Bargaining Unit

A bargaining unit is a group of employees sought to be represented by a petitioning union. There are several factors to determine the bargaining unit.

1. Concept

“Bargaining Unit” – refers to a group of employees sharing mutual interests within a given employer unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within such employer unit. (Section 1[e], Rule I, DOLE Department Order No. 40, Series of 2003, as amended by A-I)

“Bargaining unit” – refers to a “group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interests of all the employees, consistent with equity to the employer, indicated to be best suited to serve reciprocal rights and duties of the parties under the collective bargaining provisions of the law.” (Holy Child Catholic School v. Sto. Tomas, En Banc, G.R. No. 179146, 23 July 2013)

A bargaining unit is a group of employees sought to be represented by a petitioning union. Such employees need not be members of a union seeking the conduct of a certification election. A union certified as an exclusive bargaining agent represents not only its members but also other employees who are not union members. (Ibid.)

a. Union v. Legitimate Labor Organization v. Bargaining Unit

The concepts of a union and of a legitimate labor organization are different from, but related to, the concept of a bargaining unit. (Holy Child Catholic School v. Sto. Tomas, HCCS-TELU-PIGLAS, En Banc, G.R. No. 179146, 23 July 2013)

Article 212(g) of the Labor Code defines a labor organization as “any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment.” Upon compliance with all the documentary requirements, the Regional Office or Bureau shall issue in favor of the applicant labor organization a certificate indicating that it is included in the roster of legitimate labor organizations. Any applicant labor organization shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration. (Ibid.)

On the other hand, a bargaining unit has been defined as a “group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interests of all the employees, consistent with equity to the employer, indicated to be best suited to serve reciprocal rights and duties of the parties under the collective bargaining provisions of the law.” (Ibid.)

b. Multiple bargaining units

It is possible to have more than one bargaining unit in an establishment. So long as the requirements for a bargaining unit are met, there can be several bargaining units in one establishment.

2. Test

The test of grouping is community or mutuality of interest. This is so because the basic test of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. (San Miguel Foods, Incorporated v. SMCSEU, G.R. No. 146206, 01 August 2011)

UNIVERSITY OF THE PHILIPPINES v. CALLEJA, G.R. No. 96189, 14 July 1992

⦁ In the case at bar, the University employees may, as already suggested, quite easily be categorized into two general classes: one, the group composed of employees whose functions are non-academic, i.e., janitors, messengers, typists, clerks, receptionists, carpenters, electricians, grounds-keepers, chauffeurs, mechanics, plumbers; and two, the group made up of those performing academic functions, i.e., full professors, associate professors, assistant professors, instructors — who may be judges or government executives — and research, extension and professorial staff. Not much reflection is needed to perceive that the community or mutuality of interests which justifies the formation of a single collective bargaining unit is wanting between the academic and non-academic personnel of the university. It would seem obvious that teachers would find very little in common with the University clerks and other non-academic employees as regards responsibilities and functions, working conditions, compensation rates, social life and interests, skills and intellectual pursuits, cultural activities, etc. On the contrary, the dichotomy of interests, the dissimilarity in the nature of the work and duties as well as in the compensation and working conditions of the academic and non-academic personnel dictate the separation of these two categories of employees for purposes of collective bargaining. The formation of two separate bargaining units, the first consisting of the rank-and-file non-academic personnel, and the second, of the rank-and-file academic employees, is the set-up that will best assure to all the employees the exercise of their collective bargaining rights…

SAN MIGUEL FOODS, INCORPORATED v. SMCSEU, G.R. No. 146206, 01 August 2011

⦁ In National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Union – United Lumber and General Workers of the Phils, the Court, taking into account the “community or mutuality of interests” test, ordered the formation of a single bargaining unit consisting of the Sawmill Division in Butuan City and the Logging Division in Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit Lumber Development Company. It held that while the existence of a bargaining history is a factor that may be reckoned with in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The test of grouping is community or mutuality of interest. This is so because the basic test of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights.23 Certainly, there is a mutuality of interest among the employees of the Sawmill Division and the Logging Division. Their functions mesh with one another. One group needs the other in the same way that the company needs them both. There may be differences as to the nature of their individual assignments, but the distinctions are not enough to warrant the formation of a separate bargaining unit.

