SECOND DIVISION

[G. R. No.101738. April 12, 2000]

PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner, vs. HON.

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

DECISION

DE LEON, JR., J.: Miso

Before us is a petition for certiorari seeking to annul the Resolution[1] and

the Order[2] dated April 17, 1991 and August 7, 1991, respectively, of public
respondent Bienvenido E. Laguesma, acting then as Undersecretary, now the
Secretary, of the Department of Labor and Employment (DOLE), which
reversed the Order dated March 27, 1990[3] of Med-Arbiter Phibun D. Pura
declaring that supervisors and section heads of petitioner under its new
organizational structure are managerial employees and should be excluded
from the list of voters for the purpose of a certification election among
supervisory and technical staff employees of petitioner.[4]

The facts of the case are the following:

Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged

in the manufacture of paper and timber products, with principal place of
operations at Tabon, Bislig, Surigao del Sur. It has over 9,000[5] employees,
944[6] of whom are supervisory and technical staff employees. More or less

487 of these supervisory and technical staff employees are signatory

members of the private respondent PICOP-Bislig Supervisory and Technical
Staff Employees Union (PBSTSEU).[7]

On August 9, 1989. PBSTSEU instituted a Petition[8] for Certification Election

to determine the sole and exclusive bargaining agent of the supervisory and
technical staff employees of PICOP for collective bargaining agreement (CBA)
purposes.

In a Notice[9] dated August 10, 1989, the initial hearing of the petition was
set on August 18, 1989 but it was reset to August 25, 1989, at the instance
of PICOP, as it requested a fifteen (15) day period within which to file its
comments and/or position paper. But PICOP failed to file any comment or
position paper. Meanwhile, private respondents Federation of Free Workers
(FFW) and Associated Labor Union (ALU) filed their respective petitions for
intervention.

On September 14, 1989, Med-Arbiter Arturo L. Gamolo issued an Order[10]

granting the petitions for interventions of the FFW and ALU. Another
Order[11] issued on the same day set the holding of a certification election
among PICOP's supervisory and technical staff employees in Tabon, Bislig,
Surigao del Sur, with four (4) choices, namely: (1) PBSTSEU; (2) FFW; (3) ALU;
and (4) no union. Nex old

On September 21, 1989, PICOP appealed[12] the Order which set the holding
of the certification election contending that the Med-Arbiter committed grave
abuse of discretion in deciding the case without giving PICOP the opportunity
to file its comments/answer, and that PBSTSEU had no personality to file the
petition for certification election.

After PBSTSEU filed its Comments[13] to petitioner's appeal, the Secretary of

the Labor[14] issued a Resolution[15] dated November 17, 1989 which
upheld the Med-Arbiter's Order dated September 17, 1989, with modification
allowing the supervising and staff employees in Cebu, Davao and Iligan City
to participate in the certification election.

During the pre-election conference on January 18, 1990, PICOP questioned

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

Following the submission by the parties of their respective position

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

PBSTSEU appealed[22] the Order of the Med-Arbiter to the Office of the

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

PICOP sought[26] reconsideration of the Order dated April 7, 1991. However,

public respondent in his Order[27] dated August 7, 1991 denied PICOP's
motion for reconsideration.

Hence, this petition.

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

I.

THE PUBLIC RESPONDENT HONORABLE BIENVENIDO E. LAGUESMA,

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

II.

THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA, ALSO

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

PICOP's main thesis is that the positions Section Heads and Supervisors, who
have been designated as Section Managers and Unit Managers, as the case
may be, were converted to managerial employees under the decentralization
and reorganization program it implemented in 1989. Being managerial
employees, with alleged authority to hire and fire employees, they are
ineligible for union membership under Article 245[29] of the Labor Code.
Furthermore, PICOP contends that no malice should be imputed against it for
implementing its decentralization program only after the petition for
certification election was filed inasmuch as the same is a valid exercise of its

management prerogative, and that said program has long been in the
drawing boards of the company, which was realized only in 1989 and fully
implemented in 1991. PICOP emphatically stresses that it could not have
conceptualized the decentralization program only for the purpose of
"thwarting the right of the concerned employees to self-organization."

