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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(a) of the alleged 48 m embers of the local union, 31 had withdrawn prior to the filing of the
petition, and
(b)14 of the 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 affected the petition for certification
election (insofar as the 30% requirement is concerned)
Held:
YES
The SC reversed the decision of BLR, it appearing that the 31 union m em bers has withdrawn their
support to the petition BEFO RE the filing of s aid petition.
It would be otherwise if the withdrawal was made AFTER the filing of the petition for it would then be
presumed 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

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.

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 their
assigned duties and responsibilities involve routine activities of
recording and monitoring, and other paper works for their
respective departments while secretarial tasks such as receiving
telephone calls and filing of office correspondence appear to
have been commonly imposed as additional duties.

FACTS:
1. Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer, shandy, bottled water and
glass 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 the
grievance machinery. As the parties failed to amicably settle the controversy, BLMA lodged a complaint before the National
Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit the case for arbitration to resolve the issue
of "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 employees
are excluded from and are not eligible for inclusion in the bargaining unit as defined in Section 2, Article I of the CBA; the 81
employees cannot validly become members of respondent and/or if already members, that their membership is violative of the
CBA and that they should disaffiliate from respondent; and petitioner has not committed any act that restrained or tended to
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 ng
Manggagawa 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 and
intervention, 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 confidential
employees.
RATIO
Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial
employees, 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. The
rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for managerial
employees because if allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view of evident
conflict 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 undue
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 numerous
workers 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 division
secretaries would have little or no significance considering the lack of or very limited access to confidential information of these
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 these
employees actually discharged routine functions. We thus hold that the secretaries/clerks, numbering about forty (40), are rankand-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 selforganization.
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

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 the
present case, there is no showing that the secretaries/clerks and checkers assisted or acted in a confidential capacity to
managerial 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.

PEPSI COLA case

Facts: Pepsi-Cola
Employees
Organization-UOEF
(PCEU) filed a petition for certification election with the
Med-Arbiter seeking to be the exclusive bargaining agent
of supervisors of Pepsi-Cola Philippines (Pepsi). The
petition was granted, but with the explicitstatement that
PCEU was affiliated with Union de Obreros Estivadores de
Filipinas (UOEF) and 2 other rank-and-file unions, the
PCLU and the PEUP.
Pepsi then filed a petition for cancellation with the BLR
against PCEU, on the grounds that: (a) the members of
PCEU were managers and (b) a supervisors' union cannot
affiliate with a federation whose members include the rank
and file union of the same company. It also filed an urgent
ex-parte motion to suspend the certification election.
PCEU argued that Art. 245 of the Labor Code, as
amended by RA 6715, did not prohibit a local union
composed of supervisory employees from being affiliated
to a federation which has local unions with rank-and-file
members as affiliates. Furthermore, Book V, Rule II,
Section 7 of the Omnibus Rules Implementing the Labor
Code provides the grounds for cancellation of the
registration certificate of a labor organization, and the
inclusion of managerial employees is not one of
the grounds.
However, on 1992, or before the SC decision, the PCEU
issued a resolution withdrawing from the UOEF.

Issue: Whether or not PCEU may be affiliated with the


rank-and-file unions.
Held: PCEU's withdrawal from the affiliation made the
case moot and academic. But for the guidance of others
similarly situated, the Court ruled No.
If the intent of the law is to avoid a situation where
supervisors would merge with the rank and file or where
the supervisors' labor organization would represent
conflicting interests, then a local supervisors' union should
not be allowed to affiliate with the national federation of
union of rank-and-file employees where that federation
actively 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 prohibition
extends to a supervisors' local union applying for
membership in a national federation the members of which
include local unions of rank and file employees. The intent
of the law is clear especially where, as in this case at bar,
the supervisors will be co-mingling with those employees
whom they directly supervise in their own bargaining unit.
In the collective bargaining process, managerial
employees are supposed to be on the side of the
employer, to act as its representatives, and to see to it that
its interests are well protected. The employer is not
assured of such protection if these employees themselves
are union members. It is the same reason that impelled
this Court to consider the position of confidential
employees as included in the disqualification found in Art.

245 as if the disqualification of confidential employees


were written in theprovision. Said employees may act as
spies of either party to a collective bargaining agreement.

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 if
they 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 with
vehement 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 labormanagement 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 Court
deem 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

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 privileges
provided 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 ownersmembers 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 as
self-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 petitioner
SSSs 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 no
jurisdiction 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.

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, contributions
and 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 is
well 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 respondent
cooperative 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 ownersmembers 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.

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 for Employees 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 ownersmembers 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

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 Service
Contracts 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 ownersmembers.
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 employment
relationship 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, the agreed 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, by
the Social Security Law.
This Court is not unmindful of the pronouncement it made in Cooperative Rural Bank of Davao City, Inc. v. FerrerCalleja wherein 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 of
August 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.

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.The
question 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 ownersmembers.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 bylaws, 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 petitioncomplaint filed before it by the petitioner SSS

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 and
administrative 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.

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 in
all 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.

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 ones belief. 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 their
expulsion.