Title
Central Negros Electric Cooperative, Inc. vs. Secretary, Department of Labor and Employment
Case
G.R. No. 94045
Decision Date
Sep 13, 1991
CENECO employees withdrew membership to join union CURE; SC ruled withdrawal valid but annulled direct certification, ordering a certification election.
certification election
collective bargaining
employees

Case Summary (G.R. No. 94045)

Factual Background

The parties had a three-year collective bargaining agreement covering rank-and-file employees of CENECO from April 1, 1987 to March 31, 1990. CURE sought to negotiate a new CBA in late 1989. At a general assembly on December 9, 1989, CURE members adopted a resolution—ratified by 259 of 362 union members—agreeing that union members would withdraw their membership from CENECO to avail themselves of the full benefits of the existing and proposed CBA. CENECO refused the requested withdrawals by Resolution No. 90 dated February 27, 1990, citing Board Resolutions No. 5023 and No. 5033 as the basis for denial, and on January 18, 1990 declined to negotiate a new CBA on the ground that, under the Batangas decision, member-employees of an electric cooperative cannot form or join unions for collective bargaining.

Procedural History

After CENECO refused renegotiation, CURE filed a petition for direct recognition or for a certification election supported by 282 of 388 rank-and-file employees. The med-arbiter denied CENECO's motion to dismiss and ordered a certification election between CURE and No Union. On administrative appeal, the Secretary of Labor issued an order dated June 6, 1990 directly certifying CURE as the exclusive bargaining representative. CENECO filed this petition for certiorari to annul that order.

The Parties' Contentions

Petitioner CENECO contended that the Secretary committed grave abuse of discretion by failing to apply the Batangas doctrine that employees who are members of an electric cooperative cannot form or join unions for purposes of collective bargaining because an owner cannot bargain with himself. CENECO argued that the withdrawal of membership was a subterfuge to evade that doctrine, that allowing withdrawals would frustrate cooperative objectives, that withdrawal issues were within the jurisdiction of the National Electrification Administration (NEA), and that CURE failed to exhaust administrative remedies by not referring the withdrawal to the NEA. CURE and the Solicitor General responded that the withdrawal complied with CENECO's Articles of Incorporation and By-Laws, that membership in the cooperative was voluntary and withdrawable upon compliance with uniform terms, and that the employees’ right to self-organization required recognition of the withdrawals and protection of their right to form a union.

Jurisdictional and Procedural Issues

The Court addressed whether the med-arbiter or the Secretary lacked jurisdiction to consider the permissibility of membership withdrawal and the legality of union membership. It observed that CENECO had raised the legality of union membership as the basis of its motion to dismiss before the med-arbiter and thereby submitted the issue to administrative determination. Consequently, CENECO was estopped from contesting the med-arbiter’s jurisdiction after obtaining an adverse ruling. The Court further noted that a valid certification election requires that at least a majority of eligible voters cast votes under Article 256 of the Labor Code; thus the med-arbiter must determine who the eligible voters are, which necessarily entails resolving whether employees validly withdrew from cooperative membership and thereby became eligible to join the union.

Withdrawal from the Cooperative: Merits

The Court examined CENECO’s internal governing documents. The Solicitor General had shown that Article I, Section 9 of CENECO’s Articles of Incorporation and By-Laws permitted withdrawal upon compliance with uniform terms and conditions prescribed by the Board, required surrender of the membership certificate, and provided for refund of the membership fee less obligations. The Court found no additional conditions in the records that would bar withdrawal. Because CENECO never produced the alleged Board Resolutions invoked to deny withdrawal before the med-arbiter or the Secretary, and never alleged noncompliance by withdrawing members, there was no basis to deny the withdrawals. The Court emphasized that cooperative membership is voluntary and that the right to join an organization implies the right not to join it. The constitutional policy favoring labor self-organization required that employees’ choice to relinquish cooperative membership and join a union receive strong protection. The Court also observed that the employee-withdrawals represented a negligible fraction of the cooperative’s 44,000 members, so that adverse effect on cooperative operations was implausible.

Direct Certification and the Effect of Executive Order No. 111

Although the Court upheld the validity of the employees’ withdrawals and their right to unionize for collective bargaining, it concluded that the Secretary’s method of granting direct certification to CURE was improper. The Court noted that Executive Order No. 111, effective March 4, 1987, discontinued the direct certification method formerly allowed under Article 257 of the Labor Code, thereby affirming the superiority of the certification election process. The Court relied on precedent, including NAFTU-TUCP v. Bureau of Labor Relations, Colgate Palmolive Philippines, Inc. v. Ople, and ALU v. Ferrer-Calleja, to hold that direct certification without adequate proof of majority representation and without affording all employees a democratic opportunity to choose their representative subverted the statutory election procedure and jeopardized employees’ right to choose.

Ruling and Disposition

The Court annulled and set aside the Secretary’s order of direct certification of CURE as the bargaining representative. The Court ordered the med-arbiter to conduct a certification election among the rank-and-file employees of CENECO with CURE and No Union as the choices. The Court thus preserved the employees’ right to withdraw their cooperative membership and to seek union representation, while insisting on the certification election as the proper mechanism for determining exclusive bargaining representation.

Legal Basis and Reasoning

The Court grounded its decision on several legal principles articulated in the record: the presumption that cooperative membership is voluntary and withdrawable where the bylaws do not impose prohibitive conditions; the primacy of the constitutional and statutory right of workers to s

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