alternative, Stanfilco be directed to register as an

employer and to report respondent cooperatives owners-members as covered employees under the compulsory

coverage of SSS and to remit the necessary contributions in accordance with the Social Security Law of 1997.The same

was docketed as SSC Case No. 6-15507-03. Respondent cooperative filed its Answer with Motion to Dismiss alleging

that no employer-employee relationship exists between it and its owners-members, thus, petitioner SSC has nojurisdiction over the respondent cooperative.Stanfilco, on the other hand, filed an Answer with Cross -claim against

the respondent cooperative.

Issue: Whether the petitioner SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS against

the respondent cooperative.


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Held: Petitioner SSCs jurisdiction is clearly stated in Section 5 of Republic Act No. 8282 as well as in Section 1, Rule

III of the 1997 SSS Revised Rules of Procedure.

Section 5 of Republic Act No. 8282 provides:

SEC. 5. Settlement of Disputes. (a) Any dispute arising under this Act with respect to coverage, benefits, contributionsand penalties thereon or any other matter related thereto, shall be cognizable by the Commission, x x x.(Emphasis

supplied.)

Similarly, Section 1, Rule III of the 1997 SSS Revised Rules of Procedure states:

Section 1.Jurisdiction. Any dispute arising under the Social Security Act with respect to coverage, entitlement of

benefits, collection and settlement of contributions and penalties thereon, or any other matter related thereto, shall

be cognizable by the Commission after the SSS through its President, Manager or Officer-in-charge of the

Department/Branch/Representative Office concerned had first taken action thereon in writing.(Emphasis supplied.)

It is clear then from the aforesaid provisions that any issue regarding the compulsory coverage of the SSS iswell within the exclusive domain of the petitioner SSC.It is important to note, though, that the mandatory

coverage under the SSS Law is premised on the existence of an employer-employee relationship except in

cases of compulsory coverage of the self-employed.

It is axiomatic that the allegations in the complaint, not the defenses set up in the Answer or in the Motion to

Dismiss, determine which court has jurisdiction over an action; otherwise, the question of jurisdiction would

depend almost entirely upon the defendant. Moreover, it is well-settled that once jurisdiction is acquired by the

court, it remains with it until the full termination of the case. The said principle may be applied even to quasi-judicial

bodies.

In this case, the petition-complaint filed by the petitioner SSS before the petitioner SSC against the respondentcooperative and Stanfilco alleges that the owners-members of the respondent cooperative are subject to the

compulsory coverage of the SSS because they are employees of the respondent cooperative.Consequently, the

respondent cooperative being the employer of its owners-members must register as employer and report its owners-

members as covered members of the SSS and remit the necessary premium contributions in accordance with the

Social Security Law of 1997. Accordingly, based on the aforesaid allegations in the petition-complaint filed before the

petitioner SSC, the case clearly falls within its jurisdiction.Although the Answer with Motion to Dismiss filed by the

respondent cooperative challenged the jurisdiction of the petitioner SSC on the alleged lack of employer-employee

relationship between itself and its owners-members, the same is not enough to deprive the petitioner SSC of its

jurisdiction over the petition-complaint filed before it.Thus, the petitioner SSC cannot be faulted for initially

assuming jurisdiction over the petition-complaint of the petitioner SSS.

Nonetheless, since the existence of an employer-employee relationship between the respondent cooperative and its

owners-members was put in issue and considering that the compulsory coverage of the SSS Law is predicated on the

existence of such relationship, it behooves the petitioner SSC to determine if there is really an employer-employee

relationship that exists between the respondent cooperative and its owners-members.


13/18

The question on the existence of an employer-employee relationship is not within the exclusive jurisdiction of the

National Labor Relations Commission (NLRC).Article 217 of the Labor Code enumerating the jurisdiction of the

Labor Arbiters and the NLRC provides that:

ART. 217.JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. - (a) x x

6.Except claims forEmployees Compensation, Social Security, Medicare and maternity

benefits, all other claims, arising from employer-employee relations, including those of

persons in domestic or household service, involving an amount exceeding five thousand

pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily include

issues on the coverage thereof, because claims are undeniably rooted in the coverage by the system.Hence,

the question on the existence of an employer-employee relationship for the purpose of determining the

coverage of the Social Security System is explicitly excluded from the jurisdiction of the NLRC and falls

within the jurisdiction of the SSC which is primarily charged with the duty of settling disputes arising under

the Social Security Law of 1997.

