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No. L-75039. January 28, 1988.

*
FRANKLIN BAKER COMPANY OF THE PHILIPPINES, petitioner,
us. HONORABLE CRESENCIO B. TRAJANO, DIRECTOR OF
BUREAU OF LABOR RELATIONS, FRANKLIN BAKER
BROTHERHOOD ASSOCIATION (TECHNICAL AND OFFICE
EMPLOYEES)-ASSOCIATION OF TRADE UNIONS (ATU),
respondents.
Labor; Employer-employee relationship; Managerial employee,
defined.A managerial employee is defined as 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, or to effectively recommend such
managerial actions. (Reynolds Phil. Corp. v. Eslava, 137 SCRA 259
[1985]), citing Section 212 (K), Labor Code.
Same; Same; Same; Test of supervisory or managerial status
depends on whether a person possesses authority to act in the interest
of his employer and whether such authority is not merely routinary or
clerical in nature but requires use of independent judgment.The test
of supervisory or managerial status depends on whether a person
possesses 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 effective and not an exercise of
independent judgment as required by law (National Warehousing
Corp. v. CIR, 7 SCRA 602-603 [1963]).
Same; Same; Same; Employees in case at bar are not managerial
employees because they do not participate in policy making but are
given ready policies to execute and standard practices to observe.
Further-more, in line with the ruling of this Court, subject employees
are not managerial employees because as borne by the records, they do
not participate in policy making but are given ready policies to execute
and standard practices to observe, thus having little freedom of action

(National Waterworks and Sewerage Authority v. NWSA


Consolidated, L-18938, 11 SCRA 766 [1964]).
Same; Same; Same; Rule that findings of fact of the Ministry of Labor
and the NLRC are entitled to great respect, unless the findings of fact
are not supported by substantial evidence or when there is grave
abuse of discretion.It is well settled that the findings of fact of the
Ministry of Labor and National Labor Relations Commission are
entitled to great respect, unless the findings of fact and the conclusions
made therefrom, are not supported by substantial evidence, or when
there is grave abuse of discretion committed by said public official
(Kapisanan ng Manggagawa sa Camara Shoes, et al. v. Camara Shoes,
2nd Heirs of Santos Camara et al., 111 SCRA 477 [1982];
International Hardwood and Veneer Co. of the Philippines v.
Leonardo, 117 SCRA 967 [1982]; Pan-Phil-Life, Inc. vs. NLRC, 114
SCRA 866 [1982]; Pepsi-Cola Labor Union-BF LU-TUPAS Local
Chapter N-896 v. NLRC, 114 SCRA 930 [1982]; Egyptair v. NLRC,
148 SCRA 125 [1987]; RJL Martinez Fishing Corp. v. NLRC, G.R.
Nos. 63550-51, 127 SCRA 455 [1984]; and Reyes v. Phil. Duplicators,
G.R. No. 54996, 109 SCRA 489 [1981]).
Same; Same; Same; Same; Term grave abuse of discretion, defined.
By grave abuse of discretion is meant, such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The abuse of discretion must be grave as where the power is exercised
in an arbitrary or despotic manner by reason of passion or personal
hostility and must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined by or
to act at all in contemplation of law (G.R. No. 59880, George
Arguelles [Hda. Emma Arguelles v. Romeo Yang, etc.], September 11,
1987).
Same; Same; Same; Same; Certiorari; Remedy of certiorari does not
lie in the absence of any showing of abuse or misuse of power
properly vested in the Ministry of Labor and Employment.
Moreover, this Court has ruled that findings of administrative agencies
which have acquired expertise, like the Labor Ministry, are accorded
respect and finality (Special Events and Central Shipping Office
Workers Union v. San Miguel Corp., 122 SCRA 557 [1983] and that
the remedy of certiorari does not lie in the absence of any showing of

abuse or misuse of power properly vested in the Ministry of Labor and


Employment (Buiser v. Leogardo, Jr., 131 SCRA 151 [1984].)
Same; Same; Same; Unions; Managerial employees can join the union
of the rank and file but they cannot form their own exclusive union as
managerial employees.Even if We regard the employees concerned
as managerial employees, they can still join the union of the rank
and file employees. They cannot however form their own exclusive
union as managerial employees (Bulletin Publishing Corporation v.
Sanchez, 144 SCRA 628).
PETITION for certiorari to review the orders of the Ministry of Labor
and Employment.
The facts are stated in the opinion of the Court.
PARAS, J.:
This is a petition for certiorari seeking the annulment of: (a) the Order
of Mediator-Arbiter Conchita J. Martinez of the Ministry of Labor and
Employment, Davao City, dated September 17, 1984 in LRD Case No.
R-22 MED-ROXI-UR-28-84 entitled In Re: Petition for Certification
Election Among the Office and Technical Employees of Franklin
Baker Company of the Philippines, Davao Plant at Coronon, Sta. Cruz,
Davao del Sur, Franklin Baker Company of the Philippines, Davao
Plant, Employer, Franklin Baker Brotherhood Association (Technical
and Office Employees)-Association of Trade Unions (ATU), insofar
as it includes the managerial employees (inspectors, foremen and
supervisors) in the certification election; (b) the Order of April 7, 1986
of Director Cresencio B. Trajano, also of the MOLE, dismissing the
appeal of aforesaid Order of September 17, 1985 for lack of merit; and
(c) the Order of June 6, 1986 of said Director denying reconsideration
of his Order of April 7, 1986 and affirming the same in toto (Rollo, p.
90).
In brief, the undisputed facts of this case are as follows: On April 23,
1984, private respondent Franklin Baker Brotherhood AssociationATU filed a petition for certification election among the office and
technical employees of petitioner company with the Ministry of Labor
and Employment, Regional Office No. XI, Davao City, docketed as
LRD No. R-22, MED-ROXI-UR-28-84. Among other things, it alleges

that Franklin Baker Company of the Phils. Davao Plant, had in its
employ approximately ninety (90) regular technical and office
employees, which group is separate and distinct from the regular rank
and file employees and is excluded from the coverage of existing
Collective Bargaining Agreement.
Petitioner company did not object to the holding of such an election
but manifested that out of the ninety (90) employees sought to be
represented by the respondent union, seventy four (74) are managerial
employees while two (2) others are confidential employees, hence,
must be excluded from the certification election and from the
bargaining unit that may result from such election (Rollo, p. 3).
Hearings were held and thereafter, the parties agreed to file their
respective memoranda. Likewise, petitioner filed a reply to private
respondents Memorandum (Rollo, p. 4).
Subsequently, on September 17, 1984, Med-Arbiter Conchita J.
Martinez issued an order, the dispositve part of which reads:
Accordingly, the petition is hereby granted and a certification election
among the office and technical employees of Franklin Baker Company
of the Philippines, Davao Plant is ordered within twenty (20) days
from receipt hereof. The choices shall be the following:
1. Franklin Baker Brotherhood Association-ATU
2. No Union
The representation officer assigned shall call the parties for a preelection conference at least five (5) days before the date of the election
to thresh out the mechanics of the election, the finalization of the list
of voters, the posting of notices and other relevant matters.
The companys latest payroll shall be the basis for determining the
office and technical workers qualified to vote.
SO ORDERED. (Rollo, pp. 47-48).
From the aforequoted order petitioner Company appealed to the
Bureau of Labor Relations, docketed as BLR Case No. A-228-84,
praying that the appealed order be set aside and another be issued
declaring the seventy four (74) inspectors> foremen and supervisors as
managerial employees.

During the pendency of the appeal, sixty one (61) of the employees
involved, filed a Motion to Withdraw the petition for certification
election praying therein for their exclusion from the Bargaining Unit
and for a categorical declaration that they are managerial employees,
as they are performing managerial functions (Rollo, p. 4).
On April 7, 1986, public respondent Bureau of Labor Relations
Cresencio B. Trajano issued a Resolution affirming the order dated
September 17, 1984, the dispositive part of which reads:
WHEREFORE, the appealed Order dated September 17, 1985 is
hereby affirmed and the appeal dismissed for lack of merit. Let the
certification election among the office and technical employees of
Franklin Baker Company of the Philippines proceed without delay.
The latest payrolls of the company shall be used as basis of
determining the list of eligible voters. (Rollo, p. 77).
Petitioner company sought the reconsideration of the aforequoted
resolution but its motion was denied by Director Cresencio B. Trajano
in his order dated June 6, 1986, the dispositive part of which reads:
WHEREFORE, the appeal of respondent company is, dismissed for
lack of merit and the Bureaus Resolution dated April 1986 affirmed in
toto.
Let, therefore, the pertinent papers of this case be immediately
forwarded to the Office of origin for the conduct of the certification
election. (Rollo, p. 90).
Hence, this petition.
In the resolution of July 30, 1986, the Second Division of this Court
without giving due course to the petition required the respondents to
file their comment (Rollo, p. 91). On August 28, 1986, public
respondent filed its comment (Rollo, pp. 99 to 102). Likewise private
respondent filed its comment on September 5, 1986 (Rollo, pp. 104 to
107).

In the resolution of September 8, 1986, petitioner was required to file


its reply to public respondents comment (Rollo, p. 119) which reply
was filed on September 18, 1986 (Rollo, pp. 122-127).
On October 20, 1986, this Court resolved to give due course to the
petition and required the parties to file their respective Memoranda
(Rollo, p. 133). In compliance with said resolution, petitioner and
private respondent filed their Memoranda on December 8, 1986 and
December 29, 1986, respectively (Rollo, pp. 183-187). On the other
hand, public respondent filed with this Court a manifestation (Rollo, p.
153) to the effect that it is adopting as its memorandum its comment
dated August 18, 1986 (Rollo, p. 99) which manifestation was noted
by this Court in its resolution dated November 26, 1986 (Rollo, p.
155).
The lone assignment of error raised by petitioner states:
Public respondent acted with grave abuse of discretion amounting to
lack of jurisdiction when he ruled that the 76 employees subject of this
petition are not managerial employees (inspectors, foremen,
supervisors and the like) and therefore, may participate in the
certification election among the office and technical employees. Such
ruling is contrary to jurisprudence and to the factual evidence
presented by petitioner which was not rebutted by private respondent
union and is therefore patently baseless.
From this assigned error two questions are raised by petitioner,
namely:
(1) whether or not subject employees are managerial employees under
the purview of the Labor Code and its Implementing Rules; and (2)
whether the Director of the Bureau of Labor Relations acted with
abuse of discretion in affirming the order of Mediator-Arbiter Conchita
J. Martinez.
There is no question that there are in the DAVAO Plant of petitioner
company approximately 90 regular technical and office employees
which form a unit, separate and distinct from the regular rank and file
employees and are excluded from the coverage of existing Collective
Bargaining Agreement; that said group of employees organized
themselves as Franklin Baker Brotherhood Association (technical and

office employees) and affiliated with the local chapter of the


Association of Trade Unions (ATU), a legitimate labor organization
with Registration Permit No. 8745 (Fed) LC and with office located at
the 3rd Floor of Antwell Bldg., Sta. Ana, Davao City; that this group
filed a Petition for Certification Election with the Ministry of Labor
and Employment, Regional Office No. XI, Davao City; that petitioner
company did not object to the holding of such certification, but only
sought the exclusion of inspectors, foremen and supervisors, members
of Franklin Baker Brotherhood Association (technical and office
employees) numbering 76 from the certification election on the ground
that they are managerial employees.
A managerial employee is defined as 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, or to effectively recommend such managerial actions.
(Reynolds Phil. Corp. v. Eslava, 137 SCRA 259 [1985], citing Section
212 (K), Labor Code.
Also pertinent thereto is Section 1 (M) of the Implementing Rules and
Regulations, which is practically a restatement of the above provision
of law.
To sustain its posture, that the inspectors, foremen and supervisors
numbering 76 are managerial employees, petitioner painstakingly
demonstrates that subject employees indeed participate in the
formulation and execution of company policies and regulations as to
the conduct of work in the plant, exercised the power to hire, suspend
or dismiss subordinate employees and effectively recommend such
action, by citing concrete cases, among which are: (1) Mr. Ponciano
Viola, a wet process inspector, who while in the performance of his
duty, found Mr. Enrique Asuncion, a trimmer forging, falsifying and
simulating a company time card (timesheet) resulting in payroll
padding, immediately recommended the dismissal of said erring
employee, resulting in the latters discharge. (Employers Memo,
Rollo, p. 18); (2) Mr. Manuel Alipio, an opening inspector,
recommended for suspension Nut Operator Ephraim Dumayos, who
was caught in the act of surreptitiously transferring to a co-workers
bin some whole nuts which act constitutes a violation of company

policy; (3) Mr. Sofronio Abangan, a line inspector, censured and


thereafter recommended the suspension of Mr. Romeo Fullante, for
being remiss in the proper and accurate counting of nuts; (4) Binleader
Dionisio Agtang was required to explain his inefficiency of Mr.
Saturnino Bangkas, Bin Loading Inspector; (5) for disobeying the
orders of Bin Loading Inspector Mauricio Lumanogs order, Macario
Mante, Eduardo Adaptor, Rodolfo Irene and George Rellanos were all
recommended for suspension which culminated in an investigation
conducted by Lumanogs higher bosses (Ibid., p. 20).
It has also been shown that subject employees have the power to hire,
as evidenced by the hiring of Rolando Asis, Roy Layson, Arcadio
Gaudicos and Felix Arciaga, upon the recommendation of Opening
Inspector Serafin Suelo, Processing Inspector Leonardo Velez and
Laureano C. Lim, Opening Inspector (Ibid., p. 21).
It will be noted, however, that in the performance of their duties and
functions and in the exercise of their recommendatory powers, subject
employees may only recommend, as the ultimate power to hire, fire or
suspend as the case may be, rests upon the plant personnel manager.
The test of supervisory or managerial status depends on whether a
person possesses 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 effective and not an exercise of
independent judgment as required by law (National Warehousing
Corp. v. CIR, 7 SCRA 602-603 [1963]).
Furthermore, in line with the ruling of this Court, subject employees
are not managerial employees because as borne by the records, they do
not participate in policy making but are given ready policies to execute
and standard practices to observe, thus having little freedom of action
(National Waterworks and Sewerage Authority v. NWSA
Consolidated, L-18938, 11 SCRA 766 [1964]).

Petitioners contention that the Director of the Bureau of Labor


Relations acted with abuse of discretion amounting to lack of
jurisdiction in holding that the 76 employees are not managerial
employees and must be included in the certification election has no
oasis in fact and in law. Neither is its contention that the use of the
words and/or categorically shows that performance of the functions
enumerated in the law qualifies an employee as a managerial
employee.
It is well settled that the findings of fact of the Ministry of Labor and
National Labor Relations Commission are entitled to great respect,
unless the findings of fact and the conclusions made therefrom, are not
supported by substantial evidence, or when there is grave abuse of
discretion committed by said public official (Kapisanan ng
Manggagawa sa Camara Shoes, et al. v. Camara Shoes, 2nd Heirs of
Santos Camara, et al., 111 SCRA 477 [1982]; International Hardwood
and Veneer Co. of the Philippines v. Leonardo, 117 SCRA 967 [1982];
Pan-Phil-Life, Inc. v. NLRC, 114 SCRA 866 [1982]; Pepsi-Cola Labor
Union-BF LUTUPAS Local Chapter N-896 v. NLRC, 114 SCRA 930
[1982]; Egyptair v. NLRC, 148 SCRA 125 [1987]; RJL Martinez
Fishing Corp. v. NLRC, G.R. Nos. 63550-51, 127 SCRA 455 [1984];
and Reyes v. Phil. Duplicators, G.R. No. 54996, 109 SCRA 489
[1981]).
By grave abuse of discretion is meant, such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The abuse of discretion must be grave as where the power is exercised
in an arbitrary or despotic manner by reason of passion or personal
hostility and must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined by or
to act at all in contemplation of law (G.R. No. 59880, George
Arguelles [Hda. Emma Arguelles v. Romeo Yang, etc.], September 11,
1987).
Moreover, this Court has ruled that findings of administrative agencies
which have acquired expertise, like the Labor Ministry, are accorded
respect and finality (Special Events and Central Shipping Office
Workers Union v. San Miguel Corp., 122 SCRA 557 [1983] and that
the remedy of certiorari does not lie in the absence of any showing of
abuse or misuse of power properly vested in the Ministry of Labor and
Employment (Buiser v. Leogardo, Jr., 131 SCRA 151 [1984]).

After a careful review of the records, no plausible reason could be


found to disturb the findings of fact and the conclusions of law of the
Ministry of Labor.
Even if We regard the employees concerned as managerial
employees, they can still join the union of the rank and file
employees. They cannot however form their own exclusive union as
managerial employees (Bulletin Publishing Corporation v. Sanchez,
144 SCRA 628).
PREMISES CONSIDERED, the petition is DISMISSED, and the
assailed resolution and orders are AFFIRMED.
SO ORDERED.
Teehankee (C.J.), Narvasa, Cruz and Gancayco, JJ., concur.
Petition dismissed. Orders affirmed.
Notes.Length of time employee was connected with company and
employee engaged in activities usually necessary or desirable in the
employers usual business of trade, makes employee a permanent
employee. (Ochoco vs. NLRC, 120 SCRA 774.)
Employees claim that she was not given due process is belied by the
records. (Cruz vs. Minister of Labor & Employment, 120 SCRA 15.)
[Franklin Baker Company of the Phils, vs. Trajano, 157 SCRA
416(1988)]

G.R. No. 85915. January 17, 1990. *


PAGKAKAISA NG MGA MANGGAGAWA SA TRIUMPH
INTERNATIONAL-UNITED
LUMBER
AND
GENERAL
WORKERS OF THE PHILIPPINES (PMTI-ULGWF), petitioner, vs.
PURA FERRER-CALLEJA, DIRECTOR OF THE BUREAU OF
LABOR RELATIONS AND THE CONFEDERATION OF FILIPINO
WORKERS (CFW), PROGRESSIVE EMPLOYEES UNION (PEUTIPI), respondents.
Labor Law; Evidence; Factual findings of quasi-judicial agencies like
the Bureau of Labor Relations which are supported by substantial
evidence binding upon the Court and entitled to great respect.In the
determination of whether or not the members of respondent union are
managerial employees, we accord due respect and, therefore, sustain
the findings of fact made by the public respondent pursuant to the
time-honored rule that findings of fact of quasi-judicial agencies like
the Bureau of Labor Relations which are supported by substantial
evidence are binding on us and entitled to great respect considering
their expertise in their respective fields.
Same; Managerial employees, definition of.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, or to effectively
recommend such managerial action. All employees not falling within
this definition are considered rank and file employees for purposes of
this Book.
Same; Same; Test of supervisory or managerial status depends on
whether a person possesses authority to act in the interest of his
employer and whether such authority is not merely routinary or
clerical in nature but requires the use of independent judgment.We
have explicitly explained in the case of Franklin Baker Company of
the Philippines v. Trajano, 157 SCRA 416 [1988] that: The test of
supervisory or managerial status depends on whether a person
possesses 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 effective and not an exercise of independent judgment as
required by law (National Warehousing Corp. v. CIR, 7 SCRA 602603 [1963]).
Same; Same; Same; Findings that the supervisory employees sought to
be represented by the respondent union do not possess a managerial
status settled.The public respondent, in its factual findings, found
that the supervisory employees sought to be represented by the
respondent union are not involved in policy-making and their
recommendatory powers are not even instantly effective since the
same are still subject to review by at least three managerial heads
(department manager, personnel manager and general manager) before
final action can be taken. Hence, it is evidently settled that the said
employees do not possess a managerial status. The fact that their work
designations are either managers or supervisors is of no moment
considering that it is the nature of their functions and not the said
nomenclatures or titles of their jobs which determines their statuses.
Same; Same; Labor Organization; Managerial employees prohibited
from joining, assisting or forming any labor organization.Art. 245 of
the aforementioned Code prohibits managerial employees from
joining, assisting or forming any labor organization. Hence, employees
who had then formed supervisory unions were classified either as
managerial or rank-and-file depending on their functions in their
respective work assignments.
Same; Same; Same; Same; Managerial employees may join, assist or
form a separate labor organization of their own.Section 18 of the
same Act retains the provision on the ineligibility of managerial
employees to join any labor organization. However, the right of
supervisory employees to form their own union is revived under the
said section which states, in part, to wit: x x x 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.
Same; Same; Same; Findings that the employees sought to be
represented by the respondent union are rank-and-file employees
adopted.Thus, the right of supervisory employees to organize under
the Industrial Peace Act is once more recognized under the present
amendments to the Labor Code. (see Adamson & Adamson, Inc., v.
The Court of Industrial Relations, 127 SCRA 268 [1984]). In the
absence of any grave abuse of discretion on the part of the public
respondent as to the status of the members of the respondent union, we
adopt its findings that the employees sought to be represented by the
respondent union are rank-and-file employees.
Same; Same; Same; Same; Court impelled to disallow the holding of a
certification election among the workers sought to be represented by
the respondent union for want of any proof that the right of said
workers to self-organization is being suppressed.In the case at bar,
there is no dispute that the petitioner is the exclusive bargaining
representative of the rank-and-file employees of Triumph
International. A careful examination of the records of this case reveals
no evidence that rules out the commonality of interests among the
rank-and-file members of the petitioner and the herein declared rankand-file employees who are members of the respondent union. Instead
of forming another bargaining unit, the law requires them to be
members of the existing one. The ends of unionism are better served if
all the rank-and-file employees with substantially the same interests
and who invoke their right to self-orgnization are part of a single unit
so that they can deal with their employer with just one and yet potent
voice. The employees bargaining power with management is
strengthened thereby. Hence, the circumstances of this case impel us to
disallow the holding of a certification election among the workers
sought to be represented by the respondent union for want of proof that
the right of said workers to self-organization is being suppressed.
Same; Same; Same; Same; Same; Respondent unions CBA constituted
a bar to the holding of the certification election as petitioned by the
respondent union with public respondent.Anent the correlative issue
of whether or not the contract-bar rule applies to the present case, Rule

V, Section 3, Book V of the Implementing Rules and Regulations of


the Labor Code is written in plain and simple terms. It provides in
effect that if a collective bargaining agreement validly exists, a petition
for certification election can only be entertained within sixty (60) days
prior to the expiry date of said agreement. Respondent unions petition
for certification election was filed on November 25, 1987. At the time
of the filing of the said petition, a valid and existing CBA was present
between petitioner and Triumph International. The CBA was effective
up to September 24, 1989. There is no doubt that the respondent
unions CBA constituted a bar to the holding of the certification
election as petitioned by the respondent union with public respondent.
PETITION for certiorari to review the resolutions of the Director of
the Bureau of Labor Relations.
The facts are stated in the opinion of the Court.
Godofredo R. Paceo, Jr. for petitioner.
Sycip, Salazar, Hernandez & Gatmaitan for Triumph International
Phils. Inc.
Rogelio R. Udarbe for private respondents.
GUTIERREZ, JR., J.:
Once again we uphold the existing law which encourages one-union,
one-company policy in this petition for certiorari with prayer for
preliminary injunction. The petitioner assails the resolutions of the
public respondent dated August 24, 1988 and October 28, 1988 both
ordering the holding of a certification election among certain monthlypaid employees of Triumph International Philippines, Inc. (Triumph
International for brevity).
The petitioner is the recognized collective bargaining agent of the
rank-and-file employees of Triumph International with which the latter
has a valid and existing collective bargaining agreement effective up to
September 24, 1989.
On November 25, 1987, a petition for certification election was filed
by the respondent union with the Department of Labor and
Employment.
On January 30, 1988, a motion to dismiss the petition for certification
election was filed by Triumph International on the grounds that the

respondent union cannot lawfully represent managerial employees and


that the petition cannot prosper by virtue of the contract-bar rule. On
the same grounds, the petitioner, as intervenor, filed its opposition to
the petition on February 18, 1988.
On April 13, 1988, the Labor Arbiter issued an order granting the
petition for certification election and directing the holding of a
certification election to determine the sole and exclusive bargaining
representative of all monthly-paid administrative, technical,
confidential and supervisory employees of Triumph International.
On appeal, the public respondent on August 24, 1988 affirmed the
Labor Arbiters order with certain modifications as follows:
WHEREFORE, premises considered, the order appealed from is
hereby affirmed subject to the modification in that the subject
employees sought to be represented by the petitioner union are given
the option whether to join the existing bargaining unit composed of
daily paid rank-and-file employees. If they opt to join, the pertinent
provision of the existing CBA should be amended so as to include
them in its coverage. (Rollo, p. 19)
On September 5, 1988, Triumph International filed a motion for
reconsideration which was denied by the public respondent in a
resolution dated October 28, 1988.
The sole issue presented by the petitioner in the instant case is whether
or not the public respondent gravely abused its discretion in ordering
the immediate holding of a certification election among the workers
sought to be represented by the respondent union.
The petitioner argues that the members of respondent union are
managerial employees who are expressly excluded from joining,
assisting or forming any labor organization under Art. 245 of the Labor
Code.
In the determination of whether or not the members of respondent
union are managerial employees, we accord due respect and, therefore,
sustain the findings of fact made by the public respondent pursuant to
the time-honored rule that findings of fact of quasi-judicial agencies

like the Bureau of Labor Relations which are supported by substantial


evidence are binding on us and entitled to great respect considering
their expertise in their respective fields. (see Phil. Airlines Employees
Asso. (PALEA) v. Ferrer-Calleja, 162 SCRA 426 [1988]; Producers
Bank of the Philippines v. National Labor Relations Commission, G.R.
No. 76001, September 5, 1988; Salvador Lacorte v. Hon. Amado G.
Inciong, et al.,G.R. No. 52034, September 27, 1988; Johnson and
Johnson Labor Union-FFW, et al. v. Director of Labor Relations, G.R.
No. 76427, February 21, 1989; Teofila Arica, et al. v. National Labor
Relations Commission, et al., G.R. No. 78210, February 28, 1989;
A.M. Oreta & Co. Inc. v. National Labor Relations Commission, G.R.
No. 74004, August 10, 1989). According to the Med-Arbiter, while the
functions, and we may add, the titles of the personnel sought to be
organized appear on paper to involve an apparent exercise of
managerial authority, the fact remains that none of them discharge said
functions. The petitioner has failed to show reversible error insofar as
this finding is concerned.
In ruling that the members of respondent union are rankand-file and
not managerial employees, the public respondent made the following
findings:
x x x (1) They do not have the power to lay down and execute
management policies as they are given ready policies merely to
execute and standard practices to observe; 2) they do not have the
power to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees but only to recommend for such actions as the
power rests upon the personnel manager; and 3) they do not have the
power to effectively recommend any managerial actions as their
recommendations have to pass through the department manager for
review, the personnel manager for attestation and the general
manager/president for final actions. x x x (At pp. 17-18, Rollo)
The petitioner further argues that while it has recognized those
signatories and employees occcupying the positions of Assistant
Manager, Section Chief, Head Supervisor and Supervisor as
managerial employees under the existing collective bargaining
agreement, in the event that they are declared as rank-and-file

employees in the present case they are not precluded from joining and
they should join the petitioner.

We have explicitly explained in the case of Franklin Baker Company


of the Philippines v. Trajano, 157 SCRA 416 [1988] that:

We find the aforesaid contention of the petitioner meritorious in the


absence of a showing that there are compelling reasons such as the
denial of the right to join the petitioner which is the certified
bargaining unit to the members of respondent union or that there are
substantial distinctions warranting the recognition of a separate group
of rank-and-file employees even as there is an existing bargaining
agent for rank-and-file employees.

The test of supervisory or managerial status depends on whether a


person possesses 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 effective and not an exercise of
independent judgment as required by law (National Warehousing
Corp. v. CIR, 7 SCRA 602-603 [1963]).

In the case of Philtranco Service Enterprises v. Bureau of Labor


Relations, et. al., G.R. No. 85343 promulgated on June 28, 1989, we
stated that:
The Labor Code recognizes two (2) principal groups of employees,
namely, the managerial and the rank-and-file groups. Thus, Art. 212
(k) of the Code provides:
xxx

xxx

xxx

(k) Managerial employee is one who is vested with powers or


prerogtives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees, or to effectively recommend such managerial action. All
employees not falling within this definition are considered rank-andfile employees for purposes of this Book.
In implementation of the aforequoted provision of the law, Section 11
of Rule II, Book V of the Omnibus Rules implementing the Labor
Code did away with existing supervisory unions classifying the
members either as managerial or rank and file employees depending
on the work they perform. If they discharge managerial functions,
supervisors are prohibited from forming or joining any labor
organization. If they do not perform managerial work, they may join
the rank and file union and if none exists, they may form one such
rank and file organization. This rule was emphasized in the case of
Bulletin Publishing Corp. v. Sanchez, (144 SCRA 628 [1986]).

The public respondent, in its factual findings, found that the


supervisory employees sought to be represented by the respondent
union are not involved in policy-making and their recommendatory
powers are not even instantly effective since the same are still subject
to review by at least three managerial heads (department manager,
personnel manager and general manager) before final action can be
taken. Hence, it is evidently settled that the said employees do not
possess a managerial status. The fact that their work designations are
either managers or supervisors is of no moment considering that it is
the nature of their functions and not the said nomenclatures or titles of
their jobs which determines their statuses (see Engineering Equipment,
Inc. v. National Labor Relations Commission, 133 SCRA 752 [1984]
citing National Waterworks and Sewerage Authority v. NWSA
Consolidated Unions, 11 SCRA 766 [1964]).
Under the old Industrial Peace Act (Republic Act No. 875), the term
supervisors had the following definition, to wit:
Sec. 2. DefinitionsAs used in this Act
xxx

xxx

xxx

(k) Supervisor means any person having authority in the interest of


an employer, to hire, transfer, suspend, lay-off, recall, discharge,
assign, recommend, or discipline, other employees, or responsibly to

direct them, and to adjust their grievances, or effectively to


recommend such acts if, in connection with the foregoing, the exercise
of such authority is not of a merely routinary or clerical nature but
requires the use of independent judgment.
Section 3 of the same Act further provides that the supervisors as
defined above shall not be eligible for membership in a labor
organization of employees under their supervision but may form
separate organizations of their own.
With the enactment of the Labor Code (Presidential Decree No. 442 as
amended), the term supervisor was replaced by managerial
employee. Book V, Art. 212, subparagraph (k) of said Code reads:
(k) 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, or to effectively recommend such managerial actions. All
employees not falling within this definition are considered rank and
file employees for purposes of this Book.
Art. 245 of the aforementioned Code prohibits managerial employees
from joining, assisting or forming any labor organization. Hence,
employees who had then formed supervisory unions were classified
either as managerial or rank-and-file depending on their functions in
their respective work assignments. (Bulletin Publishing Corp. v.
Sanchez, supra.)
The recent amendments to the Labor Code contain separate definitions
for managerial and supervisory employees. Section 4 of Republic Act
No. 6715 states that:
Section 4, Article 212 of the Labor Code of the Philippines, as
amended, is further amended to read as follows:
xxx

xxx

xxx

(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 management 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.
Section 18 of the same Act retains the provision on the ineligibility of
managerial employees to join any labor organization. However, the
right of supervisory employees to form their own union is revived
under the said section which states, in part, to wit:
x x x 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.
Thus, the right of supervisory employees to organize under the
Industrial Peace Act is once more recognized under the present
amendments to the Labor Code. (see Adamson & Adamson, Inc., v.
The Court of Industrial Relations, 127 SCRA 268 [1984]). In the
absence of any grave abuse of discretion on thepart of the public
respondent as to the status of the members of the respondent union, we
adopt its findings t hat the employees sought to be represented by the
respondent union are rank-and-file employees.
There is no evidence in the records which sufficiently distinguishes
and clearly separates the group of employees sought to be represented
by the private respondents into managerial and supervisory on one
hand or supervisory and rank-and-file on the other. The respondents
pleadings do not show the distinctions in functions and responsibilities
which differentiate the managers from the supervisors and sets apart
the rank-and-file from either the managerial or supervisory groups. As
a matter of fact, the formation of a supervisors union was never before
the Labor Arbiter and the Bureau of Labor Relations and neither is the
issue before us. We, therefore, abide by the public respondents factual
findings in the absence of a showing of grave abuse of discretion.
In the case at bar, there is no dispute that the petitioner is the exclusive
bargaining representative of the rank-and-file employees of Triumph

International. A careful examination of the records of this case reveals


no evidence that rules out the commonality of interests among the
rank-and-file members of the petitioner and the herein declared rankand-file employees who are members of the respondent union. Instead
of forming another bargaining unit, the law requires them to be
members of the existing one. The ends of unionism are better served if
all the rank-and-file employees with substantially the same interests
and who invoke their right to self-organization are part of a single unit
so that they can deal with their employer with just one and yet potent
voice. The employees bargaining power with management is
strengthened thereby. Hence, the circumstances of this case impel us to
disallow the holding of a certification election among the workers
sought to be represented by the respondent union for want of proof that
the right of said workers to self-organization is being suppressed.
Once again we enunciate that the proliferation of unions in an
employer unit is discouraged as a matter of policy unless compelling
reasons exist which deny a certain and distinct class of employees the
right to self-organization for purposes of collective bargaining. (see
General Rubber & Footwear Corporation v. Bureau of Labor
Relations, 155 SCRA 283 [1987]).
Anent the correlative issue of whether or not the contract-bar rule
applies to the present case, Rule V Section 3, Book V of the
Implementing Rules and Regulations of the Labor Code is written in
plain and simple terms. It provides in effect that if a collective
bargaining agreement validly exists, a petition for certification election
can only be entertained within sixty (60) days prior to the expiry date
of said agreement. Respondent unions petition for certification
election was filed on November 25, 1987. At the time of the filing of
the said petition, a valid and existing CBA was present between
petitioner and Triumph International. The CBA was effective up to
September 24, 1989. There is no doubt that the respondent unions
CBA constituted a bar to the holding of the certification election as
petitioned by the respondent union with public respondent. (see
Associated Trade Unions [ATU] v. Trajano, 162 SCRA 318 [1988],
Federation of Democratic Trade Union v. Pambansang Kilusan ng
Paggawa, 156 SCRA 482 [1987]); Tanduay Distilling Labor Union v.

National Labor Relations Commissions, 149 SCRA 470 [1987]). The


members of the respondent union should wait for the proper time.
The CBA in this case expired on September 24, 1989. If a new CBA
with the same provisions as the old one has been executed, its terms
should be amended so as to conform to the tenor of this decision.
WHEREFORE, in view of the foregoing, the assailed resolutions of
the public respondent dated August 24, 1988 and October 28, 1988 are
hereby SET ASIDE. The restraining order dated January 11, 1989
issued by the Court is made permanent.
SO ORDERED.
Fernan (C.J.), Bidin and Corts, JJ., concur.
Feliciano, J., No part. One of private respondent represented by my
former firm.
Resolutions set aside.
Notes.Where there is an existing CBA, a group of employ130
130
SUPREME COURT REPORTS ANNOTATED
Pacific Mills, Inc. vs. National Labor Relations Commission
ees who wish to form another union must follow Labor Code
procedures. (Brotherhood Labor Unity Movement of the Philippines
vs. Zamora, 147 SCRA 49)
The last 60 days in a collective bargaining agreement is referred to as
the freedom period when rival union representation can be
entertained during the existence of a valid Collective Bargaining
Agreement. (Tanduay Distillery Labor Union vs. National Labor
Relations Commission, 149 SCRA 470)
o0o [ Pagkakaisa ng mga Manggagawa sa Triumph Intl.United Lumber and General<br/>Workers of the Phils. vs. FerrerCalleja , 181 SCRA 119(1990)]

EN BANC
[G.R. No. 122226. March 25, 1998]
UNITED PEPSI-COLA SUPERVISORY UNION
(UPSU), petitioner, vs. HON. BIENVENIDO E. LAGUESMA and
PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.
DECISION
MENDOZA, J.:
Petitioner is a union of supervisory employees. It appears that on
March 20, 1995 the union filed a petition for certification election on
behalf of the route managers at Pepsi-Cola Products Philippines,
Inc. However, its petition was denied by the med-arbiter and, on
appeal, by the Secretary of Labor and Employment, on the ground that
the route managers are managerial employees and, therefore, ineligible
for union membership under the first sentence of Art. 245 of the Labor
Code, which provides:
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.
Petitioner brought this suit challenging the validity of the order dated
August 31, 1995, as reiterated in the order dated September 22, 1995,
of the Secretary of Labor and Employment. Its petition was dismissed
by the Third Division for lack of showing that respondent committed
grave abuse of discretion. But petitioner filed a motion for
reconsideration, pressing for resolution its contention that the first
sentence of Art. 245 of the Labor Code, so far as it declares managerial
employees to be ineligible to form, assist or join unions, contravenes
Art. III 8 of the Constitution which provides:
The right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for the
purposes not contrary to law shall not be abridged.
For this reason, the petition was referred to the Court en banc.
The Issues in this Case

Two question are presented by the petition: (1) whether the route
managers at Pepsi-Cola Products Philippines, Inc. are managerial

employees and (2) whether Art. 245, insofar as it prohibits managerial


employees from forming, joining or assisting labor unions, violates
Art. III, 8 of the Constitution.
In resolving these issues it would be useful to begin by defining who
are managerial employees and considering the types of managerial
employees.
Types of Managerial Employees

The term manager generally refers to anyone who is responsible for


subordinates and other organization resources.[1] As a class, managers
constitute three levels of a pyramid:
Top Management
_________________
Middle Management
_________________
First Line
Management
(also called Supervisor)
____________________
____________________
Operatives
Or Operating Employees
FIRST-LINE MANAGERS The lowest level in an organization at
which individuals are responsible for the work of others is called firstline or first-level management. First-line managers direct operating
employees only; they do not supervise other managers. Example of
first-line managers are the foreman or production supervisor in a
manufacturing plant, the technical supervisor in a research department,
and the clerical supervisor in a large office. First-level managers are
often called supervisors.
MIDDLE MANAGERS The term middle management can refer to
more than one level in an organization. Middle managers direct the
activities of other managers and sometimes also those of operating
employees. Middle managers principal responsibilities are to direct
the activities that implement their organizations policies and to
balance the demands of their superiors with the capacities of their
subordinates. A plant manager in an electronics firm is an example of
a middle manager.
TOP MANAGERS Composed of a comparatively small group of
executives, top management is responsible for the overall

management of the organization. It establishes operating policies and


guides the organizations interactions with its environment. Typical
titles of top managers are chief executive officer, president, and
senior vice-president. Actual titles vary from one organization to
another and are not always a reliable guide to membership in the
highest management classification.[2]
As can be seen from this description, a distinction exist between those
who have the authority to devise, implement and control strategic and
operational policies (top and middle managers) and those whose task is
simply to ensure that such polices are carried out by the rank-and-file
employees of an organization (first-level managers/supervisors). What
distinguishes them from the rank-and file employees is that they act in
the interest of the employer in supervising such rank-and-file
employees.
Managerial employees may therefore be said to fall into two distinct
categories: the managers per se, who compose the former group
described above, and the supervisors who form the latter
group. Whether they belong to the first or second category, managers,
vis--vis employers, are, likewise, employees.[3]
The first question is whether route managers are managers are
managerial employees or supervisors.
Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees

It appears that this question was the subject of two previous


determinations by the Secretary of Labor and Employment, in
accordance with which this case was decided by the med-arbiter.
In Case No. OS-MA-10318-91, entitled Workerss Alliance Trade
Union (WATU) v. Pepsi-Cola Products Philippines, Inc., decided on
November 13, 1991, the Secretary of Labor found:
We examined carefully the pertinent job description of the subject
employees and other documentary evidence on record vis--vis
paragraph (m), Article 212 of the Labor Code, as amended, and we
find that only those employees occupying the position of route
manager and accounting manager are managerial employees. The rest
i.e. quality control manager, yard/transport manager and warehouse
operations manager are supervisory employees.
To qualify as managerial employee, there must be a clear showing of
the exercise of managerial attributes under paragraph (m), Article 212
of the Labor Code as amended. Designations or titles of positions are
not controlling. In the instant case, nothing on record will support the

claim that the quality control manager, yard/transport manager and


warehouse operations manager are vested with said attributes. The
warehouse operations manager, for example, merely assists the plant
finance manager in planning, organizing, directing and controlling all
activities relative to development and implementation of an effective
management control information system at the sale offices. The
exercise of authority of the quality control manager, on the other hand,
needs the concurrence of the manufacturing manager
As to the route managers and accounting manager, we are convinced
that they are managerial employees. Their job descriptions clearly
reveal so.
On July 6, 1992, this finding was reiterated in Case No. OS-A-3-7192, entitled In Re: Petition for Direct Certification and/or Certification
Election-Route Managers/Supervisory Employees of Pepsi-Cola
Products Phils. Inc., as follows:
The issue brought before us is not of first impression. At one time, we
had the occasion to rule upon the status of route manager in the same
company vis a vis the issue as to whether or not it is supervisory
employee or a managerial employee. In the case of Workers Alliance
Trade Unions (NATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MAA-10-318-91), 15 November 1991, we ruled that a route manager is a
managerial employee within the context of the definition of the law,
and hence, ineligible to join, form or assist a union. We have once
more passed upon the logic of our Decision aforecited in the light of
the issues raised in the instant appeal, as well as the available
documentary evidence on hand, and have come to the view that there
is no cogent reason to depart from our earlier holding. Route
Managers are, by the very nature of their functions and the authority
they wield over their subordinates, managerial employees. The
prescription found in Art. 245 of the Labor Code, as amended
therefore, clearly applies to them.[4]4
Citing our ruling in Nasipit Lumber Co. v. National Labor Relations
Commission,[5]5 however, petitioner argues that these previous
administrative determinations do not have the effect of res judicata in
this case, because "labor relations proceedings" are "non-litigious and
summary in nature without regard to legal technicalities."[6] Nasipit
Lumber Co. involved a clearance to dismiss an employee issued by the
Department of Labor. The question was whether in a subsequent
proceeding for illegal dismissal, the clearance was res judicata. In

holding it was not, this Court made it clear that it was referring to
labor relations proceedings of a non-adversary character, thus:
The requirement of a clearance to terminate employment was a
creation of the Department of labor to carry out the Labor Code
provisions on security of tenure and termination of employment. The
proceeding subsequent to the filing of an application for clearance to
terminate employment was outlined in Book V, Rule XIV of the Rules
and Regulations Implementing the Labor Code. The fact that said rule
allowed a procedure for the approval of the clearance with or without
the opposition of the employee concerned (Secs. 7 & 8), demonstrates
the non-litigious and summary nature of the proceeding. The
clearance requirement was therefore necessary only as an expeditious
shield against arbitrary dismissal without the knowledge and
supervision of the Department of Labor. Hence, a duly approved
clearance implied that the dismissal was legal or for cause (Sec. 2).
[7]
v. National Labor Relations Commission, 177 SCRA 93, 100
(1989).7
But the doctrine of res judicata certainly applies to adversary
administrative proceedings. As early as 1956, in Brillantes v. Castro,
[8]
8 we sustained the dismissal of an action by a trial court on the basis
of a prior administrative determination of the same case by the Wage
Administration Service, applying the principle of res
judicata. Recently, in Abad v. NLRC[9]9 we applied the related
doctrine of stare decisis in holding that the prior determination that
certain jobs at the Atlantic Gulf and Pacific Co. were project
employments was binding in another case involving another group of
employees of the same company. Indeed, in Nasipit Lumber Co., this
Court clarified toward the end of its opinion that "the doctrine of res
judicata applies . . . to judicial or quasi judicial proceedings and not to
the exercise of administrative powers."[10]v. National Labor Relations
Commission, supra note 7.10 Now proceedings for certification
election, such as those involved in Case No. OS-M-A-10-318-91 and
Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore,
decisions rendered in such proceedings can attain finality.[11]v. B.F.
Goodrich (Marikina Factory) Confidential and Salaries Employees
Union-NATU, 49 SCRA 532 (1973).11
Thus, we have in this case an expert's view that the employees
concerned are managerial employees within the purview of Art. 212
which 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.
At the very least, the principle of finality of administrative
determination compels respect for the finding of the Secretary of
Labor that route managers are managerial employees as defined by law
in the absence of anything to show that such determination is without
substantial evidence to support it. Nonetheless, the Court, concerned
that employees who are otherwise supervisors may wittingly or
unwittingly be classified as managerial personnel and thus denied the
right of self- organization, has decided to review the record of this
case.
DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record

The Court now finds that the job evaluation made by the Secretary of
Labor is indeed supported by substantial evidence. The nature of the
job of route managers is given in a four-page pamphlet, prepared by
the company, called "Route Manager Position Description," the
pertinent parts of which read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan; and you
achieve this objective through the skillful MANAGEMENT OF
YOUR JOB AND THE MANAGEMENT OF YOUR PEOPLE.
These then are your functions as Pepsi-Cola Route Manager. Within
these functions - managing your job and managing your people - you
are accountable to your District Manager for the execution and
completion of various tasks and activities which will make it possible
for you to achieve your sales objectives.
B. PRINCIPAL ACCOUNTABILITIES
1.0 MANAGING YOUR JOB
The Route Manager is accountable for the following:
1.1 SALES DEVELOPMENT
1.1.1 Achieve the sales plan.

1.1.2 Achieve all distribution and new account objectives.


1.1.3 Develop new business opportunities thru personal contacts
with dealers.
1.1.4 Inspect and ensure that all merchandizing [sic] objectives are
achieved in all outlets.
1.1.5 maintain and improve productivity of all cooling equipment
and kiosks.
1.1.6 Execute and control all authorized promotions.
1.1.7 Develop and maintain dealer goodwill.
1.1.8 Ensure all accounts comply with company suggested retail
pricing.
1.1.9 Study from time to time individual route coverage and
productivity for possible adjustments to maximize utilization of
resources.
1.2 Administration
1.2.1 Ensure the proper loading of route trucks before check-out and
the proper sorting of bottles before check-in.
1.2.2 Ensure the upkeep of all route sales reports and all other
related reports and forms required on an accurate and timely basis.
1.2.3 Ensure proper implementation of the various company policies
and procedures incl. but not limited to shakedown; route shortage;
progressive discipline; sorting; spoilages; credit/collection; accident;
attendance.
1.2.4 Ensure collection of receivables and delinquent accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate and develop all assigned
route salesmen and helpers at least 3 days a week, to be supported by
required route ride documents/reports & back check/spot check at least
2 days a week to be supported by required documents/reports.
2.1.2 Conduct sales meetings and morning huddles. Training should
focus on the enhancement of effective sales and merchandizing [sic]
techniques of the salesmen and helpers. Conduct group training at
least 1 hour each week on a designated day and of specific topic.
2.2 Code of Conduct
2.2.1 Maintain the company's reputation through strict adherence to
PCPPI's code of conduct and the universal standards of unquestioned
business ethics.[12]12

Earlier in this opinion, reference was made to the distinction between


managers per se (top managers and middle managers) and supervisors
(first-line managers). That distinction is evident in the work of the
route managers which sets them apart from supervisors in
general. Unlike supervisors who basically merely direct operating
employees in line with set tasks assigned to them, route managers are
responsible for the success of the company's main line of business
through management of their respective sales teams. Such
management necessarily involves the planning, direction, operation
and evaluation of their individual teams and areas which the work of
supervisors does not entail.
The route managers cannot thus possibly be classified as mere
supervisors because their work does not only involve, but goes far
beyond, the simple direction or supervision of operating employees to
accomplish objectives set by those above them. They are not mere
functionaries with simple oversight functions but business
administrators in their own right. An idea of the role of route
managers as managers per se can be gotten from a memo sent by the
director of metro sales operations of respondent company to one of the
route managers. It reads:[13]
03 April 1995
To
: CESAR T. REOLADA
From
: REGGIE M. SANTOS
Subj
: SALARY INCREASE
Effective 01 April 1995, your basic monthly salary of P11,710
will be increased to P12,881 or an increase of 10%. This represents
the added managerial responsibilities you will assume due to the recent
restructuring and streamlining of Metro Sales Operations brought
about by the continuous losses for the last nine (9) months.
Let me remind you that for our operations to be profitable, we have to
sustain the intensity and momentum that your group and yourself have
shown last March. You just have todeliver the desired volume
targets, better negotiated concessions, rationalized sustaining
deals, eliminate or reduced overdues, improved collections, more
cash accounts, controlled operating expenses, etc. Also, based on
the agreed set targets, your monthly performance will be closely
monitored.
You have proven in the past that your capable of achieving your
targets thru better planning, managing your group as a fighting

team, and thru aggressive selling. I am looking forward to your


success and I expect that you just have to exert your doubly best in
turning around our operations from a losing to a profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers, quoted in the separate
opinion of Justice Vitug, although entitled "RM's Job Description," is
only a summary of performance standards. It does not show whether
route managers are managers per se or supervisors. Obviously, these
performance standards have to be related to the specific tasks given to
route managers in the four-page "Route Manager Position
Description," and, when this is done, the managerial nature of their
jobs is fully revealed. Indeed, if any, the card indicates the great
latitude and discretion given to route managers - from servicing and
enhancing company goodwill to supervising and auditing accounts,
from trade (new business) development to the discipline, training and
monitoring of performance of their respective sales teams, and so
forth, - if they are to fulfill the company's expectations in the "key
result areas."
Article 212(m) says that "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." Thus,
their only power is to recommend. Certainly, the route managers in
this case more than merely recommend effective management
action. They perform operational, human resource, financial and
marketing functions for the company, all of which involve the laying
down of operating policies for themselves and their teams. For
example, with respect to marketing, route managers, in accordance
with B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are
charged, among other things, with expanding the dealership base of
their respective sales areas, maintaining the goodwill of current
dealers, and distributing the company's various promotional items as
they see fit. It is difficult to see how supervisors can be given such
responsibility when this involves not just the routine supervision of
operating employees but the protection and expansion of the
company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire
people (the evidence shows that they only "recommended" or

"endorsed" the taking of disciplinary action against certain


employees), this is because this is a function of the Human Resources
or Personnel Department of the company.[14]14 And neither should it
be presumed that just because they are given set benchmarks to
observe, they are ipso facto supervisors. Adequate control methods (as
embodied in such concepts as "Management by Objectives [MBO]"
and "performance appraisals") which require a delineation of the
functions and responsibilities of managers by means of ready reference
cards as here, have long been recognized in management as effective
tools for keeping businesses competitive.
This brings us to the second question, whether the first sentence of Art.
245 of the Labor Code, prohibiting managerial employees from
forming, assisting or joining any labor organization, is constitutional in
light of Art. III, 8 of the Constitution which provides:
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.
As already stated, whether they belong to the first category
(managers per se) or the second category (supervisors), managers are
employees. Nonetheless, in the United States, as Justice Puno's
separate opinion notes, supervisors have no right to form
unions. They are excluded from the definition of the term "employee"
in 2(3) of the Labor-Management Relations Act of 1947.[15]v. Bell
Aerospace Co., 416 U.S. 281, n 11, 40 L.Ed.2d 134, 147, n. 11 (1974),
thus:
Supervisors are management people. They have distinguished
themselves in their work. They have demonstrated their ability to take
care of themselves without depending upon the pressure of collective
action. No one forced them to become supervisors. They abandoned
the "collective security" of the rank and file voluntarily, because they
believed the opportunities thus opened to them to be more valuable to
them than such "security". It seems wrong, and it is wrong, to subject
people of this kind, who have demonstrated their initiative, their
ambition and their ability to get ahead, to the leveling processes of
seniority, uniformity and standardization that the Supreme Court
recognizes as being fundamental principles of unionism. (J.I. Case
Co. v. National Labor Relations Board, 321 U.S. 332, 88 L.Ed. 762, 64
S. Ct. 576 (1994). It is wrong for the foremen, for it discourages the
things in them that made them foremen in the first place. For the same

reason, that it discourages those best qualified to get ahead, it is wrong


for industry, and particularly for the future strength and productivity of
our country.15 In the Philippines, the question whether managerial
employees have a right of self-organization has arisen with respect to
first-level managers or supervisors, as shown by a review of the course
of labor legislation in this country.
Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws

Before the promulgation of the Labor Code in 1974, the field of labor
relations was governed by the Industrial Peace Act (R.A. No. 875).
In accordance with the general definition above, this law defined
"supervisor" as follows:
SECTION 2. . . .
(k) "Supervisor" means any person having authority in the interest of
an employer, to hire, transfer, suspend, lay-off, recall, discharge,
assign, recommend, or discipline other employees, or responsibly to
direct them, and to adjust their grievances, or effectively to
recommend such acts, if, in connection with the foregoing, the
exercise of such authority is not of a merely routinary or clerical nature
but requires the use of independent judgment.[16]16
The right of supervisors to form their own organizations was affirmed:
SEC. 3. Employees' Right to Self-Organization. -- Employees shall
have the right to self-organization and to form, join or assist labor
organizations of their own choosing for the purpose of collective
bargaining through representatives of their own choosing and to
engage in concerted activities for the purpose of collective bargaining
and other mutual aid and protection. Individuals employed as
supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form
separate organizations of their own.[17]
For its part, the Supreme Court upheld in several of its decisions the
right of supervisors to organize for purposes of labor relations.
[18]
v. Filoil Supervisory and Confidential Employees Association, 6
SCRA 522 (1972); Kapisanan ng mga Manggagawa sa Manila
Railroad Co. v. CIR, 106 Phil 607 (1959).18
Although it had a definition of the term "supervisor," the Industrial
Peace Act did not define the term "manager." But, using the
commonly-understood concept of "manager," as above stated, it is
apparent that the law used the term "supervisors" to refer to the subgroup of "managerial employees" known as front-line managers. The

other sub-group of "managerial employees," known as managers per


se, was not covered.
However, in Caltex Filipino Managers and Supervisors Association v.
Court of Industrial Relations,[19]J.)19 the right of all managerial
employees to self-organization was upheld as a general proposition,
thus:
It would be going too far to dismiss summarily the point raised by
respondent Company - that of the alleged identity of interest between
the managerial staff and the employing firm. That should ordinarily be
the case, especially so where the dispute is between management and
the rank and file. It does not necessarily follow though that what binds
the managerial staff to the corporation forecloses the possibility of
conflict between them. There could be a real difference between what
the welfare of such group requires and the concessions the firm is
willing to grant. Their needs might not be attended to then in the
absence of any organization of their own. Nor is this to indulge in
empty theorizing. The record of respondent Company, even the very
case cited by it, is proof enough of their uneasy and troubled
relationship. Certainly the impression is difficult to erase that an alien
firm failed to manifest sympathy for the claims of its Filipino
executives. To predicate under such circumstances that agreement
inevitably marks their relationship, ignoring that discord would not be
unusual, is to fly in the face of reality.
. . . The basic question is whether the managerial personnel can
organize. What respondent Company failed to take into account is that
the right to self-organization is not merely a statutory creation. It is
fortified by our Constitution. All are free to exercise such right unless
their purpose is contrary to law. Certainly it would be to attach
unorthodoxy to, not to say an emasculation of, the concept of law if
managers as such were precluded from organizing. Having done so
and having been duly registered, as did occur in this case, their union
is entitled to all the rights under Republic Act No. 875. Considering
what is denominated as unfair labor practice under Section 4 of such
Act and the facts set forth in our decision, there can be only one
answer to the objection raised that no unfair labor practice could be
committed by respondent Company insofar as managerial personnel is
concerned. It is, as is quite obvious, in the negative.[20]20

Actually, the case involved front-line managers or supervisors only, as


the plantilla of employees, quoted in the main opinion,[21]J.) (emphasis
added).21 clearly indicates:
CAFIMSA members holding the following Supervisory Payroll
Position Title are Recognized by the Company
Payroll Position Title
Assistant to Mgr. - National Acct. Sales
Jr. Sales Engineer
Retail Development Asst.
Staff Asst. - 0 Marketing
Sales Supervisor
Supervisory Assistant
Jr. Supervisory Assistant
Credit Assistant
Lab. Supvr. - Pandacan
Jr. Sales Engineer B
Operations Assistant B
Field Engineer
Sr. Opers. Supvr. - MIA A/S
Purchasing Assistant
Jr. Construction Engineer
St. Sales Supervisor
Deport Supervisor A
Terminal Accountant B
Merchandiser
Dist. Sales Prom. Supvr.
Instr. - Merchandising
Asst. Dist. Accountant B
Sr. Opers. Supervisor
Jr. Sales Engineer A
Asst. Bulk Ter. Supt.
Sr. Opers. Supvr.
Credit Supervisor A
Asst. Stores Supvr. A
Ref. Supervisory Draftsman
Refinery Shift Supvr. B
Asst. Supvr. A - Operations (Refinery)
Refinery Shift Supvr. B
Asst. Lab. Supvr. A (Refinery)

St. Process Engineer B (Refinery)


Asst. Supvr. A - Maintenance (Refinery)
Asst. Supvr. B - Maintenance (Refinery)
Supervisory Accountant (Refinery)
Communications Supervisor (Refinery)
Finally, also deemed included are all other employees excluded from
the rank and file unions but not classified as managerial or otherwise
excludable by law or applicable judicial precedents.
Right of Self-Organization of Managerial Employees under the Labor Code

Thus, the dictum in the Caltex case which allowed at least for the
theoretical unionization of top and middle managers by assimilating
them with the supervisory group under the broad phrase "managerial
personnel," provided the lynchpin for later laws denying the right of
self-organization not only to top and middle management employees
but to front line managers or supervisors as well. Following the Caltex
case, the Labor Code, promulgated in 1974 under martial law, dropped
the distinction between the first and second sub-groups of managerial
employees. Instead of treating the terms "supervisor" and "manager"
separately, the law lumped them together and called them "managerial
employees," as follows:
ART. 212. Definitions . . . .
(k) "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, or to effectively recommend such managerial actions. All
employees not falling within this definition are considered rank and
file employees for purposes of this Book.[22]22
The definition shows that it is actually a combination of the commonly
understood definitions of both groups of managerial employees,
grammatically joined by the phrase "and/or."
This general definition was perhaps legally necessary at that time for
two reasons. First, the 1974 Code denied supervisors their right to selforganize as theretofore guaranteed to them by the Industrial Peace
Act. Second, it stood the dictum in the Caltex case on its head by
prohibiting all types of managers from forming unions. The explicit
general prohibition was contained in the then Art. 246 of the Labor
Code.
The practical effect of this synthesis of legal concepts was made
apparent in the Omnibus Rules Implementing the Labor Code which

the Department of Labor promulgated on January 19, 1975. Book V,


Rule II, 11 of the Rules provided:
Supervisory unions and unions of security guards to cease operation. All existing supervisory unions and unions of security guards shall,
upon the effectivity of the Code, cease to operate as such and their
registration
certificates
shall
be
deemed
automatically
cancelled. However, existing collective agreements with such unions,
the life of which extends beyond the date of effectivity of the Code,
shall be respected until their expiry date insofar as the economic
benefits granted therein are concerned.
Members of supervisory unions who do not fall within the definition
of managerial employees shall become eligible to join or assist the
rank and file labor organization, and if none exists, to form or assist in
the forming of such rank and file organization. The determination of
who are managerial employees and who are not shall be the subject of
negotiation between representatives of the supervisory union and the
employer. If no agreement is reached between the parties, either or
both of them may bring the issue to the nearest Regional Office for
determination.
The Department of Labor continued to use the term "supervisory
unions" despite the demise of the legal definition of "supervisor"
apparently because these were the unions of front line managers which
were then allowed as a result of the statutory grant of the right of selforganization under the Industrial Peace Act. Had the Department of
Labor seen fit to similarly ban unions of top and middle managers
which may have been formed following the dictum in Caltex, it
obviously would have done so. Yet it did not, apparently because no
such unions of top and middle managers really then existed.
Real Intent of the 1986 Constitutional Commission

This was the law as it stood at the time the Constitutional


Commission considered the draft of Art. III, 8. Commissioner
Lerum sought to amend the draft of what was later to become Art. III,
8 of the present Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line 19, which
is to insert between the words "people" and "to" the
following: WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS. In other words, the section will now read as
follows: "The right of the people WHETHER EMPLOYED BY THE
STATE OR PRIVATE ESTABLISHMENTS to form associations,

unions, or societies for purposes not contrary to law shall not be


abridged."[23]23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to form
associations is granted to all persons whether or not they are employed
in the government. Under that provision, we allow unions in the
government, in government-owned and controlled corporations and in
other industries in the private sector, such as the Philippine
Government Employees' Association, unions in the GSIS, the SSS, the
DBP and other government-owned and controlled corporations. Also,
we have unions of supervisory employees and of security guards. But
what is tragic about this is that after the 1973 Constitution was
approved and in spite of an express recognition of the right to organize
in P.D. No. 442, known as the Labor Code, the right of government
workers, supervisory employees and security guards to form unions
was abolished.
And we have been fighting against this abolition. In every tripartite
conference attended by the government, management and workers, we
have always been insisting on the return of these rights. However,
both the government and employers opposed our proposal, so nothing
came out of this until this week when we approved a provision which
states:
Notwithstanding any provision of this article, the right to selforganization shall not be denied to government employees.
We are afraid that without any corresponding provision covering the
private sector, the security guards, the supervisory employees or
majority employees [sic] will still be excluded, and that is the purpose
of this amendment.
I will be very glad to accept any kind of wording as long as it will
amount to absolute recognition of private sector employees, without
exception, to organize.
THE PRESIDENT. What does the Committee say?
FR. BERNAS. Certainly, the sense is very acceptable, but the point
raised by Commissioner Rodrigo is well-taken. Perhaps, we can
lengthen this a little bit more to read: "The right of the people
WHETHER UNEMPLOYED OR EMPLOYED BY STATE OR
PRIVATE ESTABLISHMENTS."
I want to avoid also the possibility of having this interpreted as
applicable only to the employed.

