Republic of the PhilippinesSUPREME 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 rank-and-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. 1The 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. 6Thus, 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 Med-Arbiter 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.

Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 143616       May 9, 2001

NEGROS ORIENTAL ELECTRIC COOPERATIVE 1 (NORECO1), represented by ATTY. SUNNY R.A. MADAMBA, as General Manager, petitioner, vs.THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE), and PACIWU-NACUSIP, NORECO 1 Chapter of Bindoy, Negros Oriental, respondents.

GONZAGA-REYES, J.:

Petitioner assails the Decision of the Court of Appeals1 dated August 20, 1999 dismissing its petition for certiorari in C.A.-G.R. SP No. 50295 and the order denying its Motion for Reconsideration therefrom.

The antecedents are recited by the Court of Appeals as follows:

"It appears that on December 4, 1997, some employees of the petitioner organized themselves into a local chapter of the Philippine Agricultural Commercial and Industrial Workers' Union - Trade Union Congress of the Philippines (PACIWU-TUCP). The private respondent-union submitted its charter certificate and supporting documents on the same date.1âwphi1.nêt

On December 10, 1997, PACIWU-TUCP filed a petition for certification election on behalf of the NORECO 1 chapter, seeking to represent the seventy-seven (77) rank-and-file employees of NORECO 1. PACIWU-TUCP alleged in its petition that it had created a local chapter in NORECO 1 which had been duly reported to the DOLE Regional Office (Region VII) on December 4, 1997. It was further averred therein that NORECO 1 is an unorganized establishment, and that there is no other labor organization presently existing at the said employer establishment.

The Med-Arbiter dismissed the petition in an order dated December 23, 1997, which stated that:

'It appears in the records of this Office that the petitioner has just applied for registration. The corresponding certificate has not yet been issued. Accordingly, it has not yet acquired the status of a legitimate labor organization.

The instant petition, not having been filed by legitimate labor organization, the same is hereby DENIED.

WHEREFORE, this case is DISMISSED. 1âwphi1.nêt

SO ORDERED.'

PACIWU-TUCP filed a Motion for Reconsideration of the said order, which was treated as an appeal by the public respondent. On July 31, 1998, the public respondent rendered the assailed judgment as previously quoted.2 The petitioner filed a Motion for Reconsideration on August 24, 1998, but the same was denied in a Resolution dated September 21, 1998."3

The appellate court ruled that the Secretary of Labor properly treated PACIWU-TUCP's Motion for Reconsideration as an appeal, and held that the said chapter is deemed to have acquired legal personality as of December 4, 1997 upon submission of the documents required under the Omnibus Rules for the creation of a local chapter. The said court also dismissed petitioner's contention assailing the composition of the private respondent union.

Motion for Reconsideration of the above decision was denied. Hence this petition for review on certiorari which submits the following arguments in support thereof:

"I. THE COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED PRINCIPLE THAT THE PERIOD TO APPEAL CANNOT BE EXTENDED AND THUS THE RESPONDENT SECRETARY OF LABOR HAS NO JURISDICTION TO REVERSE THE DECISION OF THE MED-ARBITER, BECAUSE THE APPEAL HAS NOT BEEN PERFECTED ON TIME;

II. THE COURT OF APPEALS DECIDED THIS CASE CONTRARY TO THE DECISION OF THE SUPREME COURT IN THE CASE OF TOYOTA MOTOR PHILIPPINES VS. TOYOTA MOTOER PHILIPPINES CORPORATION UNION AND

THE SECRETARY OF LABOR AND EMPLOYMENT, G.R. NO. 121084, FEBRUARY 19, 1997, BY COMPLETELY IGNORING THE TOYOTA CASE WHICH IS ON FOUR SQUARE WITH THIS CASE, WHEN THE COURT OF APPEALS SUSTAINED THE ORDER FOR CERTIFICATION ELECTIONS IN SPITE OF THE EXISTENCE OF SUPERVISORY EMPLOYEES IN THE RANK AND FILE UNION OF THE RESPONDENT PACIWU-NACUSIP NORECO 1 CHAPTER;

