Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 77951 September 26, 1988
COOPERATIVE RURAL BANK OF DAVAO CITY, INC., petitioner,
vs.
PURA FERRER-CALLEJA, DIRECTOR, BUREAU OF LABOR RELATIONS, MOLE, MANILA;
FELIZARDO T. SERAPIO, MED-ARBITER DESIGNATE, REGIONAL OFFICE NO. XI, MOLE,
DAVAO CITY; and FEDERATION OF FREE WORKERS, respondents.
Herbert P. Artes for petitioner.
The Solicitor General for Public respondent.

GANCAYCO, J .:
This is a Petition for certiorari under Rule 65 of the Rules of Court where the issue is whether or not
the employees of a cooperative can organize themselves for purposes of collective bargaining.
The record of the case discloses that the herein petitioner Cooperative Rural Bank of Davao City,
Inc. is a cooperative banking corporation operating in Davao City. It is owned in part by the
Government and its employees are members and co-owners of the same. The petitioner has around
16 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.
1
The same was docketed as Case No. R-325 ROXI MED-UR-73-86. On
September 18, 1986, the herein public respondent issued an Order granting the Petition for
certification election.
On October 3, 1986, the petitioner filed an Appeal Memorandum and sought a reversal of the Order
of the Med-Arbiter.
2
The petitioner argues therein that, among others, a cooperative is not covered
by the Rules governing certification elections inasmuch as it is not an institution operating for profit.
The petitioner also adds that two of the alleged rank-and-file employees seeking the certification
election are managerial employees disqualified from joining concerted labor activities. In sum, the
petitioner insists that its employees are disqualified from forming labor organizations for purposes of
collective bargaining.
On October 8, 1986, the private respondent filed a "Motion to Dismiss the Appeal." On October 15,
1986, the petitioner filed its opposition to the said Motion.
On February 11, 1987, the herein public respondent Bureau of Labor Relations Director Pura Ferrer-
Calleja issued a Resolution affirming the Order of the Med-Arbiter and dismissing the Appeal.
3
The
pertinent portions of the said Resolution are as follows
It is beyond doubt that respondent-appellant, Cooperative Rural Bank of Davao City
falls within the purview of Article 212, paragraph C of the Labor Code, acting as such
in the interest of an employer. To argue otherwise would amount to closing one's
eyes to the realities of today's cooperative banking institutions. ....
Moreover, basic is the right of every worker in any establishment whether operated
for profit or not to organize and engage in concerted activity, mutually beneficial to
their interest. Such right is sacredly enshrined and protected in our fundamental law,
granting every worker the right to organize into a collective group and engage in
concerted activities for purposes of promoting their well being, subject only to such
limitations as may be provided for by law.
xxx xxx xxx
As this Office has consistently ruled and applied in various cases, being a member of
a cooperative organization does not preclude one from forming or joining a labor
union provided that such person or persons are not among those disqualified by law.
Nowhere in the records can we find any piece of evidence showing that the
signatories in the petition are among those disqualified to form or join a union.
Finally, we cannot give credence to (the) employer's allegation that two of the
signatories thereof, are managerial employees, since no evidence showing such fact
can be found from the records.
xxx xxx xxx
In a Motion dated March 2, 1987, the petitioner asked for a reconsideration of the said
Resolution.
4
The petitioner reiterated therein its view that its employees are disqualified from
forming the labor organization so contemplated. The petitioner also called attention to an Opinion
rendered by then Solicitor General and Minister of Justice Estelito P. Mendoza dated August 14,
1981.
5
The Opinion states that employees of an electric cooperative who are themselves
members/co-owners of the same cannot form or join labor organizations for purposes of collective
bargaining. The Opinion also states that the duty to bargain exists only between an employer and
his/its employees, and that an employer has no duty to bargain with his co-owners of a corporation
who are also its employees. The petitioner submits that the said Opinion calls for application in the
present controversy.
On March 26, 1987, director Calleja issued a Resolution denying the reconsideration sought by the
petitioner.
6
Thus, the certification election was scheduled in the morning of April 23, 1987.
Finding the action taken by the Bureau unsatisfactory, the petitioner brought the case directly to this
Court on April 9, 1987 by way of the instant Petition for certiorari. The petitioner maintains that the
public respondents both acted without jurisdiction or in excess thereof, or with grave abuse of
discretion amounting to lack of jurisdiction, in allowing the certification election sought by the private
respondent despite the arguments of the petitioner in opposition thereto. The petitioner reiterates its
argument that employees of cooperatives who are members and co-owners of the same cannot form
and join labor organizations for purposes of collective bargaining.
On April 15, 1987, this Court issued a temporary restraining order enjoining the Bureau of Labor
Relations from proceeding with the certification election scheduled on April 23, 1987.
7
The
certification election nonetheless pushed through as scheduled for the alleged reason that the
temporary restraining order was not seasonably transmitted to Davao City.
8