MR. DE LOS REYES. Will the proponent accept an amendment to


the amendment, Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the right of the
employees in the private sector is recognized.[24]
Lerum thus anchored his proposal on the fact that (1) government
employees, supervisory employees, and security guards, who had the
right to organize under the Industrial Peace Act, had been denied this
right by the Labor Code, and (2) there was a need to reinstate the right
of these employees. In consonance with his objective to reinstate the
right of government, security, and supervisory employees to organize,
Lerum then made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation with several
Members of this Commission, my amendment will now read as
follows: "The right of the people INCLUDING THOSE EMPLOYED
IN THE PUBLIC AND PRIVATE SECTORS to form associations,
unions, or societies for purposes not contrary to law shall not be
abridged. In proposing that amendment I ask to make of record that I
want the following provisions of the Labor Code to be automatically
abolished, which read:
ART. 245. Security guards and other personnel employed for the
protection and security of the person, properties and premises of the
employers shall not be eligible for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and
form any labor organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does the
Committee say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has
accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the
amendment, as amended, is approved.[25]
The question is what Commissioner Lerum meant in seeking to
"automatically abolish" the then Art. 246 of the Labor Code. Did he
simply want "any kind of wording as long as it will amount to
absolute recognition of private sector employees, without exception, to
organize"?[26] Or, did he instead intend to have his words taken in the
context of the cause which moved him to propose the amendment in
the first place, namely, the denial of the right of supervisory employees
to organize, because he said, "We are afraid that without any

corresponding provision covering the private sector, security guards,


supervisory employees or majority [of] employees will still be
excluded, and that is the purpose of this amendment"?[27]
It would seem that Commissioner Lerum simply meant to restore the
right of supervisory employees to organize. For even though he spoke
of the need to "abolish" Art. 246 of the Labor Code which, as already
stated, prohibited "managerial employees" in general from forming
unions, the fact was that in explaining his proposal, he repeatedly
referred to "supervisory employees" whose right under the Industrial
Peace Act to organize had been taken away by Art. 246. It is
noteworthy that Commissioner Lerum never referred to the then
definition of "managerial employees" in Art. 212(m) of the Labor
Code which put together, under the broad phrase "managerial
employees," top and middle managers and supervisors. Instead, his
repeated use of the term "supervisory employees," when such term
then was no longer in the statute books, suggests a frame of mind that
remained grounded in the language of the Industrial Peace Act.
Nor did Lerum ever refer to the dictum in Caltex recognizing the right
of all managerial employees to organize, despite the fact that the
Industrial Peace Act did not expressly provide for the right of top and
middle managers to organize. If Lerum was aware of the Caltex
dictum, then his insistence on the use of the term "supervisory
employees" could only mean that he was excluding other managerial
employees from his proposal. If, on the other hand, he was not aware
of the Caltex statement sustaining the right to organize to top and
middle managers, then the more should his repeated use of the term
"supervisory employees" be taken at face value, as it had been
defined in the then Industrial Peace Act.
At all events, that the rest of the Commissioners understood his
proposal to refer solely to supervisors and not to other managerial
employees is clear from the following account of Commissioner
Joaquin G. Bernas, who writes:
In presenting the modification on the 1935 and 1973 texts,
Commissioner Eulogio R. Lerum explained that the modification
included three categories of workers: (1) government employees, (2)
supervisory employees, and (3) security guards. Lerum made of record
the explicit intent to repeal provisions of P.D. 442, the Labor Code.
The provisions referred to were:

ART. 245. Security guards and other personnel employed for the
protection and security of the person, properties and premises of the
employers shall not be eligible for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and
form any labor organization.[28]28
Implications of the Lerum Proposal

In sum, Lerum's proposal to amend Art. III, 8 of the draft


Constitution by including labor unions in the guarantee of
organizational right should be taken in the context of statements that
his aim was the removal of the statutory ban against security guards
and supervisory employees joining labor organizations. The approval
by the Constitutional Commission of his proposal can only mean,
therefore, that the Commission intended the absolute right to organize
of government workers, supervisory employees, and security guards to
be constitutionally guaranteed. By implication, no similar absolute
constitutional right to organize for labor purposes should be deemed to
have been granted to top-level and middle managers. As to them the
right of self-organization may be regulated and even abridged
conformably to Art. III, 8.
Constitutionality of Art. 245

Finally, the question is whether the present ban against managerial


employees, as embodied in Art. 245 (which superseded Art. 246) of
the Labor Code, is valid. This provision reads:
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.[29]29
This provision is the result of the amendment of the Labor Code in
1989 by R.A. No. 6715, otherwise known as the Herrera-Veloso
Law. Unlike the Industrial Peace Act or the provisions of the Labor
Code which it superseded, R.A. No. 6715 provides separate definitions
of the terms "managerial" and "supervisory employees," as follows:
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 this Book.
Although the definition of "supervisory employees" seems to have
been unduly restricted to the last phrase of the definition in the
Industrial Peace Act, the legal significance given to the phrase
"effectively recommends" remains the same. In fact, the distinction
between top and middle managers, who set management policy, and
front-line supervisors, who are merely responsible for ensuring that
such policies are carried out by the rank and file, is articulated in the
present definition.[30]30 When read in relation to this definition in Art.
212(m), it will be seen that Art. 245 faithfully carries out the intent of
the Constitutional Commission in framing Art. III, 8 of the
fundamental law.
Nor is the guarantee of organizational right in Art. III, 8 infringed by
a ban against managerial employees forming a union. The right
guaranteed in Art. III, 8 is subject to the condition that its exercise
should be for purposes "not contrary to law." In the case of Art. 245,
there is a rational basis for prohibiting managerial employees from
forming or joining labor organizations. As Justice Davide, Jr., himself
a constitutional commissioner, said in his ponencia in Philips
Industrial Development, Inc. v. NLRC:[31]31
In the first place, all these employees, with the exception of the service
engineers and the sales force personnel, are confidential
employees. Their classification as such is not seriously disputed by
PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW
explicitly considered them as confidential employees. By the very
nature of their functions, they assist and act in a confidential capacity
to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, the
rationale behind the ineligibility of managerial employees to form,
assist or joint a labor union equally applies to them.
In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court
elaborated on this rationale, thus:
". . . The rationale for this inhibition has been stated to be, because if
these managerial employees would belong to or be affiliated with 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."[32]
To be sure, the Court in Philips Industrial was dealing with the right of
confidential employees to organize. But the same reason for denying
them the right to organize justifies even more the ban on managerial
employees from forming unions. After all, those who qualify as top or
middle managers are executives who receive from their employers
information that not only is confidential but also is not generally
available to the public, or to their competitors, or to other employees.
It is hardly necessary to point out that to say that the first sentence of
Art. 245 is unconstitutional would be to contradict the decision in that
case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez, and Purisima,
JJ., concur.
Davide, Melo, Puno, Vitug, Kapunan, Panganiban, and Quisumbing,
JJ., has separate, concurring and dissenting opinion.

452
G.R. No. 96189. July 14, 1992.*
UNIVERSITY OF THE PHILIPPINES, petitioner, vs. HON. PURA
FERRER-CALLEJA, Director of the Bureau of Labor Relations,
Department of Labor and Employment, and THE ALL U.P.
WORKERS UNION, represented by its President, Rosario del
Rosario, respondents.
Labor Laws; Labor Organization; Professors, associate professors and
assistant professors cannot be considered as exercising such
managerial or highly confidential functions as would justify their
being categorized as high-level employees of the University of the
Philippines.As regards the first issue, the Court is satisfied that it
has been correctly resolved by the respondent Director of Bureau
Relations. In light of Executive Order No. 180 and its implementing
rules, as well as the Universitys charter and relevant regulations, the
professors, associate professors and assistant professors (hereafter
simply referred to as professors) cannot be considered as exercising
such managerial or highly confidential functions as would justify their
being categorized as high-level employees of the institution.
Same; Same; Same; It is the University Academic Personnel
Committee composed of deans, the assistant for academic affairs and
the chief of personnel which formulates the policies, rules and
standards respecting selection, compensation and promotion of
members of the academic staff.From the foregoing, it is evident that
it is the University Academic Personnel Committee, composed of
deans, the assistant for academic affairs and the chief of personnel,
which formulates the policies, rules and standards respecting selection,
compensation and promotion of members of the academic staff. The
departmental and college academic personnel committees functions
are purely recommendatory in nature, subject to review and evaluation
by the University Academic Personnel Board.
Same; Same; Same; Membership in the University Council can not
elevate the professors to the status of high-level employees.Neither
can membership in the University Council elevate the professors to the
status of high-level employees.
_________________
*SECOND DIVISION.

Same; Same; Same; Same; Even assuming arguendo that UP


professors discharge policy-determining functions through the
University Council, still such exercise would not qualify them as highlevel employees within the context of E.O. 180.Even assuming
arguendo that UP professors discharge policy-determining functions
through the University Council, still such exercise would not qualify
them as high-level employees within the context of E.O. 180. As
correctly observed by private respondent, Executive Order No. 180 is
a law concerning public sector unionism. It must therefore be
construed within that context. Within that context, the University of
the Philippines represents the government as an employer. Policydetermining refers to policy-determination in university matters that
affect those same matters that may be the subject of negotiation
between public sector management and labor. The reason why policydetermining has been laid down as a test in segregating rank-and-file
from management is to ensure that those who lay down policies in
areas that are still negotiable in public sector collective bargaining do
not themselves become part of those employees who seek to change
these policies for their collective welfare.
Same; Same; Bargaining Unit defined.A bargaining unit has been
defined as a group of employees of a given employer, comprised of all
or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the law.
Same; Same; Same; Our labor laws do not provide the criteria for
determining the proper collective bargaining unit.Our labor laws do
not however provide the criteria for determining the proper collective
bargaining unit.
Same; Same; Same; Same; The basic test of an asserted bargaining
units acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of
their collective bargaining rights.The Court further explained that
(t)he test of the grouping is community or mutuality of interests. And
this is so because the basic test of an asserted bargaining units
acceptability is whether or not it is fundamentally the combination
which will best assure to all employees the exercise of their collective

bargaining rights (Rothenberg on Labor Relations, 490). Hence, in


that case, the Court upheld the trial courts conclusion that two
separate bargaining units should be formed, one consisting of regular
and permanent employees and another consisting of casual laborers or
stevedores.
Same; Same; Same; Same; Same; The community or mutuality of
interests test has provided the standard in determining the proper
constituency of a collective bargaining unit.Since then, the
community or mutuality of interests test has provided the standard in
determining the proper constituency of a collective bargaining unit. In
Alhambra Cigar & Cigarette Manufacturing Company, et al. vs.
Alhambra Employees Association (PAFLU), 107 Phil. 23, the Court,
noting that the employees in the administrative, sales and dispensary
departments of a cigar and cigarette manufacturing firm perform work
which have nothing to do with production and maintenance, unlike
those in the raw lead (malalasi), cigar, cigarette, packing (precintera)
and engineering and garage departments, authorized the formation of
the former set of employees into a separate collective bargaining unit.
The ruling in the Democratic Labor Association case, supra, was
reiterated in Philippine Land-Air-Sea Labor Union vs. Court of
Industrial Relations, 110 Phil. 176, where casual employees were
barred from joining the union of the permanent and regular employees.
SPECIAL CIVIL ACTION of certiorari to review the decision of the
Bureau of Labor Relations.
The facts are stated in the opinion of the Court.
U.P. Office of Legal Services for petitioner.
Ruben C. Carranza, Jr. for private respondent All-U.P. Workers
Union.
NARVASA, C.J.:
In this special civil action of certiorari the University of the
Philippines seeks the nullification of the Order dated October 30, 1990
of Director Pura Ferrer-Calleja of the Bureau of Labor Relations
holding that professors, associate professors and assistant professors
(of the University of the Philippines) are xx rank-and-file employees
xx; consequently, they should, together with the so-called nonacademic, non-teaching, and all other employees of the University, be
represented by only one labor organization.1 The University is joined

in this undertaking by the Solicitor General who has taken a position


not contrary to that of petitioner and, in fact, has manifested xx that he
is not opposing the petition xx.2
The case3 was initiated in the Bureau of Labor Relations by a petition
filed on March 2, 1990 by a registered labor union, the Organization
of Non-Academic Personnel of UP (ONAPUP).4 Claiming to have a
membership of 3,236 memberscomprising more than 33% of the
9,617 persons constituting the non-academic personnel of UP-Diliman,
Los Baos, Manila, and Visayas, it sought the holding of a certification
election among all said non-academic employees of the University of
the Philippines. At a conference thereafter held on March 22, 1990 in
the Bureau, the University stated that it had no objection to the
election.
On April 18, 1990, another registered labor union, the All UP
Workers Union,5 filed a comment, as intervenor in the certification
election proceeding. Alleging that its membership covers both
academic and non-academic personnel, and that it aims to unite all UP
rank-and-file employees in one union, it declared its assent to the
holding of the election provided the appropriate organizational unit
was first clearly defined. It observed in this connection that the
Research, Extension and Professorial Staff (REPS), who are academic
non-teaching personnel, should not be deemed part of the
organizational unit.
For its part, the University, through its General Counsel,6 made of
record its view that there should be two (2) unions: one for academic,
the other for non-academic or administrative, personnel considering
the dichotomy of interests, conditions and rules governing these
employee groups.
Director Calleja ruled on the matter on August 7, 1990.7 She declared
that the appropriate organizational unit xx should embrace all the
regular rank-and-file employees, teaching and non-teaching, of the
University of the Philippines, including all its branches and that there
was no sufficient evidence to justify the grouping of the nonacademic or administrative personnel into an organization unit apart
and distinct from that of the academic or teaching personnel. Director
Calleja adverted to Section 9 of Executive Order No. 180, viz.:
SEC.9. The appropriate organizational unit shall be the employer unit
consisting of rank-and-file employees, unless circumstances otherwise
require.

and Section 1, Rule IV of the Rules Implementing said EO 180 (as


amended by SEC. 2, Resolution of Public Sector Labor Management
Council dated May 14, 1989, viz.:
x x x
xxx
For purposes of registration, an appropriate organizational unit may
refer to:
x x x
xxx
d. State universities or colleges, government-owned or controlled
corporations with original charters.
She went on to say that the general intent of EO 180 was not to
fragmentize the employer unit, as can be gleaned from the definition
of the term accredited employees organization, which refers to:
x x a registered organization of the rank-and-file employees as
defined in these rules recognized to negotiate for the employees in an
organizational unit headed by an officer with sufficient authority to
bind the agency, such as xxx xxx state colleges and universities.
The Director thus commanded that a certification election be
conducted among rank-and-file employees, teaching and nonteaching in all four autonomous campuses of the UP, and that
management appear and bring copies of the corresponding payrolls for
January, June, and July, 1990 at the usual preelection conference xx.
At the pre-election conference held on March 22, 1990 at the Labor
Organizational Division of the DOLE,8 the University sought further
clarification of the coverage of the term, rank-and-file personnel,
asserting that not every employee could properly be embraced within
both teaching and non-teaching categories since there are those whose
positions are in truth managerial and policy-determining, and hence,
excluded by law.
At a subsequent hearing (on October 4, 1990), the University filed a
Manifestation seeking the exclusion from the organizational unit of
those employees holding supervisory positions among non-academic
personnel, and those in teaching staff with the rank of Assistant
Professor or higher, submitting the following as grounds therefor:
1) Certain high-level employees with policy-making, managerial, or
confidential functions, are ineligible to join rank-and-file employee
organizations under Section 3, EO 180:
SEC.3. High-level employees whose functions are normally
considered as policy-making or managerial or whose duties are of a

highly confidential nature shall not be eligible to join the organization


of rank-and-file government employees;
2) In the University hierarchy, not all teaching and non-teaching
personnel belong to the rank-and-file: just as there are those occupying
managerial positions within the non-teaching roster, there is also a
dichotomy between various levels of the teaching or academic staff;
3) Among the non-teaching employees composed of Administrative
Staff and Research personnel, only those holding positions below
Grade 18 should be regarded as rank-and-file, considering that those
holding higher grade positions, like Chiefs of Sections, perform
supervisory functions including that of effectively recommending
termination of appointments or initiating appointments and
promotions; and
4) Not all teaching personnel may be deemed included in the term,
rank-and-file; only those holding appointments at the instructor level
may be so considered, because those holding appointments from
Assistant Professor to Associate Professor to full Professor take part,
as members of the University Council, a policy-making body, in the
initiation of policies and rules with respect to faculty tenure and
promotion.9
The ONAPUP quite categorically made of record its position; that it
was not opposing the Universitys proferred classification of rank-andfile employees. On the other hand, the All UP Workers Union
opposed the Universitys view, in a Position Paper presented by it
under date of October 18, 1990.
Director Calleja subsequently promulgated an Order dated October 30,
1990, resolving the sole issue of whether or not professors,
associate professors and assistant professors are included in the
definition of high-level employee(s) in light of Rule I, Section (1) of
the Implementing Guidelines of Executive Order No. 180, defining
high level employee as follows:
1. High Level Employeeis one whose functions are normally
considered policy determining, managerial or one whose duties are
highly confidential in nature. A managerial function refers to the
exercise of powers such as:
1. To effectively recommend such managerial actions;
2. To formulate or execute management policies and decisions; or
3. To hire, transfer, suspend, lay-off, recall, dismiss, assign or
discipline employees.

The Director adjudged that said teachers are rank-and-file employees


qualified to join unions and vote in certification elections. According
to her
A careful perusal of the University Code xx shows that the policymaking powers of the Council are limited to academic matters,
namely, prescribing courses of study and rules of discipline, fixing
student admission and graduation requirements, recommending to the
Board of Regents the conferment of degrees, and disciplinary power
over students. The policy-determining functions contemplated in the
definition of a high-level employee pertain to managerial, executive,
or organization policies, such as hiring, firing, and disciplining of
employees, salaries, teaching/working hours, other monetary and nonmonetary benefits, and other terms and conditions of employment.
They are the usual issues in collective bargaining negotiations so that
whoever wields these powers would be placed in a situation of
conflicting interests if he were allowed to join the union of rank-andfile employees.
The University seasonably moved for reconsideration, seeking to make
the following points, to wit:
1) UP professors do wield the most potent managerial powers: the
power to rule on tenure, on the creation of new programs and new
jobs, and conversely, the abolition of old programs and the attendant
re-assignment of employees.
2) To say that the Council is limited to (acting on) academic matters
is error, since academic decisions are the most important decisions
made in a University xx (being, as it were) the heart, the core of the
University as a workplace.
3) Considering that the law regards as a high level employee, one
who performs either policy-determining, managerial, or confidential
functions, the Director erred in applying only the managerial
functions test, ignoring the policy-determining-functions test.
4) The Directors interpretation of the law would lead to absurd
results, e.g.: an administrative officer of the College of Law is a high
level employee, while a full Professor who has published several
treatises and who has distinguished himself in argument before the
Supreme Court is a mere rank-and-file employee. A dormitory
manager is classified as a high level employee, while a full Professor
of Political Science with a Ph. D. and several Honorary doctorates is
classified as rank-and-file.10

The motion for reconsideration was denied by Director Calleja, by


Order dated November 20, 1990.
The University would now have this Court declare void the Directors
Order of October 30, 1990 as well as that of November 20, 1990.11 A
temporary restraining order was issued by the Court, by Resolution
dated December 5, 1990 conformably to the Universitys application
therefor.
Two issues arise from these undisputed facts. One is whether or not
professors, associate professors and assistant professors are high-level
employees whose functions are normally considered policy
determining, managerial or xx highly confidential in nature. The other
is whether or not, they, and other employees performing academic
functions,12 should comprise a collective bargaining unit distinct and
different from that consisting of the non-academic employees of the
University,13 considering the dichotomy of interests, conditions and
rules existing between them.
As regards the first issue, the Court is satisfied that it has been
correctly resolved by the respondent Director of Bureau Relations. In
light of Executive Order No. 180 and its implementing rules, as well as
the Universitys charter and relevant regulations, the professors,
associate professors and assistant professors (hereafter simply referred
to as professors) cannot be considered as exercising such managerial
or highly confidential functions as would justify their being
categorized as high-level employees of the institution.
The Academic Personnel Committees, through which the professors
supposedly exercise managerial functions, were constituted in order
to foster greater involvement of the faculty and other academic
personnel in appointments, promotions, and other personnel matters
that directly affect them.14 Academic Personnel Committees at the
departmental and college levels were organized consistent with, and
demonstrative of the very idea of consulting the faculty and other
academic personnel on matters directly affecting them and to allow
flexibility in the determination of guidelines peculiar to a particular
department or college.15
Personnel actions affecting the faculty and other academic personnel
should, however, be considered under uniform guidelines and
consistent with the Resolution of the Board (of Regents) adopted
during its 789th Meeting (11-26-69) creating the University Academic

Personnel Board.16 Thus, the Departmental Academic Personnel


Committee is given the function of assist(ing) in the review of the
recommendations initiated by the Department Chairman with regard to
recruitment, selection, performance evaluation, tenure and staff
development, in accordance with the general guidelines formulated by
the University Academic Personnel Board and the implementing
details laid down by the College Academic Personnel Committee;17
while the College Academic Personnel Committee is entrusted with
the following functions:18
1. Assist the Dean in setting up the details for the implementation of
policies, rules, standards or general guidelines as formulated by the
University Academic Personnel Board;
2. Review the recommendations submitted by the DAPCs with regard
to recruitment, selection, performance evaluation, tenure, staff
development, and promotion of the faculty and other academic
personnel of the College;
3. Establish departmental priorities in the allocation of available funds
for promotion;
4. Act on cases of disagreement between the Chairman and the
members of the DAPC particularly on personnel matters covered by
this Order;
5. Act on complaints and/or protests against personnel actions made by
the Department Chairman and/or the DAPC.
The University Academic Personnel Board, on the other hand,
performs the following functions:19
1. Assist the Chancellor in the review of the recommendations of the
CAPCS.
2. Act on cases of disagreement between the Dean and the CAPC.
3. Formulate policies, rules, and standards with respect to the
selection, compensation, and promotion of members of the academic
staff.
4. Assist the Chancellor in the review of recommendations on
academic promotions and on other matters affecting faculty status and
welfare.
From the foregoing, it is evident that it is the University Academic
Personnel Committee, composed of deans, the assistant for academic
affairs and the chief of personnel, which formulates the policies, rules
and standards respecting selection, compensation and promotion of
members of the academic staff. The departmental and college

academic personnel committees functions are purely recommendatory


in nature, subject to review and evaluation by the University Academic
Personnel Board. In Franklin Baker Company of the Philippines vs.
Trajano,20 this Court reiterated the principle laid down in National
Merchandising Corp. vs. Court of Industrial Relations,21 that the
power to recommend, in order to qualify an employee as a supervisor
or managerial employee must not only be effective but the exercise of
such authority should not be merely of a routinary or clerical nature
but should require the use of independent judgment. 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
required by law.
Significantly, the personnel actions that may be recommended by the
departmental and college academic personnel committees must
conform with the general guidelines drawn up by the university
personnel academic committee. This being the case, the members of
the departmental and college academic personnel committees are not
unlike the chiefs of divisions and sections of the National Waterworks
and Sewerage Authority whom this Court considered as rank-and-file
employees in National Waterworks & Sewerage Authority vs. NWSA
Consolidated Unions,22 because given ready policies to execute and
standard practices to observe for their execution, x x x they have little
freedom of action, as their main function is merely to carry out the
companys orders, plans and policies.
The power or prerogative pertaining to a high-level employee to
effectively recommend such managerial actions, to formulate or
execute management policies or decisions and/or to hire, transfer,
suspend, lay-off, recall, dismiss, assign or discipline employees23 is
exercised to a certain degree by the university academic personnel
board/committees and ultimately by the Board of Regents in
accordance with Section 6 of the University Charter,24 thus:
(e) To appoint, on the recommendation of the President of the
University, professors, instructors, lecturers and other employees of
the University; to fix their compensation, hours of service, and such
other duties and conditions as it may deem proper; to grant them in its
discretion leave of absence under such regulations as it may
promulgate, any other provision of law to the contrary

notwithstanding, and to remove them for cause after investigation and


hearing shall have been had.
Another factor that militates against petitioners espousal of
managerial employment status for all its professors through
membership in the departmental and college academic personnel
committees is that not all professors are members thereof. Membership
and the number of members in the committees are provided as
follows:25
Section2. Membership in Committees.Membership in committees
may be made either through appointment, election, or by some other
means as may be determined by the faculty and other academic
personnel of a particular department or college.
Section3. Number of Members.In addition to the Chairman, in the
case of a department, and the Dean in the case of a college, there shall
be such number of members representing the faculty and academic
personnel as will afford a fairly representative, deliberative and
manageable group that can handle evaluation of personnel actions.
Neither can membership in the University Council elevate the
professors to the status of high-level employees. Sections 6 (f) and 9 of
the UP Charter respectively provide:26
Sec.6. The Board of Regents shall have the following powers and
duties x x x;
xxx xxx
(f) To approve the courses of study and rules of discipline drawn up by
the University Council as hereinafter provided; x x x
Sec.9. There shall be a University Council consisting of the President
of the University and of all instructors in the university holding the
rank of professor, associate professor, or assistant professor. The
Council shall have the power to prescribe the courses of study and
rules of discipline, subject to the approval of the Board of Regents. It
shall fix the requirements for admission to any college of the
university, as well as for graduation and the receiving of a degree. The
Council alone shall have the power to recommend students or others to
be recipients of degrees. Through its president or committees, it shall
have disciplinary power over the students within the limits prescribed
by the rules of discipline approved by the Board of Regents. The
powers and duties of the President of the University, in addition to
those specifically provided in this Act shall be those usually pertaining
to the office of president of a university.

It is readily apparent that the policy-determining functions of the


University Council are subject to review, evaluation and final approval
by the Board of Regents. The Councils power of discipline is likewise
circumscribed by the limits imposed by the Board of Regents. What
has been said about the recommendatory powers of the departmental
and college academic personnel committees applies with equal force to
the alleged policy-determining functions of the University Council.
Even assuming arguendo that UP professors discharge policydetermining functions through the University Council, still such
exercise would not qualify them as high-level employees within the
context of E.O. 180. As correctly observed by private
respondent,Executive Order No. 180 is a law concerning public
sector unionism. It must therefore be construed within that context.
Within that context, the University of the Philippines represents the
government as an employer. Policy-determining refers to policydetermination in university matters that affect those same matters that
may be the subject of negotiation between public sector management
and labor. The reason why policy-determining has been laid down as
a test in segregating rank-and-file from management is to ensure that
those who lay down policies in areas that are still negotiable in public
sector collective bargaining do not themselves become part of those
employees who seek to change these policies for their collective
welfare.27
The policy-determining functions of the University Council refer to
academic matters, i.e. those governing the relationship between the
University and its students, and not the University as an employer and
the professors as employees. It is thus evident that no conflict of
interest results in the professors being members of the University
Council and being classified as rank-and-file employees.
Be that as it may, does it follow, as public respondent would propose,
that all rank-and-file employees of the university are to be organized
into a single collective bargaining unit?
A bargaining unit has been defined as a group of employees of a
given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees,
consistent with equity to the employer, indicate to be the best suited to
serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law.28

Our labor laws do not however provide the criteria for determining the
proper collective bargaining unit. Section 12 of the old law, Republic
Act No. 875 otherwise known as the Industrial Peace Act, simply reads
as follows:29
Section12. Exclusive Collective Bargaining Representation for Labor
Organizations.The labor organization designated or selected for the
purpose of collective bargaining by the majority of the employees in
an appropriate collective bargaining unit shall be the exclusive
representative of all the employees in such unit for the purpose of
collective bargaining in respect to rates of pay, wages, hours of
employment, or other conditions of employment; Provided, That any
individual employee or group of employees shall have the right at any
time to present grievances to their employer.
Although said Section 12 of the Industrial Peace Act was subsequently
incorporated into the Labor Code with minor changes, no guidelines
were included in said Code for determination of an appropriate
bargaining unit in a given case.30 Thus, apart from the single
descriptive word appropriate, no specific guide for determining the
proper collective bargaining unit can be found in the statutes.
Even Executive Order No. 180 already adverted to is not much help.
All it says, in its Section 9, is that (t)he appropriate organizational
unit shall be the employer unit consisting of rank-and-file employees,
unless circumstances otherwise require. Case law fortunately
furnishes some guidelines.
When first confronted with the task of determining the proper
collective bargaining unit in a particular controversy, the Court had
perforce to rely on American jurisprudence. In Democratic Labor
Association vs. Cebu Stevedoring Company, Inc., decided on February
28, 1958,31 the Court observed that the issue of how to determine the
proper collective bargaining unit and what unit would be appropriate
to be the collective bargaining agency x x x is novel in this
jurisdiction; however, American precedents on the matter abound xx
(to which resort may be had) considering that our present Magna Carta
has been patterned after the American law on the subject. Said the
Court:
x x x Under these precedents, there are various factors which must be
satisfied and considered in determining the proper constituency of a
bargaining unit. No one particular factor is itself decisive of the
determination. The weight accorded to any particular factor varies in

accordance with the particular question or questions that may arise in a


given case. What are these factors? Rothenberg mentions a good
number, but the most pertinent to our case are: (1) will of the
employees (Globe Doctrine); (2) affinity and unit of employees
interest, such as substantial similarity of work and duties, or similarity
of compensation and working conditions; (3) prior collective
bargaining history; and (4) employment status, such as temporary,
seasonal and probationary employees. x x.
x x x
xxx
An enlightening appraisal of the problem of defining an appropriate
bargaining unit is given in the 10th Annual Report of the National
Labor Relations Board wherein it is emphasized that the factors which
said board may consider and weigh in fixing appropriate units are: the
history, extent and type of organization of employees; the history of
their collective bargaining; the history, extent and type of organization
of employees in other plants of the same employer, or other employers
in the same industry; the skill, wages, work, and working conditions of
the employees; the desires of the employees; the eligibility of the
employees for membership in the union or unions involved; and the
relationship between the unit or units proposed and the employers
organization, management, and operation. x x.
x x In said report, it is likewise emphasized that the basic test in
determining the appropriate bargaining unit is that a unit, to be
appropriate, must affect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and
other subjects of collective bargaining (citing Smith on Labor Laws,
316-317; Francisco, Labor Laws, 162). x x.
The Court further explained that (t)he test of the grouping is
community or mutuality of interests. And this is so because the basic
test of an asserted bargaining units acceptability is whether or not it is
fundamentally the combination which will best assure to all employees
the exercise of their collective bargaining rights (Rothenberg on Labor
Relations, 490). Hence, in that case, the Court upheld the trial courts
conclusion that two separate bargaining units should be formed, one
consisting of regular and permanent employees and another consisting
of casual laborers or stevedores.
Since then, the community or mutuality of interests test has provided
the standard in determining the proper constituency of a collective
bargaining unit. In Alhambra Cigar & Cigarette Manufacturing

Company, et al. vs. Alhambra Em-ployees Association (PAFLU), 107


Phil. 23, the Court, noting that the employees in the administrative,
sales and dispensary departments of a cigar and cigarette
manufacturing firm perform work which have nothing to do with
production and maintenance, unlike those in the raw lead (malalasi),
cigar, cigarette, packing (precintera) and engineering and garage
departments, authorized the formation of the former set of employees
into a separate collective bargaining unit. The ruling in the Democratic
Labor Association case, supra, was reiterated in Philippine Land-AirSea Labor Union vs. Court of Industrial Relations, 110 Phil. 176,
where casual employees were barred from joining the union of the
permanent and regular employees.
Applying the same community or mutuality of interests test, but
resulting in the formation of only one collective bargaining unit is the
case of National Association of Free Trade Unions vs. Mainit Lumber
Development Company Workers Union-United Lumber and General
Workers of the Phils., G.R. No. 79526, December 21, 1990, 192 SCRA
598. In said case, the Court ordered the formation of a single
bargaining unit consisting of the Sawmill Division in Butuan City and
the Logging Division in Zapanta Valley, Kitcharao, Agusan Norte of
the Mainit Lumber Development Company. The Court reasoned:
Certainly, there is a mutuality of interest among the employees of the
Sawmill Division and the Logging Division. Their functions mesh
with one another. One group needs the other in the same way that the
company needs them both. There may be difference as to the nature of
their individual assignments but the distinctions are not enough to
warrant the formation of a separate bargaining unit.
In the case at bar, the University employees may, as already suggested,
quite easily be categorized into two general classes: one, the group
composed of employees whose functions are nonacademic, i.e.,
janitors, messengers, typists, clerks, receptionists, carpenters,
electricians, grounds-keepers, chauffeurs, mechanics, plumbers;32 and
two, the group made up of those performing academic functions, i.e.,
full professors, associate professors, assistant professors, instructors
who may be judges or government executivesand research,
extension and professorial staff.33 Not much reflection is needed to
perceive that the community or mutuality of interests which justifies
the formation of a single collective bargaining unit is wanting between
the academic and non-academic personnel of the university. It would

seem obvious that teachers would find very little in common with the
University clerks and other non-academic employees as regards
responsibilities and functions, working conditions, compensation rates,
social life and interests, skills and intellectual pursuits, cultural
activities, etc. On the contrary, the dichotomy of interests, the
dissimilarity in the nature of the work and duties as well as in the
compensation and working conditions of the academic and nonacademic personnel dictate the separation of these two categories of
employees for purposes of collective bargaining. The formation of two
separate bargaining units, the first consisting of the rank-and-file nonacademic personnel, and the second, of the rank-and-file academic
employees, is the set-up that will best assure to all the employees the
exercise of their collective bargaining rights. These special
circumstances, i.e., the dichotomy of interests and concerns as well as
the dissimilarity in the nature and conditions of work, wages and
compensation between the academic and non-academic personnel,
bring the case at bar within the exception contemplated in Section 9 of
Executive Order No. 180. It was grave abuse of discretion on the part
of the Labor Relations Director to have ruled otherwise, ignoring plain
and patent realities.
WHEREFORE, the assailed Order of October 30, 1990 is hereby
AFFIRMED in so far as it declares the professors, associate professors
and assistant professors of the University of the Philippines as rankand-file employees. The Order of August 7, 1990 is MODIFIED in the
sense that the non-academic rank-and-file employees of the University
of the Philippines shall constitute a bargaining unit to the exclusion of
the academic employees of the institution.i.e, full professors,
associate professors, assistant professors, instructors, and the research,
extension and professorial staff, who may, if so minded, organize
themselves into a separate collective bargaining unit; and that,
therefore, only said non-academic rank-and-file personnel of the
University of the Philippines in Diliman, Manila, Los Baos and the
Visayas are to participate in the certification election.
SO ORDERED.
Padilla, Regalado and Nocon, JJ., concur.
Paras, J., Retired.
Order affirmed.
Note.Employees enjoy the right to self-organization and to form and
join labor organizations of their own choosing for the purpose of

collective bargaining and to engage in concerted [University of the


Philippines vs. Ferrer-Calleja, 211 SCRA 451(1992)]

G.R. No. 121084. February 19, 1997.*


TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner, vs.
TOYOTA MOTOR PHILIPPINES CORPORATION LABOR UNION
AND THE SECRETARY OF LABOR AND EMPLOYMENT,
respondents.
Labor Law; Labor Unions; Collective Bargaining; Certification
Elections; Purpose of every certification election is to determine the
exclusive representative of employees in an appropriate bargaining
unit for the purpose of collective bargaining.The purpose of every
certification election is to determine the exclusive representative of
employees in an appropriate bargaining unit for the purpose of
collective bargaining. A certification election for the collective
bargaining process is one of the fairest and most effective ways of
determining which labor organization can truly represent the working
force. In determining the labor organization which represents the
interests of the workforce, those interests must be, as far as reasonably
possible, homogeneous, so as to genuinely reach the concerns of the
individual members of a labor organization.
Same; Same; Same; Same; Labor Code has made it a statutory policy
to prevent supervisory employees from joining labor organizations
consisting of rank-and-file employees as the concerns which involve
members of either group are normally disparate and contradictory.
According to Rothenberg, an appropriate bargaining unit is a group of
employees of a given employer, composed of all or less than the entire
body of employees, which the collective interests of all the employees,
consistent with equity to the employer indicate to be best suited to
serve reciprocal rights and duties of the parties under the collective
bargaining provisions of law. In Belyca Corporation v. Ferrer-Calleja,
we defined the bargaining unit as the legal collectivity for collective
bargaining purposes whose members have substantially mutual
bargaining interests in terms and conditions of employment as will
assure to all employees their collective bargaining rights. This in
mind, the Labor Code has made it a clear statutory policy to prevent
supervisory employees from joining labor organizations consisting of
rank-and-file employees as the concerns which involve members of
either group are normally disparate and contradictory. Article 245
provides: ART. 245 Ineligibility of managerial employees to join any

labor organization; right of supervisory employees.Managerial


Employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but
may join, assist or form separate labor organizations of their own.
Same; Same; Same; Same; 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.Clearly, based on this provision, a labor organization
composed of both rank-and-file and supervisory employees is no labor
organization at all. It cannot, for any guise or purpose, be a legitimate
labor organization. Not being one, an organization which carries a
mixture of rank-and-file and supervisory employees cannot possess
any of the rights of a legitimate labor organization, including the right
to file a petition for certification election for the purpose of collective
bargaining. It becomes necessary, therefore, anterior to the granting of
an order allowing a certification election, to inquire into the
composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor
Code.
Same; Same; Same; Same; Supervisory employees are those who, in
the interest of the employer, effectively recommend managerial actions
if the exercise of such authority is not merely routinary or clerical in
nature but require the use of independent judgment.While there may
be a genuine divergence of opinion as to whether or not union
members occupying Level 4 positions are supervisory employees, it is
fairly obvious, from a reading of the Labor Codes definition of the
term that those occupying Level 5 positions are unquestionably
supervisory employees. Supervisory employees, as defined above, are
those who, in the interest of the employer, effectively recommend
managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but require the use of independent
judgment. Under the job description for level five employees, such
personnelall engineershaving a number of personnel under them,
not only oversee production of new models but also determine
manpower requirements, thereby influencing important hiring
decisions at the highest levels. This determination is neither routine
nor clerical but involves the independent assessment of factors
affecting production, which in turn affect decisions to hire or transfer

workers. The use of independent judgment in making the decision to


hire, fire or transfer in the identification of manpower requirements
would be greatly impaired if the employees loyalties are torn between
the interests of the union and the interests of management. A
supervisory employee occupying a level five position would therefore
find it difficult to objectively identify the exact manpower
requirements dictated by production demands.
Same; Same; Same; Same; The rationale behind the Codes exclusion
of supervisors from unions of rank-and-file employees is that such
employees, while in the performance of supervisory functions, become
the alter ego of management in the making and the implementing of
key decisions at the sub-managerial level.This is precisely what the
Labor Code, in requiring separate unions among rank-and-file
employees on one hand, and supervisory employees on the other, seeks
to avoid. The rationale behind the Codes exclusion of supervisors
from unions of rank-and-file employees is that such employees, while
in the performance of supervisory functions, become the alter ego of
management in the making and the implementing of key decisions at
the sub-managerial level. Certainly, it would be difficult to find unity
or mutuality of interests in a bargaining unit consisting of a mixture of
rank-and-file and supervisory employees. And this is so because the
fundamental test of a bargaining units acceptability is whether or not
such a unit will best advance to all employees within the unit the
proper exercise of their collective bargaining rights. The Code itself
has recognized this, in preventing supervisory employees from joining
unions of rank-and-file employees.
Same; Same; Same; Same; Not being a legitimate labor organization,
it cannot possess the requisite personality to file a petition for
certification election.In the case at bar, as respondent unions
membership list contains the names of at least twenty-seven (27)
supervisory employees in Level Five positions, the union could not,
prior to purging itself of its supervisory employee members, attain the
status of a legitimate labor organization. Not being one, it cannot
possess the requisite personality to file a petition for certification
election.
Same; Same; Same; Same; The unions composition being in violation
of the Labor Codes prohibition of unions composed of supervisory
and rank-and-file employees, it could not possess the requisite
personality to file for recognition as a legitimate labor organization.

The foregoing discussion, therefore, renders entirely irrelevant, the


technical issue raised as to whether or not respondent union was in
possession of the status of a legitimate labor organization at the time of
filing, when, as petitioner vigorously claims, the former was still at the
stage of processing of its application for recognition as a legitimate
labor organization. The unions composition being in violation of the
Labor Codes prohibition of unions composed of supervisory and rankand-file employees, it could not possess the requisite personality to file
for recognition as a legitimate labor organization. In any case, the
factual issue, albeit ignored by the public respondents assailed
Resolution, was adequately threshed out in the Med-Arbiters
September 28, 1994 Order.
Same; Same; Same; Same; Workers of an appropriate bargaining unit
must be allowed to freely express their choice in an election where
everything is open to sound judgment and the possibility for fraud and
misrepresentation is absent.The holding of a certification election is
based on clear statutory policy which cannot be circumvented. Its
rules, strictly construed by this Court, are designed to eliminate fraud
and manipulation. As we emphasized in Progressive Development
Corporation v. Secretary, Department of Labor and Employment, the
Courts conclusion should not be interpreted as impairing any unions
right to be certified as the employees bargaining agent in the
petitioners establishment. Workers of an appropriate bargaining unit
must be allowed to freely express their choice in an election where
everything is open to sound judgment and the possibility for fraud and
misrepresentation is absent.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
De Borja, Medialdea, Bello, Guevarra, Serapio & Gerodias for
petitioner.
Emelito A. Licerio for private respondent.
KAPUNAN, J.:
On November 26, 1992, the Toyota Motor Philippines Corporation
Labor Union (TMPCLU) filed a petition for certification election with
the Department of Labor, National Capital Region, for all rank-and-file
employees of the Toyota Motor Corporation.1

In response, petitioner filed a Position Paper on February 23, 1993


seeking the denial of the issuance of an Order directing the holding of
a certification election on two grounds: first, that the respondent union,
being in the process of registration had no legal personality to file
the same as it was not a legitimate labor organization as of the date of
the filing of the petition; and second, that the union was composed of
both rank-and-file and supervisory employees in violation of law.2
Attached to the position paper was a list of union members and their
respective job classifications, indicating that many of the signatories to
the petition for certification election occupied supervisory positions
and were not in fact rank-and-file employees.3
The Med-Arbiter, Paterno D. Adap, dismissed respondent unions
petition for certification election for lack of merit. In his March 8,
1993 Order, the Med-Arbiter found that the labor organizations
membership was composed of supervisory and rank-and-file
employees in violation of Article 245 of the Labor Code,4 and that at
the time of the filing of its petition, respondent union had not even
acquired legal personality yet.5
On appeal, the Office of the Secretary of Labor, in a Resolution6 dated
November 9, 1993 signed by Undersecretary Bienvenido E.
Laguesma, set aside the Med-Arbiters Order of March 3, 1993, and
directed the holding of a certification election among the regular rankand-file employees of Toyota Motor Corporation. In setting aside the
questioned Order, the Office of the Secretary contended that:
Contrary to the allegation of herein respondent-appellee, petitionerappellant was already a legitimate labor organization at the time of the
filing of the petition on 26 November 1992. Records show that on 24
November 1992 or two (2) days before the filing of the said petition, it
was issued a certificate of registration.
We also agree with petitioner-appellant that the Med-Arbiter should
have not dismissed the petition for certification election based on the
ground that the proposed bargaining unit is a mixture of supervisory
and rank-and-file employees, hence, violative of Article 245 of the
Labor Code as amended.
A perusal of the petition and the other documents submitted by
petitioner-appellant will readily show that what the former really seeks
to represent are the regular rank-and-file employees in the company
numbering about 1,800 more or less, a unit which is obviously

appropriate for bargaining purposes. This being the case, the mere
allegation of respondent-appellee that there are about 42 supervisory
employees in the proposed bargaining unit should have not caused the
dismissal of the instant petition. Said issue could very well be taken
cared of during the pre-election conference where inclusion/exclusion
proceedings will be conducted to determine the list of eligible voters.7
Not satisfied with the decision of the Office of the Secretary of Labor,
petitioner filed a Motion for Reconsideration of the Resolution of
March 3, 1993, reiterating its claim that as of the date of filing of
petition for certification election, respondent TMPCLU had not yet
acquired the status of a legitimate labor organization as required by the
Labor Code, and that the proposed bargaining unit was inappropriate.
Acting on petitioners motion for reconsideration, the public
respondent, on July 13, 1994 set aside its earlier resolution and
remanded the case to the Med-Arbiter concluding that the issues raised
by petitioner both on appeal and in its motion for reconsideration were
factual issues requiring further hearing and production of evidence.8
The Order stated:
We carefully re-examined the records vis-a-vis the arguments raised by
the movant, and we note that movant correctly pointed out that
petitioner submitted a copy of its certificate of registration for the first
time on appeal and that in its petition, petitioner alleges that it is an
independent organization which is in the process of registration.
Movant strongly argues that the foregoing only confirms what it has
been pointing out all along, that at the time the petition was filed
petitioner is (sic) not yet the holder of a registration certificate; that
what was actually issued on 24 November 1992 or two (2) days before
the filing of the petition was an official receipt of payment for the
application fee; and, that the date appearing in the Registration
certificate which is November 24, 1992 is not the date when petitioner
was actually registered, but the date when the registration certificate
was prepared by the processor. Movant also ratiocinates that if indeed
petitioner has been in possession of the registration certificate at the
time this petition was filed on November 26, 1992, it would have
attached the same to the petition.
The foregoing issues are factual ones, the resolution of which is crucial
to the petition. For if indeed it is true that at the time of filing of the
petition, the said registration certificate has not been approved yet,
then, petitioner lacks the legal personality to file the petition and the

dismissal order is proper. Sadly, we can not resolve the said questions
by merely perusing the records. Further hearing and introduction of
evidence are required. Thus, there is a need to remand the case to the
Med-Arbiter solely for the purpose.
WHEREFORE, the motion is hereby granted and our Resolution is
hereby set aside. Let the case be remanded to the Med-Arbiter for the
purpose aforestated.
SO ORDERED.9
Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon
submitted her findings on September 28, 1994, stating the
following:10
[T]he controvertible fact is that petitioner could not have been issued
its Certificate of Registration on November 24, 1992 when it applied
for registration only on November 23, 1992 as shown by the official
receipt of payment of filing fee. As Enrique Nalus, Chief LEO, this
office, would attest in his letter dated September 8, 1994 addressed to
Mr. Porfirio T. Reyes, Industrial Relations Officer of Respondent
company, in response to a query posed by the latter, It is unlikely that
an application for registration is approved on the date that it is filed or
the day thereafter as the processing course has to pass through routing,
screening, and assignment, evaluation, review and initialing, and
approval/disapproval procedure, among others, so that a 30-day period
is provided for under the Labor Code for this purpose, let alone
opposition thereto by interested parties which must be also given due
course.
Another evidence which petitioner presented . . . is the Union
Registration 1992 Logbook of IRD . . . and the entry date November
25, 1992 as allegedly the date of the release of the registration
certificate . . . On the other hand, respondent company presented . . . a
certified true copy of an entry on page 265 of the Union Registration
Logbook showing the pertinent facts about petitioner but which do not
show the petitioners registration was issued on or before November
26, 1992.11
Further citing other pieces of evidence presented before her, the MedArbiter concluded that respondent TMPCLU could not have
acquire[d] legal personality at the time of the filing of (its)
petition.12
On April 20, 1996, the public respondent issued a new Resolution,
directing the conduct of a certification election among the regular

rank-and-file employees of the Toyota Motor Philippines


Corporation.13 Petitioners motion for reconsideration was denied by
public respondent in his Order dated July 14, 1995.14
Hence, this special civil action for certiorari under Rule 65 of the
Revised Rules of Court, where petitioner contends that the Secretary
of Labor and Employment committed grave abuse of discretion
amounting to lack or excess of jurisdiction in reversing, contrary to
law and facts the findings of the Med-Arbiters to the effect that: 1) the
inclusion of the prohibited mix of rank-and-file and supervisory
employees in the roster of members and officers of the union cannot be
cured by a simple inclusion-exclusion proceeding; and that 2) the
respondent union had no legal standing at the time of the filing of its
petition for certification election.15
We grant the petition.
The purpose of every certification election is to determine the
exclusive representative of employees in an appropriate bargaining
unit for the purpose of collective bargaining. A certification election
for the collective bargaining process is one of the fairest and most
effective ways of determining which labor organization can truly
represent the working force.16 In determining the labor organization
which represents the interests of the workforce, those interests must
be, as far as reasonably possible, homogeneous, so as to genuinely
reach the concerns of the individual members of a labor organization.
According to Rothenberg,17 an appropriate bargaining unit is a group
of employees of a given employer, composed of all or less than the
entire body of employees, which the collective interests of all the
employees, consistent with equity to the employer indicate to be best
suited to serve reciprocal rights and duties of the parties under the
collective bargaining provisions of law. In Belyca Corporation v.
Ferrer-Calleja,18 we defined the bargaining unit as the legal
collectivity for collective bargaining purposes whose members have
substantially mutual bargaining interests in terms and conditions of
employment as will assure to all employees their collective bargaining
rights. This in mind, the Labor Code has made it a clear statutory
policy to prevent supervisory employees from joining labor
organizations consisting of rank-and-file employees as the concerns
which involve members of either group are normally disparate and
contradictory. Article 245 provides:

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


organization; Right of supervisory employees.Managerial
Employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but
may join, assist or form separate labor organizations of their own.
Clearly, based on this provision, a labor organization composed of
both rank-and-file and supervisory employees is no labor organization
at all. It cannot, for any guise or purpose, be a legitimate labor
organization. Not being one, an organization which carries a mixture
of rank-and-file and supervisory employees cannot possess any of the
rights of a legitimate labor organization, including the right to file a
petition for certification election for the purpose of collective
bargaining. It becomes necessary, therefore, anterior to the granting of
an order allowing a certification election, to inquire into the
composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor
Code.
It is the petitioners contention that forty-two (42) of the respondent
unions members, including three of its officers, occupy supervisory
positions.19 In its position paper dated February 22, 1993, petitioner
identified fourteen (14) union members occupying the position of
Junior Group Chief II20 and twenty-seven (27) members in level five
positions. Their respective job-descriptions are quoted below:
LEVEL 4 (JUNIOR GROUP CHIEF II)He is responsible for all
operators and assigned stations, prepares production reports related to
daily production output. He oversees smooth flow of production,
quality of production, availability of manpower, parts and equipment.
He also coordinates with other sections in the Production Department.
LEVEL 5He is responsible for overseeing initial production of new
models, prepares and monitors construction schedules for new models,
identifies manpower requirements for production, facilities and
equipment, and lay-out processes. He also oversees other sections in
the production process (e.g., assembly, welding, painting). (Annex
V of Respondent TMPs Position Paper, which is the Job
Description for an Engineer holding Level 5 position in the Production
Engineering Section of the Production Planning and Control
Department).

While there may be a genuine divergence of opinion as to whether or


not union members occupying Level 4 positions are supervisory
employees, it is fairly obvious, from a reading of the Labor Codes
definition of the term that those occupying Level 5 positions are
unquestionably supervisory employees. Supervisory employees, as
defined above, are those who, in the interest of the employer,
effectively recommend managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but require the
use of independent judgment.21 Under the job description for level
five employees, such personnelall engineershaving a number of
personnel under them, not only oversee production of new models but
also determine manpower requirements, thereby influencing important
hiring decisions at the highest levels. This determination is neither
routine nor clerical but involves the independent assessment of factors
affecting production, which in turn affect decisions to hire or transfer
workers. The use of independent judgment in making the decision to
hire, fire or transfer in the identification of manpower requirements
would be greatly impaired if the employees loyalties are torn between
the interests of the union and the interests of management. A
supervisory employee occupying a level five position would therefore
find it difficult to objectively identify the exact manpower
requirements dictated by production demands.
This is precisely what the Labor Code, in requiring separate unions
among rank-and-file employees on one hand, and supervisory
employees on the other, seeks to avoid. The rationale behind the
Codes exclusion of supervisors from unions of rank-and-file
employees is that such employees, while in the performance of
supervisory functions, become the alter ego of management in the
making and the implementing of key decisions at the sub-managerial
level. Certainly, it would be difficult to find unity or mutuality of
interests in a bargaining unit consisting of a mixture of rank-and-file
and supervisory employees. And this is so because the fundamental
test of a bargaining units acceptability is whether or not such a unit
will best advance to all employees within the unit the proper exercise
of their collective bargaining rights.22 The Code itself has recognized
this, in preventing supervisory employees from joining unions of rankand-file employees.
In the case at bar, as respondent unions membership list contains the
names of at least twenty-seven (27) supervisory employees in Level

Five positions, the union could not, prior to purging itself of its
supervisory employee members, attain the status of a legitimate labor
organization. Not being one, it cannot possess the requisite personality
to file a petition for certification election.
The foregoing discussion, therefore, renders entirely irrelevant, the
technical issue raised as to whether or not respondent union was in
possession of the status of a legitimate labor organization at the time of
filing, when, as petitioner vigorously claims, the former was still at the
stage of processing of its application for recognition as a legitimate
labor organization. The unions composition being in violation of the
Labor Codes prohibition of unions composed of supervisory and rankand-file employees, it could not possess the requisite personality to file
for recognition as a legitimate labor organization. In any case, the
factual issue, albeit ignored by the public respondents assailed
Resolution, was adequately threshed out in the Med-Arbiters
September 28, 1994 Order.
The holding of a certification election is based on clear statutory
policy which cannot be circumvented.23 Its rules, strictly construed by
this Court, are designed to eliminate fraud and manipulation. As we
emphasized in Progressive Development Corporation v. Secretary,
Department of Labor and Employment,24 the Courts conclusion
should not be interpreted as impairing any unions right to be certified
as the employees bargaining agent in the petitioners establishment.
Workers of an appropriate bargaining unit must be allowed to freely
express their choice in an election where everything is open to sound
judgment and the possibility for fraud and misrepresentation is
absent.25
WHEREFORE, the petition is GRANTED. The assailed Resolution
dated April 20, 1995 and Order dated July 14, 1995 of respondent
Secretary of Labor are hereby SET ASIDE. The Order dated
September 28, 1994 of the Med-Arbiter is REINSTATED.
SO ORDERED.
Padilla (Chairman), Bellosillo, Vitug and Hermosisima, Jr., JJ.,
concur.
Petition granted.
Note.What the law prohibits is a union, whose membership
comprises of supervisors merging with rank-and-file employees
because this is where the conflict of interest may arise on the areas of

discipline, collective bargaining and strikes. (Philippine Phosphate


Fertilizer Corp. vs. Torres, 231 SCRA 335 [1994])

G.R. No. 96566 January 6, 1992


ATLAS
LITHOGRAPHIC
SERVICES,
INC., petitioner,
vs.
UNDERSECRETARY
BIENVENIDO
E.
LAGUESMA
(Department of Labor and Employment) and ATLAS
LITHOGRAPHIC
SERVICES,
INC.
SUPERVISORY,
ADMINISTRATIVE,
PERSONNEL,
PRODUCTION,
ACCOUNTING
AND
CONFIDENTIAL
EMPLOYEES
ASSOCIATION-KAISAHAN NG MANGGAWANG PILIPINO
(KAMPIL-KATIPUNAN), respondents.
Romero, Lagman, Valdecantos & Arreza Law Offices for petitioner.
Esteban M. Mendoza for private respondent.
GUTIERREZ, JR., J.:p
This is a petition for certiorari under Rule 65 of the Rules of Court
seeking the modification of the Order dated 14 December 1990 and the
Resolution dated 21 November 1990 issued by the public respondents.
The antecedent facts of the case as gathered from the records are as
follows:
On July 16, 1990, the supervisory, administrative personnel,
production, accounting and confidential employees of the petitioner
Atlas Lithographic Services, Inc. (ALSI) affiliated with private
respondent Kaisahan ng Manggagawang Pilipino, a national labor
organization. The local union adopted the name Atlas Lithographic
Services, Inc. Supervisory, Administrative, Personnel, Production,
Accounting and Confidential Employees Association or ALSISAPPACEA-KAMPIL in short and which we shall hereafter refer to as
the "supervisors" union.
Shortly thereafter, private respondent Kampil-Katipunan filed on
behalf of the "supervisors" union a petition for certification election so
that it could be the sole and exclusive bargaining agent of the
supervisory employees.
The petitioners opposed the private respondent's petition claiming that
under Article 245 of the Labor bode the private respondent cannot
represent the supervisory employees for collective bargaining
purposeless because the private respondent also represents the rankand-file employees' union.

On September 18, 1990, the Med-Arbiter issued an order in favor of


the private respondent, the dispositive portion of which provides:
WHEREFORE, premises considered, a certification election among
the supervisory employees belonging to the Administrative, Personnel,
Production, Accounting Departments as well as confidential
employees performing supervisory functions of Atlas Lithographic
Services, Incorporated is hereby ordered conducted within 20 days
from receipt hereof, subject to usual pre-election conference, with the
following choices:
1. KAMPIL (KATIPUNAN);
2. No union.
SO ORDERED. (Rollo, pp. 39-40)
The petitioners, as expected, appealed for the reversal of the above
order. The public respondent, however, issued a resolution affirming
the Med-Arbiter's order.
The petitioners, in turn, filed a motion for reconsideration but the same
was denied. Hence, this petition forcertiorari.
The sole issue to be resolved in this case is whether or not, under
Article 245 of the Labor Code, a local union of supervisory employees
may be allowed to affiliate with a national federation of labor
organizations of rank-and-file employees and which national
federation actively represents its affiliates in collective bargaining
negotiations with the same employer of the supervisors and in the
implementation of resulting collective bargaining agreements.
The petitioner argues that KAMPIL-KATIPUNAN already represents
its rank-and-file employees and, therefore, to allow the supervisors of
those employees to affiliate with the private respondent is tantamount
to allowing the circumvention of the principle of the separation of
unions under Article 245 of the Labor Code.
It further argues that the intent of the law is to prevent a single labor
organization from representing different classes of employees with
conflicting interests.
The public respondent, on the other hand, contends that despite
affiliation with a national federation, the local union does not lose its
personality which is separate, and distinct from the national federation.
It cites as its legal basis the case of Adamson & Adamson,
Inc. v. CIR (127 SCRA 268 [1984]).
It maintains that Rep. Act No. 6715 contemplates the principle laid
down by this Court in the Adamson case interpreting Section 3 of Rep.