III. THE COURT OF APPEALS ERRED IN ALLOWING CERTIFICATION ELECTIONS WHEN ALL THE MEMBERS OF THE UNION ARE MEMBERS OF THE COOPERATIVE."4

The first contention was correctly resolved by the Court of Appeals. Petitioner reiterates that the Motion for Reconsideration from the Decision of the Med-Arbiter was filed by PACIWU-NACUSIP out of time, i.e. beyond the ten (10) days allowed for filing such motion for reconsideration. The allegation of late filing is bare, it does not even specify the material dates, nor furnish substantiation of the said allegation. The Court of Appeals noted that the original record does not disclose the actual date of receipt by the private respondent of the order of the Med-Arbiter dismissing the petition for certification election, and hence it "cannot conclude that the Med-Arbiter's Decision had already become final and executory pursuant to Section 14, Rule XI Book V of the Omnibus Implementing Rules". Neither the present Petition or the Reply to Comment of Solicitor General for public respondent attempts to supply the omission and we are accordingly constrained to dismiss this assigned error concerning the timeliness of respondent's appeal to the Secretary of Labor.

In its Petition for Certiorari filed in the Court of Appeals dated November 7, 1998, the allegation that the Motion for Reconsideration filed by respondent PACIWU-NACUSIP was "filed out of time" was similarly unsubstantiated. Moreover, the issue was raised below for the first time in the Motion for Reconsideration filed by NORECO I (Motion dated August 22, 1998), and the Secretary of labor rejected the petitioner's contention for not having been seasonably filed; the DOLE Resolution stated categorically that:

"there being no question as to the timeliness of the filing of appellant's Motion for Reconsideration which was elevated to us by the Regional Office, the same can be treated as an appeal xxx".5

We find no cogent justification to reverse the finding on the basis of the records before us.

The second argument posited by petitioner is also without merit. Petitioner invokes Article 245 of the Labor Code and the ruling in Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Corporation Labor Union6 which declare the ineligibility of managerial or supervisory employees to join any labor organization consisting of rank and file employees for the reason that the concerns which involve either group "are normally disparate and contradictory". Petitioner claims that it challenged the composition of the union at the earliest possible time after the decision of the Med-Arbiter was set aside by the DOLE; and that the list of the names of supervisory or confidential employees was submitted with the petition for certiorari filed in the Court of Appeals, which did not consider the same. Petitioner further argues that the failure of the Secretary of Labor and the Court of Appeals to resolve this question constituted a denial of its right to due process.

The contentions are unmeritorious.

The issue was raised for the first time in petitioner's Motion for Reconsideration of the Decision of the Secretary of Labor dated July 13, 1998 which set aside the Order of the Med-Arbiter dated December 23, 1997 dismissing the PACIWU-TUCP's petition for certification election.7 In its

Resolution dated September 21, 1998, denying the Motion for Reconsideration, the Secretary of Labor categorically stated:

"On the fourth ground, in the cited case of Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union, 268 SCRA 573, the employer, since the beginning opposed the petition indicating the specific names of the supervisory employees and their respective job descriptions. In the instant case, movant not only belatedly raised the issue but miserably failed to support the same. Hence, between the belated and bare allegation of movant that "there are supervisory and confidential employees in the union" vis-à-vis the open and repeated declaration under oath of the union members in the minutes of their organizational meeting and the ratification of their Constitution and By-Laws that they are rank and file employees, we are inclined to give more credence to the latter. Again, in Cooperative Rural Bank of Davao City, Inc. vs. Ferrer-Calleja, supra, the Supreme Court held:

'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.'

