Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II,

HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166,
RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.:

Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in
this special civil action for certiorari and Prohibition for having issued the challenged Writ of
Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel
Corporation vs. SMCEU-PTGWO, et als."

Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse
of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig.
for short), for its part, defends the Writ on the ground of absence of any employer-employee
relationship between it and the contractual workers employed by the companies Lipercon Services,
Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of
personality to represent said workers for purposes of collective bargaining. The Solicitor General
agrees with the position of SanMig.

The antecedents of the controversy reveal that:

Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with
Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are
independent contractors duly licensed by the Department of Labor and Employment (DOLE).
SanMig entered into those contracts to maintain its competitive position and in keeping with the
imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was
expressly understood and agreed that the workers employed by the contractors were to be paid by
the latter and that none of them were to be deemed employees or agents of SanMig. There was to
be no employer-employee relation between the contractors and/or its workers, on the one hand, and
SanMig on the other.

Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the
latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989
(Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary,
probationary, or contract employees and workers are excluded from the bargaining unit and,
therefore, outside the scope of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some
Lipercon and D'Rite workers had signed up for union membership and sought the regularization of
their employment with SMC. The Union alleged that this group of employees, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for
SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither
casual nor seasonal as they are performing work or activities necessary or desirable in the usual
business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting
situation. It was then demanded that the employment status of these workers be regularized.

On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig,
the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex
D, Petition).

On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex
F, Petition).

As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently,
the two (2) notices of strike were consolidated and several conciliation conferences were held to
settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G,
Petition).

Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and
D'Rite workers in various SMC plants and offices.

On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent
Court to enjoin the Union from:

a. representing and/or acting for and in behalf of the employees of LIPERCON and/or
D'RITE for the purposes of collective bargaining;

b. calling for and holding a strike vote, to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;

c. inciting, instigating and/or inducing the employees or workers of LIPERCON and

D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the
bargaining unit referred to in the CBA,...;

d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON

and D'RITE;

e. using the employees or workers of LIPERCON AND D'RITE to man the strike area
and/or picket lines and/or barricades which the defendants may set up at the plants
and offices of plaintiff within the bargaining unit referred to in the CBA ...;

f. intimidating, threatening with bodily harm and/or molesting the other employees
and/or contract workers of plaintiff, as well as those persons lawfully transacting
business with plaintiff at the work places within the bargaining unit referred to in the
CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;
 g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to,
and egress from, the work places within the bargaining unit referred to in the CBA ..,
to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the
work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to
compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex
H, Petition)

Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction
for hearing.

In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the
ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by
SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.

After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned
Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts
complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding
Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer
for whatever damages petitioners may sustain by reason thereof.

In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the existence of labor

dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance.

The evidence so far presented indicates that plaintiff has contracts for services with
Lipercon and D'Rite. The application and contract for employment of the defendants'
witnesses are either with Lipercon or D'Rite. What could be discerned is that there is
no employer-employee relationship between plaintiff and the contractual workers
employed by Lipercon and D'Rite. This, however, does not mean that a final
determination regarding the question of the existence of employer-employee
relationship has already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and engagement of the
putative employee; the mode of payment of wages; the presence or absence of a
power of dismissal; and the Presence or absence of a power to control the putative
employee's conduct. This necessitates a full-blown trial. If the acts complained of are
not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the
other hand, a writ of injunction does not necessarily expose defendants to irreparable
damages.

Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)

Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that
"we can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we
required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen
(13) of the latter's plants and offices.

On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to
conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite
employees were recalled, and discussion on their other demands, such as wage distortion and
appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement
between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case)
and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8
May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to
"lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and
return to work.

After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9
January 1990.

The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction
over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution
of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or
relates to a labor dispute. An affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.

Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves
or arose out of a labor dispute and is directly connected or interwoven with the cases pending with
the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).

On the other hand, SanMig denies the existence of any employer-employee relationship and
consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that
"respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of
strike staged by petitioner union and its officers herein complained of," for the reasons that:

A. The exclusive bargaining representative of an employer unit cannot strike to

compel the employer to hire and thereby create an employment relationship with
contractual workers, especially were the contractual workers were recognized by the
union, under the governing collective bargaining agreement, as excluded from, and
therefore strangers to, the bargaining unit.

B. A strike is a coercive economic weapon granted the bargaining representative

only in the event of a deadlock in a labor dispute over 'wages, hours of work and all
other and of the employment' of the employees in the unit. The union leaders cannot
instigate a strike to compel the employer, especially on the eve of certification
elections, to hire strangers or workers outside the unit, in the hope the latter will help
re-elect them.

C. Civil courts have the jurisdiction to enjoin the above because this specie of strike
does not arise out of a labor dispute, is an abuse of right, and violates the employer's
 constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476,
Rollo).

We find the Petition of a meritorious character.

A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."

While it is SanMig's submission that no employer-employee relationship exists between itself, on the
one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can
nevertheless exist "regardless of whether the disputants stand in the proximate relationship of
employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns,
among others, the terms and conditions of employment or a "change" or "arrangement" thereof
(ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the
fact that the plaintiffs and defendants do not stand in the proximate relation of employer and
employee.

That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union
seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that
they be absorbed into the working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved bringing the matter within the
purview of a labor dispute. Further, the Union also seeks to represent those workers, who have
signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part,
resists that Union demand on the ground that there is no employer-employee relationship between it
and those workers and because the demand violates the terms of their CBA. Obvious then is that
representation and association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation.
Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied
that the controversy below is directly connected with the labor dispute already taken cognizance of
by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).

Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and
D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship
may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon
and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the
notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the
employer to hire strangers outside the working unit; — those are issues the resolution of which call
for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably
linked with those issues.

The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon
by SanMig is not controlling as in that case there was no controversy over terms, tenure or
conditions, of employment or the representation of employees that called for the application of labor
laws. In that case, what the petitioning union demanded was not a change in working terms and
conditions, or the representation of the employees, but that its members be hired as stevedores in
the place of the members of a rival union, which petitioners wanted discharged notwithstanding the
existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis
of those facts unique to that case, that such a demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on
21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original
and exclusive jurisdiction to hear and decide the following cases involving all workers including "1.
unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other
terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this
Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the
plain command of the law.

The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil
Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That
claim for damages is interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the expeditious settlement of those
disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications, Electronics and
Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).

We recognize the proprietary right of SanMig to exercise an inherent management prerogative and
its best business judgment to determine whether it should contract out the performance of some of
its work to independent contractors. However, 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 (Section 3, Article XIII, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspective and equilibrium.

WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March
1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent
Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of
dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be
observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor
and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.

SO ORDERED.

Paras and Regalado, JJ., concur.

Padilla, Sarmiento, JJ., took no part.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 84433 June 2, 1992

ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138 others, petitioners,
vs.
CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations, Med. Arbiter
PATERNO ADAP, and TRI-UNION EMPLOYEES UNION, et al., respondent.

NARVASA, C.J.:

The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano) sustained the
denial by the Med Arbiter of the right to vote of one hundred forty-one (141) members of the "Iglesia
ni Kristo" (INK), all employed in the same company, at a certification election at which two (2) labor
organizations were contesting the right to be the exclusive representative of the employees in the
bargaining unit. That denial is assailed as having been done with grave abuse of discretion in the
special civil action of certiorari at bar, commenced by the INK members adversely affected thereby.

The certification election was authorized to be conducted by the Bureau of Labor Relations among
the employees of Tri-Union Industries Corporation on October 20, 1987. The competing unions were
Tri-Union Employees Union-Organized Labor Association in Line Industries and Agriculture (TUEU-
OLALIA), and Trade Union of the Philippines and Allied Services (TUPAS). Of the 348 workers
initially deemed to be qualified voters, only 240 actually took part in the election, conducted under
the provision of the Bureau of Labor Relations. Among the 240 employees who cast their votes were
141 members of the INK.

The ballots provided for three (3) choices. They provided for votes to be cast, of course, for either of
the two (2) contending labor organizations, (a) TUPAS and (b) TUEU-OLALIA; and, conformably
with established rule and practice, 1 for (c) a third choice: "NO UNION."

The final tally of the votes showed the following results:

TUPAS 1

TUEU-OLALIA 95

NO UNION 1

SPOILED 1

CHALLENGED 141
 The challenged votes were those cast by the 141 INK members. They were segregated and
excluded from the final count in virtue of an agreement between the competing unions,
reached at the pre-election conference, that the INK members should not be allowed to vote
"because they are not members of any union and refused to participate in the previous
certification elections."

The INK employees promptly made known their protest to the exclusion of their votes. They filed f a
petition to cancel the election alleging that it "was not fair" and the result thereof did "not reflect the
true sentiments of the majority of the employees." TUEU-OLALIA opposed the petition. It contended
that the petitioners "do not have legal personality to protest the results of the election," because
"they are not members of either contending unit, but . . . of the INK" which prohibits its followers, on
religious grounds, from joining or forming any labor organization . . . ."

