PICOP vs LAGUESMA

FACTS:
> Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in
the manufacture of paper and timber products.
> 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).
> PBSTSEU instituted a Petition8 for Certification Election to determine the sole and
exclusive bargaining agent of the supervisory and technical staff employees of
PICOP for collective bargaining agreement (CBA) purposes.
> Meanwhile, private respondents Federation of Free Workers (FFW) and
Associated Labor Union (ALU) filed their respective petitions for intervention.
> Med-Arb issued an Order 10 granting the petitions for interventions of the FFW and
ALU.
> 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. They are
classified as managerial employees, and hence, ineligible to form or join any labor
organization.
> Med-Arb 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 and ALU appealed to the Secretary of Labor, declaring that the subject
supervisors and section heads are supervisory employees eligible to vote in the
certification election.

ISSUE:
Whether or not the respondent erred in declaring that the subject supervisors and
section heads are supervisory employees eligible to vote in the certification election?

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.
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.

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU) vs

LAGUESMA
FACTS:
> Petitioner is a union of supervisory employees.
> The union filed a petition for certification election on behalf of the route managers
at Pepsi-Cola Products Philippines, Inc. but was denied by Med-Arb.
> 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.
ISSUES:

RULING:
NO. 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 not ipso facto

(1) Whether or not the route managers at Pepsi-Cola Products Philippines, Inc. are
managerial employees?
(2) Whether or not Art. 245, insofar as it prohibits managerial employees from
forming, joining or assisting labor unions, violates Art. III, 8 of the Constitution?

RULINGS:

(1) YES. 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.
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.
As to the route managers and accounting manager, we are convinced that they are
managerial employees. Their job descriptions clearly reveal so.
"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.
(2) NO. 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.
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.

CENTRAL

NEGROS

ELECTRIC

COOPERATIVE,

INC.

(CENECO) vs HONORABLE SECRETARY, DEPARTMENT

OF LABOR AND EMPLOYMENT
FACTS:
> 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.
> CURE wrote CENECO proposing that negotiations be conducted for a new
collective bargaining agreement (CBA).
> 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.
> Prior to the submission of the proposal for CBA renegotiation, CURE members,
approved Resolution was agreed that all 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.
> The withdrawal from membership was denied by CENECO for the reason that the
basis of withdrawal is not among the grounds covered by Board Resolution.
> By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition
for direct recognition or for certification election.
> Med-Arb issued an order, 6 granting the petition for certification election 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.
ISSUE:
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?
RULING:
YES. 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.
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.
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.

BENGUET ELECTRIC COOPERATIVE, INC. vs CALLEJA

FACTS:
> 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).
> 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.
> 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 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.
> 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.
ISSUES:

(1) Whether or not member-consumers who are employees of BENECO could form,
assist or join a labor union?
(2) Whether or not respondent director committed grave abuse of discretion in
certifying respondent BELU as the sole and exclusive bargaining representative of
the rank and file employees of BENECO?
RULINGS:
(1) NO. 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.
(2) YES. 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. FerrerCalleja, 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.
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
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.

COOPERATIVE RURAL BANK OF DAVAO CITY, INC vs

CALLEJA

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.

FACTS:
> 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.
> 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.
> Private respondent filed a verified Petition for certification election among the rankand-file employees of the petitioner and was granted the petition for certification of
election.
> The petitioner filed an Appeal Memorandum and sought a reversal of the Order of
the Med-Arbiter. Petitioners argues that a cooperative is not covered by the Rules
governing certification elections inasmuch as it is not an institution operating for
profit and insists that its employees are disqualified from forming labor organizations
for purposes of collective bargaining.
> BLR affirmed the order of Med-Arb. and finding the action taken by the Bureau
unsatisfactory, the petitioner brought the case directly to this Court.
> Court issued a temporary restraining order enjoining the Bureau of Labor
Relations from proceeding with the certification election but certification election
nonetheless pushed through as scheduled for the alleged reason that the temporary
restraining order was not seasonably transmitted to Davao City.
ISSUE:
Whether or not the employees of cooperative are disqualified from forming labor
organizations for the purposes of collective bargaining?
RULING:
We have to qualify.
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, therefore, 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.