In the instant case, there is no persuasive evidence to show that there are indeed supervisory and confidential employees in appellant union who under the law are disqualified to join the same."8

The above finding was correctly upheld by the Court of Appeals, and we find no cogent basis to reverse the same. Factual issues are not a proper subject for certiorari which is limited to the issue of jurisdiction and grave abuse of discretion. 1âwphi1.nêt

Indeed, the Court of Appeals cannot be expected to go over the list of alleged supervisory employees attached to the petition before it and to pass judgment in the first instance on the nature of the functions of each employee on the basis of the job description pertaining to him. As appropriately observed by the said court, the determination of such factual issues is vested in the appropriate Regional Office of the Department of Labor and Employment and pursuant to the doctrine of primary jurisdiction, the Court should refrain from resolving such controversies. The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence.9

The petitioner questions the remedy suggested by the Court of Appeals i.e., to file a petition for cancellation of registration before the appropriate Regional Office arguing that the membership of supervisory employees in the rank-and-file is not one of the grounds for cancellation of registration under the Omnibus Rules. Whether the inclusion of the prohibited mix of rank-and-file and supervisory employees in the roster of officers and members of the union can be cured by cancellation of registration under Article 238 et seq. of the Labor Code vis-à-vis Rule VIII of the Omnibus Rules, or by simple inclusion-exclusion proceedings in the pre-election conference,10 the fact remains that the determination of whether there are indeed supervisory employees in the roster of members of the rank-and-file union has never been raised nor resolved by the appropriate fact finding body, and the petition for certiorari filed in the Court of Appeals cannot cure the procedural lapse. It bears notice that unlike in Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Corp. Labor Union11 where the objection that "the union was composed of both rank-and-file and supervisory employees in violation of law" was promptly raised in the position paper to oppose the petition for certification election, and this objection was resolved by the Med-Arbiter, this issue was

belatedly raised in the case at bar and was sought to be ventilated only before the Court of Appeals in the petition for certiorari. Time and again, this Court has ruled that factual matters are not proper subjects for certiorari.12

The above observations are in point with respect to the last assigned error challenging the inclusion of members of the cooperative in the union. The argument that NORECO I is a cooperative and most if not all of the members of the petitioning union are members of the cooperative was raised only in the Motion for Reconsideration from the Decision of the Secretary of Labor dated July 31, 1998. The Secretary of Labor ruled that the argument should be rejected as it was not seasonably filed. Nevertheless the DOLE resolved the question in this wise:

"On the third ground, while movant correctly cited Cooperative Bank of Davao City, Inc. vs. Ferrer-Calleja, 165 SCRA 725, that "an employee of a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining…" it failed to mention the proviso provided by the Supreme Court in the same decision:

'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.

The questioned ruling therefore of public respondent Pura Ferrer-Calleja must be upheld in so far as it refers to the employees of petitioner who are not members or co-owners of petitioner.'

Not only did movant fail to show any proof that anyone of the union members are members or co-owners of the cooperative. It also declared that not all members of the petitioning union are members of the cooperative".13

The ruling was upheld by the appellate court thus:

"The petitioner is indeed correct in stating that employees of a cooperative who are members-consumers or members-owners, are not qualified to form, join or assist labor organizations for purposes of collective bargaining, because of the principle that an owner cannot bargain with himself. However, the petitioner failed to mention that the Supreme Court has also declared that 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.

The public respondent found that petitioner failed to show any proof that any member of the private respondent was also a member or co-owner of the petitioner-cooperative. Hence the members of the private respondent could validly form a labor organization."14

In the instant petition, NORECO 1 fails to controvert the statement of the Court of Appeals that the petitioner "failed to show any proof that any member of the private respondent was also a member or co-owner of the petitioner cooperative." More important, the factual issue is not for the Court of Appeals to resolve in a petition for certiorari. Finally, the instant petition ambiguously states that "NORECO1 is an electric cooperative and all the employees of the subject union are members of the cooperative", but submitted "a certified list of employees who are members-co-owners of the petitioner electric cooperative." Impliedly, there are rank-and-file employees of the petitioner who are not themselves members-co-owners, or who are the ones qualified to form or join a labor

organization. Again, the core issue raises a question of fact that the appellate court correctly declined to resolve in the first instance.1âwphi1.nêt

WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.