Act No. 875 (the Industrial Peace Act) on the right of a supervisor's
union to affiliate. The private respondent asserts that the legislature
must have noted the Adamson ruling then prevailing when it conceived
the reinstatement in the present Labor Code of a similar provision on
the right of supervisors to organize.
Under the Industrial Peace Act of 1953, employees were classified into
three groups, namely: (1) managerial employees; (2) supervisors; and
(3) rank-and file employees. Supervisors, who were considered
employees in relation to their employer could join a union but not a
union of rank-and-file employees.
With the enactment in 1974 of the Labor Code (Pres Decree No. 442),
employees were classified into managerial and rank-and-file
employees. Neither the category of supervisors nor their right to
organize under the old statute were recognized. So that, in Bulletin
Publishing Corporation v. Sanchez (144 SCRA 628 [1986]), the Court
interpreted the superseding labor law to have removed from
supervisors the right to unionize among themselves. The Court ruled:
In the light of the factual background of this case, We are constrained
to hold that the supervisory employees of petitioner firm may not,
under the law, form a supervisors union, separate and distinct from the
existing bargaining unit (BEU), composed of the rank-and-file
employees of the Bulletin Publishing Corporation. It is evident that
most of the private respondents are considered managerial employees.
Also, it is distinctly stated in Section 11, Rule II, of the Omnibus Rules
Implementing the Labor Code, that supervisory unions are presently
no longer recognized nor allowed to exist and operate as such. (pp.
633, 634)
In Section 11, Rule II, Book V of the Omnibus Rules implementing
Pres. Decree No. 442, the supervisory unions existing since the
effectivity of the New Code in January 1, 1975 ceased to operate as
such and the members who did not qualify as managerial employees
under this definition in Article 212 (k) therein became eligible to form,
to join or assist a rank-and-file union.
A revision of the Labor Code undertaken by the bicameral Congress
brought about the enactment of Rep. Act No. 6715 in March 1989 in
which employees were reclassified into three groups, namely: (1) the
managerial employees; (2) supervisors; and (3) the rank and file
employees. Under the present law, the category of supervisory
employees is once again recognized. Hence, Art. 212 (m) states:

(m) . . . 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. . . .
The rationale for the amendment is the government's recognition of the
right of supervisors to organize with the qualification that they shall
not join or assist in the organization of rank-and-file employees. The
reason behind the Industrial Peace Act provision on the same subject
matter has been adopted in the present statute. The interests of
supervisors on the one hand, and the rank-and-file employees on the
other, are separate and distinct. The functions of supervisors,
being recommendatory in nature, are more identified with the interests
of the employer. The performance of those functions may, thus, run
counter to the interests of the rank-and-file.
This intent of the law is made clear in the deliberations of the
legislators on then Senate Bill 530 now enacted as Rep. Act No. 6715.
The definition of managerial employees was limited to those having
authority to hire and fire while those who only recommend effectively
the hiring or firing or transfers of personnel would be considered as
closer to rank-and-file employees. The exclusion, therefore, of middle
level executives from the category of managers brought about a third
classification, the supervisory employees. These supervisory
employees are allowed to form their own union but they are not
allowed to join the rank-and-file union because of conflict of interest
(Journal of the Senate, First Regular Session, 1987, 1988, Volume 3,
p. 2245).
In terms of classification, however, while they are more closely
identified with the rank-and-file they are still not allowed to join the
union of rank-and-file employees. To quote the Senate Journal:
In reply to Sen. Guingona's query whether "supervisors" are included
in the term "employee", Sen. Herrera stated that while they are
considered as rank-and-file employees, they cannot join the union and
they would have to form their own supervisors' union pursuant to Rep.
Act 875. (supra, p. 2288)
The peculiar role of supervisors is such that while they are not
managers, when they recommend action implementing management
policy or ask for the discipline or dismissal of subordinates, they
identify with the interests of the employer and may act contrary to the
interests of the rank-and-file.

We agree with the petitioner's contention that a conflict of interest may


arise in the areas of discipline, collective bargaining and strikes.
Members of the supervisory union might refuse to carry out
disciplinary measures against their co-member rank-and-file
employees.
In the area of bargaining, their interests cannot be considered identical.
The needs of one are different from those of the other. Moreover, in
the event of a strike, the national federation might influence the
supervisors' union to conduct a sympathy strike on the sole basis of
affiliation.
More important, the factual issues in the Adamson case are different
from the present case. First, the rank-and-file employees in
the Adamson case are not directly under the supervisors who comprise
the supervisors' union. In the case at bar, the rank-and file employees
are directly under the supervisors organized by one and the same
federation.
The contemplation of the law in Sec. 3 of the Industrial Peace Act is to
prohibit supervisors from joining a labor organization of employees
under their supervision. Sec. 3 of the Industrial Peace Act provides:
Sec. 3 Employees' Right to Self Organization. Employees shall have
the right to self-organization and to form, join or assist labor
organizations of their own choosing for the purpose of collective
bargaining through representatives of their own choosing and to
engage in concerted activities for the purpose of collective bargaining
and other mutual aid or protection. Individuals employed as
supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form
separate organizations of their own (Emphasis supplied).
This was not the consideration in the Adamson case because as
mentioned earlier, the rank-and-file employees in the Adamson case
were not under the supervision of the supervisors involved.
Meanwhile, Article 245 of the Labor Code as amended by Rep. Act
No. 6715 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.

The Court construes Article 245 to mean that, as in Section 3 of the


Industrial Peace Act, supervisors shall not be given an occasion to
bargain together with the rank-and-file against the interests of the
employer regarding terms and conditions of work
Second, the national union in the Adamson case did not actively
represent its local chapters. In the present case, the local union is
actively represented by the national federation. In fact, it was the
national federation, theKAMPIL-KATIPUNAN, which initially filed a
petition for certification in behalf of the respondent union.
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.
The petitioner further contends that the term labor organization
includes a federation considering that Art. 212 (g) mentions "any union
or association of employees."
The respondent, however, argues that the phrase refers to a local union
only in which case, the prohibition in Art. 245 is inapplicable to the
case at bar.
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 local 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 the case at bar, the
supervisors will be co-mingling with those employees whom they
directly supervise in their own bargaining unit.
Technicalities should not be allowed to stand in the way of equitably
and completely resolving the rights and obligations of the parties.
(Rapid Manpower Consultants, Inc. v. NLRC, 190 SCRA 747 [1990])
What should be paramount is the intent behind the law, not its literal
construction. Where one interpretation would result in mischievous
consequences while another would bring about equity, justice, and the
promotion of labor peace, there can be no doubt as to what
interpretation shall prevail.

Finally, the respondent contends that the law prohibits the employer
from interfering with the employees' right to self-organization.
There is no question about this intendment of the law. There is,
however, in the present case, no violation of such a guarantee to the
employee. Supervisors are not prohibited from forming their own
union. What the law prohibits is their membership in a labor
organization of rank-and-file employees (Art. 245, Labor Code) or
their joining a national federation of rank-and-file employees that
includes the very local union which they are not allowed to directly
join.
In a motion dated November 15, 1991 it appears that the petitioner has
knuckled under to the respondents' pressures and agreed to let the
national federation KAMPIL-KATIPUNAN represent its supervisors
in negotiating a collective bargaining agreement. Against the advise of
its own counsel and on the basis of alleged "industrial peace", the
petitioner expressed a loss of interest in pursuing this action. The
petitioner is, of course, free to grant whatever concessions it wishes to
give to its employees unilaterally or through negotiations but we
cannot allow the resulting validation of an erroneous ruling and policy
of the Department of Labor and Employment (DOLE) to remain on the
basis of the petitioner's loss of interest. The December 14, 1990 order
and the November 21, 1990 resolution of DOLE are contrary to law
and must be declared as such.
WHEREFORE, the petition is hereby GRANTED. The private
respondent is disqualified from affiliating with a national federation of
labor organizations which includes the petitioner's rank-and-file
employees.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.

DE LA SALLE UNIVERSITY MEDICAL CENTER AND


COLLEGE OF MEDICINE, petitioner, vs. HON. BIENVENIDO
E. LAGUESMA, Undersecretary of Labor and Employment;
ROLANDO S. DE LA CRUZ, Med-Arbiter Regional Office No.
IV, DE LA SALLE UNIVERSITY MEDICAL CENTER AND
COLLEGE OF MEDICINE SUPERVISORY UNIONFEDERATION OF FREE WORKERS, respondents.
DECISION
MENDOZA, J.:
Petitioner De La Salle University Medical Center and College of
Medicine (DLSUMCCM) is a hospital and medical school at
Dasmarias, Cavite. Private respondent Federation of Free Workers
De La Salle University Medical Center and College of Medicine
Supervisory Union Chapter (FFW-DLSUMCCMSUC), on the other
hand, is a labor organization composed of the supervisory employees
of petitioner DLSUMCCM.
On April 17, 1991, the Federation of Free Workers (FFW), a national
federation of labor unions, issued a certificate to private respondent
FFW-DLSUMCCMSUC recognizing it as a local chapter. On the
same day, it filed on behalf of private respondent FFWDLSUMCCMSUC a petition for certification election among the
supervisory employees of petitioner DLSUMCCM. Its petition was
opposed by petitioner DLSUMCCM on the grounds that several
employees who signed the petition for certification election were
managerial employees and that the FFW-DLSUMCCMSUC was
composed of both supervisory and rank-and-file employees in the
company.[1]
In its reply dated May 22, 1991, private respondent FFWDLSUMCCMSUC denied petitioners allegations. It contended that
2. Herein petition seeks for the holding of a certification election
among the supervisory employees of herein respondent. It does not
intend to include managerial employees.
....
6. It is not true that supervisory employees are joining the rank-andfile employees union. While it is true that both regular rank-and-file
employees and supervisory employees of herein respondent have
affiliated with FFW, yet there are two separate unions organized by

FFW. The supervisory employees have a separate charter certificate


issued by FFW.[2]
On July 5, 1991, respondent Rolando S. de la Cruz, med-arbiter of the
Department of Labor and Employment Regional Office No. IV, issued
an order granting respondent unions petition for certification
election. He said:
. . . . [petitioner] . . . claims that based on the job descriptions which
will be presented at the hearing, the covered employees who are
considered managers occupy the positions of purchasing officers,
personnel officers, property officers, cashiers, heads of various
sections and the like.
[Petitioner] also argues that assuming that some of the employees
concerned are not managerial but mere supervisory employees, the
Federation of Free Workers (FFW) cannot extend a charter certificate
to this group of employees without violating the express provision of
Article 245 which provides 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 organizations of
their own because the FFW had similarly issued a charter certificate
to its rank-and-file employees.
....
In its position paper, [petitioner] stated that most, if not all, of the
employees listed in . . . the petition are considered managerial
employees, thereby admitting that it has supervisory employees who
are undoubtedly qualified to join or form a labor organization of their
own. The record likewise shows that [petitioner] promised to present
the job descriptions of the concerned employees during the hearing but
failed to do so. Thus, this office has no basis in determining at this
point in time who among them are considered managerial or
supervisory employees. At any rate, there is now no question that
[petitioner] has in its employ supervisory employees who are qualified
to join or form a labor union. Consequently, this office is left with no
alternative but to order the holding of certification election pursuant to
Article 257 of the Labor Code, as amended, which mandates the
holding of certification election if a petition is filed by a legitimate
labor organization involving an unorganized establishment, as in the
case of herein respondent.
As to the allegation of [petitioner] that the act of the supervisory
employees in affiliating with FFW to whom the rank-and-file

employees are also affiliated is violative of Article 245 of the Labor


Code, suffice it to state that the two groups are considered separate
bargaining units and local chapters of FFW. They are, for all intents
and purposes, separate with each other and their affiliation with FFW
would not make them members of the same labor union. This must be
the case because it is settled that the locals are considered the basic
unit or principal with the labor federation assuming the role of an
agent. The mere fact, therefore, that they are represented by or under
the same agent is of no moment. They are still considered separate
with each other.[3]
On July 30, 1991, petitioner DLSUMCCM appealed to the Secretary
of Labor and Employment, citing substantially the same arguments it
had raised before the med-arbiter. However, its appeal was
dismissed. In his resolution, dated August 30, 1991, respondent
Undersecretary of Labor and Employment Bienvenido E. Laguesma
found the evidence presented by petitioner DLSUMCCM concerning
the alleged managerial status of several employees to be
insufficient. He also held that, following the ruling of this Court
in Adamson & Adamson, Inc. v. CIR,[4] unions formed independently
by supervisory and rank-and-file employees of a company may legally
affiliate with the same national federation.
Petitioner moved for a reconsideration but its motion was denied. In
his order dated September 19, 1991, respondent Laguesma stated:
We reviewed the records once more, and find that the issues and
arguments adduced by movant have been squarely passed upon in the
Resolution sought to be reconsidered. Accordingly, we find no legal
justification to alter, much less set aside, the aforesaid
resolution. Perforce, the motion for reconsideration must fail.
WHEREFORE, the instant motion for reconsideration is hereby denied
for lack of merit and the resolution of this office dated 30 August 1991
STANDS.
No further motions of a similar nature shall hereinafter be entertained.
[5]

Hence, this petition for certiorari.


Petitioner DLSUMCCM contends that respondent Laguesma gravely
abused his discretion. While it does not anymore insist that several of
those who joined the petition for certification election are holding
managerial positions in the company, petitioner nonetheless pursues
the question whether unions formed independently by supervisory and

rank-and-file employees of a company may validly affiliate with the


same national federation. With respect to this question, it argues:
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 AMOUNTING TO ACTING
WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE
DENIED THE PETITIONERS APPEAL AND ORDERED THE
HOLDING OF A CERTIFICATION ELECTION AMONG THE
MEMBERS OF THE SUPERVISORY UNION EMPLOYED IN
PETITIONERS COMPANY DESPITE THE FACT THAT SAID
SUPERVISORY UNION WAS AFFILIATED WITH THE
FEDERATION OF FREE WORKERS TO WHICH THE RANKAND-FILE EMPLOYEES OF THE SAME COMPANY ARE
LIKEWISE AFFILIATED, CONTRARY TO THE EXPRESS
PROVISIONS OF ARTICLE 245 OF THE LABOR CODE, AS
AMENDED.[6]
The contention has no merit.
Supervisory employees have the right to self-organization as do other
classes of employees save only managerial ones. The Constitution
states that 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.[7] As we recently
held in UnitedPepsi-Cola Supervisory Union v. Laguesma,[8] the
framers of the Constitution intended, by this provision, to restore the
right of supervisory employees to self-organization which had been
withdrawn from them during the period of martial law. Thus:
Commissioner Lerum sought to amend the draft of what was later to
become Art. III, 8 of the present Constitution:
....
MR. LERUM. . . . Also, we have unions of supervisory employees and
of security guards. But what is tragic about this is that after the 1973
Constitution was approved and in spite of an express recognition of the
right to organize in P.D. No. 442, known as the Labor Code, the right
of government workers, supervisory employees and security guards to
form unions was abolished.
....

We are afraid that without any corresponding provision covering the


private sector, the security guards, the supervisory employees ... will
still be excluded and that is the purpose of this amendment.
....
In sum, Lerums proposal to amend Art. III, 8 of the draft
Constitution by including labor unions in the guarantee of
organizational right should be taken in the context of statements that
his aim was the removal of the statutory ban against security guards
and supervisory employees joining labor organizations. The approval
by the Constitutional Commission of his proposal can only mean,
therefore, that the Commission intended the absolute right to organize
of government workers, supervisory employees, and security guards to
be constitutionally guaranteed.[9]
Conformably with the constitutional mandate, Art. 245 of the Labor
Code now provides for the right of supervisory employees to selforganization, subject to the limitation that they cannot join an
organization of rank-and-file employees:
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.
The reason for the segregation of supervisory and rank-and-file
employees of a company with respect to the exercise of the right to
self-organization is the difference in their interests. Supervisory
employees are more closely identified with the employer than with the
rank-and-file employees. If supervisory and rank-and-file employees
in a company are allowed to form a single union, the conflicting
interests of these groups impair their relationship and adversely affect
discipline, collective bargaining, and strikes.[10] These consequences
can obtain not only in cases where supervisory and rank-and-file
employees in the same company belong to a single union but also
where unions formed independently by supervisory and rank-andfile
employees of a company are allowed to affiliate with the same national
federation. Consequently, this Court has held in Atlas Lithographic
Services Inc. v. Laguesma[11] that To avoid a situation where supervisors would merge with the rankand-file or where the supervisors labor organization would represent
conflicting interests, then a local supervisors union should not be
allowed to affiliate with a national federation of unions of rank-and-

file employees where that federation actively participates in union


activities in the company.
As we explained in that case, however, such a situation would obtain
only where two conditions concur: First, the rank-and-file employees
are directly under the authority of supervisory employees.[12] Second,
the national federation is actively involved in union activities in the
company.[13] Indeed, it is the presence of these two conditions which
distinguished Atlas Lithographic Services, Inc. v.
Laguesma from Adamson & Adamson, Inc. v. CIR[14] where a different
conclusion was reached.
The affiliation of two local unions in a company with the same
national federation is not by itself a negation of their independence
since in relation to the employer, the local unions are considered as the
principals, while the federation is deemed to be merely their
agent. This conclusion is in accord with the policy that any limitation
on the exercise by employees of the right to self-organization
guaranteed in the Constitution must be construed strictly. Workers
should be allowed the practice of this freedom to the extent recognized
in the fundamental law. As held in Liberty Cotton Mills Workers
Union v. Liberty Cotton Mills, Inc.:[15]
The locals are separate and distinct units primarily designed to secure
and maintain an equality of bargaining power between the employer
and their employee members in the economic struggle for the fruits of
the joint productive effort of labor and capital; and the association of
locals into the national unionwas in furtherance of the same
end. These associations are consensual entities capable of entering
into such legal relations with their members. The essential purpose
was the affiliation of the local unions into a common enterprise to
increase by collective action the common bargaining power in respect
of the terms and conditions of labor. Yet the locals remained the basic
units of association, free to serve their own and the common interest of
all, and free also to renounce the affiliation for mutual welfare upon
the terms laid down in the agreement which brought it to existence.[16]
The questions in this case, therefore, are whether the rank-and-file
employees of petitioner DLSUMCCM who compose a labor union are
directly under the supervisory employees whose own union is
affiliated with the same national federation (Federation of Free
Workers) and whether such national federation is actively involved in

union activities in the company so as to make the two unions in the


same company, in reality, just one union.
Although private respondent FFW-DLSUMCCMSUC and another
union composed of rank-and-file employees of petitioner
DLSUMCCM are indeed affiliated with the same national federation,
the FFW, petitioner DLSUMCCM has not presented any evidence
showing that the rank-and-file employees composing the other union
are directly under the authority of the supervisory employees. As held
in Adamson & Adamson, Inc. v. CIR,[17] the fact that the two groups of
workers are employed by the same company and the fact that they are
affiliated with a common national federation are not sufficient to
justify the conclusion that their organizations are actually just
one. Their immediate professional relationship must be
established. To borrow the language of Adamson & Adamson, Inc. v.
CIR:[18]
We find without merit the contention of petitioner that if affiliation
will be allowed, only one union will in fact represent both supervisors
and rank-and-file employees of the petitioner; that there would be an
indirect affiliation of supervisors and rank-andfile employees with
one labor organization; that there would be a merging of the two
bargaining units; and that the respondent union will lose its
independence because it becomes an alter ego of the federation.[19]
Mention has already been made of the fact that the petition for
certification election in this case was filed by the FFW on behalf of the
local union. This circumstance, while showing active involvement by
the FFW in union activities at the company, is by itself insufficient to
justify a finding of violation of Art. 245 since there is no proof that the
supervisors who compose the local union have direct authority over
the rank-and-file employees composing the other local union which is
also affiliated with the FFW. This fact differentiates the case
from Atlas Lithographic Services, Inc. v. Laguesma,[20] in which, in
addition to the fact that the petition for certification election had been
filed by the national federation, it was shown that the rank-and-file
employees were directly under the supervisors organized by the same
federation.
It follows that respondent labor officials did not gravely abuse their
discretion.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

Regalado (Chairman), Melo, and Martinez, JJ., concur.


Puno- no part.

DE LA SALLE UNIVERSITY MEDICAL CENTER AND


COLLEGE OF MEDICINE, petitioner, vs. HON. BIENVENIDO
E. LAGUESMA, Undersecretary of Labor and Employment;
ROLANDO S. DE LA CRUZ, Med-Arbiter Regional Office No.
IV, DE LA SALLE UNIVERSITY MEDICAL CENTER AND
COLLEGE OF MEDICINE SUPERVISORY UNIONFEDERATION OF FREE WORKERS, respondents.
DECISION
MENDOZA, J.:
Petitioner De La Salle University Medical Center and College of
Medicine (DLSUMCCM) is a hospital and medical school at
Dasmarias, Cavite. Private respondent Federation of Free Workers
De La Salle University Medical Center and College of Medicine
Supervisory Union Chapter (FFW-DLSUMCCMSUC), on the other
hand, is a labor organization composed of the supervisory employees
of petitioner DLSUMCCM.
On April 17, 1991, the Federation of Free Workers (FFW), a national
federation of labor unions, issued a certificate to private respondent
FFW-DLSUMCCMSUC recognizing it as a local chapter. On the
same day, it filed on behalf of private respondent FFWDLSUMCCMSUC a petition for certification election among the
supervisory employees of petitioner DLSUMCCM. Its petition was
opposed by petitioner DLSUMCCM on the grounds that several
employees who signed the petition for certification election were
managerial employees and that the FFW-DLSUMCCMSUC was
composed of both supervisory and rank-and-file employees in the
company.[1]
In its reply dated May 22, 1991, private respondent FFWDLSUMCCMSUC denied petitioners allegations. It contended that
2. Herein petition seeks for the holding of a certification election
among the supervisory employees of herein respondent. It does not
intend to include managerial employees.
....
6. It is not true that supervisory employees are joining the rank-andfile employees union. While it is true that both regular rank-and-file
employees and supervisory employees of herein respondent have
affiliated with FFW, yet there are two separate unions organized by

FFW. The supervisory employees have a separate charter certificate


issued by FFW.[2]
On July 5, 1991, respondent Rolando S. de la Cruz, med-arbiter of the
Department of Labor and Employment Regional Office No. IV, issued
an order granting respondent unions petition for certification
election. He said:
. . . . [petitioner] . . . claims that based on the job descriptions which
will be presented at the hearing, the covered employees who are
considered managers occupy the positions of purchasing officers,
personnel officers, property officers, cashiers, heads of various
sections and the like.
[Petitioner] also argues that assuming that some of the employees
concerned are not managerial but mere supervisory employees, the
Federation of Free Workers (FFW) cannot extend a charter certificate
to this group of employees without violating the express provision of
Article 245 which provides 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 organizations of
their own because the FFW had similarly issued a charter certificate
to its rank-and-file employees.
....
In its position paper, [petitioner] stated that most, if not all, of the
employees listed in . . . the petition are considered managerial
employees, thereby admitting that it has supervisory employees who
are undoubtedly qualified to join or form a labor organization of their
own. The record likewise shows that [petitioner] promised to present
the job descriptions of the concerned employees during the hearing but
failed to do so. Thus, this office has no basis in determining at this
point in time who among them are considered managerial or
supervisory employees. At any rate, there is now no question that
[petitioner] has in its employ supervisory employees who are qualified
to join or form a labor union. Consequently, this office is left with no
alternative but to order the holding of certification election pursuant to
Article 257 of the Labor Code, as amended, which mandates the
holding of certification election if a petition is filed by a legitimate
labor organization involving an unorganized establishment, as in the
case of herein respondent.
As to the allegation of [petitioner] that the act of the supervisory
employees in affiliating with FFW to whom the rank-and-file

employees are also affiliated is violative of Article 245 of the Labor


Code, suffice it to state that the two groups are considered separate
bargaining units and local chapters of FFW. They are, for all intents
and purposes, separate with each other and their affiliation with FFW
would not make them members of the same labor union. This must be
the case because it is settled that the locals are considered the basic
unit or principal with the labor federation assuming the role of an
agent. The mere fact, therefore, that they are represented by or under
the same agent is of no moment. They are still considered separate
with each other.[3]
On July 30, 1991, petitioner DLSUMCCM appealed to the Secretary
of Labor and Employment, citing substantially the same arguments it
had raised before the med-arbiter. However, its appeal was
dismissed. In his resolution, dated August 30, 1991, respondent
Undersecretary of Labor and Employment Bienvenido E. Laguesma
found the evidence presented by petitioner DLSUMCCM concerning
the alleged managerial status of several employees to be
insufficient. He also held that, following the ruling of this Court
in Adamson & Adamson, Inc. v. CIR,[4] unions formed independently
by supervisory and rank-and-file employees of a company may legally
affiliate with the same national federation.
Petitioner moved for a reconsideration but its motion was denied. In
his order dated September 19, 1991, respondent Laguesma stated:
We reviewed the records once more, and find that the issues and
arguments adduced by movant have been squarely passed upon in the
Resolution sought to be reconsidered. Accordingly, we find no legal
justification to alter, much less set aside, the aforesaid
resolution. Perforce, the motion for reconsideration must fail.
WHEREFORE, the instant motion for reconsideration is hereby denied
for lack of merit and the resolution of this office dated 30 August 1991
STANDS.
No further motions of a similar nature shall hereinafter be entertained.
[5]

Hence, this petition for certiorari.


Petitioner DLSUMCCM contends that respondent Laguesma gravely
abused his discretion. While it does not anymore insist that several of
those who joined the petition for certification election are holding
managerial positions in the company, petitioner nonetheless pursues
the question whether unions formed independently by supervisory and

rank-and-file employees of a company may validly affiliate with the


same national federation. With respect to this question, it argues:
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 AMOUNTING TO ACTING
WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE
DENIED THE PETITIONERS APPEAL AND ORDERED THE
HOLDING OF A CERTIFICATION ELECTION AMONG THE
MEMBERS OF THE SUPERVISORY UNION EMPLOYED IN
PETITIONERS COMPANY DESPITE THE FACT THAT SAID
SUPERVISORY UNION WAS AFFILIATED WITH THE
FEDERATION OF FREE WORKERS TO WHICH THE RANKAND-FILE EMPLOYEES OF THE SAME COMPANY ARE
LIKEWISE AFFILIATED, CONTRARY TO THE EXPRESS
PROVISIONS OF ARTICLE 245 OF THE LABOR CODE, AS
AMENDED.[6]
The contention has no merit.
Supervisory employees have the right to self-organization as do other
classes of employees save only managerial ones. The Constitution
states that 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.[7] As we recently
held in UnitedPepsi-Cola Supervisory Union v. Laguesma,[8] the
framers of the Constitution intended, by this provision, to restore the
right of supervisory employees to self-organization which had been
withdrawn from them during the period of martial law. Thus:
Commissioner Lerum sought to amend the draft of what was later to
become Art. III, 8 of the present Constitution:
....
MR. LERUM. . . . Also, we have unions of supervisory employees and
of security guards. But what is tragic about this is that after the 1973
Constitution was approved and in spite of an express recognition of the
right to organize in P.D. No. 442, known as the Labor Code, the right
of government workers, supervisory employees and security guards to
form unions was abolished.
....

We are afraid that without any corresponding provision covering the


private sector, the security guards, the supervisory employees ... will
still be excluded and that is the purpose of this amendment.
....
In sum, Lerums proposal to amend Art. III, 8 of the draft
Constitution by including labor unions in the guarantee of
organizational right should be taken in the context of statements that
his aim was the removal of the statutory ban against security guards
and supervisory employees joining labor organizations. The approval
by the Constitutional Commission of his proposal can only mean,
therefore, that the Commission intended the absolute right to organize
of government workers, supervisory employees, and security guards to
be constitutionally guaranteed.[9]
Conformably with the constitutional mandate, Art. 245 of the Labor
Code now provides for the right of supervisory employees to selforganization, subject to the limitation that they cannot join an
organization of rank-and-file employees:
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.
The reason for the segregation of supervisory and rank-and-file
employees of a company with respect to the exercise of the right to
self-organization is the difference in their interests. Supervisory
employees are more closely identified with the employer than with the
rank-and-file employees. If supervisory and rank-and-file employees
in a company are allowed to form a single union, the conflicting
interests of these groups impair their relationship and adversely affect
discipline, collective bargaining, and strikes.[10] These consequences
can obtain not only in cases where supervisory and rank-and-file
employees in the same company belong to a single union but also
where unions formed independently by supervisory and rank-andfile
employees of a company are allowed to affiliate with the same national
federation. Consequently, this Court has held in Atlas Lithographic
Services Inc. v. Laguesma[11] that To avoid a situation where supervisors would merge with the rankand-file or where the supervisors labor organization would represent
conflicting interests, then a local supervisors union should not be
allowed to affiliate with a national federation of unions of rank-and-

file employees where that federation actively participates in union


activities in the company.
As we explained in that case, however, such a situation would obtain
only where two conditions concur: First, the rank-and-file employees
are directly under the authority of supervisory employees.[12] Second,
the national federation is actively involved in union activities in the
company.[13] Indeed, it is the presence of these two conditions which
distinguished Atlas Lithographic Services, Inc. v.
Laguesma from Adamson & Adamson, Inc. v. CIR[14] where a different
conclusion was reached.
The affiliation of two local unions in a company with the same
national federation is not by itself a negation of their independence
since in relation to the employer, the local unions are considered as the
principals, while the federation is deemed to be merely their
agent. This conclusion is in accord with the policy that any limitation
on the exercise by employees of the right to self-organization
guaranteed in the Constitution must be construed strictly. Workers
should be allowed the practice of this freedom to the extent recognized
in the fundamental law. As held in Liberty Cotton Mills Workers
Union v. Liberty Cotton Mills, Inc.:[15]
The locals are separate and distinct units primarily designed to secure
and maintain an equality of bargaining power between the employer
and their employee members in the economic struggle for the fruits of
the joint productive effort of labor and capital; and the association of
locals into the national unionwas in furtherance of the same
end. These associations are consensual entities capable of entering
into such legal relations with their members. The essential purpose
was the affiliation of the local unions into a common enterprise to
increase by collective action the common bargaining power in respect
of the terms and conditions of labor. Yet the locals remained the basic
units of association, free to serve their own and the common interest of
all, and free also to renounce the affiliation for mutual welfare upon
the terms laid down in the agreement which brought it to existence.[16]
The questions in this case, therefore, are whether the rank-and-file
employees of petitioner DLSUMCCM who compose a labor union are
directly under the supervisory employees whose own union is
affiliated with the same national federation (Federation of Free
Workers) and whether such national federation is actively involved in

union activities in the company so as to make the two unions in the


same company, in reality, just one union.
Although private respondent FFW-DLSUMCCMSUC and another
union composed of rank-and-file employees of petitioner
DLSUMCCM are indeed affiliated with the same national federation,
the FFW, petitioner DLSUMCCM has not presented any evidence
showing that the rank-and-file employees composing the other union
are directly under the authority of the supervisory employees. As held
in Adamson & Adamson, Inc. v. CIR,[17] the fact that the two groups of
workers are employed by the same company and the fact that they are
affiliated with a common national federation are not sufficient to
justify the conclusion that their organizations are actually just
one. Their immediate professional relationship must be
established. To borrow the language of Adamson & Adamson, Inc. v.
CIR:[18]
We find without merit the contention of petitioner that if affiliation
will be allowed, only one union will in fact represent both supervisors
and rank-and-file employees of the petitioner; that there would be an
indirect affiliation of supervisors and rank-andfile employees with
one labor organization; that there would be a merging of the two
bargaining units; and that the respondent union will lose its
independence because it becomes an alter ego of the federation.[19]
Mention has already been made of the fact that the petition for
certification election in this case was filed by the FFW on behalf of the
local union. This circumstance, while showing active involvement by
the FFW in union activities at the company, is by itself insufficient to
justify a finding of violation of Art. 245 since there is no proof that the
supervisors who compose the local union have direct authority over
the rank-and-file employees composing the other local union which is
also affiliated with the FFW. This fact differentiates the case
from Atlas Lithographic Services, Inc. v. Laguesma,[20] in which, in
addition to the fact that the petition for certification election had been
filed by the national federation, it was shown that the rank-and-file
employees were directly under the supervisors organized by the same
federation.
It follows that respondent labor officials did not gravely abuse their
discretion.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

Regalado (Chairman), Melo, and Martinez, JJ., concur.


Puno- no part.

Republic
SUPREME
Manila
FIRST DIVISION

of

the

Philippines
COURT

G.R. No. 93468 December 29, 1994


NATIONAL ASSOCIATION OF TRADE UNIONS (NATU)REPUBLIC
PLANTERS
BANK
SUPERVISORS
CHAPTER, petitioner,
vs.
HON. RUBEN D. TORRES, SECRETARY OF LABOR AND
EMPLOYMENT
and
REPUBLIC
PLANTERS
BANK,respondents.
Filemon G. Tercero for petitioner.
The Government Corporate Counsel for Republic Planters Bank.
BELLOSILLO, J.:
NATIONAL ASSOCIATION OF TRADE UNIONS (NATU)REPUBLIC PLANTERS BANK SUPERVISORS CHAPTER seeks
nullification of the decision of public respondent Secretary of Labor
dated 23 March 1990, which modified the order of Med-Arbiter
Manases T. Cruz dated 17 August 1989 as well as his order dated 20
April 1990 denying reconsideration.
On 17 March 1989, NATU filed a petition for certification election to
determine the exclusive bargaining representative of respondent
Bank's employees occupying supervisory positions. On 24 April 1989,
the Bank moved to dismiss the petition on the ground that the
supposed supervisory employees were actually managerial and/or
confidential employees thus ineligible to join, assist or form a union,
and that the petition lacked the 20% signatory requirement under the
Labor Code.
On 17 August 1989, Med-Arbiter Manases T. Cruz granted the petition
thus
WHEREFORE, . . . let a certification election be ordered conducted
among all the regular employees of the Republic Planters Bank
occupying supervisory positions or the equivalent within 20 days from
receipt of a copy of this Order. The choice shall be: (1) National

Association of Trade Unions (NATU)-Republic Planters Bank


Supervisors Chapter; and (2) No Union.
The payroll three months prior to the filing of this petition shall be
utilized in determining the list of eligible voters . . . . 1
Respondent Bank appealed the order to the Secretary of Labor on the
main ground that several of the employees sought to be included in the
certification election, particularly the Department Managers, Branch
Managers/OICs, Cashiers and Controllers were managerial and/or
confidential employees and thus ineligible to join, assist or form a
union. It presented annexes detailing the job description and duties of
the positions in question and affidavits of certain employees. It also
invoked provisions of the General Banking Act and the Central Bank
Act to show the duties and responsibilities of the bank and its
branches.
On 23 March 1990, public respondent issued a decision partially
granting the appeal, which is now being challenged before us
WHEREFORE, . . . the appeal is hereby partially granted.
Accordingly, the Order dated 17 August 1989 is modified to the extent
that Department Managers, Assistant Managers, Branch Managers,
Cashiers and Controllers are declared managerial employees. Perforce,
they cannot join the union of supervisors such as Division Chiefs,
Accounts Officers, Staff Assistants and OIC's (sic) unless the latter are
regular managerial employees . . . . 2
NATU filed a motion for reconsideration but the same was denied on
20 April 1990. 3 Hence this recourse assailing public respondent for
rendering the decision of 23 March 1990 and the order of 20 April
1990 both with grave abuse of discretion.
The crucial issue presented for our resolution is whether the
Department Managers, Assistant Managers, Branch Managers/OICs,
Cashiers and Controllers of respondent Bank are managerial and/or
confidential employees hence ineligible to join or assist the union of
petitioner.
NATU submits that an analysis of the decision of public respondent
readily yields certain flaws that result in erroneous conclusions.
Firstly, a branch does not enjoy relative autonomy precisely because it
is treated as one unit with the head office and has to comply with
uniform policies and guidelines set by the bank itself. It would be
absurd if each branch of a particular bank would be adopting and
implementing different policies covering multifarious banking

transactions. Moreover, respondent Bank's own evidence clearly shows


that policies and guidelines covering the various branches are set by
the head office. Secondly, there is absolutely no evidence showing that
bank policies are laid down through the collective action of the Branch
Manager, the Cashier and the Controller. Thirdly, the organizational
setup where the Branch Manager exercises control over branch
operations, the Controller controls the Accounting Division, and the
Cashier controls the Cash Division, is nothing but a proper delineation
of duties and responsibilities. This delineation is a Central Bank
prescribed internal control measure intended to objectively establish
responsibilities among the officers to easily pinpoint culpability in
case of error. The "dual control" and "joint custody" aspects mentioned
in the decision of public respondent are likewise internal control
measures prescribed by the Central Bank.
Neither is there evidence showing that subject employees are vested
with powers or prerogatives to hire, transfer, suspend, lay off, recall,
discharge, assign or discipline employees. The bare allegations in the
affidavits of respondent Bank's Executive Assistant to the
President 4 and the Senior Manager of the Human Resource
Management Department 5 that those powers and prerogatives are
inherent in subject positions are self-serving. Their claim cannot be
made to prevail upon the actual duties and responsibilities of subject
employees.
The other evidence of respondent Bank which purports to show that
subject employees exercise managerial functions even belies such
claim. Insofar as Department Managers and Assistant Managers are
concerned, there is absolutely no reason mentioned in the decision
why they are managerial employees. Not even respondent Bank in its
appeal questioned the inclusion of Assistant Managers among the
qualified petitioning employees. Public respondent has deviated from
the real issue in this case, which is, the determination of whether
subject employees are managerial employees within the contemplation
of the Labor Code, as amended by RA 6715; instead, he merely
concentrated on the nature, conduct and management of banks
conformably with the General Banking Act and the Central Bank Act.
Petitioner concludes that subject employees are not managerial
employees but supervisors. Even assuming that they are confidential
employees, there is no legal prohibition against confidential employees
who are not performing managerial functions to form and join a union.

On the other hand, respondent Bank maintains that the Department


Managers, Branch Managers, Cashiers and Controllers are inherently
possessed of the powers enumerated in Art. 212, par. (m), of the Labor
Code. It relies heavily on the affidavits of its Executive Assistant to the
President and Senior Manager of the Human Resource Department.
The Branch Managers, Cashiers and Controllers are vested not only
with policy-making powers necessary to run the affairs of the branch,
given the independence and relative autonomy which it enjoys in the
pursuit of its goals and objectives, but also with the concomitant
disciplinary authority over the employees.
The Solicitor General argues that NATU loses sight of the fact that by
virtue of the appeal of respondent Bank, the whole case is thrown open
for consideration by public respondent. Even errors not assigned in the
appeal, such as the exclusion by the Med-Arbiter of Assistant
Managers from the managerial employees category, is within his
discretion to consider as it is closely related to the errors properly
assigned. The fact that Department Managers are managerial
employees is borne out by the evidence of petitioner itself.
Furthermore, while it assails public respondent's finding that subject
employees are managerial employees, petitioner never questioned the
fact that said officers also occupy confidential positions and thus
remain prohibited from forming or joining any labor organization.
Respondent Bank has no legal personality to move for the dismissal of
the petition for certification election on the ground that its supervisory
employees are in reality managerial employees. An employer has no
standing to question the process since this is the sole concern of the
workers. The only exception is where the employer itself has to file the
petition pursuant to Art. 258 of the Labor Code because of a request to
bargain collectively. 6
Public respondent, invoking RA 6715 and the inherent functions of
Department Managers, Assistant Managers, Branch Managers,
Cashiers and Controllers, held that these officers properly fall within
the definition of managerial employees. The ratiocination in his
Decision of 23 March 1990 7 is that
Republic Act No. 6715, otherwise known as the Herrera-Veloso Law,
restored the right of supervisors to form their own unions while
maintaining the proscription on the right to self-organization of
managerial employees. Accordingly, the Labor Code, as amended,

distinguishes managerial, supervisory and rank-and-file employees


thus:
Art. 212 (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 managerial authority is not routinary in
nature but requires the use of independent judgment. All employees
not falling within any of the above definitions are considered rankand-file employees (emphasis supplied).
At first glance, pursuant to the above-definitions and based on their job
descriptions as guideposts, there would seem to be no difficulty in
distinguishing a managerial employee from that of a supervisor, or
from that of a mere rank-and-file employee. Yet, this task takes on a
different dimension when applied to banks, particularly the branches
thereof. This is so because unlike ordinary corporations, a bank's
organizational operation is governed and regulated by the General
Banking Act and the Central Bank Act, both special laws . . . .
As pointed out by the respondent, in the banking industry, a branch is
the microcosm of a banking institution, uniquely autonomous and
self-governing.
This relative autonomy of a branch finds legal basis in Section 27 of
the General Banking Act, as amended, thus:
. . . . The bank shall be responsible for all business conducted in such
branches to the same extent and in the same manner as though such
business had all been conducted in the head office.
For the purpose of this Act, a bank and its branches shall be treated as
a unit (emphasis supplied).
Conformably with the above, bank policies are laid down and/or
executed through the collective action of the Branch Manager, Cashier
and Controller at the branch level. The Branch Manager exercises
over-all control and supervision over branch operation being on the top
of the branch's pyramid structure. However, both the controller and the
cashier who are called in banking parlance as "Financial Managers"
due to their fiscal functions are given such a share and sphere of
responsibility in the operations of the bank. The cashier controls and
supervises the cash division while the controller that of the Accounting

Division. Likewise, their assigned task is of great significance, without


which a bank or branch for that matter cannot operate or function.
Through the collective action of these three branch officers operational
transactions are carried out like: The two (2)-signature requirement of
the manager, on one hand, and that of the controller or cashier on the
other hand as required in bank's issuances and releases. This is the socalled "dual control" through check-and-balance as prescribed by the
Central Bank, per Section 1166.6, Book I, Manual of Regulations for
Banks and Financial Intermediaries. Another is in the joint custody of
the branch's cash in vault, accountable forms, collaterals, documents of
title, deposit, ledgers and others, among the branch manager and at
least two (2) officers of the branch as required under Section 1166.6 of
the Manual of Regulations for Banks and Other Financial
Intermediaries.
This structural set-up creates a triad of managerial authority among
the branch manager, cashier and controller. Hence, no officer of the
bank ". . . have (sic) complete authority and responsibility for handling
all phases of any transaction from beginning to end without some
control or balance from some other part of the organization" (Section
1166.3, Division of Duties and Responsibilities, Ibid).This aspect in
the banking system which calls for the division of duties and
responsibilities is a clear manifestation of managerial power and
authority. No operational transaction at branch level is carried out by
the singular act of the Branch Manager but rather through the
collective act of the Branch Manager, Cashier/Controller (emphasis
supplied).
Noteworthy is the "on call client" set up in banks. Under this scheme,
the branch manager is tasked with the responsibility of business
development and marketing of the bank's services which place him on
client call. During such usual physical absences from the branch, the
cashier assumes the reins of branch control and administration. On
those occasions, the "dual control system" is clearly manifest in the
transactions and operations of the branch bank as it will then require
the necessary joint action of the controller and the cashier.
The grave abuse of discretion committed by public respondent is at
once apparent. Art. 212, par. (m), of the Labor Code is explicit. A
managerial employee is (a) one who is vested with powers or
prerogatives to lay down and execute management policies, or to hire,
transfer, suspend, lay off, recall, discharge, assign or discipline

employees; or (b) one who is vested with both powers or prerogatives.


A supervisory employee is different from a managerial employee in
the sense that the supervisory employee, in the interest of the
employer, effectively recommends such managerial actions, if the
exercise of such managerial authority is not routinary in nature but
requires the use of independent judgment.
Ranged against these definitions and after a thorough examination of
the evidence submitted by both parties, we arrive at a contrary
conclusion. Branch Managers, Cashiers and Controllers of respondent
Bank are not managerial employees but supervisory employees. The
finding of public respondent that bank policies are laid down and/or
executed through the collective action of these employees is simply
erroneous. His discussion on the division of their duties and
responsibilities does not logically lead to the conclusion that they are
managerial employees, as the term is defined in Art. 212, par. (m).
Among the general duties and responsibilities of a Branch Manager is
"[t]o discharge his duties and authority with a high sense of
responsibility and integrity and shall at all times be guided by
prudence like a good father of the family, and sound judgment in
accordance with and within the limitations of the policy/policies
promulgated by the Board of Directors and implemented by the
Management until suspended, superseded, revoked or modified" (par.
5, emphasis supplied). 8 Similarly, the job summary of a Controller
states: "Supervises the Accounting Unit of the branch;sees to the
compliance by the Branch with established procedures, policies, rules
and regulations of the Bank and external supervising authorities; sees
to the strict implementation of control procedures (emphasis
supplied). 9 The job description of a Cashier does not mention any
authority on his part to lay down policies, either. 10 On the basis of the
foregoing evidence, it is clear that subject employees do not participate
in policy-making but are given approved and established policies to
execute and standard practices to observe, 11 leaving little or no
discretion at all whether to implement said policies or not. 12 It is the
nature of the employee's functions, and not the nomenclature or title
given to his job, which determines whether he has rank-and-file,
supervisory or managerial status. 13
Moreover, the bare statement in the affidavit of the Executive Assistant
to the President of respondent Bank that the Branch Managers,
Cashiers and Controllers "formulate and implement the plans, policies

and marketing strategies of the branch towards the successful


accomplishment of its profit targets and objectives," 14 is contradicted
by the following evidence submitted by respondent Bank itself:
(a) Memorandum issued by respondent Bank's Assistant Vice President
to all Regional Managers and Branch Managers giving them
temporary discretionary authority to grant additional interest over the
prescribed board rates for both short-term and long-term CTDs
subject, however, to specific limitations and guidelines set forth in the
same memorandum; 15
(b) Memorandum issued by respondent Bank's Executive Vice
President to all Regional Managers and Branch Officers regarding the
policy and guidelines on drawing against uncollected deposits
(DAUD); 16
(c) Memorandum issued by respondent Bank's President to all Field
Offices regarding the guidelines on domestic bills purchased
(DBP); 17 and
(d) Memorandum issued by the same officer to all Branch Managers
regarding lending authority at the branch level and the terms and
conditions thereof. 18
As a consequence, the affidavit of the Executive Assistant cannot be
given any weight at all.
Neither do the Branch Managers, Cashiers and Controllers have the
power to hire, transfer, suspend, lay off, recall, discharge, assign or
discipline employees. The Senior Manager of the Human Resource
Management Department of respondent Bank, in her affidavit, stated
that "the power to hire, fire, suspend, transfer, assign or otherwise
impose discipline among subordinates within their respective
jurisdictions is lodged with the heads of the various departments, the
branch managers and officers-in-charge, the branch cashiers and the
branch controllers. Inherent as it is in the aforementioned positions, the
authority to hire, fire, suspend, transfer, assign or otherwise discipline
employees within their respective domains was deemed unnecessary to
be incorporated in their individual job descriptions; By way of
illustration, on August 24, 1989, Mr. Renato A. Tuates, the Officer-inCharge/Branch Cashier of the Bank's Dumaguete Branch, placed under
preventive suspension and thereafter terminated the teller of the same
branch . . . . Likewise, on February 22, 1989, Mr. Francis D. Robite,
Sr., the Officer-in-Charge of International Department, assigned the

cable assistant of the International Department as the concurrent


FCDU Accountable Forms Custodian." 19
However, a close scrutiny of the memorandum of Mr. Tuates reveals
that he does not have said managerial power because as plainly stated
therein, it was issued "upon instruction from Head Office." 20 With
regard to the memorandum of Mr. Robite, Sr., it appears that the power
he exercised was merely in an isolated instance, taking into account
the other evidence submitted by respondent Bank itself showing lack
of said power by other Branch Managers/OICs:
(a) Memorandum from the Branch Manager for the
AVP-Manpower Management Department expressing the opinion that
a certain employee, due to habitual absenteeism and tardiness, must be
penalized in accordance with respondent Bank's Code of Discipline;
and
(b) Memorandum from a Branch OIC for the Assistant Vice President
recommending a certain employee's promotional adjustment to the
present position he occupies.
Clearly, those officials or employees possess only recommendatory
powers subject to evaluation, review and final action by higher
officials. Therefore, the foregoing affidavit cannot bolster the stand of
respondent Bank.
The positions of Department Managers and Assistant Managers were
also declared by public respondent as managerial, without providing
any basis therefor. Petitioner asserts that the position of Assistant
Manager was not even included in the appeal filed by respondent
Bank. While we agree with the Office of the Solicitor General that it is
within the discretion of public respondent to consider an unassigned
issue that is closely related to an issue properly assigned, still, public
respondent's error lies in the fact that his finding has no leg to stand
on. Anyway, inasmuch as the entire records are before us, now is the
opportunity to discuss this issue.
We analyzed the evidence submitted by respondent Bank in support of
its claim that Department Managers are managerial employees 21 and
concluded that they are not. Like Branch Managers, Cashiers and
Controllers, Department Managers do not possess the power to lay
down policies nor to hire, transfer, suspend, lay off, recall, discharge,
assign or discipline employees. They occupy supervisory positions,
charged with the duty among others to "recommend proposals to
improve and streamline operations." 22 With respect to Assistant

Managers, there is absolutely no evidence submitted to substantiate


public respondent's finding that they are managerial employees;
understandably so, because this position is not included in the appeal
of respondent Bank.
As regards the other claim of respondent Bank that Branch
Managers/OICs, Cashiers and Controllers are confidential employees,
having control, custody and/or access to confidential matters, e.g., the
branch's cash position, statements of financial condition, vault
combination, cash codes for telegraphic transfers, demand drafts and
other negotiable instruments, 23 pursuant to Sec. 1166.4 of the Central
Bank Manual regarding joint custody, 24 this claim is not even disputed
by petitioner. A confidential employee is one entrusted with confidence
on delicate matters, or with the custody, handling, or care and
protection of the employer's property. 25 While Art. 245 of the Labor
Code singles out managerial employees as ineligible to join, assist or
form any labor organization, under the doctrine of necessary
implication, confidential employees are similarly disqualified. 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 cases 26 the
latest of which is Chua v. Civil Service Commission 27 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 enactment, to be an allembracing legislation may be 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 . . . . 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 . . . .
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, 28 thus: ". . . 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 interests 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. 29 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. 30 It is not farfetched that in the course of collective
bargaining, they might jeopardize that interest which they are dutybound to protect. Along the same line of reasoning we held in Golden
Farms, Inc. v. Ferrer-Calleja 31 reiterated in Philips Industrial
Development, Inc. v. NLRC, 32that "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."
In fine, only the Branch Managers/OICs, Cashiers and Controllers of
respondent Bank, being confidential employees, are disqualified from
joining or assisting petitioner Union, or joining, assisting or forming
any other labor organization. But this ruling should be understood to
apply only to the present case based on the evidence of the parties, as
well as to those similarly situated. It should not be understood in any
way to apply to banks in general.
WHEREFORE, the petition is partially GRANTED. The decision of
public respondent Secretary of Labor dated 23 March 1990 and his
order dated 20 April 1990 are MODIFIED, hereby declaring that only
the Branch Managers/OICs, Cashiers and Controllers of respondent
Republic Planters Bank are ineligible to join or assist petitioner
National Association of Trade Unions (NATU)-Republic Planters Bank

Supervisors Chapter, or join, assist or form any other labor


organization.
SO ORDERED.
Davide, Jr., Quiason and Kapunan, JJ., concur.

Separate Opinions
PADILLA, J., concurring and dissenting:
I concur in the majority opinion's conclusion that respondent Bank's
Branch Managers/OICs, Cashiers and Controllers, being confidential
employees of the Bank, are disqualified from joining or assisting
petitioner labor union or joining, assisting or forming any other labor
organization, including a supervisor's union.
However, I dissent from its conclusion that respondent Bank's
Department Managers and Department Assistant Managers are not
disqualified from joining a labor union including a supervisors' union.
My years of experience in the banking industry (perhaps irrelevant to
this case) have shown that positions of such Department Heads
(Managers) are as confidential, if not more, than the position of
Branch Managers. In fact, most of such Department Heads are VicePresidents of the Bank, which underscores their status both as
managerial employees and confidential personnel of the Bank. It
would be incongruous for a Department Manager who, as already
stated, is usually a Vice-President, to be a member of the same labor
organization as his messenger or supervisory account executives. It
would be even more untenable and dangerous for a Department
Manager who usually is a Vice-President, being a member of a labor
union, to be designated a union representative for purposes of
collective bargaining with the management of which he is a part. I
think the public respondent is correct in disqualifying from
membership in a labor union of supervisors, those who are Department
Managers and Assistant Managers.
I, therefore, vote for the affirmance in toto of public respondent's
decision of 23 March 1990 and order of 20 April 1990.
# Separate Opinions

PADILLA, J., concurring and dissenting:


I concur in the majority opinion's conclusion that respondent Bank's
Branch Managers/OICs, Cashiers and Controllers, being confidential
employees of the Bank, are disqualified from joining or assisting
petitioner labor union or joining, assisting or forming any other labor
organization, including a supervisor's union.
However, I dissent from its conclusion that respondent Bank's
Department Managers and Department Assistant Managers are not
disqualified from joining a labor union including a supervisors' union.
My years of experience in the banking industry (perhaps irrelevant to
this case) have shown that positions of such Department Heads
(Managers) are as confidential, if not more, than the position of
Branch Managers. In fact, most of such Department Heads are VicePresidents of the Bank, which underscores their status both as
managerial employees and confidential personnel of the Bank. It
would be incongruous for a Department Manager who, as already
stated, is usually a Vice-President, to be a member of the same labor
organization as his messenger or supervisory account executives. It
would be even more untenable and dangerous for a Department
Manager who usually is a Vice-President, being a member of a labor
union, to be designated a union representative for purposes of
collective bargaining with the management of which he is a part. I
think the public respondent is correct in disqualifying from
membership in a labor union of supervisors, those who are Department
Managers and Assistant Managers.
I, therefore, vote for the affirmance in toto of public respondent's
decision of 23 March 1990 and order of 20 April 1990.

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


METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE
MA. NIEVES ROLDAN-CONFESOR, in her capacity as
Secretary of the Department of Labor and Employment and
METRO DRUG CORPORATION EMPLOYEES
ASSOCIATION-FEDERATION OF FREE
WORKERS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF
ADMINISTRATIVE AGENCIES; RULE; CASE AT BAR. - We
reaffirm the doctrine that considering their expertise in their respective
fields, factual findings of administrative agencies supported by
substantial evidence are accorded great respect and binds this
Court. The Secretary of Labor ruled, thus: x x x Any act committed
during the pendency of the dispute that tends to give rise to further
contentious issues or increase the tensions between the parties should
be considered an act of exacerbation. One must look at the act itself,
not on speculative reactions. A misplaced recourse is not needed to
prove that a dispute has been exacerbated. For instance, the Union
could not be expected to file another notice of strike. For this would
depart from its theory of the case that the layoff is subsumed under the
instant dispute, for which a notice of strike had already been filed. On
the other hand, to expect violent reactions, unruly behavior, and any
other chaotic or drastic action from the Union is to expect it to commit
acts disruptive of public order or acts that may be illegal. Under a
regime of laws, legal remedies take the place of violent ones. x xx
Protest against the subject layoffs need not be in the form of violent
action or any other drastic measure. In the instant case the Union
registered their dissent by swiftly filing a motion for a cease and desist
order. Contrary to petitioners allegations, the Union strongly
condemned the layoffs and threatened mass action if the Secretary of
Labor fails to timely intervene: x x x 3. This unilateral action of
management is a blatant violation of the injunction of this Office
against committing acts which would exacerbate the dispute. Unless
such act is enjoined the Union will be compelled to resort to its legal
right to mass actions and concerted activities to protest and stop the
said management action. This mass layoff is clearly one which would

result in a very serious dispute unless this Office swiftly intervenes. x


x x Metrolab and the Union were still in the process of resolving their
CBA deadlock when petitioner implemented the subject layoffs. As a
result, motions and oppositions were filed diverting the parties
attention, delaying resolution of the bargaining deadlock and
postponing the signing of their new CBA, thereby aggravating the
whole conflict.
2. LABOR AND SOCIAL LEGISLATION; TERMINATION
OF EMPLOYMENT; EXERCISE OF MANAGEMENT
PREROGATIVES; NOT ABSOLUTE; SUBJECT TO
EXCEPTIONS IMPOSED BY LAW. - This Court recognizes the
exercise of management prerogatives and often declines to interfere
with the legitimate business decisions of the employer. However, this
privilege is not absolute but subject to limitations imposed by law.
In PAL vs. NLRC, (225 SCRA 301 [1993]), we issued this reminder: ...
the exercise of management prerogatives was never considered
boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was
held that managements prerogatives must be without abuse of
discretion ...All this points to the conclusion that the exercise of
managerial prerogatives is not unlimited. It is circumscribed by
limi(ations found in law, a collective bargaining agreement, or the
general principles of fair play and justice (University of Sto. Tomas v.
NLRC, 190 SCRA 758 [1990]).
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN EXCEPTION.
- The case at bench constitutes one of the exceptions. The Secretary of
Labor is expressly given the power under the Labor Code to assume
jurisdiction and resolve labor disputes involving industries
indispensable to national interest. The disputed injunction is
subsumed under this special grant of authority. Art. 263 (g) of the
Labor Code specifically provides that: x x x (g) When, in his opinion,
there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the
effect of automatically enjoining the intended or impending strike or
lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and

the employer shall immediately resume operations and readmit all


workers under the same terms and conditions prevailing before the
strike or lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with such orders as
he may issue to enforce the same. . . . That Metrolabs business is of
national interest is not disputed. Metrolab is one of the leading
manufacturers and suppliers of medical and pharmaceutical products
to the country. Metrolabs management prerogatives, therefore, are not
being unjustly curtailed but duly balanced with and tempered by the
limitations set by law, taking into account its special character and the
particular circumstances in the case at bench.
4. ID.; LABOR RELATIONS; INELIGIBILITY OF
MANAGERIAL EMPLOYEES TO JOIN, FORM AND ASSIST
ANY LABOR ORGANIZATION; PROHIBITION EXTENDED
TO CONFIDENTIAL EMPLOYEES. - Although Article 245 of the
Labor Code limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this
prohibition to confidential employees or those who by reason of their
positions or nature of work are required to assist or act in a fiduciary
manner to managerial employees and hence, are likewise privy to
sensitive and highly confidential records.
5. ID.; ID.; EXCLUSION OF CONFIDENTIAL EMPLOYEES
FROM THE RANK AND FILE BARGAINING UNIT; NOT
TANTAMOUNT TO DISCRIMINATION. - Confidential employees
cannot be classified as rank and file. As previously discussed, the
nature of employment of confidential employees is quite distinct from
the rank and file, thus, warranting a separate category. Excluding
confidential employees from the rank and file bargaining unit,
therefore, is not tantamount to discrimination.
APPEARANCES OF COUNSEL
Bautista Picazo Buyco Tan & Fider for petitioner.
The Solicitor General for public respondent.
Perfecto V. Fernandez, Jose P. Fernandez & Cristobal P.
Fernandez for Metro Drug Corporation.
DECISION
KAPUNAN, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of
Court seeking the annulment of the Resolution and Omnibus

Resolution of the Secretary of Labor and Employment dated 14 April


1992 and 25 January 1993, respectively, in OS-AJ-04491-11 (NCMBNCR-NS-08-595-9 1; NCMB-NCR-NS-09-678-91) on grounds that
these were issued with grave abuse of discretion and in excess of
jurisdiction.
Private respondent Metro Drug Corporation Employees AssociationFederation of Free Workers (hereinafter referred to as the Union) is a
labor organization representing the rank and file employees of
petitioner Metrolab Industries, Inc. (hereinafter referred to as
Metrolab/MII) and also of Metro Drug, Inc.
On 31 December 1990, the Collective Bargaining Agreement (CBA)
between Metrolab and the Union expired. The negotiations for a new
CBA, however, ended in a deadlock.
Consequently, on 23 August 1991, the Union filed a notice of strike
against Metrolab and Metro Drug Inc. The parties failed to settle their
dispute despite the conciliation efforts of the National Conciliation and
Mediation Board.
To contain the escalating dispute, the then Secretary of Labor and
Employment, Ruben D. Torres, issued an assumption order dated 20
September 1991, the dispositive portion of which reads, thus:
WHEREFORE, PREMISES CONSIDERED, and pursuant to Article
263 (g) of the Labor Code, as amended, this Office hereby assumes
jurisdiction over the entire labor dispute at Metro Drug, Inc. - Metro
Drug Distribution Division and Metrolab Industries Inc.
Accordingly, any strike or lockout is hereby strictly enjoined. The
Companies and the Metro Drug Corp. Employees Association - FFW
are likewise directed to cease and desist from committing any and all
acts that might exacerbate the situation.
Finally, the parties are directed to submit their position papers and
evidence on the aforequoted deadlocked issues to this office within
twenty (20) days from receipt hereof.
SO ORDERED.[1] (Italics ours.)
On 27 December 1991, then Labor Secretary Torres issued an order
resolving all the disputed items in the CBA and ordered the parties
involved to execute a new CBA.
Thereafter, the Union filed a motion for reconsideration.
On 27 January 1992, during the pendency of the abovementioned
motion for reconsideration, Metrolab laid off 94 of its rank and file
employees.

