G.R. No.

76273 July 31, 1987

FEU-DR. NICANOR REYES MEDICAL FOUNDATION, INC., petitioner,

vs.
HON. CRESENCIANO TRAJANO and RICARDO C. CASTRO, FAR EASTERN UNIVERSITY DR.
NICANOR REYES MEDICAL FOUNDATION, INC. ALLIANCE OF FILIPINO WORKERS
(AFW), respondents.

PARAS, J.:

This is a petition for certiorari seeking to annul and set aside the decision of the respondent Director
which affirmed the Order of the Med-Arbiter in the petition for certification election (NCR-LRD-N-2-
050-86) filed by private respondent, thus ordering the holding of a certification election among the
rank and file employees of the herein petitioner.

The facts of the case are as follows:

The petitioner, Far Eastern University-Dr. Nicanor Reyes Memorial Foundation, Inc., has a work
force of about 350 rank and file employees, majority of whom are members of private respondent
Alliance of Filipino Workers.

On February 13, 1986, private respondent filed a Petition for Consent and/or Certification Election
with The Ministry of Labor and Employment. The petitioner opposed the petition on the ground that a
similar petition involving the same issues and the same parties is pending resolution before the
Supreme Court, docketed as G.R. No. L-49771.

In its position paper, private respondent admitted: that as early as May 10, 1976, private respondent
filed a similar petition for certification election with the Ministry of Labor and Employment but the
petition was denied by the MED Arbiter and the Secretary of Labor on appeal, on the ground that the
petitioner was a non-stock, non-profit medical institution, therefore, its employees may not form, join,
or organize a union pursuant to Article 244 of the Labor Code; that private respondent filed a petition
for certiorari with the Supreme Court (docketed as G.R. No. L-49771) assailing the constitutionality
of Article 244 of the Labor Code; that pending resolution of the aforesaid petition, or on May 1, 1980,
Batas Pambansa Bilang 70 was enacted amending Article 244 of the Labor Code, thus granting
even employees of non-stock, non-profit institutions the right to form, join and organize labor unions
of their choice; and that in the exercise of such right, private respondent filed another petition for
certification election with the Ministry of Labor and Employment (NCR-LRD-N-2-050-86).

On April 17, 1986, the Med Arbiter issued an Order granting the petition, declaring that a certification
election be conducted to determine the exclusive bargaining representative of all the rank and file
employees of the petitioner (p. 4, Rollo).

Respondent Director affirmed said Order on appeal. In dismissing the appeal, however, respondent
Director said that:

... respondent's (petitioner herein, reliance on the petition with the Supreme Court involving as it does the
provisions of Article 244 of the Labor Code vis-a-vis the character of the hospital, which has been alleged as
a non-profit medical foundation, has been rendered moot and academic by virtue of the amendatory BP #70,
which allows employees of non-profit medical institutions to unionize.

Whatever doubt there may be on the right of the workers in a medical institution has been laid to rest by
BP#70.
 WHEREFORE, premises considered, the present appeal is hereby dismissed for lack of merit and the Order
of the Med-Arbiter dated 17 April 1986 affirmed. ... (p. 19, Rollo)

Hence, this petition, raising the issue of whether or not respondent Director gravely abused his
discretion in granting the petition for certification election, despite the pendency of a similar petition
before the Supreme Court (G.R. No. 49771) which involves the same parties for the same cause.

The Petition is devoid of merit.

At the time private respondent filed its petition for certification election on February 13, 1986, Article
244 of the Labor Code was already amended by Batas Pambansa Bilang 70, to wit:

Art. 244. Coverage and employees' right to self-organization. All persons employed in commercial,
industrial and charitable, medical or educational institutions whether operating for profit or not, shall have the
right to self-organizations of their own choosing for purposes of collective bargaining. Ambulant intermittent
and itinerant workers, self-employed people, rural workers and those without any definite employers may
form labor organizations for the purpose of enhancing and defending their interests and for their mutual aid
and protection. (underscoring supplied).

Under the aforequoted provision, there is no doubt that rank and file employees of non-profit medical
institutions (as herein petitioner) are now permitted to form, organize or join labor unions of their
choice for purposes of collective bargaining. Since private respondent had complied with the
requisites provided by law for calling a certification election (p. 15, Rollo), it was incumbent upon
respondent Director to conduct such certification election to ascertain the bargaining representative
of petitioner's employees (Samahang Manggagawa Ng Pacific Mills, Inc. vs. Noriel, 134 SCRA 152).

As held in Quimpo v. Dela Victoria, 46 SCRA 139, in order that the pendency of another action
between the same parties for the same cause may be availed of as a ground to dismiss a case,
there must be, between the action under consideration and the other action: (1) Identity of parties, or
at least such as representing the same interest in both actions; (2) Identity of rights asserted and
relief prayed for, the relief being founded on the same facts; and (3) the Identity on the two
preceding particulars should be such that any judgment which may be rendered on the other action
wig, regardless of which party is successful, amount to res judicata in the action under
consideration.1avvphi1

In the instant case, any judgment which may be rendered in the petition for certiorari pending before
the Supreme Court (G. R. No. L-49771) wig not constitute res judicata in the petition for certification
election under consideration, for while in the former, private respondent questioned the
constitutionality of Article 244 of the Labor Code before its amendment, in the latter, private
respondent invokes the same article as already amended.

Petitioner, however, has pointed out that respondent Director should not have arrogated upon
himself the power to declare the aforesaid petition for certiorari (G.R. No. L-49771) moot and
academic, as the same is sub-judiceand only the Supreme Court can decide the matter. The
Director cannot be faulted for he had to make a decision.

WHEREFORE, this petition is DISMISSED, and the decision appealed from is hereby AFFIRMED.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

 [G.R. No. 121084. February 19, 1997]

TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner, vs. TOYOTA MOTOR PHILIPPINES

CORPORATION LABOR UNION AND THE SECRETARY OF LABOR AND
EMPLOYMENT, respondents.

DECISION
KAPUNAN, J.:

On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed
a petition for certification election with the Department of Labor, National Capital Region, for all rank-
and-file employees of the Toyota Motor Corporation.[1]
In response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the
issuance of an Order directing the holding of a certification election on two grounds: first, that the
respondent union, being "in the process of registration" had no legal personality to file the same as it
was not a legitimate labor organization as of the date of the filing of the petition; and second, that the
union was composed of both rank-and-file and supervisory employees in violation of law.[2] Attached
to the position paper was a list of union members and their respective job classifications, indicating
that many of the signatories to the petition for certification election occupied supervisory positions
and were not in fact rank-and-file employees.[3]
The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification
election for lack of merit. In his March 8, 1993 Order, the Med-Arbiter found that the labor
organization's membership was composed of supervisory and rank-and-file employees in violation of
Article 245 of the Labor Code,[4] and that at the time of the filing of its petition, respondent union had
not even acquired legal personality yet.[5]
On appeal, the Office of the Secretary of Labor, in a Resolution[6] dated November 9, 1993
signed by Undersecretary Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of March 3,
1993, and directed the holding of a certification election among the regular rank-and-file employees
of Toyota Motor Corporation. In setting aside the questioned Order, the Office of the Secretary
contended that:

Contrary to the allegation of herein respondent-appellee, petitioner-appellant was already a

legitimate labor organization at the time of the filing of the petition on 26 November 1992. Records
show that on 24 November 1992 or two (2) days before the filing of the said petition, it was issued a
certificate of registration.

We also agree with petitioner-appellant that the Med-Arbiter should have not dismissed the petition
for certification election based on the ground that the proposed bargaining unit is a mixture of
supervisory and rank-and-file employees, hence, violative of Article 245 of the Labor Code as
amended.

A perusal of the petition and the other documents submitted by petitioner-appellant will readily show
that what the former really seeks to represent are the regular rank-and-file employees in the
company numbering about 1,800 more or less, a unit which is obviously appropriate for bargaining
purposes. This being the case, the mere allegation of respondent-appellee that there are about 42
supervisory employees in the proposed bargaining unit should have not caused the dismissal of the
instant petition. Said issue could very well be taken cared of during the pre-election conference
where inclusion/exclusion proceedings will be conducted to determine the list of eligible voters.[7]
 Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion for
Reconsideration of the Resolution of March 3, 1993, reiterating its claim that as of the date of filing of
petition for certification election, respondent TMPCLU had not yet acquired the status of a legitimate
labor organization as required by the Labor Code, and that the proposed bargaining unit was
inappropriate.
Acting on petitioner's motion for reconsideration, the public respondent, on July 13, 1994 set
aside its earlier resolution and remanded the case to the Med-Arbiter concluding that the issues
raised by petitioner both on appeal and in its motion for reconsideration were factual issues requiring
further hearing and production of evidence.[8] The Order stated:

We carefully re-examined the records vis-a-vis the arguments raised by the movant, and we note
that movant correctly pointed out that petitioner submitted a copy of its certificate of registration for
the first time on appealand that in its petition, petitioner alleges that it is an independent organization
which is in the process of registration." Movant strongly argues that the foregoing only confirms what
it has been pointing out all along, that at the time the petition was filed petitioner is (sic) not yet the
holder of a registration certificate; that what was actually issued on 24 November 1992 or two (2)
days before the filing of the petition was an official receipt of payment for the application fee; and,
that the date appearing in the Registration certificate which is November 24, 1992 is not the date
when petitioner was actually registered, but the date when the registration certificate was prepared
by the processor. Movant also ratiocinates that if indeed petitioner has been in possession of the
registration certificate at the time this petition was filed on November 26, 1992, it would have
attached the same to the petition.

The foregoing issues are factual ones, the resolution of which is crucial to the petition. For if indeed it
is true that at the time of filing of the petition, the said registration certificate has not been approved
yet, then, petitioner lacks the legal personality to file the petition and the dismissal order is proper.
Sadly, we can not resolve the said questions by merely perusing the records. Further hearing and
introduction of evidence are required. Thus, there is a need to remand the case to the Med-Arbiter
solely for the purpose.

WHEREFORE, the motion is hereby granted and our Resolution is hereby set aside. Let the case be
remanded to the Med-Arbiter for the purpose aforestated.

SO ORDERED.[9]

Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on
September 28, 1994, stating the following:[10]

[T]he controvertible fact is that petitioner could not have been issued its Certificate of Registration on
November 24, 1992 when it applied for registration only on November 23, 1992 as shown by the
official receipt of payment of filing fee. As Enrique Nalus, Chief LEO, this office, would attest in his
letter dated September 8, 1994 addressed to Mr. Porfirio T. Reyes, Industrial Relations Officer of
Respondent company, in response to a query posed by the latter, "It is unlikely that an application
for registration is approved on the date that it is filed or the day thereafter as the processing course
has to pass thought routing, screening, and assignment, evaluation, review and initialing, and
approval/disapproval procedure, among others, so that a 30-day period is provided for under the
Labor Code for this purpose, let alone opposition thereto by interested parties which must be also
given due course."

Another evidence which petitioner presented . . . is the "Union Registration 1992 Logbook of IRD" . .
. and the entry date November 25, 1992 as allegedly the date of the release of the registration
certificate . . . On the other hand, respondent company presented . . . a certified true copy of an
entry on page 265 of the Union Registration Logbook showing the pertinent facts about petitioner but
which do not show the petitioner's registration was issued on or before November 26, 1992.[11]

Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that
respondent TMPCLU could not have "acquire[d] legal personality at the time of the filing of (its)
petition."[12]
On April 20, 1996, the public respondent issued a new Resolution, "directing the conduct of a
certification election among the regular rank-and-file employees of the Toyota Motor Philippines
Corporation.[13] Petitioner's motion for reconsideration was denied by public respondent in his Order
dated July 14, 1995.[14]
Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court, where
petitioner contends that "the Secretary of Labor and Employment committed grave abuse of
discretion amounting to lack or excess of jurisdiction in reversing, contrary to law and facts the
findings of the Med-Arbiters to the effect that: 1) the inclusion of the prohibited mix of rank-and file
and supervisory employees in the roster of members and officers of the union cannot be cured by a
simple inclusion-exclusion proceeding; and that 2) the respondent union had no legal standing at the
time of the filing of its petition for certification election.[15]
We grant the petition.
The purpose of every certification election is to determine the exclusive representative of
employees in an appropriate bargaining unit for the purpose of collective bargaining. A certification
election for the collective bargaining process is one of the fairest and most effective ways of
determining which labor organization can truly represent the working force.[16] In determining the
labor organization which represents the interests of the workforce, those interests must be, as far as
reasonably possible, homogeneous, so as to genuinely reach the concerns of the individual
members of a labor organization.
According to Rothenberg,[17] an appropriate bargaining unit is a group of employees of a given
employer, composed of all or less than the entire body of employees, which the collective interests
of all the employees, consistent with equity to the employer indicate to be best suited to serve
reciprocal rights and duties of the parties under the collective bargaining provisions of law. In Belyca
Corporation v. Ferrer Calleja,[18] we defined the bargaining unit as "the legal collectivity for collective
bargaining purposes whose members have substantially mutual bargaining interests in terms and
conditions of employment as will assure to all employees their collective bargaining rights." 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.
 It is the petitioner's contention that forty-two (42) of the respondent union's members, including
three of its officers, occupy supervisory positions.[19] In its position paper dated February 22, 1993,
petitioner identified fourteen (14) union members occupying the position of Junior Group Chief
II[20] and twenty-seven (27) members in level five positions. Their respective job-descriptions are
quoted below:

LEVEL 4 (JUNIOR GROUP CHIEF II) He is responsible for all operators and assigned stations,
prepares production reports related to daily production output. He oversees smooth flow of
production, quality of production, availability of manpower, parts and equipments. He also
coordinates with other sections in the Production Department.

LEVEL 5 He is responsible for overseeing initial production of new models, prepares and monitors
construction schedules for new models, identifies manpower requirements for production, facilities
and equipment, and lay-out processes. He also oversees other sections in the production process
(e.g. assembly, welding, painting)." (Annex "V" of Respondent TMP's Position Paper, which is the
Job Description for an Engineer holding Level 5 position in the Production Engineering Section of the
Production Planning and Control Department).

While there may be a genuine divergence of opinion as to whether or not union members
occupying Level 4 positions are supervisory employees, it is fairly obvious, from a reading of the
Labor Code's definition of the term that those occupying Level 5 positions are unquestionably
supervisory employees. Supervisory employees, as defined above, are those who, in the interest of
the employer, effectively recommend managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but require the use of independent judgment.[21] Under the job
description for level five employees, such personnel all engineers having a number of personnel
under them, not only oversee production of new models but also determine manpower requirements,
thereby influencing important hiring decisions at the highest levels. This determination is neither
routine nor clerical but involves the independent assessment of factors affecting production, which in
turn affect decisions to hire or transfer workers. The use of independent judgment in making the
decision to hire, fire or transfer in the identification of manpower requirements would be greatly
impaired if the employee's loyalties are torn between the interests of the union and the interests of
management. A supervisory employee occupying a level five position would therefore find it difficult
to objectively identify the exact manpower requirements dictated by production demands.
This is precisely what the Labor Code, in requiring separate unions among rank-and-file
employees on one hand, and supervisory employees on the other, seeks to avoid. The rationale
behind the Code's exclusion of supervisors from unions of rank-and-file employees is that such
employees, while in the performance of supervisory functions, become the alter ego of management
in the making and the implementing of key decisions at the sub-managerial level. Certainly, it would
be difficult to find unity or mutuality of interests in a bargaining unit consisting of a mixture of rank-
and-file and supervisory employees. And this is so because the fundamental test of a bargaining
unit's acceptability is whether or not such a unit will best advance to all employees within the unit the
proper exercise of their collective bargaining rights.[22] The Code itself has recognized this, in
preventing supervisory employees from joining unions of rank-and-file employees.
In the case at bar, as respondent union's membership list contains the names of at least twenty-
seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself
of its supervisory employee members, attain the status of a legitimate labor organization. Not being
one, it cannot possess the requisite personality to file a petition for certification election.
The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to
whether or not respondent union was in possession of the status of a legitimate labor organization at
the time of filing, when, as petitioner vigorously claims, the former was still at the stage of processing
of its application for recognition as a legitimate labor organization. The union's composition being in
violation of the Labor Code's prohibition of unions composed of supervisory and rank-and-file
employees, it could not possess the requisite personality to file for recognition as a legitimate labor
organization. In any case, the factual issue, albeit ignored by the public respondent's assailed
Resolution, was adequately threshed out in the Med-Arbiter's September 28, 1994 Order.
The holding of a certification election is based on clear statutory policy which cannot be
circumvented.[23] Its rules, strictly construed by this Court, are designed to eliminate fraud and
manipulation. As we emphasized in Progressive Development Corporation v. Secretary, Department
of Labor and Employment,[24] the Court's conclusion should not be interpreted as impairing any
union's right to be certified as the employees' bargaining agent in the petitioner's establishment.
Workers of an appropriate bargaining unit must be allowed to freely express their choice in an
election where everything is open to sound judgment and the possibility for fraud and
misrepresentation is absent.[25]
WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and
Order dated July 14, 1995 of respondent Secretary of Labor are hereby SET ASIDE. The Order
dated September 28, 1994 of the Med-Arbiter is REINSTATED.
SO ORDERED.
Padilla, (Chairman), Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.
 [G.R. No. 142000. January 22, 2003]

TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner, vs.

TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO, respondent.

DECISION
CARPIO-MORALES, J.:

Before this Court on certiorari under Rule 45 is the petition of the Tagaytay Highlands
International Golf Club Incorporated (THIGCI) assailing the February 15, 2002 decision of the Court
of Appeals denying its petition to annul the Department of Labor and Employment (DOLE)
Resolutions of November 12, 1998 and December 29, 1998.
On October 16, 1997, the Tagaytay Highlands Employees Union (THEU)Philippine Transport
and General Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor
organization said to represent majority of the rank-and-file employees of THIGCI, filed a petition for
certification election before the DOLE Mediation-Arbitration Unit, Regional Branch No. IV.
THIGCI, in its Comment[1] filed on November 27, 1997, opposed THEUs petition for certification
election on the ground that the list of union members submitted by it was defective and fatally flawed
as it included the names and signatures of supervisors, resigned, terminated and absent without
leave (AWOL) employees, as well as employees of The Country Club, Inc., a corporation distinct
and separate from THIGCI; and that out of the 192 signatories to the petition, only 71 were actual
rank-and-file employees of THIGCI.
THIGCI thus submitted a list of the names of its 71 actual rank-and-file employees which it
annexed[2] to its Comment to the petition for certification election. And it therein incorporated the
following tabulation[3] showing the number of signatories to said petition whose membership in the
union was being questioned as disqualified and the reasons for disqualification:

# of Signatures Reasons for Disqualification

13 Supervisors of THIGCI

6 Resigned employees of THIGCI

2 AWOL employees of THIGCI

53 Rank-and-file employees of The Country Club at Tagaytay Highlands, Inc.

14 Supervisors of The Country Club at Tagaytay Highlands, Inc.

6 Resigned employees of The Country Club at Tagaytay Highlands, Inc.

3 Terminated employees of The Country Club at Tagaytay Highlands, Inc.

1 AWOL employees of The Country Club at Tagaytay Highlands, Inc.

4 Signatures that cannot be deciphered

 16 Names in list that were erased

2 Names with first names only

THIGCI also alleged that some of the signatures in the list of union members were secured
through fraudulent and deceitful means, and submitted copies of the handwritten denial and
withdrawal of some of its employees from participating in the petition.[4]
Replying to THIGCIs Comment, THEU asserted that it had complied with all the requirements
for valid affiliation and inclusion in the roster of legitimate labor organizations pursuant to DOLE
Department Order No. 9, series of 1997,[5] on account of which it was duly granted a Certification of
Affiliation by DOLE on October 10, 1997;[6] and that Section 5, Rule V of said Department Order
provides that the legitimacy of its registration cannot be subject to collateral attack, and for as long
as there is no final order of cancellation, it continues to enjoy the rights accorded to a legitimate
organization.
THEU thus concluded in its Reply[7] that under the circumstances, the Med-Arbiter should,
pursuant to Article 257 of the Labor Code and Section 11, Rule XI of DOLE Department Order No.
09, automatically order the conduct of a certification election.
By Order of January 28, 1998, [8] DOLE Med-Arbiter Anastacio Bactin ordered the holding of a
certification election among the rank-and-file employees of THIGCI in this wise, quoted verbatim:

We evaluated carefully this instant petition and we are of the opinion that it is complete in form and
substance. In addition thereto, the accompanying documents show that indeed petitioner union
is a legitimate labor federation and its local/chapter was duly reported to this Office as one of
its affiliate local/chapter. Its due reporting through the submission of all the requirements for
registration of a local/chapter is a clear showing that it was already included in the roster of
legitimate labor organizations in this Office pursuant to Department Order No. 9 Series of 1997 with
all the legal right and personality to institute this instant petition.Pursuant therefore to the provisions
of Article 257 of the Labor Code, as amended, and its Implementing Rules as amended by
Department Order No. 9, since the respondents establishment is unorganized, the holding of a
certification election is mandatory for it was clearly established that petitioner is a legitimate labor
organization. Giving due course to this petition is therefore proper and appropriate.[9] (Emphasis
supplied)