The Med-Arbiter saw no merit in the INK employees 1 petition. By Order dated December 21, 1987,
he certified the TUEU-OLALIA as the sole and exclusive bargaining agent of the rank-and-file
employees. In that Order he decided the fact that "religious belief was (being) utilized to render
meaningless the rights of the non-members of the Iglesia ni Kristo to exercise the rights to be
represented by a labor organization as the bargaining agent," and declared the petitioners as "not
possessed of any legal personality to institute this present cause of action" since they were not
parties to the petition for certification election.

The petitioners brought the matter up on appeal to the Bureau of Labor Relations. There they argued
that the Med-Arbiter had "practically disenfranchised petitioners who had an overwhelming majority,"
and "the TUEU-OLALIA certified union cannot be legally said to have been the result of a valid
election where at least fifty-one percent of all eligible voters in the appropriate bargaining unit shall
have cast their votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge of
the Bureau of Labor Relations, denied the appeal in his Decision of July 22, 1988. He opined that
the petitioners are "bereft of legal personality to protest their alleged disenfrachisement" since they
"are not constituted into a duly organized labor union, hence, not one of the unions which vied for
certification as sole and exclusive bargaining representative." He also pointed out that the petitioners
"did not participate in previous certification elections in the company for the reason that their
religious beliefs do not allow them to form, join or assist labor organizations."

It is this Decision of July 22, 1988 that the petitioners would have this Court annul and set aside in
the present special civil action of certiorari.

The Solicitor General having expressed concurrence with the position taken by the petitioners, public
respondent NLRC was consequently required to file, and did thereafter file, its own comment on the
petition. In that comment it insists that "if the workers who are members of the Iglesia ni Kristo in the
exercise of their religious belief opted not to join any labor organization as a consequence of which
they themselves can not have a bargaining representative, then the right to be representative by a
bargaining agent should not be denied to other members of the bargaining unit."

Guaranteed to all employees or workers is the "right to self-organization and to form, join, or assist
labor organizations of their own choosing for purposes of collective bargaining." This is made plain
by no less than three provisions of the Labor Code of the Philippines. 2 Article 243 of the Code
provides as follows: 3

ART. 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 or collective bargaining. Ambulant, intermittent
and itinerant workers, self-employed people, rural workers and those without any
definite employers may form labor organizations for their mutual aid and protection.

Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to "interfere
with, restrain or coerce employees in the exercise of their right to self-organization." Similarly, Article
249 (a) makes it an unfair labor practice for a labor organization to "restrain or coerce employees in
the exercise of their rights to self-organization . . . "

The same legal proposition is set out in the Omnibus Rules Implementing the Labor Code, as
amended, as might be expected Section 1, Rule II (Registration of Unions), Book V (Labor
Relations) of the Omnibus Rules provides as follows; 4

Sec. 1. Who may join unions; exception. — All persons employed in commercial,
industrial and agricultural enterprises, including employees of government
corporations established under the Corporation Code as well as employees of
religious, medical or educational institutions, whether operating for profit or not,
except managerial employees, shall have the right to self-organization and to form,
join or assist labor organizations for purposes of collective bargaining. Ambulant,
intermittent and without any definite employers people, rural workers and those
without any definite employers may form labor organizations for their mutual aid and
protection.

xxx xxx xxx

The right of self-organization includes the right to organize or affiliate with a labor union or determine
which of two or more unions in an establishment to join, and to engage in concerted activities with
co-workers for purposes of collective bargaining through representatives of their own choosing, or
for their mutual aid and protection, i.e., the protection, promotion, or enhancement of their rights and
interests. 5

Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a
labor organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain
membership therein. The right to form or join a labor organization necessarily includes the right to
refuse or refrain from exercising said right. It is self-evident that just as no one should be denied the
exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred
right. The fact that a person has opted to acquire membership in a labor union does not preclude his
subsequently opting to renounce such membership. 6

As early as 1974 this Court had occasion to expatiate on these self-evident propositions
in Victoriano v. Elizalde Rope Workers' Union, et al., 7 viz.:

. . .What the Constitution and Industrial Peace Act recognize and guarantee is the
"right" to form or join associations. Notwithstanding the different theories propounded
by the different schools of jurisprudence regarding the nature and contents of a
"right," it can be safely said that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely: first, liberty or freedom, i.e., the
absence of legal restraint, whereby an employee may act for himself being prevented
by law; second, power, whereby an employee may, as he pleases, join or refrain
from joining an association. It is therefore the employee who should decide for
himself whether he should join or not an association; and should he choose to join;
and even after he has joined, he still retains the liberty and the power to leave and
 cancel his membership with said organization at any time (Pagkakaisa Samahang
Manggagawa ng San Miguel Brewery vs. Enriquez, et al., 108 Phil. 1010, 1019). It is
clear, therefore, that the right to join a union includes the right to abstain from joining
any union (Abo, et al. vs. PHILAME [KG] Employees Union, et al., L-19912, January
20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor Relations). Inasmuch as
what both the Constitution and the Industrial Peace Act have recognized, the
guaranteed to the employee, is the "right" to join associations of his choice, it would
be absurd to say that the law also imposes, in the same breath, upon the employee
the duty to join associations. The law does not enjoin an employee to sign up with
any association.

The right to refuse to join or be represented by any labor organization is recognized not only by law
but also in the rules drawn up for implementation thereof. The original Rules on Certification
promulgated by the defunct Court of Industrial Relations required that the ballots to be used at a
certification election to determine which of two or more competing labor unions would represent the
employees in the appropriate bargaining unit should contain, aside from the names of each union,
an alternative choice of the employee voting, to the effect that he desires not to which of two or more
competing labor unions would represent the employees in the appropriate bargaining unit should
contain, aside from the names of each union, an alternative choice of the employee voting, to the
effect that he desires not to be represented by any union. 8 And where only one union was involved,
the ballots were required to state the question — "Do you desire to be represented by said union?"
— as regards which the employees voting would mark an appropriate square, one indicating the
answer, "Yes" the other, "No."

To be sure, the present implementing rules no longer explicitly impose the requirement that the
ballots at a certification election include a choice for "NO UNION" Section 8 (rule VI, Book V of the
Omnibus Rules) entitled "Marketing and canvassing of votes," pertinently provides that:

. . . (a) The voter must write a cross (X) or a check (/) in the square opposite the
union of his choice. If only one union is involved, the voter shall make his cross or
check in the square indicating "YES" or "NO."

xxx xxx xxx

Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules expressly
bars the inclusion of the choice of "NO UNION" in the ballots. Indeed it is doubtful if the employee's
alternative right NOT to form, join or assist any labor organization or withdraw or resign from one
may be validly eliminated and he be consequently coerced to vote for one or another of the
competing unions and be represented by one of them. Besides, the statement in the quoted
provision that "(i)f only one union is involved, the voter shall make his cross or check in the square
indicating "YES" or "NO," is quite clear acknowledgment of the alternative possibility that the "NO"
votes may outnumber the "YES" votes — indicating that the majority of the employees in the
company do not wish to be represented by any union — in which case, no union can represent the
employees in collective bargaining. And whether the prevailing "NO" votes are inspired by
considerations of religious belief or discipline or not is beside the point, and may not be inquired into
at all.

The purpose of a certification election is precisely the ascertainment of the wishes of the majority of
the employees in the appropriate bargaining unit: to be or not to be represented by a labor
organization, and in the affirmative case, by which particular labor organization. If the results of the
election should disclose that the majority of the workers do not wish to be represented by any union,
then their wishes must be respected, and no union may properly be certified as the exclusive
representative of the workers in the bargaining unit in dealing with the employer regarding wages,
hours and other terms and conditions of employment. The minority employees — who wish to have
a union represent them in collective bargaining — can do nothing but wait for another suitable
occasion to petition for a certification election and hope that the results will be different. They may
not and should not be permitted, however, to impose their will on the majority — who do not desire
to have a union certified as the exclusive workers' benefit in the bargaining unit — upon the plea that
they, the minority workers, are being denied the right of self-organization and collective bargaining.
As repeatedly stated, the right of self-organization embraces not only the right to form, join or assist
labor organizations, but the concomitant, converse right NOT to form, join or assist any labor union.

That the INK employees, as employees in the same bargaining unit in the true sense of the term, do
have the right of self-organization, is also in truth beyond question, as well as the fact that when they
voted that the employees in their bargaining unit should be represented by "NO UNION," they were
simply exercising that right of self-organization, albeit in its negative aspect.