Melo, Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 94045 September 13, 1991

CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. (CENECO), petitioner, vs.HONORABLE SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT, and CENECO UNION OF RATIONAL EMPLOYEES (CURE), respondents.

Enrique S. Tabino for petitioner.

Edmundo G. Manlapao for private respondent.

 

REGALADO, J.:p

In this special civil action for certiorari, petitioner Central Negros Electric Cooperative, Inc. (CENECO) seeks to annul the order 1 issued by then Acting Secretary of Labor Bienvenido E. Laguesma on June 6, 1990, declaring the projected certification election unnecessary and directing petitioner CENECO to continue recognizing private respondent CENECO Union of Rational Employees (CURE) as the sole and exclusive bargaining representative of all the rank-and-file employees of petitioner's electric cooperative for purposes of collective bargaining.

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

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

Prior to the submission of the proposal for CBA renegotiation, CURE members, in a general assembly held on December 9, 1989, approved Resolution No. 35 whereby it was agreed that 'tall union members shall withdraw, retract, or recall the union members' membership from Central Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under the existing Collective

Bargaining Agreement entered into by and between CENECO and CURE, and the supposed benefits that our union may avail (of) under the renewed CBA. 3 This was ratified by 259 of the 362 union members. CENECO and the Department of Labor and Employment, Bacolod District, were furnished copies of this resolution.

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

By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition for direct recognition or for certification election, supported by 282 or 72% of the 388 rank-and-file employees in the bargaining unit of CENECO.

CENECO filed a motion to dismiss on the ground that there are legal constraints to the filing of the certification election, citing the ruling laid down by this Court in Batangas I Electric Cooperative Labor Union vs. Romeo A. Young, 5 (BATANGAS case) to the effect that "employees who at the same time are members of an electric cooperative are not entitled to form or join unions for purposes of collective bargaining agreement, for certainly an owner cannot bargain with himself or his co-owners."

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

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

Hence, this petition.

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

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

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

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

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

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

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

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

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

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

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

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

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

As discussed by the Solicitor General, Article I, Section 9 of the Articles of Incorporation and By- Laws of CENECO provides that "any member may withdraw from membership upon compliance with

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

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

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

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

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

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

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

under threat of being held liable for refusing to negotiate with a union whose right to bargaining status has not been legally established.

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

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

SO ORDERED.

Melencio-Herrera (Chairperson), Paras and Padilla, JJ., concur.

Sarmiento, J., is on leave.

Republic of the PhilippinesSUPREME 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 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 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 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 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 ofBatangas-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 co-owners 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 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 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 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, med-arbiter 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 PhilippinesSUPREME COURT

Manila

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.

DE LEON, JR., J.:

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

The facts of the case are the following:

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

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

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

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

On September 21, 1989, PICOP appealed 12 the Order which set the holding of the certification election contending that the Med-Arbiter committed grave abuse of discretion in deciding the case

without giving PICOP the opportunity to file its comments/answer, and that PBSTSEU had no personality to file the petition for certification election.

After PBSTSEU filed its Comments 13 to petitioner's appeal, the Secretary of the Labor 14 issued a Resolution 15dated November 17, 1989 which upheld the Med-Arbiter's Order dated September 17, 1989, with modification allowing the supervising and staff employees in Cebu, Davao and Iligan City to participate in the certification election.

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

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

PBSTSEU appealed 22 the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU likewise appealed.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 27dated August 7, 1991 denied PICOP's motion for reconsideration.

Hence, this petition.

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

I.