Passing on THIGCIs allegation that some of the union members are supervisory, resigned and
AWOL employees or employees of a separate and distinct corporation, the Med-Arbiter held that the
same should be properly raised in the exclusion-inclusion proceedings at the pre-election
conference. As for the allegation that some of the signatures were secured through fraudulent and
deceitful means, he held that it should be coursed through an independent petition for cancellation of
union registration which is within the jurisdiction of the DOLE Regional Director. In any event, the
Med-Arbiter held that THIGCI failed to submit the job descriptions of the questioned employees
and other supporting documents to bolster its claim that they are disqualified from joining
THEU.
THIGCI appealed to the Office of the DOLE Secretary which, by Resolution of June 4, 1998, set
aside the said Med-Arbiters Order and accordingly dismissed the petition for certification election on
the ground that there is a clear absence of community or mutuality of interests, it finding that THEU
sought to represent two separate bargaining units (supervisory employees and rank-and-file
employees) as well as employees of two separate and distinct corporate entities.
Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda Dimalipis-Baldoz,
by authority of the DOLE Secretary, issued DOLE Resolution of November 12, 1998 [10]setting aside
the June 4, 1998 Resolution dismissing the petition for certification election. In the November 12,
1998 Resolution, Undersecretary Dimapilis-Baldoz held that since THEU is a local chapter, the
twenty percent (20%) membership requirement is not necessary for it to acquire legitimate status,
hence, the alleged retraction and withdrawal of support by 45 of the 70 remaining rank-and-file
members . . . cannot negate the legitimacy it has already acquired before the petition; that rather
than disregard the legitimate status already conferred on THEU by the Bureau of Labor Relations,
the names of alleged disqualified supervisory employees and employees of the Country Club, Inc., a
separate and distinct corporation, should simply be removed from the THEUs roster of
membership; and that regarding the participation of alleged resigned and AWOL employees and
those whose signatures are illegible, the issue can be resolved during the inclusion-exclusion
proceedings at the pre-election stage.
The records of the case were thus ordered remanded to the Office of the Med-Arbiter for the
conduct of certification election.
THIGCIs Motion for Reconsideration of the November 12, 1998 Resolution having been denied
by the DOLE Undersecretary by Resolution of December 29, 1998,[11] it filed a petition for certiorari
before this Court which, by Resolution of April 14, 1999,[12] referred it to the Court of Appeals in line
with its pronouncement in National Federation of Labor (NFL) v. Hon. Bienvenido E. Laguesma, et
al.,[13] and in strict observance of the hierarchy of courts, as emphasized in the case of St. Martin
Funeral Home v. National Labor Relations Commission.[14]
By Decision of February 15, 2000,[15] the Court of Appeals denied THIGCIs Petition for
Certiorari and affirmed the DOLE Resolution dated November 12, 1998. It held that while a petition
for certification election is an exception to the innocent bystander rule, hence, the employer may
pray for the dismissal of such petition on the basis of lack of mutuality of interests of the members of
the union as well as lack of employer-employee relationship following this Courts ruling in Toyota
Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union et
al[16] and Dunlop Slazenger [Phils.] v. Hon. Secretary of Labor and Employment et al,[17] petitioner
failed to adduce substantial evidence to support its allegations.
Hence, the present petition for certiorari, raising the following

ISSUES/ASSIGNMENT OF ERRORS:

THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12

NOVEMER 1998 HOLDING THAT SUPERVISORY EMPLOYEES AND NON-EMPLOYEES
COULD SIMPLY BE REMOVED FROM APPELLEES ROSTER OF RANK-AND-FILE
MEMBERSHIP INSTEAD OF RESOLVING THE LEGITIMACY OF RESPONDENT UNIONS
STATUS

THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12

NOVEMBER 1998 HOLDING THAT THE DISQUALIFIED EMPLOYEES STATUS COULD READILY
BE RESOLVED DURING THE INCLUSION AND EXCLUSION PROCEEDINGS

THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT HOLDING THAT THE ALLEGATIONS
OF PETITIONER HAD BEEN DULY PROVEN BY FAILURE OF RESPONDENT UNION TO DENY
THE SAME AND BY THE SHEER WEIGHT OF EVIDENCE INTRODUCED BY PETITIONER AND
CONTAINED IN THE RECORDS OF THE CASE[18]

The statutory authority for the exclusion of supervisory employees in a rank-and-file union, and
vice-versa, is Article 245 of the Labor Code, to wit:

Article 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.

While above-quoted Article 245 expressly prohibits supervisory employees from joining a rank-
and-file union, it does not provide what would be the effect if a rank-and-file union counts
supervisory employees among its members, or vice-versa.
Citing Toyota[19] which held that a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all, and the subsequent case of Progressive
Development Corp. Pizza Hut v. Ledesma[20] which held that:

The Labor Code requires that in organized and unorganized establishments, a petition for
certification election must be filed by a legitimate labor organization. The acquisition of rights by any
union or labor organization, particularly the right to file a petition for certification election, first and
foremost, depends on whether or not the labor organization has attained the status of a legitimate
labor organization.

In the case before us, the Med-Arbiter summarily disregarded the petitioners prayer that the former
look into the legitimacy of the respondent Union by a sweeping declaration that the union was in the
possession of a charter certificate so that for all intents and purposes, Sumasaklaw sa Manggagawa
sa Pizza Hut (was) a legitimate organization,[21] (Underscoring and emphasis supplied),

petitioner contends that, quoting Toyota, [i]t becomes necessary . . ., 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.[22]
Continuing, petitioner argues that without resolving the status of THEU, the DOLE
Undersecretary conveniently deferred the resolution on the serious infirmity in the membership of
[THEU] and ordered the holding of the certification election which is frowned upon as the following
ruling of this Court shows:

We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity in the
membership of the respondent union can be remedied in the pre-election conference thru the
exclusion-inclusion proceedings wherein those employees who are occupying rank-and-file positions
will be excluded from the list of eligible voters. Public respondent gravely misappreciated the basic
antipathy between the interest of supervisors and the interest of rank-and-file employees. Due to the
irreconcilability of their interest we held in Toyota Motor Philippines v. Toyota Motors Philippines
Corporation Labor Union, viz:

xxx

Clearly, based on this provision [Article 245], 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 posses 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. (Emphasis by
petitioner) (Dunlop Slazenger (Phils.), v. Secretary of Labor, 300 SCRA 120
[1998]; Underscoring and emphasis supplied by petitioner.)
 The petition fails. 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 Rules to Implement the Labor
Code (Implementing Rules) which section reads:

Sec. 5. Effect of registration. The labor organization or workers association shall be deemed
registered and vested with legal personality on the date of issuance of its certificate of
registration. Such legal personality cannot thereafter be subject to collateral attack, but may be
questioned only in an independent petition for cancellation in accordance with these Rules.
(Emphasis supplied)

The grounds for cancellation of union registration are provided for under Article 239 of the Labor
Code, as follows:

Art. 239. Grounds for cancellation of union registration. The following shall constitute grounds for
cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of
the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of
members who took part in the ratification;

(b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days
from adoption or ratification of the constitution and by-laws or amendments thereto;

(c) Misrepresentation, false statements or fraud in connection with the election of officers,
minutes of the election of officers, the list of voters, or failure to subject these documents together
with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days
from election;

(d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the losing
of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial
report itself;

(e) Acting as a labor contractor or engaging in the cabo system, or otherwise engaging in any activity
prohibited by law;

(f) Entering into collective bargaining agreements which provide terms and conditions of employment
below minimum standards established by law;

(g) Asking for or accepting attorneys fees or negotiation fees from employers;

(h) Other than for mandatory activities under this Code, checking off special assessments or any
other fees without duly signed individual written authorizations of the members;

(i) Failure to submit list of individual members to the Bureau once a year or whenever required by
the Bureau; and

(j) Failure to comply with the requirements under Articles 237 and 238, (Emphasis supplied),

while the procedure for cancellation of registration is provided for in Rule VIII, Book V of the
Implementing Rules.
 The inclusion in a union of disqualified employees is not among the grounds for cancellation,
unless such inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted Article 239
of the Labor Code.
THEU, having been validly issued a certificate of registration, should be considered to have
already acquired juridical personality which may not be assailed collaterally.
As for petitioners allegation that some of the signatures in the petition for certification election
were obtained through fraud, false statement and misrepresentation, the proper procedure is, as
reflected above, for it to file a petition for cancellation of the certificate of registration, and not to
intervene in a petition for certification election.
Regarding the alleged withdrawal of union members from participating in the certification
election, this Courts following ruling is instructive:

[T]he best forum for determining whether there were indeed retractions from some of the laborers is
in the certification election itself wherein the workers can freely express their choice in a secret
ballot. Suffice it to say that the will of the rank-and-file employees should in every possible instance
be determined by secret ballot rather than by administrative or quasi-judicial inquiry. Such
representation and certification election cases are not to be taken as contentious litigations for suits
but as mere investigations of a non-adversary, fact-finding character as to which of the competing
unions represents the genuine choice of the workers to be their sole and exclusive collective
bargaining representative with their employer.[23]

As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie given,
as found by the court a quo, its failure to present substantial evidence that the assailed employees
are actually occupying supervisory positions.
While petitioner submitted a list of its employees with their corresponding job titles and
ranks,[24] there is nothing mentioned about the supervisors respective duties, powers and
prerogatives that would show that they can effectively recommend managerial actions which require
the use of independent judgment.[25]
As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor:[26]

Designation should be reconciled with the actual job description of subject employees x x x The
mere fact that an employee is designated manager does not necessarily make him one. Otherwise,
there would be an absurd situation where one can be given the title just to be deprived of the right to
be a member of a union. In the case of National Steel Corporation vs. Laguesma (G. R. No. 103743,
January 29, 1996), it was stressed that:

What is essential is the nature of the employees function and not the nomenclature or
title given to the job which determines whether the employee has rank-and-file or managerial status
or whether he is a supervisory employee. (Emphasis supplied).[27]

WHEREFORE, the petition is hereby DENIED. Let the records of the case be remanded to the
office of origin, the Mediation-Arbitration Unit, Regional Branch No. IV, for the immediate conduct of
a certification election subject to the usual pre-election conference.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez and Corona, JJ., concur.
G.R. No. 91902 May 20, 1991

MANILA ELECTRIC COMPANY, petitioner,

vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, STAFF AND TECHNICAL
EMPLOYEES ASSOCIATION OF MERALCO, and FIRST LINE ASSOCIATION OF MERALCO
SUPERVISORY EMPLOYEES, respondents.

Rolando R. Arbues, Atilano S. Guevarra, Jr. and Gil S. San Diego for petitioner.
The Solicitor General for public respondent.
Felipe Gojar for STEAM-PCWF.
Wakay & Wakay Legal Services for First Line Association of Meralco Supervisory Employees.

MEDIALDEA, J.:

This petition seeks to review the Resolution of respondent Secretary of Labor and Employment
Franklin M. Drilon dated November 3, 1989 which affirmed an Order of Med-Arbiter Renato P.
Parungo (Case No. NCR-O-D-M-1-70), directing the holding of a certification election among certain
employees of petitioner Manila Electric Company (hereafter "MERALCO") as well as the Order dated
January 16, 1990 which denied the Motion for Reconsideration of MERALCO.

The facts are as follows:

On November 22, 1988, the Staff and Technical Employees Association of MERALCO (hereafter
"STEAM-PCWF") a labor organization of staff and technical employees of MERALCO, filed a petition
for certification election, seeking to represent regular employees of MERALCO who are: (a) non-
managerial employees with Pay Grades VII and above; (b) non-managerial employees in the Patrol
Division, Treasury Security Services Section, Secretaries who are automatically removed from the
bargaining unit; and (c) employees within the rank and file unit who are automatically disqualified
from becoming union members of any organization within the same bargaining unit.

Among others, the petition alleged that "while there exists a duly-organized union for rank and file
employees in Pay Grade I-VI, which is the MERALCO Employees and Worker's Association
(MEWA) which holds a valid CBA for the rank and file employees,1 there is no other labor
organization except STEAM-PCWF claiming to represent the MERALCO employees.

The petition was premised on the exclusion/disqualification of certain MERALCO employees

pursuant to Art. I, Secs. 2 and 3 of the existing MEWA CBA as follows:

ARTICLE I
SCOPE
xxx xxx xxx
Sec. 2. Excluded from the appropriate bargaining unit and therefore outside the scope of this Agreement
are:
(a) Employees in Patrol Division;
(b) Employees in Treasury Security Services Section;
(c) Managerial Employees; and
(d) Secretaries.
 Any member of the Union who may now or hereafter be assigned or transferred to Patrol
Division or Treasury Security Services Section, or becomes Managerial Employee or a
Secretary, shall be considered automatically removed from the bargaining unit and excluded
from the coverage of this agreement. He shall thereby likewise be deemed automatically to
have ceased to be member of the union, and shall desist from further engaging in union
activity of any kind.

Sec. 3. Regular rank-and-file employees in the organization elements herein below listed
shall be covered within the bargaining unit, but shall be automatically disqualified from
becoming union members:

1. Office of the Corporate Secretary

2. Corporate Staff Services Department
3. Managerial Payroll Office
4. Legal Service Department
5. Labor Relations Division
6. Personnel Administration Division
7. Manpower Planning & Research Division
8. Computer Services Department
9. Financial Planning & Control Department
10. Treasury Department, except Cash Section
11. General Accounting Section
xxx xxx xxx
(p. 19, Rollo)

MERALCO moved for the dismissal of the petition on the following grounds:

The employees sought to be represented by petitioner are either 1) managerial who are
prohibited by law from forming or joining supervisory union; 2) security services personnel
who are prohibited from joining or assisting the rank-and-file union; 3) secretaries who do not
consent to the petitioner's representation and whom petitioner can not represent; and 4)
rank-and-file employees represented by the certified or duly recognized bargaining
representative of the only rank-and-file bargaining unit in the company, the Meralco
Employees Workers Association (MEWA), in accordance with the existing Collective
Bargaining Agreement with the latter.

II

The petition for certification election will disturb the administration of the existing Collective
Bargaining Agreement in violation of Art. 232 of the Labor Code.

III

The petition itself shows that it is not supported by the written consent of at least twenty
percent (20%) of the alleged 2,500 employees sought to be represented. (Resolution, Sec. of
Labor, pp. 223-224, Rollo)
Before Med-Arbiter R. Parungo, MERALCO contended that employees from Pay Grades VII and
above are classified as managerial employees who, under the law, are prohibited from forming,
joining or assisting a labor organization of the rank and file. As regards those in the Patrol Division
and Treasury Security Service Section, MERALCO maintains that since these employees are tasked
with providing security to the company, they are not eligible to join the rank and file bargaining unit,
pursuant to Sec. 2(c), Rule V, Book V of the then Implementing Rules and Regulations of the Labor
Code (1988) which reads as follows:

Sec. 2. Who may file petition. The employer or any legitimate labor organization may file the petition.
The petition, when filed by a legitimate labor organization, shall contain, among others:
xxx xxx xxx
(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise
require, and provided, further: that the appropriate bargaining unit of the rank and file employees shall
not include security guards (As amended by Sec. 6, Implementing Rules of EO 111)
xxx xxx xxx
(p. 111, Labor Code, 1988 Ed.)

As regards those rank and file employees enumerated in Sec. 3, Art. I, MERALCO contends that
since they are already beneficiaries of the MEWA-CBA, they may not be treated as a separate and
distinct appropriate bargaining unit.

MERALCO raised the same argument with respect to employees sought to be represented by
STEAM-PCWF, claiming that these were already covered by the MEWA-CBA.

On March 15, 1989, the Med-Arbiter ruled that having been excluded from the existing Collective
Bargaining Agreement for rank and file employees, these employees have the right to form a union
of their own, except those employees performing managerial functions. With respect to those
employees who had resented their alleged involuntary membership in the existing CBA, the Med-
Arbiter stated that the holding of a certification election would allow them to fully translate their
sentiment on the matter, and thus directed the holding of a certification election. The dispositive
portion of the Resolution provides as follows:

WHEREFORE, premises considered, a certification election is hereby ordered conducted

among the regular rank-and-file employees of MERALCO to wit:

1. Non-managerial employees with Pay Grades VII and above;

2. Non-managerial employees of Patrol Division, Treasury Security Services Section and

Secretaries; and

3. Employees prohibited from actively participating as members of the union.

within 20 days from receipt hereof, subject to the usual pre-election conference with the
following choices:

1. Staff and Technical, Employees Association of MERALCO (STEAM-PCWF);

2. No Union.

SO ORDERED. (p. 222, Rollo)

On April 4, 1989, MERALCO appealed, contending that "until such time that a judicial finding is
made to the effect that they are not managerial employee, STEAM-PCWF cannot represent
employees from Pay Grades VII and above, additionally reiterating the same reasons they had
advanced for disqualifying respondent STEAM-PCWF.

On April 7, 1989, MEWA filed an appeal-in-intervention, submitting as follows:

A. The Order of the Med-Arbiter is null and void for being in violation of Article 245 of the
Labor Code;

B. The Order of the Med-Arbiter violates Article 232 of the Labor Code; and

C. The Order is invalid because the bargaining unit it delineated is not an appropriated (sic)
bargaining unit.

On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.

With the enactment of RA 6715 and the rules and regulations implementing the same, STEAM-
PCWF renounced its representation of the employees in Patrol Division, Treasury Security Services
Section and rank-and-file employees in Pay Grades I-VI.

On September 13, 1989, the First Line Association of Meralco

Supervisory Employees. (hereafter FLAMES) filed a similar petition (NCR-OD-M-9-731-89) seeking

to represent those employees with Pay Grades VII to XIV, since "there is no other supervisory union
at MERALCO." (p. 266, Rollo). The petition was consolidated with that of STEAM-PCWF.

On November 3, 1989, the Secretary of Labor affirmed with modification, the assailed order of the
Med-Arbiter, disposing as follows:

WHEREFORE, premises considered, the Order appealed from is hereby affirmed but
modified as far as the employees covered by Section 3, Article I of the exist CBA in the
Company are concerned. Said employees shall remain in the unit of the rank-and-file already
existing and may exercise their right to self organization as above enunciated.

Further, the First Line Association of Meralco Supervisory Employees (FLAMES) is included
as among the choices in the certification election.

Let, therefore, the pertinent records of the case be immediately forwarded to the Office of
origin for the conduct of the certification election.

SO ORDERED. (p. 7, Rollo)

MERALCO's motion for reconsideration was denied on January 16, 1990.

On February 9, 1990, MERALCO filed this petition, premised on the following ground:

RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF DISCRETION AND/OR IN

EXCESS OF JURISDICTION AMOUNTING TO LACK OF JURISDICTION IN RULING
THAT:
 I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE ESTABLISHED
INDEPENDENT, DISTINCT AND SEPARATE FROM THE EXISTING RANK-AND-FILE
BARGAINING UNIT.

II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE RANK-AND-FILE
EMPLOYEES.

III. THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED TOGETHER WITH THE
RANK-AND-FILE UNION AND/OR THE SUPERVISORY UNION. (p. 8, Rollo)

On February 26, 1990, We issued a temporary restraining order (TRO) against the implementation
of the disputed resolution.

In its petition, MERALCO has relented and recognized respondents STEAM-PCWF and FLAMES'
desired representation of supervisory employees from Grades VII up. However, it believes that all
that the Secretary of Labor has to do is to establish a demarcation line between supervisory and
managerial rank, and not to classify outright the group of employees represented by STEAM-PCWF
and FLAMES as rank and file employees.

In questioning the Secretary of Labor's directive allowing security guards (Treasury/Patrol Services
Section) to be represented by respondents, MERALCO contends that this contravenes the
provisions of the recently passed RA 6715 and its implementing rules (specifically par. 2, Sec. 1,
Rule II, Book V) which disqualifies supervisory employees and security guards from membership in a
labor organization of the rank and file (p. 11, Rollo).

The Secretary of Labor's Resolution was obviously premised on the provisions of Art. 212, then par.
(k), of the 1988 Labor Code defining "managerial" and "rank and file" employees, the law then in
force when the complaint was filed. At the time, only two groups of employees were recognized, the
managerial and rank and file. This explains the absence of evidence on job descriptions on who
would be classified managerial employees. It is perhaps also for this reason why the Secretary of
Labor limited his classification of the Meralco employees belonging to Pay Grades VII and up, to
only two groups, the managerial and rank and file.

However, pursuant to the Department of Labor's goal of strenghthening the constitutional right of
workers to self-organization, RA 6715 was subsequently passed which reorganized the employee-
ranks by including a third group, or the supervisory employees, and laying down the distinction
between supervisory employees and those of managerial ranks in Art. 212, renumbered par. [m],
depending on whether the employee concerned has the power to lay down and execute
management policies, in the case of managerial employees, or merely to recommend them, in case
of supervisory employees.

