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) TUEUOLALIA; 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." TUEUOLALIA 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 nonmembers 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 selforganization." 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 selforganization . . . " 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 selforganization, 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 Officerin-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). The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 82914 June 20, 1988 KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027), petitioner, vs. THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND CANNING DIVISION UNIVERSAL ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW EMPLOYEES AND WORKERS UNITED LABOR ORGANIZATION, respondents. Alar, Comia, Manalo and Associates for petitioner. Danilo Bolos for respondent Robina Corporation. RESOLUTION

GRIO-AQUINO, J.: The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027) hereinafter referred to as "TUPAS," seeks a review of the resolution dated January 27, 1988 (Annex D) of public respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations, dismissing its appeal from the Order dated November 17, 1987 (Annex C) of the Med-Arbiter Rasidali C. Abdullah ordering a certification election to be conducted among the regular daily paid rank and file employees/workers of Universal Robina Corporation-Meat and Canning Division to determine which of the contending unions: a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or "TUPAS" for brevity); b) Meat and Canning Division New Employees and Workers United Labor Organization (or "NEW ULO" for brevity); c) No union. shall be the bargaining unit of the daily wage rank and file employees in the Meat and Canning Division of the company. From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of the workers in the Meat and Canning Division of the Universal Robina Corporation, with a 3-year collective bargaining agreement (CBA) which was to expire on November 15, 1987. Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS filed an amended notice of strike on September 28, 1987 as a means of pressuring the company to extend, renew, or negotiate a new CBA with it.

On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI KRISTO sect, registered as a labor union. On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an injunction against the strike, resulting in an agreement to return to work and for the parties to negotiate a new CBA. The next day, October 13, 1987, NEW ULO, claiming that it has "the majority of the daily wage rank and file employees numbering 191," filed a petition for a certification election at the Bureau of Labor Relations (Annex A). TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW ULO were mostly members of the Iglesia ni Kristo sect which three (3) years previous refused to affiliate with any labor union. It also accused the company of using the NEW ULO to defeat TUPAS' bargaining rights (Annex B). On November 17, 1987, the Med-Arbiter ordered the holding of a certification election within 20 days (Annex C). TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it was able to negotiate a new 3-year CBA with ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990. On January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D). TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On April 30, 1988, it filed this petition alleging that the public respondent acted in excess of her jurisdiction and with grave abuse of discretion in affirming the MedArbiter's order for a certification election. After deliberating on the petition and the documents annexed thereto, We find no merit in the Petition. The public respondent did not err in dismissing the petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union. The public respondent correctly observed that the "recognition of the tenets of the sect ... should not infringe on the basic right of self-organization granted by the constitution to workers, regardless of religious affiliation." The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a timely petition for certification election on October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a "certification election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can freely choose their bargaining representative thru secret ballot." Since

it has not been shown that this order is tainted with unfairness, this Court will not thwart the holding of a certification election (Associated Trade Unions [ATU] vs. Noriel, 88 SCRA 96). WHEREFORE, the petition for certiorari is denied, with costs against the petitioner. SO ORDERED. Narvasa, Cruz, Gancayco and Medialdea, JJ., concur. The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-25094

April 29, 1969

PAN AMERICAN WORLD AIRWAYS INC., petitioner, vs. PAN AMERICAN EMPLOYEES ASSOCIATION, COURT OF INDUSTRIAL RELATIONS, respondents.

Ross, Selph, Salcedo, Del Rosario, Bito and Misa for petitioner. Jose C. Espinas and Associates for respondent Pan American Employees Association.

FERNANDO, J.:

The failure of the respondent Court of Industrial Relations to indulge petitioner Pan American World Airways, Inc. in its plea to exclude from a return-to-work order five union officials of respondent Pan American Employees Association on the ground of having led an illegal strike, in itself, according to petitioner, a sufficient cause for dismissal thus resulting in their losing their incentive and motivation for doing their jobs properly with the consequent fear that they could cause grave injury to it, is challenged in this special civil action for certiorari as constituting a grave abuse of discretion. Whatever may be said against such order complained of respondent Court of Industrial Relations, the refusal to grant the prayer for such exclusion cannot be characterized as an abuse of discretion, much less as one that possesses an element of gravity.

So it must be unless we are prepared to restrict the broad scope of authority possessed by respondent Court of Industrial Relations in discharging its power of compulsory arbitration in cases certified to it by the President, and what is worse, unless an undeserved reflection on the quality of leadership in the labor movement, indicative of management refusal to accord to it the presumption of responsibility, is countenanced. The petition thus carries on its face the seeds of its own infirmity. It cannot hope to succeed.

It was set forth in the petition, after the usual allegation as to the personality of the parties, that on August 25, 1965, respondent union filed a notice of strike with the Department of Labor and on August 28, 1965, the same respondent union declared and maintained a strike against the herein petitioner. 1 Then, on September 17, 1965, the President of the Philippines certified the strike to the respondent Court of Industrial Relations as being an industrial dispute affecting the national interest, the parties being called to a conference on September 20, 1965. 2

Several conferences were held between petitioner and respondent Union before the Honorable Amando C. Bugayong, Associate Judge of respondent Court on September 20, 21, 23, 24 and 25, 1965. It was the position of the Union that its members would not resume the performance of their duties unless its officers were likewise included in the return-to-work order. Petitioner was of a different mind. It was agreeable to having the workers return to work but not the five officials of respondent Union. It alleged that the strike was illegal, being offensive to a no-strike clause of an existing collective bargaining agreement the result being that the officials could, as the responsible parties, be liable for dismissal. Consequently, it was not agreeable to their

being allowed to return to the positions held by them prior to the strike as they would not be only lacking in "incentive and motivation for doing their work properly" but would likewise have the opportunity to cause "grave and irreparable injury to petitioner." 3 Management did offer, however, to deposit their salaries even if they would not be working, with the further promise that they would not even be required to refund any amount should the right to remain in their positions be considered as legally terminated by their calling the alleged illegal strike.

Nonetheless, on September 28, 1965, Judge Bugayong issued an order requiring petitioner to accept the five union officers pending resolution on the merits of the dispute involved in the strike. 4 There was a motion for reconsideration which was denied by the court on October 8, 1965. 5 Hence, this petition, alleging a grave abuse of discretion, consisting in the failure to grant petitioner's rather unorthodox demand.

As already noted, the inherent weakness of the petition cannot escape attention.

1. Considering that this is a case certified by the President, with respondent Court exercising its broad authority of compulsory arbitration, the discretion it possesses cannot be so restricted and emasculated that the mere failure to grant a plea to exclude from the return-to-work order the union officials could be considered as tantamount to a grave abuse thereof. The law is anything but that.

As far back as 1957, this Court, speaking through Justice Labrador, categorically stated: "We agree with counsel for the Philippine Marine Radio Officers' Association that upon certification by the President under Section 10 of Republic Act 875, the case comes under the operation of Commonwealth Act 103, which enforces compulsory arbitration in cases of labor disputes in industries indispensable to the national interest when the President certifies the case to the Court of Industrial Relations. The evident intention of the law is to empower the Court of Industrial Relations to act in such cases, not only in the manner prescribed under Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that Act. If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and such solution consists in ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power or jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted. Lastly, if the said court has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of the employment." 6

Only recently this Court, speaking through Justice Sanchez, emphasized: "The overwhelming implication from the quoted text of Section 10 is that CIR is granted great breadth of discretion in its quest for a solution to a labor problem so certified." 7 Hence, as was announced at to the outset of this opinion, there can be no legal objection to the mode of exercise of authority in such fashion by respondent Court of Industrial Relations. The allegation as to the grave abuse of discretion is clearly devoid of merit.

2. That should conclude the matter except for the fact that the question presented possesses an element of novelty which may require further reflection.

The situation thus presented is the validity of the return to work order insofar as five union officers are affected, petitioner airline firm rather insistent on their being excluded arguing that since the strike called by them was illegal, and that in any event there was enough ground for dismissal, there was present a factor which might make them "lose all their incentive and motivation for doing their work properly" and which would furnish them "the opportunity to cause grave and irreparable injury to petitioner."

To be more specific, the apprehension entertained by petitioner was in the petition expressed by it thus: "The five officers of the union consist of three (3) Passenger Traffic Representatives and a reservation clerk who in the course of their duties could cause mix-ups in the reservation and accommodation of passengers which could result in very many suits for damages against petitioner such as the case of Nicolas Cuenca vs. Northwest Airlines, G.R. No. L-22425 promulgated August 31, 1965 in which this Honorable Court required the airline to pay P20,000.00 as nominal damages alone. The other union officer who, is in the cargo department could underweight or overweigh cargo to the great detriment of the service or even, of the safety of petitioner's aircraft." 8

Petitioner would attempt to remove the sting from its objection to have the union officers return to work by offering to deposit the salaries of the five officers with respondent Court to be paid to them, coupled with what it considered to be a generous concession that if their right to return to work be not recognized, there would be no need for refund.

Petitioner, perhaps without so intending it, betrayed an inexcusable lack of confidence in the responsibility of union officials and ultimately in the validity of the collective bargaining process itself. For it is the basic premise under which a regime of collective bargaining was instituted by the Industrial Peace Act that through the process of industrial democracy, with both union and management equally deserving of public trust, labor problems could be susceptible of the just solution and industrial peace attained. Implicit in such a concept is the confidence that must be displayed by management in the sense of responsibility of union officials to assure that the two indispensable elements in industry and production could-work side by side, attending to the problems of each without neglecting the common welfare that binds them together.lawphi1.nt

The moment management displays what in this case appears to be grave but unwarranted distrust in the union officials discharging their functions just because a strike was resorted to, then the integrity of the collective bargaining process itself is called into question. It would have been different if there were a rational basis for such fears, purely speculative in character. The record is bereft of slightest indication that any danger, much less one clear and present, is to be expected from their return to work. Necessarily, the union officials have the right to feel offended by the fact that, while they will be paid their salaries in the meanwhile they would not be considered as fit persons to perform the duties pertaining to the positions held by them. Far from being generous such an offer could rightfully, be considered insulting.

The greater offense is to the labor movement itself, more specifically to the right of self-organization. There is both a constitutional and statutory recognition that laborers have the right to form unions to take care of their interests vis-a-vis their employers. Their freedom organizations would be rendered nugatory if they could not choose their own leaders to speak on their behalf and to bargain for them.

If petitioner were to succeed in their unprecedented demand, the laborers in this particular union would thus be confronted with the sad spectacle of the leaders of their choice condemned as irresponsible, possibly even constituting a menace to the operations of the enterprise. That is an indictment of the gravest character, devoid of any factual basis. What is worse, the result, even if not intended, would be to call into question their undeniable right to choose their leaders, who must be treated as such with all the respect to which they are legitimately entitled. The fact that they would be paid but not be allowed to work is, to repeat, to add to the infamy that would thus attach to them necessarily, but to respondent union equally.

Apparently, respondent Court was alive to the implication of such an unwarranted demand, the effect of which would have been to deprive effectively the

rank and file of their freedom of choice as to who should represent them. For what use are leaders so undeserving of the minimum confidence. To that extent then, their constitutional and statutory right to freedom of association suffers an impairment hardly to be characterized as inconsequential.

Fortunately, respondent Court was of a different mind it acted, according to law. It had a realistic concept of what was in store for labor if its decision were otherwise. Nor did it in the process disregard the rights of management. There is no occasion then for the supervisory authority of this Court coming into play.

WHEREFORE, this petition for a writ of certiorari is denied. With costs against petitioner.

Reyes, J.B.L., Actg. C.J., Makalintal, Zaldivar, Sanchez, Capistrano, Teehankee and Barredo, JJ., concur. Concepcion, C.J. and Castro, J., are on leave. Dizon, J., concurs in the result.

Footnotes

1Petition, par. 2.

2Ibid, par. 3.

3Ibid, par. 4.

4Ibid, par. 5.

5Ibid, pars. 6, 7 and 8.

6The Phil. Marine Radio Officers' Assn. v. Court of Industrial Relations, 102 Phil. 374, 382-383 (1957).

7Bachrach Transportation Co., Inc. v. Rural Transit Shop Employees Association, L26764, July 25, 1967.

8Petition, par. 4.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 101761. March 24, 1993. NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents. Jose Mario C. Bunag for petitioner. The Solicitor General and the Chief Legal Officer, NLRC, for public respondent. Zoilo V. de la Cruz for private respondent. DECISION REGALADO, J p: The main issue presented for resolution in this original petition for certiorari is whether supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82, Book III of the same Code, and hence are not entitled to overtime rest day and holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.

On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows: "WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to 1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead of the P100.00 special allowance which was implemented on June 11, 1988; and 2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988. All other claims are hereby dismissed for lack of merit. SO ORDERED." In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom, considering that respondent union was formed only a year after the implementation of the Job Evaluation Program, hence there was no way for the individual supervisors to express their collective response thereto prior to the formation of the union; and the comparative computations presented by the private respondent union showed that the P100.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore, amounted to a diminution of benefits. On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of public respondent dated August 30, 1991. 4 Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and in

making petitioner assume the "double burden" of giving the benefits due to rank-andfile employees together with those due to supervisors under the JE Program. We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue. The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code. It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: "(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, discharged, 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 those above definitions are considered rank-and-file employees of this Book." Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter are not managerial employees, adopted the definition stated in the aforequoted statutory provision. Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to overtime, rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, to wit: "Art. 82 Coverage. The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations. "As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." (Emphasis supplied.) xxx xxx xxx

'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: xxx xxx xxx (b) Managerial employees, if they meet all of the following conditions, namely: (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof: (2) They customarily and regularly direct the work of two or more employees therein: (3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. (c) Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of their employer; (2) Customarily and regularly exercise discretion and independent judgment; (3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and above." It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 5 This is one such case where we are inclined to tip the scales of justice in favor of the employer. The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed, rather than the title of the employee's position. 6 Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation from the rule. A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. More specifically, their duties and functions include, among others, the following operations whereby the employee: 1) assists the department superintendent in the following: a) planning of systems and procedures relative to department activities; b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement; c) decision making by providing relevant information data and other inputs; d) attaining the company's set goals and objectives by giving his full support; e) selecting the appropriate man to handle the job in the department; and f) preparing annual departmental budget; 2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more productive; 4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement; 5) represents the superintendent or the department when appointed and authorized by the former; 6) coordinates and communicates with other inter and intra department supervisors when necessary; 7) recommends disciplinary actions/promotions; 8) recommends measures to improve work methods, equipment performance, quality of service and working conditions; 9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed abnormality within the refinery; 10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and 11) performs other related tasks as may be assigned by his immediate superior. From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described. Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday. The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union

members are supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made along that line and its corresponding conceptual criteria. II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members has ripened into a contractual obligation. A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rank-and-file employees such as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained: "But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday and restday pay. As to them, the practice subsists. "However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be said to occupy the same positions." 9 It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer practice, which cannot be now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. 10 The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar, respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure generosity.

B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified under levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that they occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the JE Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. 12 Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom. As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO. Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive. Not so long ago, on this particular score, we had the occasion to hold that: ". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13 WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion, and the basic complaint of private respondent union is DISMISSED.

Narvasa, C . J ., Padilla, Nocon and Campos, Jr., JJ., concur. Footnotes 1. Rollo, 209. 2. Annex E, Petition; Rollo, 51, 56-57. 3. Annex A, id.; ibid., 20-27; NLRC Case CA No. L-000058; penned by Pres. Comm. Lourdes C. Javier, with the concurrence of Comm. Ireneo B. Bernardo and Regalio I. Rayala. 4. Rollo, 28-29. 5. Sosito vs. Aguinaldo Development Corporation, 156 SCRA 392 (1987). 6. 56 C.J.S., Master and Servant, Sec. 151 (11). 7. Annexes I to I-23, Petition; Rollo, 84-149. 8. Annex G, Petition; Rollo, 72. 9. Rollo, 79 10. Globe Mackay Cable and Radio Corporation, et al. vs. NLRC et al., 163 SCRA 71 (1988). 11. Oceanic Pharmacal Employees Union (FFW) vs. Inciong, et al., 94 SCRA 270 (1979). 12. Millares vs. Subido, et al., 20 SCRA 954 (1967); Dosch, vs. NLRC, et al., 123 SCRA 296 (1983). 13. Wise and Co., Inc. vs. Wise and Co., Inc. Employees Union-Natu, et al., SCRA 536 (1989). The Lawphil Project - Arellano Law Foundation

[G.R. No. 142000. January 22, 2003] TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner, vs. TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO, respondent.