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

First. In United Pepsi-Co/a Supervisory Union (UPSU) v. Laguesma,[30] we

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

In the petition before us, a thorough dissection of the job description[34] of

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

Second. No denial of due process can be ascribed to public respondent

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

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

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

SO ORDERED.

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU),

vs.
HON. BIENVENIDO E. LAGUESMAFACTS:
Petitioner is a union of supervisory employees. It appears that on March 20,
1995 the union fileda 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
andEmployment, 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 supervisoryemployees
.

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 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 formunions, associations, or
societies for purposes not contrary to law shall not be abridged.
ISSUES
:1) whether or not the route managers at Pepsi-Cola Products Philippines, Inc.
are managerial employeesand2) whether or not Art. 245, insofar as it
prohibits managerial employees from forming, joining or assistinglabor
unions, violates Art. III, 8 of the Constitution.
RULING:
1)
YES. 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 operatingemployees to accomplish
objectives set by those above them. They are not mere functionaries
withsimple oversight functions but business administrators in their own
right.supervisory employees are those who, in the interest of the employer,
effectively

recommend
suchmanagerial actions if the exercise of such authority is not merely
routinary or clerical in nature butrequires the use of independent judgment."
Thus, their only power is to recommend. Certainly, theroute managers in this
case more than merely recommend effective management action. They
performoperational, human resource, financial and marketing functions for
the company, all of which involvethe laying down of operating policies for
themselves and their teamsThe term "manager" generally refers to "anyone
who is responsible for subordinates and other organizational resources."
Managers constitute three levels of a pyramid:
FIRST-LINE MANAGERS
: The lowest level in an organization at which individuals are responsiblefor
the work of others is called
first-line or first-level management
. First-line managers direct operatingemployees only; they do not supervise
other managers

MIDDLE MANAGERS:
Middle managers direct the activities of other managers and sometimes
alsothose of operating employees. Middle managers' principal responsibilities
are to direct the activitiesthat implement their organizations' policies and to
balance the demands of their superiors with thecapacities of their
subordinates
TOP MANAGERS:
Composed of a comparatively small group of executives,
top management
isresponsible for the overall management of the organization. It establishes
operating policies and guidesthe organization's interactions with its
environmentIn the Case, entitled
Worker's Alliance Trade Union (WATU) v
.
Pepsi-Cola Products Philippines, Inc

.,decided on November 13, 1991, the Secretary of Labor found: we find that
only those employeesoccupying the position of route manager and
accounting manager are managerial employees.2)NO. The real intent of Art.
III, 8 is evident in Lerums proposal. The Commission intended theabsolute
right to organize of government workers, supervisory employees, and
security guards to be constitutionally guaranteed. By implication, no similar
absolute constitutional right to organizefor labor purposes should be deemed
to have been granted to top-level and middle managers. Nor is the
guarantee of organizational right in Art. III,

8 infringed by a ban against managerialemployees forming a union. The right

guaranteed in Art. III,

8 is subject to the condition that itsexercise should be for purposes "not

contrary to law." In the case of Art. 245, there is a rational basisfor
prohibiting managerial employees from forming or joining labor
organizationsIn
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 thesemanagerial 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.

Central Negros Electric Cooperative vs DOLE

GR 94045

Facts:

On August 15, 1987, CENECO entered into a collective bargaining agreement

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

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

Prior to the submission of the proposal for CBA renegotiation, CURE

members, in a general assembly held on December 9, 1989, approved
Resolution No. 35 whereby it was agreed that tall union members shall
withdraw, retract, or recall the union members membership from Central
Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under
the existing Collective Bargaining Agreement entered into by and between
CENECO and CURE, and the supposed benefits that our union may avail of
under the renewed CBA.

However, the withdrawal from membership was denied by CENECO on

February 27, 1990 under Resolution No. 90.

Issue: WON the employees of CENECO who withdrew their membership from
the cooperative are entitled to form or join CURE for purposes of the
negotiations for a collective bargaining agreement proposed by the latter.

Held:

The right of the employees to self-organization is a compelling reason why

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

Thus, member employees of a cooperative may withdraw as members of the

cooperative in order to join labor union. Membership in a cooperative is
voluntary; inherent in it is the right not to join.

