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369 Phil. 617

THIRD DIVISION

[ G.R. No. 133215, July 15, 1999 ]

PAGPALAIN HAULERS, INC., PETITIONER, VS. THE HONORABLE CRESENCIANO B. TRAJANO, IN HIS OFFICIAL CAPACITY AS SECRETARY OF LABOR AND EMPLOYMENT, THE HONORABLE RENATO D. PARUNGO, IN HIS OFFICIAL CAPACITY AS THE MED-ARBITER IN DOLE CASE NO. NCR-OD-M-9705-006, AND THE INTEGRATED LABOR ORGANIZATION (ILO-PHILS) PAGPALAIN WORKERS UNION-ILO-PHILS. RESPONDENTS.

D E C I S I O N

ROMERO, J.:

On May 14, 1997, respondent Integrated Labor Organization-Pagpalain Haulers Worker's Union (hereafter referred to as ILO-PHILS), in a bid to represent the rank-and-file drivers and helpers of petitioner Pagpalain Haulers, Inc. (hereafter referred to as Pagpalain), filed a petition for certification election with the Department of Labor and Employment. ILO-PHILS attached to the petition copies of its charter certificate, its constitution and by-laws, its books of account, and a list of its officers and their addresses.

On July 10, 1997, Pagpalain filed a motion to dismiss the petition, alleging that ILO-PHILS was not a legitimate labor organization due to its failure to comply with the requirements for registration under the Labor Code. Specifically, it claimed that the books of account submitted by ILO-PHILS were not verified under oath by its treasurer and attested to by its president, a required by Rule II, Book V of the Omnibus Rules Implementing the Labor Code.

In a reply dated August 4, 1997, ILO-PHILS dismissed Pagpalain's claims, saying that Department Order No. 9, Series of 1997 had dispensed with the requirement that a local or chapter of a national union submit books of account in order to be registered with the Department of Labor and Employment.

Finding in favor of ILO-PHILS, the Med-Arbiter, on August 27, 1997, ordered the holding of certification elections among the rank-and-file of Pagpalain Haulers. Pagpalain promptly appealed the decision to the Secretary of Labor and Employment. It claimed that the Med-Arbiter had gravely abused his discretion in allowing Department Order No. 9 to take precedence over a ruling of the Supreme Court. Pagpalain cited Protection Technology v. Secretary, Department of Labor and Employment[1] and Progressive Development Corporation v. Secretary of Labor[2] in support of its contention.

Declaring Protection and Progressive to be inapplicable to the case before him, the Secretary, on February 27, 1998, issued a resolution dismissing Pagpalain's appeal. In his own words, "[I]n these aforementioned cases, the Supreme Court premised its ruling on the previous rules implementing the Labor Code, particularly Book V, that provides the requirements for the registration of a local or chapter of a federation or national union. With the issuance of Department Order No. 09 amending the rules implementing Book V of the Code, the requirement on books of account no longer exists."[3]

Aggrieved by said resolution, Pagpalain now comes to this Court for relief claiming that the Secretary of Labor acted without jurisdiction in issuing the questioned resolution. In support of its proposition, it claims that:
  1. DEPARTMENT ORDER NO. 9, SERIES OF 1997, ISSUED BY PUBLIC RESPONDENT SECRETARY OF LABOR IS NULL AND VOID FOR BEING CONTRARY TO PUBLIC POLICY LAID DOWN BY THE SUPREME COURT IN PROTECTION TECHNOLOGY, INC. V. SECRETARY OF LABOR (G.R. NO. 117211, 1 MARCH 1995) AND PROGRESSIVE DEVELOPMENT CORP. V. SECRETARY OF LABOR (G.R. NO. 96425, 4 FEBRUARY 1992);

  2. DEPARTMENT ORDER NO. 9, SERIES OF 1997, OF PUBLIC RESPONDENT SECRETARY OF LABOR CANNOT ALTER THE REQUIREMENTS OF ARTICLES 241(H) AND (J) OF THE LABOR CODE OF THE PHILIPPINES, NOR CAN IT PREVAIL OVER THE RULINGS OF THE SUPREME COURT, WHICH FORM PART OF THE LAW OF THE LAND.
Pagpalain's contentions are without merit.

Under Article 234 of the Labor Code, the requirements for registration of a labor organization is as follows:
Art. 234. Requirements of registration.- Any applicant labor organization, association or group of unions or workers 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 based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it.
As can be gleaned from the above, the Labor Code does not require the submission of books of account in order for a labor organization to be registered as a legitimate labor organization. The requirement that books of account be submitted as a requisite for a registration can be found only in Book V of the Omnibus Rules Implementing the Labor Code, prior to its amendment by Department Order No. 9, Series of 1997. Specifically, the old Section 3(e), Rule II, of Book V provided that `[t]he local or chapter of a labor federation or national union shall have and maintain a constitution and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the reporting of independently registered unions, federations or national unions shall be observed."