E.A. LEE DBA “SUPER LAMINATION SERVICES” v. SMSLS-NAFLU-KMU, G.R. No. 193816, 21 November 2016

⦁ Petitioner-Employer argues that there is no showing that the rank-and-file employees of the three companies would constitute an appropriate bargaining unit on account of the latter’s different geographical locations. This contention lacks merit. The basic test for determining the appropriate bargaining unit is the application of a standard whereby a unit is deemed appropriate if it affects a grouping of employees who have substantial, mutual interests in wages, hours, working conditions, and other subjects of collective bargaining. We have ruled that geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed.

⦁ In the present case, there was communal interest among the rank-and-file employees of the three companies based on the finding that they were constantly rotated to all three companies, and that they performed the same or similar duties whenever rotated. Therefore, aside from geographical location, their employment status and working conditions were so substantially similar as to justify a conclusion that they shared a community of interest. This finding is consistent with the policy in favor of a single-employer unit, unless the circumstances require otherwise. The more solid the employees are, the stronger is their bargaining capacity.

⦁ As correctly observed by the CA and DOLE, while there is no prohibition on the mere act of engaging in a work-pooling scheme as sister companies, that act will not be tolerated, and the sister companies’ separate juridical personalities will be disregarded, if they use that scheme to defeat the workers’ right to collective bargaining. The employees’ right to collectively bargain with their employers is necessary to promote harmonious labor-management relations in the interest of sound and stable industrial peace.

3. Factors

In determining the proper collective bargaining unit and what unit would be appropriate to be the collective bargaining agency, several factors that should be considered, to wit:

1) Will of employees (Globe Doctrine);

2) Affinity and unity of employees’ interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions;

3) Prior collective bargaining history; and,

4) Employment status, such as temporary, seasonal and probationary employees. (Ibid.)

The test of the grouping is community or mutuality of interest, because “the basic test of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights.” (Ibid.)

a. Will of employees (Globe Doctrine)

It is manifest, therefore, that “the desires of the employees” is one of the factors in determining the appropriate bargaining unit. (KMMRC v. Yard Crew Union, En Banc, G.R. Nos. L-16292-94, L-16309 and L-16317-18, 31 October 1960)

KMMRC v. YARC CREA UNION, En Banc, G.R. Nos. L-16292-94, L-16309 and L-16317-18, 31 October 1960

⦁ In the case of Democratic Labor Association vs. Cebu Stevedoring Co., G.R. No. L-10321, February 28, 1958, we stated that because of the modern complexity of the relation between both employer and union structure, it becomes difficult to determine from the evidence alone which of the several claimant groups forms a proper bargaining unit; that it becomes necessary to give consideration to the express will or desire of the employees — a practice designated as the “Globe doctrine,” which sanctions the holding of a series of elections, not for the purpose of allowing the group receiving an over all majority of votes to represent all employees, but for the specific purpose of permitting the employees in each of the several categories to select the group which each chooses as a bargaining unit; that the factors which may be considered and weighed in fixing appropriate units are: the history, of their collective bargaining; the history, extent and type of organization of employees in other plants of the same employer, or other employers in the same industry; the skill, wages, work and working conditions of the employees; the desires of the employees; the eligibility of the employees for membership in the union or unions involved; and the relationship between the unit or units proposed and the employer’s organization, management and operation, and the test in determining the appropriate bargaining unit is that a unit must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining.

⦁ It is manifest, therefore, that “the desires of the employees” is one of the factors in determining the appropriate bargaining unit. The respondent Court was simply interested “in the verification of the evidence already placed on record and submitted wherein the workers have signed manifestations and resolutions of their desire to be separated from Kapisanan.”…

MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE NATIONAL RAILWAYS v. CIR, En Banc, G.R. No. L-28223, 30 August 1968

⦁ Appellant contends that the application of the “Globe doctrine” is not warranted because the workers of the Caloocan shops do not require different skills from the rest of the workers in the Mechanical Department of the Railway Company. This question is primarily one of facts. The Industrial Court has found that there is a basic difference, in that those in the Caloocan shops not only have a community of interest and working conditions but perform major repairs of railway rolling stock, using heavy equipment and machineries found in said shops, while the others only perform minor repairs. It is easy to understand, therefore, that the workers in the Caloocan shops require special skill in the use of heavy equipment and machinery sufficient to set them apart from the rest of the workers.

b. Affinity and unity of employees’ interest

A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. (SMCSEU v. Laguesma, G.R. No. 110399, 15 August 1997)

SMCSEU v. LAGUESMA, G.R. No. 110399, 15 August 1997

⦁ It is readily seen that the employees in the instant case have “community or mutuality of interests,” which is the standard in determining the proper constituency of a collective bargaining unit. It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities.