The respondents' argument that the petitioners are disqualified to vote because they "are not
constituted into a duly organized labor union" — "but members of the INK which prohibits its
followers, on religious grounds, from joining or forming any labor organization" — and "hence, not
one of the unions which vied for certification as sole and exclusive bargaining representative," is
specious. Neither law, administrative rule nor jurisprudence requires that only employees affiliated
with any labor organization may take part in a certification election. On the contrary, the plainly
discernible intendment of the law is to grant the right to vote to all bona fide employees in the
bargaining unit, whether they are members of a labor organization or not. As held in Airtime
Specialists, Inc. v. Ferrer-Calleja: 9

In a certification election all rank-and-file employees in the appropriate bargaining

unit are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code
which states that the "labor organization designated or selected by the majority of the
employees in an appropriate bargaining unit shall be the exclusive representative of
the employees in such unit for the purpose of collective bargaining." Collective
bargaining covers all aspects of the employment relation and the resultant CBA
negotiated by the certified union binds all employees in the bargaining unit. Hence,
all rank-and-file employees, probationary or permanent, have a substantial interest in
the selection of the bargaining representative. The Code makes no distinction as to
their employment for certification election. The law refers to "all" the employees in the
bargaining unit. All they need to be eligible to support the petition is to belong to the
"bargaining unit".

Neither does the contention that petitioners should be denied the right to vote because they "did not
participate in previous certification elections in the company for the reason that their religious beliefs
do not allow them to form, join or assist labor organizations," persuade acceptance. No law,
administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to
exercise the right in past certification elections. In denying the petitioners' right to vote upon these
egregiously fallacious grounds, the public respondents exercised their discretion whimsically,
capriciously and oppressively and gravely abused the same.

WHEREFORE, the petition for certiorari is GRANTED; the Decision of the then Officer-in-Charge of
the Bureau of Labor Relations dated December 21, 1987 (affirming the Order of the Med-Arbiter
dated July 22, 1988) is ANNULLED and SET ASIDE; and the petitioners are DECLARED to have
legally exercised their right to vote, and their ballots should be canvassed and, if validly and properly
made out, counted and tallied for the choices written therein. Costs against private respondents.
SO ORDERED.

Paras, Padilla and Regalado, JJ., concur.

Nocon, J., is on leave.

Footnotes

1 SEE footnote 5, infra.

2 As amended inter alia by R.A. Nos. 6715-6725 and 6727.

3 Emphasis supplied

4 Emphasis supplied

5 Art. 247, Labor Code, as amended; SEE Fernandez and Quiazon, Law of Labor
Relations, p. 162.

6 To be sure, the right not to join a union, or discontinue membership therein, is

subject to a certain qualifications or exceptions as, e.g., where there is a close shop
or similar agreement in effect in the establishments, although it has been held that
such agreements are not applicable to any religious sect which prohibits affiliation of
their members in any labor organizations (Sec. 4(a), R.A. 875 [The Industrial Peace
Act], as amended by R.A. No. 3350)

7 59 SCRA 54, 66-67 (1974)

8 SEE Fernandez & Quiazon, op. cit. pp. 499-501

9 180 SCRA 749, 754 (1989).

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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.1âwphi1

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, Griño-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.
 FIRST DIVISION

[G.R. No. 108855. February 28, 1996]

METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE MA. NIEVES ROLDAN-

CONFESOR, in her capacity as Secretary of the Department of Labor and Employment
and METRO DRUG CORPORATION EMPLOYEES ASSOCIATION-FEDERATION OF
FREE WORKERS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF ADMINISTRATIVE AGENCIES; RULE;
CASE AT BAR. - We reaffirm the doctrine that considering their expertise in their respective
fields, factual findings of administrative agencies supported by substantial evidence are accorded
great respect and binds this Court. The Secretary of Labor ruled, thus: x x x Any act committed
during the pendency of the dispute that tends to give rise to further contentious issues or increase
the tensions between the parties should be considered an act of exacerbation. One must look at
the act itself, not on speculative reactions. A misplaced recourse is not needed to prove that a
dispute has been exacerbated. For instance, the Union could not be expected to file another
notice of strike. For this would depart from its theory of the case that the layoff is subsumed under
the instant dispute, for which a notice of strike had already been filed. On the other hand, to expect
violent reactions, unruly behavior, and any other chaotic or drastic action from the Union is to
expect it to commit acts disruptive of public order or acts that may be illegal. Under a regime of
laws, legal remedies take the place of violent ones. x xx Protest against the subject layoffs need
not be in the form of violent action or any other drastic measure. In the instant case the Union
registered their dissent by swiftly filing a motion for a cease and desist order. Contrary to
petitioners allegations, the Union strongly condemned the layoffs and threatened mass action if
the Secretary of Labor fails to timely intervene: x x x 3. This unilateral action of management is a
blatant violation of the injunction of this Office against committing acts which would exacerbate
the dispute. Unless such act is enjoined the Union will be compelled to resort to its legal right to
mass actions and concerted activities to protest and stop the said management action. This mass
layoff is clearly one which would result in a very serious dispute unless this Office swiftly
intervenes. x x x Metrolab and the Union were still in the process of resolving their CBA deadlock
when petitioner implemented the subject layoffs. As a result, motions and oppositions were filed
diverting the parties attention, delaying resolution of the bargaining deadlock and postponing the
signing of their new CBA, thereby aggravating the whole conflict.
2. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EXERCISE OF
MANAGEMENT PREROGATIVES; NOT ABSOLUTE; SUBJECT TO EXCEPTIONS IMPOSED
BY LAW. - This Court recognizes the exercise of management prerogatives and often declines
to interfere with the legitimate business decisions of the employer. However, this privilege is not
absolute but subject to limitations imposed by law. In PAL vs. NLRC, (225 SCRA 301 [1993]), we
issued this reminder: ... the exercise of management prerogatives was never considered
boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that managements
prerogatives must be without abuse of discretion ...All this points to the conclusion that the
exercise of managerial prerogatives is not unlimited. It is circumscribed by limi(ations found in
law, a collective bargaining agreement, or the general principles of fair play and justice (University
of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]).
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN EXCEPTION. - The case at bench constitutes one of the
exceptions. The Secretary of Labor is expressly given the power under the Labor Code to assume
 jurisdiction and resolve labor disputes involving industries indispensable to national interest. The
disputed injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor
Code specifically provides that: x x x (g) When, in his opinion, there exists a labor dispute causing
or likely to cause a strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or
certify the same to the Commission for compulsory arbitration. Such assumption or certification
shall have the effect of automatically enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall immediately return to work
and the employer shall immediately resume operations and readmit all workers under the same
terms and conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may issue to enforce the same. .
. . That Metrolabs business is of national interest is not disputed. Metrolab is one of the leading
manufacturers and suppliers of medical and pharmaceutical products to the country. Metrolabs
management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and
tempered by the limitations set by law, taking into account its special character and the particular
circumstances in the case at bench.
4. ID.; LABOR RELATIONS; INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN, FORM
AND ASSIST ANY LABOR ORGANIZATION; PROHIBITION EXTENDED TO CONFIDENTIAL
EMPLOYEES. - 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.
5. ID.; ID.; EXCLUSION OF CONFIDENTIAL EMPLOYEES FROM THE RANK AND FILE
BARGAINING UNIT; NOT TANTAMOUNT TO DISCRIMINATION. - Confidential employees
cannot be classified as rank and file. As previously discussed, the nature of employment of
confidential employees is quite distinct from the rank and file, thus, warranting a separate
category. Excluding confidential employees from the rank and file bargaining unit, therefore, is
not tantamount to discrimination.
APPEARANCES OF COUNSEL
Bautista Picazo Buyco Tan & Fider for petitioner.
The Solicitor General for public respondent.
Perfecto V. Fernandez, Jose P. Fernandez & Cristobal P. Fernandez for Metro Drug Corporation.

DECISION
KAPUNAN, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment
of the Resolution and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April
1992 and 25 January 1993, respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-9 1; NCMB-
NCR-NS-09-678-91) on grounds that these were issued with grave abuse of discretion and in excess
of jurisdiction.
Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers
(hereinafter referred to as the Union) is a labor organization representing the rank and file employees
of petitioner Metrolab Industries, Inc. (hereinafter referred to as Metrolab/MII) and also of Metro Drug,
Inc.
 On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the
Union expired. The negotiations for a new CBA, however, ended in a deadlock.
Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro
Drug Inc. The parties failed to settle their dispute despite the conciliation efforts of the National
Conciliation and Mediation Board.
To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres,
issued an assumption order dated 20 September 1991, the dispositive portion of which reads, thus:

WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as
amended, this Office hereby assumes jurisdiction over the entire labor dispute at Metro Drug, Inc. -
Metro Drug Distribution Division and Metrolab Industries Inc.

Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug
Corp. Employees Association - FFW are likewise directed to cease and desist from committing any
and all acts that might exacerbate the situation.

Finally, the parties are directed to submit their position papers and evidence on the aforequoted
deadlocked issues to this office within twenty (20) days from receipt hereof.

SO ORDERED.[1] (Italics ours.)

On 27 December 1991, then Labor Secretary Torres issued an order resolving all the disputed
items in the CBA and ordered the parties involved to execute a new CBA.
Thereafter, the Union filed a motion for reconsideration.
On 27 January 1992, during the pendency of the abovementioned motion for reconsideration,
Metrolab laid off 94 of its rank and file employees.
On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from
implementing the mass layoff, alleging that such act violated the prohibition against committing acts
that would exacerbate the dispute as specifically directed in the assumption order.[2]
On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its
management prerogative. It maintained that the company would suffer a yearly gross revenue loss of
approximately sixty-six (66) million pesos due to the withdrawal of its principals in the Toll and Contract
Manufacturing Department. Metrolab further asserted that with the automation of the manufacture of
its product Eskinol, the number of workers required its production is significantly reduced.[3]
Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis
due to availability of work in the production lines.
On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff
of Metrolabs 94 rank and file workers illegal and ordered their reinstatement with full backwages. The
dispositive portion reads as follows:

WHEREFORE, the Unions motion for reconsideration is granted in part, and our order of 28
December 1991 is affirmed subject to the modifications in allowances and in the close shop
provision. The layoff of the 94 employees at MII is hereby declared illegal for the failure of the latter
to comply with our injunction against committing any act which may exacerbate the dispute and with
the 30-day notice requirement. Accordingly, MII is hereby ordered to reinstate the 94 employees,
except those who have already been recalled, to their former positions or substantially equivalent,
positions with full backwages from the date they were illegally laid off on 27 January 1992 until
actually reinstated without loss of seniority rights and other benefits. Issues relative to the CBA
agreed upon by the parties and not embodied in our earlier order are hereby ordered adopted for
incorporation in the CBA. Further, the dispositions and directives contained in all previous orders
and resolutions relative to the instant dispute, insofar as not inconsistent herein, are reiterated.
Finally, the parties are enjoined to cease and desist from committing any act which may tend to
circumvent this resolution.

SO RESOLVED.[4]

On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did
not aggravate the dispute since no untoward incident occurred as a result thereof. It, likewise, filed a
motion for clarification regarding the constitution of the bargaining unit covered by the CBA.
On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The
execution, however, was without prejudice to the outcome of the issues raised in the reconsideration
and clarification motions submitted for decision to the Secretary of Labor.[5]
Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its
employees on grounds of redundancy due to lack of work which the Union again promptly opposed
on 5 October 1992.
On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order. Metrolab
moved for a reconsideration.[6]
On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution
containing the following orders:
xxx xxx xxx.

1. MIIs motion for partial reconsideration of our 14 April 1992 resolution specifically that portion
thereof assailing our ruling that the layoff of the 94 employees is illegal, is hereby denied. MII is
hereby ordered to pay such employees their full backwages computed from the time of actual layoff
to the time of actual recall;

2. For the parties to incorporate in their respective collective bargaining agreements the clarifications
herein contained; and

3. MIIs motion for reconsideration with respect to the consequences of the second wave of layoff
affecting 73 employees, to the extent of assailing our ruling that such layoff tended to exacerbate the
dispute, is hereby denied. But inasmuch as the legality of the layoff was not submitted for our
resolution and no evidence had been adduced upon which a categorical finding thereon can be
based, the same is hereby referred to the NLRC for its appropriate action.

Finally, all prohibitory injunctions issued as a result of our assumption of jurisdiction over this dispute
are hereby lifted.

SO RESOLVED.[7]

Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-
shop provision of the CBA, not from the bargaining unit.
On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the
present petition for certiorari with application for issuance of a Temporary Restraining Order.
 On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary of Labor
from enforcing and implementing the assailed Resolution and Omnibus Resolution dated 14 April 1992
and 25 January 1993, respectively.
In its petition, Metrolab assigns the following errors:
A

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT COMMITTED

GRAVE ABUSE OF DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE
TEMPORARY LAYOFF ILLEGAL AND ORDERING THE REINSTATEMENT AND PAYMENT OF
BACKWAGES TO THE AFFECTED EMPLOYEES.*

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY

ABUSED HER DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE
BARGAINING UNIT OF RANK AND FILE EMPLOYEES.[8]

Anent the first issue, we are asked to determine whether or not public respondent Labor Secretary
committed grave abuse of discretion and exceeded her jurisdiction in declaring the subject layoffs
instituted by Metrolab illegal on grounds that these unilateral actions aggravated the conflict between
Metrolab and the Union who were, then, locked in a stalemate in CBA negotiations.
Metrolab argues that the Labor Secretarys order enjoining the parties from committing any act
that might exacerbate the dispute is overly broad, sweeping and vague and should not be used to
curtail the employers right to manage his business and ensure its viability.
We cannot give credence to Metrolabs contention.
This Court recognizes the exercise of management prerogatives and often declines to interfere
with the legitimate business decisions of the employer. However, this privilege is not absolute but
subject to limitations imposed by law.[9]
In PAL v. NLRC,[10] we issued this reminder:
xxx xxx xxx

. . .the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs.
Medina ( 177 SCRA 565 [1989]), it was held that managements prerogatives must be without abuse
of discretion....

xxx xxx xxx

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective bargaining agreement, or the general
principles of fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]). . . .
(Italics ours.)

xxx xxx xxx.

The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given
the power under the Labor Code to assume jurisdiction and resolve labor disputes involving industries
indispensable to national interest. The disputed injunction is subsumed under this special grant of
authority. Art. 263 (g) of the Labor Code specifically provides that:
 xxx xxx xxx

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in
an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or certification
order. If one has already taken place at the time of assumption or certification, all striking or locked
out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike
or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of
law enforcement agencies to ensure compliance with this provision as well as with such orders as he
may issue to enforce the same. . . (Italics ours.)

xxx xxx xxx.

That Metrolabs business is of national interest is not disputed. Metrolab is one of the leading
manufacturers and suppliers of medical and pharmaceutical products to the country.
Metro labs management prerogatives, therefore, are not being unjustly curtailed but duly
balanced with and tempered by the limitations set by law, taking into account its special character and
the particular circumstances in the case at bench.
As aptly declared by public respondent Secretary of Labor in its assailed resolution:
xxx xxx xxx.

MII is right to the extent that as a rule, we may not interfere with the legitimate exercise of
management prerogatives such as layoffs. But it may nevertheless be appropriate to mention here
that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the
exacerbation of a labor dispute to the further detriment of the national interest. When a labor dispute
has in fact occurred and a general injunction has been issued restraining the commission of
disruptive acts, management prerogatives must always be exercised consistently with the statutory
objective.[11]

xxx xxx xxx.

Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no
untoward incident occurred after the layoffs were implemented. There were no work disruptions or
stoppages and no mass actions were threatened or undertaken.Instead, petitioner asserts, the
affected employees calmly accepted their fate as this was a matter which they had been previously
advised would be inevitable.[12]
After a judicious review of the record, we find no compelling reason to overturn the findings of the
Secretary of Labor.
We reaffirm the doctrine that considering their expertise in their respective fields, factual findings
of administrative agencies supported by substantial evidence are accorded great respect and binds
this Court.[13]
The Secretary of Labor ruled, thus:
xxx xxx xxx.

Any act committed during the pendency of the dispute that tends to give rise to further contentious
issues or increase the tensions between the parties should be considered an act of
exacerbation. One must look at the act itself, not on speculative reactions. A misplaced recourse is
not needed to prove that a dispute has been exacerbated. For instance, the Union could not be
expected to file another notice of strike. For this would depart from its theory of the case that the
layoff is subsumed under the instant dispute, for which a notice of strike had already been filed. On
the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic action
from the Union is to expect it to commit acts disruptive of public order or acts that may be
illegal. Under a regime of laws, legal remedies take the place of violent ones.[14]

xxx xxx xxx.

Protest against the subject layoffs need not be in the form of violent action or any other drastic
measure. In the instant case the Union registered their dissent by swiftly filing a motion for a cease
and desist order. Contrary to petitioners allegations, the Union strongly condemned the layoffs and
threatened mass action if the Secretary of Labor fails to timely intervene:

xxx xxx xxx.

3. This unilateral action of management is a blatant violation of the injunction of this Office against
committing acts which would exacerbate the dispute. Unless such act is enjoined the Union will be
compelled to resort to its legal right to mass actions and concerted activities to protest and stop the
said management action. This mass layoff is clearly one which would result in a very serious labor
dispute unless this Office swiftly intervenes.[15]

xxx xxx xxx.

Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner
implemented the subject layoffs. As a result, motions and oppositions were filed diverting the parties
attention, delaying resolution of the bargaining deadlock and postponing the signing of their new CBA,
thereby aggravating the whole conflict.
We, likewise, find untenable Metrolabs contention that the layoff of the 94 rank-and-file employees
was temporary, despite the recall of some of the laid off workers.
If Metrolab intended the layoff of the 94 workers to be temporary, it should have plainly stated so
in the notices it sent to the affected employees and the Department of Labor and Employment.
Consider the tenor of the pertinent portions of the layoff notice to the affected employees:
xxx xxx xxx.

Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng lay-off ng mga
empleyado sa Rank & File dahil nabawasan ang trabaho at puwesto para sa kanila. Marami sa atin
ang kasama sa lay-off dahil wala nang trabaho para sa kanila. Mahirap tanggapin ang mga bagay
na ito subalit kailangan nating gawin dahil hindi kaya ng kumpanya ang magbayad ng suweldo kung
ang empleyado ay walang trabaho. Kung tayo ay patuloy na magbabayad ng suweldo, mas hihina
ang ating kumpanya at mas marami ang maaring maapektuhan.

Sa pagpapatupad ng lay-off susundin natin ang LAST IN-FIRST OUT policy. Ang mga empleyadong
may pinakamaikling serbisyo sa kumpanya ang unang maaapektuhan. Ito ay batay na rin sa
nakasaad sa ating CBA na ang mga huling pumasok sa kumpanya ang unang masasama sa lay-off
kapag nagkaroon ng ganitong mga kalagayan.

Ang mga empleyado na kasama sa lay-off ay nakalista sa sulat na ito. Ang umpisa ng lay-off ay sa
Lunes, Enero 27. Hindi na muna sila papasok sa kumpanya. Makukuha nila ang suweldo nila sa
Enero 30, 1992.
Hindi po natin matitiyak kung gaano katagal ang lay-off ngunit ang aming tingin ay matatagalan bago
magkaroon ng dagdag na trabaho. Dahil dito, sinimulan na namin ang isang Redundancy Program
sa mga supervisors. Nabawasan ang mga puwesto para sa kanila, kaya sila ay mawawalan ng
trabaho at bibigyan na ng redundancy pay.[16] (Italics ours.)

xxx xxx xxx.

We agree with the ruling of the Secretary of Labor, thus:
xxx xxx xxx.

. . .MII insists that the layoff in question is temporary not permanent. It then cites International
Hardware, Inc. vs. NLRC, 176 SCRA 256, in which the Supreme Court held that the 30-day notice
required under Article 283 of the Labor Code need not be complied with if the employer has no
intention to permanently severe (sic) the employment relationship.

We are not convinced by this argument. International Hardware involves a case where there had
been a reduction of workload. Precisely to avoid laying off the employees, the employer therein
opted to give them work on a rotating basis. Though on a limited scale, work was available. This was
the Supreme Courts basis for holding that there was no intention to permanently severe (sic) the
employment relationship.

Here, there is no circumstance at all from which we can infer an intention from MII not to sever the
employment relationship permanently. If there was such an intention, MII could have made it very
clear in the notices of layoff. But as it were, the notices are couched in a language so uncertain that
the only conclusion possible is the permanent termination, not the continuation, of the employment
relationship.

MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. While
insisting that there is really no best time to announce a bad news, (sic) it also claims that it broke the
bad news only on 27 January 1992 because had it complied with the 30-day notice, it could have
broken the bad news on 02 January 1992, the first working day of the year. If there is really no best
time to announce a bad news (sic), it wouldnt have mattered if the same was announced at the first
working day of the year. That way, MII could have at least complied with the requirement of the
law.[17]

The second issue raised by petitioner merits our consideration.

In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA provisions on
closed-shop and the scope of the bargaining unit in this wise:
xxx xxx xxx.
Appropriateness of the bargaining unit.
xxx xxx xxx.
Exclusions. In our 14 April 1992 resolution, we ruled on the issue of exclusion as follows:

These aside, we reconsider our denial of the modifications which the Union proposes to introduce on
the close shop provision. While we note that the provision as presently worded has served the
relationship of the parties well under previous CBAs, the shift in constitutional policy toward
expanding the right of all workers to self-organization should now be formally recognized by the
parties, subject to the following exclusions only:
1. Managerial employees; and

2. The executive secretaries of the President, Executive Vice-President, Vice-President, Vice

President for Sales, Personnel Manager, and Director for Corporate Planning who may have access
to vital labor relations information or who may otherwise act in a confidential capacity to persons who
determine or formulate management policies.

The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be modified
consistently with the foregoing.

Article I (b) of the 1988-1990 CBA provides:

b)Close Shop. - All Qualified Employees must join the Association immediately upon regularization
as a condition for continued employment. This provision shall not apply to: (i) managerial employees
who are excluded from the scope of the bargaining unit; (ii) the auditors and executive secretaries of
senior executive officers, such as, the President, Executive Vice-President, Vice-President for
Finance, Head of Legal, Vice-President for Sales, who are excluded from membership in the
Association; and (iii) those employees who are referred to in Attachment I hereof, subject, however,
to the application of the provision of Article II, par. (b) hereof. Consequently, the above-specified
employees are not required to join the Association as a condition for their continued employment.

On the other hand, Attachment I provides:

Exclusion from the Scope of the Close Shop Provision
The following positions in the Bargaining Unit are not covered by the Close Shop provision of the
CBA (Article I, par. b):

1. Executive Secretaries of Vice-Presidents, or equivalent positions.

2. Executive Secretary of the Personnel Manager, or equivalent positions.

3. Executive Secretary of the Director for Corporate Planning, or equivalent positions.

4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at Head
Office, Accounting Department at Head Office, and Budget Staff, who because of the nature of their
duties and responsibilities need not join the Association as a condition for their employment.

5. Newly-hired secretaries of Branch Managers and Regional Managers.

Both MDD and MII read the exclusion of managerial employees and executive secretaries in our
14 April 1992 resolution as exclusion from the bargaining unit. They point out that managerial
employees are lumped under one classification with executive secretaries, so that since the former
are excluded from the bargaining unit, so must the latter be likewise excluded.
This reading is obviously contrary to the intent of our 14 April 1992 resolution. By recognizing the
expanded scope of the right to self-organization, our intent was to delimit the types of employees
excluded from the close shop provision, not from the bargaining unit, to executive secretaries
only. Otherwise, the conversion of the exclusionary provision to one that refers to the bargaining unit
from one that merely refers to the close shop provision would effectively curtail all the organizational
rights of executive secretaries.
 The exclusion of managerial employees, in accordance with law, must therefore still carry the
qualifying phrase from the bargaining unit in Article I (b)(i) of the 1988-1990 CBA. In the same manner,
the exclusion of executive secretaries should be read together with the qualifying phrase are excluded
from membership in the Association of the same Article and with the heading of Attachment I. The
latter refers to Exclusions from Scope of Close Shop Provision and provides that [t]he following
positions in Bargaining Unit are not covered by the close shop provision of the CBA.
The issue of exclusion has different dimension in the case of MII. In an earlier motion for
clarification, MII points out that it has done away with the positions of Executive Vice-President, Vice-
President for Sales, and Director for Corporate Planning. Thus, the foregoing group of exclusions is
no longer appropriate in its present organizational structure. Nevertheless, there remain MII officer
positions for which there may be executive secretaries. These include the General Manager and
members of the Management Committee, specifically i) the Quality Assurance Manager; ii) the Product
Development Manager; iii) the Finance Director; iv) the Management System Manager; v) the Human
Resources Manager; vi) the Marketing Director; vii) the Engineering Manager; viii) the Materials
Manager; and ix) the Production Manager.
xxx xxx xxx
The basis for the questioned exclusions, it should be noted, is no other than the previous CBA
between MII and the Union. If MII had undergone an organizational restructuring since then, this is a
fact to which we have never been made privy. In any event, had this been otherwise the result would
have been the same. To repeat, we limited the exclusions to recognize the expanded scope of the
right to self-organization as embodied in the Constitution.[18]
Metrolab, however, maintains that 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, who are all members of the
companys Management Committee should not only be exempted from the closed-shop provision but
should be excluded from membership in the bargaining unit of the rank and file employees as well on
grounds that their executive secretaries are confidential employees, having access to vital labor
information.[19]
We concur with Metrolab.
Although Article 245 of the Labor Code[20] 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.
The rationale behind the exclusion of confidential employees from the bargaining unit of the rank
and file employees and their disqualification to join any labor organization was succinctly discussed
in Philips Industrial Development v. NLRC:[21]
xxx xxx xxx.

On the main issue raised before Us, it is quite obvious that respondent NLRC committed grave
abuse of discretion in reversing the decision of the Executive Labor Arbiter and in decreeing that
PIDIs Service Engineers, Sales Force, division secretaries, all Staff of General Management,
Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems
are included within the rank and file bargaining unit.