This court also required the respondents to file their Comment on the Petition. The respondents
complied as instructed. The Office of the Solicitor General represented the public respondents.
The Solicitor General intimated to this Court that the instant Petition has been rendered moot and
academic inasmuch as the certification election sought to be enjoined had already been conducted.
The Solicitor General added that the public respondents did not commit any jurisdictional error.
10

In due time, the parties submitted other pleadings. On January 6, 1988, the case was deemed
submitted for decision.
After a careful examination of the entire record of the case, We find the instant Petition meritorious.
Contrary to the view espoused by the Solicitor General, this case cannot be considered moot and
academic simply because the certification election sought to be enjoined went on as scheduled. The
instant Petition is one for certiorari as a special civil action. Errors of jurisdiction on the part of the
public respondents are alleged in the Petition itself. If the public respondents had indeed committed
jurisdictional errors, the action taken by both the 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, Grio-Aquino and Medialdea, JJ., concur.
Republic of the Philippines
SUPREME 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 Appeals
1
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.1wphi 1. nt
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.1wphi 1. nt
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 Union
6
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-
-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.1wphi1.nt
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--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 Union
11
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.1wphi1.nt
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
Melo, Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 94045 September 13, 1991
CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. (CENECO), petitioner,
vs.
HONORABLE SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT, and CENECO
UNION OF RATIONAL EMPLOYEES (CURE), respondents.
Enrique S. Tabino for petitioner.
Edmundo G. Manlapao for private respondent.

REGALADO, J .:p
In this special civil action for certiorari, petitioner Central Negros Electric Cooperative, Inc.
(CENECO) seeks to annul the order
1
issued by then Acting Secretary of Labor Bienvenido E.
Laguesma on June 6, 1990, declaring the projected certification election unnecessary and directing
petitioner CENECO to continue recognizing private respondent CENECO Union of Rational
Employees (CURE) as the sole and exclusive bargaining representative of all the rank-and-file
employees of petitioner's electric cooperative for purposes of collective bargaining.
It appears from the records that on August 15, 1987, CENECO entered into a collective bargaining
agreement with CURE, a labor union representing its rank-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 Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 79025. December 29, 1989.
BENGUET ELECTRIC COOPERATIVE, INC., petitioner,
vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, and BENECO
EMPLOYEES LABOR UNION, respondents.
E.L. Gayo & Associates for petitioner.