On the same date, the Union filed a motion for a cease and desist order
to enjoin Metrolab from implementing the mass layoff, alleging that
such act violated the prohibition against committing acts that would
exacerbate the dispute as specifically directed in the assumption order.
[2]

On the other hand, Metrolab contended that the layoff was temporary
and in the exercise of its management prerogative. It maintained that
the company would suffer a yearly gross revenue loss of
approximately sixty-six (66) million pesos due to the withdrawal of its
principals in the Toll and Contract Manufacturing
Department. Metrolab further asserted that with the automation of the
manufacture of its product Eskinol, the number of workers required
its production is significantly reduced.[3]
Thereafter, on various dates, Metrolab recalled some of the laid off
workers on a temporary basis due to availability of work in the
production lines.
On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a
resolution declaring the layoff of Metrolabs 94 rank and file workers
illegal and ordered their reinstatement with full backwages. The
dispositive portion reads as follows:
WHEREFORE, the Unions motion for reconsideration is granted in
part, and our order of 28 December 1991 is affirmed subject to the
modifications in allowances and in the close shop provision. The
layoff of the 94 employees at MII is hereby declared illegal for the
failure of the latter to comply with our injunction against committing
any act which may exacerbate the dispute and with the 30-day notice
requirement. Accordingly, MII is hereby ordered to reinstate the 94
employees, except those who have already been recalled, to their
former positions or substantially equivalent, positions with full
backwages from the date they were illegally laid off on 27 January
1992 until actually reinstated without loss of seniority rights and other
benefits. Issues relative to the CBA agreed upon by the parties and not
embodied in our earlier order are hereby ordered adopted for
incorporation in the CBA. Further, the dispositions and directives
contained in all previous orders and resolutions relative to the instant
dispute, insofar as not inconsistent herein, are reiterated. Finally, the
parties are enjoined to cease and desist from committing any act which
may tend to circumvent this resolution.
SO RESOLVED.[4]

On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration


alleging that the layoff did not aggravate the dispute since no untoward
incident occurred as a result thereof. It, likewise, filed a motion for
clarification regarding the constitution of the bargaining unit covered
by the CBA.
On 29 June 1992, after exhaustive negotiations, the parties entered into
a new CBA. The execution, however, was without prejudice to the
outcome of the issues raised in the reconsideration and clarification
motions submitted for decision to the Secretary of Labor.[5]
Pending the resolution of the aforestated motions, on 2 October 1992,
Metrolab laid off 73 of its employees on grounds of redundancy due to
lack of work which the Union again promptly opposed on 5 October
1992.
On 15 October 1992, Labor Secretary Confesor again issued a cease
and desist order. Metrolab moved for a reconsideration.[6]
On 25 January 1993, Labor Secretary Confesor issued the assailed
Omnibus Resolution containing the following orders:
xxx
xxx
xxx.
1. MIIs motion for partial reconsideration of our 14 April 1992
resolution specifically that portion thereof assailing our ruling that the
layoff of the 94 employees is illegal, is hereby denied. MII is hereby
ordered to pay such employees their full backwages computed from
the time of actual layoff to the time of actual recall;
2. For the parties to incorporate in their respective collective
bargaining agreements the clarifications herein contained; and
3. MIIs motion for reconsideration with respect to the consequences
of the second wave of layoff affecting 73 employees, to the extent of
assailing our ruling that such layoff tended to exacerbate the dispute, is
hereby denied. But inasmuch as the legality of the layoff was not
submitted for our resolution and no evidence had been adduced upon
which a categorical finding thereon can be based, the same is hereby
referred to the NLRC for its appropriate action.
Finally, all prohibitory injunctions issued as a result of our assumption
of jurisdiction over this dispute are hereby lifted.
SO RESOLVED.[7]
Labor Secretary Confesor also ruled that executive secretaries are
excluded from the closed-shop provision of the CBA, not from the
bargaining unit.

On 4 February 1993, the Union filed a motion for execution. Metrolab


opposed. Hence, the present petition for certiorari with application for
issuance of a Temporary Restraining Order.
On 4 March 1993, we issued a Temporary Restraining Order enjoining
the Secretary of Labor from enforcing and implementing the assailed
Resolution and Omnibus Resolution dated 14 April 1992 and 25
January 1993, respectively.
In its petition, Metrolab assigns the following errors:
A
THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR
AND EMPLOYMENT COMMITTED GRAVE ABUSE OF
DISCRETION AND EXCEEDED HER JURISDICTION IN
DECLARING THE TEMPORARY LAYOFF ILLEGAL AND
ORDERING THE REINSTATEMENT AND PAYMENT OF
BACKWAGES TO THE AFFECTED EMPLOYEES.*
B
THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR
AND EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN
INCLUDING EXECUTIVE SECRETARIES AS PART OF THE
BARGAINING UNIT OF RANK AND FILE EMPLOYEES.[8]
Anent the first issue, we are asked to determine whether or not public
respondent Labor Secretary committed grave abuse of discretion and
exceeded her jurisdiction in declaring the subject layoffs instituted by
Metrolab illegal on grounds that these unilateral actions aggravated the
conflict between Metrolab and the Union who were, then, locked in a
stalemate in CBA negotiations.
Metrolab argues that the Labor Secretarys order enjoining the parties
from committing any act that might exacerbate the dispute is overly
broad, sweeping and vague and should not be used to curtail the
employers right to manage his business and ensure its viability.
We cannot give credence to Metrolabs contention.
This Court recognizes the exercise of management prerogatives and
often declines to interfere with the legitimate business decisions of the
employer. However, this privilege is not absolute but subject to
limitations imposed by law.[9]
In PAL v. NLRC,[10] we issued this reminder:
xxx
xxx
xxx
. . .the exercise of management prerogatives was never considered
boundless. Thus, in Cruz vs. Medina ( 177 SCRA 565 [1989]), it was

held that managements prerogatives must be without abuse of


discretion....
xxx
xxx
xxx
All this points to the conclusion that the exercise of managerial
prerogatives is not unlimited. It is circumscribed by limitations found
in law, a collective bargaining agreement, or the general principles of
fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA
758 [1990]). . . . (Italics ours.)
xxx
xxx
xxx.
The case at bench constitutes one of the exceptions. The Secretary of
Labor is expressly given the power under the Labor Code to assume
jurisdiction and resolve labor disputes involving industries
indispensable to national interest. The disputed injunction is
subsumed under this special grant of authority. Art. 263 (g) of the
Labor Code specifically provides that:
xxx
xxx
xxx
(g) When, in his opinion, there exists a labor dispute causing or likely
to cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption
or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately
resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of
law enforcement agencies to ensure compliance with this provision as
well as with such orders as he may issue to enforce the same. . . (Italics
ours.)
xxx
xxx
xxx.
That Metrolabs business is of national interest is not
disputed. Metrolab is one of the leading manufacturers and suppliers
of medical and pharmaceutical products to the country.
Metro labs management prerogatives, therefore, are not being unjustly
curtailed but duly balanced with and tempered by the limitations set by

law, taking into account its special character and the particular
circumstances in the case at bench.
As aptly declared by public respondent Secretary of Labor in its
assailed resolution:
xxx
xxx
xxx.
MII is right to the extent that as a rule, we may not interfere with the
legitimate exercise of management prerogatives such as layoffs. But it
may nevertheless be appropriate to mention here that one of the
substantive evils which Article 263 (g) of the Labor Code seeks to curb
is the exacerbation of a labor dispute to the further detriment of the
national interest. When a labor dispute has in fact occurred and a
general injunction has been issued restraining the commission of
disruptive acts, management prerogatives must always be exercised
consistently with the statutory objective.[11]
xxx
xxx
xxx.
Metrolab insists that the subject layoffs did not exacerbate their
dispute with the Union since no untoward incident occurred after the
layoffs were implemented. There were no work disruptions or
stoppages and no mass actions were threatened or undertaken. Instead,
petitioner asserts, the affected employees calmly accepted their fate
as this was a matter which they had been previously advised would be
inevitable.[12]
After a judicious review of the record, we find no compelling reason to
overturn the findings of the Secretary of Labor.
We reaffirm the doctrine that considering their expertise in their
respective fields, factual findings of administrative agencies supported
by substantial evidence are accorded great respect and binds this
Court.[13]
The Secretary of Labor ruled, thus:
xxx
xxx
xxx.
Any act committed during the pendency of the dispute that tends to
give rise to further contentious issues or increase the tensions between
the parties should be considered an act of exacerbation. One must
look at the act itself, not on speculative reactions. A misplaced
recourse is not needed to prove that a dispute has been
exacerbated. For instance, the Union could not be expected to file
another notice of strike. For this would depart from its theory of the
case that the layoff is subsumed under the instant dispute, for which a
notice of strike had already been filed. On the other hand, to expect

violent reactions, unruly behavior, and any other chaotic or drastic


action from the Union is to expect it to commit acts disruptive of
public order or acts that may be illegal. Under a regime of laws, legal
remedies take the place of violent ones.[14]
xxx
xxx
xxx.
Protest against the subject layoffs need not be in the form of violent
action or any other drastic measure. In the instant case the Union
registered their dissent by swiftly filing a motion for a cease and desist
order. Contrary to petitioners allegations, the Union strongly
condemned the layoffs and threatened mass action if the Secretary of
Labor fails to timely intervene:
xxx
xxx
xxx.
3. This unilateral action of management is a blatant violation of the
injunction of this Office against committing acts which would
exacerbate the dispute. Unless such act is enjoined the Union will be
compelled to resort to its legal right to mass actions and concerted
activities to protest and stop the said management action. This mass
layoff is clearly one which would result in a very serious labor dispute
unless this Office swiftly intervenes.[15]
xxx
xxx
xxx.
Metrolab and the Union were still in the process of resolving their
CBA deadlock when petitioner implemented the subject layoffs. As a
result, motions and oppositions were filed diverting the parties
attention, delaying resolution of the bargaining deadlock and
postponing the signing of their new CBA, thereby aggravating the
whole conflict.
We, likewise, find untenable Metrolabs contention that the layoff of
the 94 rank-and-file employees was temporary, despite the recall of
some of the laid off workers.
If Metrolab intended the layoff of the 94 workers to be temporary, it
should have plainly stated so in the notices it sent to the affected
employees and the Department of Labor and Employment. Consider
the tenor of the pertinent portions of the layoff notice to the affected
employees:
xxx
xxx
xxx.
Dahil sa mga bagay na ito, napilitan ang ating kumpanya na
magsagawa ng lay-off ng mga empleyado sa Rank & File dahil
nabawasan ang trabaho at puwesto para sa kanila. Marami sa atin ang
kasama sa lay-off dahil wala nang trabaho para sa kanila. Mahirap

tanggapin ang mga bagay na ito subalit kailangan nating gawin dahil
hindi kaya ng kumpanya ang magbayad ng suweldo kung ang
empleyado ay walang trabaho. Kung tayo ay patuloy na magbabayad
ng suweldo, mas hihina ang ating kumpanya at mas marami ang
maaring maapektuhan.
Sa pagpapatupad ng lay-off susundin natin ang LAST IN-FIRST
OUT policy. Ang mga empleyadong may pinakamaikling serbisyo sa
kumpanya ang unang maaapektuhan. Ito ay batay na rin sa nakasaad
sa ating CBA na ang mga huling pumasok sa kumpanya ang unang
masasama sa lay-off kapag nagkaroon ng ganitong mga kalagayan.
Ang mga empleyado na kasama sa lay-off ay nakalista sa sulat na
ito. Ang umpisa ng lay-off ay sa Lunes, Enero 27. Hindi na muna sila
papasok sa kumpanya. Makukuha nila ang suweldo nila sa Enero 30,
1992.
Hindi po natin matitiyak kung gaano katagal ang lay-off ngunit ang
aming tingin ay matatagalan bago magkaroon ng dagdag na
trabaho. Dahil dito, sinimulan na namin ang isang Redundancy
Program sa mga supervisors. Nabawasan ang mga puwesto para sa
kanila, kaya sila ay mawawalan ng trabaho at bibigyan na ng
redundancy pay.[16] (Italics ours.)
xxx
xxx
xxx.
We agree with the ruling of the Secretary of Labor, thus:
xxx
xxx
xxx.
. . .MII insists that the layoff in question is temporary not permanent. It
then cites International Hardware, Inc. vs. NLRC, 176 SCRA 256, in
which the Supreme Court held that the 30-day notice required under
Article 283 of the Labor Code need not be complied with if the
employer has no intention to permanently severe (sic) the employment
relationship.
We are not convinced by this argument. International
Hardware involves a case where there had been a reduction of
workload. Precisely to avoid laying off the employees, the employer
therein opted to give them work on a rotating basis. Though on a
limited scale, work was available. This was the Supreme Courts basis
for holding that there was no intention to permanently severe (sic) the
employment relationship.
Here, there is no circumstance at all from which we can infer an
intention from MII not to sever the employment relationship
permanently. If there was such an intention, MII could have made it

very clear in the notices of layoff. But as it were, the notices are
couched in a language so uncertain that the only conclusion possible is
the permanent termination, not the continuation, of the employment
relationship.
MII also seeks to excuse itself from compliance with the 30-day notice
with a tautology. While insisting that there is really no best time to
announce a bad news, (sic) it also claims that it broke the bad news
only on 27 January 1992 because had it complied with the 30-day
notice, it could have broken the bad news on 02 January 1992, the first
working day of the year. If there is really no best time to announce a
bad news (sic), it wouldnt have mattered if the same was announced
at the first working day of the year. That way, MII could have at least
complied with the requirement of the law.[17]
The second issue raised by petitioner merits our consideration.
In the assailed Omnibus Resolution, Labor Secretary Confesor
clarified the CBA provisions on closed-shop and the scope of the
bargaining unit in this wise:
xxx
xxx
xxx.
Appropriateness of the bargaining unit.
xxx
xxx
xxx.
Exclusions. In our 14 April 1992 resolution, we ruled on the issue of
exclusion as follows:
These aside, we reconsider our denial of the modifications which the
Union proposes to introduce on the close shop provision. While we
note that the provision as presently worded has served the relationship
of the parties well under previous CBAs, the shift in constitutional
policy toward expanding the right of all workers to self-organization
should now be formally recognized by the parties, subject to the
following exclusions only:
1.
Managerial employees; and
2. The executive secretaries of the President, Executive Vice-President,
Vice-President, Vice President for Sales, Personnel Manager, and
Director for Corporate Planning who may have access to vital labor
relations information or who may otherwise act in a confidential
capacity to persons who determine or formulate management policies.
The provisions of Article I (b) and Attachment I of the 1988-1990
CBA shall thus be modified consistently with the foregoing.
Article I (b) of the 1988-1990 CBA provides:

b)Close Shop. - All Qualified Employees must join the Association


immediately upon regularization as a condition for continued
employment. This provision shall not apply to: (i) managerial
employees who are excluded from the scope of the bargaining unit; (ii)
the auditors and executive secretaries of senior executive officers, such
as, the President, Executive Vice-President, Vice-President for
Finance, Head of Legal, Vice-President for Sales, who are excluded
from membership in the Association; and (iii) those employees who are
referred to in Attachment I hereof, subject, however, to the application
of the provision of Article II, par. (b) hereof. Consequently, the abovespecified employees are not required to join the Association as a
condition for their continued employment.
On the other hand, Attachment I provides:
Exclusion from the Scope of the Close Shop Provision
The following positions in the Bargaining Unit are not covered by the
Close Shop provision of the CBA (Article I, par. b):
1. Executive Secretaries of Vice-Presidents, or equivalent positions.
2. Executive Secretary of the Personnel Manager, or equivalent
positions.
3. Executive Secretary of the Director for Corporate Planning, or
equivalent positions.
4. Some personnel in the Personnel Department, EDP Staff at Head
Office, Payroll Staff at Head Office, Accounting Department at Head
Office, and Budget Staff, who because of the nature of their duties and
responsibilities need not join the Association as a condition for their
employment.
5. Newly-hired secretaries of Branch Managers and Regional
Managers.
Both MDD and MII read the exclusion of managerial employees and
executive secretaries in our 14 April 1992 resolution as exclusion from
the bargaining unit. They point out that managerial employees are
lumped under one classification with executive secretaries, so that
since the former are excluded from the bargaining unit, so must the
latter be likewise excluded.
This reading is obviously contrary to the intent of our 14 April 1992
resolution. By recognizing the expanded scope of the right to selforganization, our intent was to delimit the types of employees
excluded from the close shop provision, not from the bargaining unit,
to executive secretaries only. Otherwise, the conversion of the

exclusionary provision to one that refers to the bargaining unit from


one that merely refers to the close shop provision would effectively
curtail all the organizational rights of executive secretaries.
The exclusion of managerial employees, in accordance with law, must
therefore still carry the qualifying phrase from the bargaining unit in
Article I (b)(i) of the 1988-1990 CBA. In the same manner, the
exclusion of executive secretaries should be read together with the
qualifying phrase are excluded from membership in the Association
of the same Article and with the heading of Attachment I. The latter
refers to Exclusions from Scope of Close Shop Provision and
provides that [t]he following positions in Bargaining Unit are not
covered by the close shop provision of the CBA.
The issue of exclusion has different dimension in the case of MII. In
an earlier motion for clarification, MII points out that it has done away
with the positions of Executive Vice-President, Vice-President for
Sales, and Director for Corporate Planning. Thus, the foregoing group
of exclusions is no longer appropriate in its present organizational
structure. Nevertheless, there remain MII officer positions for which
there may be executive secretaries. These include the General
Manager and members of the Management Committee, specifically i)
the Quality Assurance Manager; ii) the Product Development
Manager; iii) the Finance Director; iv) the Management System
Manager; v) the Human Resources Manager; vi) the Marketing
Director; vii) the Engineering Manager; viii) the Materials Manager;
and ix) the Production Manager.
xxx
xxx
xxx
The basis for the questioned exclusions, it should be noted, is no other
than the previous CBA between MII and the Union. If MII had
undergone an organizational restructuring since then, this is a fact to
which we have never been made privy. In any event, had this been
otherwise the result would have been the same. To repeat, we limited
the exclusions to recognize the expanded scope of the right to selforganization as embodied in the Constitution.[18]
Metrolab, however, maintains that executive secretaries of the General
Manager and the executive secretaries of the Quality Assurance
Manager, Product Development Manager, Finance Director,
Management System Manager, Human Resources Manager, Marketing
Director, Engineering Manager, Materials Manager and Production
Manager, who are all members of the companys Management

Committee should not only be exempted from the closed-shop


provision but should be excluded from membership in the bargaining
unit of the rank and file employees as well on grounds that their
executive secretaries are confidential employees, having access to
vital labor information.[19]
We concur with Metrolab.
Although Article 245 of the Labor Code[20] limits the ineligibility to
join, form and assist any labor organization to managerial employees,
jurisprudence has extended this prohibition to confidential employees
or those who by reason of their positions or nature of work are
required to assist or act in a fiduciary manner to managerial employees
and hence, are likewise privy to sensitive and highly confidential
records.
The rationale behind the exclusion of confidential employees from the
bargaining unit of the rank and file employees and their
disqualification to join any labor organization was succinctly discussed
in Philips Industrial Development v. NLRC:[21]
xxx
xxx
xxx.
On the main issue raised before Us, it is quite obvious that respondent
NLRC committed grave abuse of discretion in reversing the decision
of the Executive Labor Arbiter and in decreeing that PIDIs Service
Engineers, Sales Force, division secretaries, all Staff of General
Management, Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems are included within
the rank and file bargaining unit.
In the first place, all these employees, with the exception of the service
engineers and the sales force personnel, are confidential employees.
Their classification as such is not seriously disputed by PEO-FFW; the
five (5) previous CBAs between PIDI and PEO-FFW explicitly
considered them as confidential employees. By the very nature of their
functions, they assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial
functions in the field of labor relations. As such, the rationale behind
the ineligibility of managerial employees to form, assist or join a labor
union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this Court
elaborated on this rationale, thus:
x x x The rationale for this inhibition has been stated to be, because if
these managerial employees would belong to or be affiliated with a

Union, the latter might not be assured of their loyalty to the Union in
view of evident conflict of interests. The Union can also become
company-dominated with the presence of managerial employees in
Union membership.
In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made
this rationale applicable to confidential employees:
This rationale holds true also for confidential employees such as
accounting personnel, radio and telegraph operators, who having
access to confidential information, may become the source of undue
advantage. Said employee(s) may act as a spy or spies of either party
to a collective bargaining agreement. This is specially true in the
present case where the petitioning Union is already the bargaining
agent of the rank-and-file employees in the establishment. To allow
the confidential employees to join the existing Union of the rank-andfile would be in violation of the terms of the Collective Bargaining
Agreement wherein this kind of employees by the nature of their
functions/positions are expressly excluded.
xxx
xxx
xxx.
Similarly, in National Association of Trade Union - Republic Planters
Bank Supervisors Chapter v. Torres[22] we declared:
xxx
xxx
xxx.
. . . As regards the other claim of respondent Bank that Branch
Managers/OICs, Cashiers and Controllers are confidential employees,
having control, custody and/ or access to confidential matters, e.g., the
branchs cash position, statements of financial condition, vault
combination, cash codes for telegraphic transfers, demand drafts and
other negotiable instruments, pursuant to Sec. 1166.4 of the Central
Bank Manual regarding joint custody, this claim is not even disputed
by petitioner. A confidential employee is one entrusted with
confidence on delicate matters, or with the custody, handling, or care
and protection of the employers property. While Art. 245 of the
Labor Code singles out managerial employees as ineligible to join,
assist or form any labor organization, under the doctrine of necessary,
implication, confidential employees are similarly disqualified. . . .
xxx
xxx
xxx.
. . .(I)n the collective bargaining process, managerial employees are
supposed to be on the side of the employer, to act as its
representatives, and to see to it that its interest are well protected. The
employer is not assured of such protection if these employees

themselves are union members. Collective bargaining in such a


situation can become one-sided. It is the same reason that impelled
this Court to consider the position of confidential employees as
included in the disqualification found in Art. 245 as if the
disqualification of confidential employees were written in the
provision. If confidential employees could unionize in order to
bargain for advantages for themselves, then they could be governed by
their own motives rather than the interest of the employers. Moreover,
unionization of confidential employees for the purpose of collective
bargaining would mean the extension of the law to persons or
individuals who are supposed to act in the interest of the
employers. It is not farfetched that in the course of collective
bargaining, they might jeopardize that interest which they are dutybound to protect. . . .
xxx
xxx
xxx.
And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc.
vs. Roldan-Confesor,[23] we ruled that:
xxx
xxx
xxx.
Upon the other hand, legal secretaries are neither managers nor
supervisors. Their work is basically routinary and clerical. However,
they should be differentiated from rank-and-file employees because
they are tasked with, among others, the typing of legal documents,
memoranda and correspondence, the keeping of records and files, the
giving of and receiving notices, and such other duties as required by
the legal personnel of the corporation. Legal secretaries therefore fall
under the category of confidential employees. . . .
xxx
xxx
xxx.
We thus hold that public respondent acted with grave abuse of
discretion in not excluding the four foremen and legal secretary from
the bargaining unit composed of rank-and-file employees.
xxx
xxx
xxx.
In the case at bench, the Union does not disagree with petitioner that
the executive secretaries are confidential employees. It however,
makes the following contentions:
xxx
xxx
xxx.
There would be no danger of company domination of the Union since
the confidential employees would not be members of and would not
participate in the decision making processes of the Union.

Neither would there be a danger of espionage since the confidential


employees would not have any conflict of interest, not being members
of the Union. In any case, there is always the danger that any
employee would leak management secrets to the Union out of
sympathy for his fellow rank and filer even if he were not a member of
the union nor the bargaining unit.
Confidential employees are rank and file employees and they, like all
the other rank and file employees, should be granted the benefits of the
Collective Bargaining Agreement. There is no valid basis for
discriminating against them. The mandate of the Constitution and the
Labor Code, primarily of protection to Labor, compels such
conclusion.[24]
xxx
xxx
xxx.
The Unions assurances fail to convince. The dangers sought to be
prevented, particularly the threat of conflict of interest and espionage,
are not eliminated by non-membership of Metrolabs executive
secretaries or confidential employees in the Union. Forming part of
the bargaining unit, the executive secretaries stand to benefit from any
agreement executed between the Union and Metrolab. Such a
scenario, thus, gives rise to a potential conflict between personal
interests and their duty as confidential employees to act for and in
behalf of Metrolab. They do not have to be union members to affect or
influence either side.
Finally, confidential employees cannot be classified as rank and
file. As previously discussed, the nature of employment of
confidential employees is quite distinct from the rank and file, thus,
warranting a separate category. Excluding confidential employees
from the rank and file bargaining unit, therefore, is not tantamount to
discrimination.
WHEREFORE, premises considered, the petition is partially
GRANTED. The resolutions of public respondent Secretary of Labor
dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to
the extent that executive secretaries of petitioner Metrolabs General
Manager and the executive secretaries of the members of its
Management Committee are excluded from the bargaining unit of
petitioners rank and file employees.
SO ORDERED.
Padilla, Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.

[G.R. No. 110399. August 15, 1997]


SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT
UNION AND ERNESTO L. PONCE, President, petitioners,
vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS
CAPACITY AS UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN
HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL
CORPORATION, respondents.
DECISION
ROMERO, J.:
This is a Petition for Certiorari with Prayer for the Issuance of
Preliminary Injunction seeking to reverse and set aside the Order of
public respondent, Undersecretary of the Department of Labor and
Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case
No. OS MA A-2-70-91[1] entitled In Re: Petition for Certification
Election Among the Supervisory and Exempt Employees of the San
Miguel Corporation Magnolia Poultry Plants of Cabuyao, San
Fernando and Otis, San Miguel Corporation Supervisors and Exempt
Union, Petitioner. The Order excluded the employees under
supervisory levels 3 and 4 and the so-called exempt employees from
the proposed bargaining unit and ruled out their participation in the
certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of
Labor and Employment (DOLE) a Petition for District Certification or
Certification Election among the supervisors and exempt employees of
the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando
and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an
Order ordering the conduct of certification among the supervisors and
exempt employees of the SMC Magnolia Poultry Products Plants of
Cabuyao, San Fernando and Otis as one bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a
Notice of Appeal with Memorandum on Appeal, pointing out, among
others, the Med-Arbiters error in grouping together all three (3)
separate plants, Otis, Cabuyao and San Fernando, into one bargaining

unit, and in including supervisory levels 3 and above whose positions


are confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma,
granted respondent companys Appeal and ordered the remand of the
case to the Med-Arbiter of origin for determination of the true
classification of each of the employees sought to be included in the
appropriate bargaining unit.
Upon petitioner-unions motion dated August 7, 1991, Undersecretary
Laguesma granted the reconsideration prayed for on September 3,
1991 and directed the conduct of separate certification elections
among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4)
and the exempt employees in each of the three plants at Cabuyao, San
Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation
filed a Motion for Reconsideration with Motion to suspend
proceedings.
On March 11, 1993, an Order was issued by the public respondent
granting the Motion, citing the doctrine enunciated in Philips Industrial
Development, Inc. v. NLRC[2] case. Said Order reads in part:
x x x Confidential employees, like managerial employees, are not
allowed to form, join or assist a labor union for purposes of collective
bargaining.
In this case, S3 and S4 and the so-called exempt employees are
admittedly confidential employees and therefore, they are not allowed
to form, join or assist a labor union for purposes of collective
bargaining following the above courts ruling. Consequently, they are
not allowed to participate in the certification election.
WHEREFORE, the motion is hereby granted and the Decision of this
Office dated 03 September 1991 is hereby modified to the extent that
employees under supervisory levels 3 and 4 (S3 and S4) and the socalled exempt employees are not allowed to join the proposed
bargaining unit and are therefore excluded from those who could
participate in the certification election.[3]
Hence this petition.
For resolution in this case are the following issues:
1. Whether Supervisory employees 3 and 4 and the exempt employees
of the company are considered confidential employees, hence
ineligible from joining a union.

2. If they are not confidential employees, do the employees of the


three plants constitute an appropriate single bargaining unit.
On the first issue, this Court rules that said employees do not fall
within the term confidential employees who may be prohibited from
joining a union.
There is no question that the said employees, supervisors and the
exempt employees, are not vested with the powers and prerogatives to
lay down and execute management policies and/or to hire, transfer,
suspend, layoff, recall, discharge or dismiss employees. They are,
therefore, not qualified to be classified as managerial employees who,
under Article 245[4] of the Labor Code, are not eligible to join, assist or
form any labor organization. In the very same provision, they are not
allowed membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of
their own. The only question that need be addressed is whether these
employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate
management policies in the field of labor relations.[5] The two criteria
are cumulative, and both must be met if an employee is to be
considered a confidential employee that is, the confidential
relationship must exist between the employees and his supervisor, and
the supervisor must handle the prescribed responsibilities relating to
labor relations.[6]
The exclusion from bargaining units of employees who, in the normal
course of their duties, become aware of management policies relating
to labor relations is a principal objective sought to be accomplished by
the confidential employee rule. The broad rationale behind this rule
is that employees should not be placed in a position involving a
potential conflict of interests.[7] Management should not be required
to handle labor relations matters through employees who are
represented by the union with the company is required to deal and who
in the normal performance of their duties may obtain advance
information of the companys position with regard to contract
negotiations, the disposition of grievances, or other labor relations
matters.[8]
There have been ample precedents in this regard, thus in Bulletin
Publishing Company v. Hon. Augusto Sanchez,[9] the Court held that
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 interest. The Union can also become
company-dominated with the presence of managerial employees in
Union membership. The same rationale was applied to confidential
employees in Golden Farms, Inc. v. Ferrer-Calleja[10] and in the more
recent case of Philips Industrial Development, Inc. v.
NLRC[11] which held that confidential employees, by the very nature
of their functions, 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. Therefore, the rationale
behind the ineligibility of managerial employees to form, assist or join
a labor union was held equally applicable to them.[12]
An important element of the confidential employee rule is the
employees need to use labor relations information. Thus, in
determining the confidentiality of certain employees, a key questions
frequently considered is the employees necessary access to
confidential labor relations information.[13]
It is the contention of respondent corporation that Supervisory
employees 3 and 4 and the exempt employees come within the
meaning of the term confidential employees primarily because they
answered in the affirmative when asked Do you handle confidential
data or documents? in the Position Questionnaires submitted by the
Union.[14] In the same questionnaire, however, it was also stated that
the confidential information handled by questioned employees relate to
product formulation, product standards and product specification
which by no means relate to labor relations.[15]
Granting arguendo that an employee has access to confidential labor
relations information but such is merely incidental to his duties and
knowledge thereof is not necessary in the performance of such duties,
said access does not render the employee a confidential employee.
[16]
If access to confidential labor relations information is to be a
factor in the determination of an employees confidential status, such
information must relate to the employers labor relations
policies. Thus, an employee of a labor union, or of a management
association, must have access to confidential labor information with
respect to his employer, the union, or the association, to be regarded a
confidential employee, and knowledge of labor relations information
pertaining to the companies with which the union deals, or which the
association represents, will not clause an employee to be excluded

from the bargaining unit representing employees of the union or


association.[17] Access to information which is regarded by the
employer to be confidential from the business standpoint, such as
financial information[18] or technical trade secrets, will not render an
employee a confidential employee.[19]
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift
operations when situations require.
2. To effectively oversee the quality control function at the processing
lines in the storage of chicken and other products.
3. To administer efficient system of evaluation of products in the
outlets.
4. To be directly responsible for the recall, holding and rejection of
direct manufacturing materials.
5. To recommend and initiate actions in the maintenance of sanitation
and hygiene throughout the plant.[20]
It is evident that whatever confidential data the questioned employees
may handle will have to relate to their functions. From the foregoing
functions, it can be gleaned that the confidential information said
employees have access to concern the employers internal business
operations. As held in Westinghouse Electric Corporation v. National
Labor Relations Board,[21] an employee may not be excluded from
appropriate bargaining unit merely because he has access to
confidential information concerning employers internal business
operations and which is not related to the field of labor relations.
It must be borne in mind that Section 3 of Article XIII of the 1987
Constitution mandates the State to guarantee to all workers the right
to self-organization. Hence, confidential employees who may be
excluded from bargaining unit must be strictly defined so as not to
needlessly deprive many employees of their right bargain collectively
through representatives of their choosing.[22]
In the case at bar, supervisors 3 and above may not be considered
confidential employees merely because they handle confidential data
as such must first be strictly classified as pertaining to labor relations
for them to fall under said restrictions. The information they handle
are properly classifiable as technical and internal business operations
data which, to our mind, has no relevance to negotiations and
settlement of grievances wherein the interests of a union and the
management are invariably adversarial. Since the employees are not

classifiable under the confidential type, this Court rules that they may
appropriately form a bargaining unit for purposes of collective
bargaining. Furthermore, even assuming that they are confidential
employees, jurisprudence has established that there is no legal
prohibition against confidential employees who are not performing
managerial functions to form and join a union.[23]
In this connection, the issue of whether the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San
Fernando, and Otis constitute a single bargaining unit needs to be
threshed out.
It is the contention of the petitioner union that the creation of three (3)
separate bargaining units, one each for Cabuyao Otis and San
Fernando as ruled by the respondent Undersecretary, is contrary to the
one-company, one-union policy. It adds that Supervisors level 1 to 4
and exempt employees of the three plants have a similarity or a
community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as a group of
employees of a given employer, comprised of all or less than all of the
entire body of employees, which the collective interest of all the
employees, consistent with equity to the employer, indicate to be best
suited to serve the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law.[24]
A unit to be appropriate must effect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and
other subjects of collective bargaining.[25]
It is readily seen that the employees in the instant case have
community or mutuality of interest, which is the standard in
determining the proper constituency of a collective bargaining unit.
[26]
It is undisputed that they all belong to the Magnolia Poultry
Division of San Miguel Corporation. This means that, although they
belong to three different plants, they perform work of the same nature,
receive the same wages and compensation, and most importantly,
share a common stake in concerted activities.
In light of these considerations, the Solicitor General has opined that
separate bargaining units in the three different plants of the division
will fragmentize the employees of the said division, thus greatly
diminishing their bargaining leverage. Any concerted activity held
against the private respondent for a labor grievance in one bargaining

unit will, in all probability, not create much impact on the operations
of the private respondent. The two other plants still in operation can
well step up their production and make up for the slack caused by the
bargaining unit engaged in the concerted activity. This situation will
clearly frustrate the provisions of the Labor Code and the Mandate of
the Constitution.[27]
The fact that the three plants are located in three different places,
namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in
San Fernando, Pampanga is immaterial. Geographical location can be
completely disregarded if the communal or mutual interests of the
employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer
where all non-academic rank and file employees of the University of
the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los
Baos, Laguna and the Visayas were allowed to participate in a
certification election. We rule that the distance among the three plants
is not productive of insurmountable difficulties in the administration of
union affairs. Neither are there regional differences that are likely to
impede the operations of a single bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET
ASIDE and the Order of the Med-Arbiter on December 19, 1990 is
REINSTATED under which a certification election among the
supervisors (level 1 to 4) and exempt employees of the San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San
Fernando, and Otis as one bargaining unit is ordered conducted.
SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

G.R. No. 116194. February 2, 2000


SUGBUANON
RURAL
BANK,
INC., Petitioner, v. HON.
UNDERSECRETARY
BIENVENIDO
E.
LAGUESMA,
DEPARTMENT OF LABOR AND EMPLOYMENT, MEDARBITER ACHILLES MANIT, DEPARTMENT OF LABOR
AND EMPLOYMENT, REGIONAL OFFICE NO. 7, CEBU
CITY, AND SUGBUANON RURAL BANK, INC. ASSOCIATION
OF
PROFESSIONAL,
SUPERVISORY,
OFFICE, AND TECHNICAL EMPLOYEES UNION-TRADE
UNIONS CONGRESS OF THE PHILIPPINES,Respondents.
DECISION
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioner
seeks the annulment of the April 27, 1994 Resolution of the
Department of Labor and Employment, affirming the order of the
Med-Arbiter, dated December 9, 1993, which denied petitioner's
motion to dismiss respondent union's petition for certification election.
Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a dulyregistered banking institution with principal office in Cebu City and a
branch in Mandaue City. Private respondent SRBI-Association of
Professional, Supervisory, Office, and Technical Employees Union
(APSOTEU) is a legitimate labor organization affiliated with the Trade
Unions Congress of the Philippines (TUCP).
On October 8, 1993, the DOLE Regional Office in Cebu City granted
Certificate of Registration No. R0700-9310-UR-0064 to APSOTEUTUCP, hereafter referred to as the union.
On October 26, 1993, the union filed a petition for certification
election of the supervisory employees of SRBI. It alleged, among
others, that: (1) APSOTEU-TUCP was a labor organization dulyregistered with the Labor Department; (2) SRBI employed 5 or more
supervisory employees; (3) a majority of these employees supported
the petition; (4) there was no existing collective bargaining agreement
(CBA) between any union and SRBI; and (5) no certification election
had been held in SRBI during the past 12 months prior to the petition.
On October 28, 1993, the Med-Arbiter gave due course to the petition.
The pre-certification election conference between SRBI and
APSOTEU- TUCP was set for November 15, 1993.

On November 12, 1993, SRBI filed a motion to dismiss the union's


petition. It sought to prevent the holding of a certification election on
two grounds: First, that the members of APSOTEU-TUCP were in fact
managerial or confidential employees. Thus, following the doctrine
in Philips Industrial Development Corporation v. National Labor
Relations Commission,[1] they were disqualified from forming,ining,
or assisting any labor organization. Petitioner attached theb
descriptions of the employees concerned to its motion. Second, the
Association of Labor Unions-Trade Unions Congress of the
Philippines or ALU-TUCP was representing the union. Since ALUTUCP also sought to represent the rank-and-file employees of SRBI,
there was a violation of the principle of separation of unions
enunciated in Atlas Lithographic Services, Inc. v. Laguesma.[2]
The union filed its opposition to the motion to dismiss on December 1,
1993. It argued that its members were not managerial employees but
merely supervisory employees. The members attached their affidavits
describing the nature of their respective duties. The union pointed out
that Article 245 of the Labor Code expressly allowed supervisory
employees to form,in, or assist their own unions.
On December 9, 1993, the Med-Arbiter denied petitioner's motion to
dismiss. He scheduled the inclusion-exclusion proceedings in
preparation for the certification election on December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor
and Employment. The appeal was denied for lack of merit. The
certification election was ordered.
On June 16, 1994, the Med-Arbiter scheduled the holding of the
certification election for June 29, 1994. His order identified the
following SRBI personnel as the voting supervisory employees in the
election: the Cashier of the Main office, the Cashier of the Mandaue
Branch, the Accountant of the Mandaue Branch, and the Acting Chief
of the Loans Department.
On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion
to suspend proceedings The Med-Arbiter denied the same on June 21,
1994. SRBI then filed a motion for reconsideration. Two days later, the
Med- Arbiter cancelled the certification election scheduled for June 29,
1994 in order to address the motion for reconsideration.
The Med-Arbiter later denied petitioner's motion for reconsideration.
SRBI appealed the order of denial to the DOLE Secretary on
December 16, 1993.

On December 22, 1993, petitioner proceeded to file a petition with the


DOLE Regional Office seeking the cancellation of the respondent
union's registration. It averred that the APSOTEU-TUCP members
were actually managerial employees who were prohibited by law
fromining or organizing unions.
On April 22, 1994, respondent DOLE Undersecretary denied SRBI's
appeal for lack of merit. He ruled that APSOTEU- TUCP was a
legitimate labor organization. As such, it was fully entitled to all the
rights and privileges granted by law to a legitimate labor organization,
including the right to file a petition for certification election. He also
held that until and unless a final order is issued canceling APSOTEUTUCP's registration certificate, it had the legal right to represent its
members for collective bargaining purposes. Furthermore, the question
of whether the APSOTEU- TUCP members should be considered as
managerial or confidential employees should not be addressed in the
proceedings involving a petition for certification election but best
threshed out in other appropriate proceedings.
On May 25, 1994, SRBI moved for reconsideration of the
Undersecretary's decision which was denied on July 7, 1994. The
Med- Arbiter scheduled the holding of certification elections on
August 12, 1994.
Hence the instant petition grounded on the following assignments of
error:
I
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH
GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED:
A. IN HOLDING THAT ART. 257 OF THE LABOR CODE
REQUIRES
THE
MED-ARBITER
TO
CONDUCT
A
CERTIFICATION ELECTION IN ANY UNORGANIZED
ESTABLISHMENT EVEN WHEN THE PETITIONING UNION
DOES NOT POSSESS THE QUALIFICATION FOR AN
APPROPRIATE BARGAINING AGENT; AND
B. IN REFUSING TO ASSUME JURISDICTION OVER THE
PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT
UNION'S PETITION FOR CERTIFICATION ELECTION.
II
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH
GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN

DENYING THE PETITIONER'S APPEAL DESPITE THE FACT


THAT:
A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE
MANAGERIAL
EMPLOYEES
WHO
ARE
LEGALLY
DISQUALIFIED FROM JOINING ANY LABOR ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF
RESPONDENT
UNION
ARE
OCCUPYING
HIGHLY
CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, THE
LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES
EQUALLY APPLY TO THEM.
III
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE
SUBJECT RESOLUTIONS ARE CONTRARY TO LAW AND ARE
DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S
RECORDED ADMISSIONS AND REPRESENTATIONS.
Considering petitioner's assigned errors, we find two core issues for
immediate resolution:
(1) Whether or not the members of the respondent union are
managerial employees and/or highly-placed confidential employees,
hence prohibited by law fromining labor organizations and engaging in
union activities?
(2) Whether or not the Med-Arbiter may validly order the holding of a
certification election upon the filing of a petition for certification
election by a registered union, despite the petitioners appeal pending
before the DOLE Secretary against the issuance of the unions
registration?
The other issues based on the assigned errors could be resolved easily
after the core issues are settled.
Respecting the first issue, Article 212 (m) of the Labor Code defines
the terms "managerial employee" and "supervisory employees" as
follows:
"Art. 212. Definitionsxxx
(m) 'Managerial employee is one who is vested with powers or
prerogatives to lay down and execute management policies and/or 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 (Italic supplied)."
Petitioner submitted detailedb descriptions to support its contention
that the union members are managerial employees and/or confidential
employees proscribed from engaging in labor activities.3 Petitioner
vehemently argues that the functions and responsibilities of the
employees involved constitute the "very core of the bank's business,
lending of money to clients and borrowers, evaluating their capacity to
pay, approving the loan and its amount, scheduling the terms of
repayment, and endorsing delinquent accounts to counsel for
collection."4 Hence, they must be deemed managerial employees.
Petitioner cites Tabacalera Insurance Co. v. National Labor Relations
Commission,[5] andPanday
v.
National
Labor
Relations
6
Commission, to sustain its submission. In Tabacalera,we sustained the
classification of a credit and collection supervisor by management as a
managerial/supervisory personnel. But in that case, the credit and
collection supervisor "had the power to recommend the hiring and
appointment of his subordinates, as well as the power to recommend
any promotion and/or increase."7 For this reason he was deemed to be
a managerial employee. In the present case, however, petitioner failed
to show that the employees in question were vested with similar
powers. At best they only had recommendatory powers subject to
evaluation, review, and final decision by the bank's management. Theb
description forms submitted by petitioner clearly show that the union
members in question may not transfer, suspend, lay-off, recall,
discharge, assign, or discipline employees. Moreover, the forms also
do not show that the Cashiers, Accountants, and Acting Chiefs of the
loans Department formulate and execute management policies which
are normally expected of management officers.
Petitioner's reliance on Panday is equally misplaced. There, we held
that a branch accountant is a managerial employee because the said
employee had managerial powers, similar to the supervisor
in Tabacalera. Their powers included recommending the hiring and
appointment of his subordinates, as the power to recommend any
promotion and/or increase.8crlwvirtualibrry
Here, we find that that the Cashiers, Accountant, and Acting Chief of
the Loans Department of the petitioner did not possess managerial

powers and duties. We are, therefore, constrained to conclude that they


are not managerial employees.
Now may the said bank personnel be deemed confidential employees?
Confidential employees are those who (1) assist or act in a confidential
capacity, in regard (2) to persons who formulate, determine, and
effectuate management policies [specifically in the field of labor
relations].9 The two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee-that is, the
confidential relationship must exist between the employee and his
superior officer; and that officer must handle the prescribed
responsibilities relating to labor relations.10crlwvirtualibrry
Article 245 of the Labor Code11 does not directly, prohibit confidential
employees from engaging in union activities. However, under the
doctrine of necessary implication, the disqualification of managerial
employees equally applies to confidential employees. 12 The
confidential-employee rule justifies exclusion of confidential
employees because in the normal course of their duties they become
aware of management policies relating to labor relations. 13 It must be
stressed, however, that when the employee does not have access to
confidential labor relations information, there is no legal prohibition
against confidential employees from forming, assisting, orining a
union.14crlwvirtualibrry
Petitioner contends that it has only 5 officers running its day-to-day
affairs. They assist in confidential capacities and have complete access
to the bank's confidential data. They form the core of the bank's
management team. Petitioner explains that:
"...Specifically: (1) the Head or the Loans Department initially
approves the loan applications before they are passed on to the Board
for confirmation. As such, no loan application is even considered by
the Board and approved by petitioner without his stamp of approval
based upon his interview of the applicant and determination of his
(applicant's) credit standing and financial capacity. The same holds
true with respect to renewals or restructuring of loan accounts. He
himself determines what account should be collected, whether
extrajudicially or judicially, and settles the problem or complaints of
borrowers regarding their accounts;
"(2) the Cashier is one of the approving officers and authorized
signatories of petitioner. He approves the opening of accounts,
withdrawals and encashment, and acceptance of check deposits, He

deals with other banks and, in the absence of the regular Manager,
manages the entire office or branch and approves disbursements of
funds for expenses; and
"(3) the Accountant, who heads the Accounting Department, is also
one of the authorized signatories of petitioner and, in the absence of
the Manager or Cashier, acts as substitute approving officer and
assumes the management of the entire office. She handles the financial
reports and reviews the debit/credit tickets submitted by the other
departments."15crlwvirtualibrry
Petitioner's explanation, however, does not state who among the
employees has access to information specifically relating to its labor
relations policies. Even Cashier Patricia Maluya, who serves as the
secretary of the bank's Board of Directors may not be so classified.
True, the board of directors is responsible for corporate policies, the
exercise of corporate powers, and the general management of the
business and affairs of the corporation. As secretary of the bank's
governing body, Patricia Maluya serves the bank's management, but
could not be deemed to have access to confidential information
specifically relating to SRBI's labor relations policies, absent a clear
showing on this matter. Thus, while petitioner's explanation confirms
the regular duties of the concerned employees, it shows nothing about
any duties specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate labor
organization under Article 242(b) of the Labor Code is the right to be
certified as the exclusive representative of all employees in an
appropriate bargaining unit for purposes of collective bargaining.
Having complied with the requirements of Art. 234, it is our view that
respondent union is a legitimate labor union. Article 257 of the Labor
Code mandates that a certification election shall automatically be
conducted by the Med-Arbiter upon the filing of a petition by a
legitimate labor organization.16 Nothing is said therein that prohibits
such automatic conduct of the certification election if the management
appeals on the issue of the validity of the union's registration. On this
score, petitioner's appeal was correctly dismissed.
Petitioner argues that giving due course to respondent union's petition
for certification election would violate the separation of unions
doctrine.17 Note that the petition was filed by APSOTEU- TUCP, a
legitimate labor organization. It was not, filed by ALU. Nor was it
filed by TUCP, which is a national labor federation of with which

respondent union is affiliated. Petitioner says that respondent union is


a mere alter ego of ALU. The records show nothing to this effect.
What the records instead reveal is that respondent union was initially
assisted by ALU during its preliminary stages of organization. A local
union maintains its separate personality despite affiliation with a larger
national federation.18Petitioner alleges that ALU seeks to represent
both respondent union and the rank-and-file union. Again, we find
nothing in the records to support this bare assertion.
The law frowns on a union where the membership is composed of both
supervisors and rank-and-file employees, for fear that conflicts of
interest may arise in the areas of discipline, collective bargaining, and
strikes.19 However, in the present case, none of the members of the
respondent union came from the rank-and-file employees of the bank.
Taking into account the circumstances in this case, it is our view that
respondent Undersecretary committed no reversible error nor grave
abuse of discretion when he found the order of the Med-Arbiter
scheduling a certification election in order. The list of employees
eligible to vote in said certification election was also found in order,
for none was specifically disqualified from membership.
WHEREFORE, the instant petition is hereby DISMISSED. No
pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman),
Mendoza,
Buena, and De
Leon,
Jr., JJ., concur.

Republic
SUPREME
Manila
EN BANC

of

the

Philippines
COURT

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 dulyorganized 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 MEWA-CBA.
On March 15, 1989, the Med-Arbiter ruled that having been excluded
from the existing Collective Bargaining Agreement for rank and file
employees, these employees have the right to form a union of their
own, except those employees performing managerial functions. With
respect to those employees who had resented their alleged involuntary
membership in the existing CBA, the Med-Arbiter stated that the
holding of a certification election would allow them to fully translate
their sentiment on the matter, and thus directed the holding of a
certification election. The dispositive portion of the Resolution
provides as follows:
WHEREFORE, premises considered, a certification election is hereby
ordered conducted among the regular rank-and-file employees of
MERALCO to wit:
1. Non-managerial employees with Pay Grades VII and above;
2. Non-managerial employees of Patrol Division, Treasury Security
Services Section and Secretaries; and
3. Employees prohibited from actively participating as members of the
union.
within 20 days from receipt hereof, subject to the usual pre-election
conference with the following choices:
1. Staff and Technical, Employees Association of MERALCO
(STEAM-PCWF);
2. No Union.
SO ORDERED. (p. 222, Rollo)

On April 4, 1989, MERALCO appealed, contending that "until such


time that a judicial finding is made to the effect that they are not
managerial employee, STEAM-PCWF cannot represent employees
from Pay Grades VII and above, additionally reiterating the same
reasons they had advanced for disqualifying respondent STEAMPCWF.
On April 7, 1989, MEWA filed an appeal-in-intervention, submitting
as follows:
A. The Order of the Med-Arbiter is null and void for being in violation
of Article 245 of the Labor Code;
B. The Order of the Med-Arbiter violates Article 232 of the Labor
Code; and
C. The Order is invalid because the bargaining unit it delineated is not
an appropriated (sic) bargaining unit.
On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.
With the enactment of RA 6715 and the rules and regulations
implementing the same, STEAM-PCWF renounced its representation
of the employees in Patrol Division, Treasury Security Services
Section and rank-and-file employees in Pay Grades I-VI.
On September 13, 1989, the First Line Association of Meralco
Supervisory Employees. (hereafter FLAMES) filed a similar petition
(NCR-OD-M-9-731-89) seeking to represent those employees with
Pay Grades VII to XIV, since "there is no other supervisory union at
MERALCO." (p. 266,Rollo). The petition was consolidated with that
of STEAM-PCWF.
On November 3, 1989, the Secretary of Labor affirmed with
modification, the assailed order of the Med-Arbiter, disposing as
follows:
WHEREFORE, premises considered, the Order appealed from is
hereby affirmed but modified as far as the employees covered by
Section 3, Article I of the exist CBA in the Company are concerned.
Said employees shall remain in the unit of the rank-and-file already
existing and may exercise their right to self organization as above
enunciated.
Further, the First Line Association of Meralco Supervisory Employees
(FLAMES) is included as among the choices in the certification
election.

Let, therefore, the pertinent records of the case be immediately


forwarded to the Office of origin for the conduct of the certification
election.
SO ORDERED. (p. 7, Rollo)
MERALCO's motion for reconsideration was denied on January 16,
1990.
On February 9, 1990, MERALCO filed this petition, premised on the
following ground:
RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF
DISCRETION AND/OR IN EXCESS OF JURISDICTION
AMOUNTING TO LACK OF JURISDICTION IN RULING THAT:
I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE
ESTABLISHED INDEPENDENT, DISTINCT AND SEPARATE
FROM THE EXISTING RANK-AND-FILE BARGAINING UNIT.
II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE
RANK-AND-FILE EMPLOYEES.
III. THE SECURITY GUARDS OR PERSONNEL MAY BE
LUMPED TOGETHER WITH THE RANK-AND-FILE UNION
AND/OR THE SUPERVISORY UNION. (p. 8, Rollo)
On February 26, 1990, We issued a temporary restraining order (TRO)
against the implementation of the disputed resolution.
In its petition, MERALCO has relented and recognized respondents
STEAM-PCWF and FLAMES' desired representation of supervisory
employees from Grades VII up. However, it believes that all that the
Secretary of Labor has to do is to establish a demarcation line between
supervisory and managerial rank, and not to classify outright the group
of employees represented by STEAM-PCWF and FLAMES as rank
and file employees.
In questioning the Secretary of Labor's directive allowing security
guards (Treasury/Patrol Services Section) to be represented by
respondents, MERALCO contends that this contravenes the provisions
of the recently passed RA 6715 and its implementing rules
(specifically par. 2, Sec. 1, Rule II, Book V) which disqualifies
supervisory employees and security guards from membership in a
labor organization of the rank and file (p. 11, Rollo).
The Secretary of Labor's Resolution was obviously premised on the
provisions of Art. 212, then par. (k), of the 1988 Labor Code defining
"managerial" and "rank and file" employees, the law then in force
when the complaint was filed. At the time, only two groups of

employees were recognized, the managerial and rank and file. This
explains the absence of evidence on job descriptions on who would be
classified managerial employees. It is perhaps also for this reason why
the Secretary of Labor limited his classification of the Meralco
employees belonging to Pay Grades VII and up, to only two groups,
the managerial and rank and file.
However, pursuant to the Department of Labor's goal of
strenghthening the constitutional right of workers to self-organization,
RA 6715 was subsequently passed which reorganized the employeeranks 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 VIIXIV,generally accepted as supervisory employees, as follows:
It must be emphasized that private respondent First Line Association
of Meralco Supervisory Employees seeks to represent only the
Supervisory Employees with Pay Grades VII to XIV.
Supervisory Employees with Pay Grades VII to XIV are not
managerial employees. In fact the petition itself of petitioner Manila
Electric Company on page 9, paragraph 3 of the petition stated as
follows, to wit:
There was no need for petitioner to prove that these employees are not
rank-and-file. As adverted to above, the private respondents admit that
these are not the rank-and-file but the supervisory employees, whom
they seek to represent. What needs to be established is the rank where
supervisory ends and managerial begins.
and First Line Association of Meralco Supervisory Employees herein
states that Pay Grades VII to XIV are not managerial employees. In
fact, although employees with Pay Grade XV carry the Rank of
Department Managers, these employees only enjoys (sic) the Rank

Manager but their recommendatory powers are subject to evaluation,


review and final action by the department heads and other higher
executives of the company. (FLAMES' Memorandum, p. 305, Rollo)
Based on the foregoing, it is clear that the employees from Pay Grades
VII and up have been recognized and accepted as supervisory. On the
other hand, those employees who have been automatically disqualified
have been directed by the Secretary of Labor to remain in the existing
labor organization for the rank and file, (the condition in the CBA
deemed as not having been written into the contract, as unduly
restrictive of an employee's exercise of the right to self-organization).
We shall discuss the rights of the excluded employees (or those
covered by Sec. 2, Art. I, MEWA-CBA later.
Anent the instant petition therefore, STEAM-PCWF, and FLAMES
would therefore represent supervisory employees only. In this regard,
the authority given by the Secretary of Labor for the establishment of
two labor organizations for the rank and file will have to be
disregarded since We hereby uphold certification elections only for
supervisory employees from Pay Grade VII and up, with STEAMPCWF and FLAMES as choices.
As to the alleged failure of the Secretary of Labor to establish a
demarcation line for purposes of segregating the supervisory from the
managerial employees, the required parameter is really not necessary
since the law itself, Art. 212-m, (as amended by Sec. 4 of RA 6715)
has already laid down the corresponding guidelines:
Art. 212. Definitions. . . .
(m) "Managerial employee" is one who is vested with powers or
prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature
but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file
employees for purposes of to Book.
In his resolution, the Secretary of Labor further elaborated:
. . . Thus, the determinative factor in classifying an employee as
managerial, supervisory or rank-and-file is the nature of the work of
the employee concerned.

In National Waterworks and Sewerage Authority vs. National


Waterworks and Sewerage Authority Consolidated Unions (11 SCRA
766) the Supreme Court had the occasion to come out with an
enlightening dissertation of the nature of the work of a managerial
employees as follows:
. . . that the employee's primary duty consists of the management of
the establishment or of a customarily recognized department or
subdivision thereof, that he customarily and regularly directs the work
of other employees therein, that he has the authority to hire or
discharge other employees or that his suggestions and
recommendations as to the hiring and discharging and or to the
advancement and promotion or any other change of status of other
employees are given particular weight, that he customarily and
regularly exercises discretionary powers . . . (56 CJS, pp. 666-668. (p.
226, Rollo)
We shall now discuss the rights of the security guards to self-organize.
MERALCO has questioned the legality of allowing them to join either
the rank and file or the supervisory union, claiming that this is a
violation of par. 2, Sec. 1, Rule II, Book V of the Implementing Rules
of RA 6715, which states as follows:
Sec 1. Who may join unions. . . .
xxx xxx xxx
Supervisory employees and security guards shall not be eligible for
membership in a labor organization of the rank-and-file employees but
may join, assist or form separate labor organizations of their own; . . .
xxx xxx xxx
(emphasis ours)
Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c), Rule V,
also of Book V of the implementing rules of RA 6715:
Rule
V.
REPRESENTATION
CASES
AND
INTERNAL-UNION CONFLICTS
Sec. 1. . . .
Sec. 2. Who may file.Any legitimate labor organization or the
employer, when requested to bargain collectively, may file the petition.
The petition, when filed by a legitimate labor-organization shall
contain, among others:
(a) . . .
(b) . . .