⦁ In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the mandate of the Constitution.

⦁ The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employee of the University of the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baños, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative.

SAN MIGUEL FOODS, INCORPORATED v. SMCSEU, G.R. No. 146206 01 August 2011

[Background]

⦁ The issues in the present case, relating to the inclusion of employees in supervisor levels 3 and 4 and the exempt employees in the proposed bargaining unit, thereby allowing their participation in the certification election; the application of the “community or mutuality of interests” test…

⦁ In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v. Laguesma, the Court held that even if they handle confidential data regarding technical and internal business operations, supervisory employees 3 and 4 and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be considered confidential employees, because the same do not pertain to labor relations, particularly, negotiation and settlement of grievances. Consequently, they were allowed to form an appropriate bargaining unit for the purpose of collective bargaining. The Court also declared that the employees belonging to the three different plants of San Miguel Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis, having “community or mutuality of interests,” constitute a single bargaining unit. They perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. It was immaterial that the three plants have different locations as they did not impede the operations of a single bargaining representative.

[Resolution]

⦁ [T]he Court affirms the finding of the CA that there should be only one bargaining unit for the employees in Cabuyao, San Fernando, and Otis of Magnolia Poultry Products Plant involved in “dressed” chicken processing and Magnolia Poultry Farms engaged in “live” chicken operations. Certain factors, such as specific line of work, working conditions, location of work, mode of compensation, and other relevant conditions do not affect or impede their commonality of interest. Although they seem separate and distinct from each other, the specific tasks of each division are actually interrelated and there exists mutuality of interests which warrants the formation of a single bargaining unit.

⦁ In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their respective positions and job descriptions. As Human Resource Assistant, the scope of one’s work necessarily involves labor relations, recruitment and selection of employees, access to employees’ personal files and compensation package, and human resource management. As regards a Personnel Assistant, one’s work includes the recording of minutes for management during collective bargaining negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioner’s team of lawyers, and implementation of company programs. Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership.

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION v. LAGUESMA, G.R. No. 110399, 15 August 1997

⦁ It is readily seen that the employees in the instant case have “community or mutuality of interests,” which is the standard in determining the proper constituency of a collective bargaining unit. It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities.

⦁ In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private Respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the mandate of the Constitution.

⦁ The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of the University of the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baños, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative.

GOLDEN FARMS, INC. v. SECRETARY OF LABOR, G.R. No. 102130, 26 July 1994

⦁ In the case at bench, the evidence established that the monthly paid rank-and-file employees of petitioner primarily perform administrative or clerical work. In contradistinction, the petitioner’s daily paid rank-and-file employees mainly work in the cultivation of bananas in the fields. It is crystal clear the monthly paid rank-and-file employees of petitioner have very little in common with its daily paid rank-and-file employees in terms of duties and obligations, working conditions, salary rates, and skills. To be sure, the said monthly paid rank-and-file employees have even been excluded from the bargaining unit of the daily paid rank-and-file employees. This dissimilarity of interests warrants the formation of a separate and distinct bargaining unit for the monthly paid rank-and-file employees of the petitioner. To rule otherwise would deny this distinct class of employees the right to self-organization for purposes of collective bargaining. Without the shield of an organization, it will also expose them to the exploitations of management.

c. Prior collective bargaining history

[T]he collective bargaining history of a company is not decisive of what should comprise the collective bargaining unit. (San Miguel Corporation v. Laguesma, G.R. No. 100485, 21 September 1994)