NOTES: (San Jose Electric Service Cooperative vs. Ministry of Labor)

1. A cooperative, therefore, 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.

2. 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. Employees of
cooperatives who are themselves members of the cooperative have no right
to form or join labor organizations for purposes of collective bargaining for
being themselves co-owners of the cooperative.

3. However, in so far as it involves cooperatives with employees who are not

members or co-owners thereof, certainly such employees are entitled to
exercise the rights of all workers to organization, collective bargaining,
negotiations and others as are enshrined in the Constitution and existing
laws of the country.

Today is Friday, December 19, 2014

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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 BWLU- ADLO) 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 med-arbiter limited the
election among the rank and file employees of petitioner who are nonmembers 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 (nonmembers/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 members-consumers 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 eighty-three (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 memberconsumers 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 med-arbiter'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. 9-10; 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 of Batangas-Electric 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 selforganization, 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 self-organization.

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 coowners 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 members-employees 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 as-exemption 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 co-owner

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 thirtyseven (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 eightythree (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 nonmembers 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.

Today is Friday, December 19, 2014

search

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 77951

September 26, 1988

COOPERATIVE RURAL BANK OF DAVAO CITY, INC., petitioner,

vs.
PURA FERRER-CALLEJA, DIRECTOR, BUREAU OF LABOR RELATIONS, MOLE,
MANILA; FELIZARDO T. SERAPIO, MED-ARBITER DESIGNATE, REGIONAL
OFFICE NO. XI, MOLE, DAVAO CITY; and FEDERATION OF FREE WORKERS,
respondents.

Herbert P. Artes for petitioner.

The Solicitor General for Public respondent.

GANCAYCO, J.:

This is a Petition for certiorari under Rule 65 of the Rules of Court where the
issue is whether or not the employees of a cooperative can organize
themselves for purposes of collective bargaining.

The record of the case discloses that the herein petitioner Cooperative Rural
Bank of Davao City, Inc. is a cooperative banking corporation operating in
Davao City. It is owned in part by the Government and its employees are
members and co-owners of the same. The petitioner has around 16 rankand-file employees. As of August, 1986, there was no existing collective
bargaining agreement between the said employees and the establishment.
On the other hand, the herein private respondent Federation of Free Workers
is a labor organization registered with the Department of Labor and

Employment. It is interested in representing the said employees for purposes

of collective bargaining.

On August 27, 1986, the private respondent filed with the Davao City
Regional Office of the then Ministry of Labor and Employment a verified
Petition for certification election among the rank-and-file employees of the
petitioner. 1 The same was docketed as Case No. R-325 ROXI MED-UR-73-86.
On September 18, 1986, the herein public respondent issued an Order
granting the Petition for certification election.

On October 3, 1986, the petitioner filed an Appeal Memorandum and sought

a reversal of the Order of the Med-Arbiter. 2 The petitioner argues therein
that, among others, a cooperative is not covered by the Rules governing
certification elections inasmuch as it is not an institution operating for profit.
The petitioner also adds that two of the alleged rank-and-file employees
seeking the certification election are managerial employees disqualified from
joining concerted labor activities. In sum, the petitioner insists that its
employees are disqualified from forming labor organizations for purposes of
collective bargaining.

On October 8, 1986, the private respondent filed a "Motion to Dismiss the

Appeal." On October 15, 1986, the petitioner filed its opposition to the said
Motion.

On February 11, 1987, the herein public respondent Bureau of Labor

Relations Director Pura Ferrer-Calleja issued a Resolution affirming the Order
of the Med-Arbiter and dismissing the Appeal. 3 The pertinent portions of the
said Resolution are as follows

It is beyond doubt that respondent-appellant, Cooperative Rural Bank of

Davao City falls within the purview of Article 212, paragraph C of the Labor
Code, acting as such in the interest of an employer. To argue otherwise would
amount to closing one's eyes to the realities of today's cooperative banking
institutions. ....

Moreover, basic is the right of every worker in any establishment whether

operated for profit or not to organize and engage in concerted activity,
mutually beneficial to their interest. Such right is sacredly enshrined and
protected in our fundamental law, granting every worker the right to
organize into a collective group and engage in concerted activities for
purposes of promoting their well being, subject only to such limitations as
may be provided for by law.

xxx

xxx

xxx

As this Office has consistently ruled and applied in various cases, being a
member of a cooperative organization does not preclude one from forming or
joining a labor union provided that such person or persons are not among
those disqualified by law. Nowhere in the records can we find any piece of
evidence showing that the signatories in the petition are among those
disqualified to form or join a union.