(c) description of the bargaining unit which shall be the employer unit
unless circumstances otherwise require; and provided further, that the
appropriate bargaining unit of the rank-and-file employees shall not
include supervisory employees and/or security guards;
xxx xxx xxx
(emphasis ours)
Both rules, barring security guards from joining a rank and file
organization, appear to have been carried over from the old rules
which implemented then Art. 245 of the Labor Code, and which
provided thus:
Art. 245. Ineligibility of security personnel to join any labor
organization.Security guards and other personnel employed for the
protection and security of the person, properties and premises of the
employer shall not be eligible for membership in any labor
organization.
On December 24, 1986, Pres. Corazon C. Aquino issued E.O. No. 111
which eliminated the above-cited provision on the disqualification of
security guards. What was retained was the disqualification of
managerial employees, renumbered as Art. 245 (previously Art. 246),
as follows:
Art. 245. Ineligibility of managerial employees to joint any labor
organization.Managerial employees are not eligible to join, assist or
form any labor organization.
With the elimination, security guards were thus free to join a rank and
file organization.
On March 2, 1989, the present Congress passed RA 6715. 2 Section 18
thereof amended Art. 245, to read as follows:
Art. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees.Managerial employees
are not eligible to join, assist or form any labor
organization.Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but
may join, assist, or form separate labor organizations of their own.
(emphasis ours)
As will be noted, the second sentence of Art. 245 embodies an
amendment disqualifying supervisory employeesfrom membership in a
labor organization of the rank-and-file employees. It does not include
security guards in the disqualification.

The implementing rules of RA 6715, therefore, insofar as they


disqualify security guards from joining a rank and file organization are
null and void, for being not germane to the object and purposes of EO
111 and RA 6715 upon which such rules purportedly derive statutory
moorings. In Shell Philippines, Inc. vs. Central Bank, G.R. No. 51353,
June 27, 1988, 162 SCRA 628, We stated:
The rule-making power must be confined to details for regulating the
mode or proceeding to carry into effect the law as it has been enacted.
The power cannot be extended to amending or expanding the statutory
requirements or to embrace matters not covered by the statute. Rules
that subvert the statute cannot be sanctioned. (citing University of Sto.
Tomas vs. Board of Tax Appeals, 93 Phil. 376).
While therefore under the old rules, security guards were barred from
joining a labor organization of the rank and file, under RA 6715, they
may now freely join a labor organization of the rank and file or that of
the supervisory union, depending on their rank. By accommodating
supervisory employees, the Secretary of Labor must likewise apply the
provisions of RA 6715 to security guards by favorably allowing them
free access to a labor organization, whether rank and file or
supervisory, in recognition of their constitutional right to selforganization.
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.

Republic
of
the
Philippines
SUPREME
COURT
Manila
THIRD DIVISION
G.R. No. 79025. December 29, 1989.
BENGUET ELECTRIC COOPERATIVE, INC., petitioner,
vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of
Labor Relations, and BENECO EMPLOYEES LABOR
UNION, respondents.
E.L. Gayo & Associates for petitioner.
CORTES, J.:
On June 21, 1985 Beneco Worker's Labor Union-Association of
Democratic Labor Organizations (hereinafter referred to as BWLUADLO) filed a petition for direct certification as the sole and exclusive
bargaining representative of all the rank and file employees of Benguet
Electric Cooperative, Inc. (hereinafter referred to as BENECO) at
Alapang, La Trinidad, Benguet alleging, inter alia, that BENECO has
in its employ two hundred and fourteen (214) rank and file employees;
that one hundred and ninety-eight (198) or 92.5% of these employees
have supported the filing of the petition; that no certification election
has been conducted for the last 12 months; that there is no existing
collective bargaining representative of the rank and file employees
sought to represented by BWLU- ADLO; and, that there is no
collective bargaining agreement in the cooperative.
An opposition to the petition was filed by the Beneco Employees
Labor Union (hereinafter referred to as BELU) contending that it was
certified as the sole and exclusive bargaining representative of the
subject workers pursuant to an order issued by the med-arbiter on
October 20,1980; that pending resolution by the National Labor
Relations Commission are two cases it filed against BENECO
involving bargaining deadlock and unfair labor practice; and, that the
pendency of these cases bars any representation question.
BENECO, on the other hand, filed a motion to dismiss the petition
claiming that it is a non-profit electric cooperative engaged in
providing electric services to its members and patron-consumers in the

City of Baguio and Benguet Province; and, that the employees sought
to be represented by BWLU-ADLO are not eligible to form, join or
assist labor organizations of their own choosing because they are
members and joint owners of the cooperative.
On September 2, 1985 the med-arbiter issued an order giving due
course to the petition for certification election. However, the medarbiter limited the election among the rank and file employees of
petitioner who are non-members thereof and without any involvement
in the actual ownership of the cooperative. Based on the evidence
during the hearing the med-arbiter found that there are thirty-seven
(37) employees who are not members and without any involvement in
the actual ownership of the cooperative. The dispositive portion of the
med-arbiter's order is as follows:
WHEREFORE, premises considered, a certification election should be
as it is hereby ordered to be conducted at the premises of Benguet,
Electric Cooperative, Inc., at Alapang, La Trinidad, Benguet within
twenty (20) days from receipt hereof among all the rank and file
employees (non-members/consumers and without any involvement in
the actual ownership of the cooperative) with the following choices:
1. BENECO WORKERS LABOR UNION-ADLO
2. BENECO EMPLOYEES LABOR UNION
3. NO UNION
The payroll for the month of June 1985 shall be the basis in
determining the qualified voters who may participate in the
certification election to be conducted.
SO ORDERED. [Rollo, pp. 22-23.]
BELU and BENECO appealed from this order but the same was
dismissed for lack of merit on March 25,1986. Whereupon BENECO
filed with this Court a petition for certiorari with prayer for
preliminary injunction and /or restraining order, docketed as G.R. No.
74209, which the Supreme Court dismissed for lack of merit in a
minute resolution dated April 28, 1986.
The ordered certification election was held on October 1, 1986. Prior
to the conduct thereof BENECO's counsel verbally manifested that
"the cooperative is protesting that employees who are membersconsumers are being allowed to vote when . . . they are not eligible to
be members of any labor union for purposes of collective bargaining;
much less, to vote in this certification election." [Rollo, p. 28].
Petitioner submitted a certification showing that only four (4)

employees are not members of BENECO and insisted that only these
employees are eligible to vote in the certification election. Canvass of
the votes showed that BELU garnered forty-nine (49) of the eightythree (83) "valid" votes cast.
Thereafter BENECO formalized its verbal manifestation by filing a
Protest. Finding, among others, that the issue as to whether or not
member-consumers who are employees of BENECO could form, assist
or join a labor union has been answered in the affirmative by the
Supreme Court in G.R. No. 74209, the med-arbiter dismissed the
protest on February 17, 1987. On June 23, 1987, Bureau of Labor
Relations (BLR) director Pura Ferrer-Calleja affirmed the medarbiter's order and certified BELU as the sole and exclusive bargaining
agent of all the rank and file employees of BENECO.
Alleging that the BLR director committed grave abuse of discretion
amounting to lack or excess of jurisdiction BENECO filed the instant
petition for certiorari. In his Comment the Solicitor General agreed
with BENECO's stance and prayed that the petition be given due
course. In view of this respondent director herself was required by the
Court to file a Comment. On April 19, 1989 the Court gave due course
to the petition and required the parties to submit their respective
memoranda.
The main issue in this case is whether or not respondent director
committed grave abuse of discretion in certifying respondent BELU as
the sole and exclusive bargaining representtative of the rank and file
employees of BENECO.
Under Article 256 of the Labor Code [Pres. Decree 442] to have a
valid certification election, "at least a majority of all eligible voters in
the unit must have cast their votes. The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all workers in the unit." Petitioner BENECO
asserts that the certification election held on October 1, 1986 was null
and void since members-employees of petitioner cooperative who are
not eligible to form and join a labor union for purposes of collective
bargaining were allowed to vote therein.
Respondent director and private respondent BELU on the other hand
submit that members of a cooperative who are also rank and file
employees are eligible to form, assist or join a labor union [Comment
of Respondent Director, p. 4; Rollo, p. 125; Comment of BELU, pp. 910; Rollo pp. 99-100].

The Court finds the present petition meritorious.


The issue of whether or not employees of a cooperative are qualified to
form or join a labor organization for purposes of collective bargaining
has already been resolved and clarified in the case of Cooperative
Rural Bank of Davao City, Inc. vs. Ferrer Calleja, et al. [G.R. No.
7795, September 26,1988] and reiterated in the cases ofBatangasElectric Cooperative Labor Union v. Young, et al. [G.R. Nos. 62386,
70880 and 74560 November 9, 1988] and San Jose City Electric
Service Cooperative, Inc. v. Ministry of Labor and Employment, et
al. [G.R. No. 77231, May 31, 1989] wherein the Court had stated that
the right to collective bargaining is not available to an employee of a
cooperative who at the same time is a member and co-owner thereof.
With respect, however, to employees who are neither members nor coowners of the cooperative they are entitled to exercise the rights to
self-organization, collective bargaining and negotiation as mandated
by the 1987 Constitution and applicable statutes.
Respondent director argues that to deny the members of petitioner
cooperative the right to form, assist or join a labor union of their own
choice for purposes of collective bargaining would amount to a patent
violation of their right to self-organization. She points out that:
Albeit a person assumes a dual capacity as rank and file employee and
as member of a certain cooperative does not militate, as in the instant
case, against his/her exercise of the right to self-organization and to
collective bargaining guaranteed by the Constitution and Labor Code
because, while so doing, he/she is acting in his/her capacity as rank
and file employee thereof. It may be added that while the employees
concerned became members of petitioner cooperative, their status
employment as rank and filers who are hired for fixed compensation
had not changed. They still do not actually participate in the
management of the cooperative as said function is entrusted to the
Board of Directors and to the elected or appointed officers thereof.
They are not vested with the powers and prerogatives to lay down and
execute managerial policies; to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees; and/or to effectively
recommend such managerial functions [Comment of Respondent
Director, p. 4; Rollo, p. 125.]
Private respondent BELU concurs with the above contention of
respondent director and, additionally, claims that since membership in
petitioner cooperative is only nominal, the rank and file employees

who are members thereof should not be deprived of their right to selforganization.
The above contentions are untenable. Contrary to respondents' claim,
the fact that the members-employees of petitioner do not participate in
the actual management of the cooperative does not make them eligible
to form, assist or join a labor organization for the purpose of collective
bargaining with petitioner. The Court's ruling in the Davao City case
that members of cooperative cannot join a labor union for purposes of
collective bargaining was based on the fact that as members of the
cooperative they are co-owners thereof. As such, they cannot invoke
the right to collective bargaining for "certainly an owner cannot
bargain with himself or his co-owners." [Cooperative Rural Bank of
Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the fact of
ownership of the cooperative, and not involvement in the management
thereof, which disqualifies a member from joining any labor
organization within the cooperative. Thus, irrespective of the degree of
their participation in the actual management of the cooperative, all
members thereof cannot form, assist or join a labor organization for
the purpose of collective bargaining.
Respondent union further claims that if nominal ownership in a
cooperative is "enough to take away the constitutional protections
afforded to labor, then there would be no hindrance for employers to
grant, on a scheme of generous profit sharing, stock bonuses to their
employees and thereafter claim that since their employees are not
stockholders [of the corporation], albeit in a minimal and involuntary
manner, they are now also co-owners and thus disqualified to form
unions." To allow this, BELU argues, would be "to allow the
floodgates of destruction to be opened upon the rights of labor which
the Constitution endeavors to protect and which welfare it promises to
promote." [Comment of BELU, p. 10; Rollo, p. 100].
The above contention of respondent union is based on the erroneous
presumption that membership in a cooperative is the same as
ownership of stocks in ordinary corporations. While cooperatives may
exercise some of the rights and privileges given to ordinary
corporations provided under existing laws, such cooperatives enjoy
other privileges not granted to the latter [See Sections 4, 5, 6, and 8,
Pres. Decree No. 175; Cooperative Rural Bank of Davao City v.
Ferrer-Calleja, supra]. Similarly, members of cooperatives have rights
and obligations different from those of stockholders of ordinary

corporations. It was precisely because of the special nature of


cooperatives, that the Court held in the Davao City case that membersemployees thereof cannot form or join a labor union for purposes of
collective bargaining. The Court held that:
A cooperative ... is by its nature different from an ordinary business
concern being run either by persons, partnerships, or corporations. Its
owners and/or members are the ones who run and operate the business
while the others are its employees. As above stated, irrespective of the
number of shares owned by each member they are entitled to cast one
vote each in deciding upon the affairs of the cooperative. Their share
capital earn limited interest. They enjoy special privileges asexemption from income tax and sales taxes, preferential right to supply
their products to State agencies and even exemption from the
minimum wage laws.
An employee therefore of such a cooperative who is a member and coowner thereof cannot invoke the right to collective bargaining for
certainly an owner cannot bargain with himself or his co-owners.
It is important to note that, in her order dated September 2, 1985, medarbiter Elnora V. Balleras made a specific finding that there are only
thirty-seven (37) employees of petitioner who are not members of the
cooperative and who are, therefore, the only employees of petitioner
cooperative eligible to form or join a labor union for purposes of
collective bargaining [Annex "A" of the Petition, p. 12; Rollo, p. 22].
However, the minutes of the certification election [Annex "C" of the
Petition: Rollo, p. 28] show that a total of eighty-three (83) employees
were allowed to vote and of these, forty-nine (49) voted for respondent
union. Thus, even if We agree with respondent union's contention that
the thirty seven (37) employees who were originally non-members of
the cooperative can still vote in the certification election since they
were only "forced and compelled to join the cooperative on pain of
disciplinary action," the certification election held on October 1, 1986
is still null and void since even those who were already members of
the cooperative at the time of the issuance of the med-arbiter's order,
and therefore cannot claim that they were forced to join the union were
allowed to vote in the election.
Article 256 of the Labor Code provides, among others, that:
To have a valid, election, at least a majority of all eligible voters in the
unit must have cast their votes. The labor union receiving the majority

of the valid votes cast shall be certified as the exclusive bargaining


agent of all workers in the unit . . . [Italics supplied.]
In this case it cannot be determined whether or not respondent union
was duly elected by the eligible voters of the bargaining unit since
even employees who are ineligible to join a labor union within the
cooperative because of their membership therein were allowed to vote
in the certification election. Considering the foregoing, the Court finds
that respondent director committed grave abuse of discretion in
certifying respondent union as the sole and exclusive bargaining
representative of the rank and file employees of petitioner cooperative.
WHEREFORE, the petition is hereby GRANTED and the assailed
resolution of respondent director is ANNULLED. The certification
election conducted on October 1, 1986, is SET ASIDE. The Regional
Office No. 1 of San Fernando, La Union is hereby directed to
immediately conduct new certification election proceedings among the
rank and file employees of the petitioner who are not members of the
cooperative.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., and Bidin, JJ., concur.
Feliciano, J., on leave.

Republic
of
the
Philippines
SUPREME
COURT
Manila
SECOND DIVISION
G.R. No. L-25246 September 12, 1974
BENJAMIN
VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE
FACTORY, INC., defendants, ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of
the Court of First Instance of Manila in its Civil Case No. 58894.
The undisputed facts that spawned the instant case follow:
Benjamin Victoriano (hereinafter referred to as Appellee), a member of
the religious sect known as the "Iglesia ni Cristo", had been in the
employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as
Company) since 1958. As such employee, he was a member of the
Elizalde Rope Workers' Union (hereinafter referred to as Union) which
had with the Company a collective bargaining agreement containing a
closed shop provision which reads as follows:
Membership in the Union shall be required as a condition of
employment for all permanent employees workers covered by this
Agreement.
The collective bargaining agreement expired on March 3, 1964 but
was renewed the following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its
amendment by Republic Act No. 3350, the employer was not
precluded "from making an agreement with a labor organization to
require as a condition of employment membership therein, if such
labor organization is the representative of the employees." On June 18,
1961, however, Republic Act No. 3350 was enacted, introducing an
amendment to paragraph (4) subsection (a) of section 4 of Republic
Act No. 875, as follows: ... "but such agreement shall not cover

members of any religious sects which prohibit affiliation of their


members in any such labor organization".
Being a member of a religious sect that prohibits the affiliation of its
members with any labor organization, Appellee presented his
resignation to appellant Union in 1962, and when no action was taken
thereon, he reiterated his resignation on September 3, 1974.
Thereupon, the Union wrote a formal letter to the Company asking the
latter to separate Appellee from the service in view of the fact that he
was resigning from the Union as a member. The management of the
Company in turn notified Appellee and his counsel that unless the
Appellee could achieve a satisfactory arrangement with the Union, the
Company would be constrained to dismiss him from the service. This
prompted Appellee to file an action for injunction, docketed as Civil
Case No. 58894 in the Court of First Instance of Manila to enjoin the
Company and the Union from dismissing Appellee. 1 In its answer, the
Union invoked the "union security clause" of the collective bargaining
agreement; assailed the constitutionality of Republic Act No. 3350;
and contended that the Court had no jurisdiction over the case,
pursuant to Republic Act No. 875, Sections 24 and 9 (d) and
(e). 2 Upon the facts agreed upon by the parties during the pre-trial
conference, the Court a quo rendered its decision on August 26, 1965,
the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is rendered enjoining the
defendant Elizalde Rope Factory, Inc. from dismissing the plaintiff
from his present employment and sentencing the defendant Elizalde
Rope Workers' Union to pay the plaintiff P500 for attorney's fees and
the costs of this action.3
From this decision, the Union appealed directly to this Court on purely
questions of law, assigning the following errors:
I. That the lower court erred when it did not rule that Republic Act No.
3350 is unconstitutional.
II. That the lower court erred when it sentenced appellant herein to pay
plaintiff the sum of P500 as attorney's fees and the cost thereof.
In support of the alleged unconstitutionality of Republic Act No. 3350,
the Union contented, firstly, that the Act infringes on the fundamental
right to form lawful associations; that "the very phraseology of said
Republic Act 3350, that membership in a labor organization is banned
to all those belonging to such religious sect prohibiting affiliation with
any labor organization" 4 , "prohibits all the members of a given

religious sect from joining any labor union if such sect prohibits
affiliations of their members thereto" 5 ; and, consequently, deprives
said members of their constitutional right to form or join lawful
associations or organizations guaranteed by the Bill of Rights, and thus
becomes obnoxious to Article III, Section 1 (6) of the 1935
Constitution. 6
Secondly, the Union contended that Republic Act No. 3350 is
unconstitutional for impairing the obligation of contracts in that, while
the Union is obliged to comply with its collective bargaining
agreement containing a "closed shop provision," the Act relieves the
employer from its reciprocal obligation of cooperating in the
maintenance of union membership as a condition of employment; and
that said Act, furthermore, impairs the Union's rights as it deprives the
union of dues from members who, under the Act, are relieved from the
obligation to continue as such members. 7
Thirdly, the Union contended that Republic Act No. 3350
discriminatorily favors those religious sects which ban their members
from joining labor unions, in violation of Article Ill, Section 1 (7) of
the 1935 Constitution; and while said Act unduly protects certain
religious sects, it leaves no rights or protection to labor organizations. 8
Fourthly, Republic Act No. 3350, asserted the Union, violates the
constitutional provision that "no religious test shall be required for the
exercise of a civil right," in that the laborer's exercise of his civil right
to join associations for purposes not contrary to law has to be
determined under the Act by his affiliation with a religious sect; that
conversely, if a worker has to sever his religious connection with a sect
that prohibits membership in a labor organization in order to be able to
join a labor organization, said Act would violate religious freedom. 9
Fifthly, the Union contended that Republic Act No. 3350, violates the
"equal protection of laws" clause of the Constitution, it being a
discriminately legislation, inasmuch as by exempting from the
operation of closed shop agreement the members of the "Iglesia ni
Cristo", it has granted said members undue advantages over their
fellow workers, for while the Act exempts them from union obligation
and liability, it nevertheless entitles them at the same time to the
enjoyment of all concessions, benefits and other emoluments that the
union might secure from the employer. 10
Sixthly, the Union contended that Republic Act No. 3350 violates the
constitutional provision regarding the promotion of social justice. 11

Appellant Union, furthermore, asserted that a "closed shop provision"


in a collective bargaining agreement cannot be considered violative of
religious freedom, as to call for the amendment introduced by
Republic Act No. 3350;12 and that unless Republic Act No. 3350 is
declared unconstitutional, trade unionism in this country would be
wiped out as employers would prefer to hire or employ members of the
Iglesia ni Cristo in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended that Republic Act
No. 3350 does not violate the right to form lawful associations, for the
right to join associations includes the right not to join or to resign from
a labor organization, if one's conscience does not allow his
membership therein, and the Act has given substance to such right by
prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of
contracts for said law formed part of, and was incorporated into, the
terms of the closed shop agreement; 15that the Act does not violate the
establishment of religion clause or separation of Church and State, for
Congress, in enacting said law, merely accommodated the religious
needs of those workers whose religion prohibits its members from
joining labor unions, and balanced the collective rights of organized
labor with the constitutional right of an individual to freely exercise
his chosen religion; that the constitutional right to the free exercise of
one's religion has primacy and preference over union security
measures which are merely contractual 16 ; that said Act does not
violate the constitutional provision of equal protection, for the
classification of workers under the Act depending on their religious
tenets is based on substantial distinction, is germane to the purpose of
the law, and applies to all the members of a given class; 17 that said
Act, finally, does not violate the social justice policy of the
Constitution, for said Act was enacted precisely to equalize
employment opportunities for all citizens in the midst of the diversities
of their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is
necessary to premise that there are some thoroughly established
principles which must be followed in all cases where questions of
constitutionality as obtains in the instant case are involved. All
presumptions are indulged in favor of constitutionality; one who
attacks a statute, alleging unconstitutionality must prove its invalidity
beyond a reasonable doubt, that a law may work hardship does not

render it unconstitutional; that if any reasonable basis may be


conceived which supports the statute, it will be upheld, and the
challenger must negate all possible bases; that the courts are not
concerned with the wisdom, justice, policy, or expediency of a statute;
and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No.
3350 prohibits and bans the members of such religious sects that
forbid affiliation of their members with labor unions from joining
labor unions appears nowhere in the wording of Republic Act No.
3350; neither can the same be deduced by necessary implication
therefrom. It is not surprising, therefore, that appellant, having thus
misread the Act, committed the error of contending that said Act is
obnoxious to the constitutional provision on freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of
association. Section 1 (6) of Article III of the Constitution of 1935, as
well as Section 7 of Article IV of the Constitution of 1973, provide
that the right to form associations or societies for purposes not
contrary to law shall not be abridged. Section 3 of Republic Act No.
875 provides that employees shall have the right to self-organization
and to form, join of assist labor organizations of their own choosing
for the purpose of collective bargaining and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid
or protection. What the Constitution and the 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 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. 20 It is clear, therefore, that the right to join a
union includes the right to abstain from joining any union. 21 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 right to refrain from joining labor organizations recognized by
Section 3 of the Industrial Peace Act is, however, limited. The legal
protection granted to such right to refrain from joining is withdrawn by
operation of law, where a labor union and an employer have agreed on
a closed shop, by virtue of which the employer may employ only
member of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract in
order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace
Act, before its amendment by Republic Act No. 3350, provides that
although it would be an unfair labor practice for an employer "to
discriminate in regard to hire or tenure of employment or any term or
condition of employment to encourage or discourage membership in
any labor organization" the employer is, however, not precluded "from
making an agreement with a labor organization to require as a
condition of employment membership therein, if such labor
organization is the representative of the employees". By virtue,
therefore, of a closed shop agreement, before the enactment of
Republic Act No. 3350, if any person, regardless of his religious
beliefs, wishes to be employed or to keep his employment, he must
become a member of the collective bargaining union. Hence, the right
of said employee not to join the labor union is curtailed and
withdrawn.
To that all-embracing coverage of the closed shop arrangement,
Republic Act No. 3350 introduced an exception, when it added to
Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but
such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization".
Republic Act No. 3350 merely excludes ipso jure from the application
and coverage of the closed shop agreement the employees belonging to
any religious sects which prohibit affiliation of their members with any
labor organization. What the exception provides, therefore, is that
members of said religious sects cannot be compelled or coerced to join
labor unions even when said unions have closed shop agreements with

the employers; that in spite of any closed shop agreement, members of


said religious sects cannot be refused employment or dismissed from
their jobs on the sole ground that they are not members of the
collective bargaining union. It is clear, therefore, that the assailed Act,
far from infringing the constitutional provision on freedom of
association, upholds and reinforces it. It does not prohibit the members
of said religious sects from affiliating with labor unions. It still leaves
to said members the liberty and the power to affiliate, or not to
affiliate, with labor unions. If, notwithstanding their religious beliefs,
the members of said religious sects prefer to sign up with the labor
union, they can do so. If in deference and fealty to their religious faith,
they refuse to sign up, they can do so; the law does not coerce them to
join; neither does the law prohibit them from joining; and neither may
the employer or labor union compel them to join. Republic Act No.
3350, therefore, does not violate the constitutional provision on
freedom of association.
2. Appellant Union also contends that the Act is unconstitutional for
impairing the obligation of its contract, specifically, the "union
security clause" embodied in its Collective Bargaining Agreement with
the Company, by virtue of which "membership in the union was
required as a condition for employment for all permanent employees
workers". This agreement was already in existence at the time
Republic Act No. 3350 was enacted on June 18, 1961, and it cannot,
therefore, be deemed to have been incorporated into the agreement.
But by reason of this amendment, Appellee, as well as others similarly
situated, could no longer be dismissed from his job even if he should
cease to be a member, or disaffiliate from the Union, and the Company
could continue employing him notwithstanding his disaffiliation from
the Union. The Act, therefore, introduced a change into the express
terms of the union security clause; the Company was partly absolved
by law from the contractual obligation it had with the Union of
employing only Union members in permanent positions, It cannot be
denied, therefore, that there was indeed an impairment of said union
security clause.
According to Black, any statute which introduces a change into the
express terms of the contract, or its legal construction, or its validity,
or its discharge, or the remedy for its enforcement, impairs the
contract. The extent of the change is not material. It is not a question
of degree or manner or cause, but of encroaching in any respect on its

obligation or dispensing with any part of its force. There is an


impairment of the contract if either party is absolved by law from its
performance. 22 Impairment has also been predicated on laws which,
without destroying contracts, derogate from substantial contractual
rights. 23
It should not be overlooked, however, that the prohibition to impair the
obligation of contracts is not absolute and unqualified. The prohibition
is general, affording a broad outline and requiring construction to fill
in the details. The prohibition is not to be read with literal exactness
like a mathematical formula, for it prohibits unreasonable impairment
only. 24 In spite of the constitutional prohibition, the State continues to
possess authority to safeguard the vital interests of its people.
Legislation appropriate to safeguarding said interests may modify or
abrogate contracts already in effect. 25 For not only are existing laws
read into contracts in order to fix the obligations as between the
parties, but the reservation of essential attributes of sovereign power is
also read into contracts as a postulate of the legal order. All contracts
made with reference to any matter that is subject to regulation under
the police power must be understood as made in reference to the
possible exercise of that power. 26 Otherwise, important and valuable
reforms may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be
prohibited. The policy of protecting contracts against impairment
presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains
adequate authority to secure the peace and good order of society. The
contract clause of the Constitution must, therefore, be not only in
harmony with, but also in subordination to, in appropriate instances,
the reserved power of the state to safeguard the vital interests of the
people. It follows that not all legislations, which have the effect of
impairing a contract, are obnoxious to the constitutional prohibition as
to impairment, and a statute passed in the legitimate exercise of police
power, although it incidentally destroys existing contract rights, must
be upheld by the courts. This has special application to contracts
regulating relations between capital and labor which are not merely
contractual, and said labor contracts, for being impressed with public
interest, must yield to the common good. 27
In several occasions this Court declared that the prohibition against
impairing the obligations of contracts has no application to statutes

relating to public subjects within the domain of the general legislative


powers of the state involving public welfare. 28 Thus, this Court also
held that the Blue Sunday Law was not an infringement of the
obligation of a contract that required the employer to furnish work on
Sundays to his employees, the law having been enacted to secure the
well-being and happiness of the laboring class, and being, furthermore,
a legitimate exercise of the police power.29
In order to determine whether legislation unconstitutionally impairs
contract obligations, no unchanging yardstick, applicable at all times
and under all circumstances, by which the validity of each statute may
be measured or determined, has been fashioned, but every case must
be determined upon its own circumstances. Legislation impairing the
obligation of contracts can be sustained when it is enacted for the
promotion of the general good of the people, and when the means
adopted to secure that end are reasonable. Both the end sought and the
means adopted must be legitimate, i.e., within the scope of the
reserved power of the state construed in harmony with the
constitutional limitation of that power. 30
What then was the purpose sought to be achieved by Republic Act No.
3350? Its purpose was to insure freedom of belief and religion, and to
promote the general welfare by preventing discrimination against those
members of religious sects which prohibit their members from joining
labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the
only means whereby they can maintain their own life and the life of
their dependents. It cannot be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said
religious sects against two aggregates of group strength from which
the individual needs protection. The individual employee, at various
times in his working life, is confronted by two aggregates of power
collective labor, directed by a union, and collective capital, directed by
management. The union, an institution developed to organize labor
into a collective force and thus protect the individual employee from
the power of collective capital, is, paradoxically, both the champion of
employee rights, and a new source of their frustration. Moreover, when
the Union interacts with management, it produces yet a third aggregate
of group strength from which the individual also needs protection
the collective bargaining relationship. 31

The aforementioned purpose of the amendatory law is clearly seen in


the Explanatory Note to House Bill No. 5859, which later became
Republic Act No. 3350, as follows:
It would be unthinkable indeed to refuse employing a person who, on
account of his religious beliefs and convictions, cannot accept
membership in a labor organization although he possesses all the
qualifications for the job. This is tantamount to punishing such person
for believing in a doctrine he has a right under the law to believe in.
The law would not allow discrimination to flourish to the detriment of
those whose religion discards membership in any labor organization.
Likewise, the law would not commend the deprivation of their right to
work and pursue a modest means of livelihood, without in any manner
violating their religious faith and/or belief. 32
It cannot be denied, furthermore, that the means adopted by the Act to
achieve that purpose exempting the members of said religious sects
from coverage of union security agreements is reasonable.
It may not be amiss to point out here that the free exercise of religious
profession or belief is superior to contract rights. In case of conflict,
the latter must, therefore, yield to the former. The Supreme Court of
the United States has also declared on several occasions that the rights
in the First Amendment, which include freedom of religion, enjoy a
preferred position in the constitutional system. 33 Religious freedom,
although not unlimited, is a fundamental personal right and
liberty, 34 and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is
only where unavoidably necessary to prevent an immediate and grave
danger to the security and welfare of the community that infringement
of religious freedom may be justified, and only to the smallest extent
necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is
unconstitutional, appellant Union averred that said Act discriminates in
favor of members of said religious sects in violation of Section 1 (7) of
Article Ill of the 1935 Constitution, and which is now Section 8 of
Article IV of the 1973 Constitution, which provides:
No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof, and the free exercise and
enjoyment of religious profession and worship, without discrimination
and preference, shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.

The constitutional provision into only prohibits legislation for the


support of any religious tenets or the modes of worship of any sect,
thus forestalling compulsion by law of the acceptance of any creed or
the practice of any form of worship, 35 but also assures the free
exercise of one's chosen form of religion within limits of utmost
amplitude. It has been said that the religion clauses of the Constitution
are all designed to protect the broadest possible liberty of conscience,
to allow each man to believe as his conscience directs, to profess his
beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good. 36 Any legislation whose
effect or purpose is to impede the observance of one or all religions, or
to discriminate invidiously between the religions, is invalid, even
though the burden may be characterized as being only indirect. 37 But
if the stage regulates conduct by enacting, within its power, a general
law which has for its purpose and effect to advance the state's secular
goals, the statute is valid despite its indirect burden on religious
observance, unless the state can accomplish its purpose without
imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that the
government should not be precluded from pursuing valid objectives
secular in character even if the incidental result would be favorable to
a religion or sect. It has likewise been held that the statute, in order to
withstand the strictures of constitutional prohibition, must have a
secular legislative purpose and a primary effect that neither advances
nor inhibits religion. 40 Assessed by these criteria, Republic Act No.
3350 cannot be said to violate the constitutional inhibition of the "noestablishment" (of religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and
temporal, not spiritual or religious or holy and eternal. It was intended
to serve the secular purpose of advancing the constitutional right to the
free exercise of religion, by averting that certain persons be refused
work, or be dismissed from work, or be dispossessed of their right to
work and of being impeded to pursue a modest means of livelihood, by
reason of union security agreements. To help its citizens to find gainful
employment whereby they can make a living to support themselves
and their families is a valid objective of the state. In fact, the state is
enjoined, in the 1935 Constitution, to afford protection to labor, and
regulate the relations between labor and capital and industry. 41 More
so now in the 1973 Constitution where it is mandated that "the State

shall afford protection to labor, promote full employment and equality


in employment, ensure equal work opportunities regardless of sex,
race or creed and regulate the relation between workers and
employers. 42
The primary effects of the exemption from closed shop agreements in
favor of members of religious sects that prohibit their members from
affiliating with a labor organization, is the protection of said
employees against the aggregate force of the collective bargaining
agreement, and relieving certain citizens of a burden on their religious
beliefs; and by eliminating to a certain extent economic insecurity due
to unemployment, which is a serious menace to the health, morals, and
welfare of the people of the State, the Act also promotes the well-being
of society. It is our view that the exemption from the effects of closed
shop agreement does not directly advance, or diminish, the interests of
any particular religion. Although the exemption may benefit those who
are members of religious sects that prohibit their members from
joining labor unions, the benefit upon the religious sects is merely
incidental and indirect. The "establishment clause" (of religion) does
not ban regulation on conduct whose reason or effect merely happens
to coincide or harmonize with the tenets of some or all religions. 43 The
free exercise clause of the Constitution has been interpreted to require
that religious exercise be preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted
consistently with the spirit of the constitutional provision. It acted
merely to relieve the exercise of religion, by certain persons, of a
burden that is imposed by union security agreements. It was Congress
itself that imposed that burden when it enacted the Industrial Peace Act
(Republic Act 875), and, certainly, Congress, if it so deems advisable,
could take away the same burden. It is certain that not every
conscience can be accommodated by all the laws of the land; but when
general laws conflict with scrupples of conscience, exemptions ought
to be granted unless some "compelling state interest" intervenes. 45 In
the instant case, We see no such compelling state interest to withhold
exemption.
Appellant bewails that while Republic Act No. 3350 protects members
of certain religious sects, it leaves no right to, and is silent as to the
protection of, labor organizations. The purpose of Republic Act No.
3350 was not to grant rights to labor unions. The rights of labor unions
are amply provided for in Republic Act No. 875 and the new Labor

Code. As to the lamented silence of the Act regarding the rights and
protection of labor unions, suffice it to say, first, that the validity of a
statute is determined by its provisions, not by its silence 46 ; and,
second, the fact that the law may work hardship does not render it
unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel
persons to join and remain members of a union to keep their jobs in
violation of their religious scrupples, would hurt, rather than help,
labor unions, Congress has seen it fit to exempt religious objectors lest
their resistance spread to other workers, for religious objections have
contagious potentialities more than political and philosophic
objections.
Furthermore, let it be noted that coerced unity and loyalty even to the
country, and a fortiori to a labor union assuming that such unity and
loyalty can be attained through coercion is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48 A
desirable end cannot be promoted by prohibited means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates
the constitutional prohibition against requiring a religious test for the
exercise of a civil right or a political right, is not well taken. The Act
does not require as a qualification, or condition, for joining any lawful
association membership in any particular religion or in any religious
sect; neither does the Act require affiliation with a religious sect that
prohibits its members from joining a labor union as a condition or
qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act
No. 3350 only exempts members with such religious affiliation from
the coverage of closed shop agreements. So, under this Act, a religious
objector is not required to do a positive act to exercise the right to
join or to resign from the union. He is exempted ipso jure without need
of any positive act on his part. A conscientious religious objector need
not perform a positive act or exercise the right of resigning from the
labor union he is exempted from the coverage of any closed shop
agreement that a labor union may have entered into. How then can
there be a religious test required for the exercise of a right when no
right need be exercised?
We have said that it was within the police power of the State to enact
Republic Act No. 3350, and that its purpose was legal and in
consonance with the Constitution. It is never an illegal evasion of a

constitutional provision or prohibition to accomplish a desired result,


which is lawful in itself, by discovering or following a legal way to do
it.49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a
discriminatory legislation, inasmuch as it grants to the members of
certain religious sects undue advantages over other workers, thus
violating Section 1 of Article III of the 1935 Constitution which
forbids the denial to any person of the equal protection of the laws. 50
The guaranty of equal protection of the laws is not a guaranty of
equality in the application of the laws upon all citizens of the state. It
is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child should
be affected alike by a statute. Equality of operation of statutes does not
mean indiscriminate operation on persons merely as such, but on
persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not
forbid discrimination as to things that are different. 51 It does not
prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or
practice because they agree with one another in certain particulars. A
law is not invalid because of simple inequality. 52 The very idea of
classification is that of inequality, so that it goes without saying that
the mere fact of inequality in no manner determines the matter of
constitutionality. 53 All that is required of a valid classification is that it
be reasonable, which means that the classification should be based on
substantial distinctions which make for real differences; that it must be
germane to the purpose of the law; that it must not be limited to
existing conditions only; and that it must apply equally to each
member of the class. 54 This Court has held that the standard is
satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary. 55
In the exercise of its power to make classifications for the purpose of
enacting laws over matters within its jurisdiction, the state is
recognized as enjoying a wide range of discretion. 56 It is not necessary

that the classification be based on scientific or marked differences of


things or in their relation. 57 Neither is it necessary that the
classification be made with mathematical nicety. 58 Hence legislative
classification may in many cases properly rest on narrow
distinctions, 59 for the equal protection guaranty does not preclude the
legislature from recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned
requirements. The Act classifies employees and workers, as to the
effect and coverage of union shop security agreements, into those who
by reason of their religious beliefs and convictions cannot sign up with
a labor union, and those whose religion does not prohibit membership
in labor unions. Tile classification rests on real or substantial, not
merely imaginary or whimsical, distinctions. There is such real
distinction in the beliefs, feelings and sentiments of employees.
Employees do not believe in the same religious faith and different
religions differ in their dogmas and cannons. Religious beliefs,
manifestations and practices, though they are found in all places, and
in all times, take so many varied forms as to be almost beyond
imagination. There are many views that comprise the broad spectrum
of religious beliefs among the people. There are diverse manners in
which beliefs, equally paramount in the lives of their possessors, may
be articulated. Today the country is far more heterogenous in religion
than before, differences in religion do exist, and these differences are
important and should not be ignored.
Even from the phychological point of view, the classification is based
on real and important differences. Religious beliefs are not mere
beliefs, mere ideas existing only in the mind, for they carry with them
practical consequences and are the motives of certain rules. of human
conduct and the justification of certain acts. 60 Religious sentiment
makes a man view things and events in their relation to his God. It
gives to human life its distinctive character, its tone, its happiness or
unhappiness its enjoyment or irksomeness. Usually, a strong and
passionate desire is involved in a religious belief. To certain persons,
no single factor of their experience is more important to them than
their religion, or their not having any religion. Because of differences
in religious belief and sentiments, a very poor person may consider
himself better than the rich, and the man who even lacks the
necessities of life may be more cheerful than the one who has all

possible luxuries. Due to their religious beliefs people, like the


martyrs, became resigned to the inevitable and accepted cheerfully
even the most painful and excruciating pains. Because of differences in
religious beliefs, the world has witnessed turmoil, civil strife,
persecution, hatred, bloodshed and war, generated to a large extent by
members of sects who were intolerant of other religious beliefs. The
classification, introduced by Republic Act No. 3350, therefore, rests on
substantial distinctions.
The classification introduced by said Act is also germane to its
purpose. The purpose of the law is precisely to avoid those who
cannot, because of their religious belief, join labor unions, from being
deprived of their right to work and from being dismissed from their
work because of union shop security agreements.
Republic Act No. 3350, furthermore, is not limited in its application to
conditions existing at the time of its enactment. The law does not
provide that it is to be effective for a certain period of time only. It is
intended to apply for all times as long as the conditions to which the
law is applicable exist. As long as there are closed shop agreements
between an employer and a labor union, and there are employees who
are prohibited by their religion from affiliating with labor unions, their
exemption from the coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects;
this is evident from its provision. The fact that the law grants a
privilege to members of said religious sects cannot by itself render the
Act unconstitutional, for as We have adverted to, the Act only restores
to them their freedom of association which closed shop agreements
have taken away, and puts them in the same plane as the other workers
who are not prohibited by their religion from joining labor unions. The
circumstance, that the other employees, because they are differently
situated, are not granted the same privilege, does not render the law
unconstitutional, for every classification allowed by the Constitution
by its nature involves inequality.
The mere fact that the legislative classification may result in actual
inequality is not violative of the right to equal protection, for every
classification of persons or things for regulation by law produces
inequality in some degree, but the law is not thereby rendered invalid.
A classification otherwise reasonable does not offend the constitution
simply because in practice it results in some inequality. 61 Anent this
matter, it has been said that whenever it is apparent from the scope of

the law that its object is for the benefit of the public and the means by
which the benefit is to be obtained are of public character, the law will
be upheld even though incidental advantage may occur to individuals
beyond those enjoyed by the general public. 62
6. Appellant's further contention that Republic Act No. 3350 violates
the constitutional provision on social justice is also baseless. Social
justice is intended to promote the welfare of all the people. 63 Republic
Act No. 3350 promotes that welfare insofar as it looks after the
welfare of those who, because of their religious belief, cannot join
labor unions; the Act prevents their being deprived of work and of the
means of livelihood. In determining whether any particular measure is
for public advantage, it is not necessary that the entire state be directly
benefited it is sufficient that a portion of the state be benefited
thereby.
Social justice also means the adoption by the Government of measures
calculated to insure economic stability of all component elements of
society, through the maintenance of a proper economic and social
equilibrium in the inter-relations of the members of the
community. 64 Republic Act No. 3350 insures economic stability to the
members of a religious sect, like the Iglesia ni Cristo, who are also
component elements of society, for it insures security in their
employment, notwithstanding their failure to join a labor union having
a closed shop agreement with the employer. The Act also advances the
proper economic and social equilibrium between labor unions and
employees who cannot join labor unions, for it exempts the latter from
the compelling necessity of joining labor unions that have closed shop
agreements and equalizes, in so far as opportunity to work is
concerned, those whose religion prohibits membership in labor unions
with those whose religion does not prohibit said membership. Social
justice does not imply social equality, because social inequality will
always exist as long as social relations depend on personal or
subjective proclivities. Social justice does not require legal equality
because legal equality, being a relative term, is necessarily premised
on differentiations based on personal or natural conditions. 65 Social
justice guarantees equality of opportunity 66 , and this is precisely what
Republic Act No. 3350 proposes to accomplish it gives laborers,
irrespective of their religious scrupples, equal opportunity for work.
7. As its last ground, appellant contends that the amendment
introduced by Republic Act No. 3350 is not called for in other

words, the Act is not proper, necessary or desirable. Anent this matter,
it has been held that a statute which is not necessary is not, for that
reason, unconstitutional; that in determining the constitutional validity
of legislation, the courts are unconcerned with issues as to the
necessity for the enactment of the legislation in question. 67 Courts do
inquire into the wisdom of laws. 68 Moreover, legislatures, being
chosen by the people, are presumed to understand and correctly
appreciate the needs of the people, and it may change the laws
accordingly. 69 The fear is entertained by appellant that unless the Act
is declared unconstitutional, employers will prefer employing
members of religious sects that prohibit their members from joining
labor unions, and thus be a fatal blow to unionism. We do not agree.
The threat to unionism will depend on the number of employees who
are members of the religious sects that control the demands of the
labor market. But there is really no occasion now to go further and
anticipate problems We cannot judge with the material now before Us.
At any rate, the validity of a statute is to be determined from its
general purpose and its efficacy to accomplish the end desired, not
from its effects on a particular case. 70 The essential basis for the
exercise of power, and not a mere incidental result arising from its
exertion, is the criterion by which the validity of a statute is to be
measured. 71
II. We now pass on the second assignment of error, in support of which
the Union argued that the decision of the trial court ordering the Union
to pay P500 for attorney's fees directly contravenes Section 24 of
Republic Act No. 875, for the instant action involves an industrial
dispute wherein the Union was a party, and said Union merely acted in
the exercise of its rights under the union shop provision of its existing
collective bargaining contract with the Company; that said order also
contravenes Article 2208 of the Civil Code; that, furthermore,
Appellee was never actually dismissed by the defendant Company and
did not therefore suffer any damage at all . 72
In refuting appellant Union's arguments, Appellee claimed that in the
instant case there was really no industrial dispute involved in the
attempt to compel Appellee to maintain its membership in the union
under pain of dismissal, and that the Union, by its act, inflicted
intentional harm on Appellee; that since Appellee was compelled to
institute an action to protect his right to work, appellant could legally

be ordered to pay attorney's fees under Articles 1704 and 2208 of the
Civil Code. 73
The second paragraph of Section 24 of Republic Act No. 875 which is
relied upon by appellant provides that:
No suit, action or other proceedings shall be maintainable in any court
against a labor organization or any officer or member thereof for any
act done by or on behalf of such organization in furtherance of an
industrial dispute to which it is a party, on the ground only that such
act induces some other person to break a contract of employment or
that it is in restraint of trade or interferes with the trade, business or
employment of some other person or with the right of some other
person to dispose of his capital or labor. (Emphasis supplied)
That there was a labor dispute in the instant case cannot be disputed
for appellant sought the discharge of respondent by virtue of the closed
shop agreement and under Section 2 (j) of Republic Act No. 875 a
question involving tenure of employment is included in the term "labor
dispute". 74 The discharge or the act of seeking it is the labor dispute
itself. It being the labor dispute itself, that very same act of the Union
in asking the employer to dismiss Appellee cannot be "an act
done ... in furtherance of an industrial dispute". The mere fact that
appellant is a labor union does not necessarily mean that all its acts are
in furtherance of an industrial dispute. 75 Appellant Union, therefore,
cannot invoke in its favor Section 24 of Republic Act No. 875. This
case is not intertwined with any unfair labor practice case existing at
the time when Appellee filed his complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked by the Union,
serve as its shield. The article provides that attorney's fees and
expenses of litigation may be awarded "when the defendant's act or
omission has compelled the plaintiff ... to incur expenses to protect his
interest"; and "in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be
recovered". In the instant case, it cannot be gainsaid that appellant
Union's act in demanding Appellee's dismissal caused Appellee to
incur expenses to prevent his being dismissed from his job. Costs
according to Section 1, Rule 142, of the Rules of Court, shall be
allowed as a matter of course to the prevailing party.
WHEREFORE, the instant appeal is dismissed, and the decision, dated
August 26, 1965, of the Court of First Instance of Manila, in its Civil

Case No. 58894, appealed from is affirmed, with costs against


appellant Union. It is so ordered.
Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, Antonio,
Esguerra, Muoz Palma and Aquino, JJ., concur.

Separate Opinions
FERNANDO, J, concurring:
The decision arrived at unanimously by this Court that Republic Act
No. 3350 is free from the constitutional infirmities imputed to it was
demonstrated in a manner wellnigh conclusive in the learned,
scholarly, and comprehensive opinion so typical of the efforts of
the ponente, Justice Zaldivar. Like the rest of my brethren, I concur
fully. Considering moreover, the detailed attention paid to each and
every objection raised as to its validity and the clarity and
persuasiveness with which it was shown to be devoid of support in
authoritative doctrines, it would appear that the last word has been
written on this particular subject. Nonetheless, I deem it proper to
submit this brief expression of my views on the transcendent character
of religious freedom 1 and its primacy even as against the claims of
protection to labor, 2 also one of the fundamental principles of the
Constitution.
1. Religious freedom is identified with the liberty every individual
possesses to worship or not a Supreme Being, and if a devotee of any
sect, to act in accordance with its creed. Thus is constitutionally
safeguarded, according to Justice Laurel, that "profession of faith to an
active power that binds and elevates man to his Creator ...." 3 The
choice of what a man wishes to believe in is his and his alone. That is a
domain left untouched, where intrusion is not allowed, a citadel to
which the law is denied entry, whatever be his thoughts or hopes. In
that sphere, what he wills reigns supreme. The doctrine to which he
pays fealty may for some be unsupported by evidence, devoid of
rational foundation. No matter. There is no requirement as to its
conformity to what has found acceptance. It suffices that for him such
a concept holds undisputed sway. That is a recognition of man's
freedom. That for him is one of the ways of self- realization. It would
be to disregard the dignity that attaches to every human being to

deprive him of such an attribute. The "fixed star on our constitutional


constellation," to borrow the felicitous phrase of Justice Jackson, is
that no official, not excluding the highest, has it in his power to
prescribe what shall be orthodox in matters of conscience or to
mundane affairs, for that matter.
Gerona v. Secretary of Education 4 speaks similarly. In the language of
its ponente, Justice Montemayor: "The realm of belief and creed is
infinite and limitless bounded only by one's imagination and thought.
So is the freedom of belief, including religious belief, limitless and
without bounds. One may believe in most anything, however strange,
bizarre and unreasonable the same may appear to others, even heretical
when weighed in the scales of orthodoxy or doctrinal
standards." 5 There was this qualification though: "But between the
freedom of belief and the exercise of said belief, there is quite a stretch
of road to travel. If the exercise of said religious belief clashes with the
established institutions of society and with the law, then the former
must yield and give way to the latter. The Government steps in and
either restrains said exercise or even prosecutes the one exercising
it." 6 It was on that basis that the daily compulsory flag ceremony in
accordance with a statute 7 was found free from the constitutional
objection on the part of a religious sect, the Jehovah's Witnesses,
whose members alleged that their participation would be offensive to
their religious beliefs. In a case not dissimilar, West Virginia State
Board of Education v. Barnette, 8 the American Supreme Court reached
a contrary conclusion. Justice Jackson's eloquent opinion is, for this
writer, highly persuasive. Thus: "The case is made difficult not
because the principles of its decision are obscure but because the flag
involved is our own. Nevertheless, we apply the limitations of the
Constitution with no fear that freedom to be intellectually and
spiritually diverse or even contrary will disintegrate the social
organization. To believe that patriotism will not flourish if patriotic
ceremonies are voluntary and spontaneous instead of a compulsory
routine is to make an unflattering estimate of the appeal of our
institutions to free minds. We can have intellectual individualism and
the rich cultural diversities that we owe to exceptional minds only at
the price of occasional eccentricity and abnormal attitudes. When they
are so harmless to others or to the State as those we deal with here, the
price is not too great. But freedom to differ is not limited to things that
do not matter much. That would be a mere shadow of freedom. The

test of its substance is the right to differ as to things that touch the
heart of the existing order." 9
There is moreover this ringing affirmation by Chief Justice Hughes of
the primacy of religious freedom in the forum of conscience even as
against the command of the State itself: "Much has been said of the
paramount duty to the state, a duty to be recognized, it is urged, even
though it conflicts with convictions of duty to God. Undoubtedly that
duty to the state exists within the domain of power, for government
may enforce obedience to laws regardless of scruples. When one's
belief collides with the power of the state, the latter is supreme within
its sphere and submission or punishment follows. But, in the forum of
conscience, duty to a moral power higher than the state has always
been maintained. The reservation of that supreme obligation, as a
matter of principle, would unquestionably be made by many of our
conscientious and law-abiding citizens. The essence of religion is
belief in a relation to God involving duties superior to those arising
from any human relation." 10 The American Chief Justice spoke in
dissent, it is true, but with him in agreement were three of the foremost
jurists who ever sat in that Tribunal, Justices Holmes, Brandeis, and
Stone.
2. As I view Justice Zaldivar's opinion in that light, my concurrence, as
set forth earlier, is wholehearted and entire. With such a cardinal
postulate as the basis of our polity, it has a message that cannot be
misread. Thus is intoned with a reverberating clang, to paraphrase
Cardozo, a fundamental principle that drowns all weaker sounds. The
labored effort to cast doubt on the validity of the statutory provision in
question is far from persuasive. It is attended by futility. It is not for
this Court, as I conceive of the judicial function, to restrict the scope of
a preferred freedom.
3. There is, however, the question of whether such an exception
possesses an implication that lessens the effectiveness of state efforts
to protect labor, likewise, as noted, constitutionally ordained. Such a
view, on the surface, may not be lacking in plausibility, but upon closer
analysis, it cannot stand scrutiny. Thought must be given to the
freedom of association, likewise an aspect of intellectual liberty. For
the late Professor Howe a constitutionalist and in his lifetime the
biographer of the great Holmes, it even partakes of the political theory
of pluralistic sovereignty. So great is the respect for the autonomy
accorded voluntary societies. 11 Such a right implies at the very least

that one can determine for himself whether or not he should join or
refrain from joining a labor organization, an institutional device for
promoting the welfare of the working man. A closed shop, on the other
hand, is inherently coercive. That is why, as is unmistakably reflected
in our decisions, the latest of which is Guijarno v. Court of Industrial
Relations, 12 it is far from being a favorite of the law. For a statutory
provision then to further curtail its operation, is precisely to follow the
dictates of sound public policy.
The exhaustive and well-researched opinion of Justice Zaldivar thus is
in the mainstream of constitutional tradition. That, for me, is the
channel to follow.
Separate Opinions
FERNANDO, J, concurring:
The decision arrived at unanimously by this Court that Republic Act
No. 3350 is free from the constitutional infirmities imputed to it was
demonstrated in a manner wellnigh conclusive in the learned,
scholarly, and comprehensive opinion so typical of the efforts of
the ponente, Justice Zaldivar. Like the rest of my brethren, I concur
fully. Considering moreover, the detailed attention paid to each and
every objection raised as to its validity and the clarity and
persuasiveness with which it was shown to be devoid of support in
authoritative doctrines, it would appear that the last word has been
written on this particular subject. Nonetheless, I deem it proper to
submit this brief expression of my views on the transcendent character
of religious freedom 1 and its primacy even as against the claims of
protection to labor, 2 also one of the fundamental principles of the
Constitution.
1. Religious freedom is identified with the liberty every individual
possesses to worship or not a Supreme Being, and if a devotee of any
sect, to act in accordance with its creed. Thus is constitutionally
safeguarded, according to Justice Laurel, that "profession of faith to an
active power that binds and elevates man to his Creator ...." 3 The
choice of what a man wishes to believe in is his and his alone. That is a
domain left untouched, where intrusion is not allowed, a citadel to
which the law is denied entry, whatever be his thoughts or hopes. In
that sphere, what he wills reigns supreme. The doctrine to which he
pays fealty may for some be unsupported by evidence, devoid of

rational foundation. No matter. There is no requirement as to its


conformity to what has found acceptance. It suffices that for him such
a concept holds undisputed sway. That is a recognition of man's
freedom. That for him is one of the ways of self- realization. It would
be to disregard the dignity that attaches to every human being to
deprive him of such an attribute. The "fixed star on our constitutional
constellation," to borrow the felicitous phrase of Justice Jackson, is
that no official, not excluding the highest, has it in his power to
prescribe what shall be orthodox in matters of conscience or to
mundane affairs, for that matter.
Gerona v. Secretary of Education 4 speaks similarly. In the language of
its ponente, Justice Montemayor: "The realm of belief and creed is
infinite and limitless bounded only by one's imagination and thought.
So is the freedom of belief, including religious belief, limitless and
without bounds. One may believe in most anything, however strange,
bizarre and unreasonable the same may appear to others, even heretical
when weighed in the scales of orthodoxy or doctrinal
standards." 5 There was this qualification though: "But between the
freedom of belief and the exercise of said belief, there is quite a stretch
of road to travel. If the exercise of said religious belief clashes with the
established institutions of society and with the law, then the former
must yield and give way to the latter. The Government steps in and
either restrains said exercise or even prosecutes the one exercising
it." 6 It was on that basis that the daily compulsory flag ceremony in
accordance with a statute 7 was found free from the constitutional
objection on the part of a religious sect, the Jehovah's Witnesses,
whose members alleged that their participation would be offensive to
their religious beliefs. In a case not dissimilar, West Virginia State
Board of Education v. Barnette, 8 the American Supreme Court reached
a contrary conclusion. Justice Jackson's eloquent opinion is, for this
writer, highly persuasive. Thus: "The case is made difficult not
because the principles of its decision are obscure but because the flag
involved is our own. Nevertheless, we apply the limitations of the
Constitution with no fear that freedom to be intellectually and
spiritually diverse or even contrary will disintegrate the social
organization. To believe that patriotism will not flourish if patriotic
ceremonies are voluntary and spontaneous instead of a compulsory
routine is to make an unflattering estimate of the appeal of our
institutions to free minds. We can have intellectual individualism and

the rich cultural diversities that we owe to exceptional minds only at


the price of occasional eccentricity and abnormal attitudes. When they
are so harmless to others or to the State as those we deal with here, the
price is not too great. But freedom to differ is not limited to things that
do not matter much. That would be a mere shadow of freedom. The
test of its substance is the right to differ as to things that touch the
heart of the existing order." 9
There is moreover this ringing affirmation by Chief Justice Hughes of
the primacy of religious freedom in the forum of conscience even as
against the command of the State itself: "Much has been said of the
paramount duty to the state, a duty to be recognized, it is urged, even
though it conflicts with convictions of duty to God. Undoubtedly that
duty to the state exists within the domain of power, for government
may enforce obedience to laws regardless of scruples. When one's
belief collides with the power of the state, the latter is supreme within
its sphere and submission or punishment follows. But, in the forum of
conscience, duty to a moral power higher than the state has always
been maintained. The reservation of that supreme obligation, as a
matter of principle, would unquestionably be made by many of our
conscientious and law-abiding citizens. The essence of religion is
belief in a relation to God involving duties superior to those arising
from any human relation." 10 The American Chief Justice spoke in
dissent, it is true, but with him in agreement were three of the foremost
jurists who ever sat in that Tribunal, Justices Holmes, Brandeis, and
Stone.
2. As I view Justice Zaldivar's opinion in that light, my concurrence, as
set forth earlier, is wholehearted and entire. With such a cardinal
postulate as the basis of our polity, it has a message that cannot be
misread. Thus is intoned with a reverberating clang, to paraphrase
Cardozo, a fundamental principle that drowns all weaker sounds. The
labored effort to cast doubt on the validity of the statutory provision in
question is far from persuasive. It is attended by futility. It is not for
this Court, as I conceive of the judicial function, to restrict the scope of
a preferred freedom.
3. There is, however, the question of whether such an exception
possesses an implication that lessens the effectiveness of state efforts
to protect labor, likewise, as noted, constitutionally ordained. Such a
view, on the surface, may not be lacking in plausibility, but upon closer
analysis, it cannot stand scrutiny. Thought must be given to the

freedom of association, likewise an aspect of intellectual liberty. For


the late Professor Howe a constitutionalist and in his lifetime the
biographer of the great Holmes, it even partakes of the political theory
of pluralistic sovereignty. So great is the respect for the autonomy
accorded voluntary societies. 11 Such a right implies at the very least
that one can determine for himself whether or not he should join or
refrain from joining a labor organization, an institutional device for
promoting the welfare of the working man. A closed shop, on the other
hand, is inherently coercive. That is why, as is unmistakably reflected
in our decisions, the latest of which is Guijarno v. Court of Industrial
Relations, 12 it is far from being a favorite of the law. For a statutory
provision then to further curtail its operation, is precisely to follow the
dictates of sound public policy.
The exhaustive and well-researched opinion of Justice Zaldivar thus is
in the mainstream of constitutional tradition. That, for me, is the
channel to follow.