In the first place, all these employees, with the exception of the service engineers and the sales
force personnel, are confidential employees. Their classification as such is not seriously disputed by
PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as
confidential employees. 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. As such, the rationale behind the ineligibility of managerial employees to
form, assist or join a labor union equally applies to them.

In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this Court elaborated on this rationale,
thus:

x x x The rationale for this inhibition has been stated to be, because 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.

In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale applicable to
confidential employees:

This rationale holds true also for 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 a spy or spies of either party to a collective
bargaining agreement. This is specially true in the present case where the petitioning Union is
already the bargaining agent of the rank-and-file employees in the establishment. To allow the
confidential employees to join the existing Union of the rank-and-file would be in violation of the
terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their
functions/positions are expressly excluded.

xxx xxx xxx.

Similarly, in National Association of Trade Union - Republic Planters Bank Supervisors Chapter
v. Torres[22] we declared:
xxx xxx xxx.

. . . As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers and
Controllers are confidential employees, having control, custody and/ or access to confidential
matters, e.g., the branchs 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, this claim is not even disputed by
petitioner. 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 employees as ineligible to join, assist or form any labor organization,
under the doctrine of necessary, implication, confidential employees are similarly disqualified. . . .

xxx xxx xxx.

. . .(I)n 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. . . .

xxx xxx xxx.

And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor,[23] we
ruled that:
xxx xxx xxx.

Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically
routinary and clerical. However, they should be differentiated from rank-and-file employees because
they 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. Legal secretaries therefore fall under
the category of confidential employees. . . .

xxx xxx xxx.

We thus hold that public respondent acted with grave abuse of discretion in not excluding the four
foremen and legal secretary from the bargaining unit composed of rank-and-file employees.

xxx xxx xxx.

In the case at bench, the Union does not disagree with petitioner that the executive secretaries are
confidential employees. It however, makes the following contentions:

xxx xxx xxx.

There would be no danger of company domination of the Union since the confidential employees
would not be members of and would not participate in the decision making processes of the Union.

Neither would there be a danger of espionage since the confidential employees would not have any
conflict of interest, not being members of the Union. In any case, there is always the danger that any
employee would leak management secrets to the Union out of sympathy for his fellow rank and filer
even if he were not a member of the union nor the bargaining unit.

Confidential employees are rank and file employees and they, like all the other rank and file
employees, should be granted the benefits of the Collective Bargaining Agreement. There is no valid
basis for discriminating against them. The mandate of the Constitution and the Labor Code, primarily
of protection to Labor, compels such conclusion.[24]

xxx xxx xxx.

The Unions assurances fail to convince. The dangers sought to be prevented, particularly the
threat of conflict of interest and espionage, are not eliminated by non-membership of Metrolabs
executive secretaries or confidential employees in the Union. Forming part of the bargaining unit, the
executive secretaries stand to benefit from any agreement executed between the Union and
Metrolab. Such a scenario, thus, gives rise to a potential conflict between personal interests and their
duty as confidential employees to act for and in behalf of Metrolab. They do not have to be union
members to affect or influence either side.
 Finally, confidential employees cannot be classified as rank and file. As previously discussed, the
nature of employment of confidential employees is quite distinct from the rank and file, thus, warranting
a separate category. Excluding confidential employees from the rank and file bargaining unit,
therefore, is not tantamount to discrimination.
WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public
respondent Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the
extent that executive secretaries of petitioner Metrolabs General Manager and the executive
secretaries of the members of its Management Committee are excluded from the bargaining unit of
petitioners rank and file employees.
SO ORDERED.
Padilla, Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.

Footnotes

[1]
Rollo, p.74.
[2]
Id., at 202-204.
[3]
Id., at 8-9.
[4]

[5]
Id., at 303.
[6]
Id., at 236-241.
[7]
Id., at 70-71.
*
Metrolab submits that the issue in the instant petition for certiorari is limited to the determination of whether
or not the Secretary of Labor gravely abused her discretion in ruling that the layoff of its 94 workers
exacerbated their labor dispute with the Union. Metrolab underscores that the basis for the said
layoff has never been placed in issue. (Rollo, pp. 327- 328.)
In the same manner, Metrolab prefatorily declared that it does not dispute the Secretary of Labors
certification to the NLRC of the legality (or illegality) of the second layoff of Metrolabs 73 rank and
file workers on grounds of redundancy (Rollo, pp. 11-12). In its Consolidated Reply, Metrolab
states, thus:
5.0. Moreover, the redundancy program of October 1992 is not an issue in the present petition. The assailed
Omnibus Order, in no uncertain terms, ordered that this matter be brought before the National
Labor Relations Commission (NLRC) for adjudication (Please see Annex A-i of the Petition).
Petitioner herein does not question the said part of the Omnibus Resolution in the present petition.
The time for the same is not yet ripe, as the NLRC still has to pass judgment upon the facts
surrounding the redundancy program. As of this writing, the said redundancy program is presently
being litigated before the Arbitration Branch of the NLRC in NLRC-NCR Case No. 00-05-03325-93
entitled Metro Drug Corporation Employees Association - FFW v. Metrolab Industries, Inc., et al.
before Labor Arbiter Cornelio Linsangan. (Rollo, p. 330.)
[8]
Id., at 13.
[9]
Radio Communications of the Philippines, Inc. v. NLRC, 221 SCRA 782 (1993); Corral v. NLRC, 221
SCRA 693(1993); Rubberworld (Phils.), Inc. v. NLRC, 175 SCRA 450 (1989).
[10]
225 SCRA 301 (1993).
[11]
Rollo, p. 46.
[12]
Id., at 335.
[13]
Association of Marine Officers & Seamen of Reyes & Lim Co. v. Laguesma, 239 SCRA 460 (1994); Maya
Farms Employees Organization v. NLRC, 239 SCRA 508 (1994); Rabago v. NLRC, 200 SCRA 158
(1991); Pan Pacific Industrial Sales, Co., Inc. v. NLRC, 194 SCRA 633 (1991).
[14]
Rollo, p. 57.
[15]
Id., at 202-204; 228-234; Urgent Motion to Resolve Unions Motion dated 27 January 1992, Folder 4,
Original Record.
[16]
Rollo, p. 198.
[17]
Id., at 58-59.
[18]
Rollo, pp. 59-63.
[19]
Id., at 31-32.
[20]
Art. 245. Labor Code. 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.
[21]
210 SCRA 339(1992).
[22]
239 SCRA 546(1994).
[23]
241 SCRA 294(1995).
[24]
Rollo, pp. 192-193.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 110854 February 13, 1995

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC., petitioner,

vs.
HON. MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of Labor and
Employment, and GENERAL MARITIME & STEVEDORES UNION (GMSU), respondents.

PUNO, J.:

Petitioner corporation and private respondent labor union entered into a three-year Collective
Bargaining Agreement (CBA) with expiry date on November 27, 1991. During the freedom period the
National Federation of Labor Unions (NAFLU) questioned the majority status of Private respondent
through a petition for certification election. The election conducted on February 27, 1992 was won by
private respondent. On March 19, 1992, private respondent was certified as the sole and exclusive
bargaining agent of petitioner's rank-and-file employees.

On June 22, 1992, private respondent's CBA proposals were received by petitioner. Counter-
proposals were made by petitioner. Negotiations collapsed, and on August 24, 1992, private-
respondent filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB). The
NCMB tried but failed to settle the parties' controversy.

On September 30, 1992, public respondent Secretary of Labor assumed jurisdiction over the
dispute. She resolved the bargaining deadlock between the parties through an Order, dated March
4, 1993, which reads, in part:

xxx xxx xxx

A. The non-economic issues

1. Scope/coverage of the CBA. Article I of the 1988 CBA provides:

The Company recognizes the Union as the sole and exclusive

collective bargaining representative of all the stevedores,
dockworkers, gang bosses, foremen, rank and file employees
working at Pier 8, North Harbor and its offices and said positions are
[sic] listed in ANNEX "A" hereof.

As such representative the UNION is designated as the collective

bargaining agent with respect to and concerning the terms and
conditions of employment and the interpretations and implementation
of the provisions and conditions of this Agreement.
Annex "A" of the CBA is the listing of positions covered thereby. These are:

1. Foremen;
2. Gang bosses;
3. Winchmen;
4. Signalmen;
5. Stevedores;
6. Dockworkers;
7. Tallymen;
8. Checkers;
9. Forklift and crane operators;
10. Sweepers;
11. Mechanics;
12. Utilitymen;
13. Carpenters; and
14. Other rank and file employees;

The company argues in the first instance that under Article 212(m) in relation to
Article 245 of the Labor Code, supervisors are ineligible for. membership in a labor
organization of rank and file. Being supervisors, foremen should be excluded from
the bargaining unit.