SAN MIGUEL CORPORATION

EXEMPT UNION vs LAGUESMA

SUPERVISORS

AND

FACTS:
> Petitioner union filed before the Department of Labor and Employment (DOLE) a
Petition for Direct Certification or Certification Election among the supervisors and
exempt employees of the SMC Magnolia Poultry Products Plants.
> Med-Arb issued an Order ordering the conduct of certification election.
> Respondent San Miguel Corporation filed a Notice of Appeal with Memorandum
on Appeal, pointing out, among others, the Med-Arbiter's error in grouping together
all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining
unit, and in including supervisory levels 3 and above whose positions are
confidential in nature.
>
Undersecretary Laguesma, granted respondent company's Appeal and ordered
the remand of the case to the Med-Arbiter of origin for determination of the true
classification of each of the employees sought to be included in the appropriate
bargaining unit and directed the conduct of separate certification elections among
the supervisors ranked as supervisory and the exempt employees in each of the
three plants.
> In this case, S3 and S4 Supervisors and the so-called exempt employees are
admittedly confidential employees and therefore, they are not allowed to form, join or
assist a labor union for purposes of collective bargaining following the above court's
ruling. Consequently, they are not allowed to participate in the certification election.
ISSUES:
(1) Whether or not the Supervisory employees 3 and 4 and the exempt employees
of the company are considered confidential employees, hence ineligible from joining
a union?
(2) If they are not confidential employees, do the employees of the three plants
constitute an appropriate single bargaining unit?

RULINGS:
(1) NO. On the first issue, this Court rules that said employees do not fall within the
term "confidential employees" who may be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt
employees, are not vested with the powers and prerogatives to lay down and
execute MANAGEMENT
policies and/or to hire, transfer, suspend, layoff, recall,
discharge or dismiss employees. They are, therefore, not qualified to be classified
as managerial employees who, under Article 245 4 of the Labor Code, are not
eligible to join, assist or form any labor organization. In the very same provision, they
are not allowed membership in a labor organization of the rank-and-file employees
but may join, assist or form separate labor organizations of their own. The only
question that need be addressed is whether these employees are properly classified
as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2)
to persons who formulate, determine, and effectuate MANAGEMENT
policies in
the field of labor relations. 5 The two criteria are cumulative, and both must be met if
an employee is to be considered a confidential employee that is, the confidential
relationship must exist between the employee and his supervisor, and the supervisor
must handle the prescribed responsibilities relating to labor relations. 6
The exclusion from bargaining units of employees who, in the normal course of their
duties, become aware of management policies relating to labor relations is a
principal objective sought to be accomplished by the ''confidential employee rule."
The broad rationale behind this rule is that employees should not be placed in a
position involving a potential conflict of interests.
An important element of the "confidential employee rule" is the employee's need to
use labor relations information. Thus, in determining the confidentiality of certain
employees, a key question frequently considered is the employee's necessary
access to confidential labor relations information.
Granting arguendo that an employee has access to confidential labor relations
information but such is merely incidental to his duties and knowledge thereof is not
necessary in the performance of such duties, said access does not render the
employee a confidential employee. 16 "If access to confidential labor relations
information is to be a factor in the determination of an employee's confidential
status, such information must relate to the employer's labor relations policies. Thus,
an employee of a labor union, or of a management association, must have access to
confidential labor relations information with respect to his employer, the union, or the
association, to be regarded a confidential employee, and knowledge of labor
relations information pertaining to the companies with which the union deals, or
which the association represents, will not cause an employee to be excluded from

the bargaining unit representing employees of the union or association." 17 "Access

to information which is regarded by the employer to be confidential from the
business standpoint, such as financial information 18 or technical trade secrets, will
not render an employee a confidential employee."
It is evident that whatever confidential data the questioned employees may handle
will have to relate to their functions. From the foregoing functions, it can be gleaned
that the confidential information said employees have access to concern the
employer's internal business operations.
In the case at bar, supervisors 3 and above may not be considered confidential
employees merely because they handle "confidential data" as such must first be
strictly classified as pertaining to labor relations for them to fall under said
restrictions. The information they handle are properly classifiable as technical and
internal business operations data which, to our mind, has no relevance to
negotiations and settlement of grievances wherein the interests of a union and the
MANAGEMENT
are invariably adversarial. Since the employees are not
classifiable under the confidential type, this Court rules that they may appropriately
form a bargaining unit for purposes of collective bargaining. Furthermore, even
assuming that they are confidential employees, jurisprudence has established that
there is no legal prohibition against confidential employees who are not performing
managerial functions to form and join a union.
(2) NO. An appropriate bargaining unit may be defined as "a group of employees of
a given employer, comprised of all or less than all of the entire body of employees,
which the collective interest of all the employees, consistent with equity to the
employer, indicate to be best suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions of thelaw."
A unit to be appropriate must effect a grouping of employees who have substantial,
mutual interests in wages, hours, working conditions and other subjects of collective
bargaining.
In light of these considerations, the Solicitor General has opined that separate
bargaining units in the three different plants of the division will fragmentize the
employees of the said division, thus greatly diminishing their bargaining leverage.
Any concerted activity held against the private respondent for a labor grievance in
one bargaining unit will, in all probability, not create much impact on the operations
of the private respondent.
The fact that the three plants are located in three different places, namely, in
Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando,
Pampanga is immaterial. Geographical location can be completely disregarded if the
communal or mutual interests of the employees are not sacrificed. We rule that the
distance among the three plants is not productive of insurmountable difficulties in the
administration of union affairs. Neither are there regional differences that are likely to
impede the operations of a single bargaining representative.