DECISION CARPIO-MORALES, J.: Before this Court on certiorari under Rule 45 is the petition of the Tagaytay Highlands International Golf Club Incorporated (THIGCI) assailing the February 15, 2002 decision of the Court of Appeals denying its petition to annul the Department of Labor and Employment (DOLE) Resolutions of November 12, 1998 and December 29, 1998. On October 16, 1997, the Tagaytay Highlands Employees Union (THEU)Philippine Transport and General Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor organization said to represent majority of the rank-and-file employees of THIGCI, filed a petition for certification election before the DOLE MediationArbitration Unit, Regional Branch No. IV. THIGCI, in its Comment1[1] filed on November 27, 1997, opposed THEUs petition for certification election on the ground that the list of union members submitted by it was defective and fatally flawed as it included the names and signatures of supervisors, resigned, terminated and absent without leave (AWOL) employees, as well as employees of The Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of the 192 signatories to the petition, only 71 were actual rank-and-file employees of THIGCI. THIGCI thus submitted a list of the names of its 71 actual rank-and-file employees which it annexed2[2] to its Comment to the petition for certification election. And it therein incorporated the following tabulation3[3] showing the number of signatories to said petition whose membership in the union was being questioned as disqualified and the reasons for disqualification: # of Signatures 13 6 2 53 Reasons for Disqualification Supervisors of THIGCI Resigned employees of THIGCI AWOL employees of THIGCI Rank-and-file employees of The Country Club at Tagaytay Highlands, Inc.

1[1]

CA Rollo at 59 62. Ibid at 63. Ibid at 60.

2[2]

3[3]

14 6 3 1 4 16 2

Supervisors of The Country Club at Tagaytay Highlands, Inc. Resigned employees of The Country Club at Tagaytay Highlands, Inc. Terminated employees of The Country Club at Tagaytay Highlands, Inc. AWOL employees of The Country Club at Tagaytay Highlands, Inc. Signatures that cannot be deciphered Names in list that were erased Names with first names only

THIGCI also alleged that some of the signatures in the list of union members were secured through fraudulent and deceitful means, and submitted copies of the handwritten denial and withdrawal of some of its employees from participating in the petition.4[4] Replying to THIGCIs Comment, THEU asserted that it had complied with all the requirements for valid affiliation and inclusion in the roster of legitimate labor organizations pursuant to DOLE Department Order No. 9, series of 1997,5[5] on account of which it was duly granted a Certification of Affiliation by DOLE on October 10, 1997;6[6] and that Section 5, Rule V of said Department Order provides that the legitimacy of its registration cannot be subject to collateral attack, and for as long as there is no final order of cancellation, it continues to enjoy the rights accorded to a legitimate organization. THEU thus concluded in its Reply7[7] that under the circumstances, the Med-Arbiter should, pursuant to Article 257 of the Labor Code and Section 11, Rule XI of DOLE Department Order No. 09, automatically order the conduct of a certification election.

4[4]

Ibid at 64-66.

Dated May 1, 1997 which took effect on June 21, 1997, Amending the Rules Implementing Book V of the Labor Code as Amended.
5[5] 6[6]

CA Rollo at 58. Ibid at 6770.

7[7]

By Order of January 28, 1998, 8[8] DOLE Med-Arbiter Anastacio Bactin ordered the holding of a certification election among the rank-and-file employees of THIGCI in this wise, quoted verbatim: We evaluated carefully this instant petition and we are of the opinion that it is complete in form and substance. In addition thereto, the accompanying documents show that indeed petitioner union is a legitimate labor federation and its local/chapter was duly reported to this Office as one of its affiliate local/chapter. Its due reporting through the submission of all the requirements for registration of a local/chapter is a clear showing that it was already included in the roster of legitimate labor organizations in this Office pursuant to Department Order No. 9 Series of 1997 with all the legal right and personality to institute this instant petition. Pursuant therefore to the provisions of Article 257 of the Labor Code, as amended, and its Implementing Rules as amended by Department Order No. 9, since the respondents establishment is unorganized, the holding of a certification election is mandatory for it was clearly established that petitioner is a legitimate labor organization. Giving due course to this petition is therefore proper and appropriate.9[9] (Emphasis supplied) Passing on THIGCIs allegation that some of the union members are supervisory, resigned and AWOL employees or employees of a separate and distinct corporation, the Med-Arbiter held that the same should be properly raised in the exclusioninclusion proceedings at the pre-election conference. As for the allegation that some of the signatures were secured through fraudulent and deceitful means, he held that it should be coursed through an independent petition for cancellation of union registration which is within the jurisdiction of the DOLE Regional Director. In any event, the Med-Arbiter held that THIGCI failed to submit the job descriptions of the questioned employees and other supporting documents to bolster its claim that they are disqualified from joining THEU. THIGCI appealed to the Office of the DOLE Secretary which, by Resolution of June 4, 1998, set aside the said Med-Arbiters Order and accordingly dismissed the petition for certification election on the ground that there is a clear absence of community or mutuality of interests, it finding that THEU sought to represent two separate bargaining units (supervisory employees and rank-and-file employees) as well as employees of two separate and distinct corporate entities. Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda Dimalipis-Baldoz, by authority of the DOLE Secretary, issued DOLE Resolution of November 12, 199810[10] setting aside the June 4, 1998 Resolution dismissing the petition for certification election. In the November 12, 1998 Resolution, Undersecretary Dimapilis-Baldoz held that since THEU is a local chapter, the twenty
8[8]

Ibid at 74-79. Ibid at 77 78. Ibid at 22-27.

9[9]

10[10]

percent (20%) membership requirement is not necessary for it to acquire legitimate status, hence, the alleged retraction and withdrawal of support by 45 of the 70 remaining rank-and-file members . . . cannot negate the legitimacy it has already acquired before the petition; that rather than disregard the legitimate status already conferred on THEU by the Bureau of Labor Relations, the names of alleged disqualified supervisory employees and employees of the Country Club, Inc., a separate and distinct corporation, should simply be removed from the THEUs roster of membership; and that regarding the participation of alleged resigned and AWOL employees and those whose signatures are illegible, the issue can be resolved during the inclusion-exclusion proceedings at the pre-election stage. The records of the case were thus ordered remanded to the Office of the Med-Arbiter for the conduct of certification election. THIGCIs Motion for Reconsideration of the November 12, 1998 Resolution having been denied by the DOLE Undersecretary by Resolution of December 29, 1998,11[11] it filed a petition for certiorari before this Court which, by Resolution of April 14, 1999,12[12] referred it to the Court of Appeals in line with its pronouncement in National Federation of Labor (NFL) v. Hon. Bienvenido E. Laguesma, et al .,13[13] and in strict observance of the hierarchy of courts, as emphasized in the case of St. Martin Funeral Home v. National Labor Relations Commission.14[14] By Decision of February 15, 2000,15[15] the Court of Appeals denied THIGCIs Petition for Certiorari and affirmed the DOLE Resolution dated November 12, 1998. It held that while a petition for certification election is an exception to the innocent bystander rule, hence, the employer may pray for the dismissal of such petition on the basis of lack of mutuality of interests of the members of the union as well as lack of employer-employee relationship following this Courts ruling in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union et al 16[16] and Dunlop Slazenger [Phils.] v. Hon. Secretary of Labor and Employment et al,17[17] petitioner failed to adduce substantial evidence to support its allegations. Hence, the present petition for certiorari, raising the following

11[11]

Rollo at 29-30. CA Rollo at 111. G. R. No. 123426, March 10, 1999 (304 SCRA 405. G. R. No. 130866, September 16, 1998 (295 SCRA 494). Rollo at 35-44. G. R. No. 121084, February 19, 1997 (268 SCRA 573). G. R. No. 131248, December 11, 1998 (300 SCRA 120).

12[12]

13[13]

14[14]

15[15]

16[16]

17[17]

ISSUES/ASSIGNMENT OF ERRORS: THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12 NOVEMER 1998 HOLDING THAT SUPERVISORY EMPLOYEES AND NONEMPLOYEES COULD SIMPLY BE REMOVED FROM APPELLEES ROSTER OF RANKAND-FILE MEMBERSHIP INSTEAD OF RESOLVING THE LEGITIMACY OF RESPONDENT UNIONS STATUS THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12 NOVEMBER 1998 HOLDING THAT THE DISQUALIFIED EMPLOYEES STATUS COULD READILY BE RESOLVED DURING THE INCLUSION AND EXCLUSION PROCEEDINGS THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT HOLDING THAT THE ALLEGATIONS OF PETITIONER HAD BEEN DULY PROVEN BY FAILURE OF RESPONDENT UNION TO DENY THE SAME AND BY THE SHEER WEIGHT OF EVIDENCE INTRODUCED BY PETITIONER AND CONTAINED IN THE RECORDS OF THE CASE18[18] The statutory authority for the exclusion of supervisory employees in a rank-and-file union, and vice-versa, is Article 245 of the Labor Code, to wit: Article 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. While above-quoted Article 245 expressly prohibits supervisory employees from joining a rank-and-file union, it does not provide what would be the effect if a rank-and-file union counts supervisory employees among its members, or vice-versa. Citing Toyota19[19] which held that a labor organization composed of both rank-andfile and supervisory employees is no labor organization at all, and the subsequent case of Progressive Development Corp. Pizza Hut v. Ledesma20[20] which held that: The Labor Code requires that in organized and unorganized establishments, a petition for certification election must be filed by a legitimate labor organization. The acquisition of rights by any union or labor organization, particularly the right to file a petition for certification election, first and foremost, depends on whether or not the labor organization has attained the status of a legitimate labor organization.

18[18]

Rollo at 17 18. Supra. G. R. No. 115077, April 18, 1997 (271 SCRA 593).

19[19]

20[20]

In the case before us, the Med-Arbiter summarily disregarded the petitioners prayer that the former look into the legitimacy of the respondent Union by a sweeping declaration that the union was in the possession of a charter certificate so that for all intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate organization,21[21] (Underscoring and emphasis supplied), petitioner contends that, quoting Toyota, [i]t becomes necessary . . ., anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code.22[22] Continuing, petitioner argues that without resolving the status of THEU, the DOLE Undersecretary conveniently deferred the resolution on the serious infirmity in the membership of [THEU] and ordered the holding of the certification election which is frowned upon as the following ruling of this Court shows: We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity in the membership of the respondent union can be remedied in the preelection conference thru the exclusion-inclusion proceedings wherein those employees who are occupying rank-and-file positions will be excluded from the list of eligible voters. Public respondent gravely misappreciated the basic antipathy between the interest of supervisors and the interest of rank-and-file employees. Due to the irreconcilability of their interest we held in Toyota Motor Philippines v. Toyota Motors Philippines Corporation Labor Union, viz: x x x Clearly, based on this provision [Article 245], a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot posses any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. (Emphasis by petitioner) (Dunlop Slazenger (Phils.), v. Secretary of Labor, 300 SCRA 120 [1998]; Underscoring and emphasis supplied by petitioner.) The petition fails. After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book IV of the Rules to Implement the Labor Code (Implementing Rules) which section reads:
21[21]

Id at 602. Supra at 582.

22[22]

Sec. 5. Effect of registration. The labor organization or workers association shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be subject to collateral attack, but may be questioned only in an independent petition for cancellation in accordance with these Rules. (Emphasis supplied) The grounds for cancellation of union registration are provided for under Article 239 of the Labor Code, as follows: Art. 239. Grounds for cancellation of union registration . The following shall constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to subject these documents together with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days from election; (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the losing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; (e) Acting as a labor contractor or engaging in the cabo system, or otherwise engaging in any activity prohibited by law; (f) Entering into collective bargaining agreements which provide terms and conditions of employment below minimum standards established by law; (g) Asking for or accepting attorneys fees or negotiation fees from employers; (h) Other than for mandatory activities under this Code, checking off special assessments or any other fees without duly signed individual written authorizations of the members; (i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau; and (j) Failure to comply with the requirements under Articles 237 and 238, (Emphasis supplied), while the procedure for cancellation of registration is provided for in Rule VIII, Book V of the Implementing Rules.

The inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted Article 239 of the Labor Code. THEU, having been validly issued a certificate of registration, should be considered to have already acquired juridical personality which may not be assailed collaterally. As for petitioners allegation that some of the signatures in the petition for certification election were obtained through fraud, false statement and misrepresentation, the proper procedure is, as reflected above, for it to file a petition for cancellation of the certificate of registration, and not to intervene in a petition for certification election. Regarding the alleged withdrawal of union members from participating in the certification election, this Courts following ruling is instructive: [T]he best forum for determining whether there were indeed retractions from some of the laborers is in the certification election itself wherein the workers can freely express their choice in a secret ballot. Suffice it to say that the will of the rank-and-file employees should in every possible instance be determined by secret ballot rather than by administrative or quasi-judicial inquiry. Such representation and certification election cases are not to be taken as contentious litigations for suits but as mere investigations of a non-adversary, fact-finding character as to which of the competing unions represents the genuine choice of the workers to be their sole and exclusive collective bargaining representative with their employer.23[23] As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie given, as found by the court a quo, its failure to present substantial evidence that the assailed employees are actually occupying supervisory positions. While petitioner submitted a list of its employees with their corresponding job titles and ranks,24[24] there is nothing mentioned about the supervisors respective duties, powers and prerogatives that would show that they can effectively recommend managerial actions which require the use of independent judgment.25[25]

Atlas Free Workers Union (AFWU)PSSLU Local v. Noriel. No. L-51905, May 26, 1981 (104 SCRA 565, 572-73, citations omitted), vide LVN Pictures, Inc. vs. Phil. Musicians Guild, 110 Phil, 725; Federation of Free Workers v. Paredes, 54 SCRA 76 (1973); Phil. Communications, Electronics and Electricity Workers Federation v. CIR, 56 SCRA 480 (1974).
23[23] 24[24]

Records at 347-354.

Vide AD Gothong Manufacturing Corporation Employees UnionALU v. Confessor. G. R. No. 113638, November 16, 1999, 318 SCRA 58.
25[25]

As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor:26[26] Designation should be reconciled with the actual job description of subject employees x x x The mere fact that an employee is designated manager does not necessarily make him one. Otherwise, there would be an absurd situation where one can be given the title just to be deprived of the right to be a member of a union. In the case of National Steel Corporation vs. Laguesma (G. R. No. 103743, January 29, 1996), it was stressed that: What is essential is the nature of the employees function and not the nomenclature or title given to the job which determines whether the employee has rank-and-file or managerial status or whether he is a supervisory employee. (Emphasis supplied).27[27] WHEREFORE, the petition is hereby DENIED. Let the records of the case be remanded to the office of origin, the Mediation-Arbitration Unit, Regional Branch No. IV, for the immediate conduct of a certification election subject to the usual preelection conference. SO ORDERED. Puno, (Chairman), Panganiban, Sandoval-Gutierrez and Corona, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 88957 June 25, 1992

26[26]

G. R. No. 96663, August 10, 1999, 312 SCRA 104. G. R. No. 96663, August 10, 1999 (312 SCRA 104, 118).

27[27]

PHILIPS INDUSTRIAL DEVELOPMENT, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PHILIPS EMPLOYEES ORGANIZATION (FFW), respondents.