On the basis thereof, considering that the petition-complaint of the petitioner SSS involved the issue of compulsory

coverage of the owners-members of the respondent cooperative, this Court agrees with the petitioner SSC when it

declared in its Order dated 17 February 2004 that as an incident to the issue of compulsory coverage, it may inquire

into the presence or absence of an employer-employee relationship without need of waiting for a prior

pronouncement or submitting the issue to the NLRC for prior determination.Since both the petitioner SSC and the

NLRC are independent bodies and their jurisdiction are well-defined by the separate statutes creating them,

petitioner SSC has the authority to inquire into the relationship existing between the worker and the person or entity

to whom he renders service to determine if the employment, indeed, is one that is excepted by the Social Security

Law of 1997 from compulsory coverage.

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the

selection and engagement of the workers; (2) the payment of wages by whatever means; (3) the power of dismissal;

and (4) the power to control the workers conduct, with the latter assuming primacy in the overall consideration. The

most important element is the employers control of the employees conduct, not only as to the result of the work to

be done, but also as to the means and methods to accomplish. The power of control refers to the existence of the

power and not necessarily to the actual exercise thereof.It is not essential for the employer to actually supervise the

performance of duties of the employee; it is enough that the employer has the right to wield that power. All the

aforesaid elements are present in this case.

First.It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive

discretion in the selection and engagement of the owners-members as well as its team leaders who will be

assigned at Stanfilco.Second.Wages are defined as remuneration or earnings, however designated, capable of being

expressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission basis, or other

method of calculating the same, which is payable by an employer to an employee under a written or unwritten

contract of employment for work done or to be done, or for service rendered or to be rendered . In this case, the

weekly stipends or the so-called shares in the service surplus given by the respondent cooperative to its owners-

members were in reality wages, as the same were equivalent to an amount not lower than that prescribed by existing

labor laws, rules and regulations, including the wage order applicable to the area and industry; or the same shall not

be lower than the prevailing rates of wages. It cannot be doubted then that those stipends or shares in the service


14/18

surplus are indeed wages, because these are given to the owners-members as compensation in rendering services to

respondent cooperatives client, Stanfilco.Third.It is also stated in the above-mentioned Service Contracts that it is the

respondent cooperative which has the power to investigate, discipline and remove the owners-members and its

team leaders who were rendering services at Stanfilco. Fourth.As earlier opined, of the four elements of the

employer-employee relationship, the control test is the most important.In the case at bar, it is the respondent

cooperative which has the sole control over the manner and means of performing the services under the ServiceContracts with Stanfilco as well as the means and methods of work . Also, the respondent cooperative is solely and

entirely responsible for its owners-members, team leaders and other representatives at Stanfilco. All these clearly

prove that, indeed, there is an employer-employee relationship between the respondent cooperative and its owners-

members.

It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide

that there shall be no employer-employee relationship between the respondent cooperative and its owners-members.

This Court, however, cannot give the said provision force and effect.

As previously pointed out by this Court, an employee-employer relationship actually exists between the respondent

cooperative and its owners-members.The four elements in the four-fold test for the existence of an employmentrelationship have been complied with.The respondent cooperative must not be allowed to deny its employment

relationship with its owners-members by invoking the questionable Service Contracts provision, when in actuality, it

does exist.The existence of an employer-employee relationship cannot be negated by expressly repudiating it in a

contract, when the terms and surrounding circumstances show otherwise.The employment status of a person is

defined and prescribed by law and not by what the parties say it should be.

It is settled that the contracting parties may establish such stipulations, clauses, terms and conditions as they want,

and their agreement would have the force of law between them.However, theagreed terms and conditions must not

be contrary to law, morals, customs, public policy or public order. The Service Contract provision in question must

be struck down for being contrary to law and public policy since it is apparently being used by the respondent

cooperative merely to circumvent the compulsory coverage of its employees, who are also its owners-members, bythe Social Security Law.