Finally, we cannot give credence to (the) employer's allegation that two of

the signatories thereof, are managerial employees, since no evidence
showing such fact can be found from the records.

xxx

xxx

xxx

In a Motion dated March 2, 1987, the petitioner asked for a reconsideration of

the said Resolution. 4 The petitioner reiterated therein its view that its
employees are disqualified from forming the labor organization so
contemplated. The petitioner also called attention to an Opinion rendered by
then Solicitor General and Minister of Justice Estelito P. Mendoza dated
August 14, 1981. 5 The Opinion states that employees of an electric
cooperative who are themselves members/co-owners of the same cannot
form or join labor organizations for purposes of collective bargaining. The
Opinion also states that the duty to bargain exists only between an employer
and his/its employees, and that an employer has no duty to bargain with his
co-owners of a corporation who are also its employees. The petitioner
submits that the said Opinion calls for application in the present controversy.

On March 26, 1987, director Calleja issued a Resolution denying the

reconsideration sought by the petitioner. 6 Thus, the certification election
was scheduled in the morning of April 23, 1987.

Finding the action taken by the Bureau unsatisfactory, the petitioner brought
the case directly to this Court on April 9, 1987 by way of the instant Petition
for certiorari. The petitioner maintains that the public respondents both
acted without jurisdiction or in excess thereof, or with grave abuse of
discretion amounting to lack of jurisdiction, in allowing the certification
election sought by the private respondent despite the arguments of the
petitioner in opposition thereto. The petitioner reiterates its argument that
employees of cooperatives who are members and co-owners of the same
cannot form and join labor organizations for purposes of collective
bargaining.

On April 15, 1987, this Court issued a temporary restraining order enjoining
the Bureau of Labor Relations from proceeding with the certification election
scheduled on April 23, 1987. 7 The certification election nonetheless pushed
through as scheduled for the alleged reason that the temporary restraining
order was not seasonably transmitted to Davao City. 8

This court also required the respondents to file their Comment on the
Petition. The respondents complied as instructed. The Office of the Solicitor
General represented the public respondents.

The Solicitor General intimated to this Court that the instant Petition has
been rendered moot and academic inasmuch as the certification election
sought to be enjoined had already been conducted. The Solicitor General
added that the public respondents did not commit any jurisdictional error. 10

In due time, the parties submitted other pleadings. On January 6, 1988, the
case was deemed submitted for decision.

After a careful examination of the entire record of the case, We find the
instant Petition meritorious.

Contrary to the view espoused by the Solicitor General, this case cannot be
considered moot and academic simply because the certification election
sought to be enjoined went on as scheduled. The instant Petition is one for
certiorari as a special civil action. Errors of jurisdiction on the part of the
public respondents are alleged in the Petition itself. If the public respondents
had indeed committed jurisdictional errors, the action taken by both the MedArbiter and the Bureau Director will be deemed null and void ab initio. 11
And if this were so, the certification election would, necessarily, have no
legal justification. The arguments raised in the instant Petition strike at the
very heart of the validity of the certification election itself.

We come now to the main aspect of the case.

Article 243 of the Labor Code 12 enumerates who are eligible to form, join, or
assist labor organizations for purposes of collective bargaining, to wit

ART. 243. Coverage and employees' right to self-organization. All persons

employed in commercial, industrial and agricultural enterprises and in
religious, charitable, medical or educational institutions whether operating
for profit or not, shall have the right to self-organization and to form, join, or
assist labor organizations of their own choosing for purposes of collective
bargaining. ....

The recognized exception to this enumeration is found in Article 245 of the

same code, which provides for the ineligibility of managerial employees to
join any labor reorganization, viz-

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

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

From the foregoing provisions of law it would appear at first blush that all the
rank and file employees of a cooperative who are not managerial employees
are eligible to form, join or assist any labor organization of their own
choosing for the purpose of collective bargaining.