DAVIDE, JR., J.: In this petition for certiorari and prohibition under Rule 65 of the Rules of Court with a prayer for a temporary restraining order and/or a writ of preliminary injunction, petitioner Philips Industrial Development, Inc. (PIDI) seeks to set aside the Decision and Resolution, dated 16 January 1989 and 17 March 1989, respectively, of the National Labor Relations Commission (NLRC) in Case No. NLRC-NCR-00-11-03936-87 on the ground that it committed grave abuse of discretion amounting to lack of jurisdiction in holding that service engineers, sales representatives and confidential employees of PIDI are qualified to be included in the existing bargaining unit. PIDI is a domestic corporation engaged in the manufacturing and marketing of electronic products Since 1971, it had a total of six (6) collective bargaining agreements (CBAs) with private respondent Philips Employees Organization-FFW (PEO-FFW), a registered labor union and the certified bargaining agent of all the rank and file employees of PIDI. In the first CBA (1971-1974), the supervisors referred to in R.A. No. 875, confidential employees, security guards, temporary employees and sales representatives were excluded from the bargaining unit. In the second to the fifth CBAs (1975-1977; 1978-1980; 1981-1983; and 1984-1986), the sales force, confidential employees and heads of small units, together with the managerial employees, temporary employees and security personnel, were specifically excluded from the bargaining unit. 1 The confidential employees are the division secretaries of light/telecom/data and consumer electronics, marketing managers, secretaries of the corporate planning and business manager, fiscal and financial system manager and audit and EDP manager, and the staff of both the General Management and the Personnel Department. 2 In the sixth CBA covering the years 1987 to 1989, it was agreed upon, among others, that the subject of inclusion or exclusion of service engineers, sales personnel and confidential employees in the coverage of the bargaining unit would be submitted for arbitration. Pursuant thereto, on June 1987, PEO-FFW filed a petition before the Bureau of Labor Relations (BLR) praying for an order "directing the parties to select a voluntary arbitrator in accordance with its rules and regulations." As the parties failed to agree on a voluntary arbitrator, the BLR endorsed the petition to the Executive Labor Arbiter of the National Capital Region for compulsory arbitration pursuant to Article 228 of the Labor Code. Docketed as Case No. NLRCNCR-00-11-03936-87, the case was assigned to Executive Labor Arbiter Arthur Amansec. On 17 March 1988, Labor Arbiter Amansec rendered a decision, the dispositive portion of which states:

In view of the foregoing, a decision is hereby rendered, ordering the respondent to conduct a referendum to determine the will of the service engineers, sales representatives as to their inclusion or exclusion in the bargaining unit. It is hereby declared that the Division Secretaries and all Staff of general management, personnel and industrial relations department, secretaries of audit, EDP, financial system are confidential employees and as such are hereby deemed excluded in the bargaining unit. SO ORDERED. PEO-FFW appealed from the decision to the NLRC. On 16 January 1989, the NLRC rendered the questioned decision, the dispositive portion of which reads: WHEREFORE, the foregoing premises considered, the appealed decision of the Executive Labor Arbiter is hereby SET ASIDE and a new one entered declaring respondent company's 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. SO ORDERED. The reversal is anchored on the respondent NLRC's conclusion that based on Section 1, 3 Rule II, Book V of the Omnibus Rules Implementing the Labor Code, as amended by Section 3, Implementing Rules of E.O. No. 111; paragraph (c) Section 2, Rule V of the same Code, as amended by Section 6 4 of the Implementing Rules of E.O. No. 111; and Article 245 5 of the Labor Code, as amended: . . . all workers, except managerial employees and security personnel, are qualified to join or be a part of the bargaining unit. . . . It further ruled that: The Executive Labor Arbiters directive that the service engineers and sales representatives to (sic) conduct a referendum among themselves is erroneous inasmuch as it arrogates unto said employees the right to define what the law means. It would not be amiss to state at this point that there would be no one more interested in excluding the subject employees from the bargaining unit than management and that it would not be improbable for the latter to lobby and/or exert pressure on the employees concerned, thus agitating unrest among the rank-and-file. Likewise, the Executive Labor Arbiter's declaration that the Division Secretaries and all Staff of general management, personnel and industrial relations department, secretaries of audit, EDP and financial system "are confidential employees and as such are hereby deemed

excluded in (sic) the bargaining unit" is contrary to law for the simple reason that the law, as earlier quoted, does not mention them as among those to be excluded from the bargaining unit only (sic) managerial employees and security guards. As a matter of fact, supervisory unions have already been dissolved and their members who do not fall within the definition of managerial employees have become eligible to join or assist the rank-and-file organization. 6 Its motion for the reconsideration of this decision having been denied by the NLRC in its Resolution of 16 March 1989, a copy of which it received on 8 June 1989, petitioner PIDI filed the instant petition on 20 July 1989, alleging that: I THE NLRC COMMITTED ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT SERVICE ENGINEERS, SALES REPRESENTATIVES AND CONFIDENTIAL EMPLOYEES OF PETITIONER ARE QUALIFIED TO BE PART OF THE EXISTING BARGAINING UNIT. II THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT APPLYING THE TIME HONORED "GLOBE DOCTRINE." 7 On 31 July 1989, this Court; required the respondents to comment on the petition, which PEO-FFW complied with on 28 August 1989. Public respondent NLRC, thru its counsel, the Solicitor General, moved for, and was granted a 30-day extension to file its Comment. On 18 September 1989, this Court required the parties to show cause why the petition should not be dismissed in view of the finality of the NLRC decision as provided for by the penultimate sentence of Article 223 of the Labor Code, as amended by R.A. No. 6715 R..A. No. 6715, which amended Article 223 of the Labor Code, was enacted on 2 March 1989 and took effect on 21 March 1989. The parties subsequently complied with the Resolution. On 16 May 1990, this Court required the parties to submit Memoranda explaining the effect in this case of Article 223 of the Labor Code, as amended by Section 12 of R.A. No-6715 with respect to the finality of decisions of the NLRC. The parties complied separately with the same. On 10 September 1990, this Court gave due course to the petition and required the parties to submit their respective Memoranda. The petitioner and the Office of the Solicitor General filed their separate Memoranda. On the other hand, PEO-FFW moved that its Motion and manifestation dated 23 August 1989 be considered as its Memorandum; this Court granted the same.

As stated earlier, the principal issue in this case is whether the NLRC committed grave abuse of discretion in holding that service engineers, sales representatives and confidential employees (division secretaries, staff of general management, personnel and industrial relations department, secretaries of audit, EDP and financial system) are qualified to be included in the existing bargaining unit. Petitioner maintains that it did, and in support of its stand that said employees should not be absorbed by the existing bargaining unit, it urges this Court to consider these points: 1) The inclusion of the group in the existing bargaining unit would run counter to the history of this parties CBA. The parties' five (5) previous CBAs consistently excluded this group of employees from the scope of the bargaining unit. The rationale for such exclusion is that these employees hold positions which are highly sensitive, confidential and of a highly fiduciary nature; to include them in the bargaining unit may subject the company to breaches in security and the possible revelation of highly sensitive and confidential matters. It would cripple the company's bargaining position and would give undue advantage to the union. 2) The absence of mutuality of interests between this group of employees and the regular rank and file militates against such inclusion. A table prepared by the petitioner shows the disparity of interests between the said groups: SERVICE ENGINEERS SERVICE SALES REPRESENTATIVES TECHNICIANS (Non-Bargaining (Bargaining AREAS OF INTEREST Unit Employees) Unit Employees) Qualifications Professional Employees High School/ Vocational Grads. Work Schedule With Night Shift None Schedule Night Shift 10% of Basic Rate None Differential Pay Stand-By Call & On Stand-By Call with: None Allowance First Line:15% of basic rate Second Line: 10% of basic rate Uniforms None 2 sets of polo & pants every 6 months Retirement Benefits 15 yrs. ser.70% 15 yrs. serv. 50% 16 75% 16 85% 17 80% 17 90% 18 85% 18 100% 19 90% 19 115% 20 100% 20 135% Year End Performance Merit Increase system None

Evaluation Sales Commission Yes None Car Loan Yes None Precalculated Yes None Kilometer allowance

The Office of the Solicitor General supports the decision of the Executive Labor Arbiter and refuses to uphold the position of the NLRC. It holds the view that the division Secretaries; the staff members of General Management, Personnel and the Industrial Relations Department; and the secretaries of Audit, EDP and Financial Systems, are disqualified from joining the PEO-FFW as they are confidential employees. They cannot even form a union of their own for, as held in Golden Farms, Inc. vs. FerrerCalleja, 8 the rationale for the disqualification of managerial employees from joining unions holds true also for confidential employees. As regards the sales representatives and service engineers, however, there is no doubt that they are entitled to join or form a union, as they are not disqualified by law from doing so. Considering that they have interests dissimilar to those of the rank and file employees comprising the existing bargaining unit, and following the Globe Doctrine enunciated in In Re: Globe Machine and Stamping Company 9 to the effect that in determining the proper bargaining unit the express will or desire of the employees shall be considered, they should be allowed to determine for themselves what union to join or form. The best way to determine their preference is through a referendum. As shown by the records, such a. referendum was decreed by the Executive Labor Arbiter. The petition is impressed with merit. At the outset, We express Our agreement with the petitioner's view that respondent NLRC did not quite accurately comprehend the issue raised before it. Indeed, the issue is not whether the subject employees may join or form a union, but rather, whether or not they may be part of the existing bargaining unit for the rank and file employees of PIDI. Even if the issue was, indeed, as perceived by the NLRC, still, a palpable error was committed by it in ruling that under the law, all workers, except managerial employees and security personnel, are qualified to join a union, or form part of a bargaining unit. At the time Case No. NLRC-NCR-00-11-03936-87 was filed in 1987, security personnel were no longer disqualified from joining or forming a union. Section 6 of E.O. No. 111, enacted on 24 December 1986, repealed the original provisions of Article 245 of the Labor Code, reading as follows: 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. and substituted it with the following provision:

Art. 245. Right of employees in the public service. xxx xxx xxx

10

By virtue of such repeal and substitution, security guards became eligible for membership in any labor organization. 11 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 PIDI's "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 PEOFFW 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. 12 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 rationale, thus:
13

this Court elaborated on

. . . 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, applicable to confidential employees:
14

this Court explicitly made this rationale

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.

As regards the service engineers and the sales representatives, two (2) points which respondent NLRC likewise arbitrarily and erroneously ruled upon agreed to be discussed. Firstly, in holding that they are included in the bargaining unit for the rank and file employees of PIDI, the NLRC practically forced them to become members of PEO-FFW or to be subject to its sphere of influence, it being the certified bargaining agent for the subject bargaining unit. This violates, obstructs, impairs and impedes the service engineers' and the sales representatives' constitutional right to form unions or associations 15 and to self-organization. 16 In Victoriano vs. Elizalde Rope Workers Union, 17 this Court already ruled: . . . 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 without being prevented by law; and 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, he himself makes up his mind as to which association he would 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. 18 It is clear, therefore, that the right to join a union includes the right to abstain from joining any union. 19 Inasmuch as what both the Constitution and the Industrial Peace Act have recognized, and 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 decision then of the Executive Labor Arbiter in merely directing the holding of a referendum "to determine the will of the service engineers, sales representatives as to their inclusion or exclusion in (sic) the bargaining unit" is the most appropriate procedure that conforms with their right to form, assist or join in labor union or organization. However, since this decision was rendered before the effectivity of R.A. No. 6715, it must now be stressed that its future application to the private parties in this case should, insofar as service engineers and sales representatives holding supervisory positions or functions are concerned, take into account the present Article 245 20 of the Labor Code which, as amended by R.A. No. 6715, now reads: ARTICLE 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. (emphasis supplied)

The foregoing disquisitions render unnecessary a discussion on the second ground on the alleged grave abuse of discretion on the part of the NLRC in not applying the "Globe Doctrine". Suffice it to state here that since the only issue is the subject employees' inclusion in or exclusion from the bargaining unit in question, and PIDI never questioned the decision of the Executive Labor Arbiter, the Globe Doctrine finds no application. Besides, this doctrine applies only in instances of evenly balanced claims by competitive groups for the right to be established as the bargaining unit, 21 which do not obtain in this case. WHEREFORE, the petition is hereby GRANTED. The Decision of public respondent National Labor Relations Commission in Case No. NLRC-NCR-00-11-03936-87, promulgated on 16 January 1989, is hereby SET ASIDE while the Decision of the Executive Labor Arbiter in said case dated 17 March 1988 is hereby REINSTATED, subject to the modifications above indicated. Costs against private respondent. SO ORDERED. Gutierrez, Feliciano, Bidin and Romero, JJ., concur.

Footnotes 1 Rollo, 4. 2 Id. 3 On who may join labor unions. 4 On exclusion of security guards from the bargaining unit of the rank and file employees. 5 On ineligibility of managerial employees to join any labor organization. 6 Rollo, 111. 7 Id., 2. 8 175 SCRA 471 [1989]. 9 3 NLRC 294 [1937]. 10 In view of the repeal of Article 238 of the Labor Code by Section 5 of E.O. 111, this Article was deemed renumbered as Article 244. 11 Manila Electric Co. vs. Secretary of Labor and Employment, 197 SCRA 275 [1991].

12 PASCUAL, C., Labor Relations Law, 1986 ed., 159. 13 144 SCRA 628, 635 [1986]. 14 Supra. 15 Section 8, Article III (Bill of Rights) and Section 3, Article XIII of the present Constitution. 16 Article 246, Labor Code of the Philippines, as amended. 17 59 SCRA 54, 66-67 [1974]. See also Anucension vs. National Labor Union, 80 SCRA 350 [1977]; Vassar Industries Employees Union vs. Estrelia, 82 SCRA 280 [1978]. 18 Citing Pagkakaisa Samahang Manggagawa ng San Miguel Brewery at mga Kasangay (PAFLU) vs. Enriquez, 108 Phil. 1010 [1960]. 19 Citing Abo vs. PHILAME (KG) Employees & Workers Union, 13 SCRA 120 [1965]. 20 Originally Article 246. 21 Rothenberg on Labor Relations, 1949 ed., 483. The Lawphil Project - Arellano Law Foundation

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.:p 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:

I 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 rankand-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 MEWACBA. 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 (STEAMPCWF); 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-9-73189) 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 RANKAND-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-andfile 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. amended Art. 245, to read as follows:

Section 18 thereof

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 employees from 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. ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with modification the Resolution of the Secretary of Labor dated November 3, 1989 upholding an employee's right to self-organization. A certification election is hereby ordered conducted among supervisory employees of MERALCO, belonging to Pay Grades VII and above, using as guideliness an employee's power to either recommend or execute management policies, pursuant to Art. 212 (m), of the Labor Code, as amended by Sec. 4 of RA 6715, with respondents STEAM-PCWF and FLAMES as choices. Employees of the Patrol Division, Treasury Security Services Section and Secretaries may freely join either the labor organization of the rank and file or that of the supervisory union depending on their employee rank. Disqualified employees covered by Sec. 3, Art. I of the MEWA-CBA, shall remain with the existing labor organization of the rank and file, pursuant to the Secretary of Labor's directive: By the parties' own agreement, they find the bargaining unit, which includes the positions enumerated in Section 3, Article I of their CBA, appropriate for purposes of collective bargaining. The composition of the bargaining unit should be left to the agreement of the parties, and unless there are legal infirmities in such agreement, this Office will not substitute its judgment for that of the parties. Consistent with the story of collective bargaining in the company, the membership of said group of employees in the existing rank-and-file unit should continue, for it will enhance stability in that unit already well establish. However, we cannot approve of the condition set in Section 3, Article I of the CBA that the employees covered are automatically disqualified from becoming union members. The condition unduly restricts the exercise of the right to self organization by the employees in question. It is contrary to law and public policy and, therefore, should be considered to have not been written into the contract. Accordingly, the option to join or not to join the union should be left entirely to the employees themselves. (p. 229, Rollo) The Temporary Restraining Order (TRO) issued on February 26, 1990 is hereby LIFTED. Costs against petitioner. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Grio-Aquino, Regalado and Davide, Jr., JJ., concur.