STANDARD CHARTERED BANK EMPLOYEES UNION

(SCBEU-NUBE) vs STANDARD CHARTERED BANK
FACTS:
> Petitioner and the Standard Chartered Bank (Bank) began negotiating for a new
Collective Bargaining Agreement (CBA) in CBA already expired.
> Due to a deadlock in the negotiations, petitioner filed a Notice of Strike prompting
the Secretary of Labor and Employment to assume jurisdiction over the labor
dispute.
> Secretary of Labor an Employment ordered the Standard Chartered Bank and the
Standard Chartered Bank Employees Union are directed to execute their collective
bargaining agreement.

Petitioner insists that the foregoing employees are not confidential employees;
however, it failed to buttress its claim. Aside from its generalized arguments, and
despite the Secretary's finding that there was no evidence to support it, petitioner
still failed to substantiate its claim.
Absent any proof that Chief Cashiers and Assistant Cashiers, personnel of the Telex
department and one (1) HR Staff have mutuality of interest with the other rank and
file employees, then they are rightfully excluded from the appropriate bargaining
unit.
Petitioner cannot simply rely on jurisprudence without explaining how and why it
should apply to this case. Allegations must be supported by evidence. In this case,
there is barely any at all.

ISSUE:
Whether or not the Bank's Chief Cashiers and Assistant Cashiers, personnel of the
Telex Department and HR staff are confidential employees, such that they should be
excluded?

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC. vs

CONFESOR

RULING:

FACTS:

YES.

> Petitioner corporation and private respondent labor union entered into a three-year
Collective Bargaining Agreement (CBA) with expiry date on November 27, 1991.
During the freedom period the National Federation of Labor Unions (NAFLU)
questioned the majority status of Private respondent through a petition for
certification election.
> The election conducted and was won by the private respondent; was certified as
the sole and exclusive bargaining agent of petitioner's rank-and-file employees.
> Private respondent's CBA proposals were received by petitioner. Counterproposals were made by petitioner. Negotiations collapsed, private-respondent filed
a Notice of Strike with the National Conciliation and Mediation Board (NCMB). The
NCMB tried but failed to settle the parties' controversy.

As regards the qualification of bank cashiers as confidential employees, National

Association of Trade Unions (NATU) Republic Planters Bank Supervisors Chapter
v. Torres16 declared that they are confidential employees having control, custody
and/or access to confidential matters, e.g., the branch's cash position, statements of
financial condition, vault combination, cash codes for telegraphic transfers, demand
drafts and other negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank
Manual regarding joint custody, and therefore, disqualified from joining or assisting a
union; or joining, assisting or forming any other labor organization.17
Golden Farms, Inc. v. Ferrer-Calleja18 meanwhile stated that "confidential employees
such as accounting personnel, radio and telegraph operators who, having access
to confidential information, may become the source of undue advantage. Said
employee(s) may act as spy or spies of either party to a collective bargaining
agreement."19
Finally, in Philips Industrial Development, Inc. v. National Labor Relations
Commission,20 the Court designated personnel staff, in which human resources
staff may be qualified, as confidential employees because by the very nature of their
functions, they assist and act in a confidential capacity to, or have access to
confidential matters of, persons who exercise managerial functions in the field of
labor relations.