However, under Section 2 of P.D. No. 175, a cooperative is defined to mean

"organizations composed primarily of small producers and of consumers who
voluntarily join together to form business enterprises which they themselves
own, control, and patronize." Its creation and growth were declared as a
policy of the State as a means of increasing the income and purchasing
power of the low-income sector of the population in order to attain a more
equitable distribution of income and wealth . 13 The principles governing it
are:

a)
Open membership"Should be voluntary and available without
artificial restriction, or any social, political, racial or religious discrimination,
to all persons who can make use of its services and are willing to accept
responsibilities of membership;"

b)
Democratic control."Irrespective of the number of shares owned,
each member can only cast one vote in deciding upon the affairs of the
cooperative;"

c)
Limited interests to capital. "Share capital shall earn only limited
interest, the maximum rate of interest to be established by the Department
of Local Government and Community Development from time to time;" and

d)
Patronage refund "Net income after the interest on capital has been
paid shall be redistributed among the members in proposition to their
patronage." 14

While cooperatives may exercise the same rights and privileges given to
persons, partnership and corporations provided under existing laws, operate
business enterprises of all kinds, establish rural banks, enjoy all the
privileges and incentives granted by the NACIDA Act and other government
agencies to business organizations under existing laws, to expropriate idle
urban or rural lands for its purposes, to own and dispose of properties, enter
into contracts, to sue and be sued and perform other acts necessary to
pursue its objectives, 15 such cooperatives enjoy such privileges as:

a)

Exemption from income tax and sales taxes;

b)
Preferential right to supply rice, corn and other grains, and other
commodities produced by them to State agencies administering price
stabilization program; and

c)
In appropriate cases, exemption from application of minimum wage law
upon recommendation of the Bureau of Cooperative Development subject to
the approval of the Secretary of Labor. 16

A cooperative development loan fund has been created for the development
of the cooperative movement. 17

It may be, further stated that the Department of Local Govemment and
Community Development through the Bureau of Cooperative Development is
vested with full authority to promulgate rules and regulations to cover the
promotion, organization, registration, regulation and supervision of all types
of cooperatives. 18 Electric cooperatives, however, are under the regulation
and supervision of the National Electrification Ad. Administration, 19 while it
is the Monetary Board of the Central Bank that has exclusive responsibility
and authority over the banking functions and operations of cooperative
banks . 20

A cooperative, therefore, 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 interests. They enjoy special privileges as exemption from income
tax and sales taxes, preferential right to supply their products to State
agencies and even exemption from the minimum wages laws.

An employee therefore of such a cooperative who is a member and co-owner

thereof cannot invoke the right to collective bargaining for certainly an owner
cannot bargain with himself or his co-owners. In the opinion of August 14,
1981 of the Solicitor General he correctly opined that employees of
cooperatives who are themselves members of the cooperative have no right

to form or join labor organizations for purposes of collective bargaining for

being themselves co-owners of the cooperative. 21

However, in so far as it involves cooperatives with employees who are not

members or co-owners thereof, certainly such employees are entitled to
exercise the rights of all workers to organization, collective bargaining,
negotiations and others as are enshrined in the Constitution and existing
laws of the country. 22

The questioned ruling therefore of public respondent Pura Ferrer-Calleja must

be upheld insofar as it refers to the employees of petitioner who are not
members or co-owners of petitioner. It cannot extend to the other employees
who are at the same time its members or co-owners.

The Court upholds the findings of said public respondent that no persuasive
evidence has been presented to show that two of the signatories in the
petition for certification election are managerial employees who under the
law are disqualified from pursuing union activities.

WHEREFORE, the herein petition is hereby GRANTED and the resolution of

public respondent Pura Ferrer-Calleja, Director, Bureau of Labor Relations, of
February 11, 1987 is hereby MODIFIED to the effect that only the rank and
file employees of petitioner who are not its members or co-owners are
entitled to self-organization, collective bargaining, and negotiations, while
the other employees who are members or co-owners thereof can not enjoy
such right.

SO ORDERED.

JUST CAUSES OF TERMINATION

ANITA-LLOSA TAN VS SILAHIS HOTEL MAY 27,1991
2.
GOLD CITY INTEGRATED PORTS VS NLRC SEPTEMBER 21, 1990
3.
ESCOBIN CS NLRC APRIL 15, 1998:
4.
CITIBANK VS GATCHALIAN JANUARY 18, 1995: LABOR VS
SEPTEMBER 14, 1995:
1.