Footnotes

1 This CBA expired on November 30, 1989. There is an on-going CBA negotiation with National Capitol Region, Dole, per Comment of FLAMES, dated March 6, 1990, p. 248, Rollo. 2 Published in two newspapers, the law took effect on March 21, 1989. The Lawphil Project - Arellano Law Foundation

[G.R. No. 113638. November 16, 1999] A. D. GOTHONG MANUFACTURING CORPORATION EMPLOYEES UNION-ALU, petitioner, vs. HON. NIEVES CONFESOR, SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT and A. D. GOTHONG MANUFACTURING CORPORATION, Subangdaku, Mandaue City, respondents. DECISION GONZAGA_REYES, J.: Petitioner A. D. Gothong Manufacturing Corporation Employees Union-ALU seeks to reverse and set aside the decision of the Secretary of Labor promulgated on September 30, 1993 affirming in toto the Resolution of Mediator-Arbiter, Achilles V. Manit declaring Romulo Plaza and Paul Michael Yap as rank- and-file employees of A. D. Gothong Manufacturing Corporation. On May 12, 1993, petitioner A. D. Gothong Manufacturing Corporation Employees Union-ALU (Union) filed a petition for certification election in its bid to represent the unorganized regular rank-and-file employees of respondent A. D. Gothong Manufacturing Corporation (Company) excluding its office staff and personnel. Respondent Company opposed the petition as it excluded office personnel who are rank and file employees. In the inclusion-exclusion proceedings, the parties agreed to the inclusion of Romulo Plaza and Paul Michael Yap in the list of eligible voters on condition that their votes are considered challenged on the ground that they were supervisory employees. The certification election was conducted as scheduled and yielded the following results: YES - - - - - - - - - - - - - - - 20 NO - - - - - - - - - - - - - - - - 19

Spoiled - - - - - - - - - - - - - - 0 Challenged - - -- - - - - - - - _2 Total votes cast - - - - - - - -41 Both Plaza and Yap argued that they are rank-and-file employees. Plaza claimed that he was a mere salesman based in Cebu, and Yap argued that he is a mere expediter whose job includes the facilitation of the processing of the bills of lading of all intended company shipments. Petitioner Union maintains that both Plaza and Yap are supervisors who are disqualified to join the proposed bargaining unit for rank-and-file employees. In support of its position paper, the petitioner Union submitted the following: 1. Joint affidavit of Ricardo Caete, et al. which alleges that Michael Yap is a supervisory employee of A. D. Gothong Manufacturing Corporation and can effectively recommend for their suspension/dismissal. 2. Affidavit of Pedro Diez which alleges that the affiant is a supervisor in the production department of A. D. Gothong Manufacturing Corporation; that the affiant knows the challenged voters because they are also supervisory employees of the same corporation; that the challenged voters used to attend the quarterly meeting of the staff employees of A. D. Gothong Manufacturing Corporation; 3. Photocopy of the memorandum dated January 4, 1991 regarding the compulsory attendance of department heads/supervisors to the regular quarterly meeting of all regular workers of A. D. Gothong Manufacturing Corporation on January 13, 1991. Appearing therein are the names ROMULO PLAZA and MICHAEL YAP; 4. A not-so-legible photocopy of a memorandum dated March 1, 1989 wherein the name ROMY PLAZA is mentioned as the acting OIC of GT Marketing in Davao; and 5. Photocopy of the minutes of the regular quarterly staff meeting on August 13, 1989 at Mandaue City wherein Michael Yap is mentioned as a shipping assistant and a newly hired member of the staff.i[1] The Med-Arbiter declared that the challenged voters Yap and Plaza are rank-and-file employees. Petitioner Union appealed to the Secretary of Labor insisting that Yap and Plaza are supervisor and manager respectively of the corporation and are prohibited from joining the proposed bargaining unit of rank-and-file employees. In an attempt to controvert the arguments of petitioner, respondent Company stressed that Pacita Gothong is the companys corporate secretary and not Baby L. Siador, who signed the minutes of the meeting submitted in evidence. Respondent also argued that Romulo Plaza could not qualify as a manager of the Davao Branch the opening of which branch never materialized.

Respondent Secretary of Labor affirmed the finding of the Med-Arbiter. Motion for Reconsideration of the above resolution having been denied, petitioner Union appeals to this Court by petition for review on certiorari alleging the following grounds: I. THAT THE SECRETARY OF LABOR AND EMPLOYMENT CLEARLY COMMITTED MISAPPREHENSION OF FACTS/EVIDENCE AND IF IT WERE NOT FOR SUCH MISAPPREHENSION IT WOULD HAVE ARRIVED AT DIFFERENT CONCLUSION FAVORABLE TO PETITIONER. II. THAT THE SECRETARY OF LABOR AND EMPLOYMENT ACTED WITH GRAVE ABUSE OF DISCRETION AND CONTRARY TO LAW IN AFFIRMING IN TOTO THE DECISION OF HONORABLE ACHILLES V. MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE No. 7, CEBU CITY IN DENYING PETITIONERS MOTION FOR RECONSIDERATION.ii[2] We find no merit in the instant petition. The Labor Code recognizes two (2) principal groups of employees, namely, the managerial and the rank and file groups. Article 212 (m) of the Code provides: (m) Managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Under Rule I, Section 2 (c), Book III of the Implementing Rules of the Labor Code, to be a member of managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary duty consists of the performance of work directly related to management policies; (2) that he customarily and regularly exercises discretion and independent judgment in the performance of his functions; (3) that he regularly and directly assists in the management of the establishment; and (4) that he does not devote more than twenty percent of his time to work other than those described above. In the case of Franklin Baker Company of the Philippines vs. Trajanoiii[3], this Court stated: The test of supervisory or managerial status depends on whether a person possess authority to act in the interest of his employer in the matter specified in Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing Rules and whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment. Thus, where such recommendatory powers as in the case at bar, are subject to evaluation, review and final action by the department heads and other higher executives of the company, the same, although present, are not exercise of independent judgment as required by law.iv[4]

It has also been established that in the determination of whether or not certain employees are managerial employees, this Court accords due respect and therefore sustains the findings of fact made by quasi-judicial agencies which are supported by substantial evidence considering their expertise in their respective fields.v[5] The petition has failed to show reversible error in the findings of the Med-Arbiter and the Secretary of the Department of Labor. In ruling against petitioner Union, the Med-Arbiter ruled that the petitioner Union failed to present concrete and substantial evidence to establish the fact that challenged voters are either managerial or supervising employees; the Med-Arbiter evaluated the evidence as follows: The said joint affidavit of Ricardo Caete, et al. and that of Pedro Diez merely tagged the challenged voters as supervisors, but nothing is mentioned about their respective duties, powers and prerogatives as employees which would have indicated that they are indeed supervisory employees. There is no statement about an instance where the challenged voters effectively recommended such managerial action which required the use of independent judgment. The aforementioned documents have not been properly identified which renders them inadmissible in evidence. But, granting that they are the exact replica of a genuine and authentic original copy, there is nothing in them which specifically and precisely tells that the challenged voters can exercise the powers and prerogatives to effectively recommended such managerial actions which require the use of independent judgment.vi[6] In upholding the above findings, the respondent Secretary of Labor rationalized: Based on the foregoing, Romulo Plaza and Paul Michael Yap can not qualify as managerial and supervisory employees, respectively, because there is nothing in the documentary evidence offered by herein petitioner-appellant showing that they are actually conferred or actually exercising the said managerial/supervisory attributes. In the case of Romulo Plaza, we note that indeed there is nothing in the minutes of the staff meeting held on 05 March 1993, particularly on the report of the Sales Department, indicating that said appellee had been exercising managerial prerogatives by hiring workers and issuing a check for the payment of rentals of a warehouse, relative to the company branch in Davao City. The imputation on the exercise of the said prerogative is misleading if not malicious because a plain reading of that portion of the report shows in clear and simple language that one who made the said hiring and payment was no other than Mr. John Chua, the Sales Manager. The only instance when the name of Romy Plaza was mentioned in the said report was in reference to his designation as an OIC of the Davao City Branch while all the aspect of the creation of the said branch is awaiting final approval by the Company president and general manager (p. 197, last paragraph, records). The setting up of said branch however, did not materialize, as evidenced by the certification issued by the Revenue District Office and Office of the Mayor in Davao City (pp. 198-199, records).

Likewise, evidence pinpointing that Paul Michael Yap is a supervisory employee is altogether lacking. The fact that he was designated as shipping assistant/expediter is of no moment, because titles or nomenclatures attached to the position is not controlling. Finally, the job descriptions extant on records vividly exhibit no trace of the performance of managerial or supervisory functions (pp. 124-126, records).vii[7] In this petition, petitioner Union claims that the documentary evidence was misapprehended by public respondent. Petitioner Union reiterates that: (1) in minutes of the staff meeting of respondent Company on August 13, 1989, duly signed by the President Albino Gothong and attested by Jose F. Loseo presiding officer/VP and Gertrudo Lao, Assistant General Manager, Paul Michael Yap was listed as one of the staff; (2) in the regular quarterly meeting on January 4, 1991, the names of Yap and Plaza are listed under the heading Department Heads/Supervisors duly signed by President/General Manager Albino Gothong and Asst. General Manager Gertrudo Lao; and (3) in the staff meeting of March 5, 1993, Plaza was assigned as officer-in-charge of the companys branch in Davao. We find no cogent reason to disturb the finding of the Med-Arbiter and the Secretary of Labor that the copies of the minutes presented in evidence do not prove that Yap and Plaza were managerial or supervisory employees. We have examined the documentary evidence, and nowhere is there a statement therein about any instance where the challenged voters effectively recommended any managerial action which would require the use of independent judgment. The last piece of evidence was not discussed by the Med-Arbiter; however a perusal thereof would show that while one J. Chua of the Sales Department reported that Romy Plaza was in Davao right now acting as OIC, the same document states that the Davao operations still had to be finalized. On the other hand, the claim of respondent Company that Plaza is the head of the Davao branch is belied by the certification of the City Treasurer of Davao and of the Bureau of Internal Revenue of Mandaue City that the plan to open a branch in Davao City did not materialize.viii[8] The reliance of petitioner on the affidavit of Jose Loseo, Personnel Manager, that Plaza and Yap were hired by him as department head and supervisor of the respondent Company cannot be sustained in light of the affidavit of said Loseo dated September 28, 1993, attesting that he was forced to sign the earlier memorandum on the job assignment of Yap and Plaza. This affidavit is sought to be discarded by respondent Company for being perjurious and ill-motivated.ix[9] Petitioner Union however reiterates that Loseos affidavit is corroborated by the other public documents indicating that Plaza and Yap are not rank-and-file employees.x[10] The issue raised herein is basically one of fact: whether in the light of the evidence submitted by both parties, Plaza and Yap are managerial employees or rank-and-file employees. This Court is not a trier of facts. As earlier stated, it is not the function of this Court to examine and evaluate the probative value of all evidence presented to the concerned tribunal which formed the basis of its impugned decision or resolution. Following

established precedents, it is inappropriate to review that factual findings of the MedArbiter regarding the issue whether Romulo Plaza and Paul Michael Yap are or are not rank-and-file employees considering that these are matters within their technical expertise.xi[11] They are binding on this Court as we are satisfied that they are supported by substantial evidence, and we find no capricious exercise of judgment warranting reversal by certiorari. WHEREFORE, the petition is denied for lack of merit. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 94045 September 13, 1991 CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. (CENECO), petitioner, vs. HONORABLE SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT, and CENECO UNION OF RATIONAL EMPLOYEES (CURE), respondents. Enrique S. Tabino for petitioner. Edmundo G. Manlapao for private respondent.

REGALADO, J.:p In this special civil action for certiorari, petitioner Central Negros Electric Cooperative, Inc. (CENECO) seeks to annul the order 1 issued by then Acting Secretary of Labor Bienvenido E. Laguesma on June 6, 1990, declaring the projected certification election unnecessary and directing petitioner CENECO to continue recognizing private

respondent CENECO Union of Rational Employees (CURE) as the sole and exclusive bargaining representative of all the rank-and-file employees of petitioner's electric cooperative for purposes of collective bargaining. It appears from the records that on August 15, 1987, CENECO entered into a collective bargaining agreement with CURE, a labor union representing its rank-andfile employees, providing for a term of three years retroactive to April 1, 1987 and extending up to March 31, 1990. On December 28, 1989, CURE wrote CENECO proposing that negotiations be conducted for a new collective bargaining agreement (CBA). On January 18, 1990, CENECO denied CURE's request on the ground that, under applicable decisions of the Supreme Court, employees who at the same time are members of an electric cooperative are not entitled to form or join a union. 2 Prior to the submission of the proposal for CBA renegotiation, CURE members, in a general assembly held on December 9, 1989, approved Resolution No. 35 whereby it was agreed that 'tall union members shall withdraw, retract, or recall the union members' membership from Central Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under the existing Collective Bargaining Agreement entered into by and between CENECO and CURE, and the supposed benefits that our union may avail (of) under the renewed CBA. 3 This was ratified by 259 of the 362 union members. CENECO and the Department of Labor and Employment, Bacolod District, were furnished copies of this resolution. However, the withdrawal from membership was denied by CENECO on February 27, 1990 under Resolution No. 90 "for the reason that the basis of withdrawal is not among the grounds covered by Board Resolution No. 5023, dated November 22, 1989 and that said request is contrary to Board Resolution No. 5033 dated December 13, 1989, ..." 4 By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition for direct recognition or for certification election, supported by 282 or 72% of the 388 rank-and-file employees in the bargaining unit of CENECO. CENECO filed a motion to dismiss on the ground that there are legal constraints to the filing of the certification election, citing the ruling laid down by this Court in Batangas I Electric Cooperative Labor Union vs. Romeo A. Young , 5 (BATANGAS case) to the effect that "employees who at the same time are members of an electric cooperative are not entitled to form or join unions for purposes of collective bargaining agreement, for certainly an owner cannot bargain with himself or his co-owners." Med-Arbiter Felizardo T. Serapio issued an order, 6 granting the petition for certification election which, in effect, was a denial of CENECO's motion to dismiss, and directing the holding of a certification election between CURE and No Union. CENECO appealed to the Department of Labor and Employment which issued the questioned order modifying the aforestated order of the med-arbiter by directly

certifying CURE as the exclusive bargaining representative of the rank-and-file employees of CURE. Hence, this petition. Petitioner CENECO argues that respondent Secretary committed a grave abuse of discretion in not applying to the present case the doctrine enunciated in the BATANGAS case that employees of an electric cooperative who at the same time are members of the electric cooperative are prohibited from forming or joining labor unions for purposes of a collective bargaining agreement. While CENECO recognizes the employees' right to self-organization, it avers that this is not absolute. Thus, it opines that employees of an electric cooperative who at the same time are members thereof are not allowed to form or join labor unions for purposes of collective bargaining. However, petitioner does not hesitate to admit that the prohibition does not extend to employees of an electric cooperative who are not members of the cooperative. The issue, therefore, actually involves a determination of whether or not the employees of CENECO who withdrew their membership from the cooperative are entitled to form or join CURE for purposes of the negotiations for a collective bargaining agreement proposed by the latter. As culled from the records, it is the submission of CENECO that the withdrawal from membership in the cooperative and, as a consequence, the employees' acquisition of membership in the union cannot be allowed for the following reasons: 1. It was made as a subterfuge or to subvert the ruling in the BATANGAS case: 2. To allow the withdrawal of the members of CENECO from the cooperative without justifiable reason would greatly affect the objectives and goals of petitioner as an electric cooperative; 3. The Secretary of Labor, as well as the Med-Arbiter, has no jurisdiction over the issue of the withdrawal from membership which is vested in the National Electrification Administration (NEA) which has direct control and supervision over the operations of electric cooperatives; and 4. Assuming that the Secretary has jurisdiction, CURE failed to exhaust administrative remedies by not referring the matter of membership withdrawal to the NEA. The petition is destitute of merit; certiorari will not lie. We first rule on the alleged procedural infirmities affecting the instant case. CENECO avers that the med-arbiter has no jurisdiction to rule on the issue of withdrawal from membership of its employees in the cooperative which, it claims, is properly vested in the NEA which has control and supervision over all electric cooperatives.