CORTES, J .:
On June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations
(hereinafter referred to as BWLU- ADLO) filed a petition for direct certification as the sole and
exclusive bargaining representative of all the rank and file employees of Benguet Electric
Cooperative, Inc. (hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging,
inter alia, that BENECO has in its employ two hundred and fourteen (214) rank and file employees;
that one hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of
the petition; that no certification election has been conducted for the last 12 months; that there is no
existing collective bargaining representative of the rank and file employees sought to represented by
BWLU- ADLO; and, that there is no collective bargaining agreement in the cooperative.
An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to
as BELU) contending that it was certified as the sole and exclusive bargaining representative of the
subject workers pursuant to an order issued by the med-arbiter on October 20,1980; that pending
resolution by the National Labor Relations Commission are two cases it filed against BENECO
involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars
any representation question.
BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit
electric cooperative engaged in providing electric services to its members and patron-consumers in
the City of Baguio and Benguet Province; and, that the employees sought to be represented by
BWLU-ADLO are not eligible to form, join or assist labor organizations of their own choosing
because they are members and joint owners of the cooperative.
On September 2, 1985 the med-arbiter issued an order giving due course to the petition for
certification election. However, the med-arbiter limited the election among the rank and file
employees of petitioner who are 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 Philippines
SUPREME 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 Resolution
1
and the Order
2
dated April 17,
1991 and August 7, 1991, respectively, of public respondent Bienvenido E. Laguesma, acting then
as Undersecretary, now the Secretary, of the Department of Labor and Employment (DOLE), which
reversed the Order dated March 27, 1990
3
of Med-Arbiter Phibun D. Pura declaring that supervisors
and section heads of petitioner under its new organizational structure are managerial employees and
should be excluded from the list of voters for the purpose of a certification election among
supervisory and technical staff employees of petitioner.
4

The facts of the case are the following:
Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the manufacture of
paper and timber products, with principal place of operations at Tabon, Bislig, Surigao del Sur. It has
over 9,000
5
employees, 944
6
of whom are supervisory and technical staff employees. More or less
487 of these supervisory and technical staff employees are signatory members of the private
respondent PICOP-Bislig Supervisory and Technical Staff Employees Union (PBSTSEU).
7

On August 9, 1989, PBSTSEU instituted a Petition
8
for Certification Election to determine the sole
and exclusive bargaining agent of the supervisory and technical staff employees of PICOP for
collective bargaining agreement (CBA) purposes.
In a Notice
9
dated August 10, 1989, the initial hearing of the petition was set on August 18, 1989 but
it was reset to August 25, 1989, at the instance of PICOP, as it requested a fifteen (15) day period
within which to file its comments and/or position paper. But PICOP failed to file any comment or
position paper. Meanwhile, private respondents Federation of Free Workers (FFW) and Associated
Labor Union (ALU) filed their respective petitions for intervention.
On September 14, 1989, Med-Arbiter Arturo L. Gamolo issued an Order
10
granting the petitions for
interventions of the FFW and ALU. Another Order
11
issued on the same day set the holding of a
certification election among PICOP's supervisory and technical staff employees in Tabon, Bislig,
Surigao del Sur, with four (4) choices, namely: (1) PBSTSEU; (2) FFW; (3) ALU; and (4) no union.
On September 21, 1989, PICOP appealed
12
the Order which set the holding of the certification
election contending that the Med-Arbiter committed grave abuse of discretion in deciding the case
without giving PICOP the opportunity to file its comments/answer, and that PBSTSEU had no
personality to file the petition for certification election.
After PBSTSEU filed its Comments
13
to petitioner's appeal, the Secretary of the Labor
14
issued a
Resolution
15
dated November 17, 1989 which upheld the Med-Arbiter's Order dated September 17,
1989, with modification allowing the supervising and staff employees in Cebu, Davao and Iligan City
to participate in the certification election.
During the pre-election conference on January 18, 1990, PICOP questioned and objected to the
inclusion of some section heads and supervisors in the list of voters whose positions it averred were
reclassified as managerial employees in the light of the reorganization effected by it.
16
Under the
Revised Organizational Structure of the PICOP, the company was divided into four (4) main
business groups, namely: Paper Products Business, Timber Products Business, Forest Resource
Business and Support Services Business. A vice- president or assistant vice-president heads each
of these business groups. A division manager heads the divisions comprising each business group.
A department manager heads the departments comprising each division. Section heads and
supervisors, now called section managers and unit managers, head the sections and independent
units, respectively, comprising each department.
17
PICOP advanced the view that considering the
alleged present authority of these section managers and unit managers to hire and fire, they are
classified as managerial employees, and hence, ineligible to form or join any labor organization.
18