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 CorporationMeat 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 Med-Arbiter'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 inVictoriano 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.

Republic
SUPREME
Manila
FIRST DIVISION

of

the

Philippines
COURT

G.R. No. 80887 September 30, 1994


BLISS DEVELOPMENT CORPORATION EMPLOYEES
UNION
(BDCEU)-SENTRO
NG
DEMOKRATIKONG
MANGGAGAWA
(SDM), petitioner,
vs.
HON. PURA FERRER CALLEJA and BLISS DEVELOPMENT
CORPORATION, respondents.
Capulong, Magpantay, Ladrido, Canilao and Malabanan for private
respondent.
KAPUNAN, J.:
The focal issue in the case at bench is whether or not Bliss
Development Corporation (BDC) is a government-owned controlled
corporation subject to Civil Service Laws, rules and regulations.
Corollary to this issue is the question of whether or not petitioner is
covered by Executive Order No. 180 and must register under Section 7
thereof as a precondition for filing a petition for certification election.
The antecedents of the case are:
On October 10, 1986, petitioner, a duly registered labor union, filed
with the Department of Labor, National Capital Region, a petition for
certification election of private respondent Bliss Development
Corporation (BDC).
Based on the position papers submitted by the parties, Med-Arbiter
Napoleon V. Fernando, in an order dated January 26, 1987, dismissed
the petition for lack of jurisdiction stating that the majority of BDC's
stocks is owned by the Human Settlement Development Corporation
(HSDC), a wholly-owned government corporation. Therefore, BDC is
subject to Civil Service law, rules and regulations. The pertinent
portion of said Order reads:
It may not be amised (sic) to further state that the Supreme Court in its
Decision in the case of National Housing Corporation versus Benjamin

Juco and the National Labor Relations Commission G-R 63313


promulgated on January 17, 1985 has pronounced that:
There should no longer be any question at this time that employees of
government owned or controlled corporations are governed by the
Civil Service Rules and Regulations.
Corollary to the issue of whether or not employees of BDC may form
or join labor organizations therefore is the issue of whether or not
BDC is a government owned corporation.
The pertinent law on the matter is P.D. No. 2029 which provides that:
Section 2 Definition A government-owned or controlled
corporation is a stock or non-stock corporation whether performing
government or proprietary functions, which is directly chartered by
special law or if organized under the general corporation law is owned
or controlled by the government or subsidiary corporation, to the
extent of at least a majority of its outstanding capital stock or of its
outstanding voting stock.
In the case at bar, it is not disputed that majority of the stocks of BDC
are owned by Human Settlement Development Corporation, a wholly
government owned corporation, hence, this Office cannot, but
otherwise conclude that Bliss Development Corporation is a
government owned corporation whose employees are governed not by
the Labor Code but by the Civil Service law, rules, and regulations. Its
employees therefore, are prohibited to join or form labor organization.
Further, this Office is without authority to entertain the present petition
for obvious lack of jurisdiction.
Indeed, Opinion No. 94, series of 1985, the Minister of Justice has
declared:
In determining whether a corporation created under the Corporation
Code is government owned or controlled or not, this ministry has
consistently applied theownership test whereby a corporation will be
deemed owned by the government if the majority of its voting stocks
are owned by the government.
It appearing that Human Settlement Development Corporation
(HSDC), which is a wholly-owned government corporation, owns a
majority of the stocks of Bliss Development Corporation (BDC), our
conclusion is that BDC is a government-owned corporation subject to
the coverage of the Civil Service law, rules and regulations as
pronounced by the Supreme Court in the case of NHA versus Juco. 1
Petitioner then filed an appeal with the Bureau of Labor Relations.

In the meantime, or on June 1, 1987 Executive Order No. 180 was


issued the then President Corazon C. Aquino extending to government
employees the right to organize and bargain collectively. Sections 1
and 7 of said Order provide:
Sec. 1. This Executive Order applies to all employees of all branches,
subdivisions, instrumentalities, and agencies of the government,
including government-owned or controlled corporations with original
charters. . . . (Emphasis supplied)
Sec. 7. Government employees' organizations shall register with the
Civil Service Commission and the Department of Labor and
Employment. The application shall be filed with the Bureau of Labor
Relations of the Department which shall process the same in
accordance with the provisions of the Labor Code of the Philippines,
as amended. Applications may also be filed with the Regional Offices
of the Department of Labor and Employment which shall immediately
transmit the said applications to the Bureau of Labor Relations within
three (3) days from receipt hereof.
On August 7, 1987, Director Pura Ferrer-Calleja of the Bureau of
Labor Relations issued an Order dismissing the appeal. Said Order is
reproduced hereunder:
For disposition is an appeal of the Bliss Development Corporation
Employees Union Sentro ng Demokratikong Manggagawa (BDCEUSDM) from the Order of the Med-Arbiter dismissing its petition for
direct certification/certification election dated January 26, 1987.
On January 26, 1987, the Med-Arbiter issued an Order dismissing the
petition filed by BDCEU-SDM. He ruled that the Bliss Development
Corporation which is under the then Ministry of Human Settlement, is
a government Corporation where the workers are prohibited from
organizing and joining labor unions. The Med-Arbiter cited Opinion
No. 94 series of 1985, of the Minister of Justice which is hereunder
quoted as follows:
In determining whether a corporation created under the Corporation
Code is government-owned or a controlled or not, this Ministry has
consistently applied the ownership test whereby a corporation will be
deemed owned by the government if all or a majority of its stocks are
owned by the government, and it will be deemed controlled by the
government, if the majority of its voting stocks are owned by the
government.

It appearing that HSDC, which is a wholly-owned government


corporation, owns a majority of the stocks of BDC, our conclusion is
that BDC is a government-owned corporation subject to the coverage
of the Civil Service Law and rules as pronounced by the Supreme
Court in the case of NHA vs. Juco.
But circumstances have changed. With the issuance of Executive
Order No. 180 dated June 1, 1987, government employees are now
given the right to organize and bargain collectively. This, therefore,
renders academic the order subject of the appeal.
xxx xxx xxx
Consequently, this Bureau hereby enjoins the Petitioner to register in
accordance with the aforecited provision. Meantime, the petition is
dismissed without prejudice to its refiling after petitioner is granted
registration to avoid legal complications.
WHEREFORE, in view of the foregoing, the case is hereby dismissed
without prejudice.
SO ORDERED. 2
Taking exception to the Director's Order, petitioner brought the instant
petition to annul the same on the following grounds:
I
THE DIRECTOR GRAVELY ABUSED HER DISCRETION
AMOUNTING TO LACK OF JURISDICTION WHEN SHE
ORDERED PETITIONER TO REGISTER UNDER SECTION 7 OF
EXECUTIVE ORDER NO. 180 WHICH DOES NOT COVER
PETITIONER;
II
THE DIRECTOR GRAVELY ABUSED HER DISCRETION WHEN
SHE INSISTED ON ENFORCING AN OPINION OF THE
MINISTER OF JUSTICE WHICH RESPONDENT BDC ITSELF
HAS CONSISTENTLY IGNORED AND CONTINUES TO IGNORE
AND WHICH THE ENTIRE GOVERNMENT DOES NOT CARE
TO ENFORCE. 3
In a resolution dated May 29, 1989 the Court gave due course to the
petition and required the parties to file their respective memoranda
which was complied with. The Solicitor General begged leave to be
relieved from filing a comment on the petition and a memorandum,
averring that he could not sustain the position of respondent Director.
The petition is impressed with merit.

Section 1 of Executive Order No. 180 expressly limits its application


to only government-owned or controlled corporations with original
charters. Hence, public respondent's order dated August 7, 1987
requiring petitioner to register in accordance with Section 7 of
executive Order No. 180 is without legal basis.
Without categorically saying so, public respondent sustained the MedArbiter's invocation of the case of National Housing Corporation v.
Juco, 4 which rules that the inclusion of "government-owned or
controlled corporations" within the embrace of the civil service shows
a deliberate effort of the framers of the 1973 Constitution to plug an
earlier loophole which allowed government-owned or controlled
corporations to avoid the full consequences of the all encompassing
coverage of the civil service system. In said case, we stressed that:
Section 1 of Article XII-B, Constitution uses the word "every" to
modify the phrase "government-owned or controlled corporation."
Every means each one of a group, without exception. It means all
possible and all, taken one by one. Of course, our decision in this case
refers to a corporation created as a government-owned or controlled
entity. . . . . 5
However, our ruling in NHC v. Juco 6 case, which was decided under
the 1973 Constitution, lost its applicability with the advent of the 1987
Constitution. Thus, in National Service Corporation v. NLRC, 7 we
held that:
. . . (I)n the matter of coverage by the civil service of governmentowned or controlled corporations, the 1987 Constitution starkly varies
from the 1973 Constitution, upon which National Housing Corporation
vs. Juco is based. Under the 1973 Constitution, it was provided that:
The civil service embraces every branch, agency, subdivision, and
instrumentality of the Government, including every governmentowned or controlled corporation. . . . [Constitution, 1973, Art. II-B,
Sec. I(1)]
On the other hand, the 1987 Constitution provides that:
The civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charter.
(Emphasis supplied) [Constitution (1987), Art. IX-B, Sec. 2(1).
Thus the situations sought to be avoided by the 1973 Constitution and
expressed by the Court in theNational Housing Corporation case in
the following manner

The infirmity of the respondents' position lies in its permitting a


circumvention or emasculation of Section 1, Article XII-B of the
Constitution. It would be possible for a regulate ministry of
government to create a host of subsidiary corporations under the
Corporation Code funded by a willing legislature. A governmentowned corporation could create several subsidiary corporations. These
subsidiary corporations would enjoy the best of two worlds. Their
officials and employees would be privileged individuals, free from the
strict accountability required by the Civil Service Decree and the
regulations of the Commission on Audit. Their incomes would not be
subject to the competitive restrains of the open market nor to the terms
and conditions of civil service employment. Conceivably, all
government-owned or controlled corporations could be created, no
longer by special charters, but through incorporations under the
general law. The Constitutional amendment including such
corporations in the embrace of the civil service would cease to have
application. Certainly, such a situation cannot be allowed to exist. [134
SCRA 182-183]
appear relegated to relative insignificance by the 1987 Constitutional
provision that the Civil Service embraces government-owned or
controlled corporations with original charter; and, therefore, by clear
implication, the Civil Service does not include government-owned or
controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general
corporation law. 8
A corporation is created by operation of law. It acquires a judicial
personality either by special law or a general law. The general law
under which a private corporation may be formed or organized is the
Corporation Code, the requirements of which must be complied with
by those wishing to incorporate. Only upon such compliance will the
corporation come into being and acquire a juridical personality, thus
giving rise to is right to exist and act as a legal entity. On the other
hand, a government corporation is normally created by special law,
referred to often as a charter. 9
BDC is a government-owned corporation created under the
Corporation Law. It is without a charter, governed by the Labor Code
and not by the Civil Service Law hence, Executive Order No. 180 does
not apply to it.

Consequently, public respondent committed grave abuse of discretion


in ordering petition to register under Section 7, of Executive Order No.
180 as a precondition for filing a petition for certification election.
WHEREFORE, the instant petition is hereby GRANTED. The order of
public respondent dated August 7, 1987 is SET ASIDE and the
Director of Labor Relations is hereby directed to give due course of
petitioner's application for certification election.
SO ORDERED.
Cruz, Davide, Jr., Bellosillo and Quiason, JJ., concur.

Republic
SUPREME
Manila
EN BANC

of

the

Philippines
COURT

G.R. No. 95237-38 September 13, 1991


DAVAO CITY WATER DISTRICT, CAGAYAN DE ORO CITY
WATER DISTRICT, METRO CEBU WATER DISTRICT,
ZAMBOANGA CITY WATER DISTRICT, LEYTE METRO
WATER DISTRICT, BUTUAN CITY WATER DISTRICT,
CAMARINES NORTE WATER DISTRICT, LAGUNA WATER
DISTRICT, DUMAGUETE CITY WATER DISTRICT, LA
UNION WATER DISTRICT, BAYBAY WATER DISTRICT,
METRO LINGAYEN WATER DISTRICT, URDANETA WATER
DISTRICT, COTABATO CITY WATER DISTRICT, MARAWI
WATER DISTRICT, TAGUM WATER DISTRICT, DIGOS
WATER DISTRICT, BISLIG WATER DISTRICT, and
MECAUAYAN
WATER
DISTRICT, petitioners,
vs.
CIVIL SERVICE COMMISSION, and COMMISSION ON
AUDIT, respondents.
Rodolfo S. De Jesus for petitioners.
Evalyn H. Itaas-Fetalino, Rogelio C. Limare and Daisy B. GarciaTingzon for CSC.
MEDIALDEA, J.:p
Whether or not the Local Water Districts formed and created pursuant
to the provisions of Presidential Decree No. 198, as amended, are
government-owned or controlled corporations with original charter
falling under the Civil Service Law and/or covered by the visitorial
power of the Commission on Audit is the issue which the petitioners
entreat this Court, en banc, to shed light on.
Petitioners are among the more than five hundred (500) water districts
existing throughout the country formed pursuant to the provisions of
Presidential Decree No. 198, as amended by Presidential Decrees Nos.
768 and 1479, otherwise known as the "Provincial Water Utilities Act
of 1973."

Presidential Decree No. 198 was issued by the then President


Ferdinand E. Marcos by virtue of his legislative power under
Proclamation No. 1081. It authorized the different local legislative
bodies to form and create their respective water districts through a
resolution they will pass subject to the guidelines, rules and
regulations therein laid down. The decree further created and formed
the "Local Water Utilities Administration" (LWUA), a national agency
attached to the National Economic and Development Authority
(NEDA), and granted with regulatory power necessary to optimize
public service from water utilities operations.
The respondents, on the other hand, are the Civil Service Commission
(CSC) and the Commission on Audit (COA), both government
agencies and represented in this case by the Solicitor General.
On April 17, 1989, this Court ruled in the case of Tanjay Water
District v. Gabaton, et al. (G.R. No. 63742, 172 SCRA 253):
Significantly, Article IX (B), Section 2(1) of the 1987 Constitution
provides that the Civil Service embraces all branches, subdivisions,
instrumentalities, and agencies of the government, including
government-owned and controlled corporations with original charters.
Inasmuch as PD No. 198, as amended, is the original charter of the
petitioner, Tanjay Water District, and respondent Tarlac Water District
and all water districts in the country, they come under the coverage of
the Civil Service Law, rules and regulations. (Sec. 35, Art. VIII and
Sec. 37, Art. IX of PD No. 807).
As an offshoot of the immediately cited ruling, the CSC. issued
Resolution No. 90-575, the dispositive portion of which reads:
NOW THEREFORE, in view of all the foregoing, the Commission
resolved, as it hereby resolves to rule that Local Water Districts, being
quasi-public corporations created by law to perform public services
and supply public wants, the matter of hiring and firing of its officers
and employees should be governed by the Civil Service Law, rules and
regulations. Henceforth, all appointments of personnel of the different
local water districts in the country shall be submitted to the
Commission for appropriate action. (Rollo. p. 22).
However, on May 16, 1990, in G.R. No. 85760, entitled "Metro Iloilo
Water District v. National Labor Relations Commission, et al.," the
Third Division of this Court ruled in a minute resolution:
xxx xxx xxx

Considering that PD 198 is a general legislation empowering and/or


authorizing government agencies and entities to create water districts,
said PD 198 cannot be considered as the charter itself creating the
Water District. Public respondent NLRC did not commit any grave
abuse of discretion in holding that the operative act, that created the
Metro Iloilo Water District was the resolution of the Sangguniang
Panglunsod of Iloilo City. Hence, the employees of Water Districts are
not covered by Civil Service Laws as the latter do (sic) not have
original charters.
In adherence to the just cited ruling, the CSC suspended the
implementation of Resolution No. 90-575 by issuing Resolution No.
90-770 which reads:
xxx xxx xxx
NOW, THEREFORE, in view of all the foregoing, the Commission
resolved to rule, as it hereby rules, that the implementation of CSC.
Resolution No. 575 dated June 27, 1990 be deferred in the meantime
pending clarification from the Supreme Court are regards its
conflicting decisions in the cases of Tanjay Water District v.
Gabaton and Metro Iloilo Water District v. National Labor Relations
Commission. (p. 26, Rollo)
In the meanwhile, there exists a divergence of opinions between COA
on one hand, and the (LWUA), on the other hand, with respect to the
authority of COA to audit the different water districts.
COA opined that the audit of the water districts is simply an act of
discharging the visitorial power vested in them by law (letter of COA
to LWUA dated August 13, 1985, pp. 29-30, Rollo).
On the other hand, LWUA maintained that only those water districts
with subsidies from the government fall within the COA's jurisdiction
and only to the extent of the amount of such subsidies, pursuant to the
provision of the Government Auditing Code of the Phils.
It is to be observed that just like the question of whether the employees
of the water districts falls under the coverage of the Civil Service Law,
the conflict between the water districts and the COA is also dependent
on the final determination of whether or not water districts are
government-owned or controlled corporations with original charter.
The reason behind this is Sec. 2(1), Article IX-D of the 1987
constitution which reads:
Sec. 2(1) The Commission on Audit shall have the power, authority,
and duty to examine, audit, and settle all accounts pertaining to the

revenue and receipts of, and expenditures or uses of funds and


property, owned or held in trust by, or pertaining to the Government,
or any of its subdivisions, agencies or instrumentalities, including
government-owned or controlled corporations with original charters,
and on a post audit basis. (emphasis supplied)
Petitioners' main argument is that they are private corporations without
original charter, hence they are outside the jurisdiction of respondents
CSC and COA. Reliance is made on the Metro Iloilo case which
declared petitioners as quasi-public corporations created by virtue of
PD 198, a general legislation which cannot be considered as the
charter itself creating the water districts. Holding on to this ruling,
petitioners contend that they are private corporations which are only
regarded as quasi-public or semi-public because they serve public
interest and convenience and that since PD 198 is a general legislation,
the operative act which created a water district is not the said decree
but the resolution of the sanggunian concerned.
After a fair consideration of the parties' arguments coupled with a
careful study of the applicable laws as well as the constitutional
provisions involved, We rule against the petitioners and reiterate Our
ruling in Tanjay case declaring water districts government-owned or
controlled corporations with original charter.
As early as Baguio Water District v. Trajano, et al., (G.R. No. 65428,
February 20, 1984, 127 SCRA 730), We already ruled that a water
district is a corporation created pursuant to a special law P.D. No.
198, as amended, and as such its officers and employees are covered
by the Civil Service Law.
In another case (Hagonoy Water District v. NLRC, G.R. No. 81490,
August 31, 1988, 165 SCRA 272), We ruled once again that local
water districts are quasi-public corporations whose employees belong
to the Civil Service. The Court's pronoucement in this case, as
extensively quoted in the Tanjay case, supra, partly reads:
"The only question here is whether or not local water districts are
governmkent owned or controlled corporations whose employees are
subject to the provisions of the Civil Service Law. The Labor Arbiter
asserted jurisdiction over the alleged illegal dismissal of private
respondent Villanueva by relying on Section 25 of Presidential decree
No. 198, known as the Provincial Water Utilities Act of 1973" which
went onto effect in 25 May 1973, and which provides as follows:

Exemption from Civil Service. The district and its employees, being
engaged in a proprietary function, are hereby exempt from the
provisions of the Civil Service Law. Collective Bargaining shall be
available only to personnel below supervisory levels:Provided,
however, That the total of all salaries, wages emoluments, benefits or
other compensation paid to all employees in any month shall not
exceed fifty percent (50%) of average net monthy revenue. Said net
revenue representing income from water sales and sewerage service
charges, less pro-rata share of debt service and expenses for fuel or
energy for pumping during the preceding fiscal year.
The Labor Arbiter failed to take into accout the provisions of
Presidential Decree No. 1479, which went into effect on 11 June 1978,
P.D. No. 1479, wiped away Section 25 of PD 198 quoted above, and
Section 26 of PD 198 was renumbered as Section 25 in the following
manner:
Section 26 of the same decree PD 198 is hereby amended to read as
Section 25 as follows:
Section 25. Authorization. The district may exercise all the powers
which are expressly granted by this Title or which are necessarily
implied from or incidental to the powers and purposes herein stated.
For the purpose of carrying out the objectives of this Act, a district is
hereby granted the power of eminent domain, the exercise thereof
shall, however, be subject to review by the Administration.
Thus, Section 25 of PD 198 exempting the employees of water
districts from the application of the Civil Service Law was removed
from the statute books:
xxx xxx xxx
We grant the petition for the following reasons:
1. Section 25 of PD No. 198 was repealed by Section 3 of PD No.
1479; Section 26 of PD No. 198 was amended ro read as Sec. 25 by
Sec. 4 of PD No. 1479. The amendatory decree took effect on June 11,
1978.
xxx xxx xxx
3. The BWD is a corporation created pursuant to a special law PD
No. 198, as amended. As such its officers and employees are part of
the Civil Service (Sec. 1, Art. XII-B, [1973] Constitution; PD No.
868).
Ascertained from a consideration of the whole statute, PD 198 is a
special law applicable only to the different water districts created

pursuant thereto. In all its essential terms, it is obvious that it pertains


to a special purpose which is intended to meet a particular set of
conditions and cirmcumstances. The fact that said decree generally
applies to all water districts throughout the country does not change
the fact that PD 198 is a special law. Accordingly, this Court's
resolution in Metro Iloilo case declaring PD 198 as a general
legislation is hereby abandoned.
By "government-owned or controlled corporation with original
charter," We mean government owned or controlled corporation
created by a special law and not under the Corporation Code of the
Philippines. Thus, in the case ofLumanta v. NLRC (G.R. No. 82819,
February 8, 1989, 170 SCRA 79, 82), We held:
The Court, in National Service Corporation (NASECO) v. National
Labor Relations Commission, G.R. No 69870, promulgated on 29
November 1988, quoting extensively from the deliberations of 1986
Constitutional Commission in respect of the intent and meaning of the
new phrase "with original character," in effect held that governmentowned and controlled corporations with original charter refer to
corporations chartered by special law as distinguished from
corporations organized under our general incorporation statute the
Corporations Code. In NASECO, the company involved had been
organized under the general incorporation statute and was a sbusidiary
of the National Investment Development Corporation (NIDC) which in
turn was a subsidiary of the Philippine National Bank, a bank
chartered by a special statute. Thus, government-owned or controlled
corporations like NASECO are effectively, excluded from the scope of
the Civil Service. (emphasis supplied)
From the foregoing pronouncement, it is clear that what has been
excluded from the coverage of the CSC are those corporations created
pursuant to the Corporation Code. Significantly, petitioners are not
created under the said code, but on the contrary, they were created
pursuant to a special law and are governed primarily by its provision.
No consideration may thus be given to petitioners' contention that the
operative act which created the water districts are the resolutions of the
respective local sanggunians and that consequently, PD 198, as
amended, cannot be considered as their charter.
It is to be noted that PD 198, as amended is the source of authorization
and power to form and maintain a district. Section 6 of said decree
provides:

Sec. 6. Formation of District. This Act is the source of


authorization and power to form and maintain a district. Once formed,
a district is subject to the provisions of this Act and not under the
jurisdiction of any political subdivision, . . . .
Moreover, it must be observed that PD 198, contains all the essential
terms necessary to constitute a charter creating a juridical person. For
example, Section 6(a) provides for the name that will be used by a
water district, thus:
Sec. 6. . . . To form a district, the legislative body of any city,
municipality or province shall enact a resolution containing the
following:
a) The name of the local water district, which shall include the name of
the city, municipality, or province, or region thereof, served by said
system, followed by the words "Water District."
It also prescribes for the numbers and qualifications of the members of
the Board of Directors:
Sec. 8. Number and Qualification. The Board of Directors of a
district shall be composed of five citizens of the Philippines who are of
voting age and residents within the district. One member shall be a
representative of civic-oriented service clubs, one member of
representative of professional associations, one member a
representative of business, commercial or financial organizations, one
member a representative of educational institutions and one member a
representative of women's organization. No public official shall serve
as director. Provided, however, that if the district has availed of the
financial assistance of the Administration, the Administration may
appoint any of its personnel to sit in the board of directors with all the
rights and privileges appertaining to a regular member for such period
as the indebtedness remains unpaid in which case the board shall be
composed of six members; (as amended by PDs Nos. 768 and 1479).
the manner of their appointment and nominations;
Sec. 9. Appointment. Board members shall be appointed by the
appointing authority. Said appointments shall be made from a list of
nominees, if any, submitted pursuant to Section 10. If no nominations
are submitted, the appointing authority shall appoint any qualified
person of the category to the vacant position;
Sec.10. Nominations. On or before October 1 of each even
numbered year, the secretary of the district shall contact each known
organization, association, or institution being represented by the

director whose term will expire on December 31 and solicit


nominations from these organizations to fill the position for the
ensuing term. One nomination may be submitted in writing by each
such organization to the Secretary of the district on or before
November 1 of such year: This list of nominees shall be transmitted by
the Secretary of the district to the office of the appointing authority on
or before November 15 of such year and he shall make his
appointment from the list submitted on or before December 15. In the
event the appointing authority fails to make his appointments on or
before December 15, selection shall be made from said list of
nominees by majority vote of the seated directors of the district
constituting a quorum. Initial nominations for all five seats of the
board shall be solicited by the legislative body or bodies at the time of
adoption of the resolution forming the district. Thirty days thereafter, a
list of nominees shall be submitted to the provincial governor in the
event the resolution forming the district is by a provincial board, or the
mayor of the city or municipality in the event the resolution forming
the adoption of the district is by the city or municipal board of
councilors, who shall select the initial directors therefrom within 15
days after receipt of such nominations;
their terms of office:
Sec. 11. Term of Office. Of the five initial directors of each newly
formed district, two shall be appointed for a maximum term of two
years, two for a maximum term of four years, and one for a maximum
term of six years. Terms of office of all directors in a given district
shall be such that the term of at least one director, but not more then
two, shall expire on December 31 of each even-numbered year.
Regular terms of office after the initial terms shall be for six years
commencing on January 1 of odd-numbered years. Directors may be
removed for cause only, subject to review and approval of the
Administration; (as amended by PD 768).
the manner of filling up vacancies:
Sec. 12. Vacancies. In the event of a vacancy in the board of
directors occurring more than six months before expiration of any
director's term, the remaining directors shall within 30 days, serve
notice to or request the secretary of the district for nominations and
within 30 days, thereafter a list of nominees shall be submitted to the
appointing authority for his appointment of a replacement director
from the list of nominees. In the absence of such nominations, the

appointing authority shall make such appointment. If within 30 days


after submission to him of a list of nominees the appointing authority
fails to make an appointment, the vacancy shall be filled from such list
by a majority vote of the remaining members of the Board of Directors
constituting a quorum. Vacancies occurring within the last six months
of an unexpired term shall also be filled by the Board in the above
manner. The director thus appointed shall serve the unexpired term
only; (as amended by PD 768).
and the compensation and personal liability of the members of the
Board of Directors:
Sec. 13. Compensation. Each director shall receive a per diem, to
be determined by the board, for each meeting of the board actually
attended by him, but no director shag receive per diems in any given
month in excess of the equivalent of the total per diems of four
meetings in any given month. No director shall receive other
compensation for services to the district.
Any per diem in excess of P50.00 shall be subject to approval of the
Administration (as amended by PD 768).
Sec. 14. Personal Liability. No director may be held to be
personally liable for any action of the district.
Noteworthy, the above quoted provisions of PD 198, as amended, are
similar to those which are actually contained in other corporate
charters. The conclusion is inescapable that the said decree is in truth
and in fact the charter of the different water districts for it clearly
defines the latter's primary purpose and its basic organizational set-up.
In other words, PD 198, as amended, is the very law which gives a
water district juridical personality. While it is true that a resolution of a
local sanggunian is still necessary for the final creation of a district,
this Court is of the opinion that said resolution cannot be considered as
its charter, the same being intended only to implement the provisions
of said decree. In passing a resolution forming a water district, the
local sanggunian is entrusted with no authority or discretion to grant a
charter for the creation of a private corporation. It is merely given the
authority for the formation of a water district, on a local option basis,
to be exercised under and in pursuance of PD 198.
More than the aforequoted provisions, what is of important interest in
the case at bar is Section 3, par. (b) of the same decree which reads:
Sec. 3(b). Appointing authority. The person empowered to appoint
the members of the Board of Directors of a local water district,

depending upon the geographic coverage and population make-up of


the particular district. In the event that more than seventy-five percent
of the total active water service connections of a local water districts
are within the boundary of any city or municipality, the appointing
authority shall be the mayor of that city or municipality, as the case
may be; otherwise, the appointing authority shall be the governor of
the province within which the district is located:Provided, That if the
existing waterworks system in the city or municipality established as a
water district under this Decree is operated and managed by the
province, initial appointment shall be extended by the governor of the
province. Subsequent appointments shall be as specified herein.
If portions of more than one province are included within the boundary
of the district, and the appointing authority is to be the governors then
the power to appoint shall rotate between the governors involved with
the initial appointments made by the governor in whose province the
greatest number of service connections exists (as amended by PD
768).
The above-quoted section definitely sets to naught petitioners'
contention that they are private corporations. It is clear therefrom that
the power to appoint the members who will comprise the Board of
Directors belongs to the local executives of the local subdivision units
where such districts are located. In contrast, the members of the Board
of Directors or trustees of a private corporation are elected from
among the members and stockholders thereof. It would not be amiss to
emphasize at this point that a private corporation is created for the
private purpose, benefit, aim and end of its members or stockholders.
Necessarily, said members or stockholders should be given a free hand
to choose those who will compose the governing body of their
corporation. But this is not the case here and this clearly indicates that
petitioners are definitely not private corporations.
The foregoing disquisition notwithstanding, We are, however, not
unaware of the serious repercussion this may bring to the thousands of
water districts' employees throughout the country who stand to be
affected because they do not have the necessary civil service
eligibilities. As these employees are equally protected by the
constitutional guarantee to security of tenure, We find it necessary to
rule for the protection of such right which cannot be impaired by a
subsequent ruling of this Court. Thus, those employees who have
already acquired their permanent employment status at the time of the

promulgation of this decision cannot be removed by the mere reason


that they lack the necessary civil service eligibilities.
ACCORDINGLY, the petition is hereby DISMISSED. Petitioners are
declared "government-owned or controlled corporations with original
charter" which fall under the jurisdiction of the public respondents
CSC and COA.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Padilla,
Grio-Aquino, Regalado and Davide, Jr., JJ., concur.
Gutierrez, Jr., Feliciano and Sarmiento, JJ., are on leave.

Separate Opinions
BIDIN, J., dissenting:
I regret I have to register my dissent in this case. I agree with the main
ponencia that P.D. 198, as amended, authorizes the different local
legislative bodies (Sanggunian) to form and create their respective
water districts through a Resolution which they will pass subject to the
guidelines, rules and regulations therein laid down. The issue,
therefore, to be resolved is whether the local water districts so created
are government-owned or controlled corporations with original
charters embraced by the Civil Service as contemplated by Art. IX-B,
Sec. 2[1] of the 1987 Constitution.
P.D. 198 is a general legislation which authorizes the formation of
water districts. However, the operative act which creates a water
district is not said decree but the resolution of the Sanggunian
concerned forming and maintaining a local water district. Thus,
Section 2 of P.D. 198, among others, provides:
Sec. 2. Declaration of Policy . . . To encourage the formulation of
such local water districts and the transfer thereto of existing water
supply and waste water disposal facilities, this Decree provides by
general act the authority for the formation thereof, on a local option
basis. . . . (Emphasis supplied)
Implementing the above policy, Title II of P.D. 198 provides:
TITLE
II.
LOCAL
WATER
DISTRICT
LAW
CHAPTER I. Title

Sec. 4. Title. The provisions of this Title shall be known and


referred to as the "Local Water District Law."
CHAPTER II. Purpose and Formation
Sec. 5. Purpose. Local water districts may be formed pursuant to
this Title for the purposes of (a) acquiring, installing, improving,
maintaining and operating water supply and distribution systems for
domestic, industrial, municipal and agricultural uses for residents and
lands within the boundaries of such districts, (b) providing,
maintaining and operating wastewater collection, treatment and
disposal facilities, and (c) conducting such other functions and
operations incidental to water resource development, utilization and
disposal within such districts, as are necessary or incidental to said
purpose.
Sec. 6. Formation of District. This Act is the source of
authorization and power to form and maintain a district. For purposes
of this Act, a district shall be considered as a quasi-public
corporation performing public service and supplying public wants. As
such, a district shall exercise the powers, rights and privileges given
to private corporations under existing laws, in addition to the powers
granted in, and subject to such restrictions imposed, under this Act.
xxx xxx xxx
Sec. 7. Filing of Resolution. A certifted copy of the resolution or
resolutions forming a district shall be forwarded to the office of the
Secretary of the Administration. If found by the Administration to
conform to the requirements of Section 6 and the policy objectives in
Section 2, the resolution shall be duly filed. The district shall be
deemed duly formed and existing upon the date of such filing. A
certified copy of said resolution showing the filing stamp of the
Administration shall be maintained in the office of the district. Upon
such filing, the local government or governments concerned shall lose
ownership, supervision and control or any right whatsoever over the
district except as provided herein. (Emphasis supplied)
It is apparent that insofar as the formation of local water districts are
concerned, P.D. 198 is not an original charter but a general act
authorizing the formation of water districts on local option basis (Sec.
2, P.D. 198) similar to the Corporation Code. What is chartered,
formed and created under P.D. 198 as a government corporation is the
"Local Water Utilities Administration" attached to the Office of the
President as follows:

Sec. 49. Charter. There is hereby chartered, created and formed a


government corporation to be known as the "Local Water Utilities
Administration which is hereby attached to the Office of the President.
The provisions of this title shall be and constitute the charter of the
Administration.
On the other hand, local water districts are formed by resolutions of
the respective Provincial, City and Municipal councils (Sec. 7, P.D.
198) filed with the Local Water Utilities Administration, a government
corporation chartered under Section 49, P.D. 198 and attached to the
Office of the President. Consequently, without the requisite resolution
of the Sanggunian concerned forming the water district having been
filed with the Local Water Utility Administration, no water district is
formed. What gives the water districts juridical personality is the
resolution of the respective Sanggunian forming the district and filed
with the Local Water Utilities Administration. Once formed, a water
district is subject to the provisions of P.D. 198 and no longer under the
jurisdiction of any political administration which shall thereafter lose
ownership, supervision and control over the district (Sec. 7, PD 198).
In view of the foregoing, I vote to Grant the petition and to declare
petitioners as quasi-public corporations performing public service
without original charters and therefore not embraced by the Civil
Service.
Separate Opinions
BIDIN, J., dissenting:
I regret I have to register my dissent in this case. I agree with the main
ponencia that P.D. 198, as amended, authorizes the different local
legislative bodies (Sanggunian) to form and create their respective
water districts through a Resolution which they will pass subject to the
guidelines, rules and regulations therein laid down. The issue,
therefore, to be resolved is whether the local water districts so created
are government-owned or controlled corporations with original
charters embraced by the Civil Service as contemplated by Art. IX-B,
Sec. 2[1] of the 1987 Constitution.
P.D. 198 is a general legislation which authorizes the formation of
water districts. However, the operative act which creates a water
district is not said decree but the resolution of the Sanggunian
concerned forming and maintaining a local water district. Thus,
Section 2 of P.D. 198, among others, provides:

Sec. 2. Declaration of Policy . . . To encourage the formulation of


such local water districts and the transfer thereto of existing water
supply and waste water disposal facilities, this Decree provides by
general act the authority for the formation thereof, on a local option
basis. . . . (Emphasis supplied)
Implementing the above policy, Title II of P.D. 198 provides:
TITLE
II.
LOCAL
WATER
DISTRICT
LAW
CHAPTER I. Title
Sec. 4. Title. The provisions of this Title shall be known and
referred to as the "Local Water District Law."
CHAPTER II. Purpose and Formation
Sec. 5. Purpose. Local water districts may be formed pursuant to
this Title for the purposes of (a) acquiring, installing, improving,
maintaining and operating water supply and distribution systems for
domestic, industrial, municipal and agricultural uses for residents and
lands within the boundaries of such districts, (b) providing,
maintaining and operating wastewater collection, treatment and
disposal facilities, and (c) conducting such other functions and
operations incidental to water resource development, utilization and
disposal within such districts, as are necessary or incidental to said
purpose.
Sec. 6. Formation of District. This Act is the source of
authorization and power to form and maintain a district. For purposes
of this Act, a district shall be considered as a quasi-public
corporation performing public service and supplying public wants. As
such, a district shall exercise the powers, rights and privileges given
to private corporations under existing laws, in addition to the powers
granted in, and subject to such restrictions imposed, under this Act.
xxx xxx xxx
Sec. 7. Filing of Resolution. A certifted copy of the resolution or
resolutions forming a district shall be forwarded to the office of the
Secretary of the Administration. If found by the Administration to
conform to the requirements of Section 6 and the policy objectives in
Section 2, the resolution shall be duly filed. The district shall be
deemed duly formed and existing upon the date of such filing. A
certified copy of said resolution showing the filing stamp of the
Administration shall be maintained in the office of the district. Upon
such filing, the local government or governments concerned shall lose

ownership, supervision and control or any right whatsoever over the


district except as provided herein. (Emphasis supplied)
It is apparent that insofar as the formation of local water districts are
concerned, P.D. 198 is not an original charter but a general act
authorizing the formation of water districts on local option basis (Sec.
2, P.D. 198) similar to the Corporation Code. What is chartered,
formed and created under P.D. 198 as a government corporation is the
"Local Water Utilities Administration" attached to the Office of the
President as follows:
Sec. 49. Charter. There is hereby chartered, created and formed a
government corporation to be known as the "Local Water Utilities
Administration which is hereby attached to the Office of the President.
The provisions of this title shall be and constitute the charter of the
Administration.
On the other hand, local water districts are formed by resolutions of
the respective Provincial, City and Municipal councils (Sec. 7, P.D.
198) filed with the Local Water Utilities Administration, a government
corporation chartered under Section 49, P.D. 198 and attached to the
Office of the President. Consequently, without the requisite resolution
of the Sanggunian concerned forming the water district having been
filed with the Local Water Utility Administration, no water district is
formed. What gives the water districts juridical personality is the
resolution of the respective Sanggunian forming the district and filed
with the Local Water Utilities Administration. Once formed, a water
district is subject to the provisions of P.D. 198 and no longer under the
jurisdiction of any political administration which shall thereafter lose
ownership, supervision and control over the district (Sec. 7, PD 198).
In view of the foregoing, I vote to Grant the petition and to declare
petitioners as quasi-public corporations performing public service
without original charters and therefore not embraced by the Civil
Service.

EN BANC
[G.R. No. 124540. November 14, 1997]
MERLINDA JACINTO, ADELINA AGUSTIN, SUSAN
AGUSTIN, EVELYN ATIENZA, NIDA BALANE, ANICIA
CARLOS, CELEDONIA CARLOS, LIWANAG CASTILLO,
JOSEFINA DE GUZMAN, MINERVA GARCIA, MARIA
GATDULA, ALICIA GUNDA, AURORA LOPEZ,
CARMENCITA MANANSALA, ERLINDA MARTINEZ,
LOLITA NAVARRETE, GUADALUPE PANERGO, MARIA
PULGA, PAZ SERRA and VIRGINIA ZAMORA, petitioners,
vs. HON. COURT OF APPEALS; THE CIVIL SERVICE
COMMISSION; and THE SECRETARY OF EDUCATION,
CULTURE AND SPORTS, respondents.
DECISION
PANGANIBAN, J.:
While we recognize and appreciate the toil and hardship of our public
schoolteachers in fulfilling the states responsibility of educating our
children, and realize their inadequately addressed plight as compared
to other professionals, we have the equal task of promoting the larger
public interest which withholds from them and other similarly situated
government workers the right to engage in mass actions resulting in
work stoppages for any purpose. Although the Constitution vests in
them the right to organize, to assemble peaceably and to petition the
government for a redress of grievances, there is no like express
provision granting them the right to strike. Rather, the constitutional
grant of the right to strike is restrained by the proviso that its exercise
shall be done in accordance with law.
The Case
Before us is a petition for review under Rule 45 of the Rules of Court
seeking to set aside the November 27, 1995 Decision[1] of the Court of
Appeals[2] in CA-G.R. SP No. 37596, which found no grave abuse of
discretion on the part of the Civil Service Commission (CSC) in
issuing its resolutions[3] disposing of the separate appeals and motions
for reconsideration of herein petitioners. The dispositive portions of
most of the CSC resolutions, with the exception of the name of the
appellant concerned, uniformly read:

WHEREFORE, foregoing premises considered, the Commission


hereby resolves to find Susan Agustin guilty of Conduct Prejudicial to
the Best Interest of the Service. She is meted out the penalty of six (6)
months suspension without pay. Agustin is now automatically
reinstated in the service without payment of back salaries.[4]
As regards Petitioner Merlinda Jacinto, the decretal portion of the
resolution pertaining to her case reads:
WHEREFORE, foregoing premises considered, the Commission
hereby resolves to find Merlinda Jacinto guilty of Violation of
Reasonable Office Rules and Regulations. She is hereby meted out the
penalty of reprimand. She is automatically reinstated in the service
without payment of back salaries.[5]
In a Resolution[6] dated March 29, 1996, Respondent Court of Appeals
denied the petitioners motion for reconsideration.
The Facts
The following are the antecedents of the case as narrated by the Court
of Appeals, which we find substantiated by the records:
Petitioners are public school teachers from various schools in
Metropolitan Manila. Between the period September 17 to 21, 1990,
they incurred unauthorized absences in connection with the mass
actions then staged; and on September 17, 1990, DECS Secretary
Isidro Cario immediately issued a return-to-work order worded as
follows:
TO: ALL PUBLIC SCHOOL TEACHERS AND OTHER DECS
PERSONNEL
SUBJECT: RETURN TO WORK ORDER
Under Civil service law and rules, strikes, unauthorized mass leaves
and other forms of mass actions by civil servants which disrupt public
services are strictly prohibited.
Those of you who are engaged in the above-mentioned prohibited acts
are therefore ordered, in the interest of public service, to return to work
within 24 hours from your walkout otherwise dismissal proceedings
shall be instituted against you. (Underscoring supplied).
The directive was ignored by petitioners. Consequently, on separate
dates, Secretary Cario issued formal charges and preventive
suspension orders against them. They were administratively charged
with gross misconduct; gross neglect of duty, etc. for joining
unauthorized mass actions; ignoring report-to-work directives;
unjustified abandonment of teaching posts; non-observance of Civil

Service law, rules and regulations; non-compliance with reasonable


office rules and regulations; and incurring unauthorized absences
without leave, etc. An investigation committee was then created by
Sec. Cario to look into the matter. However, during the investigation,
petitioners did not file their answers or controvert the charges against
them. As a consequence, Sec. Cario, in his decisions found them
guilty as charged and imposed the penalty of dismissal, except with
respect to petitioners Merlinda Jacinto and Adelina Agustin who were
meted only six (6) months suspension.
The decisions were appealed to the Merit Systems Protection Board
(MSPB) which dismissed the appeals for lack of merit and then to the
Civil Service Commission which set aside the Orders of the MSPB in
the contested resolutions. The Civil Service Commission, in separate
resolutions, found the petitioners (except Merlinda Jacinto) guilty of
Conduct Prejudicial to the Best Interest of the Service; imposed upon
them the penalty of six (6) months suspension without pay; and
automatically reinstated them to the service without payment of back
salaries x x x. In the case of Petitioner Merlinda Jacinto, the CSC
found her guilty of Violation of Reasonable Office Rules and
Regulations; imposed upon her the penalty of reprimand; and
automatically reinstated her in the service without payment of back
salaries x x x.
Acting on the motions for reconsideration, the CSC rendered the
assailed resolutions denying the motions for lack of merit.[7]
Petitioners initially questioned the CSC resolutions directly before this
Court in petitions docketed as G.R. Nos. 118252 to 118271. In
accordance with Revised Administrative Circular 1-95, we referred
them to the Court of Appeals.
Respondent Court found that the petitioners absented themselves
from their classes in furtherance of or in connection with the mass
action for the purpose of pressuring the government to grant their
demands. Citing the resolution of this Court in MPSTA vs.
Laguio[8] that the mass actions staged by the public schoolteachers
from September 17 to September 19, 1990, were to all intents and
purposes a strike, it denied the petition, since the right to strike did
not extend to civil service employees. In the case of Merlinda Jacinto,
Respondent Court found no error on the part of the CSC in finding her
guilty of violation of reasonable office rules and regulations. Neither
did it find the petitioners entitled to backwages for the period of their

preventive suspension, as they were not exonerated of the charges


against them.
Hence, this petition.[9]
Issues
Petitioners raise the following grounds for their appeal:
I. The Respondent Court of Appeals committed grave abuse of
discretion when it upheld the resolutions of the Civil Service
Commission that penalized all the petitioners whose only offense
(except Jacinto) was to exercise their constitutional right peaceably to
assemble and petition the government for redress of grievances.
II. The Respondent Court of Appeals committed grave abuse of
discretion when it upheld the resolutions of the Civil Service
Commission that penalized Petitioner Jacinto for an alleged offense
which has no basis whatsoever thereby violating her right to security
of tenure.
III. The Respondent Court of Appeals committed grave abuse of
discretion when it upheld the resolutions of the Civil Service
Commission that denied petitioners their right to backwages covering
the period when they were illegally not allowed to teach.[10]
Preliminarily, we note that the remedy resorted to by petitioners is a
petition for review under Rule 45 of the Rules of Court which,
however, allows only questions of law.[11]Jurisprudence has extended
this remedy to questions of fact in exceptional cases.[12] Where the
issues raised involve lack of jurisdiction or grave abuse of discretion
as in this case, the Rules provide for a different remedy -- Rule 65. In
the interest of substantial justice, however, we hereby decide to deal
with this petition as one filed under Rule 45, as denominated in its
prefatory paragraph, and treat the grave abuse of discretion on the
part of Respondent Court of Appeals as allegations of reversible
errors.
The Courts Ruling
The petition, which fails to convince us, merits only dismissal.
First Issue: Improper Exercise of the Right to Peaceful Assembly
and to Petition for a Redress of Grievances
There is no question as to the petitioners rights to peaceful assembly
to petition the government for a redress of grievances and, for that
matter, to organize or form associations for purposes not contrary to
law, as well as to engage in peaceful concerted activities. These rights
are guaranteed by no less than the Constitution, particularly Sections

4[13] and 8[14] of the Bill of Rights, Section 2(5)[15] of Article IX, and
Section 3[16] of Article XIII. Jurisprudence abounds with hallowed
pronouncements defending and promoting the peoples exercise of
these rights. As early as the onset of this century, this Court, in U.S.
vs. Apurado,[17] already upheld the right to assembly and petition and
even went as far as to acknowledge:
It is rather to be expected that more or less disorder will mark the
public assembly of the people to protest against grievances whether
real or imaginary, because on such occasions feeling is always
wrought to a high pitch of excitement, and the greater the grievance
and the more intense the feeling, the less perfect, as a rule, will be the
disciplinary control of the leaders over their irresponsible
followers. But if the prosecution be permitted to seize upon every
instance of such disorderly conduct by individual members of a crowd
as an excuse to characterize the assembly as a seditious and
tumultuous rising against the authorities, then the right to assemble
and to petition for redress of grievances would become a delusion and
a snare and the attempt to exercise it on the most righteous occasion
and in the most peaceable manner would expose all those who took
part therein to the severest and most unmerited punishment, if the
purposes which they sought to attain did not happen to be pleasing to
the prosecuting authorities. If instances of disorderly conduct occur on
such occasions, the guilty individuals should be sought out and
punished therefor, but the utmost discretion must be exercised in
drawing the line between disorderlyand seditious conduct and between
an essentially peaceable assembly and a tumultuous uprising.[18]
Primicias vs. Fugoso[19] further sustained the supremacy of the
freedoms of speech and of assembly over comfort and convenience in
the use of streets or parks. Although the Court opined that the exercise
of the rights of free speech and of peaceful assembly to petition the
government for redress of grievances is not absolute for it may be so
regulated that it shall not be injurious to the equal enjoyment of others
having equal rights, nor injurious to the rights of the community or
society, regulation was limited to the mayors reasonable discretion in
issuing a permit to determine or specify only the streets or public
places to be used for the purpose and to provide adequate and proper
policing to minimize the risk of disorder. Quoting Justice Brandeis in
his concurring opinion in Whitney vs. California, the Court said:[20]

Fear of serious injury cannot alone justify suppression of free speech


and assembly. x x x To justify suppression of free speech there must
be reasonable ground to fear that serious evil will result if free speech
is practiced. There must be reasonable ground to believe that the
danger apprehended is imminent. There must be reasonable ground to
believe that the evil to be prevented is a serious one x x x.
xxx
xxx
xxx
x x x The fact that speech is likely to result in some violence or in
destruction of property is not enough to justify its suppression. There
must be the probability of serious injury to the state. x x x
This limitation was strictly applied in Reyes vs. Bagatsing,[21] in
which the Court [was] called upon to protect the exercise of the
cognate rights to free speech and peaceful assembly, arising from the
denial of a permit. In that case, retired Justice J.B.L. Reyes, on
behalf of the Anti-Bases Coalition, sought a permit from the mayor of
Manila to hold a march and a rally starting from Luneta, proceeding
through Roxas Boulevard to the gates of the U.S. Embassy, to be
attended by local and foreign participants to the International
Conference for General Disarmament, World Peace and the Removal
of All Foreign Military Bases. The Manila mayor denied them the
permit due to police intelligence reports which strongly militate
against the advisability of issuing such permit at this time and at the
place applied for. In reversing the mayor, this Court stated that to
justify limitations on freedom of assembly, there must be proof of
sufficient weight to satisfy the clear and present
danger[22] test. Thereafter, the Court proceeded to summarize the
rules on assembly and petition,[23] making the clear-and-present danger
rule the standard for refusing or modifying the grant of a permit. But
it stressed that the presumption must be to incline the weight of the
scales of justice on the side of such rights [of free speech and
peaceable assembly], enjoying as they do precedence and primacy.
Philippine Blooming Mills Employees Organization vs. Philippine
Blooming Mills Co., Inc.,[24] which was promulgated after the
proclamation of martial law, further underscored the supremacy of
these basic constitutional rights, this time over property
rights. Speaking through Mr. Justice Makasiar, the Court explained:
x x x the primacy of human rights -- freedom of expression, of
peaceful assembly and of petition for redress of grievances -- over
property rights has been sustained. Emphatic reiteration of this basic

tenet as a coveted boon -- at once the shield and armor of the dignity
and worth of the human personality, the all-consuming ideal of our
enlightened civilization -- becomes [o]ur duty, if freedom and social
justice have any meaning at all for him who toils so that capital can
produce economic goods that can generate happiness for all. To regard
the demonstration against police officers, not against the employer, as
evidence of bad faith in collective bargaining and hence a violation of
the collective bargaining agreement and a cause for the dismissal from
employment of the demonstrating employees, stretches unduly the
compass of the collective bargaining agreement, is a potent means of
inhibiting speech and therefore inflicts a moral as well as mortal
wound on the constitutional guarantees of free expression, of peaceful
assembly and of petition.[25]
Specifically, the right of civil servants to organize themselves was
positively recognized in Association of Court of Appeals Employees
(ACAE) vs. Ferrer-Calleja.[26] But, as in the exercise of the rights of
free expression and of assembly, there are standards for allowable
limitations such as the legitimacy of the purposes of the association,
[27]
the overriding considerations of national security and the
preservation of democratic institutions.[28]
As regards the right to strike, the Constitution itself qualifies its
exercise with the proviso in accordance with law. This is a clear
manifestation that the state may, by law, regulate the use of this right,
or even deny certain sectors such right. Executive Order 180[29] which
provides guidelines for the exercise of the right of government workers
to organize, for instance, implicitly endorsed an earlier CSC circular
which enjoins under pain of administrative sanctions, all government
officers and employees from staging strikes, demonstrations, mass
leaves, walkouts and other forms of mass action which will result in
temporary stoppage or disruption of public service,[30] by stating that
the Civil Service law and rules governing concerted activities and
strikes in the government service shall be observed.[31]
It is also settled in jurisprudence that, in general, workers in the public
sector do not enjoy the right to strike. Alliance of Government
Workers vs. Minister of Labor and Employment[32]rationalized the
proscription thus:
The general rule in the past and up to the present is that the terms
and conditions of employment in the Government, including any
political subdivision or instrumentality thereof are governed by

law. x x x. Since the terms and conditions of government


employment are fixed by law, government workers cannot use the
same weapons employed by the workers in the private sector to secure
concessions from their employers. The principle behind labor
unionism in private industry is that industrial peace cannot be secured
through compulsion by law. Relations between private employers and
their employees rest on an essentially voluntary basis. Subject to the
minimum requirements of wage laws and other labor and welfare
legislation, the terms and conditions of employment in the unionized
private sector are settled through the process of collective
bargaining. In government employment, however, it is the legislature
and, where properly given delegated power, the administrative heads
of government which fix the terms and conditions of
employment. And this is effected through statutes or administrative
circulars, rules, and regulations, not through collective bargaining
agreements.[33]
After delving into the intent of the framers of the Constitution, the
Court affirmed the above rule in Social Security System Employees
Association (SSSEA) vs. Court of Appeals[34] and explained:
Government employees may, therefore, through their unions or
associations, either petition the Congress for the betterment of the
terms and conditions of employment which are within the ambit of
legislation or negotiate with the appropriate government agencies for
the improvement of those which are not fixed by law. If there be any
unresolved grievances, the dispute may be referred to the Public Sector
Labor-Management Council for appropriate action. But employees in
the civil service may not resort to strikes, walkouts and other
temporary work stoppages, like workers in the private sector, to
pressure the Government to accede to their demands. As now
provided under Sec. 4, Rule III of the Rules and Regulations to Govern
the Exercise of the Right of Government Employees to SelfOrganization, which took effect after the instant dispute arose, [t]he
terms and conditions of employment in the government, including any
political subdivision or instrumentality thereof and government-owned
and controlled corporations with original charters are governed by law
and employees therein shall not strike for the purpose of securing
changes [thereto].[35]
We now come to the case before us. Petitioners, who are public
schoolteachers and thus government employees, do not seek to

establish that they have a right to strike. Rather, they tenaciously insist
that their absences during certain dates in September 1990 were a valid
exercise of their constitutional right to engage in peaceful assembly to
petition the government for a redress of grievances. They claim that
their gathering was not a strike; therefore, their participation therein
did not constitute any offense. MPSTA vs. Laguio[36] and ACT vs.
Cario,[37] in which this Court declared that these mass actions were
to all intents and purposes a strike; they constituted a concerted and
unauthorized stoppage of, or absence from, work which it was the
teachers duty to perform, undertaken for essentially economic
reasons, should not principally resolve the present case, as the
underlying facts are allegedly not identical.
Strike, as defined by law, means any temporary stoppage of work by
the concerted action of employees as a result of an industrial or labor
dispute.[38] A labor dispute includes any controversy or matter
concerning terms and conditions of employment; or the association or
representation of persons in negotiating, fixing, maintaining, changing
or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employers
and employees.[39] With these premises, we now evaluate the
circumstances of the instant petition.
It cannot be denied that the mass action or assembly staged by the
petitioners resulted in the non-holding of classes in several public
schools during the corresponding period. Petitioners do not dispute
that the grievances for which they sought redress concerned the
alleged failure of public authorities -- essentially, their employers -to fully and justly implement certain laws and measures intended to
benefit them materially, such as:
1. Immediate release of P680 million Secondary Education Fund
(SEF) fringe benefits of teachers under Section 17 of Republic Act
6758.
2. Clothing allowance at P500 to P1,000 per teachers [sic] under the
General Appropriations Act of 1990
3. DMB Circular 904
4. Increase in minimum wage to P5,000 for teachers.[40]
And probably to clothe their action with permissible character,[41] they
also raised national issues such as the removal of the U.S. bases and
the repudiation of foreign debt. In Balingasan vs. Court of Appeals,
[42]
however, this Court said that the fact that the conventional term

strike was not used by the participants to describe their common


course of action was insignificant, since the substance of the situation,
and not its appearance, was deemed controlling.[43]
Moreover, the petitioners here, except Merlinda Jacinto, were not
penalized for the exercise of their right to assemble peacefully and to
petition the government for a redress of grievances. Rather, the Civil
Service Commission found them guilty of conduct prejudicial to the
best interest of the service for having absented themselves without
proper authority, from their schools during regular school days, in
order to participate in the mass protest, their absence ineluctably
resulting in the non-holding of classes and in the deprivation of
students of education, for which they were responsible. Had
petitioners availed themselves of their free time -- recess, after classes,
weekends or holidays -- to dramatize their grievances and to dialogue
with the proper authorities within the bounds of law, no one -- not the
DECS, the CSC or even this Court -- could have held them liable for
the valid exercise of their constitutionally guaranteed rights. As it
was, the temporary stoppage of classes resulting from their activity
necessarily disrupted public services, the very evil sought to be
forestalled by the prohibition against strikes by government
workers. Their act by its nature was enjoined by the Civil Service law,
rules and regulations, for which they must, therefore, be made
answerable.
Second Issue: Violation by Petitioner Jacinto of Reasonable Office
Rules and Regulations
Petitioner Jacinto, for her part, pleads for exoneration. She asks the
Court to reexamine and give due weight to the certification[44] issued
by her school principal that she met her class on September 20, 1990
but failed to sign in the attendance logbook. Stated elsewise, Jacinto
wants us to scrutinize firsthand a document already ruled upon by the
Civil Service Commission and the Court of Appeals to be of doubtful
credibility. Time and again, we have held that findings of
administrative agencies, which have acquired expertise because their
jurisdiction is confined to specific matters, are accorded not only
respect but even finality[45] particularly when affirmed by the appellate
tribunal. It is not a function of this Court to examine and evaluate the
probative value of the evidence proffered in the concerned forum,
which formed the basis of the latters impugned decision, resolution or
order,[46] absent a clear showing of arbitrariness and want of any

rational basis therefor.[47] In the instant case, we find no sufficient


reason to reverse the findings of the CSC.
In any event, as observed by the Commission, said certification, dated
December 19, 1990, was belatedly submitted by Petitioner Jacinto
only with her motion for reconsideration of the CSC resolution
promulgated September 21, 1993; thus it was correctly rejected as a
newly discovered evidence. Additionally, the Commission explained:
x x x such certification contradicts the allegation that she filed an
application for leave. If she was really present on September 20, 1990,
there would have been no need for her to file an application for
leave. Apparently, this is a vain effort to present documents of
doubtful credibility just to have Jacinto exonerated of the charges
against her.[48]
The futility of the tactics of Petitioner Jacinto to evade culpability is
further exemplified by her contradictory assertions. In a sworn
explanation submitted to Secretary Cario, she claimed that she left
the school premises on the day in question, because she was
emotionally and mentally depressed, and went to see a physician.
[49]
In her motion for reconsideration before the CSC, she submitted the
above certification to the effect that she was not absent. Now, in
assailing the Commissions decision to reprimand her for violation of
reasonable office rules and regulations in not filing an application for
leave of absence, she invokes Sec. 15, Rule XVI of the Civil Service
rules, which provides:
Sec. 15. Applications for vacation leave of absence for one full day
or more shall be submitted on the prescribed form for action by the
proper chief of agency in advance, whenever possible, of the effective
date of such leave.
She contends that the filing of an application for vacation leave need
not always be in advance of the effective date thereof.[50] Clearly, her
present stance is diametric to her illness justification before the
DECS. In the latter case, it is Section 16 of said rules that is pertinent:
Sec. 16. All applications for sick leaves of absence for one full day
or more shall be on the prescribed form and shall be filed immediately
upon the employees return from such leave. Notice of absence,
however, should be sent to the immediate supervisor and/or to the
office head. x x x
The regulation requires (1) the filing of the application for sick leave
on the prescribed form immediately upon the employees return from

such leave and (2) a notice of absence to be sent to the immediate


supervisor and/or office head. But the Commission found that the
records are bereft of any showing that Jacinto asked permission from
school authorities to go out of school premises and seek medical
attention outside nor did she file an application for sick leave x x
x.[51] Hence, its conclusion that petitioner violated reasonable office
rules and regulations.
The totality of the evidence on record sustains the findings and
conclusions of the Commission, as affirmed by the Court of
Appeals. We have no reason to reverse them. The Civil Service rules
clearly provide that violation of reasonable office rules and
regulations, on first offense, carries the penalty of reprimand.[52]
Third Issue: No Right to Backwages
Petitioners anchor their claim for backwages on the supposed illegality
of (1) their preventive suspension upon the filing of the charges
against them and (2) the immediate execution of the DECS Secretarys
decisions ordering their dismissal.
The charges against petitioners consisted of the following: (1) grave
misconduct; (2) gross neglect of duty; (3) gross violation of Civil
Service law, rules and regulations and reasonable office regulations;
(4) refusal to perform official duty; (5) gross insubordination; (6)
conduct prejudicial to the best interest of the service; and (7) absence
without approved leave. These were based on their alleged
unauthorized participation in the mass actions in September 1990,
disregard of report-to-work directives, unjustified abandonment of
teaching posts, unauthorized absences without leave, and other similar
violations reported to the DECS Secretary by their respective school
supervisors.[53]
We find that the charges filed against petitioners warranted their
preventive suspension from the service, as provided under Section 51,
Chapter 7 (on Discipline) of the Administrative Code, which reads:
Sec. 51. Preventive Suspension. -- The proper disciplining authority
may preventively suspend any subordinate officer or employee under
his authority pending an investigation, if the charge against such
officer or employee involves dishonesty, oppression or grave
misconduct, or neglect in the performance of duty, or if there are
reasons to believe that the respondent is guilty of charges which would
warrant his removal from the service.