From a perusal of petitioner's motion to dismiss filed with the med-arbiter, it becomes readily apparent that the sole basis for petitioner's motion is the illegality of the employees' membership in respondent union despite the fact that they allegedly are still members of the cooperative. Petitioner itself adopted the aforesaid argument in seeking the dismissal of the petition for certification election filed with the med-arbiter, and the finding made by the latter was merely in answer to the arguments advanced by petitioner. Hence, petitioner is deemed to have submitted the issue of membership withdrawal from the cooperative to the jurisdiction of the med-arbiter and it is now estopped from questioning that same jurisdiction which it invoked in its motion to dismiss after obtaining an adverse ruling thereon. Under Article 256 of the Labor Code, to have a valid certification election at least a majority of all eligible voters in the unit must have cast their votes. It is apparent that incidental to the power of the med-arbiter to hear and decide representation cases is the power to determine who the eligible voters are. In so doing, it is axiomatic that the med-arbiter should determine the legality of the employees' membership in the union. In the case at bar, it obviously becomes necessary to consider first the propriety of the employees' membership withdrawal from the cooperative before a certification election can be had. Lastly, it is petitioner herein who is actually questioning the propriety of the withdrawal of its members from the cooperative. Petitioner could have brought the matter before the NEA if it wanted to and. if such remedy had really been available, and there is nothing to prevent it from doing so. It would be absurd to fault the employees for the neglect or laxity of petitioner in protecting its own interests. The argument of CENECO that the withdrawal was merely to subvert the ruling of this Court in the BATANGAS case is without merit. The case referred to merely declared that employees who are at the same time members of the cooperative cannot join labor unions for purposes of collective bargaining. However, nowhere in said case is it stated that member-employees are prohibited from withdrawing their membership in the cooperative in order to join a labor union. As discussed by the Solicitor General, Article I, Section 9 of the Articles of Incorporation and By- Laws of CENECO provides that "any member may withdraw from membership upon compliance with such uniform terms and conditions as the Board may prescribe." The same section provides that upon withdrawal, the member is merely required to surrender his membership certificate and he is to be refunded his membership fee less any obligation that he has with the cooperative. There appears to be no other condition or requirement imposed upon a withdrawing member. Hence, there is no just cause for petitioner's denial of the withdrawal from membership of its employees who are also members of the union. 7 The alleged board resolutions relied upon by petitioner in denying the withdrawal of the members concerned were never presented nor their contents disclosed either before the med-arbiter or the Secretary of Labor if only to prove the ratiocination for said denial. Furthermore, CENECO never averred non-compliance with the terms and conditions for withdrawal, if any. It appears that the Articles of Incorporation of CENECO do not provide any ground for withdrawal from membership which

accordingly gives rise to the presumption that the same may be done at any time and for whatever reason. In addition, membership in the cooperative is on a voluntary basis. Hence, withdrawal therefrom cannot be restricted unnecessarily. The right to join an organization necessarily includes the equivalent right not to join the same. The right of the employees to self-organization is a compelling reason why their withdrawal from the cooperative must be allowed. As pointed out by CURE, the resignation of the member- employees is an expression of their preference for union membership over that of membership in the cooperative. The avowed policy of the State to afford fall protection to labor and to promote the primacy of free collective bargaining mandates that the employees' right to form and join unions for purposes of collective bargaining be accorded the highest consideration. Membership in an electric cooperative which merely vests in the member a right to vote during the annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and more important constitutional right of an employee to join a union of his choice. Besides, the 390 employees of CENECO, some of whom have never been members of the cooperative, represent a very small percentage of the cooperative's total membership of 44,000. It is inconceivable how the withdrawal of a negligible number of members could adversely affect the business concerns and operations of CENECO. We rule, however, that the direct certification ordered by respondent Secretary is not proper. By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct certification originally allowed under Article 257 of the Labor Code has apparently been discontinued as a method of selecting the exclusive bargaining agent of the workers. This amendment affirms the superiority of the certification election over the direct certification which is no longer available now under the change in said provision. 8 We have said that where a union has filed a petition for certification election, the mere fact that no opposition is made does not warrant a direct certification. 9 In said case which has similar features to that at bar, wherein the respondent Minister directly certified the union, we held that: ... As pointed out by petitioner in its petition, what the respondent Minister achieved in rendering the assailed orders was to make a mockery of the procedure provided under the law for representation cases because: ... (c) By directly certifying a Union without sufficient proof of majority representation, he has in effect arrogated unto himself the right, vested naturally in the employee's to choose their collective bargaining representative. (d) He has in effect imposed upon the petitioner the obligation to negotiate with a union whose majority representation is under serious question. This is highly irregular because while the Union enjoys the blessing of the Minister, it does not enjoy the blessing of the employees. Petitioner is therefore under threat of being held liable for refusing to negotiate with a union whose right to bargaining status has not been legally established.

While there may be some factual variances, the rationale therein is applicable to the present case in the sense that it is not alone sufficient that a union has the support of the majority. What is equally important is that everyone be given a democratic space in the bargaining unit concerned. The most effective way of determining which labor organization can truly represent the working force is by certification election. 10 WHEREFORE, the questioned order for the direct certification of respondent CURE as the bargaining representative of the employees of petitioner CENECO is hereby ANNULLED and SET ASIDE. The med-arbiter is hereby ordered to conduct a certification election among the rank-and- file employees of CENECO with CURE and No Union as the choices therein. SO ORDERED. Melencio-Herrera (Chairperson), Paras and Padilla, JJ., concur. Sarmiento, J., is on leave.

Footnotes 1 Annex A, Petition; Rollo, 20. 2 Annex J., Id., Ibid., 108. 3 Annex 4, Comment of CURE; Ibid., 139. 4 Annex I, Petition; Ibid., 107. 5 167 SCRA 136 (1988). 6 Annex F, Id.; Ibid., 80. 7 Rollo, 167-170. 8 National Association of Free Trade Unions (NAFTU-TUCP) vs. Bureau of Labor Relations (BLR) et al., 164 SCRA 12 (1988). 9 Colgate Palmolive Philippines, Inc. vs. Ople, et al., 163 SCRA 323 (1988). 10 Associated Labor Unions (ALU) vs. Ferrer-Calleja, etc., et al., 179 SCRA (1989).

[G.R. No. 96663. August 10, 1999] PEPSI - COLA PRODUCTS PHILIPPINES, INC., petitioner, vs. HONORABLE SECRETARY OF LABOR, MED - ARBITER NAPOLEON V. FERNANDO & PEPSI - COLA SUPERVISORY EMPLOYEES ORGANIZATION - UOEF, respondents. [G.R. No. 103300. August 10, 1999] PEPSI COLA PRODUCTS PHILIPPINES, petitioner, vs. OFFICE OF THE SECRETARY DEPARTMENT OF LABOR AND HON. CELENIO N. DAING, in his capacity as MedArbiter Labor Regional Office No. X, Cagayan de Oro City, CAGAYAN DE ORO PEPSI COLA SUPERVISORS UNION (UOEF), respondents. DECISION PURISIMA, J.: These are petitions for certiorari relating to three (3) cases filed with the Med-Arbiter, to wit: MED ARB ROX Case No. R100-9101-RU-002 for Certification Election filed by Pepsi Cola Supervisors Union-UOEF (Union), MED ARB Case No. R1000-9102-RU008, Re: Petition to Set Aside, Cancel and/ or Revoke the Charter Affiliation of the Union, and MED-ARB ROX Case No. R1000-9104-RU-012, for Cancellation of Registration Certificate No. 11492-LC in favor of the Union.
G. R. No. 96663

The facts that matter can be culled as follows: Sometime in June 1990, the Pepsi-Cola Employees Organization-UOEF (Union) filed a petition for certification election with the Med-Arbiter seeking to be the exclusive bargaining agent of supervisors of Pepsi-Cola Philippines, Inc. (PEPSI). On July 12, 1990, the Med-Arbiter granted the Petition, with the explicit statement that it was an affiliate of Union de Obreros Estivadores de Filipinas (federation) together with two (2) rank and file unions, Pepsi-Cola Labor Unity (PCLU) and PepsiCola Employees Union of the Philippines (PEUP). On July 23, 1990, PEPSI filed with the Bureau of Labor Relations a petition to Set Aside, Cancel and/or Revoke Charter Affiliation of the Union, entitled PCPPI v. PCEUUOEF and docketed as Case No. 725-90, on the grounds that (a) the members of the Union were managers and (b) a supervisors union can not affiliate with a federation whose members include the rank and file union of the same company. On August 29,1990, PEPSI presented a motion to re-open the case since it was not furnished with a copy of the Petition for Certification Election. On September 4, 1990, PEPSI submitted its position paper to the BLR in Case No. 725-90.

On September 21, 1990, PEPSI received summons to appear at the pre-trial conference set on September 25, 1990 but which the hearing officer rescheduled on October 21, 1990. On October 12, 1990, PEPSI filed a Notice of Appeal and Memorandum of Appeal with the Secretary of Labor, questioning the setting of the certification election on the said date and five (5) days after. It also presented an urgent Ex-Parte Motion to Suspend the Certification Election, which motion was granted on October 18, 1990. On November 12, 1990, the Secretary of Labor denied the appeal and Motion for Reconsideration. Even as the Petition to Cancel, Revoke and Suspend Union Charter Certificate was pending before the BLR, PEPSI found its way to this Court via the present petition for certiorari. On February 6, 1991, the Court granted the prayer for temporary restraining order and/or preliminary injunction. The pivot of inquiry here is: whether or not a supervisors union can affiliate with the same Federation of which two (2) rank and file unions are likewise members, without violating Article 245 of the Labor Code (PD 442), as amended, by Republic Act 6715, which provides: Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees.- Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. In its Comment dated March 19, 1991, the Federation argued that: The pertinent portion of Article 245 of the Labor Code states that. Supervisory employees shall not be eligible for membership in a labor organization of the rank and file employees but may join, assist or form separate labor organization of their own. This provision of law does not prohibit a local union composed of supervisory employees from being affiliated to a federation which has local unions with rank-andfile members as affiliates. xxx xxx xxx

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

On April 8, 1991, the Secretary of Labor and Employment, through the Office of the Solicitor General, sent in a Comment, alleging inter alia, that: xxx under Article 259 of the New Labor Code, only orders of the Med-Arbiter can be appealed through the Secretary of Labor and only on the ground that the rules and regulations for the conduct of the certification election have been violated. The Order of the Representation Officer is interlocutory and not appealable. xxx xxx until and unless there is a final order cancelling its certificate of registration or charter certificate, a labor organization remains to be a legitimate labor organization entitled to exercise all the rights and duties accorded to it by the Labor Code including the right to be certified as a bargaining representative. xxx xxx Public respondent cannot be deemed to have committed grave abuse of discretion with respect to an issue that was never presented before it for resolution. xxx Article 245 of the New Labor Code does not preclude the supervisors union and the rank-and-file union from being affiliated with the same federation. xxx xxx xxx

A federation of local union is not the labor organization referred to in Article 245 but only becomes entitled to all the rights enjoyed by the labor organization (at the company level) when it has complied with the registration requirements found in Articles 234 and 237. Hence, what is prohibited by Article 245 is membership of supervisory employees in a labor union (at the company level) of the rank and file. xxx xxx In other words, the affiliation of the supervisory employees union with the same federation with which the rank and file employees union is affiliated did not make the supervisory employees members of the rank and file employees union and vice versa.xiii[2] xxx PEPSI, in its Reply dated May 7, 1991, asserted: It is our humble contention that a final determination of the Petition to Set-Aside, Cancel, Revoke Charter Union Affiliation should first be disposed of before granting the Petition for the Conduct of Certification Election. To allow the conduct of the certification election to proceed would make any decision arrived at by the Bureau of Labor Relations useless inasmuch as the same would necessarily be rendered moot and academic.xiv[3] On June 7, 1991, petitioner again filed a Supplemental Reply stressing: It is likewise stressed that officials of both the PCLU and PEUP are top ranking officers of UOEF, the federation of supervisors union, to wit: POSITION IN RANK AND FILE UNION POSITION IN FEDERATION

1. Rogelio de la Cruz 2. Felix Gatela 3. Carlito Epino xxx xxx xxx

PCLU -President PEUP - President PCLU Board Member

General Vice President General Treasurer Educational Research Director

The respondent supervisory union could do indirectly what it could not do directly as the simple expedient of affiliating with UOEF would negate the manifest intent and letter of the law that supervisory employees can only join, assist or form separate labor organizations of their own and cannot be eligible for membership in a labor organization of the rank and file employees.xv[4] On August 6, 1991, the Secretary of Labor and Employment filed a Rejoinder, claiming thus: xxx an employer has no legal standing to question the validity of a certifi cation election. xxx For this reason, the Supreme Court has consistently held that, as a rule, a certification election is the sole and exclusive concern of the employees and that the employer is definitely an intruder or a mere bystander (Consolidated Farms vs. Noriel, L-47752, July 31, 1978, 84 SCRA 469; Filipino Metals Corporation vs. Ople, L- 43861, September 4, 1981, 107 SCRA 211; Trade Unions of the Philippines and Allied Services (TUPAS) vs. Trajano No. L-61153, January 17, 1983, 120 SCRA 64]. xxx xxx xxx

In Adamson & Adamson, Inc. vs. CIR No. L-35120, January 31, 1984, 127 SCRA 268, the Supreme Court (then dealing with the interpretation of Section 3 of the Industrial Peace Act, from which Section 245 of the Labor Code was derived) grappled with the issue in the case at bar. It held that, There is nothing in the provisions of the Industrial Peace Act which provides that a duly registered local union affiliating with a national union or federation loses its legal personality, or its independence. xxx xxx xxx

However, there is absolutely nothing in the Labor Code that prohibits a federation from representing or exercising influence over its affiliates. On the contrary, this is precisely the reason why federations are formed and are allowed by law to exist.xvi[5] On November 8, 1991, the Union also filed a Rejoinder. On December 9, 1991, the Court resolved to DISMISS the case for failure to sufficiently show that the questioned judgment is tainted with grave abuse of discretion.

In a Resolution dated March 2, 1992, the Second Division of the Court resolved to grant the motion for reconsideration interposed on January 28, 1992.
G.R. No. 103300

What are assailed in this case is Med-Arbiter Order dated May 23, 1991 and the Decision and Order of the Secretary of Labor and Employment, dated October 4, 1991 and December 12, 1991, respectively. The decretal portion of the Med-Arbiter Order under attack, reads: WHEREFORE, premises considered, an order is hereby issued: 1. Dismissing MED ARB ROX CASE NO. R1000-919104-RU-012 and R1000-9102RU-008 for lack of merit; and 2. Ordering the conduct of a Certification Election to be participated by and among the supervisory workers of the respondent company, Pepsi-Cola Products Philippines, Inc. at its plant at Tin-ao, Cagayan de Oro City, including all the satellite warehouse within the territorial coverage and control of the Cagayan de Oro Pepsi-Cola Plant. The choices are as follows: 1. Cagayan de Oro Pepsi-Cola Supervisors Union (U.O.E.P.) 2. No union The parties are directed to attend a pre-election conference on June 10, 1991, 2:30 p.m. at the Regional Office to determine the qualification of the voters and to thresh out the mechanics of the election. Respondent/employer is directed to submit five (5) copies of the names of the rank and file workers taken from the payroll on October 131, 1991, alphabetically arranged (sic) indicating their names and positions and dates of employment and to bring the aforementioned payroll during the pre-election conference for verification purposes.xvii[6] xxx The supervisory employees of the Union are: POSITION 1. Felipe Valdehueza 2. Gerberto Vertudazo 3. Paul Mendoza 4. Gilberto Emano, Jr. 5. Jaime Huliganga Route Manager C & C Manager Sales Service Department Manager Route Manager Chief Checker

6. Elias Edgama, Sr. 7. Romanico Ramos 8. Raul Yacapin 9. Jovenal Albaque 10. Fulvio Narciso 11. Apolinario Opiniano 12. Alfredo Panas 13. Simplicio Nelie 14. Arthur Rodriguez 15. Marco Ilano 16. Deodoro Ramos

Accounting Manager Route Manager Route Manager Route Manager Route Manager Route Manager Route Manager Route Manager Route Manager Warehouse Operations Manager and Maintenance Manager