ISSUE:
Whether or not the Secretary of Labor committed grave abuse of discretion in not
excluding certain positions from the Bargaining Agreement Unit?
RULING:
YES. This Court has ruled on numerous occasions that the test of supervisory or
managerial status is whether an employee possesses authority to act in the interest
of his employer which authority is not merely routinary or clerical in nature but
requires use of independent judgment. 3 What governs the determination of the

nature of employment is not the employee's title, but his job description. If the nature
of the employee's job does not fall under the definition of "managerial" or
"supervisory" in the Labor Code, he is eligible to be a member of the rank-and-file
bargaining unit. 4

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS

(ISAE) vs QUISUMBING
FACTS:

Foremen are chief and often especially-trained workmen who work with and
commonly are in charge of a group of employees in an industrial plant or in
construction work. 5 They are the persons designated by the employer-management
to direct the work of employees and to superintend and oversee them. 6 They are
representatives of the employer-management with authority over particular groups
of workers, processes, operations, or sections of a plant or an entire organization. In
the performance their work, foremen definitely use their independent judgment and
are empowered to make recommendations for managerial action with respect to
those employees under their control. Foremen fall squarely under the category of
supervisory employees, and cannot be part of rank-and-file unions.
Legal secretaries are neither managers nor supervisors. Their work is basically
routinary and clerical. However, they should be differentiated from rank-and-file
employees because they, are tasked with, among others, the typing of legal
documents, memoranda and correspondence, the keeping of records and files, the
giving of and receiving notices and such other duties as required by the legal
personnel of the corporation. 8 Legal secretaries therefore fall under the category of
confidential employees.
The rationale, for this inhibition has been stated to be, because if these managerial
employees would belong to or be affiliated with 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.
This rationale holds true also for confidential employees - who having access to
confidential information, may become the source of undue advantage. Said
employee(s) may act as a spy or spies of either party to a collective bargaining
agreement.

> Private respondent International School, Inc. is a domestic educational institution

established primarily for dependents of foreign diplomatic personnel and other
temporary residents.
> Accordingly, the School hires both foreign and local teachers as members of its
faculty, classifying the same into two: (1) foreign-hires and (2) local-hires.
> The School grants foreign-hires certain benefits not accorded local-hires. These
include housing, transportation, shipping costs, taxes, and home leave travel
allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more
than local-hires. The School justifies the difference on two "significant economic
disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and
(b) limited tenure.
> Petitioner International School Alliance of Educators, "a legitimate labor union and
the collective bargaining representative of all faculty members"4 of the School,
contested the difference in salary rates between foreign and local-hires.
> Petitioner filed a notice of strike. The failure of the National Conciliation and
Mediation Board to bring the parties to a compromise prompted the Department of
Labor and Employment (DOLE) to assume jurisdiction over the dispute. DOLE
Acting Secretary, issued an Order resolving the parity and representation issues in
favor of the School.
> Petitioner claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.
ISSUES:
Whether or not it is justifiable to uphold the practice of respondent School of
according foreign-hires higher salaries than local-hires?
RULINGS:

We thus hold that public respondent acted with grave abuse of discretion in not
excluding the four foremen and legal secretary from the bargaining unit composed of
rank-and-file employees.
As for the timekeeper and assistant timekeeper it is clear from petitioner's own
pleadings that they are, neither managerial nor supervisory employees. They are
merely tasked to report those who commit infractions against company rules and
regulations. This reportorial function is routinary and clerical. They do not determine
the fate of those who violate company policy rules and regulations function. It follows
that they cannot be excluded from the subject bargaining unit.

NO. The School cannot invoke the need to entice foreign-hires to leave their
domicile to rationalize the distinction in salary rates without violating the principle of
equal work for equal pay.
While we recognize the need of the School to attract foreign-hires, salaries should
not be used as an enticement to the prejudice of local-hires. The local-hires perform
the same services as foreign-hires and they ought to be paid the same salaries as
the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited
tenure also cannot serve as valid bases for the distinction in salary rates. The
dislocation factor and limited tenure affecting foreign-hires are adequately

compensated by certain benefits accorded them which are not enjoyed by localhires, such as housing, transportation, shipping costs, taxes and home leave travel
allowances.
In this case, we find the point-of-hire classification employed by respondent School
to justify the distinction in the salary rates of foreign-hires and local hires to be an
invalid classification. There is no reasonable distinction between the services
rendered by foreign-hires and local-hires. The practice of the School of according
higher salaries to foreign-hires contravenes public policy and, certainly, does not
deserve the sympathy of this Court.
We agree, however, that foreign-hires do not belong to the same bargaining unit as
the local-hires.
A bargaining unit is "a group of employees of a given employer, comprised of all or
less than all of the entire body of employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties of the parties
under the collective bargaining provisions of the law." 29 The factors in determining
the appropriate collective bargaining unit are (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status. 30 The basic test of an asserted bargaining unit's
acceptability is whether or not it is fundamentally the combination which will best
assure to all employees the exercise of their collective bargaining rights.
To include foreign-hires in a bargaining unit with local-hires would not assure either
group the exercise of their respective collective bargaining rights.