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

IMPLEMENTED IN JANUARY 1991 AFTER THE CASE WAS ELEVATED ON APPEAL AND SUBMITTED FOR DECISION.

II.

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

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

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

First. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, 30 we had occasion to elucidate on the term "managerial employees." Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers. Top and Middle Managers have the authority to devise, implement and control strategic and operational policies while the task of First-Line Managers is simply to ensure that such policies are carried out by the rank-and- file employees of an organization. Under this distinction, "managerial employees" therefore fall in two (2) categories, namely, the "managers" per se composed of Top and Middle Managers, and the "supervisors" composed of First-Line Managers. 31 Thus, the mere fact that an employee is designated "manager" does notipso facto make him one. Designation should be reconciled with the actual job description of the employee, 32 for it is the job description that determines the nature of employment. 33

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

Second. No denial of due process can be ascribed to public respondent Undersecretary Laguesma for the latter's denial to allow PICOP to present additional evidence on the implementation of its program inasmuch as in the appeal before the said public respondent, PICOP even then had already submitted voluminous supporting documents. 38 The record of the case is replete with position papers and exhibits that dealt with the main thesis it relied upon. What the law prohibits is the lack of opportunity to be heard. 39 PICOP has long harped on its contentions and these were dealt upon and resolved in detail by public respondent Laguesma. We see no reason or justification to deviate from his assailed resolutions for the reason that law and jurisprudence aptly support them. 1âwphi1

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.1âwphi1.nêt

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

Republic of the PhilippinesSUPREME COURT

Manila

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.

 

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 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 questions 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 organizational 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 first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers. Examples 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 organization's 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 exists 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 policies 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 the second category, managers, vis-a-vis employers, are, likewise, employees. 3

The first question is whether route managers are managerial employees or supervisors.

Previous Administrative Determinations of the Question Whether Route Managersare 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-10-318-91, entitled Worker's 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 descriptions of the subject employees and other documentary evidence on record vis-a-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-3-71-92. 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 (WATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-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

Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission, 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

But the doctrine of res judicata certainly applies to adversary administrative proceedings. As early as 1956, inBrillantes v. Castro, 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 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 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

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 areManagerial Employees Supported bySubstantial 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

2.1.2 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

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 to deliver 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, effectivelyrecommend 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 thisis a function of the Human Resources or Personnel Department of the company. 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 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 ManagerialEmployees 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:

Sec. 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

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

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 sub-group 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 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

Actually, the case involved front-line managers or supervisors only, as the plantilla of employees, quoted in the main opinion, 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

Sr. 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 ManagerialEmployees 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

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 self-organize 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 canceled. 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 self-organization 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

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 self-organization 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

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

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 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 inPhilips Industrial Development, Inc. v. NLRC: 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.

THIRD DIVISION 

TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIABREWERY,                             Petitioner,

                   - versus -

        G.R. No.  162025

        Present:

        CARPIO MORALES, J.,                   Chairperson,        BRION,        BERSAMIN,        ABAD,* and        VILLARAMA, JR., JJ.

ASIA BREWERY, INC.,                   Respondent.

        Promulgated:

          August 3, 2010x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x 

DECISION 

VILLARAMA, JR., J.:

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

          The facts are:

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

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

Section 1. Recognition.  The COMPANY recognizes the UNION as the sole and exclusive bargaining representative of all the regular rank-and-file daily paid employees within the scope of the appropriate bargaining unit with respect to rates of pay, hours of work and other terms and conditions of employment.  The UNION shall not represent or accept for membership employees outside the scope of the bargaining unit herein defined.

Section 2.  Bargaining Unit .   The bargaining unit shall be comprised of all regular rank-and-file daily-paid employees of the COMPANY.  However, the following jobs/positions as herein defined shall be excluded from the bargaining unit, to wit:

1.      Managers2.      Assistant Managers3.      Section Heads4.      Supervisors5.      Superintendents6.      Confidential and Executive Secretaries7.      Personnel, Accounting and Marketing Staff8.      Communications Personnel9.      Probationary Employees10.    Security and Fire Brigade Personnel11.    Monthly Employees12.    Purchasing and Quality Control Staff[6] [EMPHASIS

SUPPLIED.]