In this petition, MERALCO has admitted that the employees belonging to Pay Grades VII and up are
supervisory (p. 10, Rollo). The records also show that STEAM-PCWF had "renounced its
representation of the employees in Patrol Division, Treasury Security Service Section and rank and
file employees in Pay Grades I-VI" (p. 6, Rollo); while FLAMES, on the other hand, had limited its
representation to employees belonging to Pay Grades VII-XIV, generally accepted as supervisory
employees, as follows:

It must be emphasized that private respondent First Line Association of Meralco Supervisory
Employees seeks to represent only the Supervisory Employees with Pay Grades VII to XIV.
 Supervisory Employees with Pay Grades VII to XIV are not managerial employees. In fact
the petition itself of petitioner Manila Electric Company on page 9, paragraph 3 of the petition
stated as follows, to wit:

There was no need for petitioner to prove that these employees are not rank-and-file.
As adverted to above, the private respondents admit that these are not the rank-and-
file but the supervisory employees, whom they seek to represent. What needs to be
established is the rank where supervisory ends and managerial begins.

and First Line Association of Meralco Supervisory Employees herein states that Pay Grades
VII to XIV are not managerial employees. In fact, although employees with Pay Grade XV
carry the Rank of Department Managers, these employees only enjoys (sic) the Rank
Manager but their recommendatory powers are subject to evaluation, review and final action
by the department heads and other higher executives of the company. (FLAMES'
Memorandum, p. 305, Rollo)

Based on the foregoing, it is clear that the employees from Pay Grades VII and up have been
recognized and accepted as supervisory. On the other hand, those employees who have been
automatically disqualified have been directed by the Secretary of Labor to remain in the existing
labor organization for the rank and file, (the condition in the CBA deemed as not having been written
into the contract, as unduly restrictive of an employee's exercise of the right to self-organization). We
shall discuss the rights of the excluded employees (or those covered by Sec. 2, Art. I, MEWA-CBA
later.

Anent the instant petition therefore, STEAM-PCWF, and FLAMES would therefore represent
supervisory employees only. In this regard, the authority given by the Secretary of Labor for the
establishment of two labor organizations for the rank and file will have to be disregarded since We
hereby uphold certification elections only for supervisory employees from Pay Grade VII and up, with
STEAM-PCWF and FLAMES as choices.

As to the alleged failure of the Secretary of Labor to establish a demarcation line for purposes of
segregating the supervisory from the managerial employees, the required parameter is really not
necessary since the law itself, Art. 212-m, (as amended by Sec. 4 of RA 6715) has already laid
down the corresponding guidelines:

Art. 212. Definitions. . . .

(m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of to Book.

In his resolution, the Secretary of Labor further elaborated:

. . . Thus, the determinative factor in classifying an employee as managerial, supervisory or

rank-and-file is the nature of the work of the employee concerned.

In National Waterworks and Sewerage Authority vs. National Waterworks and Sewerage
Authority Consolidated Unions (11 SCRA 766) the Supreme Court had the occasion to come
 out with an enlightening dissertation of the nature of the work of a managerial employees as
follows:

. . . that the employee's primary duty consists of the management of the

establishment or of a customarily recognized department or subdivision thereof, that
he customarily and regularly directs the work of other employees therein, that he has
the authority to hire or discharge other employees or that his suggestions and
recommendations as to the hiring and discharging and or to the advancement and
promotion or any other change of status of other employees are given particular
weight, that he customarily and regularly exercises discretionary powers . . . (56 CJS,
pp. 666-668. (p. 226, Rollo)

We shall now discuss the rights of the security guards to self-organize. MERALCO has
questioned the legality of allowing them to join either the rank and file or the supervisory
union, claiming that this is a violation of par. 2, Sec. 1, Rule II, Book V of the Implementing
Rules of RA 6715, which states as follows:

Sec 1. Who may join unions. . . .

xxx xxx xxx
Supervisory employees and security guards 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; . . .
xxx xxx xxx
(emphasis ours)
Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c), Rule V, also of Book V of the implementing
rules of RA 6715:
Rule V.
REPRESENTATION CASES AND
INTERNAL-UNION CONFLICTS
Sec. 1. . . .
Sec. 2. Who may file.Any legitimate labor organization or the employer, when requested to bargain
collectively, may file the petition.
The petition, when filed by a legitimate labor-organization shall contain, among others:
(a) . . .
(b) . . .
(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise
require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall
not include supervisory employees and/or security guards;
xxx xxx xxx
(emphasis ours)

Both rules, barring security guards from joining a rank and file organization, appear to have been
carried over from the old rules which implemented then Art. 245 of the Labor Code, and which
provided thus:

Art. 245. Ineligibility of security personnel to join any labor organization.Security guards
and other personnel employed for the protection and security of the person, properties and
premises of the employer shall not be eligible for membership in any labor organization.
On December 24, 1986, Pres. Corazon C. Aquino issued E.O. No. 111 which eliminated the above-
cited provision on the disqualification of security guards. What was retained was the disqualification
of managerial employees, renumbered as Art. 245 (previously Art. 246), as follows:

Art. 245. Ineligibility of managerial employees to joint any labor organization.Managerial

employees are not eligible to join, assist or form any labor organization.

With the elimination, security guards were thus free to join a rank and file organization.

On March 2, 1989, the present Congress passed RA 6715.2 Section 18 thereof amended Art. 245, to
read as follows:

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. (emphasis ours)

As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying supervisory
employeesfrom membership in a labor organization of the rank-and-file employees. It does not
include security guards in the disqualification.

The implementing rules of RA 6715, therefore, insofar as they disqualify security guards from joining
a rank and file organization are null and void, for being not germane to the object and purposes of
EO 111 and RA 6715 upon which such rules purportedly derive statutory moorings. In Shell
Philippines, Inc. vs. Central Bank, G.R. No. 51353, June 27, 1988, 162 SCRA 628, We stated:

The rule-making power must be confined to details for regulating the mode or proceeding to
carry into effect the law as it has been enacted. The power cannot be extended to amending
or expanding the statutory requirements or to embrace matters not covered by the statute.
Rules that subvert the statute cannot be sanctioned. (citing University of Sto. Tomas vs.
Board of Tax Appeals, 93 Phil. 376).

While therefore under the old rules, security guards were barred from joining a labor organization of
the rank and file, under RA 6715, they may now freely join a labor organization of the rank and file or
that of the supervisory union, depending on their rank. By accommodating supervisory employees,
the Secretary of Labor must likewise apply the provisions of RA 6715 to security guards by favorably
allowing them free access to a labor organization, whether rank and file or supervisory, in
recognition of their constitutional right to self-organization.

We are aware however of possible consequences in the implementation of the law in allowing
security personnel to join labor unions within the company they serve. The law is apt to produce
divided loyalties in the faithful performance of their duties. Economic reasons would present the
employees concerned with the temptation to subordinate their duties to the allegiance they owe the
union of which they are members, aware as they are that it is usually union action that obtains for
them increased pecuniary benefits.

Thus, in the event of a strike declared by their union, security personnel may neglect or outrightly
abandon their duties, such as protection of property of their employer and the persons of its officials
and employees, the control of access to the employer's premises, and the maintenance of order in
the event of emergencies and untoward incidents.
It is hoped that the corresponding amendatory and/or suppletory laws be passed by Congress to
avoid possible conflict of interest in security personnel.1wphi1

ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with modification the Resolution of
the Secretary of Labor dated November 3, 1989 upholding an employee's right to self-organization.
A certification election is hereby ordered conducted among supervisory employees of MERALCO,
belonging to Pay Grades VII and above, using as guideliness an employee's power to either
recommend or execute management policies, pursuant to Art. 212 (m), of the Labor Code, as
amended by Sec. 4 of RA 6715, with respondents STEAM-PCWF and FLAMES as choices.

Employees of the Patrol Division, Treasury Security Services Section and Secretaries may freely join
either the labor organization of the rank and file or that of the supervisory union depending on their
employee rank. Disqualified employees covered by Sec. 3, Art. I of the MEWA-CBA, shall remain
with the existing labor organization of the rank and file, pursuant to the Secretary of Labor's directive:

By the parties' own agreement, they find the bargaining unit, which includes the positions
enumerated in Section 3, Article I of their CBA, appropriate for purposes of collective
bargaining. The composition of the bargaining unit should be left to the agreement of the
parties, and unless there are legal infirmities in such agreement, this Office will not substitute
its judgment for that of the parties. Consistent with the story of collective bargaining in the
company, the membership of said group of employees in the existing rank-and-file unit
should continue, for it will enhance stability in that unit already well establish. However, we
cannot approve of the condition set in Section 3, Article I of the CBA that the employees
covered are automatically disqualified from becoming union members. The condition unduly
restricts the exercise of the right to self organization by the employees in question. It is
contrary to law and public policy and, therefore, should be considered to have not been
written into the contract. Accordingly, the option to join or not to join the union should be left
entirely to the employees themselves. (p. 229, Rollo)

The Temporary Restraining Order (TRO) issued on February 26, 1990 is hereby LIFTED. Costs
against petitioner.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Sarmiento, Grio-Aquino, Regalado and Davide, Jr., JJ., concur.

Footnotes

1
This CBA expired on November 30, 1989. There is an on-going CBA negotiation with
National Capitol Region, Dole, per Comment of FLAMES, dated March 6, 1990, p.
248, Rollo.

2
Published in two newspapers, the law took effect on March 21, 1989.
 [G.R. No. 113638. November 16, 1999]

A. D. GOTHONG MANUFACTURING CORPORATION EMPLOYEES UNION-ALU, petitioner,

vs. HON. NIEVES CONFESOR, SECRETARY, DEPARTMENT OF LABOR AND
EMPLOYMENT and A. D. GOTHONG MANUFACTURING CORPORATION, Subangdaku,
Mandaue City, respondents.

DECISION
GONZAGA_REYES, J.:

Petitioner A. D. Gothong Manufacturing Corporation Employees Union-ALU seeks to reverse

and set aside the decision of the Secretary of Labor promulgated on September 30, 1993 affirming
in toto the Resolution of Mediator-Arbiter, Achilles V. Manit declaring Romulo Plaza and Paul
Michael Yap as rank- and-file employees of A. D. Gothong Manufacturing Corporation.
On May 12, 1993, petitioner A. D. Gothong Manufacturing Corporation Employees Union-ALU
(Union) filed a petition for certification election in its bid to represent the unorganized regular rank-
and-file employees of respondent A. D. Gothong Manufacturing Corporation (Company) excluding its
office staff and personnel. Respondent Company opposed the petition as it excluded office
personnel who are rank and file employees. In the inclusion-exclusion proceedings, the parties
agreed to the inclusion of Romulo Plaza and Paul Michael Yap in the list of eligible voters on
condition that their votes are considered challenged on the ground that they were supervisory
employees.
The certification election was conducted as scheduled and yielded the following results:

YES - - - - - - - - - - - - - - - 20

NO - - - - - - - - - - - - - - - - 19

Spoiled - - - - - - - - - - - - - - 0

Challenged - - -- - - - - - - - _2

Total votes cast - - - - - - - -41

Both Plaza and Yap argued that they are rank-and-file employees. Plaza claimed that he was a
mere salesman based in Cebu, and Yap argued that he is a mere expediter whose job includes the
facilitation of the processing of the bills of lading of all intended company shipments.
Petitioner Union maintains that both Plaza and Yap are supervisors who are disqualified to join
the proposed bargaining unit for rank-and-file employees. In support of its position paper, the
petitioner Union submitted the following:
1. Joint affidavit of Ricardo Caete, et al. which alleges that Michael Yap is a supervisory employee of A. D.
Gothong Manufacturing Corporation and can effectively recommend for their suspension/dismissal.
2. Affidavit of Pedro Diez which alleges that the affiant is a supervisor in the production department of A.
D. Gothong Manufacturing Corporation; that the affiant knows the challenged voters because they are
also supervisory employees of the same corporation; that the challenged voters used to attend the
quarterly meeting of the staff employees of A. D. Gothong Manufacturing Corporation;
 3. Photocopy of the memorandum dated January 4, 1991 regarding the compulsory attendance of
department heads/supervisors to the regular quarterly meeting of all regular workers of A. D. Gothong
Manufacturing Corporation on January 13, 1991. Appearing therein are the names ROMULO PLAZA
and MICHAEL YAP;
4. A not-so-legible photocopy of a memorandum dated March 1, 1989 wherein the name ROMY PLAZA is
mentioned as the acting OIC of GT Marketing in Davao; and
5. Photocopy of the minutes of the regular quarterly staff meeting on August 13, 1989 at Mandaue City
wherein Michael Yap is mentioned as a shipping assistant and a newly hired member of the staff. [1]

The Med-Arbiter declared that the challenged voters Yap and Plaza are rank-and-file
employees.
Petitioner Union appealed to the Secretary of Labor insisting that Yap and Plaza are supervisor
and manager respectively of the corporation and are prohibited from joining the proposed bargaining
unit of rank-and-file employees. In an attempt to controvert the arguments of petitioner, respondent
Company stressed that Pacita Gothong is the companys corporate secretary and not Baby L.
Siador, who signed the minutes of the meeting submitted in evidence. Respondent also argued that
Romulo Plaza could not qualify as a manager of the Davao Branch the opening of which branch
never materialized.
Respondent Secretary of Labor affirmed the finding of the Med-Arbiter. Motion for
Reconsideration of the above resolution having been denied, petitioner Union appeals to this Court
by petition for review on certiorari alleging the following grounds:
I. THAT THE SECRETARY OF LABOR AND EMPLOYMENT CLEARLY COMMITTED
MISAPPREHENSION OF FACTS/EVIDENCE AND IF IT WERE NOT FOR SUCH
MISAPPREHENSION IT WOULD HAVE ARRIVED AT DIFFERENT CONCLUSION FAVORABLE TO
PETITIONER.
II. THAT THE SECRETARY OF LABOR AND EMPLOYMENT ACTED WITH GRAVE ABUSE OF
DISCRETION AND CONTRARY TO LAW IN AFFIRMING IN TOTO THE DECISION OF HONORABLE
ACHILLES V. MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE No. 7,
CEBU CITY IN DENYING PETITIONERS MOTION FOR RECONSIDERATION.[2]

We find no merit in the instant petition.

The Labor Code recognizes two (2) principal groups of employees, namely, the managerial and
the rank and file groups. Article 212 (m) of the Code provides:

(m) Managerial employee is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees.Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of independent judgment. All employees not falling within any
of the above definitions are considered rank-and-file employees for purposes of this Book.

Under Rule I, Section 2 (c), Book III of the Implementing Rules of the Labor Code, to be a
member of managerial staff, the following elements must concur or co-exist, to wit: (1) that his
primary duty consists of the performance of work directly related to management policies; (2) that he
customarily and regularly exercises discretion and independent judgment in the performance of his
functions; (3) that he regularly and directly assists in the management of the establishment; and (4)
that he does not devote more than twenty percent of his time to work other than those described
above.
In the case of Franklin Baker Company of the Philippines vs. Trajano[3], this Court stated:
The test of supervisory or managerial status depends on whether a person possess authority to act
in the interest of his employer in the matter specified in Article 212 (k) of the Labor Code and Section
1 (m) of its Implementing Rules and whether such authority is not merely routinary or clerical in
nature, but requires the use of independent judgment. Thus, where such recommendatory powers
as in the case at bar, are subject to evaluation, review and final action by the department heads and
other higher executives of the company, the same, although present, are not exercise of
independent judgment as required by law.[4]

It has also been established that in the determination of whether or not certain employees are
managerial employees, this Court accords due respect and therefore sustains the findings of fact
made by quasi-judicial agencies which are supported by substantial evidence considering their
expertise in their respective fields.[5]
The petition has failed to show reversible error in the findings of the Med-Arbiter and the
Secretary of the Department of Labor.
In ruling against petitioner Union, the Med-Arbiter ruled that the petitioner Union failed to
present concrete and substantial evidence to establish the fact that challenged voters are either
managerial or supervising employees; the Med-Arbiter evaluated the evidence as follows:

The said joint affidavit of Ricardo Caete, et al. and that of Pedro Diez merely tagged the challenged
voters as supervisors, but nothing is mentioned about their respective duties, powers and
prerogatives as employees which would have indicated that they are indeed supervisory
employees. There is no statement about an instance where the challenged voters effectively
recommended such managerial action which required the use of independent judgment.

The aforementioned documents have not been properly identified which renders them inadmissible
in evidence. But, granting that they are the exact replica of a genuine and authentic original copy,
there is nothing in them which specifically and precisely tells that the challenged voters can exercise
the powers and prerogatives to effectively recommended such managerial actions which require the
use of independent judgment.[6]

In upholding the above findings, the respondent Secretary of Labor rationalized:

Based on the foregoing, Romulo Plaza and Paul Michael Yap can not qualify as managerial and
supervisory employees, respectively, because there is nothing in the documentary evidence offered
by herein petitioner-appellant showing that they are actually conferred or actually exercising the said
managerial/supervisory attributes.

In the case of Romulo Plaza, we note that indeed there is nothing in the minutes of the staff meeting
held on 05 March 1993, particularly on the report of the Sales Department, indicating that said
appellee had been exercising managerial prerogatives by hiring workers and issuing a check for the
payment of rentals of a warehouse, relative to the company branch in Davao City. The imputation on
the exercise of the said prerogative is misleading if not malicious because a plain reading of that
portion of the report shows in clear and simple language that one who made the said hiring and
payment was no other than Mr. John Chua, the Sales Manager. The only instance when the name of
Romy Plaza was mentioned in the said report was in reference to his designation as an OIC of the
Davao City Branch while all the aspect of the creation of the said branch is awaiting final approval by
the Company president and general manager (p. 197, last paragraph, records). The setting up of
said branch however, did not materialize, as evidenced by the certification issued by the Revenue
District Office and Office of the Mayor in Davao City (pp. 198-199, records).
Likewise, evidence pinpointing that Paul Michael Yap is a supervisory employee is altogether
lacking. The fact that he was designated as shipping assistant/expediter is of no moment, because
titles or nomenclatures attached to the position is not controlling.

Finally, the job descriptions extant on records vividly exhibit no trace of the performance of
managerial or supervisory functions (pp. 124-126, records).[7]

In this petition, petitioner Union claims that the documentary evidence was misapprehended by
public respondent. Petitioner Union reiterates that: (1) in minutes of the staff meeting of respondent
Company on August 13, 1989, duly signed by the President Albino Gothong and attested by Jose F.
Loseo presiding officer/VP and Gertrudo Lao, Assistant General Manager, Paul Michael Yap was
listed as one of the staff; (2) in the regular quarterly meeting on January 4, 1991, the names of Yap
and Plaza are listed under the heading Department Heads/Supervisors duly signed by
President/General Manager Albino Gothong and Asst. General Manager Gertrudo Lao; and (3) in
the staff meeting of March 5, 1993, Plaza was assigned as officer-in-charge of the companys branch
in Davao.
We find no cogent reason to disturb the finding of the Med-Arbiter and the Secretary of Labor
that the copies of the minutes presented in evidence do not prove that Yap and Plaza were
managerial or supervisory employees. We have examined the documentary evidence, and nowhere
is there a statement therein about any instance where the challenged voters effectively
recommended any managerial action which would require the use of independent judgment. The last
piece of evidence was not discussed by the Med-Arbiter; however a perusal thereof would show that
while one J. Chua of the Sales Department reported that Romy Plaza was in Davao right now acting
as OIC, the same document states that the Davao operations still had to be finalized. On the other
hand, the claim of respondent Company that Plaza is the head of the Davao branch is belied by the
certification of the City Treasurer of Davao and of the Bureau of Internal Revenue of Mandaue City
that the plan to open a branch in Davao City did not materialize.[8]
The reliance of petitioner on the affidavit of Jose Loseo, Personnel Manager, that Plaza and
Yap were hired by him as department head and supervisor of the respondent Company cannot be
sustained in light of the affidavit of said Loseo dated September 28, 1993, attesting that he was
forced to sign the earlier memorandum on the job assignment of Yap and Plaza. This affidavit is
sought to be discarded by respondent Company for being perjurious and ill-motivated.[9] Petitioner
Union however reiterates that Loseos affidavit is corroborated by the other public documents
indicating that Plaza and Yap are not rank-and-file employees.[10]
The issue raised herein is basically one of fact: whether in the light of the evidence submitted by
both parties, Plaza and Yap are managerial employees or rank-and-file employees.
This Court is not a trier of facts. As earlier stated, it is not the function of this Court to examine
and evaluate the probative value of all evidence presented to the concerned tribunal which formed
the basis of its impugned decision or resolution. Following established precedents, it is inappropriate
to review that factual findings of the Med-Arbiter regarding the issue whether Romulo Plaza and Paul
Michael Yap are or are not rank-and-file employees considering that these are matters within their
technical expertise.[11] They are binding on this Court as we are satisfied that they are supported by
substantial evidence, and we find no capricious exercise of judgment warranting reversal
by certiorari.
WHEREFORE, the petition is denied for lack of merit.
No pronouncement as to costs.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.
G.R. No. 101738 April 12, 2000

PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner,

vs.
HON. BIENVENIDO E. LAGUESMA, Undersecretary of Labor and Employment, HON. HENRY
PABEL, Director of the Department of Labor and Employment Regional Office No. XI and/or
the Representation Officer of the Industrial Relations Division who will act for and in his
behalf, PCOP- BISLIG SUPERVISORY AND TECHNICAL STAFF EMPLOYEES UNION,
ASSOCIATED LABOR UNION and FEDERATION OF FREE WORKERS, respondents.