In Progressive Development Corporation, cited by Pagpalain, this Court held that the above-mentioned "`procedure governing the reporting of independently registered unions' refers to the certification and attestation requirements contained in Article 235, paragraph 2." Article 235, paragraph 2 provides that "[a]ll requisite documents and papers shall be certified under oath by the secretary or the treasurer of the organization, as the case may be, and attested to by its president;" hence, in the above-mentioned case, we ruled that in applications for registration by a local or chapter of a federation or national union, the constitution and by-laws, set of officers and books of account submitted by said local or chapter must be certified under oath by the secretary or treasurer and attested to by its president.

Three years later, in Protection Technology v. Secretary of Labor, we amplified our ruling in Progressive, saying that the non-submission of books of account certified by and attested to by the appropriate officer is a ground for an employer to legitimately oppose a petition for certification election filed by a local or chapter of a national union.

By virtue of Department Order No. 9, Series of 1997, however, the documents needed to be submitted by a local or chapter have been reduced to the following:
(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter;

(b) The names of the local/chapter's officers, their addresses, and the principal office of the local/chapter;

(c) The local/chapter's constitution and by-laws; provided that where the local/chapter's constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or Treasurer of the local/chapter and attested by its President.[4]
Since the Department Order No. 9 has done away with the submission of books of account as a requisite for registration, Pagpalain's only recourse now is to have said order declared null and void. It premises its case on the principles laid down in Progressive and Protection Technology. First, Pagpalain maintains that Department Order No. 9 is illegal, allegedly because it contravenes the above-mentioned rulings of this Court. Citing Article 8 of the Civil Code, which provides that "[j]udicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines," Pagpalain declares the two cases part of the law of the land which, under the third paragraph of Article 7 of the Civil Code,[5] may not be supplanted by mere regulation.

Second, it claims that dispensing with books of account contravenes public policy, citing Protection Technology, as follows:
It is immaterial that the Union, having been organized for less than a year before the application for registration with the BLR, would have had no real opportunity to levy and collect dues and fees from its members which need to be recorded in the books of account. Such accounting books can and must be submitted to the BLR, even if they contain no detailed or extensive entries as yet. The point to be stressed is that the applicant local or chapter must demonstrate to the BLR that it is entitled to registered status because it has in place a system for accounting for members' contributions to its fund even before it actually receives dues and fees from its members. The controlling intention is to minimize the risk of fraud and diversion in the course of the subsequent formation and growth of the Union fund. [Underscoring petitioner's]
To buttress its argument, Pagpalain also cites Progressive, thus:
The employer naturally needs assurance that the union it is dealing with is a bona fide organization, one which has not submitted false statements or misrepresentations to the Bureau. The inclusion of the certification and attestation requirements will in a marked degree allay these apprehensions of management. Not only is the issuance of any false statement and misrepresentation a ground for cancellation of registration (See Article 239(a), (c) and (d)); it is also a ground for a criminal charge of perjury.

The certification and attestation requirements are preventive measures against the commission of fraud. They likewise afford a measure of protection to unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or to use the union for dubious ends. [Underscoring petitioner's]
Finally, Pagpalain cites as indicative of public policy, the following sections of Article 241 of the Labor Code:

The following are the rights and conditions of membership in a labor organization:
xxx xxx xxx

(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for that purpose;

xxx xxx xxx

(j) Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is made, which shall state the date, place and purpose of such payment. Such record or receipt shall form part of the financial records of the organization. [Underscoring petitioner's]
Under Article 8 of the Civil Code, "[j]udicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines." This does not mean, however, that courts can create law. The courts exist for interpreting the law, not for enacting it. To allow otherwise would be violative of the principle of separation of powers, inasmuch as the sole function of our courts is to apply or interpret the laws, particularly where gaps or lacunae exist or where ambiguities becloud issues, but it will not arrogate unto itself the task of legislating.

Consequently, Progressive and Protection Technology are not to be deemed as laws on the registration of unions. They merely interpret and apply the implementing rules of the Labor Code as to registration of unions. It is this interpretation that forms part of the legal system of the Philippines, for the interpretation placed upon the written law by a competent court has the force of law.[6] Progressive and Protection Technology, however, applied and interpreted the then existing Book V of the Omnibus Rules Implementing the Labor Code. Since Book V of the Omnibus Rules, as amended by Department Order No. 9, no longer requires a local or chapter to submit books of accounts as a prerequisite for registration, the doctrines enunciated in the above-mentioned cases, with respect to books of account, are already passe and therefore, no longer applicable. Hence, Pagpalain cannot insist that ILO-PHILS comply with the requirements prescribed in said rulings, for the current implementing rules have deleted the same.

Neither can Pagpalain contend that Department Order No. 9 is an invalid exercise of rule-making power by the Secretary of Labor. For an administrative order to be valid, it must (i) be issued on the authority of law and (ii) it must not be contrary to the law and Constitution.[7]

Department Order No. 9 has been issued on authority of law. Under the law, the Secretary is authorized to promulgate rules and regulations to implement the Labor Code. Specifically, Article 5 of the Labor Code provides that "[t]he Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations." Consonant with this article, the Secretary of Labor and Employment promulgated the Omnibus Rules Implementing the Labor Code. By virtue of this self-same authority, the Secretary amended the above-mentioned omnibus rules by issuing Department Order No. 9, Series of 1997.

