G.R. No. 77231 May 31, 1989
SAN JOSE CITY ELECTRIC SERVICE COOPERATIVE, INC. (SAJELCO), petitioner, vs. MINISTRY OF LABOR AND EMPLOYMENT and MAGKAISA-ADLO, respondents.

FACTS

On July 29, 1986, respondent union MAGKAISA-ADLO, a legitimate labor organization, filed a petition for a certification election among the rank-and-file employees of petitioner SAJELCO, an electric cooperative. The union alleged it had the support of 62% of the approximately 54 employees and that no certification election had been held in the preceding twelve months. SAJELCO opposed the petition, arguing that many of the employees were also member-consumers of the cooperative. According to SAJELCO, these individuals, as members of the General Assembly which acts as the final arbiter of cooperative disputes, possessed a dual personality as both employer (via the assembly) and employee. This merger of identities, SAJELCO contended, made collective bargaining legally untenable and unjust, as a person could not bargain with himself.
The Med-Arbiter granted the petition for a certification election, ruling that the employees, regardless of their membership status, were entitled to the right of self-organization under the Labor Code. This order was affirmed by the Director of the Bureau of Labor Relations. SAJELCO elevated the case to the Supreme Court via certiorari. During the pendency of the petition, a certification election was conducted on April 13, 1987, wherein a majority voted for the union.

ISSUE

Whether employees of an electric cooperative who are also member-consumers (co-owners) of the same cooperative possess the right to form, join, or assist labor unions for the purpose of collective bargaining.

RULING

The Supreme Court granted the petition and modified the assailed orders. The legal logic hinges on the fundamental nature of the employer-employee relationship required for collective bargaining. The Court drew a clear distinction between two classes of employees based on SAJELCO’s own by-laws: (1) employees who are member-consumers (co-owners), and (2) employees who are not members but are immediate family members of members.
The Court ruled that employees who are also member-consumers or co-owners of the cooperative are not qualified to form or join a labor union for collective bargaining purposes. The principle is that an owner cannot bargain with himself. Collective bargaining presupposes two distinct parties—management and labor. When the employees are part of the ownership body (the General Assembly) that ultimately controls management, this essential dichotomy disappears, making collective bargaining an absurdity where one sits on both sides of the table.
However, the Court upheld the right to self-organization for employees who are not themselves member-consumers. Even if hired because they are immediate family members of co-owners, their legal status remains purely that of employees. They do not share in the ownership or managerial prerogatives of the cooperative. Therefore, they retain the constitutional and statutory right to organize for collective bargaining. Consequently, the certification election that had already been conducted was set aside. The case was remanded to the labor authorities to determine the number of non-member employees and, if statutory requirements were met, to conduct a new certification election exclusively among them.