          Subsequently, a dispute arose when ABI’s management stopped deducting union dues from eighty-one (81) employees, believing that their membership in BLMA-INDEPENDENT violated the CBA. Eighteen (18) of these affected employees are QA Sampling Inspectors/Inspectresses and Machine Gauge Technician who formed part of the Quality Control Staff.  Twenty (20) checkers are assigned at the Materials Department of the Administration Division, Full

Goods Department of the Brewery Division and Packaging Division. The rest are secretaries/clerks directly under their respective division managers.[7]

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

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

          On appeal, the CA reversed the Voluntary Arbitrator, ruling that:

WHEREFORE, foregoing premises considered, the questioned decision of the Honorable Voluntary Arbitrator Bienvenido De Vera is hereby REVERSED and SET ASIDE, and A NEW ONE ENTERED DECLARING THAT:

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

b)   the 81 employees cannot validly become members of respondent and/or if already members, that their membership is violative of the CBA and that they should disaffiliate from respondent; and

c)   petitioner has not committed any act that restrained or tended to restrain its employees in the exercise of their right to self-organization.

NO COSTS.

SO ORDERED.[10]  

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

          The petition is anchored on the following grounds:

(1)

THE COURT OF APPEALS ERRED  IN RULING THAT THE 81 EMPLOYEES ARE EXCLUDED FROM AND ARE NOT ELIGIBLE FOR INCLUSION IN THE BARGAINING UNIT AS DEFINED IN SECTION 2, ARTICLE 1 OF THE CBA[;]

(2)

THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES CANNOT VALIDLY BECOME UNION MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF THE CBA AND THAT THEY SHOULD DISAFFILIATE FROM RESPONDENT;

(3)

THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER (NOW PRIVATE RESPONDENT) HAS NOT COMMITTED ANY ACT THAT RESTRAINED OR TENDED TO RESTRAIN ITS EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION.[13]

          Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records.[14]  Confidential employees are thus excluded from the rank-and-file bargaining unit.  The rationale for their separate category and

disqualification to join any labor organization is similar to the inhibition for managerial employees because if allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view of evident conflict of interests and the Union can also become company-denominated with the presence of managerial employees in the Union membership.[15] Having access to confidential information, confidential employees may also become the source of undue advantage.  Said employees may act as a spy or spies of either party to a collective bargaining agreement.[16] 

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

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

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

NAME DEPARTMENT IMMEDIATE   SUPERIOR

C1  ADMIN DIVISION

1.    Angeles, Cristina C. Transportation Mr. Melito K. Tan2.    Barraquio, Carina P. Transportation Mr. Melito K. Tan3.    Cabalo, Marivic B. Transportation Mr. Melito K. Tan