Moreover, Pagpalain has failed to show that Department Order No. 9 is contrary to the law or the Constitution. At the risk of being repetitious, the Labor Code does not require a local or chapter to submit books of account in order for it to be registered as a legitimate labor organization. There is, thus, no inconsistency between the Labor Code and Department Order No. 9. Neither has Pagpalain shown that said order contravenes any provision of the Constitution.

Pagpalain cannot also allege that Department Order No. 9 is violative of public policy. As adverted to earlier, the sole function of our courts is to apply or interpret the laws.[8] It does not formulate public policy, which is the province of the legislative and executive branches of government. It cannot, thus, be said that the principles laid down by the court in Progressive and Protection Technology constitute public policy on the matter. They do, however, constitute the Court's interpretation of public policy, as formulated by the executive department through its promulgation of rules implementing the Labor Code. However, this public policy has itself been changed by the executive department, through the amendments introduced in Book V of the Omnibus Rules by Department Order No. 9. It is not for us to question this change in policy, it being a well-established principle beyond question that it is not within the province of the courts to pass judgment upon the policy of legislative or executive action.[9] Notwithstanding the expanded judicial power under Section 1, Article VIII of the Constitution, an inquiry on the above-stated policy would delve into matters of wisdom not within the powers of this Court.

Furthermore, the controlling intention in requiring the submission of books of account is the protection of labor through the minimization of the risk of fraud and diversion in the handling of union funds. As correctly pointed out by the Solicitor General, this intention can still be realized through other provisions of the Labor Code. Article 241 of the Labor Code, for instance:
Art. 241. Rights and conditions of membership in a labor organization- The following are the rights and conditions of membership in a labor organization:

xxx xxx xxx

(b) The members shall be entitled to full and detailed reports from their officers and representatives of all financial transactions as provided for in the constitution and by-laws of the organization;

xxx xxx xxx

(g) No officer, agent or member of a labor organization shall collect any fees, dues, or other contributions in its behalf or make any disbursement of its funds unless he is duly authorized pursuant to its constitution and by-laws;

(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for the that purpose;

(i) The funds of the organization shall not be applied for any purpose or object other than those expressly provided by its constitution or by-laws or those expressly authorized by written resolution adopted by the majority of the members at a general meeting duly called for the purpose;

(j) Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is made, which shall state the date, place and purpose of such payment. Such record or receipt shall form part of the financial records of the organization.

xxx xxx xxx

(l) The treasurer of any labor organization and every officer thereof who is responsible for the account of such organization or for the collection, management, disbursement, custody or control of the fund, moneys and other properties of the organization, shall render to the organization and to its members a true and correct account of all the moneys received and paid by him since he assumed office or since the last day on which he rendered such account, and of all bonds, securities and other properties of the organization entrusted to his custody or under his control. The rendering of such account shall be made:

(1) At least once a year within 30 days after the close of its fiscal year;

(2) At such other times as may be required by a resolution of the majority of the members of the organization;

(3) Upon vacating his office.

The account shall be duly audited and verified by affidavit and a copy thereof shall be furnished the Secretary of Labor.

(m) The books of account and other records of the financial activities of any labor organization shall be open to inspection by any officer or member thereof during office hours;

xxx xxx xxx
Furthermore, Article 274 of the Labor Code empowers the Secretary of Labor or his duly authorized representative to inquire into the financial activities of legitimate labor organizations upon the filing of a complaint under oath duly supported by the written consent of 20% of the total membership of the labor organization concerned, as well as to examine their books of accounts and other records to determine compliance or non-compliance with the law. All of these provisions are designed to safeguard the funds of a labor organization that they may not be squandered or frittered away by its officers or by third persons to the detriment of its members.

Lastly, Department Order No. 9 only dispenses with books of account as a requirement for registration of a local or chapter of a national union or federation. As provided by Article 241 (h) and (j), a labor organization must still maintain books of account, but it need not submit the same as a requirement for registration. Given the foregoing disquisition, we find no cogent reason to declare Department Order No. 9 null and void, as well as to reverse the assailed resolution of the Secretary of Labor.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit and the resolution of the Secretary of Labor dated February 27, 1998 AFFIRMED. Costs against petitioner.

SO ORDERED.

Vitug, Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.



[1] 242 SCRA 99 (1995).

[2] 205 SCRA 802 (1992).

[3] Rollo, pp. 23-24.

[4] Section 1, Rule VI, Book V, Omnibus Rules Implementing the Labor Code.

[5] Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution.

[6] People v. Jabinal, 55 SCRA 607 (1974).

[7] De Leon, Administrative Law: Text and Cases, p. 90.

[8] Tolentino, Civil Code of the Philippines: Vol. 1, citing 1 Camus 38.

[9] TaƱada v. Cuenco, 103 Phil. 1031 (1957).

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