The Company likewise seeks the exclusion on the ground of lack of community of
interest and divergence in functions, mode of compensation and working conditions
of the following:

1. Accounting clerk;
2. Audit clerk;
3. Collector;
4. Payroll clerk;
5. Nurse;
6. Chief biller;
7. Biller;
8. Teller/biller;
9. Personnel clerk;
10. Timekeeper;
11. Asst. timekeeper;
12. Legal secretary;
13. Telephone operator;
14. Janitor/Utility; and
15. Clerk

These positions, the Company argues, cannot be lumped together with the
stevedores or dockworkers who mostly comprise the bargaining unit. Further,
notwithstanding the check-off provisions of the CBA, the incumbents in these
positions have never paid union dues. Finally, some of them occupy confidential
positions and therefore ought to be excluded from the bargaining unit.

The Union generally argues that the Company's proposed exclusions retrogressive. .
..
 We see no compelling justification to order the modification of Article I of the 1988
CBA as worded. For by lumping together stevedores and other rank and file
employees, the obvious intent of the parties was to treat all employees not
disqualified from union membership as members of one bargaining unit. This is
regardless of working conditions, mode of compensation, place of work, or other
considerations. In the absence of mutual agreement of the parties or evidence that
the present compositions of the bargaining unit is detrimental to the individual and
organizational rights either of the employees or of the Company, this expressed
intent cannot be set aside.

It may well be that as a consequence of Republic Act No. 6715, foremen are
ineligible to join the union of the rank and file. But this provision can be invoked only
upon proof that the foremen sought to be excluded from the bargaining unit are
cloaked with effective recommendatory powers such as to qualify them under the
legal definitions of supervisors.

xxx xxx xxx

7. Effectivity of the CBA. The Union demands that the CBA should be fully retroactive
to 28 November 1991. The Company is opposed on the ground that under Article
253-A of the labor code, the six-month period within which the parties must come to
an agreement so that the same will be automatically retroactive is long past.

The Union's demand for full retroactivity, we note, will result in undue financial
burden to the Company. On the other hand, the Company's reliance on Article 253-A
is misplaced as this applies only to the renegotiated terms of an existing CBA. Here,
the deadlock arose from negotiations for a new CBA.

These considered, the CBA shall be effective from the time we assumed jurisdiction
over the dispute, that is, on 22 September 1992, and shall remain e effective for five
(5) years thereafter. It shall be understood that except for the representation aspect
all other provisions thereof shall be renegotiated not later than three (3) years after
its effectivity, consistently with Article 253-A of the Labor Code.

B. The economic issues

The comparative positions of the parties are:

COMPANY UNION

xxx xxx xxx

. Vacation and sick leave

5
17 days vacation and sick leave
17 days sick leave per year
for employment with at least
five years of service.
i) For all covered employees
and 17 days sick than gang
gang bosses:
15 working days vacation and
15 working days sick leave
for those with at least 1 year
 of service

20 working days vacation and

20 working days sick leave
for those with more than one
year of service up to 5 years
of service

25 working days vacation and

25 working days sick leave
for those with more than 5
years of service up to 10
years of service

30 working days vacation and

30 working days sick leave
for those with more than 10
years of service

Provided that in the case Provided that in the case of a

of a rotation worker, he rotation worker, he must have
must have work for at worked for 140 days in a
least 160 days in a year calendar year as a condition
for availment for availment.

Provided, further that in the

event a rotation worker fails
to complete 140 days work in
a calendar year, he shall still
be entitled to vacation and
sick leave with pay, as follows:
139 - 120 days worked: 90%
119 - 110 days worked: 50%

ii) For Gang bosses:

Same as the above schedule
except that:

1) the condition that a gang

bosses must have worked for at
least 120 days in a calendar
year shall be reduced to 110
 days; and

2) where the above number of

days worked is not met, the
gang boss shall still be entitled
to vacation and sick leave with
pay, as follows:
109 - 90 days worked: 90%
89 - 75 days worked: 50%

xxx xxx xxx

. Death aid
7
P1,500.00 to heirs P10,000.00 to heirs of covered
of covered employees employees

P5,000.00 assistance for death

of immediate member of
covered employee's family

xxx xxx xxx

12
. Emergency loan
a) amount of P700.00 but damage 30 days salary payable through
entitlement to dwelling by fire shall payroll deduction in twelve
be included monthly installments

b) cash bond None The company shall put up a

cash
for loss, damage bond of not less than
P40,000.00
or accident for winchmen, crane and forklift
operators.

xxx xxx xxx

Balancing the right of the Company to remain viable and to just returns to its
investments with right of the Union members to just rewards for their labors, we find
the following award to be fair and reasonable:

xxx xxx xxx

. Vacation and Sick Leave

6

a) Non-rotation workers 17 days vacation/17 days sick

leave
 for those with at least 1 year of
service

b) Rotation workers other 17 days vacation/17 days sick

leave,
than gang boss provided that the covered
worker
must have worked for at least
155 days
in a calendar year

c) Gang bosses 17 days vacation/17 days sick

leave,
provided that the gang boss
must have
worked for at least 115 days in a
calendar year

xxx xxx xxx

8. Death aid P3,000.00 to the heirs of each covered employee

xxx xxx xxx

12. Emergency loan 30 days pay, payable through payroll deductions of 1/12 of
monthly salary

WHEREFORE, the Pier 8 Arrastre and Stevedoring Services and the General
Maritime Services Union are hereby ordered to execute new collective bargaining
agreement the incorporating the dispositions herein contained. These shall be in
addition to all other existing terms, conditions and benefits of employment, except
those specifically deleted herein, which have previously governed the relations of the
parties. All other disputed items not specifically touched upon herein are deemed
denied, without prejudice to such other agreements as the parties may have reached
in the meantime. The collective bargaining agreement so executed shall be effective
from 22 September 1992 and up to five years thereafter, subject to renegotiation on
the third year of its effectivity pursuant to Article 253-A of the Labor Code.1

Petitioner sought partial reconsideration of the Order. On June 8, 1993, public respondent affirmed
her findings, except for the date of effectivity of the Collective Bargaining Agreement which was
changed to September 30, 1992. This is the date when she assumed jurisdiction over the deadlock.

Petitioner now assails the Order as follows:

I
 THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT EXCLUDING CERTAIN POSITIONS FROM THE
BARGAINING AGREEMENT UNIT

II

THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF

DISCRETION IN MAKING THE CBA EFFECTIVE ON SEPTEMBER 30, 1992
WHEN SHE ASSUMED JURISDICTION OVER THE LABOR DISPUTE AND NOT
MARCH 4, 1993 WHEN SHE RENDERED JUDGMENT OVER THE DISPUTE

III

THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF

DISCRETION IN REDUCING THE NUMBER OF DAYS AN EMPLOYEE SHOULD
ACTUALLY WORK TO BE ENTITLED TO VACATION AND SICK LEAVE BENEFITS

IV

THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF

DISCRETION IN INCREASING WITHOUT FACTUAL BASIS THE DEATH AID AND
EMERGENCY LOAN 2

The petition is partially meritorious.

Firstly, petitioner questions public respondent for not excluding four (4) foremen, a legal secretary, a
timekeeper and an assistant timekeeper from the bargaining unit composed of rank-and-file
employees represented by private respondent. Petitioner argues that: (1) the failure of private
respondent to object when the foremen and legal secretary were prohibited from voting in the
certification election constitutes an admission that such employees holdsupervisory/confidential positions; and
(2) the primary duty and responsibility of the timekeeper and assistant timekeeper is "to enforce company rules and regulations by reporting
to petitioner . . . those workers who committed infractions, such as those caught abandoning their posts." and hence, they should not be
considered as rank-and-file employees.

The applicable law governing the proper composition of bargaining unit is Article 245 of the labor
Code, as amended, which provides as follows:

Art. 245. Ineligibility of managerial employees to join any labor

organization; 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.

Article 212(m) of the same Code, as well as Book V, Rule 1, Section 1(o) of the Omnibus Rules
Implementing the Labor Code, as amended by the Rules and Regulations Implementing R.A.. 6715,
differentiate managerial, supervisory, and rank-and-file employees, thus:

"Managerial Employee" is one who is vested with powers or prerogatives to lay down
and execute management policies and/or to hire, transfer, suspend, layoff 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 the Book.