NLRC

5.

MABEZA VS HOTEL SUPREME APRIL 18, 1997

RPROCEDURE:
1.
2.

SHOEMART VS NLRC AUGUST 11, 1989

MANEJA VS NLRC JUNE 5, 1998

STANDARDS OF DUE PROCESS:

1.
2.
3.
4.

SHOPPERS GAIN VS NLRC JULY 26, 1996

MAGNOLIA DAIRY PRODUCTS VS NLRC JANUARY 29, 1996:
ANSCOR TRANSPORT VS NLRC SEPTEMBER 28, 1990
HELLENIC PHIL VS E SIETE & NLRC MARCH 13, 1991

PREVENTIVE SUSPENSION:
1.

GLOBE MACKAY VS NLRC MARCH 3, 1992

FILING COMPLAINT FOR ILLEGAL DISMISSAL

1.

DAYAG VS CANIZARES, NLRC MARCH 6,1998

CONSEQUENCES OF TERMINATION:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

PLDT VS NLRC AUGUST 23, 1988

REYES VS MIN LAB FEBRUARY 9, 1989
INDUSTRIAL TIMBER VS NLRC FEBRUARY 14, 1996
SANTOS VS NLRC SEPTEMBER 21, 1987:
GEN BAPTIST BIBLE VS NLRC MARCH 5, 1993:
BUSTAMANTE VS NLRC NOVEMBER 28, 1996
ALA MODE GARMENTS VS NLRC FEBRUARY 17, 1997
PHIL TOBACCO FLUE-CURING VS NLRC DECEMBER 10, 1998)
GLOBE MACKAY VS NLRC MARCH 3, 1992)
DV QUIJANO VS MERCURY DRUG JULY 8, 1998
MARANAO HOTEL VS NLRC NOVEMBER 16, 1994
SUARIO VS BPI, APRIL 25, 1989
PRIMERO VS IAC 156 SCRA 435= 1987:
GARCIA VS NLRC 234 SCRA 632=1994

PERSONS LIABLE FOR WRONGFUL DISMISSAL:

1.

SUNIO VS NLRC 127 SCRA 390=1984

2.
3.
4.
5.
6.

ASIONICS PHIL VS NLRC MAY 19, 1998:

PABALAN VS NLRC APRIL 20, 1990
UICHICO VS NLRC JUNE 2, 1997
SENTINEL SECURITY VS NLRC SEPTEMBER 3, 1998
ROSEWOOD CS NLRC MAY 21, 1998

TERMINATION BY EMPLOYEE
1.
2.
3.

PHIMCO VS NLRC JUNE 11, 1997

CUSTODIO VS MOLE JULY 19, 1990
TRAVELAIRE & TOURS VS NLRC AUGUST 20, 1998

CONSTRUCTIVE DISMISSAL:
1.
2.
3.

PHILIPPINE JAPAN ACTIVE CARBON VS NLRC MARCH 8, 1989

V REYES VS NLRC AUGUST 31, 1989)
CONCRETE AGGREGATES VS NLRC SEPTEMBER 7, 1989

WHEN IS EMPLOYMENT NOT DEEMED TERMINATED?

1.
2.
6.
7.

VALDEZ VS NLRC
SENTINEL SECURITY VS NLRC SEPTEMBER 3, 1998
UFFY VS NLRC FEBRUARY 15, 1990
DIZON VS NLRC DECEMBER 14, 1989)

SECOND DIVISION
[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 MEDARBITER 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 MedArbiters 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 so-called 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 selforganization. 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.

Today is Friday, December 19, 2014

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Republic of the Philippines

SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 161933

April 22, 2008

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

vs.

STANDARD CHARTERED BANK and ANNEMARIE DURBIN, in her capacity as

Chief Executive Officer, Philippines, Standard Chartered Bank, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

For resolution is an appeal by certiorari filed by petitioner under Rule 45 of

the Rules of Court, assailing the Decision1 dated October 9, 2002 and
Resolution2 dated January 26, 2004 issued by the Court of Appeals (CA),
dismissing their petition and affirming the Secretary of Labor and
Employment's Orders dated May 31, 2001 and August 30, 2001.