4.    Fameronag, Leodigario C. Transportation Mr. Melito K. Tan1.    Abalos, Andrea A. Materials Mr. Andres G. Co2.    Algire, Juvy L. Materials Mr. Andres G. Co3.    Anoñuevo, Shirley P. Materials Mr. Andres G. Co4.    Aviso, Rosita S. Materials Mr. Andres G. Co5.    Barachina, Pauline C. Materials Mr. Andres G. Co6.    Briones, Catalina P. Materials Mr. Andres G. Co7.    Caralipio, Juanita P. Materials Mr. Andres G. Co8.    Elmido, Ma. Rebecca S. Materials Mr. Andres G. Co9.    Giron, Laura P. Materials Mr. Andres G. Co10.  Mane, Edna A. Materials Mr. Andres G. Cox x x xC2   BREWERY DIVISION1.    Laloon, Daisy S. Brewhouse Mr. William Tan1.    Arabit, Myrna F. Bottling Production Mr. Julius Palmares2.    Burgos, Adelaida D. Bottling Production Mr. Julius Palmares3.    Menil, Emmanuel S. Bottling Production Mr. Julius Palmares4.    Nevalga, Marcelo G. Bottling Production Mr. Julius Palmares1.    Mapola, Ma. Esraliza T. Bottling Maintenance Mr. Ernesto Ang2.    Velez, Carmelito A. Bottling Maintenance Mr. Ernesto Ang1.    Bordamonte, Rhumela D. Bottled Water Mr. Faustino Tetonche2.    Deauna, Edna R. Bottled Water Mr. Faustino Tetonche3.    Punongbayan, Marylou F. Bottled Water Mr. Faustino Tetonche4.    Saguan, Lennie Y. Bottled Water Mr. Faustino Tetonche1.    Alcoran, Simeon A. Full Goods Mr. Tsoi Wah Tung2.    Cervantes, Ma. Sherley Y. Full Goods Mr. Tsoi Wah Tung3.    Diongco, Ma. Teresa M. Full Goods Mr. Tsoi Wah Tung4.    Mabilangan, Evelyn M. Full Goods Mr. Tsoi Wah Tung5.    Rivera, Aurora M. Full Goods Mr. Tsoi Wah Tung6.    Salandanan, Nancy G. Full Goods Mr. Tsoi Wah Tung1.    Magbag, Ma. Corazon C. Tank Farm/

Cella ServicesMr. Manuel Yu Liat

1.    Capiroso, Francisca A. Quality Assurance Ms. Regina Mirasol1.    Alconaba, Elvira C. Engineering Mr. Clemente Wong2.    Bustillo, Bernardita E. Electrical Mr. Jorge Villarosa3.    Catindig, Ruel A. Civil Works Mr. Roger Giron4.    Sison, Claudia B. Utilities Mr. Venancio Alconabax x x xC3 PACKAGING DIVISION1.      Alvarez, Ma. Luningning L.

GP Administration Ms. Susan Bella

2.    Cañiza, Alma A. GP Technical Mr. Chen Tsai Tyan3.    Cantalejo, Aida S. GP Engineering Mr. Noel Fernandez4.    Castillo, Ma. Riza R. GP Production Mr. Tsai Chen Chih5.    Lamadrid, Susana C. GP Production Mr. Robert Bautista6.    Mendoza, Jennifer L. GP Technical Mr. Mel Oña

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

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

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

          Again, the job descriptions of these checkers assigned in the storeroom section of the Materials Department, finishing section of the Packaging Department, and the decorating and glass sections of the Production Department plainly showed that they perform routine and mechanical tasks preparatory to the delivery of the finished products.[24]  While it may be argued that quality control extends to post-production phase -- proper packaging of the finished products -- no evidence was presented by the respondent to prove that these daily-paid checkers actually form part of the company’s Quality Control Staff who as such “were

exposed to sensitive, vital and confidential information about [company’s] products” or “have knowledge of mixtures of the products, their defects, and even their formulas” which are considered ‘trade secrets’.  Such allegations of respondent must be supported by evidence.[25]

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

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

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

          Unfair labor practice refers to “acts that violate the workers’ right to organize.” The prohibited acts are related to the workers’ right to self organization and to the observance of a CBA.  For a charge of unfair labor practice to prosper, it must be shown that ABI was motivated by ill will, “bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x x”[28] from ABI’s act in discontinuing the union dues deduction

from those employees it believed were excluded by the CBA.  Considering that the herein dispute arose from a simple disagreement in the interpretation of the CBA provision on excluded employees from the bargaining unit, respondent cannot be said to have committed unfair labor practice that restrained its employees in the exercise of their right to self-organization, nor have thereby demonstrated an anti-union stance.

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

          No costs.

          SO ORDERED.