The By-Stander Rule: The Role of the Company in Certification Elections

A certification election is the most democratic and expeditious method by which the laborers can freely determine the union that shall act as their representative in their dealings with the establishment where they are working. It is the appropriate means whereby controversies and disputes on representation may be laid to rest, by the unequivocal vote of the employees themselves.

The usual issue is the right of the employer-corporation in the process.

According to the Supreme Court, the employer’s role in a certification election is that of a mere by-stander, as the choice of a collective bargaining agent is the sole concern of the employees. The employer has no legal standing in a certification election as it cannot oppose the petition or appeal the orders related thereto. While employers may rightfully be notified or informed of petitions of such nature, they should not be considered parties with the concomitant right to oppose it. Otherwise stated, the employer has no material interest to assail the certification election and cannot be considered a party with an inalienable right to oppose it.

The only exception to this rule, according to the Supreme Court, is where the employer has to file the petition for certification election pursuant to Article 258 of the Labor Code because it was requested to bargain collectively.

Apparently, this is not the only exception.

In the 1997 case of Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Corporation Labor Union, the employer-company actively opposed the petition for certification election. The employer-company sought the denial of the issuance of an order directing the holding of a certification election on two grounds: first, that the union had no legal personality to file petition for certification as it was still in the process of registration; and, second, that the union was composed of both rank-and-file and supervisory employees in violation of law. The Supreme Court sustained the employer-company and ruled that:

xxx This in mind, the Labor Code has made it a clear statutory policy to prevent supervisory employees from joining labor organizations consisting of rank-and-file employees as the concerns which involve members of either group are normally disparate and contradictory. Article 245 provides:

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

Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code.

Also in 1997, the Supreme Court promulgated its decision in Progressive Development Corp. – Pizza Hut vs. Ledesma, wherein it ordered the remand of the case that arose from a petition for certification election, with a directive to immediately resolve the accompanying petition for cancellation of registration of the union. The petitioner for cancellation is, in effect, considered a prejudicial question. This decision is a departure from the 1981 ruling in National Union of Bank Employees vs. Minister of Labor that “the pendency of the petition for cancellation of the registration certificate of herein petitioner union is not a bar to the holding of a certification election.”

The ruling in Toyota is considered by some as a fluke, not only because it goes against the consistent rulings discussed above, but also because the decision resolved the legal personality of the union through the petition for certification election. This cannot be done, as ruled by the Supreme Court in the more recent case of Tagaytay Highlands International Golf Club Incorporated vs. Tagaytay Highlands Employees Union-PGTWO, wherein the employer-petitioner cited the cases of Toyota and Progressive Development, to the effect that “a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all.” The Supreme Court ruled that after a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book IV of the Labor Code Implementing Rules.

The Toyota ruling has not been expressly overturned, although it is clearly disregarded in the Tagaytay Highlands case.

Atty.Fred

5 thoughts on “The By-Stander Rule: The Role of the Company in Certification Elections

  1. Avatarnerveending

    Apologies for the late reply.

    Perhaps it is possible to reconcile the Toyota and Tagaytay Highlands rulings on the role of the company in certification elections. The ruling in Progressive Development is definitely out the window with the Omnibus Rules as confirmed in Tagaytay Highlands.

    In Tagaytay Highlands, the union was a chartered local/affiliate and (more importantly) a legitimate labor organization. As such, it was entitled to all the rights bestowed on it by law, including the right to be certified as the sole bargaining representative for all employees in the appropriate bargaining unit (Art. 234, Labor Code). In Toyota, the union was not a legitimate labor organization at the time of the filing of the petition for certification election. The Med-Arbiter even ruled later on that the registration of the labor union should not be given due course because he himself found that the registrant-union had members who were rank-and-file and supervisory employees. Thus, the union in Toyota never attained legal personality to file the petition for certification election and it never attained the right to be certified as the sole bargaining representative for all the employees in the appropriate bargaining unit.

    This makes sense. If the Omnibus Rules say that the registration of the labor union can only be challenged directly in a cancellation suit specifically filed for the purpose, where does it go when the petitioning union has not even been registered yet files a petition for certification election?

    Taking into consideration the decision in Laguna Autoparts, which you cited earlier, it seems that this doctrine will apply only when there is no certificate of registration at the time the union files a petition for certification election.

    Thus, do you think it is possible to restate the by-stander doctrine thus: In a petition for certification election by a legitimate labor organization, the company has no other function but to act as a by-stander interested in the peaceful and orderly conduct of the certification election. It may not challenge the holding of the certification election on the ground that the union has acquired legal personality through fraud or otherwise as the union’s legal personality may not be collaterally attacked. However, the company may use the absence of the union’s legal personality as evidenced by the absence of a certificate of registration as a prejudicial question in order to postpone or cancel the holding of the certification election; but when the union has already been issued a certificate of registration by the Department of Labor and Employment, the employer may no longer challenge the holding of the certification election on the ground that the union has no legal personality to assert such right.

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  2. Avatarnerveending

    I think Poquiz agrees with this stand in his latest book, in which he cites Rule VIII, DO 40-03:

    “Any question pertaining to the validity of petitioning union’s certificate of registration or agreements shall be heard and resolved by the Regional Director in an independent petition for cancellation of its registration and not by the Med-Arbiter in the petition for certification election, unless the petitioning union is not found in the Department’s roster of legitimate labor orgainzations or an existing Collective Bargaining Agreement is unregistered with the Department of Labor.” (2 POQUIZ 218 [2006], citing Rule VIII, D.O. 40-03)

    Reply
  3. Avatarjun

    sir..this is the question..the SPFL southern philippines federation of labor..filed the certificate of election as INTERVENOR at SCIPSI ARRASTRE STEVEDORING.NOW’ the issue was regarding the signing of union members as requirements for application of CE..hence which is considerably object by the incumbent union..that the signing of union members is forgery & double signing perhaps that the signing of union members supported by company I.D TAGGED NUMBER of stevedore.., is there any possibilities or bar existing rule for the disqualification of filing of certificate of election union of the SPFL..?

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