On June 6, 1991, PEPSI appealed the said Order to the Secretary of Labor and Employment on the ground of grave abuse of discretion, docketed as Case No. OS-A232-91. On October 4, 1991, the Secretary modified the appealed decision, ruling thus: WHEREFORE, the Order of the Med-Arbiter dated 23 May 1991 is hereby modified to the effect that MED ARB ROX Case No. R1000-9104-RU-012 and R1000-9102-RU-008 are hereby referred to the Office of the Regional Director which has jurisdiction over these cases. The call for certification election among the supervisory workers of the Pepsi-Cola Products Philippines, Inc. at its plant at Tin-ao, Cagayan de Oro City is hereby sustained.xviii[7] On October 19, 1991, PEPSI presented a motion for reconsideration of the aforesaid Order but the same was denied on December 12, 1991. Meanwhile, the BLR issued Registration Certificate No. 11492-LC in favor of the Union. Dissatisfied therewith, PEPSI brought the instant petition for certiorari, contending that: PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT PRIVATE RESPONDENTS OFFICERS AND MEMBERS ARE NOT MANAGERIAL EMPLOYEES; PRIVATE RESPONDENT IS PROHIBITED FROM AFFILIATING ITSELF WITH A FEDERATION ALREADY AFFILIATED WITH THE RANK AND FILE UNION;

PUBLIC RESPONDENT COMMITTED GRAVE OF (SIC) ABUSE OF DISCRETION IN RULING THAT THE INSTITUTION OF A PETITION FOR CANCELLATION OF UNION REGISTRATION DOES NOT CONSTITUTE A PREJUDICIAL QUESTION TO A PETITION CERTIFICATION ELECTION.xix[8] The petitions must fail for want of merit. At the outset, it must be stressed that on September 1, 1992, there was a Resolution of the Union withdrawing from the Federation, to wit: BE IT RESOLVED, as it is hereby RESOLVED, that this UNION WITHDRAW, as it hereby WITHDRAWS its affiliation from the Union de Obreros Estivadores de Filipinas, and at the same time, give our thanks to the said federation for its help and guidance rendered to this Union in the past.xx[9] The issue in G.R. No. 96663, whether or not the supervisors union can be affiliated with a Federation with two (2) rank and file unions directly under the supervision of the former, has thus become moot and academic in view of the Unions withdrawal from the federation. In a long line of cases (Narciso Nakpil, et. al., vs. Hon. Crisanto Aragon, et. al.,, G. R. No. L - 24087, January 22, 1980, 95 SCRA 85; Toribio v. Bidin, et. al., G.R. No. L-37960, February 28, 1980, 96 SCRA 361; Gumaua v. Espino, G.R. No. L- 36188 - 37586 February 29, 1980, 96 SCRA 402), the Court dismissed the petition for being moot and academic. In the case of F. C. Fisher v. Yangco Steamship Co., March 31, 1915, the Court held: It is unnecessary, however to indulge in academic discussion of a moot question. xxx xxx The action would have been dismissed at any time on a showing of the facts as they were . The question left for the court was a moot one. Its Resolution would have been useless. Its judgment would have been impossible of execution xxx. However, in the case of University of San Agustin, Inc., et al. vs. Court of Appeals, et al., the court resolved the case, ruling that even if a case were moot and academic, a statement of the governing principle is appropriate in the resolution of dismissal for the guidance not only of the parties but of others similarly situated. xxxxxi[10] In Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12, [1992] decided by the Third Division with J. Gutierrez, Jr., as ponente and JJ. Feliciano, Bidin, Romero and now Chief Justice Davide, Jr., as members it was ratiocinated: xxx xxx xxx

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

xxx

xxx

xxx

The prohibition against a supervisors union joining a local union of rank and file is replete with jurisprudence. The Court emphasizes that the limitation is not confined to a case of supervisors wanting to join a rank-and-file union. The prohibition extends to a supervisors local union applying for membership in a national federation the members of which include local unions of rank and file employees. The intent of the law is clear especially where, as in this case at bar, the supervisors will be comingling with those employees whom they directly supervise in their own bargaining unit. Anent the issue of whether or not the Petition to cancel/revoke registration is a prejudicial question to the petition for certification election, the following ruling in the case of Association of the Court of Appeals Employees (ACAE) vs. Hon. Pura FerrerCalleja, in her capacity as Director, Bureau of Labor Relations et. Al., 203 ACRA 597, 598, [1991], is in point, to wit: xxx It is a well-settled rule that a certification proceedings is not a litigation in the sense that the term is ordinarily understood, but an investigation of a non-adversarial and fact finding character. (Associated Labor Unions (ALU) v. Ferrer-Calleja, 179 SCRA 127 [1989]; Philippine Telegraph and Telephone Corporation v. NLRC, 183 SCRA 451 [1990]. Thus, the technical rules of evidence do not apply if the decision to grant it proceeds from an examination of the sufficiency of the petition as well as a careful look into the arguments contained in the position papers and other documents. At any rate, the Court applies the established rule correctly followed by the public respondent that an order to hold a certification election is proper despite the pendency of the petition for cancellation of the registration certificate of the respondent union. The rationale for this is that at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order directing the cancellation. xxx xxx xxx

As regards the issue of whether or not confidential employees can join the labor union of the rank and file, what was held in the case of National Association of Trade Unions (NATU) - Republic Planters Bank Supervisors Chapter vs. Hon. R. D. Torres, et. al., G.R. No. 93468, December 29, 1994, applies to this case. Citing Bulletin Publishing Corporation vs. Sanchez, 144 SCRA 628,635, Golden Farms vs. NLRC, 175 SCRA 471, and Pier 8 Arrastre and Stevedoring Services, Inc. vs. Hon. Nieves Roldan-Confessor et al., G.R. No. 110854, February 14, 1995, the Court ruled: xxx A confidential employee is one entrusted with confidence on delicate matte rs, or with the custody, handling, or care and protection of the employers property. While Art. 245 of the Labor Code singles out managerial employee as ineligible to join, assist or form any labor organization, under the doctrine of necessary implication, confidential employees are similarly disqualified. This doctrine states that what is implied in a statute is as much a part thereof as that which is expressed, as

elucidated in several case; the latest of which is Chua v. Civil Service Commission where we said: No statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation. What is thought, at the time of the enactment, to be an all embracing legislation maybe inadequate to provide for the unfolding events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of statutory construction used to fill in the gap is the doctrine of necessary implication xxx, Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitate legis xxx In applying the doctrine of necessary implication, we took into consideration the rationale behind the disqualification of managerial employees expressed in Bulletin Publishing Corporation v. Sanchez, thus xxx if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company dominated with the presence of managerial employees in Union membership. Stated differently, in the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interest are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act in the interest of the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty bound to protect. Along the same line of reasoning we held in Golden Farms, Inc. vs. Ferrer-Calleja reiterated in Philips Industrial Development, Inc., NLRC, that confidential employees such as accounting personnel, radio and telegraph operators who, having access to confidential information, may become the source of undue advantage. Said employee(s) may act as spy or spies of either party to a collective bargaining agreement. The Court finds merit in the submission of the OSG that Route Managers, Chief Checkers and Warehouse Operations Managers are supervisors while Credit & Collection Managers and Accounting Managers are highly confidential employees. Designation should be reconciled with the actual job description of subject employees. A careful scrutiny of their job description indicates that they dont lay down company policies. Theirs is not a final determination of the company policies since they have to report to their respective superior. The mere fact that an employee is designated manager does not necessarily make him one. Otherwise, there would be an absurd situation where one can be given the title just to be deprived of the right to be a

member of a union. In the case of National Steel Corporation v. Laguesma, G. R. No. 103743, January 29,1996, it was stressed that: What is essential is the nature of the employees function and not the nomenclature or title given to the job which determines whether the employee has rank and file or managerial status, or whether he is a supervisory employee. WHEREFORE, the petitions under consideration are DISMISSED but subject Decision, dated October 4, 1991, of the Secretary of Labor and Employment is MODIFIED in that Credit and Collection Managers and Accounting Managers are highly confidential employees not eligible for membership in a supervisors union. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, and Gonzaga-Reyes, JJ., concur. Panganiban, J., in the result.

SECOND DIVISION [G. R. No.101738. April 12, 2000] PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner, vs. HON. BIENVENIDO E. LAGUESMA, Undersecretary of Labor and Employment, HON. HENRY PABEL, Director of the Department of Labor and Employment Regional Office No. XI and/or the Representation Officer of the Industrial Relations Division who will act for and in his behalf, PCOP- BISLIG SUPERVISORY AND TECHNICAL STAFF EMPLOYEES UNION, ASSOCIATED LABOR UNION and FEDERATION OF FREE WORKERS, respondents. DECISION DE LEON, JR., J.: Miso Before us is a petition for certiorari seeking to annul the Resolution28[1] and the Order29[2] dated April 17, 1991 and August 7, 1991, respectively, of public

28[1] Rollo, pp. 35-45. 29[2] Rollo, pp. 31-34.

respondent Bienvenido E. Laguesma, acting then as Undersecretary, now the Secretary, of the Department of Labor and Employment (DOLE), which reversed the Order dated March 27, 199030[3] of Med-Arbiter Phibun D. Pura declaring that supervisors and section heads of petitioner under its new organizational structure are managerial employees and should be excluded from the list of voters for the purpose of a certification election among supervisory and technical staff employees of petitioner.31[4] The facts of the case are the following: Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the manufacture of paper and timber products, with principal place of operations at Tabon, Bislig, Surigao del Sur. It has over 9,00032[5] employees, 94433[6] of whom are supervisory and technical staff employees. More or less 487 of these supervisory and technical staff employees are signatory members of the private respondent PICOPBislig Supervisory and Technical Staff Employees Union (PBSTSEU).34[7] On August 9, 1989. PBSTSEU instituted a Petition35[8] for Certification Election to determine the sole and exclusive bargaining agent of the supervisory and technical staff employees of PICOP for collective bargaining agreement (CBA) purposes. In a Notice36[9] dated August 10, 1989, the initial hearing of the petition was set on August 18, 1989 but it was reset to August 25, 1989, at the instance of PICOP, as it requested a fifteen (15) day period within which to file its comments and/or position paper. But PICOP failed to file any comment or position paper. Meanwhile, private respondents Federation of Free Workers (FFW) and Associated Labor Union (ALU) filed their respective petitions for intervention. On September 14, 1989, Med-Arbiter Arturo L. Gamolo issued an Order37[10] granting the petitions for interventions of the FFW and ALU. Another Order38[11] issued on the same day set the holding of a certification election among PICOP's supervisory and technical staff employees in Tabon, Bislig, Surigao del Sur, with four (4) choices, namely: (1) PBSTSEU; (2) FFW; (3) ALU; and (4) no union. Nex old On September 21, 1989, PICOP appealed39[12] the Order which set the holding of the certification election contending that the Med-Arbiter committed grave abuse of discretion in deciding the case without giving PICOP the opportunity to file its

30[3] Rollo, pp. 321-333. 31[4] Rollo, p. 332. 32[5] Rollo, p. 542. 33[6] Rollo, pp. 46-47. 34[7] Ibid. 35[8] Docketed as R-202-ROXI MED-UR-59-89, Department of Labor and Employment (DOLE), Regional Office XI in

Davao City, ibid. 36[9] Issued by Assistant Regional Director Teodulo B. Ramirez, Rollo, p. 48. 37[10] Rollo, p. 52. 38[11] Rollo, pp. 49-51. 39[12] Rollo, pp. 53-62.

comments/answer, and that PBSTSEU had no personality to file the petition for certification election. After PBSTSEU filed its Comments40[13] to petitioner's appeal, the Secretary of the Labor41[14] issued a Resolution42[15] dated November 17, 1989 which upheld the Med-Arbiter's Order dated September 17, 1989, with modification allowing the supervising and staff employees in Cebu, Davao and Iligan City to participate in the certification election. During the pre-election conference on January 18, 1990, PICOP questioned and objected to the inclusion of some section heads and supervisors in the list of voters whose positions it averred were reclassified as managerial employees in the light of the reorganization effected by it.43[16] Under the Revised Organizational Structure of the PICOP, the company was divided into four (4) main business groups, namely: Paper Products Business, Timber Products Business, Forest Resource Business and Support Services Business. A vice- president or assistant vice-president heads each of these business groups. A division manager heads the divisions comprising each business group. A department manager heads the departments comprising each division. Section heads and supervisors, now called section managers and unit managers, head the sections and independent units, respectively, comprising each department.44[17] PICOP advanced the view that considering the alleged present authority of these section managers and unit managers to hire and fire, they are classified as managerial employees, and hence, ineligible to form or join any labor organization.45[18] Mani kx Following the submission by the parties of their respective position papers46[19] and evidence47[20] on this issue, Med-Arbiter Phibun D. Pura issued an Order48[21] dated March 27, 1990, holding that supervisors and section heads of the petitioner are managerial employees and therefore excluded from the list of voters for purposes of certification election. PBSTSEU appealed49[22] the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU likewise appealed.50[23] PICOP submitted evidence militating against the appeal.51[24] Public respondent Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the assailed Order52[25] dated April 17, 1991 setting aside the Order dated March 27, 1990 of the Med-Arbiter and declaring that the
40[13] Dated October 5,1989, Rollo, pp. 63-92. 41[14] Franklin M. Drilon, now Senator. 42[15] Rollo, pp. 93-97. 43[16] Rollo, p. 322. 44[17] Rollo,p.543. 45[18] Rollo, p. 103. 46[19] Rollo, pp. 98-110, 148-163,237-249, 265-272, 273-276,277-289,311-320. 47[20] Rollo, pp. 111-146, 164-236, 250-264, 290-310. 48[21] Rollo, pp. 321-333. 49[22] Petition dated April 12, 1990, Rollo, pp. 334-361. 50[23] Rollo, pp. 402-406. 51[24] Rollo, pp. 542-694. 52[25] See Note No.1, supra.

subject supervisors and section heads are supervisory employees eligible to vote in the certification election. PICOP sought53[26] reconsideration of the Order dated April 7, 1991. However, public respondent in his Order54[27] dated August 7, 1991 denied PICOP's motion for reconsideration. Hence, this petition. PICOP anchors its petition on two (2) grounds, to wit: Maniks I. THE PUBLIC RESPONDENT HONORABLE BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF LABOR AND EMPLOYMENT, IN A CAPRICIOUS, ARBITRARY AND WHIMSICAL EXERCISE OF POWER ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE DENIED YOUR PETITIONER'S PLEA TO PRESENT ADDITIONAL EVIDENCE TO PROVE THAT SOME OF ITS MANAGERIAL EMPLOYEES ARE DISQUALIFIED FROM JOINING OR FORMING A UNION REPRESENTED BY CO-RESPONDENT PBSTSEU, IN VIEW OF A SUPERVENING EVENT BROUGHT ABOUT BY THE CHANGES IN THE ORGANIZATIONAL STRUCTURE OF YOUR PETITIONER WHICH WAS FULLY IMPLEMENTED IN JANUARY 1991 AFTER THE CASE WAS ELEVATED ON APPEAL AND SUBMITTED FOR DECISION. II. THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA, ALSO ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ARBITRARILY ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE TOTALLY DISREGARDED THE DOCUMENTARY EVIDENCE SO FAR SUBMITTED BY YOUR PETITIONER AND RELIED MAINLY ON THE UNSUBSTANTIATED CLAIM AND MERE ALLEGATIONS OF PRIVATE RESPONDENT, PBSTSEU, THAT THE REORGANIZATION OF YOUR PETITIONER WAS A SHAM AND CALCULATED MERELY TO FRUSTRATE THE UNIONIZATION OF YOUR PETITIONER'S SUPERVISORY PERSONNEL; AND SOLELY ON THIS BASIS, DENIED YOUR PETITIONER'S URGENT MOTION FOR RECONSIDERATION.55[28] Manikan PICOP's main thesis is that the positions Section Heads and Supervisors, who have been designated as Section Managers and Unit Managers, as the case may be, were converted to managerial employees under the decentralization and reorganization
53[26] Rollo, pp. 703- 715. 54[27] See Note No.2, supra. 55[28] Rollo, p. 14.