Following the submission by the parties of their respective position papers
19
and evidence
20
on this
issue, Med-Arbiter Phibun D. Pura issued an Order
21
dated March 27, 1990, holding that
supervisors and section heads of the petitioner are managerial employees and therefore excluded
from the list of voters for purposes of certification election.
PBSTSEU appealed
22
the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU
likewise appealed.
23
PICOP submitted evidence militating against the appeal.
24
Public respondent
Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the assailed
Order
25
dated April 17, 1991 setting aside the Order dated March 27, 1990 of the Med-Arbiter and
declaring that the subject supervisors and section heads are supervisory employees eligible to vote
in the certification election.
PICOP sought
26
reconsideration of the Order dated April 7, 1991. However, public respondent in his
Order
27
dated August 7, 1991 denied PICOP's motion for reconsideration.
Hence, this petition.
PICOP anchors its petition on two (2) grounds, to wit:
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.1wphi 1
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.1wphi 1. nt
Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.
Republic of the Philippines
SUPREME 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 Managers
are Managerial Employees
It appears that this question was the subject of two previous determinations by the Secretary of
Labor and Employment, in accordance with which this case was decided by the med-arbiter.
In Case No. OS-MA-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 are
Managerial Employees Supported by
Substantial Evidence in the Record
The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by
substantial evidence. The nature of the job of route managers is given in a four-page pamphlet,
prepared by the company, called "Route Manager Position Description," the pertinent parts of which
read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan; and you
achieve this objective through the skillful MANAGEMENT OF YOUR JOB
AND THE MANAGEMENT OF YOUR PEOPLE.
These then are your functions as Pepsi-Cola Route Manager. Within these
functions managing your job and managing your people you are
accountable to your District Manager for the execution and completion of
various tasks and activities which will make it possible for you to achieve your
sales objectives.
B. PRINCIPAL ACCOUNTABILITIES
1.0 MANAGING YOUR JOB
The Route Manager is accountable for the following:
1.1 SALES DEVELOPMENT
1.1.1 Achieve the sales plan.
1.1.2 Achieve all distribution and new account
objectives.
1.1.3 Develop new business opportunities thru
personal contacts with dealers.
1.1.4 Inspect and ensure that all
merchandizing [sic] objectives are achieved in
all outlets.
1.1.5 maintain and improve productivity of all
cooling equipment and kiosks.
1.1.6 Execute and control all authorized
promotions.
1.1.7 Develop and maintain dealer goodwill.
1.1.8 Ensure all accounts comply with
company suggested retail pricing.
1.1.9 Study from time to time individual route
coverage and productivity for possible
adjustments to maximize utilization of
resources.
1.2 Administration
1.2.1 Ensure the proper loading of route
trucks before check-out and the proper sorting
of bottles before check-in.
1.2.2 Ensure the upkeep of all route sales
reports and all other related reports and forms
required on an accurate and timely basis.
1.2.3 Ensure proper implementation of the
various company policies and procedures incl.
but not limited to shakedown; route shortage;
progressive discipline; sorting; spoilages;
credit/collection; accident; attendance.
1.2.4 Ensure collection of receivables and
delinquent accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.2 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!!
(
S
g
d
.
)

R
.
M
.

S
A
N
T
O
S
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 this
is 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 Managerial
Employees under Pre-Labor Code Laws
Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the
Industrial Peace Act (R.A. No. 875).
In accordance with the general definition above, this law defined "supervisor" as follows:
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 Managerial
Employees under the Labor Code
Thus, the dictum in the Caltex case which allowed at least for the theoretical unionization of top and
middle managers by assimilating them with the supervisory group under the broad phrase
"managerial personnel," provided the lynchpin for later laws denying the right of self-organization not
only to top and middle management employees but to front line managers or supervisors as well.
Following the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the
distinction between the first and second sub-groups of managerial employees. Instead of treating the
terms "supervisor" and "manager" separately, the law lumped them together and called them
"managerial employees," as follows:
Art. 212. Definitions . . . .
(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign
or discipline employees, or to effectively recommend such managerial actions. All employees not
falling within this definition are considered rank and file employees for purposes of this Book.
22