DE LEON, JR., J.:

Before us is a petition for certiorari seeking to annul the Resolution1 and the Order2 dated April 17,
1991 and August 7, 1991, respectively, of public respondent Bienvenido E. Laguesma, acting then
as Undersecretary, now the Secretary, of the Department of Labor and Employment (DOLE), which
reversed the Order dated March 27, 19903 of Med-Arbiter Phibun D. Pura declaring that supervisors
and section heads of petitioner under its new organizational structure are managerial employees and
should be excluded from the list of voters for the purpose of a certification election among
supervisory and technical staff employees of petitioner.4

The facts of the case are the following:

Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the manufacture of
paper and timber products, with principal place of operations at Tabon, Bislig, Surigao del Sur. It has
over 9,0005 employees, 9446 of whom are supervisory and technical staff employees. More or less
487 of these supervisory and technical staff employees are signatory members of the private
respondent PICOP-Bislig Supervisory and Technical Staff Employees Union (PBSTSEU).7

On August 9, 1989, PBSTSEU instituted a Petition8 for Certification Election to determine the sole
and exclusive bargaining agent of the supervisory and technical staff employees of PICOP for
collective bargaining agreement (CBA) purposes.

In a Notice9 dated August 10, 1989, the initial hearing of the petition was set on August 18, 1989 but
it was reset to August 25, 1989, at the instance of PICOP, as it requested a fifteen (15) day period
within which to file its comments and/or position paper. But PICOP failed to file any comment or
position paper. Meanwhile, private respondents Federation of Free Workers (FFW) and Associated
Labor Union (ALU) filed their respective petitions for intervention.

On September 14, 1989, Med-Arbiter Arturo L. Gamolo issued an Order 10 granting the petitions for
interventions of the FFW and ALU. Another Order 11 issued on the same day set the holding of a
certification election among PICOP's supervisory and technical staff employees in Tabon, Bislig,
Surigao del Sur, with four (4) choices, namely: (1) PBSTSEU; (2) FFW; (3) ALU; and (4) no union.

On September 21, 1989, PICOP appealed 12 the Order which set the holding of the certification
election contending that the Med-Arbiter committed grave abuse of discretion in deciding the case
without giving PICOP the opportunity to file its comments/answer, and that PBSTSEU had no
personality to file the petition for certification election.
After PBSTSEU filed its Comments 13 to petitioner's appeal, the Secretary of the Labor 14 issued a
Resolution 15dated November 17, 1989 which upheld the Med-Arbiter's Order dated September 17,
1989, with modification allowing the supervising and staff employees in Cebu, Davao and Iligan City
to participate in the certification election.

During the pre-election conference on January 18, 1990, PICOP questioned and objected to the
inclusion of some section heads and supervisors in the list of voters whose positions it averred were
reclassified as managerial employees in the light of the reorganization effected by it. 16 Under the
Revised Organizational Structure of the PICOP, the company was divided into four (4) main
business groups, namely: Paper Products Business, Timber Products Business, Forest Resource
Business and Support Services Business. A vice- president or assistant vice-president heads each
of these business groups. A division manager heads the divisions comprising each business group.
A department manager heads the departments comprising each division. Section heads and
supervisors, now called section managers and unit managers, head the sections and independent
units, respectively, comprising each department. 17 PICOP advanced the view that considering the
alleged present authority of these section managers and unit managers to hire and fire, they are
classified as managerial employees, and hence, ineligible to form or join any labor organization. 18

Following the submission by the parties of their respective position papers 19 and evidence 20 on this
issue, Med-Arbiter Phibun D. Pura issued an Order 21 dated March 27, 1990, holding that
supervisors and section heads of the petitioner are managerial employees and therefore excluded
from the list of voters for purposes of certification election.

PBSTSEU appealed 22 the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU
likewise appealed. 23PICOP submitted evidence militating against the appeal. 24 Public respondent
Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the assailed
Order 25 dated April 17, 1991 setting aside the Order dated March 27, 1990 of the Med-Arbiter and
declaring that the subject supervisors and section heads are supervisory employees eligible to vote
in the certification election.

PICOP sought 26 reconsideration of the Order dated April 7, 1991. However, public respondent in his
Order 27dated August 7, 1991 denied PICOP's motion for reconsideration.

Hence, this petition.

PICOP anchors its petition on two (2) grounds, to wit:

I.

THE PUBLIC RESPONDENT HONORABLE BIENVENIDO E. LAGUESMA,

UNDERSECRETARY OF LABOR AND EMPLOYMENT, IN A CAPRICIOUS, ARBITRARY
AND WHIMSICAL EXERCISE OF POWER ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION, TANTAMOUNT TO ACTING WITHOUT OR IN EXCESS OF JURISDICTION
WHEN HE DENIED YOUR PETITIONER'S PLEA TO PRESENT ADDITIONAL EVIDENCE
TO PROVE THAT SOME OF ITS MANAGERIAL EMPLOYEES ARE DISQUALIFIED FROM
JOINING OR FORMING A UNION REPRESENTED BY CO-RESPONDENT PBSTSEU, IN
VIEW OF A SUPERVENING EVENT BROUGHT ABOUT BY THE CHANGES IN THE
ORGANIZATIONAL STRUCTURE OF YOUR PETITIONER WHICH WAS FULLY
IMPLEMENTED IN JANUARY 1991 AFTER THE CASE WAS ELEVATED ON APPEAL
AND SUBMITTED FOR DECISION.

II.
 THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA, ALSO ERRED
AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ARBITRARILY
ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE TOTALLY
DISREGARDED THE DOCUMENTARY EVIDENCE SO FAR SUBMITTED BY YOUR
PETITIONER AND RELIED MAINLY ON THE UNSUBSTANTIATED CLAIM AND MERE
ALLEGATIONS OF PRIVATE RESPONDENT, PBSTSEU, THAT THE REORGANIZATION
OF YOUR PETITIONER WAS A SHAM AND CALCULATED MERELY TO FRUSTRATE
THE UNIONIZATION OF YOUR PETITIONER'S SUPERVISORY PERSONNEL; AND
SOLELY ON THIS BASIS, DENIED YOUR PETITIONER'S URGENT MOTION FOR
RECONSIDERATION. 28

PICOP's main thesis is that the positions Section Heads and Supervisors, who have been
designated as Section Managers and Unit Managers, as the case may be, were converted to
managerial employees under the decentralization and reorganization program it implemented in
1989. Being managerial employees, with alleged authority to hire and fire employees, they are
ineligible for union membership under Article 245 29 of the Labor Code. Furthermore, PICOP
contends that no malice should be imputed against it for implementing its decentralization program
only after the petition for certification election was filed inasmuch as the same is a valid exercise of
its management prerogative, and that said program has long been in the drawing boards of the
company, which was realized only in 1989 and fully implemented in 1991. PICOP emphatically
stresses that it could not have conceptualized the decentralization program only for the purpose of
"thwarting the right of the concerned employees to self-organization."

The petition, not being meritorious, must fail and the same should be as it is hereby dismissed.

First. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, 30 we had occasion to elucidate
on the term "managerial employees." Managerial employees are ranked as Top Managers, Middle
Managers and First Line Managers. Top and Middle Managers have the authority to devise,
implement and control strategic and operational policies while the task of First-Line Managers is
simply to ensure that such policies are carried out by the rank-and- file employees of an
organization. Under this distinction, "managerial employees" therefore fall in two (2) categories,
namely, the "managers" per se composed of Top and Middle Managers, and the "supervisors"
composed of First-Line Managers. 31 Thus, the mere fact that an employee is designated "manager"
does not ipso facto make him one. Designation should be reconciled with the actual job description
of the employee, 32 for it is the job description that determines the nature of employment. 33

In the petition before us, a thorough dissection of the job description 34 of the concerned supervisory
employees and section heads indisputably show that they are not actually managerial but only
supervisory employees since they do not lay down company policies. PICOP's contention that the
subject section heads and unit managers exercise the authority to hire and fire 35 is ambiguous and
quite misleading for the reason that any authority they exercise is not supreme but merely advisory
in character. Theirs is not a final determination of the company policies inasmuch as any action
taken by them on matters relative to hiring, promotion, transfer, suspension and termination of
employees is still subject to confirmation and approval by their respective superior. 36 Thus, where
such power, which is in effect recommendatory in character, is subject to evaluation, review and final
action by the department heads and other higher executives of the company, the same, although
present, is not effective and not an exercise of independent judgment as required by law. 37

Second. No denial of due process can be ascribed to public respondent Undersecretary Laguesma
for the latter's denial to allow PICOP to present additional evidence on the implementation of its
program inasmuch as in the appeal before the said public respondent, PICOP even then had already
submitted voluminous supporting documents. 38 The record of the case is replete with position
papers and exhibits that dealt with the main thesis it relied upon. What the law prohibits is the lack of
opportunity to be heard. 39 PICOP has long harped on its contentions and these were dealt upon and
resolved in detail by public respondent Laguesma. We see no reason or justification to deviate from
his assailed resolutions for the reason that law and jurisprudence aptly support them.1wphi1

Finally, considering all the foregoing, the fact that PICOP voiced out its objection to the holding of
certification election, despite numerous opportunities to ventilate the same, only after respondent
Undersecretary of Labor affirmed the holding thereof, simply bolstered the public respondents'
conclusion that PICOP raised the issue merely to prevent and thwart the concerned section heads
and supervisory employees from exercising a right granted them by law. Needless to stress, no
obstacle must be placed to the holding of certification elections, for it is a statutory policy that should
not be circumvented. 40

WHEREFORE, the petition is hereby DISMISSED, and the Resolution and Order of public
respondent Bienvenido E. Laguesma dated April 17, 1991 and August 17, 1991, respectively, finding
the subject supervisors and section heads as supervisory employees eligible to vote in the
certification election are AFFIRMED. Costs against petitioner.

SO ORDERED.1wphi1.nt

Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.

 [G.R. No. 96663. August 10, 1999]

PEPSI - COLA PRODUCTS PHILIPPINES, INC., petitioner, vs. HONORABLE SECRETARY OF

LABOR, MED - ARBITER NAPOLEON V. FERNANDO & PEPSI - COLA SUPERVISORY
EMPLOYEES ORGANIZATION - UOEF, respondents.

[G.R. No. 103300. August 10, 1999]

PEPSI COLA PRODUCTS PHILIPPINES, petitioner, vs. OFFICE OF THE SECRETARY

DEPARTMENT OF LABOR AND HON. CELENIO N. DAING, in his capacity as Med-
Arbiter Labor Regional Office No. X, Cagayan de Oro City, CAGAYAN DE ORO PEPSI
COLA SUPERVISORS UNION (UOEF), respondents.

DECISION
PURISIMA, J.:

These are petitions for certiorari relating to three (3) cases filed with the Med-Arbiter, to wit:
MED ARB ROX Case No. R100-9101-RU-002 for Certification Election filed by Pepsi Cola
Supervisors Union-UOEF (Union), MED ARB Case No. R1000-9102-RU-008, Re: Petition to Set
Aside, Cancel and/ or Revoke the Charter Affiliation of the Union, and MED-ARB ROX Case No.
R1000-9104-RU-012, for Cancellation of Registration Certificate No. 11492-LC in favor of the Union.

G. R. No. 96663

The facts that matter can be culled as follows:

Sometime in June 1990, the Pepsi-Cola Employees Organization-UOEF (Union) filed a petition
for certification election with the Med-Arbiter seeking to be the exclusive bargaining agent of
supervisors of Pepsi-Cola Philippines, Inc. (PEPSI).
On July 12, 1990, the Med-Arbiter granted the Petition, with the explicit statement that it was an
affiliate of Union de Obreros Estivadores de Filipinas (federation) together with two (2) rank and file
unions, Pepsi-Cola Labor Unity (PCLU) and Pepsi-Cola Employees Union of the Philippines (PEUP).
On July 23, 1990, PEPSI filed with the Bureau of Labor Relations a petition to Set Aside, Cancel
and/or Revoke Charter Affiliation of the Union, entitled PCPPI v. PCEU-UOEF and docketed as
Case No. 725-90, on the grounds that (a) the members of the Union were managers and (b) a
supervisors union can not affiliate with a federation whose members include the rank and file union
of the same company.
On August 29,1990, PEPSI presented a motion to re-open the case since it was not furnished
with a copy of the Petition for Certification Election.
On September 4, 1990, PEPSI submitted its position paper to the BLR in Case No. 725-90.
 On September 21, 1990, PEPSI received summons to appear at the pre-trial conference set on
September 25, 1990 but which the hearing officer rescheduled on October 21, 1990.
On October 12, 1990, PEPSI filed a Notice of Appeal and Memorandum of Appeal with the
Secretary of Labor, questioning the setting of the certification election on the said date and five (5)
days after. It also presented an urgent Ex-Parte Motion to Suspend the Certification Election, which
motion was granted on October 18, 1990.
On November 12, 1990, the Secretary of Labor denied the appeal and Motion for
Reconsideration. Even as the Petition to Cancel, Revoke and Suspend Union Charter Certificate
was pending before the BLR, PEPSI found its way to this Court via the present petition for certiorari.
On February 6, 1991, the Court granted the prayer for temporary restraining order and/or
preliminary injunction.
The pivot of inquiry here is: whether or not a supervisors union can affiliate with the same
Federation of which two (2) rank and file unions are likewise members, without violating Article 245
of the Labor Code (PD 442), as amended, by Republic Act 6715, which 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.

In its Comment dated March 19, 1991, the Federation argued that:

The pertinent portion of Article 245 of the Labor Code states that. 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 organization of their own.

This provision of law does not prohibit a local union composed of supervisory employees from being
affiliated to a federation which has local unions with rank-and-file members as affiliates.

xxx xxx xxx

xxx the Petition to Cancel, Revoke or Set Aside the Charter Certificate of the private respondent is
anchored on the alleged ground that certain managerial employees are included as members
thereof. The grounds for the cancellation of the registration certificate of a labor organization are
provided in Section 7 of Rule II, Book V of the Omnibus Rules Implementing the Labor Code, and
the inclusion of managerial employees is not one of the grounds. xxx (in this case, the private
respondent herein) remains to be a legitimate labor organization.[1]

On April 8, 1991, the Secretary of Labor and Employment, through the Office of the Solicitor
General, sent in a Comment, alleging inter alia, that:

xxx under Article 259 of the New Labor Code, only orders of the Med-Arbiter can be appealed
through the Secretary of Labor and only on the ground that the rules and regulations for the conduct
of the certification election have been violated. The Order of the Representation Officer is
interlocutory and not appealable. xxx

xxx until and unless there is a final order cancelling its certificate of registration or charter certificate,
a labor organization remains to be a legitimate labor organization entitled to exercise all the rights
and duties accorded to it by the Labor Code including the right to be certified as a bargaining
representative. xxx

xxx Public respondent cannot be deemed to have committed grave abuse of discretion with respect
to an issue that was never presented before it for resolution. xxx

Article 245 of the New Labor Code does not preclude the supervisors union and the rank-and-file
union from being affiliated with the same federation.

xxx xxx xxx

A federation of local union is not the labor organization referred to in Article 245 but only becomes
entitled to all the rights enjoyed by the labor organization (at the company level) when it has
complied with the registration requirements found in Articles 234 and 237. Hence, what is prohibited
by Article 245 is membership of supervisory employees in a labor union (at the company level) of the
rank and file. xxx

xxx In other words, the affiliation of the supervisory employees union with the same federation with
which the rank and file employees union is affiliated did not make the supervisory employees
members of the rank and file employees union and vice versa.[2] xxx

PEPSI, in its Reply dated May 7, 1991, asserted:

It is our humble contention that a final determination of the Petition to Set-Aside, Cancel, Revoke
Charter Union Affiliation should first be disposed of before granting the Petition for the Conduct of
Certification Election. To allow the conduct of the certification election to proceed would make any
decision arrived at by the Bureau of Labor Relations useless inasmuch as the same would
necessarily be rendered moot and academic.[3]

On June 7, 1991, petitioner again filed a Supplemental Reply stressing:

It is likewise stressed that officials of both the PCLU and PEUP are top ranking officers of UOEF, the
federation of supervisors union, to wit:

POSITION IN RANK AND FILE POSITION IN FEDERATION

UNION

1. Rogelio de la Cruz PCLU -President General Vice President

2. Felix Gatela PEUP - President General Treasurer
3. Carlito Epino PCLU Board Member Educational Research
Director

xxx xxx xxx

The respondent supervisory union could do indirectly what it could not do directly as the simple
expedient of affiliating with UOEF would negate the manifest intent and letter of the law that
supervisory employees can only join, assist or form separate labor organizations of their own and
cannot be eligible for membership in a labor organization of the rank and file employees.[4]

On August 6, 1991, the Secretary of Labor and Employment filed a Rejoinder, claiming thus:
xxx an employer has no legal standing to question the validity of a certification election.

xxx For this reason, the Supreme Court has consistently held that, as a rule, a certification election is the sole and
exclusive concern of the employees and that the employer is definitely an intruder or a mere bystander (Consolidated
Farms vs. Noriel, L-47752, July 31, 1978, 84 SCRA 469; Filipino Metals Corporation vs. Ople, L- 43861, September
4, 1981, 107 SCRA 211; Trade Unions of the Philippines and Allied Services (TUPAS) vs. Trajano No. L-61153,
January 17, 1983, 120 SCRA 64].

xxx xxx xxx

In Adamson & Adamson, Inc. vs. CIR No. L-35120, January 31, 1984, 127 SCRA 268, the Supreme
Court (then dealing with the interpretation of Section 3 of the Industrial Peace Act, from which
Section 245 of the Labor Code was derived) grappled with the issue in the case at bar. It held that,

There is nothing in the provisions of the Industrial Peace Act which provides that a duly registered
local union affiliating with a national union or federation loses its legal personality, or its
independence.

xxx xxx xxx

However, there is absolutely nothing in the Labor Code that prohibits a federation from representing
or exercising influence over its affiliates. On the contrary, this is precisely the reason why federations
are formed and are allowed by law to exist.[5]

On November 8, 1991, the Union also filed a Rejoinder.

On December 9, 1991, the Court resolved to DISMISS the case for failure to sufficiently show
that the questioned judgment is tainted with grave abuse of discretion.
In a Resolution dated March 2, 1992, the Second Division of the Court resolved to grant the
motion for reconsideration interposed on January 28, 1992.

G.R. No. 103300

What are assailed in this case is Med-Arbiter Order dated May 23, 1991 and the Decision and
Order of the Secretary of Labor and Employment, dated October 4, 1991 and December 12, 1991,
respectively.
The decretal portion of the Med-Arbiter Order under attack, reads:

WHEREFORE, premises considered, an order is hereby issued:

1. Dismissing MED ARB ROX CASE NO. R1000-919104-RU-012 and R1000-9102-RU-008 for lack
of merit; and

2. Ordering the conduct of a Certification Election to be participated by and among the supervisory
workers of the respondent company, Pepsi-Cola Products Philippines, Inc. at its plant at Tin-ao,
Cagayan de Oro City, including all the satellite warehouse within the territorial coverage and control
of the Cagayan de Oro Pepsi-Cola Plant. The choices are as follows:

1. Cagayan de Oro Pepsi-Cola Supervisors Union (U.O.E.P.)

2. No union

The parties are directed to attend a pre-election conference on June 10, 1991, 2:30 p.m. at the
Regional Office to determine the qualification of the voters and to thresh out the mechanics of the
election.Respondent/employer is directed to submit five (5) copies of the names of the rank and file
workers taken from the payroll on October 1-31, 1991, alphabetically arranged (sic) indicating their
names and positions and dates of employment and to bring the aforementioned payroll during the
pre-election conference for verification purposes.[6] xxx

The supervisory employees of the Union are:

POSITION
1. Felipe Valdehueza Route Manager
2. Gerberto Vertudazo C & C Manager
3. Paul Mendoza Sales Service Department Manager
4. Gilberto Emano, Jr. Route Manager
5. Jaime Huliganga Chief Checker
6. Elias Edgama, Sr. Accounting Manager
7. Romanico Ramos Route Manager
8. Raul Yacapin Route Manager
9. Jovenal Albaque Route Manager
10. Fulvio Narciso Route Manager
11. Apolinario Opiniano Route Manager
12. Alfredo Panas Route Manager
13. Simplicio Nelie Route Manager
14. Arthur Rodriguez Route Manager
15. Marco Ilano Warehouse Operations Manager and
16. Deodoro Ramos Maintenance Manager
On June 6, 1991, PEPSI appealed the said Order to the Secretary of Labor and Employment on
the ground of grave abuse of discretion, docketed as Case No. OS-A-232-91.
On October 4, 1991, the Secretary modified the appealed decision, ruling thus:

WHEREFORE, the Order of the Med-Arbiter dated 23 May 1991 is hereby modified to the effect that
MED ARB ROX Case No. R1000-9104-RU-012 and R1000-9102-RU-008 are hereby referred to the
Office of the Regional Director which has jurisdiction over these cases. The call for certification
election among the supervisory workers of the Pepsi-Cola Products Philippines, Inc. at its plant at
Tin-ao, Cagayan de Oro City is hereby sustained.[7]

On October 19, 1991, PEPSI presented a motion for reconsideration of the aforesaid Order but
the same was denied on December 12, 1991.
Meanwhile, the BLR issued Registration Certificate No. 11492-LC in favor of the
Union. Dissatisfied therewith, PEPSI brought the instant petition for certiorari, contending that:

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT PRIVATE

RESPONDENTS OFFICERS AND MEMBERS ARE NOT MANAGERIAL EMPLOYEES;

PRIVATE RESPONDENT IS PROHIBITED FROM AFFILIATING ITSELF WITH A FEDERATION ALREADY

AFFILIATED WITH THE RANK AND FILE UNION;
PUBLIC RESPONDENT COMMITTED GRAVE OF (SIC) ABUSE OF DISCRETION IN RULING THAT THE
INSTITUTION OF A PETITION FOR CANCELLATION OF UNION REGISTRATION DOES NOT CONSTITUTE A
PREJUDICIAL QUESTION TO A PETITION CERTIFICATION ELECTION.[8]

The petitions must fail for want of merit.