This Court is not unmindful of the pronouncement it made in Cooperative Rural Bank of Davao City, Inc. v. Ferrer-

Callejawherein it held that:

A cooperative, therefore, 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 x x x.

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. In the opinion ofAugust 14, 1981 of the Solicitor General he correctly opined that employees of cooperatives who are themselves

members of the cooperative have no right to form or join labor organizations for purposes of collective bargaining for

being themselves co-owners of the cooperative.

However, in so far as it involves cooperatives with employees who are not members or co-owners thereof,

certainly such employees are entitled to exercise the rights of all workers to organization, collective

bargaining, negotiations and others as are enshrined in the Constitution and existing laws of the country.


15/18

The situation in the aforesaid case is very much different from the present case.The declaration made by the

Court in the aforesaid case was made in the context of whether an employee who is also an owner-member

of a cooperative can exercise the right to bargain collectively with the employer who is the cooperative

wherein he is an owner-member. Obviously, an owner-member cannot bargain collectively with the

cooperative of which he is also the owner because an owner cannot bargain with himself.In the instant case,

there is no issue regarding an owner-members right to bargain collectively with the cooperative.Thequestion involved here is whether an employer-employee relationship can exist between the cooperative

and an owner-member.In fact, a closer look at Cooperative Rural Bank of Davao City, Inc. will show that it

actually recognized that an owner-member of a cooperative can be its own employee.

It bears stressing, too, that a cooperative acquires juridical personality upon its registration with the

Cooperative Development Authority. It has its Board of Directors, which directs and supervises its business;

meaning, its Board of Directors is the one in charge in the conduct and management of its affairs. With that,

a cooperative can be likened to a corporation with a personality separate and distinct from its owners-

members.Consequently, an owner-member of a cooperative can be an employee of the latter and an

employer-employee relationship can exist between them.

In the present case, it is not disputed that the respondent cooperative had registered itself with the

Cooperative Development Authority, as evidenced by its Certificate of Registration No. 0-623-2460. In its by-

laws, its Board of Directors directs, controls, and supervises the business and manages the property of the

respondent cooperative.Clearly then, the management of the affairs of the respondent cooperative is vested

in its Board of Directors and not in its owners-members as a whole.Therefore, it is completely logical that

the respondent cooperative, as a juridical person represented by its Board of Directors, can enter into an

employment with its owners-members.

In sum, having declared that there is an employer-employee relationship between the respondent

cooperative and its owners-member, we conclude that the petitioner SSC has jurisdiction over the petition-

complaint filed before it by the petitioner SSS


16/18

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION VS. CALLEJA

Justice Melencio-Herrera, 28 September 1990

Facts:

These two consolidated cases involve the validity of the claim of immunity by the International Catholic Migration

Commission (ICMC) and the International Rice Research Institute, Inc. (IRRI) from the application of Philippine labor laws.

ICMC and IRRI are both international organizations. Their respective employees union, Trade Unions of the Philippines

and Allied Services (TUPAS) for IRRI and Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan) for IRRI, filed a Petition for

Certification Election. ICMC and IRRI both opposed the petitions. The Bureau of Labor Relations dismissed ICMC and IRRIs

opposition and ordered the conduct of certification election. On the other hand, the Secretary of Labor dismissed the petition for

certification election of Kapisanan

ISSUE AND HOLDING:

Whether or not the grant of diplomatic privileges and immunities to ICMC and IRRI extends to immunity from the

application of Philippine labor laws. YES, but not with regards to the basic rights of labor

RATIO:

The Court finds that there can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI. The

grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective

purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The

exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is

to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the

host country to the prejudice of member States of the organization, and to ensure the unhampered performance of their functions.

However, ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which

are guaranteed by Article II, Section 18, Article III, Section 8, and Article XIII, Section 3 (supra), of the 1987 Constitution; and

implemented by Articles 243 and 246 of the Labor Code relied on by the BLR Director and by Kapisanan. In fact, ICMC employees

are not without recourse whenever there are disputes to be settled. Neither are the employees of IRRI without remedy in case of

dispute with management as, in fact, there had been organized a forum for better management-employee relationship.

A CERTIFICATION ELECTION INEVITABLY INVOLVES A LEGAL PROCESS

The immunity granted being "from every form of legal process except in so far as in any particular case they have

expressly waived their immunity," it is inaccurate to state that a certification election is beyond the scope of that immunity for

the reason that it is not a suit against ICMC. A certification election cannot be viewed as an independent or isolated

process. It could tugger off a series of events in the collective bargaining process together with related incidents and/or

concerted activities, which could inevitably involve ICMC in the "legal process," which includes "any penal, civil andadministrative proceedings." The eventuality of Court litigation is neither remote and from which international organizations are

precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional immunity are said to be

standard provisions in the constitutions of international Organizations. "The immunity covers the organization concerned, its property

and its assets. It is equally applicable to proceedings in personam and proceedings in rem.


17/18

Ebralinag vs. Division Superintendent of School of Cebu

GR 95770, 29 December 1995; En Banc Resolution, Kapunan [J]

FACTS:

Two special civil actions for certiorari, Mandamus and Prohibition were filed and consolidated raising

the same issue whether school children who are members or a religious sect known as Jehovahs

Witnesses may be expelled from school (both public and private), for refusing, on account of their

religious beliefs, to take part in the flag ceremony which includes playing (by a band) or singing the

Philippine national anthem, saluting the Philippine flag and reciting the patriotic pledge.

All of the petitioners in both (consolidated) cases were expelled from their classes by the public

school authorities in Cebu for refusing to salute the flag, sing the national anthem and recite the

patriotic pledge as required by Republic Act No. 1265 (An Act making flagceremony compulsory inall educational institutions) of July 11, 1955 , and by Department Order No. 8 (Rules and

Regulations for Conducting the Flag Ceremony in All Educational Institutions)dated July 21, 1955 of

the Department of Education, Culture and Sports (DECS) making the flag ceremony compulsory in

all educational institutions.

Petitioners are Jehovahs Witnesses believing that by doing these is religious worship/devotion akin

to idolatry against their teachings. They contend that to compel transcends constitutional limits and

invades protection against official control and religious freedom. The respondents relied on the

precedence of Gerona et al v. Secretary of Education where the Court upheld the explulsions.

Gerona doctrine provides that we are a system of separation of the church and state and the flag is

devoid of religious significance and it doesnt involve any religious ceremony. The children of

Jehovahs Witnesses cannot be exempted from participation in the flag ceremony. They have no

valid right to such exemption. Moreover, exemption to the requirement will disrupt school discipline

and demoralize the rest of the school population which by far constitutes the great majority. The

freedom of religious belief guaranteed by the Constitution does not and cannot mean exemption

from or non-compliance with reasonable and non-discriminatory laws, rules and regulations

promulgated by competent authority.

ISSUE: Whether or not the expulsion of petitioners violated their freedom of religion?

HELD:

YES. The Court held that the expulsion of the petitioners from the school was not justified.


18/18

Religious freedom is a fundamental right of highest priority and the amplest protection

among human rights, for it involves the relationship of man to his Creator. The right to

religious profession and worship has a two-fold aspect, vis., freedom to believe and freedom

to act on onesbelief. The first is absolute as long as the belief is confined within the realm of

thought. The second is subject to regulation where the belief is translated into external acts

that affect the public welfare. The only limitation to religious freedom is the existence of

grave and present danger to public safety, morals, health and interests where State has right

to prevent.

Petitioners stress that while they do not take part in the compulsory flag ceremony, they do not

engage in external acts or behavior that would offend their countrymen who believe in expressing

their love of country through the observance of the flag ceremony. They quietly stand at attention

during the flag ceremony to show their respect for the right of those who choose to participate in the

solemn proceedings. Since they do not engage in disruptive behavior, there is no warrant for theirexpulsion.

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