This Court has ruled on numerous occasions that the test of supervisory or managerial status is
whether an employee possesses authority to act in the interest of his employer which authority is not
merely routinary or clerical in nature but requires use of independent judgment. 3 What governs the
determination of the nature of employment is not the employee's title, but his job description. If the
nature of the employee's job does not fall under the definition of "managerial" or "supervisory" in the
Labor Code, he is eligible to be a member of the rank-and-file bargaining unit. 4

Foremen are chief and often especially-trained workmen who work with and commonly are in charge
of a group of employees in an industrial plant or in construction work. 5 They are the persons
designated by the employer-management to direct the work of employees and to superintend and
oversee them. 6 They are representatives of the employer-management with authority over particular
groups of workers, processes, operations, or sections of a plant or an entire organization. In the
modern industrial plant, they are at once a link in the chain of command and the bridge between the
management and labor. 7 In the performance their work, foremen definitely use their independent
judgment and are empowered to make recommendations for managerial action with respect to those
employees under their control. Foremen fall squarely under the category of supervisory employees,
and cannot be part of rank-and-file unions.

Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically
routinary and clerical. However, they should be differentiated from rank-and-file employees because
they, 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. 8 Legal secretaries therefore fall under
the category of confidential employees. Thus, to them applies our holding in the case of Philips
Industrial Development, Inv., v. NLRC, 210 SCRA 339 (1992), that:

. . . By the very functions, they assist confidential capacity to, or have access to
confidential. matters of, persons to, exercise managerial functions in the field of labor
relations. As such, the rationale behind the ineligibility of managerial employees to
form, assist or join a labor union equally applies to them.

In Bulletin Publishing Co., Inc., vs. Hon. Augusto Sanchez, this Court elaborated on
this rationale, thus:

. . . The rationale, for this inhibition has been stated to be, because if
these managerial employees would belong to or be affiliated with
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.

In Golden Farms, Inc., vs. Ferrer-Calleja, 9 this court explicitly made this rationale
applicable to confidential employees:

This rationale holds true also for confidential employees . . ., who

having access to confidential information, may become the source of
undue advantage. Said employee(s) may act as a spy or spies of
either party to a collective bargaining agreement. . . .
We thus hold that public respondent acted with grave abuse of discretion in not excluding the four
foremen and legal secretary from the bargaining unit composed of rank-and-file employees.

As for the timekeeper and assistant timekeeper it is clear from petitioner's own pleadings that they
are, neither managerial nor supervisory employees. They are merely tasked to report those who
commit infractions against company rules and regulations. This reportorial function is routinary and
clerical. They do not determine the fate of those who violate company policy rules and regulations
function. It follows that they cannot be excluded from the subject bargaining unit.

The next issue is the date when the new CBA of the parties should be given effect. Public
respondent fixed the effectivity date on September 30, 1992. when she assumed jurisdiction over the
dispute. Petitioner maintains it should be March 4. 1993, when public respondent rendered judgment
over the dispute.

The applicable laws are Articles 253 and 253- A of the Labor Code, thus:

Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. — When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its expiration date.
It shall be the duty of both parties to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement during the 60-day
period and/or until a new agreement is reached by the parties.

and;

Art. 253-A. Terms of a collective bargaining agreement. — Any Collective Bargaining

Agreement that the parties may enter into shall, insofar as the representation aspect
is concerned, be for a term of five (5) years. No petition questioning the majority
status of the incumbent bargaining agent shall be entertained and no certification
election shall be conducted by the Department of Labor and Employment outside the
sixty-day period immediately before the date of expiry of such five year term of the
Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution.
Any agreement on such other provisions of the Collective Bargaining Agreement
entered into within six (6) months from the date of expiry of the term of such other
provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day
immediately following such date. If any such agreement is entered into beyond six
months, the parties shall agree on the duration of collective bargaining agreement,
the parties may exercise their rights under this Code.

In Union of Filipino Employees v. NLRC, 192 SCRA 414 (1990), this court interpreted the above law
as follows:

In light of the foregoing, this Court upholds the pronouncement of the NLRC holding
the CBA to be signed by the parties effective upon the promulgation of the assailed
resolution. It is clear and explicit from Article 253-A that any agreement on such other
provisions of the CBA shall be given retroactive effect only when it is entered into
within six (6) months from its expiry date. If the agreement was entered into outside
the six (6) month period, then the parties shall agree on the duration of the
retroactivity thereof.
 The assailed resolution which incorporated the CBA to be signed by the parties was
promulgated June 5, 1989, the expiry date of the past CBA. Based on the provision
of Section 253-A, its retroactivity should be agreed upon. by the parties. But since no
agreement to that effect was made, public respondent did not abuse its discretion in
giving the said CBA a prospective effect. The action of the public respondent is within
the ambit of its authority vested by existing law.

In the case of Lopez Sugar Corporation v. Federation of Free Workers, 189 SCRA 179 (1991), this
Court reiterated the rule that although a CBA has expired, it continues to have legal effects as
between the parties until a new CBA has been entered into. It is the duty of both parties to the to
keep the status quo, and to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day freedom period and/or until a new agreement is reached by the
parties. 10 Applied to the case at bench, the legal effects of the immediate past CBA between
petitioner and private respondent terminated, and the effectivity of the new CBA began, only on
March 4, 1993 when public respondent resolved their dispute.

Finally, we find no need to discuss at length the merits of the third and fourth assignments of error.
The questioned Order relevantly states:

In the resolution of the economic issues, the Company urges us to consider among
others, present costs of living, its financial capacity, the present wages being paid by
the other cargo handlers at the North Harbor, and the fact that the present average
wage of its workers is P127.75 a day, which is higher than the statutory minimum
wage of P118.00 a day. The Company's evidence, consisting of its financial
statements for the past three years, shows that its net income was P743,423.45 for
1989, P2,108,569.03 for 1990, and P1,479,671.84 for 1991, or an average of
P1,443,885.10 over the three-year period. It argues that for just the first year of
effectivity of the CBA, the Company's proposals on wages, effect thereof on
overtime, 13th month pay, and vacation and sick leave commutation, will cost about
P520,723,44, or 35.19% of its net income for 1991. The Company likewise urges us
to consider the multiplier effect of its proposals on the second and third years of the
CBA. As additional argument, the Company manifests that a portion of its pier will
undergo a six-month to one-year renovation starting January 1993.

On the other hand, the Union's main line of argument — that is, aside from being
within the financial capacity of the Company to grant, its demands are fair and
reasonable — is not supported by evidence controverting the Company's own
presentation of its financial capacity. The Union in fact uses statements of the
Company for 1989-1991, although it interprets these data as sufficient justification for
its own proposals. It also draws our attention to the bargaining history of the parties,
particularly the 1988 negotiations during which the company was able to grant wage
increases despite operational losses.

Balancing the right of the Company to remain viable and to just returns to its
investments with right of the Union members to just
rewards for their labors, we find the following award to be fair and reasonable . . . . 11

It is evident that the above portion of the impugned Order is based on well-studied evidence. The
conclusions reached by public respondent in the discharge of her statutory duty as compulsory
arbitrator, demand the high respect of this Court. The study and settlement of these disputes fall
within public respondent's distinct administrative expertise. She is especially trained for this delicate
task, and she has within her cognizance such data and information as will assist her in striking the
equitable balance between the needs of management, labor and the public. Unless there is clear
showing of grave abuse of discretion, this Court cannot and will not interfere with the labor expertise
of public respondent Secretary of Labor.

IN VIEW WHEREOF, public respondents Order, dated March 4, 1993, and Resolution, dated June
8, 1993, are hereby MODIFIED to exclude foremen and legal secretaries from the rank-and-file
bargaining unit represented by private respondent union, and to fix the date of effectivity of the five-
year collective bargaining agreement between petitioner corporation and private respondent union
on March 4, 1993. No costs.

SO ORDERED.

Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.

Footnotes

1 Order of the Secretary of Labor and Employment, dated March 4, 1993. See Annex
"A" to Petition, p. 27- 47 of Rollo.

2 Rollo, pp. 6-7.

3 See Philippine Appliance Corporation v. Laguesma, 226 SCRA 730 (1993);

Pagkakaisa ng mga Manggagawa sa Triumph International-United Lumber and
General Workers of the Philippines v. Ferrer-Calleja, 181 SCRA 119 (1990). See
also Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12 (1992); Philtranco
Service Enterprises v. Bureau of Labor Relations, 174 SCRA 338 (1989).

4 See Southern Philippines Federation of Labor (SPFL) v. Calleja, 172 SCRA 676
(1989).

5 See Ballentine's Law Dictionary, 3rd Edition (1969); Webster's Third New
International Dictionary (1971).

6 Black's Law Dictionary, 6th Edition (1990).

7 Webster's Third New International Dictionary (1971).

8 See Black's Law Dictionary, 6th Edition (1990).

9 210 SCRA 471 (1989).

10 National Congress of Unions in the Sugar Industry of the Philippines v. Ferrer-

Calleja, 205 SCRA 478 (1992).

11 Rollo, pp. 44-45.

 epublic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

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 Baños, 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, 1 and 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. 13 The 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.