At the outset, it must be stressed that on September 1, 1992, there was a Resolution of the
Union withdrawing from the Federation, to wit:

BE IT RESOLVED, as it is hereby RESOLVED, that this UNION WITHDRAW, as it hereby

WITHDRAWS its affiliation from the Union de Obreros Estivadores de Filipinas, and at the same
time, give our thanks to the said federation for its help and guidance rendered to this Union in the
past.[9]

The issue in G.R. No. 96663, whether or not the supervisors union can be affiliated with a
Federation with two (2) rank and file unions directly under the supervision of the former, has thus
become moot and academic in view of the Unions withdrawal from the federation.
In a long line of cases (Narciso Nakpil, et. al., vs. Hon. Crisanto Aragon, et. al.,, G. R. No. L -
24087, January 22, 1980, 95 SCRA 85; Toribio v. Bidin, et. al., G.R. No. L-37960, February 28,
1980, 96 SCRA 361; Gumaua v. Espino, G.R. No. L- 36188 - 37586 February 29, 1980, 96 SCRA
402), the Court dismissed the petition for being moot and academic. In the case of F. C. Fisher v.
Yangco Steamship Co., March 31, 1915, the Court held:

It is unnecessary, however to indulge in academic discussion of a moot question. xxx

xxx The action would have been dismissed at any time on a showing of the facts as they were . The
question left for the court was a moot one. Its Resolution would have been useless. Its judgment
would have been impossible of execution xxx.

However, in the case of University of San Agustin, Inc., et al. vs. Court of Appeals, et al., the
court resolved the case, ruling that even if a case were moot and academic, a statement of the
governing principle is appropriate in the resolution of dismissal for the guidance not only of the
parties but of others similarly situated. xxx[10]
In Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12, [1992] decided by the Third
Division with J. Gutierrez, Jr., as ponente and JJ. Feliciano, Bidin, Romero and now Chief Justice
Davide, Jr., as members it was ratiocinated:
xxx xxx xxx

Thus, if the intent of the law is to avoid a situation where supervisors would merge with the rank-and-
file or where the supervisors labor organization would represent conflicting interests, then a local
supervisors union should not be allowed to affiliate with the national federation of union of rank-and-
file employees where that federation actively participates in union activity in the company.

xxx xxx xxx

The prohibition against a supervisors union joining a local union of rank and file is replete with
jurisprudence. The Court emphasizes that the limitation is not confined to a case of supervisors
wanting to join a rank-and-file union. The prohibition extends to a supervisors local union applying
for membership in a national federation the members of which include local unions of rank and file
employees. The intent of the law is clear especially where, as in this case at bar, the supervisors will
be co-mingling with those employees whom they directly supervise in their own bargaining unit.
 Anent the issue of whether or not the Petition to cancel/revoke registration is a prejudicial
question to the petition for certification election, the following ruling in the case of Association of the
Court of Appeals Employees (ACAE) vs. Hon. Pura Ferrer-Calleja, in her capacity as Director,
Bureau of Labor Relations et. Al., 203 ACRA 597, 598, [1991], is in point, to wit:

xxx It is a well-settled rule that a certification proceedings is not a litigation in the sense that the term
is ordinarily understood, but an investigation of a non-adversarial and fact finding character.
(Associated Labor Unions (ALU) v. Ferrer-Calleja, 179 SCRA 127 [1989]; Philippine Telegraph and
Telephone Corporation v. NLRC, 183 SCRA 451 [1990]. Thus, the technical rules of evidence do not
apply if the decision to grant it proceeds from an examination of the sufficiency of the petition as well
as a careful look into the arguments contained in the position papers and other documents.

At any rate, the Court applies the established rule correctly followed by the public respondent that an
order to hold a certification election is proper despite the pendency of the petition for cancellation of
the registration certificate of the respondent union. The rationale for this is that at the time the
respondent union filed its petition, it still had the legal personality to perform such act absent an
order directing the cancellation.

xxx xxx xxx

As regards the issue of whether or not confidential employees can join the labor union of the
rank and file, what was held in the case of National Association of Trade Unions (NATU) - Republic
Planters Bank Supervisors Chapter vs. Hon. R. D. Torres, et. al., G.R. No. 93468, December 29,
1994, applies to this case. Citing Bulletin Publishing Corporation vs. Sanchez, 144 SCRA 628,635,
Golden Farms vs. NLRC, 175 SCRA 471, and Pier 8 Arrastre and Stevedoring Services, Inc. vs.
Hon. Nieves Roldan-Confessor et al., G.R. No. 110854, February 14, 1995, the Court ruled:

xxx A confidential employee is one entrusted with confidence on delicate matters, or with the
custody, handling, or care and protection of the employers property. While Art. 245 of the Labor
Code singles out managerial employee as ineligible to join, assist or form any labor organization,
under the doctrine of necessary implication, confidential employees are similarly disqualified. This
doctrine states that what is implied in a statute is as much a part thereof as that which is expressed,
as elucidated in several case; the latest of which is Chua v. Civil Service Commission where we
said:

No statute can be enacted that can provide all the details involved in its application. There is always
an omission that may not meet a particular situation. What is thought, at the time of the enactment,
to be an all embracing legislation maybe inadequate to provide for the unfolding events of the
future. So-called gaps in the law develop as the law is enforced. One of the rules of statutory
construction used to fill in the gap is the doctrine of necessary implication xxx, Every statute is
understood, by implication, to contain all such provisions as may be necessary to effectuate its
object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants,
including all such collateral and subsidiary consequences as may be fairly and logically inferred from
its terms. Ex necessitate legis xxx

In applying the doctrine of necessary implication, we took into consideration the rationale behind the
disqualification of managerial employees expressed in Bulletin Publishing Corporation v. Sanchez,
thus xxx if these managerial employees would belong to or be affiliated with a Union, the latter might
not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also
become company dominated with the presence of managerial employees in Union membership.
Stated differently, in the collective bargaining process, managerial employees are supposed to be on
the side of the employer, to act as its representatives, and to see to it that its interest are well
protected. The employer is not assured of such protection if these employees themselves are union
members. Collective bargaining in such a situation can become one-sided. It is the same reason that
impelled this Court to consider the position of confidential employees as included in the
disqualification found in Art. 245 as if the disqualification of confidential employees were written in
the provision. If confidential employees could unionize in order to bargain for advantages for
themselves, then they could be governed by their own motives rather than the interest of the
employers. Moreover, unionization of confidential employees for the purpose of collective bargaining
would mean the extension of the law to persons or individuals who are supposed to act in the
interest of the employers. It is not farfetched that in the course of collective bargaining, they might
jeopardize that interest which they are duty bound to protect. Along the same line of reasoning we
held in Golden Farms, Inc. vs. Ferrer-Calleja reiterated in Philips Industrial Development, Inc.,
NLRC, that confidential employees such as accounting personnel, radio and telegraph operators
who, having access to confidential information, may become the source of undue advantage. Said
employee(s) may act as spy or spies of either party to a collective bargaining agreement.

The Court finds merit in the submission of the OSG that Route Managers, Chief Checkers and
Warehouse Operations Managers are supervisors while Credit & Collection Managers and
Accounting Managers are highly confidential employees. Designation should be reconciled with the
actual job description of subject employees. A careful scrutiny of their job description indicates that
they dont lay down company policies. Theirs is not a final determination of the company policies
since they have to report to their respective superior. The mere fact that an employee is designated
manager does not necessarily make him one. Otherwise, there would be an absurd situation where
one can be given the title just to be deprived of the right to be a member of a union. In the case
of National Steel Corporation v. Laguesma, G. R. No. 103743, January 29,1996, it was stressed
that:

What is essential is the nature of the employees function and not the nomenclature or title given to
the job which determines whether the employee has rank and file or managerial status, or whether
he is a supervisory employee.

WHEREFORE, the petitions under consideration are DISMISSED but subject Decision, dated
October 4, 1991, of the Secretary of Labor and Employment is MODIFIED in that Credit and
Collection Managers and Accounting Managers are highly confidential employees not eligible for
membership in a supervisors union. No pronouncement as to costs.
SO ORDERED.
Melo, (Chairman), Vitug, and Gonzaga-Reyes, JJ., concur.
Panganiban, J., in the result.
 THIRD DIVISION

TUNAY NA PAGKAKAISA NG G.R. No. 162025

MANGGAGAWA SA ASIABREWERY,
Petitioner, Present:

CARPIO MORALES, J.,

- versus - Chairperson,
BRION,
BERSAMIN,
ABAD,* and
VILLARAMA, JR., JJ.

ASIA BREWERY, INC., Promulgated:

Respondent.
August 3, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision[1] dated November 22, 2002 and Resolution[2] dated
January 28, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 55578, granting the
petition of respondent company and reversing the Voluntary Arbitrators Decision[3] dated October 14,
1999.

The facts are:

Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer,
shandy, bottled water and glass products. ABI entered into a Collective Bargaining Agreement
(CBA),[4] effective for five (5) years from August 1, 1997 to July 31, 2002, with Bisig at Lakas ng mga
Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the exclusive bargaining representative
of ABIs rank-and-file employees. On October 3, 2000, ABI and BLMA-INDEPENDENT signed a
renegotiated CBA effective from August 1, 2000 to 31 July 2003.[5]

Article I of the CBA defined the scope of the bargaining unit, as follows:

Section 1. Recognition. The COMPANY recognizes the UNION as the sole

and exclusive bargaining representative of all the regular rank-and-file daily paid
employees within the scope of the appropriate bargaining unit with respect to rates of
pay, hours of work and other terms and conditions of employment. The UNION shall
not represent or accept for membership employees outside the scope of the
bargaining unit herein defined.
 Section 2. Bargaining Unit. The bargaining unit shall be comprised of all
regular rank-and-file daily-paid employees of the COMPANY. However, the following
jobs/positions as herein defined shall be excluded from the bargaining unit, to wit:

1. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
12. Purchasing and Quality Control Staff[6] [EMPHASIS
SUPPLIED.]

Subsequently, a dispute arose when ABIs management stopped deducting union dues from eighty-
one (81) employees, believing that their membership in BLMA-INDEPENDENT violated the CBA.
Eighteen (18) of these affected employees are QA Sampling Inspectors/Inspectresses and Machine
Gauge Technician who formed part of the Quality Control Staff. Twenty (20) checkers are assigned
at the Materials Department of the Administration Division, Full Goods Department of the Brewery
Division and Packaging Division. The rest are secretaries/clerks directly under their respective
division managers.[7]

BLMA-INDEPENDENT claimed that ABIs actions restrained the employees right to self-organization
and brought the matter to the grievance machinery. As the parties failed to amicably settle the
controversy, BLMA-INDEPENDENT lodged a complaint before the National Conciliation and
Mediation Board (NCMB). The parties eventually agreed to submit the case for arbitration to resolve
the issue of [w]hether or not there is restraint to employees in the exercise of their right to self-
organization.[8]

In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-INDEPENDENT after
finding that the records submitted by ABI showed that the positions of the subject employees qualify
under the rank-and-file category because their functions are merely routinary and clerical. He noted
that the positions occupied by the checkers and secretaries/clerks in the different divisions are not
managerial or supervisory, as evident from the duties and responsibilities assigned to them. With
respect to QA Sampling Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI
failed to establish with sufficient clarity their basic functions as to consider them Quality Control Staff
who were excluded from the coverage of the CBA. Accordingly, the subject employees were
declared eligible for inclusion within the bargaining unit represented by BLMA-INDEPENDENT.[9]
On appeal, the CA reversed the Voluntary Arbitrator, ruling that:

WHEREFORE, foregoing premises considered, the questioned decision of

the Honorable Voluntary Arbitrator Bienvenido De Vera is hereby REVERSED and
SET ASIDE, and A NEW ONE ENTERED DECLARING THAT:

a) the 81 employees are excluded from and are not eligible for
inclusion in the bargaining unit as defined in Section 2, Article I of
the CBA;

b) the 81 employees cannot validly become members of respondent

and/or if already members, that their membership is violative of
the CBA and that they should disaffiliate from respondent; and

c) petitioner has not committed any act that restrained or tended to

restrain its employees in the exercise of their right to self-
organization.

NO COSTS.

SO ORDERED.[10]

BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a certification election

was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ng Manggagawa
sa Asia (TPMA) won. As the incumbent bargaining representative of ABIs rank-and-file employees
claiming interest in the outcome of the case, petitioner filed with the CA an omnibus motion for
reconsideration of the decision and intervention, with attached petition signed by the union
officers.[11] Both motions were denied by the CA.[12]

The petition is anchored on the following grounds:

(1)

THE COURT OF APPEALS ERRED IN RULING THAT THE 81 EMPLOYEES ARE

EXCLUDED FROM AND ARE NOT ELIGIBLE FOR INCLUSION IN THE
BARGAINING UNIT AS DEFINED IN SECTION 2, ARTICLE 1 OF THE CBA[;]

(2)

THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES

CANNOT VALIDLY BECOME UNION MEMBERS, THAT THEIR MEMBERSHIP IS
VIOLATIVE OF THE CBA AND THAT THEY SHOULD DISAFFILIATE FROM
RESPONDENT;

(3)

THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER

(NOW PRIVATE RESPONDENT) HAS NOT COMMITTED ANY ACT THAT
RESTRAINED OR TENDED TO RESTRAIN ITS EMPLOYEES IN THE EXERCISE
OF THEIR RIGHT TO SELF-ORGANIZATION.[13]
Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this prohibition to confidential
employees or those who by reason of their positions or nature of work are required to assist or act in
a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly
confidential records.[14] Confidential employees are thus excluded from the rank-and-file bargaining
unit. The rationale for their separate category and disqualification to join any labor organization is
similar to the inhibition for managerial employees because if allowed to be affiliated with a Union, the
latter might not be assured of their loyalty in view of evident conflict of interests and the Union can
also become company-denominated with the presence of managerial employees in the Union
membership.[15] Having access to confidential information, confidential employees may also become
the source of undue advantage. Said employees may act as a spy or spies of either party to a
collective bargaining agreement.[16]

In Philips Industrial Development, Inc. v. NLRC,[17] this Court held that petitioners division
secretaries, all Staff of General Management, Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems are confidential employees not included within the
rank-and-file bargaining unit.[18] Earlier, in Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-
Confesor,[19] we declared that legal secretaries who are tasked with, among others, the typing of
legal documents, memoranda and correspondence, the keeping of records and files, the giving of
and receiving notices, and such other duties as required by the legal personnel of the corporation,
fall under the category of confidential employees and hence excluded from the bargaining unit
composed of rank-and-file employees.[20]

Also considered having access to vital labor information are the executive secretaries of the General
Manager and the executive secretaries of the Quality Assurance Manager, Product Development
Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing
Director, Engineering Manager, Materials Manager and Production Manager.[21]

In the present case, the CBA expressly excluded Confidential and Executive Secretaries from the
rank-and-file bargaining unit, for which reason ABI seeks their disaffiliation from petitioner. Petitioner,
however, maintains that except for Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had
been promoted to monthly paid positions, the following secretaries/clerks are deemed included
among the rank-and-file employees of ABI:[22]
NAME DEPARTMENT IMMEDIATE SUPERIOR

C1 ADMIN DIVISION

1. Angeles, Cristina C. Transportation Mr. Melito K. Tan

2. Barraquio, Carina P. Transportation Mr. Melito K. Tan
3. Cabalo, Marivic B. Transportation Mr. Melito K. Tan
4. Fameronag, Leodigario C. Transportation Mr. Melito K. Tan

1. Abalos, Andrea A. Materials Mr. Andres G. Co

2. Algire, Juvy L. Materials Mr. Andres G. Co
3. Anouevo, Shirley P. Materials Mr. Andres G. Co
 4. Aviso, Rosita S. Materials Mr. Andres G. Co
5. Barachina, Pauline C. Materials Mr. Andres G. Co
6. Briones, Catalina P. Materials Mr. Andres G. Co
7. Caralipio, Juanita P. Materials Mr. Andres G. Co
8. Elmido, Ma. Rebecca S. Materials Mr. Andres G. Co
9. Giron, Laura P. Materials Mr. Andres G. Co
10. Mane, Edna A. Materials Mr. Andres G. Co

xxxx

C2 BREWERY DIVISION

1. Laloon, Daisy S. Brewhouse Mr. William Tan

1. Arabit, Myrna F. Bottling Production Mr. Julius Palmares

2. Burgos, Adelaida D. Bottling Production Mr. Julius Palmares
3. Menil, Emmanuel S. Bottling Production Mr. Julius Palmares
4. Nevalga, Marcelo G. Bottling Production Mr. Julius Palmares

1. Mapola, Ma. Esraliza T. Bottling Maintenance Mr. Ernesto Ang

2. Velez, Carmelito A. Bottling Maintenance Mr. Ernesto Ang

1. Bordamonte, Rhumela D. Bottled Water Mr. Faustino Tetonche

2. Deauna, Edna R. Bottled Water Mr. Faustino Tetonche
3. Punongbayan, Marylou F. Bottled Water Mr. Faustino Tetonche
4. Saguan, Lennie Y. Bottled Water Mr. Faustino Tetonche

1. Alcoran, Simeon A. Full Goods Mr. Tsoi Wah Tung

2. Cervantes, Ma. Sherley Y. Full Goods Mr. Tsoi Wah Tung
3. Diongco, Ma. Teresa M. Full Goods Mr. Tsoi Wah Tung
4. Mabilangan, Evelyn M. Full Goods Mr. Tsoi Wah Tung
5. Rivera, Aurora M. Full Goods Mr. Tsoi Wah Tung
6. Salandanan, Nancy G. Full Goods Mr. Tsoi Wah Tung

1. Magbag, Ma. Corazon C. Tank Farm/ Mr. Manuel Yu Liat

Cella Services

1. Capiroso, Francisca A. Quality Assurance Ms. Regina Mirasol

1. Alconaba, Elvira C. Engineering Mr. Clemente Wong

2. Bustillo, Bernardita E. Electrical Mr. Jorge Villarosa
3. Catindig, Ruel A. Civil Works Mr. Roger Giron
4. Sison, Claudia B. Utilities Mr. Venancio Alconaba

xxxx

C3 PACKAGING DIVISION

1. Alvarez, Ma. Luningning L. GP Administration Ms. Susan Bella

2. Caiza, Alma A. GP Technical Mr. Chen Tsai Tyan
3. Cantalejo, Aida S. GP Engineering Mr. Noel Fernandez
4. Castillo, Ma. Riza R. GP Production Mr. Tsai Chen Chih
5. Lamadrid, Susana C. GP Production Mr. Robert Bautista
6. Mendoza, Jennifer L. GP Technical Mr. Mel Oa

As can be gleaned from the above listing, it is rather curious that there would be several
secretaries/clerks for just one (1) department/division performing tasks which are mostly routine and
clerical. Respondent insisted they fall under the Confidential and Executive Secretaries expressly
excluded by the CBA from the rank-and-file bargaining unit. However, perusal of the job descriptions
of these secretaries/clerks reveals that their assigned duties and responsibilities involve routine
activities of recording and monitoring, and other paper works for their respective departments while
secretarial tasks such as receiving telephone calls and filing of office correspondence appear to
have been commonly imposed as additional duties.[23] Respondent failed to indicate who among
these numerous secretaries/clerks have access to confidential data relating to management policies
that could give rise to potential conflict of interest with their Union membership. Clearly, the rationale
under our previous rulings for the exclusion of executive secretaries or division secretaries would
have little or no significance considering the lack of or very limited access to confidential information
of these secretaries/clerks. It is not even farfetched that the job category may exist only on paper
since they are all daily-paid workers. Quite understandably, petitioner had earlier expressed the view
that the positions were just being reclassified as these employees actually discharged routine
functions.

We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-file employees
and not confidential employees.

With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine Technician, there
seems no dispute that they form part of the Quality Control Staff who, under the express terms of the
CBA, fall under a distinct category. But we disagree with respondents contention that the twenty (20)
checkers are similarly confidential employees being quality control staff entrusted with the handling
and custody of company properties and sensitive information.

Again, the job descriptions of these checkers assigned in the storeroom section of the Materials
Department, finishing section of the Packaging Department, and the decorating and glass sections
of the Production Department plainly showed that they perform routine and mechanical tasks
preparatory to the delivery of the finished products.[24] While it may be argued that quality control
extends to post-production phase -- proper packaging of the finished products -- no evidence was
presented by the respondent to prove that these daily-paid checkers actually form part of the
companys Quality Control Staff who as such were exposed to sensitive, vital and confidential
information about [companys] products or have knowledge of mixtures of the products, their defects,
and even their formulas which are considered trade secrets. Such allegations of respondent must be
supported by evidence.[25]

Consequently, we hold that the twenty (20) checkers may not be considered confidential
employees under the category of Quality Control Staff who were expressly excluded from the CBA of
the rank-and-file bargaining unit.

Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to
persons who formulate, determine, and effectuate management policies in the field of labor
relations. The two (2) criteria are cumulative, and both must be met if an employee is to be considered
a confidential employee that is, the confidential relationship must exist between the employee and his
supervisor, and the supervisor must handle the prescribed responsibilities relating to labor
relations. The exclusion from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal objective sought to be
accomplished by the confidential employee rule.[26] There is no showing in this case that the
secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees
and obtained confidential information relating to labor relations policies. And even assuming that they
had exposure to internal business operations of the company, respondent claimed, this is not per
se ground for their exclusion in the bargaining unit of the daily-paid rank-and-file employees.[27]

Not being confidential employees, the secretaries/clerks and checkers are not disqualified from
membership in the Union of respondents rank-and-file employees. Petitioner argues that
respondents act of unilaterally stopping the deduction of union dues from these employees
constitutes unfair labor practice as it restrained the workers exercise of their right to self-
organization, as provided in Article 248 (a) of the Labor Code.

Unfair labor practice refers to acts that violate the workers right to organize. The prohibited acts are
related to the workers right to self organization and to the observance of a CBA. For a charge of
unfair labor practice to prosper, it must be shown that ABI was motivated by ill will, bad faith, or
fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public
policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x
x[28] from ABIs act in discontinuing the union dues deduction from those employees it believed were
excluded by the CBA. Considering that the herein dispute arose from a simple disagreement in the
interpretation of the CBA provision on excluded employees from the bargaining unit, respondent
cannot be said to have committed unfair labor practice that restrained its employees in the exercise
of their right to self-organization, nor have thereby demonstrated an anti-union stance.

WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2002 and Resolution
dated January 28, 2004 of the Court of Appeals in CA-G.R. SP No. 55578 are hereby REVERSED
and SET ASIDE. The checkers and secretaries/clerks of respondent company are hereby declared
rank-and-file employees who are eligible to join the Union of the rank-and-file employees.

No costs.

SO ORDERED.
G.R. No. 161933 April 22, 2008

STANDARD CHARTERED BANK EMPLOYEES UNION (SCBEU-NUBE), petitioner,

vs.
STANDARD CHARTERED BANK and ANNEMARIE DURBIN, in her capacity as Chief Executive
Officer, Philippines, Standard Chartered Bank, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the Rules of Court,
assailing the Decision1 dated October 9, 2002 and Resolution2 dated January 26, 2004 issued by the
Court of Appeals (CA), dismissing their petition and affirming the Secretary of Labor and
Employment's Orders dated May 31, 2001 and August 30, 2001.

Petitioner and the Standard Chartered Bank (Bank) began negotiating for a new Collective
Bargaining Agreement (CBA) in May 2000 as their 1998-2000 CBA already expired. Due to a
deadlock in the negotiations, petitioner filed a Notice of Strike prompting the Secretary of Labor and
Employment to assume jurisdiction over the labor dispute.

On May 31, 2001, Secretary Patricia A. Sto. Tomas of the Department of Labor and Employment
(DOLE) issued an Order with the following dispositive portion:

WHEREFORE, PREMISES CONSIDERED, the Standard Chartered Bank and the Standard
Chartered Bank Employees Union are directed to execute their collective bargaining
agreement effective 01 April 2001 until 30 March 2003 incorporating therein the foregoing
dispositions and the agreements they reached in the course of negotiations and conciliation.
All other submitted issues that were not passed upon are dismissed.

The charge of unfair labor practice for bargaining in bad faith and the claim for damages
relating thereto are hereby dismissed for lack of merit.

Finally, the charge of unfair labor practice for gross violation of the economic provisions of
the CBA is hereby dismissed for want of jurisdiction.

SO ORDERED.3

Both petitioner and the Bank filed their respective motions for reconsideration, which were denied by
the Secretary per Order dated August 30, 2001.4

Petitioner sought recourse with the CA via a petition for certiorari, and in the assailed Decision dated
October 9, 20025 and Resolution dated January 26, 2004,6 the CA dismissed their petition and
affirmed the Secretary's Orders.

Hence, herein petition based on the following grounds:

I.
 THE COURT A QUO ERRED IN DECIDING THAT THERE WAS NO BASIS FOR REVISING
THE SCOPE OF EXCLUSIONS FROM THE APPROPRIATE BARGAINING UNIT UNDER
THE CBA.

II.

THE COURT A QUO ERRED IN DECIDING THAT A ONE-MONTH OR LESS TEMPORARY

OCCUPATION OF A POSITION (ACTING CAPACITY) DOES NOT MERIT ADJUSTMENT
IN REMUNERATION.7

The resolution of this case has been overtaken by the execution of the parties' 2003-2005 CBA.
While this would render the case moot and academic, nevertheless, the likelihood that the same
issues will come up in the parties' future CBA negotiations is not far-fetched, thus compelling its
resolution. Courts will decide a question otherwise moot if it is capable of repetition yet evading
review.[8]

The CBA provisions in dispute are the exclusion of certain employees from the appropriate
bargaining unit and the adjustment of remuneration for employees serving in an acting capacity for
one month.

In their proposal, petitioner sought the exclusion of only the following employees from the
appropriate bargaining unit all managers who are vested with the right to hire and fire employees,
confidential employees, those with access to labor relations materials, Chief Cashiers, Assistant
Cashiers, personnel of the Telex Department and one Human Resources (HR) staff.9

In the previous 1998-2000 CBA,10 the excluded employees are as follows:

A. All covenanted and assistant officers (now called National Officers)

B. One confidential secretary of each of the:
1. Chief Executive, Philippine Branches
2. Deputy Chief Executive/Head, Corporate Banking Group
3. Head, Finance
4. Head, Human Resources
5. Manager, Cebu
6. Manager, Iloilo
7. Covenanted Officers provided said positions shall be filled by new recruits.
C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and in any other branch that the
BANK may establish in the country.
D. Personnel of the Telex Department
E. All Security Guards
F. Probationary employees, without prejudice to Article 277 (c) of the Labor Code, as amended by R.A.
6715, casuals or emergency employees; and
G. One (1) HR Staff11

The Secretary, however, maintained the previous exclusions because petitioner failed to show that
the employees sought to be removed from the list qualify for exclusion.12

With regard to the remuneration of employees working in an acting capacity, it was petitioner's
position that additional pay should be given to an employee who has been serving in a
temporary/acting capacity for one week. The Secretary likewise rejected petitioner's proposal and
instead, allowed additional pay for those who had been working in such capacity for one month. The
Secretary agreed with the Bank's position that a restrictive provision would curtail management's
prerogative, and at the same time, recognized that employees should not be made to work in an
acting capacity for long periods of time without adequate compensation.

The Secretary's disposition of the issues raised by petitioner were affirmed by the CA.13 The Court
sustains the CA.

Whether or not the employees sought to be excluded from the appropriate bargaining unit are
confidential employees is a question of fact, which is not a proper issue in a petition for review under
Rule 45 of the Rules of Court.14 This holds more true in the present case in which petitioner failed to
controvert with evidence the findings of the Secretary and the CA.

The disqualification of managerial and confidential employees from joining a bargaining unit for rank
and file employees is already well-entrenched in jurisprudence. While Article 245 of the Labor Code
limits the ineligibility to join, form and assist any labor organization to managerial employees,
jurisprudence has extended this prohibition to confidential employees or those who by reason of
their positions or nature of work are required to assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive and highly confidential records.15

In this case, the question that needs to be answered is whether the Bank's Chief Cashiers and
Assistant Cashiers, personnel of the Telex Department and HR staff are confidential employees,
such that they should be excluded.

As regards the qualification of bank cashiers as confidential employees, National Association of

Trade Unions (NATU) Republic Planters Bank Supervisors Chapter v. Torres16 declared that they
are confidential employees having control, custody and/or access to confidential matters, e.g., the
branch's cash position, statements of financial condition, vault combination, cash codes for
telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Sec. 1166.4 of
the Central Bank Manual regarding joint custody, and therefore, disqualified from joining or assisting
a union; or joining, assisting or forming any other labor organization.17

Golden Farms, Inc. v. Ferrer-Calleja18 meanwhile stated that "confidential employees such as
accounting personnel, radio and telegraph operators who, having access to confidential
information, may become the source of undue advantage. Said employee(s) may act as spy or spies
of either party to a collective bargaining agreement."19

Finally, in Philips Industrial Development, Inc. v. National Labor Relations Commission,20 the Court
designated personnel staff, in which human resources staff may be qualified, as confidential
employees because by the very nature of their functions, they assist and act in a confidential
capacity to, or have access to confidential matters of, persons who exercise managerial functions in
the field of labor relations.

Petitioner insists that the foregoing employees are not confidential employees; however, it failed to
buttress its claim. Aside from its generalized arguments, and despite the Secretary's finding that
there was no evidence to support it, petitioner still failed to substantiate its claim. Petitioner did not
even bother to state the nature of the duties and functions of these employees, depriving the Court
of any basis on which it may be concluded that they are indeed confidential employees. As aptly
stated by the CA:

While We agree that petitioner's proposed revision is in accordance with the law, this does not necessarily
mean that the list of exclusions enumerated in the 1998-2000 CBA is contrary to law. As found by public
 respondent, petitioner failed to show that the employees sought to be removed from the list of
exclusions are actually rank and file employees who are not managerial or confidential in status and
should, accordingly, be included in the appropriate bargaining unit.

Absent any proof that Chief Cashiers and Assistant Cashiers, personnel of the Telex department and
one (1) HR Staff have mutuality of interest with the other rank and file employees, then they are
rightfully excluded from the appropriate bargaining unit. x x x21(Emphasis supplied)

Petitioner cannot simply rely on jurisprudence without explaining how and why it should apply to this
case. Allegations must be supported by evidence. In this case, there is barely any at all.

There is likewise no reason for the Court to disturb the conclusion of the Secretary and the CA that
the additional remuneration should be given to employees placed in an acting capacity for one
month. The CA correctly stated:

Likewise, We uphold the public respondent's Order that no employee should be temporarily placed in a
position (acting capacity) for more than one month without the corresponding adjustment in the salary. Such
order of the public respondent is not in violation of the "equal pay for equal work" principle, considering that
after one (1) month, the employee performing the job in an acting capacity will be entitled to salary
corresponding to such position.

xxxx

In arriving at its Order, the public respondent took all the relevant evidence into account and weighed both
parties arguments extensively. Thus, public respondent concluded that a restrictive provision with respect to
employees being placed in an acting capacity may curtail management's valid exercise of its prerogative. At
the same time, it recognized that employees should not be made to perform work in an acting capacity for
extended periods of time without being adequately compensated. x x x22

Thus, the Court reiterates the doctrine that:

[T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court requires
that it shall raise only questions of law. The factual findings by quasi-judicial agencies, such
as the Department of Labor and Employment, when supported by substantial evidence, are
entitled to great respect in view of their expertise in their respective fields. Judicial review of
labor cases does not go so far as to evaluate the sufficiency of evidence on which the labor
official's findings rest. It is not our function to assess and evaluate all over again the
evidence, testimonial and documentary, adduced by the parties to an appeal, particularly
where the findings of both the trial court (here, the DOLE Secretary) and the appellate court
on the matter coincide, as in this case at bar. The Rule limits that function of the Court to the
review or revision of errors of law and not to a second analysis of the evidence. x x x Thus,
absent any showing of whimsical or capricious exercise of judgment, and unless lack of any
basis for the conclusions made by the appellate court be amply demonstrated, we may not
disturb such factual findings.23

WHEREFORE, the petition is DENIED.

SO ORDERED.

Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.

G.R. No. 94045 September 13, 1991

CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. (CENECO), petitioner,

vs.
HONORABLE SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT, and CENECO
UNION OF RATIONAL EMPLOYEES (CURE), respondents.

Enrique S. Tabino for petitioner.

Edmundo G. Manlapao for private respondent.

REGALADO, J.:

In this special civil action for certiorari, petitioner Central Negros Electric Cooperative, Inc.
(CENECO) seeks to annul the order1 issued by then Acting Secretary of Labor Bienvenido E.
Laguesma on June 6, 1990, declaring the projected certification election unnecessary and directing
petitioner CENECO to continue recognizing private respondent CENECO Union of Rational
Employees (CURE) as the sole and exclusive bargaining representative of all the rank-and-file
employees of petitioner's electric cooperative for purposes of collective bargaining.

It appears from the records that on August 15, 1987, CENECO entered into a collective bargaining
agreement with CURE, a labor union representing its rank-and-file employees, providing for a term
of three years retroactive to April 1, 1987 and extending up to March 31, 1990. On December 28,
1989, CURE wrote CENECO proposing that negotiations be conducted for a new collective
bargaining agreement (CBA).

On January 18, 1990, CENECO denied CURE's request on the ground that, under applicable
decisions of the Supreme Court, employees who at the same time are members of an electric
cooperative are not entitled to form or join a union.2

Prior to the submission of the proposal for CBA renegotiation, CURE members, in a general
assembly held on December 9, 1989, approved Resolution No. 35 whereby it was agreed that 'tall
union members shall withdraw, retract, or recall the union members' membership from Central
Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under the existing Collective
Bargaining Agreement entered into by and between CENECO and CURE, and the supposed
benefits that our union may avail (of) under the renewed CBA.3 This was ratified by 259 of the 362
union members. CENECO and the Department of Labor and Employment, Bacolod District, were
furnished copies of this resolution.

However, the withdrawal from membership was denied by CENECO on February 27, 1990 under
Resolution No. 90 "for the reason that the basis of withdrawal is not among the grounds covered by
Board Resolution No. 5023, dated November 22, 1989 and that said request is contrary to Board
Resolution No. 5033 dated December 13, 1989, ..."4

By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition for direct
recognition or for certification election, supported by 282 or 72% of the 388 rank-and-file employees
in the bargaining unit of CENECO.
CENECO filed a motion to dismiss on the ground that there are legal constraints to the filing of the
certification election, citing the ruling laid down by this Court in Batangas I Electric Cooperative
Labor Union vs. Romeo A. Young,5 (BATANGAS case) to the effect that "employees who at the
same time are members of an electric cooperative are not entitled to form or join unions for purposes
of collective bargaining agreement, for certainly an owner cannot bargain with himself or his co-
owners."

Med-Arbiter Felizardo T. Serapio issued an order,6 granting the petition for certification election
which, in effect, was a denial of CENECO's motion to dismiss, and directing the holding of a
certification election between CURE and No Union.

CENECO appealed to the Department of Labor and Employment which issued the questioned order
modifying the aforestated order of the med-arbiter by directly certifying CURE as the exclusive
bargaining representative of the rank-and-file employees of CURE.

Hence, this petition.

Petitioner CENECO argues that respondent Secretary committed a grave abuse of discretion in not
applying to the present case the doctrine enunciated in the BATANGAS case that employees of an
electric cooperative who at the same time are members of the electric cooperative are prohibited
from forming or joining labor unions for purposes of a collective bargaining agreement. While
CENECO recognizes the employees' right to self-organization, it avers that this is not absolute.
Thus, it opines that employees of an electric cooperative who at the same time are members thereof
are not allowed to form or join labor unions for purposes of collective bargaining. However, petitioner
does not hesitate to admit that the prohibition does not extend to employees of an electric
cooperative who are not members of the cooperative.

The issue, therefore, actually involves a determination of whether or not the employees of CENECO
who withdrew their membership from the cooperative are entitled to form or join CURE for purposes
of the negotiations for a collective bargaining agreement proposed by the latter.

As culled from the records, it is the submission of CENECO that the withdrawal from membership in
the cooperative and, as a consequence, the employees' acquisition of membership in the union
cannot be allowed for the following reasons:

1. It was made as a subterfuge or to subvert the ruling in the BATANGAS case:

2. To allow the withdrawal of the members of CENECO from the cooperative without
justifiable reason would greatly affect the objectives and goals of petitioner as an electric
cooperative;

3. The Secretary of Labor, as well as the Med-Arbiter, has no jurisdiction over the issue of
the withdrawal from membership which is vested in the National Electrification Administration
(NEA) which has direct control and supervision over the operations of electric cooperatives;
and

4. Assuming that the Secretary has jurisdiction, CURE failed to exhaust administrative
remedies by not referring the matter of membership withdrawal to the NEA.

The petition is destitute of merit; certiorari will not lie.

We first rule on the alleged procedural infirmities affecting the instant case. CENECO avers that the
med-arbiter has no jurisdiction to rule on the issue of withdrawal from membership of its employees
in the cooperative which, it claims, is properly vested in the NEA which has control and supervision
over all electric cooperatives.

From a perusal of petitioner's motion to dismiss filed with the med-arbiter, it becomes readily
apparent that the sole basis for petitioner's motion is the illegality of the employees' membership in
respondent union despite the fact that they allegedly are still members of the cooperative. Petitioner
itself adopted the aforesaid argument in seeking the dismissal of the petition for certification election
filed with the med-arbiter, and the finding made by the latter was merely in answer to the arguments
advanced by petitioner. Hence, petitioner is deemed to have submitted the issue of membership
withdrawal from the cooperative to the jurisdiction of the med-arbiter and it is now estopped from
questioning that same jurisdiction which it invoked in its motion to dismiss after obtaining an adverse
ruling thereon.

Under Article 256 of the Labor Code, to have a valid certification election at least a majority of all
eligible voters in the unit must have cast their votes. It is apparent that incidental to the power of the
med-arbiter to hear and decide representation cases is the power to determine who the eligible
voters are. In so doing, it is axiomatic that the med-arbiter should determine the legality of the
employees' membership in the union. In the case at bar, it obviously becomes necessary to consider
first the propriety of the employees' membership withdrawal from the cooperative before a
certification election can be had.

Lastly, it is petitioner herein who is actually questioning the propriety of the withdrawal of its
members from the cooperative. Petitioner could have brought the matter before the NEA if it wanted
to and. if such remedy had really been available, and there is nothing to prevent it from doing so. It
would be absurd to fault the employees for the neglect or laxity of petitioner in protecting its own
interests.

The argument of CENECO that the withdrawal was merely to subvert the ruling of this Court in the
BATANGAS case is without merit. The case referred to merely declared that employees who are at
the same time members of the cooperative cannot join labor unions for purposes of collective
bargaining. However, nowhere in said case is it stated that member-employees are prohibited from
withdrawing their membership in the cooperative in order to join a labor union.

As discussed by the Solicitor General, Article I, Section 9 of the Articles of Incorporation and By-
Laws of CENECO provides that "any member may withdraw from membership upon compliance with
such uniform terms and conditions as the Board may prescribe." The same section provides that
upon withdrawal, the member is merely required to surrender his membership certificate and he is to
be refunded his membership fee less any obligation that he has with the cooperative. There appears
to be no other condition or requirement imposed upon a withdrawing member. Hence, there is no
just cause for petitioner's denial of the withdrawal from membership of its employees who are also
members of the union.7

The alleged board resolutions relied upon by petitioner in denying the withdrawal of the members
concerned were never presented nor their contents disclosed either before the med-arbiter or the
Secretary of Labor if only to prove the ratiocination for said denial. Furthermore, CENECO never
averred non-compliance with the terms and conditions for withdrawal, if any. It appears that the
Articles of Incorporation of CENECO do not provide any ground for withdrawal from membership
which accordingly gives rise to the presumption that the same may be done at any time and for
whatever reason. In addition, membership in the cooperative is on a voluntary basis. Hence,
withdrawal therefrom cannot be restricted unnecessarily. The right to join an organization
necessarily includes the equivalent right not to join the same.

The right of the employees to self-organization is a compelling reason why their withdrawal from the
cooperative must be allowed. As pointed out by CURE, the resignation of the member- employees is
an expression of their preference for union membership over that of membership in the cooperative.
The avowed policy of the State to afford fall protection to labor and to promote the primacy of free
collective bargaining mandates that the employees' right to form and join unions for purposes of
collective bargaining be accorded the highest consideration.

Membership in an electric cooperative which merely vests in the member a right to vote during the
annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and more important
constitutional right of an employee to join a union of his choice. Besides, the 390 employees of
CENECO, some of whom have never been members of the cooperative, represent a very small
percentage of the cooperative's total membership of 44,000. It is inconceivable how the withdrawal
of a negligible number of members could adversely affect the business concerns and operations of
CENECO.

We rule, however, that the direct certification ordered by respondent Secretary is not proper. By
virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct certification
originally allowed under Article 257 of the Labor Code has apparently been discontinued as a
method of selecting the exclusive bargaining agent of the workers. This amendment affirms the
superiority of the certification election over the direct certification which is no longer available now
under the change in said provision.8

We have said that where a union has filed a petition for certification election, the mere fact that no
opposition is made does not warrant a direct certification.9 In said case which has similar features to
that at bar, wherein the respondent Minister directly certified the union, we held that:

... As pointed out by petitioner in its petition, what the respondent Minister achieved in
rendering the assailed orders was to make a mockery of the procedure provided under the
law for representation cases because: ... (c) By directly certifying a Union without sufficient
proof of majority representation, he has in effect arrogated unto himself the right, vested
naturally in the employee's to choose their collective bargaining representative. (d) He has in
effect imposed upon the petitioner the obligation to negotiate with a union whose majority
representation is under serious question. This is highly irregular because while the Union
enjoys the blessing of the Minister, it does not enjoy the blessing of the employees.
Petitioner is therefore under threat of being held liable for refusing to negotiate with a union
whose right to bargaining status has not been legally established.