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, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -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 Arbitrators
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 ABIs 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 UNI ON 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. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
12. Purchasing and Quality Control Staff
[6]
[EMPHASIS
SUPPLIED.]
Subsequently, a dispute arose when ABIs 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 ABIs 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 ABIs 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
petitioners 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. Tan
2. Barraquio, Carina P. Transportation Mr. Melito K. Tan
3. Cabalo, Marivic B. Transportation Mr. Melito K. Tan
4. Fameronag, Leodigario C. Transportation Mr. Melito K. Tan

1. Abalos, Andrea A. Materials Mr. Andres G. Co
2. Algire, Juvy L. Materials Mr. Andres G. Co
3. Anouevo, Shirley P. Materials Mr. Andres G. Co
4. Aviso, Rosita S. Materials Mr. Andres G. Co
5. Barachina, Pauline C. Materials Mr. Andres G. Co
6. Briones, Catalina P. Materials Mr. Andres G. Co
7. Caralipio, Juanita P. Materials Mr. Andres G. Co
8. Elmido, Ma. Rebecca S. Materials Mr. Andres G. Co
9. Giron, Laura P. Materials Mr. Andres G. Co
10. Mane, Edna A. Materials Mr. Andres G. Co

x x x x

C2 BREWERY DIVISION

1. Laloon, Daisy S. Brewhouse Mr. William Tan

1. Arabit, Myrna F. Bottling Production Mr. Julius Palmares
2. Burgos, Adelaida D. Bottling Production Mr. Julius Palmares
3. Menil, Emmanuel S. Bottling Production Mr. Julius Palmares
4. Nevalga, Marcelo G. Bottling Production Mr. Julius Palmares

1. Mapola, Ma. Esraliza T. Bottling Maintenance Mr. Ernesto Ang
2. Velez, Carmelito A. Bottling Maintenance Mr. Ernesto Ang

1. Bordamonte, Rhumela D. Bottled Water Mr. Faustino Tetonche
2. Deauna, Edna R. Bottled Water Mr. Faustino Tetonche
3. Punongbayan, Marylou F. Bottled Water Mr. Faustino Tetonche
4. Saguan, Lennie Y. Bottled Water Mr. Faustino Tetonche

1. Alcoran, Simeon A. Full Goods Mr. Tsoi Wah Tung
2. Cervantes, Ma. Sherley Y. Full Goods Mr. Tsoi Wah Tung
3. Diongco, Ma. Teresa M. Full Goods Mr. Tsoi Wah Tung
4. Mabilangan, Evelyn M. Full Goods Mr. Tsoi Wah Tung
5. Rivera, Aurora M. Full Goods Mr. Tsoi Wah Tung
6. Salandanan, Nancy G. Full Goods Mr. Tsoi Wah Tung

1. Magbag, Ma. Corazon C. Tank Farm/
Cella Services
Mr. Manuel Yu Liat

1. Capiroso, Francisca A. Quality Assurance Ms. Regina Mirasol

1. Alconaba, Elvira C. Engineering Mr. Clemente Wong
2. Bustillo, Bernardita E. Electrical Mr. Jorge Villarosa
3. Catindig, Ruel A. Civil Works Mr. Roger Giron
4. Sison, Claudia B. Utilities Mr. Venancio Alconaba

x x x x

C3 PACKAGING DIVISION

1. Alvarez, Ma. Luningning L. GP Administration Ms. Susan Bella
2. Caiza, Alma A. GP Technical Mr. Chen Tsai Tyan
3. Cantalejo, Aida S. GP Engineering Mr. Noel Fernandez
4. Castillo, Ma. Riza R. GP Production Mr. Tsai Chen Chih
5. Lamadrid, Susana C. GP Production Mr. Robert Bautista
6. Mendoza, Jennifer L. GP Technical Mr. Mel Oa
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 respondents 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 companys Quality Control Staff who as such were
exposed to sensitive, vital and confidential information about [companys]
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 respondents rank-and-file
employees. Petitioner argues that respondents 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 ABIs 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.