[W]hile the existence of a bargaining history is a factor that may be reckoned with in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The test of grouping is community or mutuality of interest. This is so because the basic test of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. (San Miguel Foods, Incorporated v. SMCSEU, G.R. No. 146206, 01 August 2011)

d. Employment status, such as temporary, seasonal and probationary employees

4. Extent of Representation

A bargaining unit is a group of employees sought to be represented by a petitioning union. Such employees need not be members of a union seeking the conduct of a certification election. A union certified as an exclusive bargaining agent represents not only its members but also other employees who are not union members. (Holy Child Catholic School v. Sto. Tomas, HCCS-TELU-PIGLAS, En Banc, G.R. No. 179146, 23 July 2013)

Moreover, when a union bids to be the bargaining agent, it voluntarily assumes the responsibility of representing all the employees in the appropriate bargaining unit. (NBAILUP v. San Miguel Brewery, Inc., En Banc, G.R. No. L-18170, 31 August 1963)

HOLY CHILD CATHOLIC SCHOOL v. STO. TOMAS, HCCS-TELU-PIGLAS, En Banc, G.R. No. 179146, 23 July 2013

[Resolution]

⦁ Petitioner likewise claimed that we erred in interpreting the decision of the Supreme Court in U.P. v. Ferrer-Calleja,… According to petitioner-Company, the Supreme Court stated that the non-academic rank-and-file employees of the University of the Philippines shall constitute a bargaining unit to the exclusion of the academic employees of the institution. Hence, petitioner argues, it sought the creation of separate bargaining units, namely: (1) petitioner’s teaching personnel to the exclusion of non-teaching personnel; and (2) petitioner’s non-teaching personnel to the exclusion of teaching personnel.

⦁ Petitioner appears to have confused the concepts of membership in a bargaining unit and membership in a union. In emphasizing the phrase “to the exclusion of academic employees” stated in U.P. v. Ferrer-Calleja, petitioner believed that the petitioning union could not admit academic employees of the university to its membership. But such was not the intention of the Supreme Court.

⦁ A bargaining unit is a group of employees sought to be represented by a petitioning union. Such employees need not be members of a union seeking the conduct of a certification election. A union certified as an exclusive bargaining agent represents not only its members but also other employees who are not union members. As pointed out in our assailed Decision, there were two contending unions in the U.P. case, namely, the Organization of Non-Academic Personnel of U.P. (ONAPUP) and the All U.P. Worker’s Union composed of both U.P. academic and non-academic personnel. ONAPUP sought the conduct of a certification election among the rank-and-file non-academic personnel only, while the All U.P. Workers Union intended to cover all U.P. rank-and-file employees, involving both academic and non-academic personnel.

⦁ The Supreme Court ordered the “non-academic rank-and-file employees of U.P. to constitute a bargaining unit to the exclusion of the academic employees of the institution”, but did not order them to organize a separate labor organization. In the U.P. case, the Supreme Court did not dismiss the petition and affirmed the order for the conduct of a certification election among the non-academic personnel of U.P., without prejudice to the right of the academic personnel to constitute a separate bargaining unit for themselves and for the All U.P. Workers Union to institute a petition for certification election.

⦁ In the same manner, the teaching and non-teaching personnel of petitioner school must form separate bargaining units. Thus, the order for the conduct of two separate certification elections, one involving teaching personnel and the other involving non-teaching personnel. It should be stressed that in the subject petition, private respondent union sought the conduct of a certification election among all the rank-and-file personnel of petitioner school. Since the decision of the Supreme Court in the U.P. case prohibits us from commingling teaching and non-teaching personnel in one bargaining unit, they have to be separated into two separate bargaining units with two separate certification elections to determine whether the employees in the respective bargaining units desired to be represented by private respondent. In the U.P. case, only one certification election among the non-academic personnel was ordered, because ONAPUP sought to represent that bargaining unit only. No petition for certification election among the academic personnel was instituted by All U.P. Workers Union in the said case; thus, no certification election pertaining to its intended bargaining unit was ordered by the Court.

⦁ Indeed, the purpose of a certification election is precisely to ascertain the majority of the employees’ choice of an appropriate bargaining unit – to be or not to be represented by a labor organization and, if in the affirmative case, by which one.