The petitioners alleged lapses, initially found substantiated by the


DECS, qualify as grave misconduct or neglect in the performance of
duty under the above rule. Thus, former Education Secretary Cario
had the legal authority to suspend them pending further investigation.
The Secretarys immediate execution of his decisions imposing the
penalty of dismissal finds legal basis in Sec. 47 (2) of the Civil Service
law[54] which provides:
Sec. 47. Disciplinary Jurisdiction. -- x x x.
(2) The Secretaries and heads of agencies and instrumentalities,
provinces, cities and municipalities shall have jurisdiction to
investigate and decide matters involving disciplinary action against
officers and employees under their jurisdiction. Their decisions shall
be final in case the penalty imposed is suspension for not more than
thirty days or fine in an amount not exceeding thirty days salary. In
case the decision rendered by a bureau or office head is appealable to
the Commission, the same may be initially appealed to the department
and finally to the Commission and pending appeal, the same shall be
executory except when the penalty is removal, in which case the same
shall be executory only after confirmation by the Secretary
concerned.
As can be gleaned from the above, the department secretarys decision
confirming the removal of an officer or employee under his
jurisdiction is executory in character, i.e. such decision may be
immediately executed even pending further remedy, such as an appeal,
[55]
by the dismissed officer or employee. In the case at bar, it was
already the final judgments of Secretary Cario which were forthwith
carried out. The aforequoted statutory provision rules out the alleged
illegality of the actions of the DECS Secretary.
In any event, the rule is settled that backwages may be granted only to
those who have been illegally dismissed and thenceforth ordered
reinstated, or to those acquitted of the charge against them.[56] Even a
pardoned convicted employee is not automatically entitled to
backpay. Monsanto vs. Factoran Jr.[57] established the general rule
that -- while pardon has been commonly regarded as eliminating the
existence of guilt so that in the eyes of the law the offender is as
innocent as though he never committed the offense -- such exoneration
does not operate for all purposes. It does not erase the fact of the
commission of the offense and the conviction therefor. It frees the
convict from all penalties and legal disabilities and restores to him all

his civil rights; but unless expressly grounded on the persons


innocence, it does not ipso facto restore him to public office
necessarily relinquished or forfeited by reason of the
conviction. Pardon does not generally result in automatic
reinstatement because the offender has to apply for reappointment;
neither is he entitled to backpay.[58]
Thus, in Sabello vs. DECS,[59] although we reinstated the petitionerpardonee to his previous position in the interest of justice and equity,
we did not grant him backwages since he was lawfully separated
from the government service upon his conviction for an offense. We
reiterated that the right to backwages was afforded only to those who
were illegally dismissed but thereafter ordered reinstated, or to those
otherwise acquitted of the charge against them.
Again, in City Mayor of Zamboanga vs. Court of Appeals,[60] we said
that back salaries may be ordered paid to an officer or employee only
if he is exonerated of the charge against him and his suspension or
dismissal is found and declared to be illegal. Hence, in Garcia vs.
Chairman, Commission on Audit,[61] we said that if the pardon is
based on the innocence of the individual, it affirms this innocence and
makes him a new man and as innocent as if he had not been found
guilty of the offense charged.[62] In that case, Garcia was found
administratively liable for dishonesty. He was, however, acquitted by
the trial court of the complaint for qualified theft based on the very
same acts. The acquittal was founded not on lack of proof beyond
reasonable doubt but on the fact that he did not commit the offense
imputed to him. This Court said that after having been declared
innocent of the criminal complaint, which had the same basis as the
administrative charge, for all legal purposes the petitioner should not
be considered to have left his office, so that he was entitled to all the
rights and privileges that accrued to him by virtue of the office held,
including backwages. He was restored to his office ipso facto upon
the issuance of the clemency. The grant of backwages was justified
to afford relief to [the] petitioner who [was] innocent from the start
and to make reparation for what he [had] suffered as a result of his
unjust dismissal from the service.[63]
However, in Balingasan, finding that petitioners therein indeed
participated in the unlawful mass actions for which they were similarly
meted suspension, the Court opined that they were not completely
exonerated of the charges against them. They were denied back

salaries because they had given ground for their suspension. This
means that being found liable for a lesser offense is not equivalent to
exoneration from the original complaint against the concerned public
officer or employee. Balingasan referred to the earlier case of Yacia
vs. City of Baguio,[64] in which this Court denied the claim of an
employee for backwages for the period during which he was not
allowed to work because of the execution of the CSC decision
dismissing him for dishonesty, even though, on appeal, his penalty was
reduced to a fine equivalent to six months pay.
Based on the above premises, petitioners demand for backwages
cannot be granted, for they had given cause for their suspension -their unjustified abandonment of classes to the prejudice of their
students. Although they were eventually found guilty only of conduct
prejudicial to the best interest of the service, and not grave misconduct
or other offense warranting their dismissal from the service, they were
not fully innocent of the charges against them.
We find the case of Petitioner Jacinto different, however. The Civil
Service Commission found her culpable only of violation of
reasonable office rules and regulations, for not having asked
permission from school authorities to leave the school premises and
seek medical attention and for not filing an application for sick leave
for approval by the school authorities. There was no proof that she
joined the mass actions which caused prejudice to the school
system. In Balingasan, this Court, after finding that Rodolfo Mariano
was not involved in the mass actions but was absent because he
attended the wake and burial of his grandmother in Ilocos Sur without
however the benefit of an approved leave of absence, held that [t]o
deny petitioner Mariano his back wages during his suspension would
be tantamount to punishing him after his exoneration from the charges
which caused his dismissal from the service, i.e.participation in the
unlawful mass actions. Therefore, in line with Balingasan, we
likewise grant back salaries to Petitioner Jacinto who did not join the
illegal activity.
WHEREFORE, in view of the foregoing, the petition is
hereby DENIED and the assailed Decision of the Court of Appeals is
hereby AFFIRMED with the modification that Petitioner Merlinda
Jacinto is granted backwages, without deduction or qualification, from
the time she was suspended until her actual reinstatement, the total of

which, consistent with prevailing jurisprudence,[65] should not exceed


five years.
SO ORDERED.
Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug,
Kapunan, Mendoza, and Francisco, JJ., concur.
Narvasa, C.J., on official leave.

Republic
of
the
Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 132088
June 28, 2000
EVERDINA ACOSTA, NOEMI ACOSTA, ELVIRA AMPARADO,
REBECCA AQUINO, ROBERTO ARCAYA, EVA ARCEO,
JULIET ARELLANO, ANITA ASCANO, GRACE AUSTRA,
LUISA AVILES, SUSIE AW, VICTORIA BADILLO, SUSAN
BALDEMOR, ELISA BASA, NORY BATUIGAS, TERESITA
BAUTISTA, SEGUNDINA BERMAS, FERMINER BOCO,
EVELYN BULAONG, SYLVA BULARIO, GILDA BOLOSAN,
JOSIE BUNGAY, ARCELI CABUSE, TERESA CACHO,
ROSSANA CAJANDINEZ, NELY CALPITO, OLIVIA
CARDINES, THELMA CARINO, CORAZON CARRACEDO,
ELENITA CASAUAY, MARIETA CAULI, MARILOU CAYTON,
VIRGINIA CHIAPOCO, ALLEN CIPRIANO, MELINDA B.
CONTRERAS, ZENAIDA CORPORAL, PRISCILLA CORPUZ,
LUZ COSIO, EMILIA CRUZ, CRISTINA DELA CRUZ,
ROSALINA DELA CRUZ, GRACE CUNANAN, EVELYN DE
CASTRO, HAYDEE DE VALLE, CECILIA DEL ROSARIO,
GULLERMINA DE LA CRUZ, FRANCIS DINGIL, BELLA DY,
CORAZON ESTEBAL, LUZ FAJARDO, TERESA FRAGO,
VIRGINIA GACHO, SABINO GALES, MYRNA GALLEGO,
MARILYN GARNA, NATIVIDAD GAVILAN, LOLITA GAVINO,
MARILOU GO, LETICIA GOMEZ, OLYMPIO GONZAGA,
RUTH GONZALES, REMEDIOS HAVOC, GREGORIA
HERNANDEZ, OSCAR HIDALGO, BIBIANO HUGO, RITA
HUERTA, LOURDES HULIPAS, ROMEO IDOS, ERLINDA
ISLA, LITA ITALIA, MATIAS JABONETE, DIANA JIMENEZ,
DOMINADOR LABACLADO, ALMA LAGUIAN, MELCY
LALU, REBECCA LAMALINAO, MARITA LAMSEN,
LOURDES ESTER LAREDO, TERESITA LATION, ROSALINA
LEDESMA, NORMA LECCIONES, NORMA LEYTE, CECILIA
LINCOPINES, OFELIA LIZARDO, VENILLA LOCSIN,
ADELINA LORENZO, SATURNINA LORENZO, ALEJANDRA
MABAET, JULIETA MADRID,
ERLINA MAGPAYO,
ROLANDO MAGSINO, ERLINDA MAILIG, FLORENDA

MALAPAYA,
CORAZON
MALLEN,
ESMERALDA
MANALANG, MERLE MANALO, ERLINDA MANEGA,
SHIRLEY MANGAHAS, ELFRIDA MARQUEZ, EFIGENIA
MENEZ, NILDA NAVA, MERLY NERY, ROSAMINDA OBEN,
MELISSA OLAQUERRA, ENRIQUETA OLIVAR, DOLORES
ORDINARIO, ESTRELLA ORTEGA, ROSE ORPRECIO,
AURORA OSTACO, ELVIRA PAMPANGA, NORMA PAQUIZ,
EVANGELINE PARDO, GLORIA PARMA, ERLINDA
PASTRANA, LERMA QUIRIT, MECELIN QUILANDRA,
MEWLIN QUILLANORA, NATIVIDAD RAGUD, ERLINDA
RANTE, EUFEMIA RAMIREZ, JUDITHA RANESES,
ULDARICO REJABA, MELINA REJUSO, FELISA RENIDO,
MILGROS REY, REDENTOR REYES, RESALINA SAGUN,
ZENAIDA SALAZAR, FE SALIMA, SHIRLEY SARAGON,
PURIFICACION SARI, ELVIRA SATUMBAGA, MARIBEY
SEALMOY, EDITHA SINJAY, TITA SILVINO, AURORA
TOLENTINO, ESPERANZA URBIZTONDO, SATURNINO
YODICO, RODOLFO MARIANO, ALICIA MARINAY, SUSAN
MATANGA, PATRIA MATIAS, LOUELITA MAYUNA, LOLITA
MERCADO, EUGENIA MILLA, CRESENCIA MIRADOR,
ERMA
MORAL,
RAQUEL
MORALES,
DOLORES
LAGRADA, petitioners,
vs.
HON. COURT OF APPEALS and THE CIVIL SERVICE
COMMISSION and THE SECRETARY OF EDUCATION,
CULTURE AND SPORTS, respondents.
DE LEON. JR., J.:
Before us is a petition for review on certiorari which seeks to set aside
the Decision 1 dated August 29, 1997 and Resolution2 dated January 7,
1998 of the Court of Appeals in CA-G.R. SP No. 39878, affirming the
Resolutions3of respondent Civil Service Commission (CSC) finding
petitioners guilty of conduct prejudicial to the service and imposing a
penalty of six-(6) months suspension without pay.
Petitioners are teachers from different public schools in Metro Manila.
On various dates in September and October 1990, petitioners did not
report for work and instead, participated in mass actions by public
school teachers at the Liwasang Bonifacio for the purpose of
petitioning the government for redress of their grievances.

On the basis of reports submitted by their respective school principals


that petitioners participated in said mass actions and refused to comply
with the return-to-work order issued September 17, 1990 by then
Secretary Isidro D. Cario of the Department of Education, Culture
and Sports (DECS), petitioners were administratively charged with
such offenses as grave misconduct, gross neglect of duty, gross
violation of civil service law, rules and regulations and reasonable
office regulations, refusal to perform official duty, gross
insubordination, conduct prejudicial to the best interest of the service
and absence without official leave. Petitioners failed to answer these
charges. Following the investigations conducted by the DECS
Investigating Committees, Secretary Cario found petitioners guilty as
charged and ordered their immediate dismissal from the service.4
Petitioners appealed the orders of Secretary Cario to the Merit
Systems Protection Board (MSPB) and later to the CSC. In 1995, the
CSC modified the said orders of Secretary Cario as follows:
WHEREFORE, the Commission hereby finds Everdina Acosta guilty
of Conduct Prejudicial to the Best Interest of the Service. She is
hereby meted out the penalty of six (6) months suspension without
pay. Considering the period of time she was out of service, she is
automatically reinstated to her former position (sic).5
Following the denial of their motion for reconsideration, petitioners
questioned the matter before the Court of Appeals. The appellate court
denied their petition for certiorari and subsequent motion for
reconsideration. Hence, this petition.
Petitioners submit the following issues for our consideration:
RESPONDENT COURT OF APPEALS GRIEVOUSLY ERRED
WHEN IT AFFIRMED THE ASSAILED RESOLUTIONS OF THE
CIVIL SERVICE COMMISSION THAT WRONGLY PENALIZED
PETITIONERS WHOSE ONLY "OFFENSE" WAS TO EXERCISE
THEIR CONSITUTIONAL RIGHT TO PEACEABLY ASSEMBLE
AND PETITION THE GOVERNMENT FOR REDRESS OF
GRIEVANCES.
RESPONDENT COURT OF APPEALS GRIEVOUSLY ERRED
WHEN IT AFFIRMED THE ASSAILED RESOLUTIONS OF THE
CIVIL SERVICE COMMISSION THAT WRONGLY DENIED
PETITIONERS THEIR RIGHT TO BACKWAGES.
This petition is not impressed with merit.

Petitioners do not deny their absence from work nor the fact that said
absences were due to their participation in the mass actions at the
Liwasang Bonifacio. However, they contend that their participation in
the mass actions was an exercise of their constitutional rights to
peaceably assemble and petition the government for redress of
grievances. Petitioner likewise maintain that they never went on strike
because they never sought to secure changes or modification of the
terms and conditions of their employment.
Petitioners' contentions are without merit. The character and legality of
the mass actions which they participated in have been passed upon by
this Court as early as 1990 in Manila Public School
Teachers' Association (MPSTA) v. Laguio, Jr.6 wherein we ruled that
"these 'mass actions' were to all intents and purposes a strike; they
constituted a concerted and unauthorized stoppage of, or absence from,
work which it was the teachers' sworn duty to perform, undertaken for
essentially
economic
reasons."7 In Bangalisan
v. Court
of
8
Appeals, we added that:
It is an undisputed fact that there was a work stoppage and that
petitioners' purpose was to realize their demands by withholding their
services. The fact that the conventional term "strike" was not used by
the striking employees to describe their common course of action is
inconsequential, since the substance of the situation, and not its
appearance, will be deemed to be controlling.
The ability to strike is not essential to the right of association. In the
absence of statute, public employees for not have the right to engaged
in concerted work stoppages for any purpose.
Further, herein petitioners, except Mariano, are being penalized not
because they exercised their right of peaceable assembly and petition
for redress of grievances but because of their successive unauthorized
and unilateral absences which produced adverse effects upon their
students for whose education they are responsible. The actuations of
petitioners definitely constituted conduct prejudicial to the best interest
of the service, punishable under the Civil Service law, rules and
regulations.1wphi1.nt
As aptly stated by the Solicitor General, "It is not the exercise by the
petitioners of their constitutional right to peaceable assemble that was
punished, but the manner in which they exercised such right which
resulted in the temporary stoppage or disruption of public service and
classes in various public schools in Metro Manila. For, indeed, there

are efficient and non-disruptive avenues, other than the mass actions in
question, whereby petitioners could petition the government for
redress of grievances.
It bears stressing that suspension of public services, however
temporary, will inevitably derail services to the public, which is one of
the reasons why the right to strike is denied government employees. It
may be conceded that the petitioners had valid grievances and noble
intentions in staging the "mass action," but that will not justify their
absences to the prejudice of innocent school children. Their righteous
indignation does not legalize an illegal work stoppage.9
In Jacinto v. Court of Appeals, 10 De La Cruz v. Court of
Appeals, 11 and Alipat v. Court of Appeals, 12 we upheld our rulings in
MPSTA and Bangalisan. Considering the factual circumstances of this
case and the doctrine of stare decisis to which we consistently adhere,
we find no compelling reason to deviate from our earlier rulings in
these related cases.
Anent the second issue, petitioners invoke our statement in Bangalisan
that payment of salaries corresponding to the period when an
employee is not allowed to work may be decreed if he is found
innocent of the charges which caused his suspension and if his
suspension is unjustified. Petitioners cite CSC Resolution No. 93-162
and contend that the determination of the CSC therein that not
an iota of evidence was given to substantiate the conclusion that they
participated in a "teacher's strike" amounted to a finding that they were
innocent of the charges filed against them.
As a general proposition, a public official is not entitled to any
compensation if he has not rendered any service. 1While there
recognized instances when backwages may be awarded to a suspended
or dismissed public official who is later ordered reinstated, as pointed
by petitioners in citing Bangalisan, the factual circumstances of the
case at bar impel us to rule otherwise.
Petitioners' reliance on CSC Resolution No. 93-162 is misplaced. Said
CSC resolution disposed of the appeals of Fely Ilarina, Adelaida Dela
Cruz, Alicia Galvo, Nenita Albios and Nerissa Abellanda. Petitioners
were never parties to their appeals and, therefore, cannot cite CSC
Resolution No. 93-162 in support of their contention. Petitioner also
overlook the fact that although no evidence was presented to prove
that Ilarina, et al. participated in the mass actions, the CSC explained
that the deficiency was cured by their admissions during the hearings

before the MSPB. 14 More importantly, however, herein petitioners'


claim of exoneration is belied by the determination of the CSC that
their participation in the mass actions constituted conduct prejudicial
to the service. Being found liable for a lesser offense is not equivalent
to
exoneration. 15
Petitioners also point out that from the issuance of the orders of
dismissal by Secretary Cario to the modification thereof by the CSC,
almost five (5) years elapsed. Petitioners argue that the period in
excess of their preventive suspension and penalty of six (6) months
suspension amounted to unjustified suspension for which an award of
backwages was proper pursuant to our rulings Bautista
v. Peralta 16 and Abellera v. City of Baguio. 17
We disagree. It will be recalled that in Jacinto, we upheld the legality
of the immediate execution of the dismissal orders issued by Secretary
Cario on the ground that under Section 47(2), 18 Subtitle A, Title I,
Book V of Executive Order No. 292, otherwise known as the
Administrative Code of 1987, the decision of a department secretary
confirming the dismissal of an employee under his jurisdiction is
executory even pending appeal thereof. 19 Since dismissal orders
remain valid and effective until modified or set aside, the intervening
period during which an employee is not permitted to work cannot be
argued as amounting to unjustified suspension. InGloria v. Court of
Appeals, 20 we further explained that:
Preventive suspension pending investigation, as already discussed, is
not a penalty but only a means of enabling the disciplining authority to
conduct an unhampered investigation. On the other hand, preventive
suspension pending appeal is actually punitive although it is in effect
subsequently considered illegal if respondent is exonerated and the
administrative with full pay for the period of the suspension. Thus,
47(4) state that respondent "shall be considered as under preventive
suspension during the pendency of the appeal in the event he wins."
On the other hand, if his conviction is affirmed, i.e. if he is not
exonerated, the period of his suspension becomes part of the final
penalty of suspension or dismissal. 21
Petitioners' reliance on Fabella v. Court of Appeals 22 is likewise
unavailing. In that case, the petitioners therein immediately went to
court to seek injunctive relief against the DECS administrative
proceedings on the ground that they were deprived of due process. The

trial court declared the administrative proceedings void and ordered


the payment of backwages to the petitioners therein. The Court of
Appeals then upheld the order of the trial court. In affirming both the
trial and the Court, we stated therein that:
. . . Because the administrative proceedings involved in this case are
void, no delinquency or misconduct may be imputed to private
respondents. Moreover, the suspension or dismissal meted on them is
baseless. Private respondents should, as a consequence, be reinstated
and awarded all monetary benefits that may have accrued to them
during the period of their unjustified suspension or dismissal. . . . 2
On the other hand, in the case at bar, petitioners initially assailed the
alleged non-observance of due process by the DECS Investigating
Committees only upon appeal to the MSPB. Significantly, however, it
had been our consistent ruling that an appeal is curative of any
supposed denial of due process. 24 Thus, after full ventilation of their
case before the MSPB and CSC, and later on before the Court of
Appeals, petitioner cannot now allege denial of due process to justify
their claim for backwages.
WHEREFORE, the instant petition is DENIED.
SO ORDERED.
Bellosillo,
Mendoza
and
Buena,
JJ.,
concur.
Quisumbing, J., took no part.

Republic
of
the
Philippines
SUPREME
COURT
Manila
FIRST DIVISION
G.R. No. 58768-70 December 29, 1989
LIBERTY FLOUR
MILLS
EMPLOYEES, ANTONIO
EVARISTO
and
POLICARPIO
BIASCAN, petitioners,
vs.
LIBERTY FLOUR MILLS, INC. PHILIPPINE LABOR
ALLIANCE COUNCIL (PLAC) and NATIONAL LABOR
RELATIONS COMMISSION, (NLRC), respondents.
Julius A. Magno for petitioners.
De Leon, Diokno & Associates for respondent Liberty Flour Mills,
Inc.
CRUZ, J.:
In this petition for certiorari, the resolution of the public respondent
dated August 3, 1978, is faulted for: (a) affirming the decision of the
labor arbiter dismissing the employees' claim for emergency allowance
for lack of jurisdiction; and (b) modifying the said decision by
disallowing the award of back wages to petitioners Policarpio Biascan
and Antonio Evaristo.
The basic facts are as follows:
On February 6, 1974, respondent Philippine Labor Alliance Council
(PLAC) and respondent Liberty Flour Mills, Inc. entered into a threeyear collective bargaining agreement effective January 1, 1974,
providing for a daily wage increase of P2.00 for 1974, Pl.00 for 1975
and another Pl.00 for 1976. The agreement contained a compliance
clause, which will be explained later in this opinion. Additionally, the
parties agreed to establish a union shop by imposing "membership in
good standing for the duration of the CBA as a condition for continued
employment" of workers. 1
On October 18, 1974, PLAC filed a complaint against the respondent
company for non-payment of the emergency cost of living allowance
under P.D. No. 525. 2 A similar complaint was filed on March 4, 1975,
this time by the petitioners, who apparently were already veering away
from PLAC. 3

On March 20, 1975, petitioners Evaristo and Biascan, after organizing


a union caged the Federation of National Democratic Labor Unions,
filed with the Bureau of Labor Relations a petition for certification
election among the rank-and-file employees of the respondent
company 4 PLAC then expelled the two for disloyalty and demanded
their dismissal by the respondent company, which complied on May
20, 1975. 5
The objection of Evaristo and Biascan to their termination were
certified for compulsory arbitration and assigned to Labor Arbiter
Apolinario N. Lomabao, Jr. Meanwhile, the claims for emergency
allowance were referred for voluntary arbitration to Edmundo Cabal,
who eventually dismissed the same on the ground that the allowances
were already absorbed by the wage increases. This latter case was
ultimately also certified for compulsory arbitration and consolidated
with the termination case being heard by Lomabao. His decision was,
on appeal, dealt with by the NLRC as above stated, 6 and the motion
for reconsideration was denied on August 26, 1981. 7
At the outset, we note that the petitioners are taking an ambivalent
position concerning the CBA concluded in 1974. While claiming that
this was entered into in bad faith and to forestall the payment of the
emergency allowances expected to be decreed, they nonetheless
invoke the same agreement to support their contention that their
complaint for emergency allowances was invalidly referred to
voluntary arbitrator Cabal rather than Froilan M. Bacungan.
We find there was no such violation as the choice of the voluntary
arbitrator was not limited to Bacungan although he was probably the
first preference. Moreover, the petitioners are estopped from raising
this objection now because they did not seasonably interpose it and
instead willingly submitted to Cabal's jurisdiction when he undertook
to hear their complaint.
In sustaining Labor Arbiter Lomabao, the NLRC agreed that the
decision of voluntary Arbiter Cabal was final and unappealable under
Article 262-A of the Labor Code and so could no longer be reviewed
by it. True enough. However, it is equally true that the same decision is
not binding on this Court, as we held in Oceanic Bic Division (FFW)
v. Romero 8 and reiterated in Mantrade/FMMC Division Employees
and Workers Union v. Bacungan. 9 The rule as announced in these
cases is reflected in the following statements:

In spite of statutory provisions making "final" the decision of certain


administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or
erroneous interpretation of the law were brought to our attention.
xxx xxx xxx
A voluntary arbitrator by the nature of her functions acts in a quasijudicial capacity. There is no reason why her decisions involving
interpretation of law should be beyond this Court's review.
Administrative officials are presumed to act in accordance with law
and yet we do not hesitate to pass upon their work where a question of
law is involved or where a showing of abuse of authority or discretion
in their official acts is properly raised in petitions for certiorari.
Accordingly, the validity of the voluntary arbiter's finding that the
emergency allowance sought by the petitioners are already absorbed in
the stipulated wage increases will now be examined by the Court itself.
The position of the company is that the emergency allowance required
by P.D. No. 525 is already covered by the wage increases prescribed in
the said CBA. Furthermore, pursuant to its Article VIII, such
allowances also include all other statutory minimum wage increases
that might be decreed during the lifetime of the said agreement.
That agreement provided in Section 2 thereof as follows:
Section 2. The wage increase in the amounts and during the period
above set forth shall, in the event of any statutory increase of the
minimum wage, either as allowance or as basic wage, during the life of
this Agreement, be considered compliance and payment of such
required statutory increase as far as it will go and under no
circumstances will it be cumulative nor duplication to the differential
amount involved consequent to such statutory wage increase.
The Court holds that such allowances are indeed absorbed by the wage
increases required under the agreement. This is because Section 6 of
the Interpretative Bulletin on LOI No. 174 specifically provides:
Sec. 6. Allowances under LOI. -All allowances, bonuses, wage
adjustments and other benefits given by employers to their employees
shall be treated by the Department of Labor as in substantial
compliance with the minimum standards set forth in LOI No. 174 if:
(a) they conform with at least the minimum allowances scales
specified in the immediately preceding Section; and

(b) they are given in response to the appeal of the President in his
speech on 4 January 1974, or to countervail the quantum jump in the
cost of living as a result of the energy crisis starting in November
1973, or pursuant to Presidential Decree No. 390; Provided, That the
payment is retroactive to 18 February 1974 or earlier.
The allowances and other benefits may be granted unilaterally by the
employer or through collective bargaining, and may be paid at the
same time as the regular wages of the employees.
Allowances and other benefits which are not given in substantial
compliance with the LOI as interpreted herein shall not be treated by
the Department of Labor as emergency allowances in the
contemplation of the LOI unless otherwise shown by sufficient proof.
Thus, without such proof, escalation clauses in collective bargaining
agreements concluded before the appeal of the President providing for
automatic or periodic wage increases shall not be considered
allowances for purposes of the LOI. (Emphasis supplied.)
The "immediately preceding section" referred to above states:
SEC. 5. Determination of Amount of Allowances. In determining
the amount of allowances that should be given by employers to meet
the recommended minimum standards, the LOI has classified
employers into three general categories. As an implementation policy,
the Department of Labor shall consider as sufficient compliance with
the scales of allowances recommended by the LOI if the following
monthly allowances are given by employers:
(a) P50.00 or higher where the authorized capital stock of the
corporation, or the total assets in the case of other undertakings,
exceeds P 1 million;
(b) P 30.00 or higher where the authorized capital stock of the
corporation, or the total assets in the case of other undertakings, is not
less than P100,000.00 but not more than P1million; and
(c) P15.00 or higher where the authorized capital stock or total assets,
as the case may be, is less than P100,000.00.
It is not denied that the company falls under paragraph (a), as it has a
capitalization of more than P l million, 10and so must pay a minimum
allowance of P50.00 a month. This amount is clearly covered by the
increases prescribed in the CBA, which required a monthly increase
(on the basis of 30 days) of P60.00 for 1974, to be increased by P30.00
in 1975 (to P90.00) and another P 30.00 in 1976 (to P120.00). The first
increase in 1974 was already above the minimum allowance of P50.00,

which was exceeded even more with the increases of Pl.00 for each of
the next two years.
Even if the basis used were 26 days a month (excluding Sundays), the
conclusion would remain unchanged as the raise in wage would be
P52.00 for 1974, which amount was increased to P78.00 in 1975 and
to P104.00 in 1976.
But the petitioners contend that the wage increases were the result of
negotiation undertaken long before the promulgation of P.D. No. 525
and so should not be considered part of the emergency allowance
decreed. In support of this contention, they cite Section 15 of the Rules
implementing P.D. No. 525, providing as follows:
Nothing herein shall prevent the employer and his employees, from
entering into any agreement with terms more favorable to the
employees than those provided herein, or be construed to sanction the
diminution of any benefits granted to the employees under existing
laws, agreements, and voluntary practice.
Obviously, this section should not be read in isolation but must be
related to the other sections above-quoted, to give effect to the intent
and spirit of the decree. The meaning of the section simply is that any
benefit over and above the prescribed allowances may still be agreed
upon by the employees and the employer or, if already granted, may
no longer be withdrawn or diminished.
The petitioners also maintain that the above-quoted Section 2 of CBA
is invalid because it constitutes a waiver by the laborers of future
benefits that may be granted them by law. They contend this cannot be
done because it is contrary to public policy.
While the principle is correct, the application is not, for there are no
benefits being waived under the provision. The benefits are already
included in the wage increases. It is the law itself that considers these
increases, under the conditions prescribed in LOI No. 174, as
equivalent to, or in lieu of, the emergency allowance granted by P.D.
No. 525.
In fact, the company agreed to grant the emergency allowance even
before the obligation was imposed by the government. What the
petitioners claim they are being made to waive is the additional P50.00
allowance but the truth is that they are not entitled to this because they
are already enjoying the stipulated increases. There is no waiver of
these increases.

Moreover, Section 2 provides that the wage increase shall be


considered payment of any statutory increase of the minimum wage
"as far as it will go," which means that any amount not covered by
such wage increase will have to be made good by the company. In
short, the difference between the stipulated wage increase and the
statutory minimum wage will have to be paid by the company
notwithstanding and, indeed, pursuant to the said article. There is no
waiver as to this.
Curiously, Article 2 was produced verbatim in the collective
bargaining agreement concluded by the petitioners with the company
in 1977 after PLAC had been replaced by the new labor union formed
by petitioners Evaristo and Biascan. 11 It is difficult to understand the
petitioners' position when they blow hot and cold like this.
Coming now to the second issue, we find that it must also be resolved
against the petitioners.
Evaristo and Biascan claim they were illegally dismissed for
organizing another labor union opposed to PLAC, which they describe
as a company union. Arguing that they were only exercising the right
to self organization as guaranteed by the Constitution, they insist they
are entitled to the back wages which the NLRC disallowed while
affirming their reinstatement.
In its challenged decision, the public respondent held that in
demanding the dismissal of Evaristo and Biascan, PLAC had acted
prematurely because the 1974 CBA providing for union shop and
pursuant to which the two petitioners were dismissed had not yet been
certified. 12 The implication is that it was not yet in effect and so could
not be the basis of the action taken against the two petitioners. This
conclusion is erroneous. It disregards the ruling of this Court
in Tanduay Distillery Labor Union v. NLRC, 13 were we held:
The fact, therefore, that the Bureau of Labor Relations (BLR) failed to
certify or act on TDLU's request for certification of the CBA in
question is of no moment to the resolution of the issues presented in
this case. The BLR itself found in its order of July 8, 1982, that the
(un)certified CBA was duly filed and submitted on October 29, 1980,
to last until June 30, 1982 is certifiable for having complied with all
the requirements for certification. (Emphasis supplied.)
The CBA concluded in 1974 was certifiable and was in fact certified
on April 11, 1975, It bears stressing that Evaristo and Biascan were

dismissed only on May 20, 1975, more than a month after the said
certification.
The correct view is that expressed by Commissioner Cecilio P. Seno in
his concurring and dissenting opinion, 14viz.:
I cannot however subscribe to the majority view that the 'dismissal of
complainants Biascan and Evaristo, ... was, to say the least, a
premature action on the part of the respondents because at the time
they were expelled by PLAC the contract containing the union security
clause upon which the action was based was yet to be certified and the
representation status of the contracting union was still in question.
Evidence on record show that after the cancellation of the registration
certificate of the Federation of Democratic Labor Unions, no other
union contested the exclusive representation of the Philippine Labor
Alliance Council (PLAC), consequently, there was no more legal
impediment that stood on the way as to the validity and enforceability
of the provisions of the collective bargaining agreement entered into
by and between respondent corporation and respondent union. The
certification of the collective bargaining agreement by the Bureau of
Labor Relations is not required to put a stamp of validity to such
contract. Once it is duly entered into and signed by the parties, a
collective bargaining agreement becomes effective as between the
parties regardless of whether or not the same has been certified by the
BLR.
To be fair, it must be mentioned that in the certification election held at
the Liberty Flour Mills, Inc. on December 27, 1976, the Ilaw at Buklod
ng Manggagawa, with which the union organized by Biascan and
Evaristo was affiliated, won overwhelmingly with 441 votes as against
the 5 votes cast for PLAC. 15 However, this does not excuse the fact
that the two disaffiliated from PLAC as early as March 1975 and thus
rendered themselves subject to dismissal under the union shop clause
in the CBA.
The petitioners say that the reinstatement issue of Evaristo and Biascan
has become academic because the former has been readmitted and the
latter has chosen to await the resolution of this case. However, they
still insist on the payment of their back wages on the ground that their
dismissal was illegal. This claim must be denied for the reasons
already given. The union shop clause was validly enforced against
them and justified the termination of their services.

It is the policy of the State to promote unionism to enable the workers


to negotiate with management on the same level and with more
persuasiveness than if they were to individually and independently
bargain for the improvement of their respective conditions. To this end,
the Constitution guarantees to them the rights "to self-organization,
collective bargaining and negotiations and peaceful concerted actions
including the right to strike in accordance with law." There is no
question that these purposes could be thwarted if every worker were to
choose to go his own separate way instead of joining his co-employees
in planning collective action and presenting a united front when they
sit down to bargain with their employers. It is for this reason that the
law has sanctioned stipulations for the union shop and the closed shop
as a means of encouraging the workers to join and support the labor
union of their own choice as their representative in the negotiation of
their demands and the protection of their interest vis-a-vis the
employer.
The Court would have preferred to resolve this case in favor of the
petitioners, but the law and the facts are against them. For all the
concern of the State, for the well-being of the worker, we must at all
times conform to the requirements of the law as long as such law has
not been shown to be violative of the Constitution. No such violation
has been shown here.
WHEREFORE, the petition is DISMISSED, without any
pronouncement as to costs. It is so ordered.
Narvasa, Gancayco, Grio-Aquino Medialdea, JJ., concur.

Republic
of
the
Philippines
SUPREME
COURT
Manila
SECOND DIVISION
G.R. No. L-25246 September 12, 1974
BENJAMIN
VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE
FACTORY, INC., defendants, ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of
the Court of First Instance of Manila in its Civil Case No. 58894.
The undisputed facts that spawned the instant case follow:
Benjamin Victoriano (hereinafter referred to as Appellee), a member of
the religious sect known as the "Iglesia ni Cristo", had been in the
employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as
Company) since 1958. As such employee, he was a member of the
Elizalde Rope Workers' Union (hereinafter referred to as Union) which
had with the Company a collective bargaining agreement containing a
closed shop provision which reads as follows:
Membership in the Union shall be required as a condition of
employment for all permanent employees workers covered by this
Agreement.
The collective bargaining agreement expired on March 3, 1964 but
was renewed the following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its
amendment by Republic Act No. 3350, the employer was not
precluded "from making an agreement with a labor organization to
require as a condition of employment membership therein, if such
labor organization is the representative of the employees." On June 18,
1961, however, Republic Act No. 3350 was enacted, introducing an
amendment to paragraph (4) subsection (a) of section 4 of Republic
Act No. 875, as follows: ... "but such agreement shall not cover

members of any religious sects which prohibit affiliation of their


members in any such labor organization".
Being a member of a religious sect that prohibits the affiliation of its
members with any labor organization, Appellee presented his
resignation to appellant Union in 1962, and when no action was taken
thereon, he reiterated his resignation on September 3, 1974.
Thereupon, the Union wrote a formal letter to the Company asking the
latter to separate Appellee from the service in view of the fact that he
was resigning from the Union as a member. The management of the
Company in turn notified Appellee and his counsel that unless the
Appellee could achieve a satisfactory arrangement with the Union, the
Company would be constrained to dismiss him from the service. This
prompted Appellee to file an action for injunction, docketed as Civil
Case No. 58894 in the Court of First Instance of Manila to enjoin the
Company and the Union from dismissing Appellee. 1 In its answer, the
Union invoked the "union security clause" of the collective bargaining
agreement; assailed the constitutionality of Republic Act No. 3350;
and contended that the Court had no jurisdiction over the case,
pursuant to Republic Act No. 875, Sections 24 and 9 (d) and
(e). 2 Upon the facts agreed upon by the parties during the pre-trial
conference, the Court a quo rendered its decision on August 26, 1965,
the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is rendered enjoining the
defendant Elizalde Rope Factory, Inc. from dismissing the plaintiff
from his present employment and sentencing the defendant Elizalde
Rope Workers' Union to pay the plaintiff P500 for attorney's fees and
the costs of this action.3
From this decision, the Union appealed directly to this Court on purely
questions of law, assigning the following errors:
I. That the lower court erred when it did not rule that Republic Act No.
3350 is unconstitutional.
II. That the lower court erred when it sentenced appellant herein to pay
plaintiff the sum of P500 as attorney's fees and the cost thereof.
In support of the alleged unconstitutionality of Republic Act No. 3350,
the Union contented, firstly, that the Act infringes on the fundamental
right to form lawful associations; that "the very phraseology of said
Republic Act 3350, that membership in a labor organization is banned
to all those belonging to such religious sect prohibiting affiliation with
any labor organization" 4 , "prohibits all the members of a given

religious sect from joining any labor union if such sect prohibits
affiliations of their members thereto" 5 ; and, consequently, deprives
said members of their constitutional right to form or join lawful
associations or organizations guaranteed by the Bill of Rights, and thus
becomes obnoxious to Article III, Section 1 (6) of the 1935
Constitution. 6
Secondly, the Union contended that Republic Act No. 3350 is
unconstitutional for impairing the obligation of contracts in that, while
the Union is obliged to comply with its collective bargaining
agreement containing a "closed shop provision," the Act relieves the
employer from its reciprocal obligation of cooperating in the
maintenance of union membership as a condition of employment; and
that said Act, furthermore, impairs the Union's rights as it deprives the
union of dues from members who, under the Act, are relieved from the
obligation to continue as such members. 7
Thirdly, the Union contended that Republic Act No. 3350
discriminatorily favors those religious sects which ban their members
from joining labor unions, in violation of Article Ill, Section 1 (7) of
the 1935 Constitution; and while said Act unduly protects certain
religious sects, it leaves no rights or protection to labor organizations. 8
Fourthly, Republic Act No. 3350, asserted the Union, violates the
constitutional provision that "no religious test shall be required for the
exercise of a civil right," in that the laborer's exercise of his civil right
to join associations for purposes not contrary to law has to be
determined under the Act by his affiliation with a religious sect; that
conversely, if a worker has to sever his religious connection with a sect
that prohibits membership in a labor organization in order to be able to
join a labor organization, said Act would violate religious freedom. 9
Fifthly, the Union contended that Republic Act No. 3350, violates the
"equal protection of laws" clause of the Constitution, it being a
discriminately legislation, inasmuch as by exempting from the
operation of closed shop agreement the members of the "Iglesia ni
Cristo", it has granted said members undue advantages over their
fellow workers, for while the Act exempts them from union obligation
and liability, it nevertheless entitles them at the same time to the
enjoyment of all concessions, benefits and other emoluments that the
union might secure from the employer. 10
Sixthly, the Union contended that Republic Act No. 3350 violates the
constitutional provision regarding the promotion of social justice. 11

Appellant Union, furthermore, asserted that a "closed shop provision"


in a collective bargaining agreement cannot be considered violative of
religious freedom, as to call for the amendment introduced by
Republic Act No. 3350;12 and that unless Republic Act No. 3350 is
declared unconstitutional, trade unionism in this country would be
wiped out as employers would prefer to hire or employ members of the
Iglesia ni Cristo in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended that Republic Act
No. 3350 does not violate the right to form lawful associations, for the
right to join associations includes the right not to join or to resign from
a labor organization, if one's conscience does not allow his
membership therein, and the Act has given substance to such right by
prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of
contracts for said law formed part of, and was incorporated into, the
terms of the closed shop agreement; 15that the Act does not violate the
establishment of religion clause or separation of Church and State, for
Congress, in enacting said law, merely accommodated the religious
needs of those workers whose religion prohibits its members from
joining labor unions, and balanced the collective rights of organized
labor with the constitutional right of an individual to freely exercise
his chosen religion; that the constitutional right to the free exercise of
one's religion has primacy and preference over union security
measures which are merely contractual 16 ; that said Act does not
violate the constitutional provision of equal protection, for the
classification of workers under the Act depending on their religious
tenets is based on substantial distinction, is germane to the purpose of
the law, and applies to all the members of a given class; 17 that said
Act, finally, does not violate the social justice policy of the
Constitution, for said Act was enacted precisely to equalize
employment opportunities for all citizens in the midst of the diversities
of their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is
necessary to premise that there are some thoroughly established
principles which must be followed in all cases where questions of
constitutionality as obtains in the instant case are involved. All
presumptions are indulged in favor of constitutionality; one who
attacks a statute, alleging unconstitutionality must prove its invalidity
beyond a reasonable doubt, that a law may work hardship does not

render it unconstitutional; that if any reasonable basis may be


conceived which supports the statute, it will be upheld, and the
challenger must negate all possible bases; that the courts are not
concerned with the wisdom, justice, policy, or expediency of a statute;
and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No.
3350 prohibits and bans the members of such religious sects that
forbid affiliation of their members with labor unions from joining
labor unions appears nowhere in the wording of Republic Act No.
3350; neither can the same be deduced by necessary implication
therefrom. It is not surprising, therefore, that appellant, having thus
misread the Act, committed the error of contending that said Act is
obnoxious to the constitutional provision on freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of
association. Section 1 (6) of Article III of the Constitution of 1935, as
well as Section 7 of Article IV of the Constitution of 1973, provide
that the right to form associations or societies for purposes not
contrary to law shall not be abridged. Section 3 of Republic Act No.
875 provides that employees shall have the right to self-organization
and to form, join of assist labor organizations of their own choosing
for the purpose of collective bargaining and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid
or protection. What the Constitution and the 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 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. 20 It is clear, therefore, that the right to join a
union includes the right to abstain from joining any union. 21 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 right to refrain from joining labor organizations recognized by
Section 3 of the Industrial Peace Act is, however, limited. The legal
protection granted to such right to refrain from joining is withdrawn by
operation of law, where a labor union and an employer have agreed on
a closed shop, by virtue of which the employer may employ only
member of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract in
order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace
Act, before its amendment by Republic Act No. 3350, provides that
although it would be an unfair labor practice for an employer "to
discriminate in regard to hire or tenure of employment or any term or
condition of employment to encourage or discourage membership in
any labor organization" the employer is, however, not precluded "from
making an agreement with a labor organization to require as a
condition of employment membership therein, if such labor
organization is the representative of the employees". By virtue,
therefore, of a closed shop agreement, before the enactment of
Republic Act No. 3350, if any person, regardless of his religious
beliefs, wishes to be employed or to keep his employment, he must
become a member of the collective bargaining union. Hence, the right
of said employee not to join the labor union is curtailed and
withdrawn.
To that all-embracing coverage of the closed shop arrangement,
Republic Act No. 3350 introduced an exception, when it added to
Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but
such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization".
Republic Act No. 3350 merely excludes ipso jure from the application
and coverage of the closed shop agreement the employees belonging to
any religious sects which prohibit affiliation of their members with any
labor organization. What the exception provides, therefore, is that
members of said religious sects cannot be compelled or coerced to join
labor unions even when said unions have closed shop agreements with

the employers; that in spite of any closed shop agreement, members of


said religious sects cannot be refused employment or dismissed from
their jobs on the sole ground that they are not members of the
collective bargaining union. It is clear, therefore, that the assailed Act,
far from infringing the constitutional provision on freedom of
association, upholds and reinforces it. It does not prohibit the members
of said religious sects from affiliating with labor unions. It still leaves
to said members the liberty and the power to affiliate, or not to
affiliate, with labor unions. If, notwithstanding their religious beliefs,
the members of said religious sects prefer to sign up with the labor
union, they can do so. If in deference and fealty to their religious faith,
they refuse to sign up, they can do so; the law does not coerce them to
join; neither does the law prohibit them from joining; and neither may
the employer or labor union compel them to join. Republic Act No.
3350, therefore, does not violate the constitutional provision on
freedom of association.
2. Appellant Union also contends that the Act is unconstitutional for
impairing the obligation of its contract, specifically, the "union
security clause" embodied in its Collective Bargaining Agreement with
the Company, by virtue of which "membership in the union was
required as a condition for employment for all permanent employees
workers". This agreement was already in existence at the time
Republic Act No. 3350 was enacted on June 18, 1961, and it cannot,
therefore, be deemed to have been incorporated into the agreement.
But by reason of this amendment, Appellee, as well as others similarly
situated, could no longer be dismissed from his job even if he should
cease to be a member, or disaffiliate from the Union, and the Company
could continue employing him notwithstanding his disaffiliation from
the Union. The Act, therefore, introduced a change into the express
terms of the union security clause; the Company was partly absolved
by law from the contractual obligation it had with the Union of
employing only Union members in permanent positions, It cannot be
denied, therefore, that there was indeed an impairment of said union
security clause.
According to Black, any statute which introduces a change into the
express terms of the contract, or its legal construction, or its validity,
or its discharge, or the remedy for its enforcement, impairs the
contract. The extent of the change is not material. It is not a question
of degree or manner or cause, but of encroaching in any respect on its

obligation or dispensing with any part of its force. There is an


impairment of the contract if either party is absolved by law from its
performance. 22 Impairment has also been predicated on laws which,
without destroying contracts, derogate from substantial contractual
rights. 23
It should not be overlooked, however, that the prohibition to impair the
obligation of contracts is not absolute and unqualified. The prohibition
is general, affording a broad outline and requiring construction to fill
in the details. The prohibition is not to be read with literal exactness
like a mathematical formula, for it prohibits unreasonable impairment
only. 24 In spite of the constitutional prohibition, the State continues to
possess authority to safeguard the vital interests of its people.
Legislation appropriate to safeguarding said interests may modify or
abrogate contracts already in effect. 25 For not only are existing laws
read into contracts in order to fix the obligations as between the
parties, but the reservation of essential attributes of sovereign power is
also read into contracts as a postulate of the legal order. All contracts
made with reference to any matter that is subject to regulation under
the police power must be understood as made in reference to the
possible exercise of that power. 26 Otherwise, important and valuable
reforms may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be
prohibited. The policy of protecting contracts against impairment
presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains
adequate authority to secure the peace and good order of society. The
contract clause of the Constitution must, therefore, be not only in
harmony with, but also in subordination to, in appropriate instances,
the reserved power of the state to safeguard the vital interests of the
people. It follows that not all legislations, which have the effect of
impairing a contract, are obnoxious to the constitutional prohibition as
to impairment, and a statute passed in the legitimate exercise of police
power, although it incidentally destroys existing contract rights, must
be upheld by the courts. This has special application to contracts
regulating relations between capital and labor which are not merely
contractual, and said labor contracts, for being impressed with public
interest, must yield to the common good. 27
In several occasions this Court declared that the prohibition against
impairing the obligations of contracts has no application to statutes

relating to public subjects within the domain of the general legislative


powers of the state involving public welfare. 28 Thus, this Court also
held that the Blue Sunday Law was not an infringement of the
obligation of a contract that required the employer to furnish work on
Sundays to his employees, the law having been enacted to secure the
well-being and happiness of the laboring class, and being, furthermore,
a legitimate exercise of the police power.29
In order to determine whether legislation unconstitutionally impairs
contract obligations, no unchanging yardstick, applicable at all times
and under all circumstances, by which the validity of each statute may
be measured or determined, has been fashioned, but every case must
be determined upon its own circumstances. Legislation impairing the
obligation of contracts can be sustained when it is enacted for the
promotion of the general good of the people, and when the means
adopted to secure that end are reasonable. Both the end sought and the
means adopted must be legitimate, i.e., within the scope of the
reserved power of the state construed in harmony with the
constitutional limitation of that power. 30
What then was the purpose sought to be achieved by Republic Act No.
3350? Its purpose was to insure freedom of belief and religion, and to
promote the general welfare by preventing discrimination against those
members of religious sects which prohibit their members from joining
labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the
only means whereby they can maintain their own life and the life of
their dependents. It cannot be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said
religious sects against two aggregates of group strength from which
the individual needs protection. The individual employee, at various
times in his working life, is confronted by two aggregates of power
collective labor, directed by a union, and collective capital, directed by
management. The union, an institution developed to organize labor
into a collective force and thus protect the individual employee from
the power of collective capital, is, paradoxically, both the champion of
employee rights, and a new source of their frustration. Moreover, when
the Union interacts with management, it produces yet a third aggregate
of group strength from which the individual also needs protection
the collective bargaining relationship. 31

The aforementioned purpose of the amendatory law is clearly seen in


the Explanatory Note to House Bill No. 5859, which later became
Republic Act No. 3350, as follows:
It would be unthinkable indeed to refuse employing a person who, on
account of his religious beliefs and convictions, cannot accept
membership in a labor organization although he possesses all the
qualifications for the job. This is tantamount to punishing such person
for believing in a doctrine he has a right under the law to believe in.
The law would not allow discrimination to flourish to the detriment of
those whose religion discards membership in any labor organization.
Likewise, the law would not commend the deprivation of their right to
work and pursue a modest means of livelihood, without in any manner
violating their religious faith and/or belief. 32
It cannot be denied, furthermore, that the means adopted by the Act to
achieve that purpose exempting the members of said religious sects
from coverage of union security agreements is reasonable.
It may not be amiss to point out here that the free exercise of religious
profession or belief is superior to contract rights. In case of conflict,
the latter must, therefore, yield to the former. The Supreme Court of
the United States has also declared on several occasions that the rights
in the First Amendment, which include freedom of religion, enjoy a
preferred position in the constitutional system. 33 Religious freedom,
although not unlimited, is a fundamental personal right and
liberty, 34 and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is
only where unavoidably necessary to prevent an immediate and grave
danger to the security and welfare of the community that infringement
of religious freedom may be justified, and only to the smallest extent
necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is
unconstitutional, appellant Union averred that said Act discriminates in
favor of members of said religious sects in violation of Section 1 (7) of
Article Ill of the 1935 Constitution, and which is now Section 8 of
Article IV of the 1973 Constitution, which provides:
No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof, and the free exercise and
enjoyment of religious profession and worship, without discrimination
and preference, shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.