While there may be some factual variances, the rationale therein is applicable to the present case in
the sense that it is not alone sufficient that a union has the support of the majority. What is equally
important is that everyone be given a democratic space in the bargaining unit concerned. The most
effective way of determining which labor organization can truly represent the working force is by
certification election.10

WHEREFORE, the questioned order for the direct certification of respondent CURE as the
bargaining representative of the employees of petitioner CENECO is hereby ANNULLED and SET
ASIDE. The med-arbiter is hereby ordered to conduct a certification election among the rank-and-
file employees of CENECO with CURE and No Union as the choices therein.

SO ORDERED.
G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner

vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR
RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS)
WFTU respondents.

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION IN

LINE INDUSTRIES AND AGRICULTURE, petitioner,
vs
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH
INSTITUTE, INC., respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.

Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.

Jimenez & Associates for IRRI.

Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J.:

Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by
the International Catholic Migration Commission (ICMC) and the International Rice Research
Institute, Inc. (IRRI) from the application of Philippine labor laws.

Facts and Issues

A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's
communist rule confronted the international community.

In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine
Government and the United Nations High Commissioner for Refugees whereby an operating center
for processing Indo-Chinese refugees for eventual resettlement to other countries was to be
established in Bataan (Annex "A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee processing
center in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as
a non-profit agency involved in international humanitarian and voluntary work. It is duly registered
with the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status,
Category II. As an international organization rendering voluntary and humanitarian services in the
Philippines, its activities are parallel to those of the International Committee for Migration (ICM) and
the International Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-
87, ICMC v. Calleja, Vol. 1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then
Ministry of Labor and Employment a Petition for Certification Election among the rank and file
members employed by ICMC The latter opposed the petition on the ground that it is an international
organization registered with the United Nations and, hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for
lack of jurisdiction.

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the
Med-Arbiter's Decision and ordered the immediate conduct of a certification election. At that time,
ICMC's request for recognition as a specialized agency was still pending with the Department of
Foreign Affairs (DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF,
granted ICMC the status of a specialized agency with corresponding diplomatic privileges and
immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC
(Annex "E", Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking
the immunity expressly granted but the same was denied by respondent BLR Director who, again,
ordered the immediate conduct of a pre-election conference. ICMC's two Motions for
Reconsideration were denied despite an opinion rendered by DEFORAF on 17 October 1988 that
said BLR Order violated ICMC's diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction
assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the
certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of
the Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive
department with the competence and authority to act on matters involving diplomatic immunity and
privileges, and tasked with the conduct of Philippine diplomatic and consular relations with foreign
governments and UN organizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the
submittal of memoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to
ICMC extends to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the
Philippine Government giving it the status of a specialized agency, (infra); (2) the Convention on the
Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21
November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May
1949 (the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and
deposited with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution,
which declares that the Philippines adopts the generally accepted principles of international law as
part of the law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the
DEFORAF determination that the BLR Order for a certification election among the ICMC employees
is violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State
policy and Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and
Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as
amended, ibid. In addition, she contends that a certification election is not a litigation but a mere
investigation of a non-adversary, fact-finding character. It is not a suit against ICMC its property,
funds or assets, but is the sole concern of the workers themselves.

B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989,
resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered
case pending with the Second Division, upon manifestation by the Solicitor General that both cases
involve similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and
Rockefeller Foundations signed a Memorandum of Understanding establishing the International Rice
Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic,
tax-free, non-profit, non-stock organization designed to carry out the principal objective of conducting
"basic research on the rice plant, on all phases of rice production, management, distribution and
utilization with a view to attaining nutritive and economic advantage or benefit for the people of Asia
and other major rice-growing areas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a
private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620,
promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities
of an international organization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor
organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI
(Kapisanan, for short) in respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV,
Regional Office of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an
international organization and granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres.
Decree No. 1620 and dismissed the Petition for Direct Certification.
On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-
Arbiter's Order and authorized the calling of a certification election among the rank-and-file
employees of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra and
Article XIII, Section 3 of the 1987 Constitution, 1and held that "the immunities and privileges granted
to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration sought by IRRI
was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's
Order, dismissed the Petition for Certification Election, and held that the grant of specialized agency
status by the Philippine Government to the IRRI bars DOLE from assuming and exercising
jurisdiction over IRRI Said Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives,
privileges and immunities of an international organization is clear and explicit. It
provides in categorical terms that:

Art. 3 The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as immunity has been expressly waived by the Director-
General of the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons,
subpoena, orders, decisions or proceedings ordered by any court or administrative
or quasi-judicial agency are enforceable as against the Institute. In the case at bar
there was no such waiver made by the Director-General of the Institute. Indeed, the
Institute, at the very first opportunity already vehemently questioned the jurisdiction
of this Department by filing an ex-parte motion to dismiss the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by
respondent Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to comment
on the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it
was "not adopting as his own" the decision of the BLR Director in the ICMC Case as well as the
Comment of the Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14
August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be
excused from filing a comment "it appearing that in the earlier case of International Catholic
Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General had
sustained the stand of Director Calleja on the very same issue now before it, which position has
been superseded by respondent Secretary of Labor in G.R. No. 89331," the present case. The Court
acceded to the Solicitor General's prayer.

The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse
of discretion in dismissing the Petition for Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges,
prerogatives and immunities of an international organization, invoked by the Secretary of Labor, is
unconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional
right to form trade unions for the purpose of collective bargaining as enshrined in the 1987
Constitution.
A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining
IRRI'S appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of
a certification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of
the Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final
and unappeable and that, therefore, the Secretary of Labor had no more jurisdiction over the said
appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep.
Act. No. 6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the
Med-Arbiter to the Office of the Secretary of Labor and Employment instead of to the Director of the
Bureau of Labor Relations in cases involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides
that ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of
the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN
General Assembly on 21 November 1947 and concurred in by the Philippine Senate through
Resolution No. 19 on 17 May 1949, explicitly provides:

Art. III, Section 4. The specialized agencies, their property and assets, wherever
located and by whomsoever held, shall enjoy immunity from every form of legal
process except insofar as in any particular case they have expressly waived their
immunity. It is, however, understood that no waiver of immunity shall extend to any
measure of execution.

Sec. 5. The premises of the specialized agencies shall be inviolable. The property
and assets of the specialized agencies, wherever located and by whomsoever held
shall be immune from search, requisition, confiscation, expropriation and any other
form of interference, whether by executive, administrative, judicial or legislative
action. (Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any
penal, civil and administrative proceedings, except insofar as that immunity has been
expressly waived by the Director-General of the Institute or his authorized
representatives.

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity
when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the
Director of the Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification
Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect of
IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a
letter, dated 17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from
the jurisdiction of DOLE in this particular instance."
The foregoing opinions constitute a categorical recognition by the Executive Branch of the
Government that ICMC and IRRI enjoy immunities accorded to international organizations, which
determination has been held to be a political question conclusive upon the Courts in order not to
embarrass a political department of Government.

It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government,
and where the plea of diplomatic immunity is recognized and affirmed by the
executive branch of the government as in the case at bar, it is then the duty of the
courts to accept the claim of immunity upon appropriate suggestion by the principal
law officer of the government . . . or other officer acting under his direction. Hence, in
adherence to the settled principle that courts may not so exercise their jurisdiction . .
. as to embarrass the executive arm of the government in conducting foreign
relations, it is accepted doctrine that in such cases the judicial department of (this)
government follows the action of the political branch and will not embarrass the latter
by assuming an antagonistic jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in order. The
term "international organization" is generally used to describe an organization set up by agreement
between two or more states. 4 Under contemporary international law, such organizations are
endowed with some degree of international legal personality 5 such that they are capable of
exercising specific rights, duties and powers. 6 They are organized mainly as a means for conducting
general international business in which the member states have an interest. 7 The United Nations,
for instance, is an international organization dedicated to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular fields. The term
appears in Articles 57 8 and 63 9 of the Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting
progress and international cooperation in economic, social, health, cultural,
educational and related matters, contemplates that these tasks will be mainly fulfilled
not by organs of the United Nations itself but by autonomous international
organizations established by inter-governmental agreements outside the United
Nations. There are now many such international agencies having functions in many
different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea
transport, civil aviation, meteorology, atomic energy, finance, trade, education and
culture, health and refugees. Some are virtually world-wide in their membership,
some are regional or otherwise limited in their membership. The Charter provides
that those agencies which have "wide international responsibilities" are to be brought
into relationship with the United Nations by agreements entered into between them
and the Economic and Social Council, are then to be known as "specialized
agencies." 10

The rapid growth of international organizations under contemporary international law has paved the
way for the development of the concept of international immunities.

It is now usual for the constitutions of international organizations to contain

provisions conferring certain immunities on the organizations themselves,
representatives of their member states and persons acting on behalf of the
organizations. A series of conventions, agreements and protocols defining the
 immunities of various international organizations in relation to their members
generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities to international
organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international
institutions should have a status which protects them against control or interference by any one
government in the performance of functions for the effective discharge of which they are responsible
to democratically constituted international bodies in which all the nations concerned are represented;
2) no country should derive any national financial advantage by levying fiscal charges on common
international funds; and 3) the international organization should, as a collectivity of States members,
be accorded the facilities for the conduct of its official business customarily extended to each other
by its individual member States. 12 The theory behind all three propositions is said to be essentially
institutional in character. "It is not concerned with the status, dignity or privileges of individuals, but
with the elements of functional independence necessary to free international institutions from
national control and to enable them to discharge their responsibilities impartially on behalf of all their
members. 13The raison d'etre for these immunities is the assurance of unimpeded performance of
their functions by the agencies concerned.

The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their
international character and respective purposes. The objective is to avoid the danger of partiality and
interference by the host country in their internal workings. The exercise of jurisdiction by the
Department of Labor in these instances would defeat the very purpose of immunity, which is to
shield the affairs of international organizations, in accordance with international practice, from
political pressure or control by the host country to the prejudice of member States of the
organization, and to ensure the unhampered performance of their functions.

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights,
which are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3
(supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor
Code, 16 relied on by the BLR Director and by Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be settled. Section
31 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United
Nations 17 provides that "each specialized agency shall make provision for appropriate modes of
settlement of: (a) disputes arising out of contracts or other disputes of private character to which the
specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement
between ICMC the the Philippine Government, whenever there is any abuse of privilege by ICMC,
the Government is free to withdraw the privileges and immunities accorded. Thus:

Art. IV. Cooperation with Government Authorities. 1. The Commission shall

cooperate at all times with the appropriate authorities of the Government to ensure
the observance of Philippine laws, rules and regulations, facilitate the proper
administration of justice and prevent the occurrences of any abuse of the privileges
and immunities granted its officials and alien employees in Article III of this
Agreement to the Commission.

2. In the event that the Government determines that there has been an abuse of the
privileges and immunities granted under this Agreement, consultations shall be held
between the Government and the Commission to determine whether any such abuse
has occurred and, if so, the Government shall withdraw the privileges and immunities
granted the Commission and its officials.
Neither are the employees of IRRI without remedy in case of dispute with management as, in fact,
there had been organized a forum for better management-employee relationship as evidenced by
the formation of the Council of IRRI Employees and Management (CIEM) wherein "both
management and employees were and still are represented for purposes of maintaining mutual and
beneficial cooperation between IRRI and its employees." The existence of this Union factually and
tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI the status, privileges
and immunities of an international organization, deprives its employees of the right to self-
organization.

The immunity granted being "from every form of legal process except in so far as in any particular
case they have expressly waived their immunity," it is inaccurate to state that a certification election
is beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification
election cannot be viewed as an independent or isolated process. It could tugger off a series of
events in the collective bargaining process together with related incidents and/or concerted activities,
which could inevitably involve ICMC in the "legal process," which includes "any penal, civil and
administrative proceedings." The eventuality of Court litigation is neither remote and from which
international organizations are precisely shielded to safeguard them from the disruption of their
functions. Clauses on jurisdictional immunity are said to be standard provisions in the constitutions
of international Organizations. "The immunity covers the organization concerned, its property and its
assets. It is equally applicable to proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo),
wherein TUPAS calls attention to the case entitled "International Catholic Migration Commission v.
NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken
cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a six-
month probationary employment), the Court is now estopped from passing upon the question of
DOLE jurisdiction petition over ICMC.

We find no merit to said submission. Not only did the facts of said controversy occur between 1983-
1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with
corresponding immunities, but also because ICMC in that case did not invoke its immunity and,
therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was
tacitly recognized as enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR
Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration
filed by IRRI Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which
provides for direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in
certification election cases either from the order or the results of the election itself, was already in
effect, specifically since 21 March 1989. Hence, no grave abuse of discretion may be imputed to
respondent Secretary of Labor in his assumption of appellate jurisdiction, contrary to Kapisanan's
allegations. The pertinent portion of that law provides:

Art. 259. Any party to an election may appeal the order or results of the election
as determined by the Med-Arbiter directly to the Secretary of Labor and Employment
on the ground that the rules and regulations or parts thereof established by the
Secretary of Labor and Employment for the conduct of the election have been
violated. Such appeal shall be decided within 15 calendar days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two
departments of the executive branch of government have been rectified and the resultant
embarrassment to the Philippine Government in the eyes of the international community now,
hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the
Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary Restraining
Order earlier issued is made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having
been committed by the Secretary of Labor and Employment in dismissing the Petition for
Certification Election.

No pronouncement as to costs.

SO ORDERED.

Padilla, Sarmiento and Regalado, JJ., concur.

Paras, J., is on leave.

Footnotes

1 Article XIII, Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment opportunities for
all. It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations and peaceful concerted activities including the right to
strike in accordance with law. They shall be entitled to security of tenure, humane
conditions of work and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by
law.

2 RULE V. Section 7. Appeal Any aggrieved party may appeal the order of the
Med-Arbiter to the Bureau only on the following grounds: a) grave abuse of discretion
and b) gross incompetence. The appeal shall specifically state the grounds relied
upon by the appellant with supporting memorandum.

Section 8. Where to file appeal appellant shall file his appeal which shall be under
oath, in the Regional Office where the case originated, copy furnished the appellee.

Section 9. Period to Appeal. The appeal shall be filed within ten (10) working days
from receipt of the Order by the appellant. Likewise, the appellee shall file his answer
thereto within ten (10) working days from receipt of the appeal. The Regional Director
shall immediately forward the entire records of the case to the Bureau.

Section 10. Decision of the Bureau is final and unappealable. The Bureau shall
have twenty (20) working days within which to decide the appeal from receipt of the
records of the case. The decision of the Bureau in all cases shall be final and
unappealable.
3 World Health Organization and Dr. Leonce Verstuyft v. Hon. Benjamin Aquino, et
al., L-35131, 29 November 1972, 48 SCRA 242.

4 MICHAEL AKEHURST A MODERN INTRODUCTION TO INTERNATIONAL LAW

(1984) at 69.

5 The leading judicial authority on the personality of international organizations is the

advisory opinion even by the ICJ in the Reparation for Injuries Suffered in the Service
of the United Nations Case ([1949] I.C.J. Rep 174) where the Court recognized the
UNs international personality.

6 M. AKEHURST supra, at 70.

7 J.L. BRIERLY, THE LAW OF NATIONS (1963) at 95.

8 Article 57. 1. The various specialized-agencies, established by inter-

governmental agreement and having wide international responsibilities, as defined in
their basic instruments, in economic, social, cultural, educational, health, and related
fields, shall be brought into relationship with the United Nations in accordance with
the provisions of Article 63.

2. Such agencies thus brought into relationship with the United Nations are
hereinafter referred to as specialized agencies.

9 Article 63. 1. The Economic and Social Council may enter into agreements with
any of the agencies referred to in Article 57, defining the terms on which the agency
concerned shall be brought into relationship with the United Nations. Such
agreements shall be subject to approval by the General Assembly.

2. It may co-ordinate the activities of the specialized agencies through consultation

with and recommendations to such agencies and through recommendations to the
General Assembly and to the Members of the United Nations.

10 BRIERLY, supra, at 121-122.

11 C. WILFRED JENKS, INTERNATIONAL IMMUNITIES (1961) at 2-3.

12 Ibid., at 17.

13 Ibid.

14 Article II, Section 18. The State affirms labor as a primary social economic force.
It shall protect the rights of workers and promote their welfare.

15 Article III, Section 8. The right of the people, including those employed in the
public and private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.

16 Article 243. Coverage and Employees' Right to Self- Organization. All persons
employed in commercial, industrial and agricultural enterprises and in religious,
charitable, medical or educational institutions whether operating for profit or not, shall
have the right to self-organization and to form, join or assist labor organizations of
their own choosing for purposes of collective bargaining. Ambulant, intermittent and
itinerant workers, self- employed people, rural workers and those without any definite
employees may form labor organizations for their mutual aid and protection.

Article 246. Non-abridgement of Right to Self-organization. It shall be unlawful for

any person to restrain, coerce, discriminate against or unduly interfere with
employees and workers in their exercise of the right to self-organization. Such right
shall include the rignt to form, join, or assist labor organizations for the purpose of
collective bargaining through representatives of their own choosing and to engage in
lawful concerted activities for the same purpose or for their mutual aid and protection,
subject to the provisions of Article 264 of this Code.

17 This Convention, adopted by the U.N. General Assembly on November 21, 1947,
was concurred in by the Philippine Senate under Senate Resolution No. 21, dated 17
May 1949. The Philippine Instrument of Ratification was signed by the Philippine
President on 21 February 1959. (Vol. 1, Phil. Treaty Series, p. 621).

18 JENKS, supra at 38.

G.R. No. 91307 January 24, 1991

SINGER SEWING MACHINE COMPANY, petitioner

vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE
COLLECTORS UNION-BAGUIO (SIMACUB), respondents.

Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for petitioner.

Domogan, Lockey, Orate & Dao-ayan Law Office for private respondent.

GUTIERREZ, JR., J.:

This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B. Chaguile, Jr., the
resolution of then Labor Secretary Franklin M. Drilon affirming said order on appeal and the order
denying the motion for reconsideration in the case entitled "In Re: Petition for Direct Certification as
the Sole and Exclusive Collective Bargaining Agent of Collectors of Singer Sewing Machine
Company-Singer Machine Collectors Union-Baguio (SIMACUB)" docketed as OS-MA-A-7-119-89
(IRD Case No. 02-89 MED).

On February 15, 1989, the respondent union filed a petition for direct certification as the sole and
exclusive bargaining agent of all collectors of the Singer Sewing Machine Company, Baguio City
branch (hereinafter referred to as "the Company").

The Company opposed the petition mainly on the ground that the union members are actually not
employees but are independent contractors as evidenced by the collection agency agreement which
they signed.

The respondent Med-Arbiter, finding that there exists an employer-employee relationship between
the union members and the Company, granted the petition for certification election. On appeal,
Secretary of Labor Franklin M. Drilon affirmed it. The motion for reconsideration of the Secretary's
resolution was denied. Hence, this petition in which the Company alleges that public respondents
acted in excess of jurisdiction and/or committed grave abuse of discretion in that:

a) the Department of Labor and Employment (DOLE) has no jurisdiction over the case since
the existence of employer-employee relationship is at issue;

b) the right of petitioner to due process was denied when the evidence of the union
members' being commission agents was disregarded by the Labor Secretary;

c) the public respondents patently erred in finding that there exists an employer-employee
relationship;

d) the public respondents whimsically disregarded the well-settled rule that commission
agents are not employees but are independent contractors.

The respondents, on the other hand, insist that the provisions of the Collection Agency Agreement
belie the Company's position that the union members are independent contractors. To prove that
union members are employees, it is asserted that they "perform the most desirable and necessary
activities for the continuous and effective operations of the business of the petitioner Company"
(citing Article 280 of the Labor Code). They add that the termination of the agreement by the
petitioner pending the resolution of the case before the DOLE "only shows the weakness of
petitioner's stand" and was "for the purpose of frustrating the constitutionally mandated rights of the
members of private respondent union to self-organization and collective organization." They also
contend that under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing the Labor
Code, which defines job-contracting, they cannot legally qualify as independent contractors who
must be free from control of the alleged employer, who carry independent businesses and who have
substantial capital or investment in the form of equipment, tools, and the like necessary in the
conduct of the business.

The present case mainly calls for the application of the control test, which if not satisfied, would lead
us to conclude that no employer-employee relationship exists. Hence, if the union members are not
employees, no right to organize for purposes of bargaining, nor to be certified as such bargaining
agent can ever be recognized. The following elements are generally considered in the determination
of the employer-employee relationship; "(1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct
although the latter is the most important element" (Mafinco Trading Corporation v. Ople, 70 SCRA
139 [1976]; Development Bank of the Philippines v. National Labor Relations Commission, 175
SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway Motors Inc. v.
NLRC, 156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v. Zamora, 147
SCRA 49 [1986]).