5. Members Outside Bargaining Unit

ART. 256. [245-A] Effect of Inclusion as Members of Employees Outside the Bargaining Unit. The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union. (P.D. 442, Labor Code)

After a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code. (Holy Child Catholic School v. Sto. Tomas, supra.)

a. Procedure for contesting bargaining unit

In case of alleged inclusion of disqualified employees in a union, the proper procedure for an employer is to directly file a petition for cancellation of the union’s certificate of registration due to misrepresentation, false statement or fraud under the circumstances enumerated in Article 239 of the Labor Code, as amended. To reiterate, a union, having been validly issued a certificate of registration, should be considered as having acquired juridical personality which may not be attacked collaterally. (Holy Child Catholic School v. Sto. Tomas, En Banc, G.R. No. 179146, 23 July 2013)

6. Different Employers

a. Related businesses

The fact that their businesses are related and that the 236 employees of the Georgia Pacific International Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a justification for disregarding their separate personalities. (Diatagon Labor Federation Local 110 of the ULGWP v. Ople, G.R. No. L-44493 & L-44494, 03 December 1980)

INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO V. CALICA, G.R. No. 96490, 03 February 1992

⦁ Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist, the legal fiction that a corporation is an entity with a juridical personality separate and distinct from its members or stockholders may be disregarded. In such cases, the corporation will be considered as a mere association of persons. The members or stockholders of the corporation will be considered as the corporation, that is liability will attach directly to the officers and stockholders. The doctrine applies when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation…

⦁ In the case at bar, [the Union] seeks to pierce the veil of corporate entity of Acrylic [a separate business from the Company], alleging that the creation of the corporation is a devise to evade the application of the CBA between [the Union] and [the Company]. While we do not discount the possibility of the similarities of the businesses of [the Company] and Acrylic, neither are we inclined to apply the doctrine invoked by [the Union] in granting the relief sought. The fact that the businesses of [the Company] and Acrylic are related, that some of the employees of [the Company] are the same persons manning and providing for auxilliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.

⦁ In the same case of Umali, et al. v. Court of Appeals…, We already emphasized that “the legal corporate entity is disregarded only if it is sought to hold the officers and stockholders directly liable for a corporate debt or obligation.” In the instant case, [the Union] does not seek to impose a claim against the members of the Acrylic.

⦁ Furthermore, We already ruled in the case of Diatagon Labor Federation Local 110 of the ULGWP v. Ople… that it is grave abuse of discretion to treat two companies as a single bargaining unit when these companies are indubitably distinct entities with separate juridical personalities.

⦁ Hence, the Acrylic not being an extension or expansion of [the Company], the rank-and-file employees working at Acrylic should not be recognized as part of, and/or within the scope of the [the Union], as the bargaining representative of [the Company].

b. Subsidiaries

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO v. CONFESOR, G.R. No. 111262, 19 September 1996

⦁ Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991. Management saw the need for these transformations in keeping with its vision and long-term strategy…

⦁ Undeniably, the transformation of the companies was a management prerogative and business judgment which the courts can not look into unless it is contrary to law, public policy or morals. Neither can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of piercing the corporate veil. Ever mindful of the employees’ interests, management has assured the concerned employees that they will be absorbed by the new corporations without loss of tenure and retaining their present pay and benefits according to the existing CBAs. They were advised that upon the expiration of the CBAs, new agreements will be negotiated between the management of the new corporations and the bargaining representatives of the employees concerned. As a result of the spin-offs:

1. Each of the companies are run by, supervised and controlled by different management teams including separate human resource/personnel managers.

2. Each Company enforces its own administrative and operational rules and policies and are not dependent on each other in their operations.

3. Each entity maintains separate financial statements and are audited separately from each other. 20

⦁ Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities. Thus, they can not belong to a single bargaining unit…

⦁ [The Union’s] attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit so as to have a bigger mass base of employees has, therefore, no more valid ground.

References

Book V, Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

Book V, Omnibus Rules Implementing the Labor Code

DOLE Department Order No. 40, Series of 2003

DOLE Department Order No. 40-A-I, Series of 2003

DOLE Department Order No. 40-B, Series of 2003

DOLE Department Order No. 40-C, Series of 2004

DOLE Department Order No. 40-D, Series of 2005

DOLE Department Order No. 40-F-3, Series of 2008

DOLE Department Order No. 40-G-03, Series of 2010

DOLE Department Order No. 40-I, Series of 2015

DOLE Department Order No. 15, Series of 2015

/Updated: February 14, 2023

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