The constitutional provision into only prohibits legislation for the


support of any religious tenets or the modes of worship of any sect,
thus forestalling compulsion by law of the acceptance of any creed or
the practice of any form of worship, 35 but also assures the free
exercise of one's chosen form of religion within limits of utmost
amplitude. It has been said that the religion clauses of the Constitution
are all designed to protect the broadest possible liberty of conscience,
to allow each man to believe as his conscience directs, to profess his
beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good. 36 Any legislation whose
effect or purpose is to impede the observance of one or all religions, or
to discriminate invidiously between the religions, is invalid, even
though the burden may be characterized as being only indirect. 37 But
if the stage regulates conduct by enacting, within its power, a general
law which has for its purpose and effect to advance the state's secular
goals, the statute is valid despite its indirect burden on religious
observance, unless the state can accomplish its purpose without
imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that the
government should not be precluded from pursuing valid objectives
secular in character even if the incidental result would be favorable to
a religion or sect. It has likewise been held that the statute, in order to
withstand the strictures of constitutional prohibition, must have a
secular legislative purpose and a primary effect that neither advances
nor inhibits religion. 40 Assessed by these criteria, Republic Act No.
3350 cannot be said to violate the constitutional inhibition of the "noestablishment" (of religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and
temporal, not spiritual or religious or holy and eternal. It was intended
to serve the secular purpose of advancing the constitutional right to the
free exercise of religion, by averting that certain persons be refused
work, or be dismissed from work, or be dispossessed of their right to
work and of being impeded to pursue a modest means of livelihood, by
reason of union security agreements. To help its citizens to find gainful
employment whereby they can make a living to support themselves
and their families is a valid objective of the state. In fact, the state is
enjoined, in the 1935 Constitution, to afford protection to labor, and
regulate the relations between labor and capital and industry. 41 More
so now in the 1973 Constitution where it is mandated that "the State

shall afford protection to labor, promote full employment and equality


in employment, ensure equal work opportunities regardless of sex,
race or creed and regulate the relation between workers and
employers. 42
The primary effects of the exemption from closed shop agreements in
favor of members of religious sects that prohibit their members from
affiliating with a labor organization, is the protection of said
employees against the aggregate force of the collective bargaining
agreement, and relieving certain citizens of a burden on their religious
beliefs; and by eliminating to a certain extent economic insecurity due
to unemployment, which is a serious menace to the health, morals, and
welfare of the people of the State, the Act also promotes the well-being
of society. It is our view that the exemption from the effects of closed
shop agreement does not directly advance, or diminish, the interests of
any particular religion. Although the exemption may benefit those who
are members of religious sects that prohibit their members from
joining labor unions, the benefit upon the religious sects is merely
incidental and indirect. The "establishment clause" (of religion) does
not ban regulation on conduct whose reason or effect merely happens
to coincide or harmonize with the tenets of some or all religions. 43 The
free exercise clause of the Constitution has been interpreted to require
that religious exercise be preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted
consistently with the spirit of the constitutional provision. It acted
merely to relieve the exercise of religion, by certain persons, of a
burden that is imposed by union security agreements. It was Congress
itself that imposed that burden when it enacted the Industrial Peace Act
(Republic Act 875), and, certainly, Congress, if it so deems advisable,
could take away the same burden. It is certain that not every
conscience can be accommodated by all the laws of the land; but when
general laws conflict with scrupples of conscience, exemptions ought
to be granted unless some "compelling state interest" intervenes. 45 In
the instant case, We see no such compelling state interest to withhold
exemption.
Appellant bewails that while Republic Act No. 3350 protects members
of certain religious sects, it leaves no right to, and is silent as to the
protection of, labor organizations. The purpose of Republic Act No.
3350 was not to grant rights to labor unions. The rights of labor unions
are amply provided for in Republic Act No. 875 and the new Labor

Code. As to the lamented silence of the Act regarding the rights and
protection of labor unions, suffice it to say, first, that the validity of a
statute is determined by its provisions, not by its silence 46 ; and,
second, the fact that the law may work hardship does not render it
unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel
persons to join and remain members of a union to keep their jobs in
violation of their religious scrupples, would hurt, rather than help,
labor unions, Congress has seen it fit to exempt religious objectors lest
their resistance spread to other workers, for religious objections have
contagious potentialities more than political and philosophic
objections.
Furthermore, let it be noted that coerced unity and loyalty even to the
country, and a fortiori to a labor union assuming that such unity and
loyalty can be attained through coercion is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48 A
desirable end cannot be promoted by prohibited means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates
the constitutional prohibition against requiring a religious test for the
exercise of a civil right or a political right, is not well taken. The Act
does not require as a qualification, or condition, for joining any lawful
association membership in any particular religion or in any religious
sect; neither does the Act require affiliation with a religious sect that
prohibits its members from joining a labor union as a condition or
qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act
No. 3350 only exempts members with such religious affiliation from
the coverage of closed shop agreements. So, under this Act, a religious
objector is not required to do a positive act to exercise the right to
join or to resign from the union. He is exempted ipso jure without need
of any positive act on his part. A conscientious religious objector need
not perform a positive act or exercise the right of resigning from the
labor union he is exempted from the coverage of any closed shop
agreement that a labor union may have entered into. How then can
there be a religious test required for the exercise of a right when no
right need be exercised?
We have said that it was within the police power of the State to enact
Republic Act No. 3350, and that its purpose was legal and in
consonance with the Constitution. It is never an illegal evasion of a

constitutional provision or prohibition to accomplish a desired result,


which is lawful in itself, by discovering or following a legal way to do
it.49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a
discriminatory legislation, inasmuch as it grants to the members of
certain religious sects undue advantages over other workers, thus
violating Section 1 of Article III of the 1935 Constitution which
forbids the denial to any person of the equal protection of the laws. 50
The guaranty of equal protection of the laws is not a guaranty of
equality in the application of the laws upon all citizens of the state. It
is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child should
be affected alike by a statute. Equality of operation of statutes does not
mean indiscriminate operation on persons merely as such, but on
persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not
forbid discrimination as to things that are different. 51 It does not
prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or
practice because they agree with one another in certain particulars. A
law is not invalid because of simple inequality. 52 The very idea of
classification is that of inequality, so that it goes without saying that
the mere fact of inequality in no manner determines the matter of
constitutionality. 53 All that is required of a valid classification is that it
be reasonable, which means that the classification should be based on
substantial distinctions which make for real differences; that it must be
germane to the purpose of the law; that it must not be limited to
existing conditions only; and that it must apply equally to each
member of the class. 54 This Court has held that the standard is
satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary. 55
In the exercise of its power to make classifications for the purpose of
enacting laws over matters within its jurisdiction, the state is
recognized as enjoying a wide range of discretion. 56 It is not necessary

that the classification be based on scientific or marked differences of


things or in their relation. 57 Neither is it necessary that the
classification be made with mathematical nicety. 58 Hence legislative
classification may in many cases properly rest on narrow
distinctions, 59 for the equal protection guaranty does not preclude the
legislature from recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned
requirements. The Act classifies employees and workers, as to the
effect and coverage of union shop security agreements, into those who
by reason of their religious beliefs and convictions cannot sign up with
a labor union, and those whose religion does not prohibit membership
in labor unions. Tile classification rests on real or substantial, not
merely imaginary or whimsical, distinctions. There is such real
distinction in the beliefs, feelings and sentiments of employees.
Employees do not believe in the same religious faith and different
religions differ in their dogmas and cannons. Religious beliefs,
manifestations and practices, though they are found in all places, and
in all times, take so many varied forms as to be almost beyond
imagination. There are many views that comprise the broad spectrum
of religious beliefs among the people. There are diverse manners in
which beliefs, equally paramount in the lives of their possessors, may
be articulated. Today the country is far more heterogenous in religion
than before, differences in religion do exist, and these differences are
important and should not be ignored.
Even from the phychological point of view, the classification is based
on real and important differences. Religious beliefs are not mere
beliefs, mere ideas existing only in the mind, for they carry with them
practical consequences and are the motives of certain rules. of human
conduct and the justification of certain acts. 60 Religious sentiment
makes a man view things and events in their relation to his God. It
gives to human life its distinctive character, its tone, its happiness or
unhappiness its enjoyment or irksomeness. Usually, a strong and
passionate desire is involved in a religious belief. To certain persons,
no single factor of their experience is more important to them than
their religion, or their not having any religion. Because of differences
in religious belief and sentiments, a very poor person may consider
himself better than the rich, and the man who even lacks the
necessities of life may be more cheerful than the one who has all

possible luxuries. Due to their religious beliefs people, like the


martyrs, became resigned to the inevitable and accepted cheerfully
even the most painful and excruciating pains. Because of differences in
religious beliefs, the world has witnessed turmoil, civil strife,
persecution, hatred, bloodshed and war, generated to a large extent by
members of sects who were intolerant of other religious beliefs. The
classification, introduced by Republic Act No. 3350, therefore, rests on
substantial distinctions.
The classification introduced by said Act is also germane to its
purpose. The purpose of the law is precisely to avoid those who
cannot, because of their religious belief, join labor unions, from being
deprived of their right to work and from being dismissed from their
work because of union shop security agreements.
Republic Act No. 3350, furthermore, is not limited in its application to
conditions existing at the time of its enactment. The law does not
provide that it is to be effective for a certain period of time only. It is
intended to apply for all times as long as the conditions to which the
law is applicable exist. As long as there are closed shop agreements
between an employer and a labor union, and there are employees who
are prohibited by their religion from affiliating with labor unions, their
exemption from the coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects;
this is evident from its provision. The fact that the law grants a
privilege to members of said religious sects cannot by itself render the
Act unconstitutional, for as We have adverted to, the Act only restores
to them their freedom of association which closed shop agreements
have taken away, and puts them in the same plane as the other workers
who are not prohibited by their religion from joining labor unions. The
circumstance, that the other employees, because they are differently
situated, are not granted the same privilege, does not render the law
unconstitutional, for every classification allowed by the Constitution
by its nature involves inequality.
The mere fact that the legislative classification may result in actual
inequality is not violative of the right to equal protection, for every
classification of persons or things for regulation by law produces
inequality in some degree, but the law is not thereby rendered invalid.
A classification otherwise reasonable does not offend the constitution
simply because in practice it results in some inequality. 61 Anent this
matter, it has been said that whenever it is apparent from the scope of

the law that its object is for the benefit of the public and the means by
which the benefit is to be obtained are of public character, the law will
be upheld even though incidental advantage may occur to individuals
beyond those enjoyed by the general public. 62
6. Appellant's further contention that Republic Act No. 3350 violates
the constitutional provision on social justice is also baseless. Social
justice is intended to promote the welfare of all the people. 63 Republic
Act No. 3350 promotes that welfare insofar as it looks after the
welfare of those who, because of their religious belief, cannot join
labor unions; the Act prevents their being deprived of work and of the
means of livelihood. In determining whether any particular measure is
for public advantage, it is not necessary that the entire state be directly
benefited it is sufficient that a portion of the state be benefited
thereby.
Social justice also means the adoption by the Government of measures
calculated to insure economic stability of all component elements of
society, through the maintenance of a proper economic and social
equilibrium in the inter-relations of the members of the
community. 64 Republic Act No. 3350 insures economic stability to the
members of a religious sect, like the Iglesia ni Cristo, who are also
component elements of society, for it insures security in their
employment, notwithstanding their failure to join a labor union having
a closed shop agreement with the employer. The Act also advances the
proper economic and social equilibrium between labor unions and
employees who cannot join labor unions, for it exempts the latter from
the compelling necessity of joining labor unions that have closed shop
agreements and equalizes, in so far as opportunity to work is
concerned, those whose religion prohibits membership in labor unions
with those whose religion does not prohibit said membership. Social
justice does not imply social equality, because social inequality will
always exist as long as social relations depend on personal or
subjective proclivities. Social justice does not require legal equality
because legal equality, being a relative term, is necessarily premised
on differentiations based on personal or natural conditions. 65 Social
justice guarantees equality of opportunity 66 , and this is precisely what
Republic Act No. 3350 proposes to accomplish it gives laborers,
irrespective of their religious scrupples, equal opportunity for work.
7. As its last ground, appellant contends that the amendment
introduced by Republic Act No. 3350 is not called for in other

words, the Act is not proper, necessary or desirable. Anent this matter,
it has been held that a statute which is not necessary is not, for that
reason, unconstitutional; that in determining the constitutional validity
of legislation, the courts are unconcerned with issues as to the
necessity for the enactment of the legislation in question. 67 Courts do
inquire into the wisdom of laws. 68 Moreover, legislatures, being
chosen by the people, are presumed to understand and correctly
appreciate the needs of the people, and it may change the laws
accordingly. 69 The fear is entertained by appellant that unless the Act
is declared unconstitutional, employers will prefer employing
members of religious sects that prohibit their members from joining
labor unions, and thus be a fatal blow to unionism. We do not agree.
The threat to unionism will depend on the number of employees who
are members of the religious sects that control the demands of the
labor market. But there is really no occasion now to go further and
anticipate problems We cannot judge with the material now before Us.
At any rate, the validity of a statute is to be determined from its
general purpose and its efficacy to accomplish the end desired, not
from its effects on a particular case. 70 The essential basis for the
exercise of power, and not a mere incidental result arising from its
exertion, is the criterion by which the validity of a statute is to be
measured. 71
II. We now pass on the second assignment of error, in support of which
the Union argued that the decision of the trial court ordering the Union
to pay P500 for attorney's fees directly contravenes Section 24 of
Republic Act No. 875, for the instant action involves an industrial
dispute wherein the Union was a party, and said Union merely acted in
the exercise of its rights under the union shop provision of its existing
collective bargaining contract with the Company; that said order also
contravenes Article 2208 of the Civil Code; that, furthermore,
Appellee was never actually dismissed by the defendant Company and
did not therefore suffer any damage at all . 72
In refuting appellant Union's arguments, Appellee claimed that in the
instant case there was really no industrial dispute involved in the
attempt to compel Appellee to maintain its membership in the union
under pain of dismissal, and that the Union, by its act, inflicted
intentional harm on Appellee; that since Appellee was compelled to
institute an action to protect his right to work, appellant could legally

be ordered to pay attorney's fees under Articles 1704 and 2208 of the
Civil Code. 73
The second paragraph of Section 24 of Republic Act No. 875 which is
relied upon by appellant provides that:
No suit, action or other proceedings shall be maintainable in any court
against a labor organization or any officer or member thereof for any
act done by or on behalf of such organization in furtherance of an
industrial dispute to which it is a party, on the ground only that such
act induces some other person to break a contract of employment or
that it is in restraint of trade or interferes with the trade, business or
employment of some other person or with the right of some other
person to dispose of his capital or labor. (Emphasis supplied)
That there was a labor dispute in the instant case cannot be disputed
for appellant sought the discharge of respondent by virtue of the closed
shop agreement and under Section 2 (j) of Republic Act No. 875 a
question involving tenure of employment is included in the term "labor
dispute". 74 The discharge or the act of seeking it is the labor dispute
itself. It being the labor dispute itself, that very same act of the Union
in asking the employer to dismiss Appellee cannot be "an act
done ... in furtherance of an industrial dispute". The mere fact that
appellant is a labor union does not necessarily mean that all its acts are
in furtherance of an industrial dispute. 75 Appellant Union, therefore,
cannot invoke in its favor Section 24 of Republic Act No. 875. This
case is not intertwined with any unfair labor practice case existing at
the time when Appellee filed his complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked by the Union,
serve as its shield. The article provides that attorney's fees and
expenses of litigation may be awarded "when the defendant's act or
omission has compelled the plaintiff ... to incur expenses to protect his
interest"; and "in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be
recovered". In the instant case, it cannot be gainsaid that appellant
Union's act in demanding Appellee's dismissal caused Appellee to
incur expenses to prevent his being dismissed from his job. Costs
according to Section 1, Rule 142, of the Rules of Court, shall be
allowed as a matter of course to the prevailing party.
WHEREFORE, the instant appeal is dismissed, and the decision, dated
August 26, 1965, of the Court of First Instance of Manila, in its Civil

Case No. 58894, appealed from is affirmed, with costs against


appellant Union. It is so ordered.
Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, Antonio,
Esguerra, Muoz Palma and Aquino, JJ., concur.

Separate Opinions
FERNANDO, J, concurring:
The decision arrived at unanimously by this Court that Republic Act
No. 3350 is free from the constitutional infirmities imputed to it was
demonstrated in a manner wellnigh conclusive in the learned,
scholarly, and comprehensive opinion so typical of the efforts of
the ponente, Justice Zaldivar. Like the rest of my brethren, I concur
fully. Considering moreover, the detailed attention paid to each and
every objection raised as to its validity and the clarity and
persuasiveness with which it was shown to be devoid of support in
authoritative doctrines, it would appear that the last word has been
written on this particular subject. Nonetheless, I deem it proper to
submit this brief expression of my views on the transcendent character
of religious freedom 1 and its primacy even as against the claims of
protection to labor, 2 also one of the fundamental principles of the
Constitution.
1. Religious freedom is identified with the liberty every individual
possesses to worship or not a Supreme Being, and if a devotee of any
sect, to act in accordance with its creed. Thus is constitutionally
safeguarded, according to Justice Laurel, that "profession of faith to an
active power that binds and elevates man to his Creator ...." 3 The
choice of what a man wishes to believe in is his and his alone. That is a
domain left untouched, where intrusion is not allowed, a citadel to
which the law is denied entry, whatever be his thoughts or hopes. In
that sphere, what he wills reigns supreme. The doctrine to which he
pays fealty may for some be unsupported by evidence, devoid of
rational foundation. No matter. There is no requirement as to its
conformity to what has found acceptance. It suffices that for him such
a concept holds undisputed sway. That is a recognition of man's
freedom. That for him is one of the ways of self- realization. It would
be to disregard the dignity that attaches to every human being to

deprive him of such an attribute. The "fixed star on our constitutional


constellation," to borrow the felicitous phrase of Justice Jackson, is
that no official, not excluding the highest, has it in his power to
prescribe what shall be orthodox in matters of conscience or to
mundane affairs, for that matter.
Gerona v. Secretary of Education 4 speaks similarly. In the language of
its ponente, Justice Montemayor: "The realm of belief and creed is
infinite and limitless bounded only by one's imagination and thought.
So is the freedom of belief, including religious belief, limitless and
without bounds. One may believe in most anything, however strange,
bizarre and unreasonable the same may appear to others, even heretical
when weighed in the scales of orthodoxy or doctrinal
standards." 5 There was this qualification though: "But between the
freedom of belief and the exercise of said belief, there is quite a stretch
of road to travel. If the exercise of said religious belief clashes with the
established institutions of society and with the law, then the former
must yield and give way to the latter. The Government steps in and
either restrains said exercise or even prosecutes the one exercising
it." 6 It was on that basis that the daily compulsory flag ceremony in
accordance with a statute 7 was found free from the constitutional
objection on the part of a religious sect, the Jehovah's Witnesses,
whose members alleged that their participation would be offensive to
their religious beliefs. In a case not dissimilar, West Virginia State
Board of Education v. Barnette, 8 the American Supreme Court reached
a contrary conclusion. Justice Jackson's eloquent opinion is, for this
writer, highly persuasive. Thus: "The case is made difficult not
because the principles of its decision are obscure but because the flag
involved is our own. Nevertheless, we apply the limitations of the
Constitution with no fear that freedom to be intellectually and
spiritually diverse or even contrary will disintegrate the social
organization. To believe that patriotism will not flourish if patriotic
ceremonies are voluntary and spontaneous instead of a compulsory
routine is to make an unflattering estimate of the appeal of our
institutions to free minds. We can have intellectual individualism and
the rich cultural diversities that we owe to exceptional minds only at
the price of occasional eccentricity and abnormal attitudes. When they
are so harmless to others or to the State as those we deal with here, the
price is not too great. But freedom to differ is not limited to things that
do not matter much. That would be a mere shadow of freedom. The

test of its substance is the right to differ as to things that touch the
heart of the existing order." 9
There is moreover this ringing affirmation by Chief Justice Hughes of
the primacy of religious freedom in the forum of conscience even as
against the command of the State itself: "Much has been said of the
paramount duty to the state, a duty to be recognized, it is urged, even
though it conflicts with convictions of duty to God. Undoubtedly that
duty to the state exists within the domain of power, for government
may enforce obedience to laws regardless of scruples. When one's
belief collides with the power of the state, the latter is supreme within
its sphere and submission or punishment follows. But, in the forum of
conscience, duty to a moral power higher than the state has always
been maintained. The reservation of that supreme obligation, as a
matter of principle, would unquestionably be made by many of our
conscientious and law-abiding citizens. The essence of religion is
belief in a relation to God involving duties superior to those arising
from any human relation." 10 The American Chief Justice spoke in
dissent, it is true, but with him in agreement were three of the foremost
jurists who ever sat in that Tribunal, Justices Holmes, Brandeis, and
Stone.
2. As I view Justice Zaldivar's opinion in that light, my concurrence, as
set forth earlier, is wholehearted and entire. With such a cardinal
postulate as the basis of our polity, it has a message that cannot be
misread. Thus is intoned with a reverberating clang, to paraphrase
Cardozo, a fundamental principle that drowns all weaker sounds. The
labored effort to cast doubt on the validity of the statutory provision in
question is far from persuasive. It is attended by futility. It is not for
this Court, as I conceive of the judicial function, to restrict the scope of
a preferred freedom.
3. There is, however, the question of whether such an exception
possesses an implication that lessens the effectiveness of state efforts
to protect labor, likewise, as noted, constitutionally ordained. Such a
view, on the surface, may not be lacking in plausibility, but upon closer
analysis, it cannot stand scrutiny. Thought must be given to the
freedom of association, likewise an aspect of intellectual liberty. For
the late Professor Howe a constitutionalist and in his lifetime the
biographer of the great Holmes, it even partakes of the political theory
of pluralistic sovereignty. So great is the respect for the autonomy
accorded voluntary societies. 11 Such a right implies at the very least

that one can determine for himself whether or not he should join or
refrain from joining a labor organization, an institutional device for
promoting the welfare of the working man. A closed shop, on the other
hand, is inherently coercive. That is why, as is unmistakably reflected
in our decisions, the latest of which is Guijarno v. Court of Industrial
Relations, 12 it is far from being a favorite of the law. For a statutory
provision then to further curtail its operation, is precisely to follow the
dictates of sound public policy.
The exhaustive and well-researched opinion of Justice Zaldivar thus is
in the mainstream of constitutional tradition. That, for me, is the
channel to follow.
Separate Opinions
FERNANDO, J, concurring:
The decision arrived at unanimously by this Court that Republic Act
No. 3350 is free from the constitutional infirmities imputed to it was
demonstrated in a manner wellnigh conclusive in the learned,
scholarly, and comprehensive opinion so typical of the efforts of
the ponente, Justice Zaldivar. Like the rest of my brethren, I concur
fully. Considering moreover, the detailed attention paid to each and
every objection raised as to its validity and the clarity and
persuasiveness with which it was shown to be devoid of support in
authoritative doctrines, it would appear that the last word has been
written on this particular subject. Nonetheless, I deem it proper to
submit this brief expression of my views on the transcendent character
of religious freedom 1 and its primacy even as against the claims of
protection to labor, 2 also one of the fundamental principles of the
Constitution.
1. Religious freedom is identified with the liberty every individual
possesses to worship or not a Supreme Being, and if a devotee of any
sect, to act in accordance with its creed. Thus is constitutionally
safeguarded, according to Justice Laurel, that "profession of faith to an
active power that binds and elevates man to his Creator ...." 3 The
choice of what a man wishes to believe in is his and his alone. That is a
domain left untouched, where intrusion is not allowed, a citadel to
which the law is denied entry, whatever be his thoughts or hopes. In
that sphere, what he wills reigns supreme. The doctrine to which he
pays fealty may for some be unsupported by evidence, devoid of

rational foundation. No matter. There is no requirement as to its


conformity to what has found acceptance. It suffices that for him such
a concept holds undisputed sway. That is a recognition of man's
freedom. That for him is one of the ways of self- realization. It would
be to disregard the dignity that attaches to every human being to
deprive him of such an attribute. The "fixed star on our constitutional
constellation," to borrow the felicitous phrase of Justice Jackson, is
that no official, not excluding the highest, has it in his power to
prescribe what shall be orthodox in matters of conscience or to
mundane affairs, for that matter.
Gerona v. Secretary of Education 4 speaks similarly. In the language of
its ponente, Justice Montemayor: "The realm of belief and creed is
infinite and limitless bounded only by one's imagination and thought.
So is the freedom of belief, including religious belief, limitless and
without bounds. One may believe in most anything, however strange,
bizarre and unreasonable the same may appear to others, even heretical
when weighed in the scales of orthodoxy or doctrinal
standards." 5 There was this qualification though: "But between the
freedom of belief and the exercise of said belief, there is quite a stretch
of road to travel. If the exercise of said religious belief clashes with the
established institutions of society and with the law, then the former
must yield and give way to the latter. The Government steps in and
either restrains said exercise or even prosecutes the one exercising
it." 6 It was on that basis that the daily compulsory flag ceremony in
accordance with a statute 7 was found free from the constitutional
objection on the part of a religious sect, the Jehovah's Witnesses,
whose members alleged that their participation would be offensive to
their religious beliefs. In a case not dissimilar, West Virginia State
Board of Education v. Barnette, 8 the American Supreme Court reached
a contrary conclusion. Justice Jackson's eloquent opinion is, for this
writer, highly persuasive. Thus: "The case is made difficult not
because the principles of its decision are obscure but because the flag
involved is our own. Nevertheless, we apply the limitations of the
Constitution with no fear that freedom to be intellectually and
spiritually diverse or even contrary will disintegrate the social
organization. To believe that patriotism will not flourish if patriotic
ceremonies are voluntary and spontaneous instead of a compulsory
routine is to make an unflattering estimate of the appeal of our
institutions to free minds. We can have intellectual individualism and

the rich cultural diversities that we owe to exceptional minds only at


the price of occasional eccentricity and abnormal attitudes. When they
are so harmless to others or to the State as those we deal with here, the
price is not too great. But freedom to differ is not limited to things that
do not matter much. That would be a mere shadow of freedom. The
test of its substance is the right to differ as to things that touch the
heart of the existing order." 9
There is moreover this ringing affirmation by Chief Justice Hughes of
the primacy of religious freedom in the forum of conscience even as
against the command of the State itself: "Much has been said of the
paramount duty to the state, a duty to be recognized, it is urged, even
though it conflicts with convictions of duty to God. Undoubtedly that
duty to the state exists within the domain of power, for government
may enforce obedience to laws regardless of scruples. When one's
belief collides with the power of the state, the latter is supreme within
its sphere and submission or punishment follows. But, in the forum of
conscience, duty to a moral power higher than the state has always
been maintained. The reservation of that supreme obligation, as a
matter of principle, would unquestionably be made by many of our
conscientious and law-abiding citizens. The essence of religion is
belief in a relation to God involving duties superior to those arising
from any human relation." 10 The American Chief Justice spoke in
dissent, it is true, but with him in agreement were three of the foremost
jurists who ever sat in that Tribunal, Justices Holmes, Brandeis, and
Stone.
2. As I view Justice Zaldivar's opinion in that light, my concurrence, as
set forth earlier, is wholehearted and entire. With such a cardinal
postulate as the basis of our polity, it has a message that cannot be
misread. Thus is intoned with a reverberating clang, to paraphrase
Cardozo, a fundamental principle that drowns all weaker sounds. The
labored effort to cast doubt on the validity of the statutory provision in
question is far from persuasive. It is attended by futility. It is not for
this Court, as I conceive of the judicial function, to restrict the scope of
a preferred freedom.
3. There is, however, the question of whether such an exception
possesses an implication that lessens the effectiveness of state efforts
to protect labor, likewise, as noted, constitutionally ordained. Such a
view, on the surface, may not be lacking in plausibility, but upon closer
analysis, it cannot stand scrutiny. Thought must be given to the

freedom of association, likewise an aspect of intellectual liberty. For


the late Professor Howe a constitutionalist and in his lifetime the
biographer of the great Holmes, it even partakes of the political theory
of pluralistic sovereignty. So great is the respect for the autonomy
accorded voluntary societies. 11 Such a right implies at the very least
that one can determine for himself whether or not he should join or
refrain from joining a labor organization, an institutional device for
promoting the welfare of the working man. A closed shop, on the other
hand, is inherently coercive. That is why, as is unmistakably reflected
in our decisions, the latest of which is Guijarno v. Court of Industrial
Relations, 12 it is far from being a favorite of the law. For a statutory
provision then to further curtail its operation, is precisely to follow the
dictates of sound public policy.
The exhaustive and well-researched opinion of Justice Zaldivar thus is
in the mainstream of constitutional tradition. That, for me, is the
channel to follow.

Republic
of
the
Philippines
SUPREME
COURT
Manila
EN BANC
G.R. No. L-20764
November 29, 1965
SANTOS
JUAT, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, BULAKLAK
PUBLICATIONS and JUAN EVANGELISTA, respondents.
Vicente
T.
Ocampo
for
petitioner.
Mariano B. Tuason for respondent Court of Industrial Relations.
Rufo B. Albor for other respondents.
ZALDIVAR, J.:
This is a petition for certiorari to review the decision dated August 15,
1962 and the resolution en banc dated October 30, 1962, of the Court
of Industrial Relations in its Case No. 2889-ULP.
After investigating charges of unfair labor practice filed by petitioner
Santos Juat before the Court of Industrial Relations against
respondents Bulaklak Publications and its Executive Officer, Acting
Prosecutor Alberto Cruz of the Court of Industrial Relations filed a
complaint, docketed as Case No. 2889-ULP, charging Bulaklak
Publications and/or Juan N. Evangelista of unfair labor practice within
the meaning of Section 4 (a) subsections 1, 4 and 5 of Republic Act
875, alleging, among others, that complainant Santos Juat was an
employee of the respondent company since August 1953; that on or
about July 15, 1960, and on several occasions thereafter, complainant
Santos Juat was asked by his respondent employer to join the
Busocope Labor Union, but he refused to do so; that respondent
employer suspended him without justifiable cause; that two separate
cases were filed by complainant against the respondents one on
March 13, 1961 for unfair labor practice, and another on March 18,
1961 for payment of wages for overtime work and work on Sundays
and holidays, the filing of which cases had come to the knowledge of
the respondents; that on March 15, 1961, respondent employer
dismissed him from the service without justifiable cause and that from
the time of his dismissal up to the filing of the complaint he had not
found any substantial employment for himself.

In their answer, dated August 3, 1961, respondent alleged, among


others, that complainant Santos Juat was suspended for cause; that
while Case No. 1462-V was filed with the Court of Industrial
Relations on March 13, 1961, the same came to the knowledge of
respondents only when they received the summons and a copy of the
petition on March 24, 1961, and while case No. 2789-ULP was filed
on April 3, 1961, the same became known to respondents long after the
employer-employee relationship between respondent employer and
Santos Juat had been terminated, so that the suspension of the
complainant on March 1, 1961 and his subsequent separation from the
service were not acts of reprisal because of the filing of those two
cases; that it was complainant Juat who had caused his separation
when he ignored the letter sent to him by Juan N. Evangelista,
executive officer of respondent company, requiring him to report for
work; that the principal reason why complainant refused to work with
respondent company was because he was occupied with his work in
the Juat Printing Press Co. of which he was a stockholder and the
treasurer. Respondent company thereby made a counterclaim for
damages because of complainant's having filed an unwarranted and
malicious action against it.
On August 15, 1962, after hearing, Associate Judge Baltazar N.
Villanueva of the Court of Industrial Relations rendered a decision
dismissing the complaint but made no pronouncement regarding
respondent's counterclaim.
Petitioner filed a motion for reconsideration of the decision, and in a
resolution dated October 30, 1962, the Court of Industrial Relations en
banc denied the motion for reconsideration. Hence, this petition
for certiorari to review said decision and resolution.
The facts of this case may best be gathered from the findings and
conclusions of the Court of Industrial Relations in its decision, as
follows:
On December 1, 1959, a collective bargaining agreement was entered
into between the Bulaklak Publications and the BUSOCOPE LABOR
UNION, to remain in effect for 3 years, and renewable for another
term of 3 years. Section 4 of said agreement contains a closed shop
proviso. On December 27, 1960, said Section 4 of said agreement was
amended to read as follows:
"All employees and/or workers who on January 1, 1960 are members
of the Union in good standing in accordance with its Constitution and

By-Laws and all members who become members after that date shall,
as a condition of employment, maintain their membership in the Union
for the duration of this Agreement. All employees and/or workers who
on January 1, 1961 are not yet members of the Union shall, as a
condition of maintaining their employment, become members of such
union."
It is clear that it was by virtue of the above-mentioned closed shop
provision of the collective bargaining agreement between the
Busocope Labor Union and the Bulaklak Publications that the
management of the latter required Santos Juat to become a member of
the former. In requiring Santos Juat to become a member of said
Union, it was only obeying the law between the parties, which is their
collective bargaining agreement.
Because of the refusal of Santos Juat to become a member of said
Union, Mr. Juan N. Evangelists, the executive officer of respondent
company, suspended him for 15 days. After the expiration of the
suspension of Santos Juat, Mr. Evangelista addressed a letter to the
former, ordering him to report back for duty, and in spite of said letter,
Santos Juat did not report for work, consequently, Santos Juat was
dropped from the service of the company. Juat could afford not to
report for duty because he has his own business by the name of JUAT
PRINTING PRESS CO., INC. The refusal of Santos Juat to become a
member of the Busocope Labor Union as well as his refusal to report
for work when ordered by his superior officer, shows the lack of
respect on the part of Santos Juat toward his superior officer. With
such attitude, the continuation in the service of the company of Santos
Juat is indeed inimical to the interest of his employer.
The charge of complainant to the effect that on March 13, 1961, he
filed a petition with this Court against respondent company which was
docketed as Case No. 1462-V is of no moment, because according to
the decision of the Supreme Court in Case G.R. No. L-11745, Royal
Interocean Lines, et al. vs. Hon. Court of Industrial Relations, et al.,
Promulgated October 31, 1960, it was held that an employee's having
filed charges or having given testimony or being about to give
testimony has no relation to union activities. With respect to Case No.
2789-ULP, Mr. Evangelista stated that he did not know anything about
its having been filed in Court.
It is now contended by the petitioner before this Court that:

1. The Court of Industrial Relations erred, or committed a grave abuse


of discretion, when it applied to the petitioner the collective bargaining
agreement with closed shop proviso between the respondent Bulaklak
Publications and the Busocope Labor Union, he being an old
employee;
2. The Court of Industrial Relations erred, or committed a grave abuse
of discretion, in holding that the respondent Bulaklak Publications did
not commit unfair labor practice when it dismissed petitioner for his
refusal to join the Busocope Labor Union; and
3. The Court of Industrial Relations committed a grave abuse of
discretion when it dismissed the complaint of petitioner because its
allegations; are not supported by substantial evidence.
The contentions of the petitioner are without merit, The closed-shop
proviso in a collective bargaining agreement between employer and
employee is sanctioned by law. The pertinent provision of the law, in
this connection, says:
Provided, that nothing in this Act or in any Act or statute of the
Republic of the Philippines shall preclude an employer from making
an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the
representative of the employees as provided in said section
twelve; ... ." (Section 4, subsection [a] par. 4 of Republic Act No. 875,
known as the Industrial Peace Act).
The validity of a closed-shop agreement has been upheld by this Court.
In one particular case this Court held:
There is no need for us to take sides and give reasons because our
Congress, in the exercise of its policy-making power, has chosen to
approve the closed-shop, when it legalized in Sec. 4, sub-section (a)
paragraph 4 of Republic Act 875 (Magna Charta of Labor) "any
agreement of the employer with a labor organization requiring
membership in such organization as condition of employment,"
provided such labor organization properly represents the employees
(National Labor Union vs. Aguinaldo's Echague, et al., G.R. No. L7358, May 31, 1955.)
The foregoing pronouncement of this Court had been reiterated in the
cases of Tolentino, et al. vs. Angeles, et al., G.R. No. L-8150, May 30,
1956; Ang Malayang Manggagawa Ng Ang Tibay Enterprises, et al.,
vs. Ang Tibay, et al., G.R. No. L-8259, Dec. 23, 1957; Confederated
Sons of Labor vs. Anakan Lumber Co., et al., G.R. No. L-12503, April

20, 1960; Bacolod-Murcia Milling Co., et al. vs. National Employees


Workers Security Union, 53 O.G. 615.
A closed-shop agreement has been considered as one form of union
security whereby only union members can be hired and workers must
remain union members as a condition of continued employment. The
requirement for employees or workers to become members of a union
as a condition for employment redounds to the benefit and advantage
of said employees because by holding out to loyal members a promise
of employment in the closed-shop the union wields group solidarity. In
fact, it is said that "the closed-shop contract is the most prized
achievement of unionism" (National Labor Union vs. Aguinaldo'sEchague, Inc. et al., supra).
Coming now to the closed-shop proviso of the collective bargaining
agreement between the respondent Bulaklak Publications and the
Busocope Labor Union, it is clearly provided that "All employees
and/or workers who on January 1, 1961 are not yet members of the
Union shall, as condition of maintaining their employment, become
members of such Union." The question now before Us is whether the
above-quoted proviso of the said collective bargaining agreement
applies to the petitioner Santos Juat. The contention of said petitioner
is that the said proviso cannot apply, and should not be applied to him
because he is an old employee of the Bulaklak Publications. It is not
disputed that petitioner had been employed with the Bulaklak
Publications since 1953, and the collective bargaining agreement
embodying the closed-shop proviso in question was entered into only
on December 1, 1959 and amended on December 27, 1960. It has been
established, however, that said petitioner was not a member of any
labor union when that collective bargaining agreement was entered
into, and in fact he had never been a member of any labor union.
This Court had categorically held in the case of Freeman Shirt
Manufacturing Co., Inc., et al. vs. Court of Industrial Relations, et al.,
G.R. No. L-16561, Jan. 28, 1961, that the closed-shop proviso of a
collective bargaining agreement entered into between an employer and
a duly authorized labor union is applicable not only to the employees
or laborers that are employed after the collective bargaining agreement
had been entered into but also to old employees who are not members
of any labor union at the time the said collective bargaining agreement
was entered into. In other words, if an employee or laborer is already a
member of a labor union different from the union that entered into a

collective bargaining agreement with the employer providing for a


closed-shop, said employee or worker cannot be obliged to become a
member of that union which had entered into a collective bargaining
agreement with the employer as a condition for his continued
employment. This Court in that Freeman case made this clear
pronouncement:
The closed-shop agreement authorized under Sec. 4 sub-sec. a (4) of
the Industrial Peace Act above-quoted should, however, apply only to
persons to be hired or to employees who are not yet members of any
labor organization. It is inapplicable to those already in the service
who are members of another union.To hold otherwise, i.e., that the
employees in a company who are members of a minority union may be
compelled to disaffiliate from their union and join the majority or
contracting union, would render nugatory the right of all employees to
self-organization and to form, joint or assist labor organizations of
their own choosing, a right guaranteed by the Industrial Peace Act
(sec. 3, Rep. Act No. 875) as well as by the Constitution (Art. III, see.
1 [6]).
Section 12 of the Industrial Peace Act, providing that when there is
reasonable doubt as to who the employees have chosen as their
representative the Industrial Court can order a certification election,
would also become useless. For once a union has been certified by the
court and enters into a collective bargaining agreement with the
employer a closed-shop clause applicable to all employees be they
union or non-union members, the question of majority representation
among the members would be closed forever. Certainly, there can no
longer exist any petition for certification election, since eventually the
majority or contracting union will become a perpetual labor union.
This alarming result could not have been the intention of Congress.
The Industrial Peace Act was enacted precisely for the promotion of
unionism in this country. (Emphasis supplied)
The above-quoted ruling was reaffirmed by this Court in its decision in
the case of Findlay Miller Timber Co. vs. PLASLU, et al., G.R. Nos. L18217 & L-18222, Sept. 29, 1962.
It should be declared, therefore, as a settled doctrine, that the closedshop proviso of a collective bargaining agreement entered into
between an employer and a duly authorized labor union applies, and
should be applied, to old employees or workers who are non-members
of any labor union at the time the collective bargaining agreement was

entered into. In other words, the old employees or workers can be


obliged by his employer to join the labor union which had entered into
a collective bargaining agreement that provides for a closed-shop as a
condition for his continuance in his employment, otherwise his refusal
to join the contracting labor union would constitute a justifiable basis
for his dismissal.
It being established by the evidence that petitioner Santos Juat,
although an old employee of the respondent Bulaklak Publications,
was not a member of any labor union at the time when the collective
bargaining agreement in question was entered into he could be obliged
by the respondent Bulaklak Publications to become a member of the
Busocope Labor Union. And because petitioner refused to join the
Busocope Labor Union respondent Bulaklak Publications was justified
in dismissing him from the service on the ground that he had refused
to join said union.
We, therefore, hold that the respondent Court of Industrial Relations
did not err, nor did it commit a grave abuse of discretion, when it
decided that the respondent Bulaklak Publications did not commit
unfair labor practice when it dismissed petitioner because of his refusal
to join the Busocope labor union. Moreover, as found by the
respondent Court of Industrial Relations, petitioner Santos Juat had
furnished another ground for his dismissal and that was because he
refused to return to work after the end of his suspension even when he
was ordered to do so by his employer, the respondent Bulaklak
Publications. The respondent Court of Industrial Relations further
found that the reason why the petitioner did not want to return to work
was because he was already working in his own establishment known
as the "Juat Printing Press Co. Inc." of which he was a stockholder and
the treasurer.
Neither did the respondent Court of Industrial Relations commit a
grave abuse of discretion when it dismissed the complaint on the
ground that the petitioner had not adduced substantial evidence to
support the allegations in the complaint. We have carefully examined
the records, and we believe that the factual findings of the respondent
court should not be disturbed.
IN VIEW OF THE FOREGOING, the decision and resolution
appealed from are affirmed, with costs against the petitioner.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon,


Regala,
Makalintal
and
Bengzon,
J.P.,
JJ.,concur.
Barrera, J., took no part.

Republic
of
the
Philippines
SUPREME
COURT
Manila
FIRST DIVISION
G.R. No. L-27079 August 31, 1977
MANILA
CORDAGE
COMPANY, petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS AND MANILA
CORDAGE WORKERS UNION, respondents.
G.R. No. L-27080 August 31, 1977
MANCO LABOR UNION (NLU), petitioner,
vs.
MANILA CORDAGE WORKERS UNION and THE COURT OF
INDUSTRIAL RELATIONS, respondents.
G.R. No. L-27080 August 31, 1977
MANCI
LABOR
UNION
(NLU), petitioner,
vs.
MANILA CORDAGE WORKERS UNION and THE COURT OF
INDUSTRIAL RELATIONS, respondents.
Sycip, Salazar, Luna & Associates for petitioner Manila Cordage
Company.
Eulogio R. Lerum for petitioner Manco Labor Union (NLU)
B. C. Pineda & Associates for private respondent.
FERNANDEZ, J.:
These are petitions to review the decision dated May 4, 1966 1 and the
resolution dated October 19, 1966 2 of the respondent Court of
Industrial Relations (CIR) in Case No. 2728-ULP entitled "Manila
Cordage Workers Union, complainant, vs. Manila Cordage Company
and Manco Labor Union, respondents."
The dispositive part of the decision reads:
FOREGOING PREMISES CONSIDERED, this Court finds
substantial evidence to sustain the charge of unfair labor practice
against respondent Manila Cordage Company in violation of Section
4(a), paragraphs 1, 2 and 4 of the Industrial Peace Act, and against
respondent Manco Labor Union in violation of Section 4(b),

paragraphs 1 and 2 of the same Act and, therefore, orders both


respondents their officials or agents:
1. To cease and desist from restraining and coersing complainants in
the exercise of their rights guaranteed by Section 3 of Republic Act
No. 875;
2. To cease and desist from further committing the unfair labor
practice complained of; and
3. To reinstate complainants Silvino Rabago, Natalio Nisperos and
Ricardo Trajano to their former positions and with all the rights and
privileges formerly appertaining thereto and to pay jointly and salary
their back wages from the time of their respective dismissal on January
27, 1961, February 3, 1961, and May 2, 1961 up to the date of their
actual re-instatements, minus their earnings elsewhere, if any.
To facilitate the payment of back wages due the complainants, the
Chief of the Examining Division of this Court and/or his duly
authorized assistant is hereby directed to examine the payrolls, daily
time records and other pertinent documents relative to complainants
services with respondent company and to submit the corresponding
report and computation for further disposition.
SO ORDERED.
Manila, Philippines, May 4, 1966.
AMANDO C. BUGAYONG Associate Judge 3
The resolution dated October 19, 1966 denied the two (2) separate
motions filed by Manila Cordage Company and Manco Labor Union
for the reconsideration of the decision dated May 4,1966.
On February 1, 1967 the petitioner Manco Labor Union filed the
following Motion in G.R. No. L-27080 (Manco Labor Union [NLU]
vs. Manila Cordage Workers Union, et al.):
MOTION TO CONSOLIDATE THIS CASE WITH G.R. NO. L27079 AND TO ADOPT THE PETITION THEREIN AS THE
PETITION IN THIS CASE
Comes now the petitioner Manco Labor Union NLU by the
undersigned attorney, and to this Honorable Court, respectfully states:
That in Case No. 2728-ULP of the Court of Industrial Relations.
entitled "Manila Cordage Company and Manco Labor Union NLU
respondents", said Court rendered its Decision and Resolution on May
4, 1966 and October 19, 1966, respectively, against the respondents;
That the Manila Cordage Company had appealed said Decision and
Resolution in Case No. 2728-ULP before this Honorable Court by

certiorari and in the resolution of this Court dated January 23, 1967, in
G.R. No. L-27079 (Manila Cordage Company vs. The Court of
Industrial Relations, et al.), the same was given due course by this
Court.
That since the issues to be brought by the herein petitioner in this case
are similar to the issues raised in the petition for certiorari in G.R. No.
L-27079, in order to avoid a multiplicity of cases, it is desirable that
the present case be consolidated with the said case;
That in order to avoid repetitions and a voluminous record, herein
petitioner is adopting the petition for review filed in G.R. No. LZ7079 as its own in the present case, and by reference, is made a part
hereof;
That this motion is timely because copy of the resolution of the Court
of Industrial Relations in this case was received on January 6, 1967,
notice of appeal and a petition for extension for 15 days was filed with
this Court on January 16, 1967, which was granted, and today is the
last day for the filing of our petition for review in this case.
WHEREFORE, it is respectfully prayed of this Honorable Court:
1. That the present case be consolidated with G.R. No. L- 27079,
entitled "Manila Cordage Company vs. The Court of Industrial
Relations and Manila Cordage Workers Union;
2. That herein petitioner be allowed to adopt the petition for review in
G.R. No. L-27079 as its own, and by reference made a part hereof;
3. That upon notice in accordance with the Rules of this Court, herein
petitioner will deposit the amount of P80.40 in payment of costs.
4. That in case this motion will be denied, that herein petitioner be
given five (15) days from notice to file its own petition for review.
Manila, January 31, 1967.
EULOGIO R. LERUM
Attorney for Petitioner
Manco Labor Union (NLU)
3199 Magsaysay Blvd., Manila
The Court issued on February 15, 1967 the following resolution:
Considering the motion of attorney for petitioner in L-27080 (Manco
Labor Union [NLU] vs. Manila Cordage Workers Union, et al.)
praying (a) that this case be consolidated with L-27079 (Manila
cordage Company vs. The Court of Industrial Relations, et al. (b) that
petitioner be allowed to adopt the petition for review in aforesaid case
L-27079 as its own, and by reference made a part thereof; (c) that upon

notice in accordance with the Rules of Court, petitioner will deposit


the amount of P80.40 for costs; and (d) in case the motion is denied,
petitioner be given five days from notice to file its own petition for
review THE COURT RESOLVED to grant the first three prayers of the
motion, provided that docket and other fees are paid.
Very truly yours,
BIENVENIDO EJERCITO
Clerk of Court
On October 24, 1967 the petitioner Manco Labor Union submitted the
following motion:
MOTION TO ADOPT THE BRIEF OF
PETITIONER MANILA CORDAGE CO.
Comes now the petitioner Manco Labor Union NLU by the
undersigned attorney, and to this Honorable Court, respectfully moves
that in view of the fact that said Union could not afford the printing of
its brief due to poor finances, that it be allowed to adopt as its own, the
brief of the Manila Cordage Co.
That in addition to the arguments contained in said brief, this petitioner
would like to emphasize the following:
1. That complainants in the Court below, namely, Silvino Rabago,
Natalio Nisperos and Ricardo Trajano, by resigning from the Manco
Labor Union NLU violated the provision of the collective bargaining
agreement then in force, which reads as follows: IV MAINTENANCE
OF MEMBERSHIP
'Both parties agree that all employees of the COMPANY who are
already members of the UNION at the time of the signing of this
AGREEMENT shall continue to remain members of the UNION for
the duration of this AGREEMENT' (Exhibits '5-B' and '6- B'
Company).
Having violated said agreement, these complainants are liable to
dismissal in the same manner as strikers who violate a no strike clause
in a contract could be dismissed although said contract is silent
regarding the penalty for breach thereof.
Hence, the Manco Labor Union NLU should not be the one penalized
for its effort to secure compliance with the terms of its central with
petitioning company,
2. That said agreement could not be susceptible of any other
interpretation except that violation thereof would result in dismissal

because as found out by the Court below, the said provision was
explained to the members before and after the same was signed.
3. Petitioner Manco Labor Union (NLU) could not be held guilty of
discriminating against Rabago, Nisperos and Trajano because of heir
union activities, The record shows that besides these three, Vicente
Untalan Ruperto Balsams and 40 others resigned. In the case of
Untalan and Balsamo after the Manila Cordage Co. had dismissed
them on request of the petitioning Union, this Union was also the one
who asked for their reinstatement when they withdrew their
resignation from the union, In the case of the other 40 members who
resigned (Exhs. 'A', A-l to 'A-49') when they withdrew their
resignations, the Manco Labor Union did not do anything to them,
although it had full knowledge that they have joined the rival union.
WHEREFORE, considering that Silvino Rabago, Natalio Nisperos and
Ricardo Traiano had violated the Collective Bargaining Agreement
whereas the action of the petitioner was one in good faith in what it
believes to be its right under said contract, we respectfully pray of this
Honorable Court that the decision appealed from be set aside and case
No. 2728-ULP of the Court of Industrial Relations be ordered
dismissed.
Manila, October 24, 1967.
EULOGIO R. LERUM
Attorney for the Petitioner
3199 Magsaysay Blvd., Manila
The petitioner, Manila Cordage Company, is a corporation duly
organized and existing under the laws of the Philippines.
The petitioner, Manco Labor Union, is a legitimate labor organization.
The respondent, Manila Cordage Workers Union, is also a legitimate
labor organization. Said respondent union is composed of employees
of the petitioner company.
Sometime in 1957, the Manila Cordage Company and the Manco
Labor Union, then acting as the exclusive bargaining representative of
the former's employees, entered into a collective bargaining agreement
which contained, among others, the following stipulations:
WHEREAS, the parties hereto decided to enter into an agreement
relating to the terms and conditions of employment, with reference to
those members to whom the provisions of this agreement applies.
xxx xxx xxx

Both parties agree that all employees of the COMPANY who are
already members of the UNION at the time of the signing of this
AGREEMENT shall continue to remain members of the UNION for
the duration of this AGREEMENT. 4
The foregoing stipulations were also embodied in the collective
bargaining agreement entered into between the Manila Cordage
Company and the Manco Labor Union in 1959.
When the collective bargaining agreements were entered into, the
employees. Silvino Rabago, Ricardo Trajano and Natalio Nisperos
were already members of Manco Labor Union.
Shortly after 1959, some employees of Manila Cordage Company
formed the Manila Cordage Workers Union. The usual campaign for
membership of the new union took place. Some employees who were
members of the Manco Labor Union resigned from said union and
joined the Manila Cordage Workers Union. At the instance of the
Manco Labor Union, the Manila Cordage Company dismissed those
who resigned from the Manco Labor Union, among them, Silvino
Rabago, Vicente Untalan, Ruperto Balsamo, Natalio Nisperos, Ricardo
Traiano, Roque Ruby and Salvador de Leon. It is alleged that the
Manco Labor Union held meetings wherein the members were
informed that under the above-quoted stipulations of the collective
bargaining agreement, continued membership in the Manco Labor
Union was a condition precedent to employment in the Manila
Cordage Company. As a consequence, some of those who resigned
from the Manco Labor Union withdrew their resignations and were reemployed by the Manila Cordage Company.
At the behest of the Manila Cordage Workers Union, an acting
prosecutor of the Court of Industrial Relations filed a complaint dated
March 28, 1961 for unfair labor practice against Manila Cordage
Company and the Manco Labor Union in behalf of the Manila
Cordage Workers Union and its members namely, Silvino Rabago,
Vicente Untalan Ruperto Balsams rid Natalio Nisperos The complaint
was docketed as Case No. Z728-ULP of the Court of Industrial
Relations. 5
The acting prosecutor of the Court of Industrial Relations filed an
amended complaint in Case No. 2728-ULP dated July 14, 1961 adding
as complainants Ricardo Trajano and Salvador de Leon. 6
It was alleged in the amended complaint that the Manco Labor Union,
through its President, for no other valid cause except for the

resignation of some of its members and the active campaign of the


Manila Cordage Workers Union in recruiting members, knowingly and
unlawfully influenced and connived with officers of the Manila
Cordage Company in the dismissal of Silvino Rabago, Vicente Untalan
Ruperto Balsams Natalio Nisperos Ricardo Trajano and Salvador de
Leon, who had resigned from the Manco Labor Union and joined the
Manila Cordage Workers Union.
The Manco Labor Union averred in its answer that the complainants
were dismissed on the basis of an existing collective bargaining
contract between said union and the Manila Cordage Company. 7
The Manila Cordage Company alleged that said company had entered
into a valid collective bargaining contract with the Manco Labor
Union, a bona fide legitimate labor organization, then recognized as
the sole and exclusive bargaining agent for all the employees of the
respondent company; that one of the conditions of employment
provided in said collective bargaining agreement is the maintenanceof-membership clause requiring all members of the Manco Labor
Union to remain as such members thereof during the life of the
contract; that the Manco Labor Union demanded of the Manila
Cordage Company the dismissal of the individual complainants from
employment for the reason that said complainants had failed to
continue and maintain their membership in the union; that acting in
good faith and in pursuance of its obligations under the said contract,
respondent company had to terminate the employment of said
complainants, otherwise the Manila Cordage Company would be
charged with contractual breach and confronted with the Manco Labor
Union's reprisal. 8
After trial the respondent Court of Industrial Relations rendered a
decision dated May 4, 1966 ordering the petitioner, Cordage Company,
and the Manco Labor Union "To reinstate complainants Silvino
Rabago, Natalio Nisperos and Ricardo Trajano to their former
positions and with all the rights and privileges formerly appertaining
thereto and to pay jointly and severally their back wages from the time
of their respective dismissals on January 27, 1961, February 3, 1961,
and May 2, 1961 tip to the date of their actual reinstatements, minus
their hearings elsewhere, if any. 9
The motions for reconsideration of the Manila Cordage Company and
the Manco Labor Union were denied by the Court of Industrial
Relations in a resolution en banc dated October 19, 1966. 10 However,

the Presiding Judge voted for the modification of the decision dated
May 4, 1966 by eliminating therefrom the award of back wages. He
concurred in the reinstatement of complainants Nisperos Trajano and
Rabago. 11
The petitioner Manila Cordage Company assigns the following errors:
I
THE LOWER COURT ERRED IN NOT HOLDING THAT, UNDER
THE MAINTENANCE-OF-MEMBERSHIP' CLAUSE IN THE
COLLECTIVE BARGAINING AGREEMENT BETWEEN THE
PETITIONER ('COMPANY') AND MANCO LABOR UNION
MANCO EMPLOYEES OF THE COMPANY WHO ARE ALREADY
MEMBERS OF MANCO WHEN SAID AGREEMENT TOOK
EFFECT WERE REQUIRED TO REMAIN SUCH MEMBERS AS A
CONDITION OF CONTINUED EMPLOYMENT IN THE
COMPANY.
II
THE LOWER COURT ERRED IN NOT HOLDING THAT
INDIVIDUALS, WHOSE EMPLOYMENT HAS CEASED DUE TO
ALLEGED UNFAIR LABOR PRACTICES AND WHO HAVE NOT
SOUGHT OTHER SUBSTANTIALLY EQUIVALENT AND
REGULAR EMPLOYMENT, CEASE TO BE 'EMPLOYEES'
WITHIN THE MEANING OF SECTION 2 (d) OF REPUBLIC ACT
NO. 875, AS AMENDED, AND HENCE, ARE NOT ENTITLED TO
PROTECTION AND RELIEF UNDER This ACT.
III
THE LOWER COURT ERRED IN NOT HOLDING THAT
INDIVIDUALS DISMISSED PURSUANT TO A UNION
SECURITY CLAUSE ARE NOT ENTITLED TO BACK WAGES,
WHEN THEIR EMPLOYER EFFECTED THEIR DISMISSAL IN
GOOD FAITH AND IN AN HONEST BELIEF THAT THE CLAUSE
AUTHORIZED SUCH DISMISSAL.
IV
THE LOWER COURT ERRED IN NOT DISMISSING THE
COMPLAINT. 12
Anent the first error assigned, the petitioner avers:
It should be emphasized strongly that this is virtually a case of first
impression in this jurisdiction, We are not aware of any decision of this
Tribunal squarely determinative of the principal issue in this petition.
For this reason, it should be appropriate to consider American

jurisprudence which is the source of most of our law on labor


relations. (Flores vs. San Pedro, L-8580, September 30, 1957.)
Decisions of American federal and state courts as well as the
comments of recognized American treatise writers uniformly define a
maintenance-of-membership provision as one which requires all
employees who are already members of the union at the time the
provision takes effect to remain such members during the life thereof
-is a condition of continued employment. (NLRB vs. Eaton Mfg. Co.
[6th Cir. 1949]175 F2d 292, 16 Lab Cas 75, 761; Markham & Callow
vs. International Woodworkers, 175 P2d 727, 170 or 517 [1943];
Walter vs. State, 38 Sold 609, 34 AlaApp 268 [1949]; Colonial Press
vs. Ellis 74 NE2d 1, 321 Mass 495; Rothenberg on Labor Relations,
49-50; Mathews Labor Relations and the Law 448; Prentice-Hall
Labor Course, Par. 12, 204, also at 914; 3 CCH Labor Law Reporter
[Labor Relations], Pat. 4520. ) 13
It is not necessary to consider American jurisprudence. The issue of
whether or not the so-called "maintenance-of membership" clause
requires all employees who were already members of the Manco Labor
Union at the time the said clause took effect to remain members of the
union during the life of the collection bargaining agreement as a
condition of continued employment may be resolved under the
constitution and relevant Philippine jurisprudence.
It is a fact that the complainants were employees of the Manila
Cordage Company and members of the Manco Labor Union when the
following stipulation was included in the collective bargaining
agreement:
IV MAINTENANCE OF MEMBERSHIP
Both parties agree that all employees of the COMPANY who are
already members of the UNION at the time of the signing of this
AGREEMENT shall continue to remain members of the UNION for
the duration- of this AGREEMENT" (Exhibits '5-B' and '6-B'
Company ). 14
The foregoing stipulation, however, does not clearly state that
maintenance of membership in the Manco Labor Union is a condition
of continuous employment in the Manila Labor Cordage Company.
In consonance with the ruling in Confederated Sons of Labor vs.
Anakan Lumber Co., et al., 107 Phil. 915, in order that the Manila
Cordage Company may be deemed bound to dismiss employees who
do not maintain their membership in the Manco Labor Union, the

stipulation to this effect must be so clear as to leave no room for doubt


thereon An undertaking of this nature is so harsh that it must be strictly
construed and doubts must be resolved against the existence of the
right to dismiss.
Apparently aware of the deficiency of the maintenance- of
membership clause, the petitioner urges that the same should be
construed together with the "Whereas" provision of the contract which
reads:
WHEREAS, the parties hereto nave decided to enter into an agreement
relating to the terms and conditions of employment and reference to
those employees to whom 7 the provisions of this AGREEMENT
apply." (Exhibits '5-A' and '?-A-Company) 15
Anent this point, the Court of Industrial Relations through 'Judge
Amando Bugayong ruled:
But whether read disjunctively or conjunctively, these two provisions
would not justify the interpretation which respondent company would
want to attribute to the same. For said whereas' proviso neither refers
to tenure of duration of employment which is tile issue in the case at
bar but only to terms and conditions of employment such as working
hours. wages, other benefits and privileges clearly specified therein.
We need not stretch our imagination too far to know the difference
between or duration of employment from terms and conditions of
employment. Besides even on the assumption that 'terms and
conditions of employment' covers continuity or period of employment,
the ambiguity of the provision should not adversely affect
complainants. Hence, even with the conjuctive interpretation, these
two provisions can not supplant the omission of and said maintenance
of membership clause, let alone cure the act of the same This is
especially so if the rule which states that in case of inconsistency a
particular provision like the disputed maintenance of membership
clause prevails over or controls a general provision, such as
'WHEREAS' proviso, invoked by respondents, is to be applied to the
interpretation of this doubtful provision (Rule 130(4), Section 10, New
Rules of Court). 16
To construe the stipulations above-quoted as imposing as a condition
to continued employment in the Manila Cordage Company the
maintenance of membership in the Manco Labor Union is to violate
the natural and constitutional right of the laborer to organize

freely. 17 Such interpretation would be inconsistent with the


constitutional mandate that the State shall afford protection to labor. 18
The respondent Court of Industrial Relations correctly found that the
disputed "maintenance-of-membership" clause in question did not give
the Manila Cordage Company the right to dismiss just because they
resigned as members of the Manco Labor Union.
There is a showing that the dismissed complainants sought our
substantially equivalent and regular employment. They failed to find
any.
The contention n of the petitioners that they acted in good faith in
dismissing the complainants and, therefore, should not be field liable
to pay their back wages has no merit. The dismissal of the
complainants by the petitioners was precipitate and done with undue
haste. Considering that the so-called "maintenance to membership'
clause did it clearly the petitioners the right to dismiss the
complainants if said complainants did not maintain their membership
in the Manco Labor Union, the petitioners should have raised the issue
before the Court of Industrial Relations in a petition for permission to
dismiss the complainants.
However, considering the circumstances and equity of the case, the
petitioners should be held liable to pay the back wages of the
complainants for a period of two years only from the date they were
respectively dismissed. 19
The reinstatement order of respondent Court of Industrial Relations of
complainants Silvino Rabago, Natalio Nisperos and Ricardo Trajano to
their former positions and with all the rights arid privileges formerly
appertaining thereto is correct (supra, p. 2). Such reinstatement now is
of course subject to said complainants still being within the required
physical and age requirements, but any physical or medical
examination to which they may be subjected is to be given them as old
reinstated workers, but not as a precondition to their reinstatement.
Our ruling in Davao Free Workers Front vs. CIR, 60 SCRA 408, 425,
is fully applicable mutatis mutandis in the case at bar as follows:
... The filing and pendency of an unfair labor practice case as in the
case at bar presupposes a continuing employer-employee relationship
and when the case is decided in favor of the workers, this relationship
is in law deemed to have continued uninterruptedly notwithstanding
their unlawful dismissal or the lawful strike and stoppage of work, and
hence, seniority and other privileges are preserved in their favor, To

require them to undergo a physical or medical examination ad a


precondition of reinstatement or return to work simply because of the
long pendency of their case which is due to no fault of theirs would not
only defeat the purpose of the law and the constitutional and statutory
mandates to protect labor but would work to their unfair prejudice as
aggrieved parties and give an undue advantage to employers as the
offenders who have the means and resources to wage attrition and
withstand the bane of protracted litigation.
Hence, the aggrieved workers may be subjected to periodic physical or
medical examination as old reinstated workers, but not as a
precondition to their reinstatement or return to work with the important
consequence that if they are found to be ill or suffering from some
disability, they would be entitled to all the benefits that the laws and
company practices provide by way of compensation, medical care,
disability benefits and gratuities. etc. to employees and workers.
WHEREFORE, the decision appealed from is hereby affirmed with the
sole modification that the backwages which both the petitioners are
ordered, jointly and severally, to pay the complainants Silvino Rabago,
Natalio Nisperos and Ricardo Trajano are hereby fixed at the
equivalent of two years pay without deduction or qualification
computed on the basis of their wages at the time of their respective
dismissals on January 27, 1961, February 3, 1961 and May 2, 1961.
Without pronouncement as to costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Mu;oz-Palma, Martin and
Guerrero, JJ., concur.