The Collection Agency Agreement defines the relationship between the Company and each of the
union members who signed a contract. The petitioner relies on the following stipulations in the
agreements: (a) a collector is designated as a collecting agent" who is to be considered at all times
as an independent contractor and not employee of the Company; (b) collection of all payments on
installment accounts are to be made monthly or oftener; (c) an agent is paid his compensation for
service in the form of a commission of 6% of all collections made and turned over plus a bonus on
said collections; (d) an agent is required to post a cash bond of three thousand pesos (P3,000.00) to
assure the faithful performance and observance of the terms and conditions under the agreement;
(e) he is subject to all the terms and conditions in the agreement; (f) the agreement is effective for
one year from the date of its execution and renewable on a yearly basis; and (g) his services shall
be terminated in case of failure to satisfy the minimum monthly collection performance required,
failure to post a cash bond, or cancellation of the agreement at the instance of either party unless
the agent has a pending obligation or indebtedness in favor of the Company.

Meanwhile, the respondents rely on other features to strengthen their position that the collectors are
employees. They quote paragraph 2 which states that an agent shall utilize only receipt forms
authorized and issued by the Company. They also note paragraph 3 which states that an agent has
to submit and deliver at least once a week or as often as required a report of all collections made
using report forms furnished by the Company. Paragraph 4 on the monthly collection quota required
by the Company is deemed by respondents as a control measure over the means by which an agent
is to perform his services.

The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and neither
are all collecting agents independent contractors. The collectors could fall under either category
depending on the facts of each case.

The Agreement confirms the status of the collecting agent in this case as an independent contractor
not only because he is explicitly described as such but also because the provisions permit him to
perform collection services for the company without being subject to the control of the latter except
only as to the result of his work. After a careful analysis of the contents of the agreement, we rule in
favor of the petitioner.

The requirement that collection agents utilize only receipt forms and report forms issued by the
Company and that reports shall be submitted at least once a week is not necessarily an indication of
control over the means by which the job of collection is to be performed. The agreement itself
specifically explains that receipt forms shall be used for the purpose of avoiding a co-mingling of
personal funds of the agent with the money collected on behalf of the Company. Likewise, the use of
standard report forms as well as the regular time within which to submit a report of collection are
intended to facilitate order in office procedures. Even if the report requirements are to be called
control measures, any control is only with respect to the end result of the collection since the
requirements regulate the things to be done after the performance of the collection job or the
rendition of the service.

The monthly collection quota is a normal requirement found in similar contractual agreements and is
so stipulated to encourage a collecting agent to report at least the minimum amount of proceeds. In
fact, paragraph 5, section b gives a bonus, aside from the regular commission every time the quota
is reached. As a requirement for the fulfillment of the contract, it is subject to agreement by both
parties. Hence, if the other contracting party does not accede to it, he can choose not to sign it. From
the records, it is clear that the Company and each collecting agent intended that the former take
control only over the amount of collection, which is a result of the job performed.

The respondents' contention that the union members are employees of the Company is based on
selected provisions of the Agreement but ignores the following circumstances which respondents
never refuted either in the trial proceedings before the labor officials nor in its pleadings filed before
this Court.

1. The collection agents are not required to observe office hours or report to Singer's office
everyday except, naturally and necessarily, for the purpose of remitting their collections.

2. The collection agents do not have to devote their time exclusively for SINGER. There is no
prohibition on the part of the collection agents from working elsewhere. Nor are these agents
required to account for their time and submit a record of their activity.

3. The manner and method of effecting collections are left solely to the discretion of the
collection agents without any interference on the part of Singer.

4. The collection agents shoulder their transportation expenses incurred in the collections of
the accounts assigned to them.

5. The collection agents are paid strictly on commission basis. The amounts paid to them are
based solely on the amounts of collection each of them make. They do not receive any
commission if they do not effect any collection even if they put a lot of effort in collecting.
They are paid commission on the basis of actual collections.

6. The commissions earned by the collection agents are directly deducted by them from the
amount of collections they are able to effect. The net amount is what is then remitted to
Singer." (Rollo, pp. 7-8)

If indeed the union members are controlled as to the manner by which they are supposed to perform
their collections, they should have explicitly said so in detail by specifically denying each of the facts
asserted by the petitioner. As there seems to be no objections on the part of the respondents, the
Court finds that they miserably failed to defend their position.

A thorough examination of the facts of the case leads us to the conclusion that the existence of an
employer-employee relationship between the Company and the collection agents cannot be
sustained.

The plain language of the agreement reveals that the designation as collection agent does not
create an employment relationship and that the applicant is to be considered at all times as an
independent contractor. This is consistent with the first rule of interpretation that the literal meaning
of the stipulations in the contract controls (Article 1370, Civil Code; La Suerte Cigar and Cigarette
Factory v. Director of Bureau of Labor, Relations, 123 SCRA 679 [1983]). No such words as "to hire
and employ" are present. Moreover, the agreement did not fix an amount for wages nor the required
working hours. Compensation is earned only on the basis of the tangible results produced, i.e., total
collections made (Sarra v. Agarrado, 166 SCRA 625 [1988]). In Investment Planning Corp. of the
Philippines v. Social Security System, 21 SCRA 924 [1967] which involved commission agents, this
Court had the occasion to rule, thus:

We are convinced from the facts that the work of petitioner's agents or registered
representatives more nearly approximates that of an independent contractor than that of an
employee. The latter is paid for the labor he performs, that is, for the acts of which such labor
consists the former is paid for the result thereof . . . .

xxx xxx xxx

Even if an agent of petitioner should devote all of his time and effort trying to sell its
investment plans he would not necessarily be entitled to compensation therefor. His right to
compensation depends upon and is measured by the tangible results he produces."

Moreover, the collection agent does his work "more or less at his own pleasure" without a regular
daily time frame imposed on him (Investment Planning Corporation of the Philippines v. Social
Security System, supra; See alsoSocial Security System v. Court of Appeals, 30 SCRA 210 [1969]).

The grounds specified in the contract for termination of the relationship do not support the view that
control exists "for the causes of termination thus specified have no relation to the means and
methods of work that are ordinarily required of or imposed upon employees." (Investment Planning
Corp. of the Phil. v. Social Security System, supra)

The last and most important element of the control test is not satisfied by the terms and conditions of
the contracts. There is nothing in the agreement which implies control by the Company not only over
the end to be achieved but also over the means and methods in achieving the end (LVN Pictures,
Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).

The Court finds the contention of the respondents that the union members are employees under
Article 280 of the Labor Code to have no basis. The definition that regular employees are those who
perform activities which are desirable and necessary for the business of the employer is not
determinative in this case. Any agreement may provide that one party shall render services for and
in behalf of another for a consideration (no matter how necessary for the latter's business) even
without being hired as an employee. This is precisely true in the case of an independent
contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument
that Article 280 is not the yardstick for determining the existence of an employment relationship
because it merely distinguishes between two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain benefits, to join or form a
union, or to security of tenure. Article 280 does not apply where the existence of an employment
relationship is in dispute.

Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does not apply
to this case.1wphi1Respondents assert that the said provision on job contracting requires that for
one to be considered an independent contractor, he must have "substantial capital or investment in
the form of tools, equipment, machineries, work premises, and other materials which are necessary
in the conduct of his business." There is no showing that a collection agent needs tools and
machineries. Moreover, the provision must be viewed in relation to Article 106 of the Labor Code
which provides:

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the former's work, the employees of the contractor
and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this
Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under the
contract, in the same manner and extent that he is liable to employees directly employed by
him.

xxx xxx xxx

There is "labor-only" contracting where the person supplying workers to an employer does
not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him." (p. 20)

It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in determining
whether the employer is solidarily liable to the employees of an alleged contractor and/or sub-
contractor for unpaid wages in case it is proven that there is a job-contracting situation.

The assumption of jurisdiction by the DOLE over the case is justified as the case was brought on
appeal by the petitioner itself which prayed for the reversal of the Order of the Med-Arbiter on the
ground that the union members are not its employees. Hence, the petitioner submitted itself as well
as the issue of existence of an employment relationship to the jurisdiction of the DOLE which was
faced with a dispute on an application for certification election.

The Court finds that since private respondents are not employees of the Company, they are not
entitled to the constitutional right to join or form a labor organization for purposes of collective
bargaining. Accordingly, there is no constitutional and legal basis for their "union" to be granted their
petition for direct certification. This Court made this pronouncement in La Suerte Cigar and Cigarette
Factory v. Director of Bureau of Labor Relations, supra:

. . . The question of whether employer-employee relationship exists is a primordial

consideration before extending labor benefits under the workmen's compensation, social
security, medicare, termination pay and labor relations law. It is important in the
 determination of who shall be included in a proposed bargaining unit because, it is the sine
qua non, the fundamental and essential condition that a bargaining unit be composed of
employees. Failure to establish this juridical relationship between the union members and
the employer affects the legality of the union itself. It means the ineligibility of the union
members to present a petition for certification election as well as to vote therein . . . . (At p.
689)

WHEREFORE, the Order dated June 14,1989 of Med-Arbiter Designate Felix B. Chaguile, Jr., the
Resolution and Order of Secretary Franklin M. Drilon dated November 2, 1989 and December 14,
1989, respectively are hereby REVERSED and SET ASIDE. The petition for certification election is
ordered dismissed and the temporary restraining order issued by the Court on December 21, 1989 is
made permanent.

SO ORDERED.

Fernan, C.J., Feliciano and Bidin, JJ., concur.

G.R. No. L-30241 June 30, 1972

MACTAN WORKERS UNION and TOMAS FERRER, as President thereof, plaintiffs-appellees,

vs.
DON RAMON ABOITIZ, President, Cebu Shipyard & Engineering Works, Inc.; EDDIE LIM, as
Treasurer; JESUS DIAGO, Superintendent of the aforesaid corporation; WILFREDO VIRAY, as
Resident Manager of the Shipyard & Engineering Works, Inc.; and the CEBU SHIPYARD &
ENGINEERING WORKS, INC., defendants-appellees; ASSOCIATION LABOR
UNION, intervenor-appellant.

Andales Law Office for plaintiffs-appellees.

Pedro B. Uy Calderon for defendants-appellees.

Seno, Mendoza & Associates for intervenor-appellant.

FERNANDO, J.:p

The dispute in this appealed decision from the Court of First Instance of Cebu on questions of law is
between plaintiff Mactan Workers Union1 and intervenor Associated Labor Union. The former in its
complaint on behalf of seventy-two of its members working in defendant corporation, Cebu Shipyard
and Engineering Works, Inc.2 did file a money claim in the amount of P4,035.82 representing the
second installment of a profit-sharing agreement under a collective bargaining contract entered into
between such business firm and intervenor labor union as the exclusive collective bargaining
representative of its workers. The plaintiff was successful both in the City Court of Lapulapu where
such complaint was first started as well as in the Court of First Instance of Cebu. It is from the
decision of the latter court, rendered on February 22, 1968, that this appeal was interposed by
intervenor Associated Labor Union. It must have been an awareness on appellant's part that on the
substantive aspect, the claim of plaintiff to what was due its members under such collective
bargaining agreement was meritorious that led it to rely on alleged procedural obstacles for the
reversal sought. Intervenor, however, has not thereby dented the judgment. As will be more fully
explained, there are no applicable procedural doctrines that stand in the way of plaintiff's suit. We
affirm.

The facts are not in dispute. According to the decision: "From the evidence presented it appears that
the defendant Cebu Shipyard & Engineering Works, Inc. in Lapulapu City is employing laborers and
employees belonging to two rival labor unions. Seventy-two of these employees or laborers whose
names appear in the complaint are affiliated with the Mactan Workers Union while the rest are
members of the intervenor Associated Labor Union. On November 28, 1964, the defendant Cebu
Shipyard & Engineering Works, Inc. and the Associated Labor Union entered into a 'Collective
Bargaining Agreement' ... the pertinent part of which, Article XIII thereof, [reads thus]: '... The
[Company] agrees to give a profit-sharing bonus to its employees and laborers to be taken from ten
per cent (10%) of its net profits or net income derived from the direct operation of its shipyard and
shop in Lapulapu City and after deducting the income tax and the bonus annually given to its
General Manager and the Superintendent and the members of the Board of Directors and Secretary
of the Corporation, to be payable in two (2) installments, the first installment being payable in March
and the second installment in June, each year out of the profits in agreement. In the computation of
said ten per cent (10%) to [be] distributed as a bonus among the employees and laborers of the
[Company] in proportion to their salaries or wages, only the income derived by the [Company] from
the direct operation of its shipyard and shop in Lapulapu City, as stated herein-above-commencing
from the earnings during the year 1964, shall be included. Said profit-sharing bonus shall be paid by
the [Company] to [Associated Labor Union] to be delivered by the latter to the employees and
laborers concerned and it shall be the duty of the Associated Labor Union to furnish and deliver to
the [Company] the corresponding receipts duly signed by the laborers and employees entitled to
receive the profit-sharing bonus within a period of sixty (60) days from the date of receipt by [it] from
the [Company] of the profit-sharing bonus. If a laborer or employee of the [Company] does not want
to accept the profit-sharing bonus which the said employee or laborer is entitled under this
Agreement, it shall be the duty of the [Associated Labor Union] to return the money received by [it]
as profit-sharing bonus to the [Company] within a period of sixty (60) days from the receipt by the
[Union] from the [Company] of the said profit-sharing bonus.'"3 The decision went on to state: "In
compliance with the said collective bargaining agreement, in March, 1965 the defendant Cebu
Shipyard & Engineering Works, Inc. delivered to the ALU for distribution to the laborers or
employees working with the defendant corporation to the profit-sharing bonus corresponding to the
first installment for the year 1965. Again in June 1965 the defendant corporation delivered to the
Associated Labor Union the profit-sharing bonus corresponding to the second installment for 1965.
The members of the Mactan Workers Union failed to receive their shares in the second installment
of bonus because they did not like to go to the office of the ALU to collect their shares. In
accordance with the terms of the collective bargaining after 60 days, the uncollected shares of the
plaintiff union members was returned by the ALU to the defendant corporation. At the same time the
defendant corporation was advised by the ALU not to deliver the said amount to the members of the
Mactan Workers Union unless ordered by the Court, otherwise the ALU will take such step to protect
the interest of its members ... . Because this warning given by the intervenor union the defendant
corporation did not pay to the plaintiffs the sum of P4,035.82 which was returned by the Associated
Labor Union, but instead, deposited the said amount with the Labor Administrator. For the recovery
of this amount this case was filed with the lower court."4

The dispositive portion of such decision follows: "[Wherefore], judgment is hereby rendered ordering
the defendants to deliver to the Associated Labor Union the sum of P4,035.82 for distribution to the
employees of the defendant corporation who are members of the Mactan Workers Union; and
ordering the intervenor Associated Labor Union, immediately after receipt of the said amount, to pay
the members of the Mactan Workers Union their corresponding shares in the profit-sharing bonus for
the second installments for the year 1965."5

It is from such a decision that an appeal was taken by intervenor Associated Labor Union. As is quite
apparent on the face of such judgment, the lower court did nothing except to require literal
compliance with the terms of a collective bargaining contract. Nor, as will be hereafter discussed,
has any weakness thereof been demonstrated on the procedural questions raised by appellant. To
repeat, we have to affirm.

1. The terms and conditions of a collective bargaining contract constitute the law between the
parties. Those who are entitled to its benefits can invoke its provisions. In the event that an
obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for
redress.6 Nor does it suffice as a defense that the claim is made on behalf of non-members of
intervenor Associated Labor Union, for it is a well-settled doctrine that the benefits of a collective
bargaining agreement extend to the laborers and employees in the collective bargaining unit,
including those who do not belong to the chosen bargaining labor organization.7 Any other view
would be a discrimination on which the law frowns. It is appropriate that such should be the case. As
was held in United Restauror's Employees and Labor Union v. Torres,8 this Court speaking through
Justice Sanchez, "the right to be the exclusive representative of all the employees in an appropriate
collective bargaining unit is vested in the labor union 'designated or selected' for such purpose 'by
the majority of the employees' in the unit concerned."9 If it were otherwise, the highly salutory
purpose and objective of the collective bargaining scheme to enable labor to secure better terms in
employment condition as well as rates of pay would be frustrated insofar as non-members are
concerned, deprived as they are of participation in whatever advantages could thereby be gained.
The labor union that gets the majority vote as the exclusive bargaining representative does not act
for its members alone. It represents all the employees in such a bargaining unit. It is not to be
indulged in any attempt on its part to disregard the rights of non-members. Yet that is what
intervenor labor union was guilty of, resulting in the complaint filed on behalf of the laborers, who
were in the ranks of plaintiff Mactan Labor Union.

The outcome was not at all unexpected. The right being clear all that had to be done was to see to
its enforcement. Nor did the lower court in the decision now on appeal, require anything else other
than that set forth in the collective bargaining agreement. All that was done was to have the
covenants therein contained as to the profit-sharing scheme carried out and respected. It would be
next to impossible for intervenor Associated Labor Union to point to any feature thereof that could
not in any wise be objected to as repugnant to the provisions of the collective bargaining contract.
Certainly the lower court, as did the City Court of Lapu-lapu, restricted itself to compelling the parties
to abide by what was agreed upon. How then can the appealed decision be impugned?

2. Intervenor Associated Labor Union, laboring under such a predicament had perforce to rely on
what it considered procedural lapses. It would assail the alleged lack of a cause of action, of
jurisdiction of the City Court of Lapulapu and of personality of the Mactan Workers Union to
represent its members. There is no merit to such an approach. The highly sophisticated line of
argument followed in its brief as appellant does not carry a persuasive ring. What is apparent is that
intervenor was hard put to prop up what was inherently a weak, not to say an indefensible, stand.
The impression given is that of a litigant clutching at straws.

How can the allegation of a lack of a cause of action be taken seriously when precisely there was a
right violated on the part of the members of plaintiff Mactan Workers Union, a grievance that called
for redress? The assignment of error that the City Court of Lapulapu was bereft of jurisdiction is
singularly unpersuasive. The amount claimed by plaintiff Mactan Workers Union on behalf of its
members was P4,035.82 and if the damages and attorney's fees be added, the total sum was less
than P10,000.00. Section 88 of the Judiciary Act in providing for the original jurisdiction of city courts
in civil cases provides: "In all civil actions, including those mentioned in Rules fifty-nine and sixty-two
(now Rules 57 and 60) of the Rules of Court, arising in his municipality or city, and not exclusively
cognizable by the Court of First Instance, the municipal judge and the judge of a city court shall have
exclusive original jurisdiction where the value of the subject matter or amount of the demand does
not exceed ten thousand pesos, exclusive of interests and costs." 10 It is true that if an element of
unfair labor practice may be discerned in a suit for the enforcement of a collective bargaining
contract, then the matter is solely cognizable by the Court of Industrial Relations. 11 It is equally true
that as of the date the lower court decision was rendered, the question of such enforcement had
been held to be for the regular courts to pass upon. 12 Counsel for intervenor Associated Labor
Union was precisely the petitioner in one of the decisions of this Court, Seno v . Mendoza, 13 where
such a doctrine was reiterated. In the language of Justice Makalintal, the ponente: "As the issue
involved in the instant case, although arising from a labor dispute, does not refer to one affecting an
industry which is indispensable to the national interest and certified by the President to the Industrial
Court, nor to minimum wage under the Minimum Wage Law, nor to hours of employment under the
Eight-Hour Labor Law, nor to an unfair labor practice, but seeks the enforcement of a provision of
the collective bargaining agreement, ..., jurisdiction pertains to the ordinary courts and not to the
Industrial Court." 14 There was only a half-hearted attempt, if it could be called that, to lend credence
to the third error assigned, namely that plaintiff Mactan Workers Union could not file the suit on
behalf of its members. That is evident by intervenor Associated Labor Union devoting only half a
page in its brief to such an assertion. It is easy to see why it should be thus. On its face, it certainly
appeared to be oblivious of how far a labor union can go, or is expected to, in the defense of the
rights of its rank and file. There was an element of surprise, considering that such a contention came
from a labor organization, which under normal condition should be the last to lay itself open to a
charge that it is not averse to denigrating the effectiveness of labor unions.

3. This brings us to one last point. It is quite understandable that labor unions in their campaign for
membership, for acquiring ascendancy in any shop, plant, or industry would do what lies in their
power to put down competing groups. The struggle is likely to be marked with bitterness, no quarter
being given or expected on the part of either side. Nevertheless, it is not to be forgotten that what is
entitled to constitutional protection is labor, or more specifically the working men and women, not
labor organizations. The latter are merely the instrumentalities through which their welfare may be
promoted and fostered. That is the raison d'etre of labor unions. The utmost care should be taken
then, lest in displaying an unyielding, intransigent attitude on behalf of their members, injustice be
committed against opposing labor organizations. In the final analysis, they alone are not the sole
victims, but the labor movement itself, which may well be the recipient of a crippling blow. Moreover,
while it is equally understandable that their counsel would take advantage of every legal doctrine
deemed applicable or conjure up any defense that could serve their cause, still, as officers of the
court, there should be an awareness that resort to such a technique does result in clogged dockets,
without the least justification especially so if there be insistence on flimsy and insubstantial
contentions just to give some semblance of plausibility to their pleadings. Certainly, technical
virtuosity, or what passes for it, is no substitute for an earnest and sincere desire to assure that there
be justice according to law. That is a creed to which all members of the legal profession, labor
lawyers not excluded, should do their best to live by.

WHEREFORE, the decision of the lower court of February 22, 1968 is affirmed. Costs against
Associated Labor Union.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar and
Antonio, JJ., concur.