program it implemented in 1989. Being managerial employees, with alleged authority to hire and fire employees, they are ineligible for union membership under Article 24556[29] of the Labor Code. Furthermore, PICOP contends that no malice should be imputed against it for implementing its decentralization program only after the petition for certification election was filed inasmuch as the same is a valid exercise of its management prerogative, and that said program has long been in the drawing boards of the company, which was realized only in 1989 and fully implemented in 1991. PICOP emphatically stresses that it could not have conceptualized the decentralization program only for the purpose of "thwarting the right of the concerned employees to self-organization." The petition, not being meritorious, must fail and the same should be as it is hereby dismissed. First. In United Pepsi-Co/a Supervisory Union (UPSU) v. Laguesma,57[30] we had occasion to elucidate on the term "managerial employees." Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers. Top and Middle Managers have the authority to devise, implement and control strategic and operational policies while the task of First-Line Managers is simply to ensure that such policies are carried out by the rank-and- file employees of an organization. Under this distinction, "managerial employees" therefore fall in two (2) categories, namely, the "managers" per se composed of Top and Middle Managers, and the "supervisors" composed of First-Line Managers.58[31] Thus, the mere fact that an employee is designated manager" does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee,59[32] for it is the job description that determines the nature of employment.60[33] Oldmis o In the petition before us, a thorough dissection of the job description61[34] of the concerned supervisory employees and section heads indisputably show that they are not actually managerial but only supervisory employees since they do not lay down company policies. PICOP's contention that the subject section heads and unit managers exercise the authority to hire and fire62[35] is ambiguous and quite misleading for the reason that any authority they exercise is not supreme but merely advisory in character. Theirs is not a final determination of the company policies inasmuch as any action taken by them on matters relative to hiring, promotion,
56[29] 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. 57[30] 288 SCRA 15 (1998) 58[31] Ibid., citing James A.F. Stoner & Charles Wankel, Management 11 (3rd. ed., 1987) 59[32] Pepsi-Cola Products Phil. Inc. v. Secretary of Labor, et al. G.R. No.96663; Pepsi Cola Products Philippines v. Office of the Secretary Department of Labor et al., G.R. No.103300, August 10, 1999; Pagkakaisa ng mga Manggagawa sa Triumph International-United Lumber and General Workers of the Philippines v. Ferer-Calleja, 181 SCRA 119, 126 (1990) 60[33] Dunlop Slazenger (Phils.), v. Secretary of Labor and Employment, 300 SCRA 120, 127 (1998) citing Engineering Equipment, Inc. v. NLRC, 133 SCRA 752, 760-761 (1984) 61[34] Rollo, pp. 545-548, 549-554, 555-558, 559-563. 62[35] Rollo, p. 103.

transfer, suspension and termination of employees is still subject to confirmation and approval by their respective superior.63[36] Thus, where such power, which is in effect recommendatory in character, is subject to evaluation, review and final action by the department heads and other higher executives of the company, the same, although present, is not effective and not an exercise of independent judgment as required by law.64[37] Second. No denial of due process can be ascribed to public respondent Undersecretary Laguesma for the latter's denial to allow PICOP to present additional evidence on the implementation of its program inasmuch as in the appeal before the said public respondent, PICOP even then had already submitted voluminous supporting documents.65[38] The record of the case is replete with position papers and exhibits that dealt with the main thesis it relied upon. What the law prohibits is the lack of opportunity to be heard.66[39] PICOP has long harped on its contentions and these were dealt upon and resolved in detail by public respondent Laguesma. We see no reason or justification to deviate from his assailed resolutions for the reason that law and jurisprudence aptly support them. Finally, considering all the foregoing, the fact that PICOP voiced out its objection to the holding of certification election, despite numerous opportunities to ventilate the same, only after respondent Undersecretary of Labor affirmed the holding thereof, simply bolstered the public respondents' conclusion that PICOP raised the issue merely to prevent and thwart the concerned section heads and supervisory employees from exercising a right granted them by law. Needless to stress, no obstacle must be placed to the holding of certification elections, for it is a statutory policy that should not be circumvented.67[40] WHEREFORE, the petition is hereby DISMISSED, and the Resolution and Order of public respondent Bienvenido E. Laguesma dated April 17, 1991 and August 17, 1991, respectively, finding the subject supervisors and section heads as supervisory employees eligible to vote in the certification election are AFFIRMED. Costs against petitioner. SO ORDERED. Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur. 6/5/00 3:14 PM

63[36] Authority Chart revised December 20, 1989,

Rollo, p. 145; see Atlas Lithographic Services, Inc. v. Laguesma,

205 SCRA 12, 17 (1992) 64[37] Philippine Appliance Corporation v. Laguesma, 226 SCRA 730, 737 (1993) citing Franklin Baker Company of the Philippines v. Trajano, 157 SCRA 416, 422-433 (1988) 65[38] Rollo, pp. 542-694. 66[39] Alliance of Democratic Free Labor Organization v. Laguesma, 254 SCRA 565, 574 (1996) 67[40] Trade Unions of the Philippines v. Laguesma, 233 SCRA 565, 571 (1994); Progressive Development Corporation v. Secretary Department of Labor and Employment, 205 SCRA 802, 807 (1992)

Republic 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. I 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 nonadversary, fact-finding character. It is not a suit against ICMC its property, funds or assets, but is the sole concern of the workers themselves. B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case). Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989, resolved to consolidate G.R. No. 89331 pending before it with G.R.

No. 85750, the lower-numbered case pending with the Second Division, upon manifestation by the Solicitor General that both cases involve similar issues. The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of Understanding establishing the International Rice Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free, non-profit, non-stock organization designed to carry out the principal objective of conducting "basic research on the rice plant, on all phases of rice production, management, distribution and utilization with a view to attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice." Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international organization. The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI. On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of the Department of Labor and Employment (DOLE). IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international organization and granting it immunity from all civil, criminal and administrative proceedings under Philippine laws. On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No. 1620 and dismissed the Petition for Direct Certification. On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's Order and authorized the calling of a certification election among the rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra and Article XIII, Section 3 of the 1987 Constitution, 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 DirectorGeneral 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 selforganization. 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 intergovernmental 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. The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 91307 January 24, 1991 SINGER SEWING MACHINE COMPANY, petitioner vs. HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB), respondents. Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for petitioner. Domogan, Lockey, Orate & Dao-ayan Law Office for private respondent.

GUTIERREZ, JR., J.:p This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B. Chaguile, Jr., the resolution of then Labor Secretary Franklin M. Drilon affirming said order on appeal and the order denying the motion for reconsideration in the case entitled "In Re: Petition for Direct Certification as the Sole and Exclusive Collective Bargaining Agent of Collectors of Singer Sewing Machine Company-Singer Machine

Collectors Union-Baguio (SIMACUB)" docketed as OS-MA-A-7-119-89 (IRD Case No. 02-89 MED). On February 15, 1989, the respondent union filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company, Baguio City branch (hereinafter referred to as "the Company"). The Company opposed the petition mainly on the ground that the union members are actually not employees but are independent contractors as evidenced by the collection agency agreement which they signed. The respondent Med-Arbiter, finding that there exists an employer-employee relationship between the union members and the Company, granted the petition for certification election. On appeal, Secretary of Labor Franklin M. Drilon affirmed it. The motion for reconsideration of the Secretary's resolution was denied. Hence, this petition in which the Company alleges that public respondents acted in excess of jurisdiction and/or committed grave abuse of discretion in that: a) the Department of Labor and Employment (DOLE) has no jurisdiction over the case since the existence of employer-employee relationship is at issue; b) the right of petitioner to due process was denied when the evidence of the union members' being commission agents was disregarded by the Labor Secretary; c) the public respondents patently erred in finding that there exists an employeremployee relationship; d) the public respondents whimsically disregarded the well-settled rule that commission agents are not employees but are independent contractors. The respondents, on the other hand, insist that the provisions of the Collection Agency Agreement belie the Company's position that the union members are independent contractors. To prove that union members are employees, it is asserted that they "perform the most desirable and necessary activities for the continuous and effective operations of the business of the petitioner Company" (citing Article 280 of the Labor Code). They add that the termination of the agreement by the petitioner pending the resolution of the case before the DOLE "only shows the weakness of petitioner's stand" and was "for the purpose of frustrating the constitutionally mandated rights of the members of private respondent union to self-organization and collective organization." They also contend that under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing the Labor Code, which defines job-contracting, they cannot legally qualify as independent contractors who must be free from control of the alleged employer, who carry independent businesses and who have substantial capital or investment in the form of equipment, tools, and the like necessary in the conduct of the business. The present case mainly calls for the application of the control test, which if not satisfied, would lead us to conclude that no employer-employee relationship exists. Hence, if the union members are not employees, no right to organize for purposes of

bargaining, nor to be certified as such bargaining agent can ever be recognized. The following elements are generally considered in the determination of the employeremployee relationship; "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct although the latter is the most important element" (Mafinco Trading Corporation v. Ople, 70 SCRA 139 [1976]; Development Bank of the Philippines v. National Labor Relations Commission, 175 SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway Motors Inc. v. NLRC, 156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v. Zamora, 147 SCRA 49 [1986]). The Collection Agency Agreement defines the relationship between the Company and each of the union members who signed a contract. The petitioner relies on the following stipulations in the agreements: (a) a collector is designated as a collecting agent" who is to be considered at all times as an independent contractor and not employee of the Company; (b) collection of all payments on installment accounts are to be made monthly or oftener; (c) an agent is paid his compensation for service in the form of a commission of 6% of all collections made and turned over plus a bonus on said collections; (d) an agent is required to post a cash bond of three thousand pesos (P3,000.00) to assure the faithful performance and observance of the terms and conditions under the agreement; (e) he is subject to all the terms and conditions in the agreement; (f) the agreement is effective for one year from the date of its execution and renewable on a yearly basis; and (g) his services shall be terminated in case of failure to satisfy the minimum monthly collection performance required, failure to post a cash bond, or cancellation of the agreement at the instance of either party unless the agent has a pending obligation or indebtedness in favor of the Company. Meanwhile, the respondents rely on other features to strengthen their position that the collectors are employees. They quote paragraph 2 which states that an agent shall utilize only receipt forms authorized and issued by the Company. They also note paragraph 3 which states that an agent has to submit and deliver at least once a week or as often as required a report of all collections made using report forms furnished by the Company. Paragraph 4 on the monthly collection quota required by the Company is deemed by respondents as a control measure over the means by which an agent is to perform his services. The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The collectors could fall under either category depending on the facts of each case. The Agreement confirms the status of the collecting agent in this case as an independent contractor not only because he is explicitly described as such but also because the provisions permit him to perform collection services for the company without being subject to the control of the latter except only as to the result of his work. After a careful analysis of the contents of the agreement, we rule in favor of the petitioner.

The requirement that collection agents utilize only receipt forms and report forms issued by the Company and that reports shall be submitted at least once a week is not necessarily an indication of control over the means by which the job of collection is to be performed. The agreement itself specifically explains that receipt forms shall be used for the purpose of avoiding a co-mingling of personal funds of the agent with the money collected on behalf of the Company. Likewise, the use of standard report forms as well as the regular time within which to submit a report of collection are intended to facilitate order in office procedures. Even if the report requirements are to be called control measures, any control is only with respect to the end result of the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of the service. The monthly collection quota is a normal requirement found in similar contractual agreements and is so stipulated to encourage a collecting agent to report at least the minimum amount of proceeds. In fact, paragraph 5, section b gives a bonus, aside from the regular commission every time the quota is reached. As a requirement for the fulfillment of the contract, it is subject to agreement by both parties. Hence, if the other contracting party does not accede to it, he can choose not to sign it. From the records, it is clear that the Company and each collecting agent intended that the former take control only over the amount of collection, which is a result of the job performed. The respondents' contention that the union members are employees of the Company is based on selected provisions of the Agreement but ignores the following circumstances which respondents never refuted either in the trial proceedings before the labor officials nor in its pleadings filed before this Court. 1. The collection agents are not required to observe office hours or report to Singer's office everyday except, naturally and necessarily, for the purpose of remitting their collections. 2. The collection agents do not have to devote their time exclusively for SINGER. There is no prohibition on the part of the collection agents from working elsewhere. Nor are these agents required to account for their time and submit a record of their activity. 3. The manner and method of effecting collections are left solely to the discretion of the collection agents without any interference on the part of Singer. 4. The collection agents shoulder their transportation expenses incurred in the collections of the accounts assigned to them. 5. The collection agents are paid strictly on commission basis. The amounts paid to them are based solely on the amounts of collection each of them make. They do not receive any commission if they do not effect any collection even if they put a lot of effort in collecting. They are paid commission on the basis of actual collections.

6. The commissions earned by the collection agents are directly deducted by them from the amount of collections they are able to effect. The net amount is what is then remitted to Singer." (Rollo, pp. 7-8) If indeed the union members are controlled as to the manner by which they are supposed to perform their collections, they should have explicitly said so in detail by specifically denying each of the facts asserted by the petitioner. As there seems to be no objections on the part of the respondents, the Court finds that they miserably failed to defend their position. A thorough examination of the facts of the case leads us to the conclusion that the existence of an employer-employee relationship between the Company and the collection agents cannot be sustained. The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship and that the applicant is to be considered at all times as an independent contractor. This is consistent with the first rule of interpretation that the literal meaning of the stipulations in the contract controls (Article 1370, Civil Code; La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor, Relations, 123 SCRA 679 [1983]). No such words as "to hire and employ" are present. Moreover, the agreement did not fix an amount for wages nor the required working hours. Compensation is earned only on the basis of the tangible results produced, i.e., total collections made (Sarra v. Agarrado, 166 SCRA 625 [1988]). In Investment Planning Corp. of the Philippines v. Social Security System, 21 SCRA 924 [1967] which involved commission agents, this Court had the occasion to rule, thus: We are convinced from the facts that the work of petitioner's agents or registered representatives more nearly approximates that of an independent contractor than that of an employee. The latter is paid for the labor he performs, that is, for the acts of which such labor consists the former is paid for the result thereof . . . . xxx xxx xxx Even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans he would not necessarily be entitled to compensation therefor. His right to compensation depends upon and is measured by the tangible results he produces." Moreover, the collection agent does his work "more or less at his own pleasure" without a regular daily time frame imposed on him (Investment Planning Corporation of the Philippines v. Social Security System, supra; See also Social Security System v. Court of Appeals, 30 SCRA 210 [1969]). The grounds specified in the contract for termination of the relationship do not support the view that control exists "for the causes of termination thus specified have no relation to the means and methods of work that are ordinarily required of or imposed upon employees." (Investment Planning Corp. of the Phil. v. Social Security System, supra)