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

On May 31, 2001, Secretary Patricia A. Sto. Tomas of the Department of

Labor and Employment (DOLE) issued an Order with the following dispositive
portion:

WHEREFORE, PREMISES CONSIDERED, the Standard Chartered Bank and the

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

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

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

SO ORDERED.3

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

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

Hence, herein petition based on the following grounds:

I.

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

II.

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

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

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

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

In their proposal, petitioner sought the exclusion of only the following

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

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

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

B. One confidential secretary of each of the:

1. Chief Executive, Philippine Branches

2. Deputy Chief Executive/Head, Corporate Banking Group

3. Head, Finance

4. Head, Human Resources

5. Manager, Cebu

6. Manager, Iloilo

7. Covenanted Officers provided said positions shall be filled by new recruits.

C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and
in any other branch that the BANK may establish in the country.

D. Personnel of the Telex Department

E. All Security Guards

F. Probationary employees, without prejudice to Article 277 (c) of the Labor

Code, as amended by R.A. 6715, casuals or emergency employees; and

G. One (1) HR Staff11

The Secretary, however, maintained the previous exclusions because

petitioner failed to show that the employees sought to be removed from the
list qualify for exclusion.12

With regard to the remuneration of employees working in an acting capacity,

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

The Secretary's disposition of the issues raised by petitioner were affirmed

by the CA.13 The Court sustains the CA.

Whether or not the employees sought to be excluded from the appropriate

bargaining unit are confidential employees is a question of fact, which is not
a proper issue in a petition for review under Rule 45 of the Rules of Court.14

This holds more true in the present case in which petitioner failed to
controvert with evidence the findings of the Secretary and the CA.

The disqualification of managerial and confidential employees from joining a

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

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

As regards the qualification of bank cashiers as confidential employees,

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

Golden Farms, Inc. v. Ferrer-Calleja18 meanwhile stated that "confidential

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

Finally, in Philips Industrial Development, Inc. v. National Labor Relations

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

Petitioner insists that the foregoing employees are not confidential

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

While We agree that petitioner's proposed revision is in accordance with the

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

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

Petitioner cannot simply rely on jurisprudence without explaining how and

why it should apply to this case. Allegations must be supported by evidence.
In this case, there is barely any at all.

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

Likewise, We uphold the public respondent's Order that no employee should

be temporarily placed in a position (acting capacity) for more than one
month without the corresponding adjustment in the salary. Such order of the
public respondent is not in violation of the "equal pay for equal work"
principle, considering that after one (1) month, the employee performing the

job in an acting capacity will be entitled to salary corresponding to such

position.

xxxx

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

Thus, the Court reiterates the doctrine that:

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

WHEREFORE, the petition is DENIED.

SO ORDERED.

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

Footnotes

1 Penned by Associate Justice Elvi John S. Asuncion, with Associate Justices

Portia Alio-Hormachuelos and Juan Q. Enriquez, Jr., concurring; rollo, pp. 2731.

2 Id. at 25.

3 CA rollo, p. 42.

4 Id. at 17-23.

5 Id. at 243-246.

6 Id. at 268.

7 Rollo, p. 14.

8 Metropolitan Bank and Trust Company, Inc. v. National Wages and

Productivity Commission, G.R. No. 144322, February 6, 2007, 514 SCRA 346,
360.

9 CA rollo, p. 37.

10 Id. at 102.

11 Id. at 105.

12 Id. at 37.

13 Id. at 246.

14 Kabankalan Catholic College v. Kabankalan Catholic College UnionPACIWU-TUCP, G.R. No. 157320, June 28, 2005, 461 SCRA 481, 491.

15 Metrolab Industries, Inc. v. Roldan-Confesor, 324 Phil. 416 437-438

(1996).

16 G.R. No. 93468, December 29, 1994, 239 SCRA 546.

17 Id. at 559.

18 G.R. No. 78755, July 19, 1989, 175 SCRA 471.

19 Id. at 477.

20 G.R. No. 88957, June 25, 1992, 210 SCRA 339, 347-348.

21 Rollo, p. 29.

22 Id. at 29-30.

23 Telefunken Semiconductors Employees Union-FFW v. Court of Appeals,

401 Phil. 776, 791-792 (2000).

The Lawphil Project - Arellano Law Foundation