The last and most important element of the control test is not satisfied by the terms and conditions of the contracts. There is nothing in the agreement which implies control by the Company not only over the end to be achieved but also over the means and methods in achieving the end (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]). The Court finds the contention of the respondents that the union members are employees under Article 280 of the Labor Code to have no basis. The definition that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute. Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does not apply to this case. Respondents assert that the said provision on job contracting requires that for one to be considered an independent contractor, he must have "substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business." There is no showing that a collection agent needs tools and machineries. Moreover, the provision must be viewed in relation to Article 106 of the Labor Code which provides: Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. xxx xxx xxx There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In

such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him." (p. 20) It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in determining whether the employer is solidarily liable to the employees of an alleged contractor and/or sub-contractor for unpaid wages in case it is proven that there is a job-contracting situation. The assumption of jurisdiction by the DOLE over the case is justified as the case was brought on appeal by the petitioner itself which prayed for the reversal of the Order of the Med-Arbiter on the ground that the union members are not its employees. Hence, the petitioner submitted itself as well as the issue of existence of an employment relationship to the jurisdiction of the DOLE which was faced with a dispute on an application for certification election. The Court finds that since private respondents are not employees of the Company, they are not entitled to the constitutional right to join or form a labor organization for purposes of collective bargaining. Accordingly, there is no constitutional and legal basis for their "union" to be granted their petition for direct certification. This Court made this pronouncement in La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, supra: . . . The question of whether employer-employee relationship exists is a primordial consideration before extending labor benefits under the workmen's compensation, social security, medicare, termination pay and labor relations law. It is important in the determination of who shall be included in a proposed bargaining unit because, it is the sine qua non, the fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this juridical relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for certification election as well as to vote therein . . . . (At p. 689) WHEREFORE, the Order dated June 14,1989 of Med-Arbiter Designate Felix B. Chaguile, Jr., the Resolution and Order of Secretary Franklin M. Drilon dated November 2, 1989 and December 14, 1989, respectively are hereby REVERSED and SET ASIDE. The petition for certification election is ordered dismissed and the temporary restraining order issued by the Court on December 21, 1989 is made permanent. SO ORDERED. Fernan, C.J., Feliciano and Bidin, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-30241 June 30, 1972 MACTAN WORKERS UNION and TOMAS FERRER, as President thereof, plaintiffsappellees, vs. DON RAMON ABOITIZ, President, Cebu Shipyard & Engineering Works, Inc.; EDDIE LIM, as Treasurer; JESUS DIAGO, Superintendent of the aforesaid corporation; WILFREDO VIRAY, as Resident Manager of the Shipyard & Engineering Works, Inc.; and the CEBU SHIPYARD & ENGINEERING WORKS, INC., defendants-appellees; ASSOCIATION LABOR UNION, intervenor-appellant. Andales Law Office for plaintiffs-appellees. Pedro B. Uy Calderon for defendants-appellees. Seno, Mendoza & Associates for intervenor-appellant. FERNANDO, J.:p The dispute in this appealed decision from the Court of First Instance of Cebu on questions of law is between plaintiff Mactan Workers Union 1 and intervenor Associated Labor Union. The former in its complaint on behalf of seventy-two of its members working in defendant corporation, Cebu Shipyard and Engineering Works, Inc. 2 did file a money claim in the amount of P4,035.82 representing the second installment of a profit-sharing agreement under a collective bargaining contract entered into between such business firm and intervenor labor union as the exclusive collective bargaining representative of its workers. The plaintiff was successful both in the City Court of Lapulapu where such complaint was first started as well as in the Court of First Instance of Cebu. It is from the decision of the latter court, rendered on February 22, 1968, that this appeal was interposed by intervenor Associated Labor Union. It must have been an awareness on appellant's part that on the substantive aspect, the claim of plaintiff to what was due its members under such collective bargaining agreement was meritorious that led it to rely on alleged procedural obstacles for the reversal sought. Intervenor, however, has not thereby dented the judgment. As will be more fully explained, there are no applicable procedural doctrines that stand in the way of plaintiff's suit. We affirm. The facts are not in dispute. According to the decision: "From the evidence presented it appears that the defendant Cebu Shipyard & Engineering Works, Inc. in Lapulapu City is employing laborers and employees belonging to two rival labor unions. Seventytwo of these employees or laborers whose names appear in the complaint are affiliated with the Mactan Workers Union while the rest are members of the intervenor Associated Labor Union. On November 28, 1964, the defendant Cebu Shipyard & Engineering Works, Inc. and the Associated Labor Union entered into a 'Collective Bargaining Agreement' ... the pertinent part of which, Article XIII thereof, [reads thus]: '... The [Company] agrees to give a profit-sharing bonus to its employees and laborers to be taken from ten per cent (10%) of its net profits or net income derived from the direct operation of its shipyard and shop in Lapulapu City and after deducting the income tax and the bonus annually given to its General Manager and the Superintendent and the members of the Board of Directors and Secretary of the Corporation, to be payable in two (2) installments, the first installment being payable

in March and the second installment in June, each year out of the profits in agreement. In the computation of said ten per cent (10%) to [be] distributed as a bonus among the employees and laborers of the [Company] in proportion to their salaries or wages, only the income derived by the [Company] from the direct operation of its shipyard and shop in Lapulapu City, as stated herein-above-commencing from the earnings during the year 1964, shall be included. Said profit-sharing bonus shall be paid by the [Company] to [Associated Labor Union] to be delivered by the latter to the employees and laborers concerned and it shall be the duty of the Associated Labor Union to furnish and deliver to the [Company] the corresponding receipts duly signed by the laborers and employees entitled to receive the profit-sharing bonus within a period of sixty (60) days from the date of receipt by [it] from the [Company] of the profit-sharing bonus. If a laborer or employee of the [Company] does not want to accept the profit-sharing bonus which the said employee or laborer is entitled under this Agreement, it shall be the duty of the [Associated Labor Union] to return the money received by [it] as profit-sharing bonus to the [Company] within a period of sixty (60) days from the receipt by the [Union] from the [Company] of the said profitsharing bonus.'" 3 The decision went on to state: "In compliance with the said collective bargaining agreement, in March, 1965 the defendant Cebu Shipyard & Engineering Works, Inc. delivered to the ALU for distribution to the laborers or employees working with the defendant corporation to the profit-sharing bonus corresponding to the first installment for the year 1965. Again in June 1965 the defendant corporation delivered to the Associated Labor Union the profit-sharing bonus corresponding to the second installment for 1965. The members of the Mactan Workers Union failed to receive their shares in the second installment of bonus because they did not like to go to the office of the ALU to collect their shares. In accordance with the terms of the collective bargaining after 60 days, the uncollected shares of the plaintiff union members was returned by the ALU to the defendant corporation. At the same time the defendant corporation was advised by the ALU not to deliver the said amount to the members of the Mactan Workers Union unless ordered by the Court, otherwise the ALU will take such step to protect the interest of its members ... . Because this warning given by the intervenor union the defendant corporation did not pay to the plaintiffs the sum of P4,035.82 which was returned by the Associated Labor Union, but instead, deposited the said amount with the Labor Administrator. For the recovery of this amount this case was filed with the lower court." 4 The dispositive portion of such decision follows: "[Wherefore], judgment is hereby rendered ordering the defendants to deliver to the Associated Labor Union the sum of P4,035.82 for distribution to the employees of the defendant corporation who are members of the Mactan Workers Union; and ordering the intervenor Associated Labor Union, immediately after receipt of the said amount, to pay the members of the Mactan Workers Union their corresponding shares in the profit-sharing bonus for the second installments for the year 1965." 5 It is from such a decision that an appeal was taken by intervenor Associated Labor Union. As is quite apparent on the face of such judgment, the lower court did nothing except to require literal compliance with the terms of a collective bargaining contract. Nor, as will be hereafter discussed, has any weakness thereof been demonstrated on the procedural questions raised by appellant. To repeat, we have to affirm. 1. The terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress. 6 Nor does it suffice as a defense that the claim is

made on behalf of non-members of intervenor Associated Labor Union, for it is a wellsettled doctrine that the benefits of a collective bargaining agreement extend to the laborers and employees in the collective bargaining unit, including those who do not belong to the chosen bargaining labor organization. 7 Any other view would be a discrimination on which the law frowns. It is appropriate that such should be the case. As was held in United Restauror's Employees and Labor Union v. Torres, 8 this Court speaking through Justice Sanchez, "the right to be the exclusive representative of all the employees in an appropriate collective bargaining unit is vested in the labor union 'designated or selected' for such purpose 'by the majority of the employees' in the unit concerned." 9 If it were otherwise, the highly salutory purpose and objective of the collective bargaining scheme to enable labor to secure better terms in employment condition as well as rates of pay would be frustrated insofar as non-members are concerned, deprived as they are of participation in whatever advantages could thereby be gained. The labor union that gets the majority vote as the exclusive bargaining representative does not act for its members alone. It represents all the employees in such a bargaining unit. It is not to be indulged in any attempt on its part to disregard the rights of non-members. Yet that is what intervenor labor union was guilty of, resulting in the complaint filed on behalf of the laborers, who were in the ranks of plaintiff Mactan Labor Union. The outcome was not at all unexpected. The right being clear all that had to be done was to see to its enforcement. Nor did the lower court in the decision now on appeal, require anything else other than that set forth in the collective bargaining agreement. All that was done was to have the covenants therein contained as to the profit-sharing scheme carried out and respected. It would be next to impossible for intervenor Associated Labor Union to point to any feature thereof that could not in any wise be objected to as repugnant to the provisions of the collective bargaining contract. Certainly the lower court, as did the City Court of Lapu-lapu, restricted itself to compelling the parties to abide by what was agreed upon. How then can the appealed decision be impugned? 2. Intervenor Associated Labor Union, laboring under such a predicament had perforce to rely on what it considered procedural lapses. It would assail the alleged lack of a cause of action, of jurisdiction of the City Court of Lapulapu and of personality of the Mactan Workers Union to represent its members. There is no merit to such an approach. The highly sophisticated line of argument followed in its brief as appellant does not carry a persuasive ring. What is apparent is that intervenor was hard put to prop up what was inherently a weak, not to say an indefensible, stand. The impression given is that of a litigant clutching at straws. How can the allegation of a lack of a cause of action be taken seriously when precisely there was a right violated on the part of the members of plaintiff Mactan Workers Union, a grievance that called for redress? The assignment of error that the City Court of Lapulapu was bereft of jurisdiction is singularly unpersuasive. The amount claimed by plaintiff Mactan Workers Union on behalf of its members was P4,035.82 and if the damages and attorney's fees be added, the total sum was less than P10,000.00. Section 88 of the Judiciary Act in providing for the original jurisdiction of city courts in civil cases provides: "In all civil actions, including those mentioned in Rules fiftynine and sixty-two (now Rules 57 and 60) of the Rules of Court, arising in his municipality or city, and not exclusively cognizable by the Court of First Instance, the municipal judge and the judge of a city court shall have exclusive original jurisdiction where the value of the subject matter or amount of the demand does not exceed ten thousand pesos, exclusive of interests and costs." 10 It is true that if an element of

unfair labor practice may be discerned in a suit for the enforcement of a collective bargaining contract, then the matter is solely cognizable by the Court of Industrial Relations. 11 It is equally true that as of the date the lower court decision was rendered, the question of such enforcement had been held to be for the regular courts to pass upon. 12 Counsel for intervenor Associated Labor Union was precisely the petitioner in one of the decisions of this Court, Seno v . Mendoza, 13 where such a doctrine was reiterated. In the language of Justice Makalintal, the ponente: "As the issue involved in the instant case, although arising from a labor dispute, does not refer to one affecting an industry which is indispensable to the national interest and certified by the President to the Industrial Court, nor to minimum wage under the Minimum Wage Law, nor to hours of employment under the Eight-Hour Labor Law, nor to an unfair labor practice, but seeks the enforcement of a provision of the collective bargaining agreement, ..., jurisdiction pertains to the ordinary courts and not to the Industrial Court." 14 There was only a half-hearted attempt, if it could be called that, to lend credence to the third error assigned, namely that plaintiff Mactan Workers Union could not file the suit on behalf of its members. That is evident by intervenor Associated Labor Union devoting only half a page in its brief to such an assertion. It is easy to see why it should be thus. On its face, it certainly appeared to be oblivious of how far a labor union can go, or is expected to, in the defense of the rights of its rank and file. There was an element of surprise, considering that such a contention came from a labor organization, which under normal condition should be the last to lay itself open to a charge that it is not averse to denigrating the effectiveness of labor unions. 3. This brings us to one last point. It is quite understandable that labor unions in their campaign for membership, for acquiring ascendancy in any shop, plant, or industry would do what lies in their power to put down competing groups. The struggle is likely to be marked with bitterness, no quarter being given or expected on the part of either side. Nevertheless, it is not to be forgotten that what is entitled to constitutional protection is labor, or more specifically the working men and women, not labor organizations. The latter are merely the instrumentalities through which their welfare may be promoted and fostered. That is the raison d'etre of labor unions. The utmost care should be taken then, lest in displaying an unyielding, intransigent attitude on behalf of their members, injustice be committed against opposing labor organizations. In the final analysis, they alone are not the sole victims, but the labor movement itself, which may well be the recipient of a crippling blow. Moreover, while it is equally understandable that their counsel would take advantage of every legal doctrine deemed applicable or conjure up any defense that could serve their cause, still, as officers of the court, there should be an awareness that resort to such a technique does result in clogged dockets, without the least justification especially so if there be insistence on flimsy and insubstantial contentions just to give some semblance of plausibility to their pleadings. Certainly, technical virtuosity, or what passes for it, is no substitute for an earnest and sincere desire to assure that there be justice according to law. That is a creed to which all members of the legal profession, labor lawyers not excluded, should do their best to live by. WHEREFORE, the decision of the lower court of February 22, 1968 is affirmed. Costs against Associated Labor Union. Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar and Antonio, JJ., concur.

Footnotes 1 Its President, Tomas Ferrer, was joined as co-plaintiff. 2 Its President, Ramon Aboitiz, its Treasurer Eddie Lim, its Superintendent, Jesus Diago and Resident Manager, Wilfredo Viray, were joined as co-defendants. 3 Decision, Record on Appeal, pp. 95-97. 4 Ibid, pp. 97-98. 5 Ibid, p. 100. 6 Cf. Article 1159 and Articles 1700-1702 of the Civil Code. Also Shell Oil Workers Union v. Shell Company of the Philippines, L-28607, May 31, 1971, 39 SCRA 276. 7 Cf. Rivera v. San Miguel Brewery, Inc., L-26197, July 20, 1968, 24 SCRA 86. Citing Leyte Land Transportation v. Leyte Farmers' and Laborers' Union, 80 Phil. 842 (1948); Land Settlement and Development Corporation v. Caledonia Pile Workers' Union, 90 Phil. 817 (1952); Price Stabilization Corporation v. Prisco Workers' Union, 104 Phil. 1066 (1958) and International Oil Factory Workers Union v. Martinez, 110 Phil. 595 (1960). 8 L-24993, December 18, 1968, 26 SCRA 435. 9 Ibid, p. 440. 10 Section 88 of the Judiciary Act, Republic Act 296 (1948). 11 Cf. Republic Savings Bank v. Court of Industrial Relations, L-20303, Sept. 27, 1967, 21 SCRA 226; Security Bank Employees Union v. Security Bank and Trust Co., L-28536, April 30, 1968, 23 SCRA 503; Alhambra Industries, Inc. v. Court of Industrial Relations, L-25984, Oct. 30, 1970, 35 SCRA 550. 12 Cf. Dee Cho Lumber Workers' Union v. Dee Cho Lumber Co., 101 Phil. 417 (1957); Philippine Sugar Institute v. Court of Industrial Relations, 106 Phil. 401 (1959); Elizalde Paint and Oil Factory v. Bautista, 110 Phil. 49 (1960); National Mines and Allied Workers Union v. Phil. Iron Mines, Inc., L-19372, Oct. 31, 1964, 12 SCRA 316 and Nasipit Labor Union v. Court of Industrial Relations, L-17838, Aug. 1966, 17 SCRA 882. 13 L-20565, Nov. 29, 1967, 21 SCRA 1124. 14 Ibid, p. 1131.

i[1] Rollo, p. 35. ii[2] Rollo, pp. 8-9. iii[3] 157 SCRA 416. iv[4] See also Engineering Equipment, Inc. vs. NLRC, 133 SCRA 752; National Warehousing Corp. vs. CIR, 7 SCRA 602 [1963]; National Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, 11 SCRA 766. v[5] Philippine Airline Employees Ass. (PALEA) vs. Ferrer-Calleja, 162 SCRA 426; Lacorte vs. Inciong, G. R. No. 52034, September 27, 1988; Arica vs. NLRC, G. R. No. 78210, February 28, 1989; A. M. Oreta & Co. Inc. vs. NLRC, G. R. No. 74004, August 10, 1989. vi[6] Rollo, p. 35.

vii[7] Rollo, pp. 29-31. viii[8] Annexes D & E, Comments to petitioners Petition for Review on Certiorari. ix[9] Rejoinder to petitioner Appellants Reply; p. 247, Rollo. x[10] Memorandum for petitioner; p. 371, Rollo. xi[11] Trade Unions of the Philippines vs. Laguesma, 236 SCRA 586. xii[1] Pepsi - Cola Supervisory Employees Organization - UOEF, Comment, pp. 4-6, Rollo, pp. 71-73. xiii[2] Rollo, pp. 86-89, 92. xiv[3] Rollo, p. 104. xv[4] Rollo, p.110. xvi[5] Rejoinder, pp. 2,3,10,14; Rollo, pp. 125,126, 133,137. xvii[6] OSG Comment, pp. 3 -4, Rollo, pp. 145 - 146. xviii[7] OSG Comment, p. 5, Rollo, p. 147. xix[8] Petition, pp. 8, 13, 14; Rollo, pp. 9, 14, 15. xx[9] Annex I, Rollo, p. 213. xxi[10] 230 SCRA 761, 770, citing Eastern Broadcasting Corporation (DYRE) vs. Dans, etc, et al., 137 SCRA 628