ST. JAMES SCHOOL OF QUEZON CITY vs SAMAHANG

MANGGAGAWA SA ST. JAMES SCHOOL OF QUEZON CITY
FACTS:
> The Samahang Manggagawa sa St. James School of Quezon City (Samahang
Manggagawa) filed a petition for certification election to determine the collective
bargaining representative of the motor pool, construction and transportation
employees of St. James School of Quezon City (St. James).
> St. James filed a certification election protest challenging the 84 votes. St. James
alleged that it had 179 rank and file employees, none of whom voted in the
certification election. St. James argued that those who voted were not its regular
employees but construction workers of an independent contractor.
> Med-Arbiter rendered the certification election for the rank and file employees of
respondent/protestant St. James School a failure and null and void ab initio.
> Secretary of Labor reversed and set aside the ruling of Med-Arb.
ISSUES:
(1) Whether or not the formation of labor union is valid?
(2) Whether or not the petition of certification of election is valid?
RULINGS:
(1) YES. St. James may no longer question the validity of the formation of the labor
union. The Court of Appeals ruled that the construction workers are actually St.
James regular employees in its motor pool, construction and transportation
departments. The Court of Appeals also ruled that Architect Bacoy is a labor-only
contractor and thus an agent of St. James, which is the real employer.
(2) YES. St. James has five campuses. The members of Samahang Manggagawa
are employees in the Tandang Sora campus. Under its constitution and by-laws,
Samahang Manggagawa seeks to represent the motor pool, construction and
transportation employees of the Tandang Sora campus.[20] Thus, the computation
of the quorum should be based on the rank and file motor pool, construction and
transportation employees of the Tandang Sora campus and not on all the employees
in St. James five campuses.
The motor pool, construction and transportation employees of the Tandang Sora
campus had 149 qualified voters at the time of the certification election. Hence, the
149 qualified voters should be used to determine the existence of a quorum. Since a
majority or 84 out of the 149 qualified voters cast their votes, a quorum existed in the
certification election.

St. James further alleges that the names of the 84 voters are not on the list of its
rank and file employees. On this score, we sustain the factual finding of the DOLE
that the list submitted by St. James consists of its administrative, teaching and office
personnel. These administrative, teaching and office personnel are not members of
Samahang Manggagawa. They do not belong to the bargaining unit that Samahang
Manggagawa seeks to represent. Hence, the list submitted by St. James may not
be used as basis to determine the members of Samahang Manggagawa.

SAN MIGUEL CORPORATION vs LAGUESMA

FACTS:
> Petitioner San Miguel Corporation (SMC) prays that the Resolution declaring
respondent union as the sole and exclusive bargaining agent of all the Magnolia
sales personnel in northern Luzon be set aside for having been issued in excess of
jurisdiction and/or with grave abuse of discretion.
> North Luzon Magnolia Sales Labor Union (respondent union for brevity) filed with
the Department of Labor a petition for certification election among all the regular
sales personnel of Magnolia Dairy Products in the North Luzon Sales Area.
> Petitioner opposed the petition and questioned the appropriateness of the
bargaining unit sought to be represented by respondent union. It claimed that its
bargaining history in its sales offices, plants and warehouses is to have a separate
bargaining unit for each sales office.
> Respondent union won the election and certified respondent union as the sole and
exclusive bargaining agent for all the regular sales personnel in all the sales offices
of Magnolia Dairy Products in the North Luzon Sales Area.
> Petitioner appealed to the Secretary of Labor but denied SMC's appeal and
affirmed the Order of the Med- Arbiter.
ISSUE:
Whether or not respondent union represents an appropriate bargaining unit?
RULING:
YES. A bargaining unit is a "group of employees of a given employer, comprised of
all or less than all of the entire body of employees, consistent with equity to the
employer, indicate to be the best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the law." 5
The fundamental factors in determining the appropriate collective bargaining
unit are: (1) the will of the employees (Globe Doctrine); 6 (2) affinity and unity of the

employees' interest, such as substantial similarity of work and duties, or similarity of

compensation and working conditions (Substantial Mutual Interests Rule); (3) prior
collective bargaining history; and (4) similarity of employment status.
Court has categorically ruled that the existence of a prior collective bargaining
history is neither decisive nor conclusive in the determination of what constitutes an
appropriate bargaining unit. 8
Indeed, the test of grouping is mutuality or commonality of interests. The employees
sought to be represented by the collective bargaining agent must have substantial
mutual interests in terms of employment and working conditions as evinced by the
type of work they perform.
In the case at bench, respondent union sought to represent the sales personnel in
the various Magnolia sales offices in northern Luzon. There is similarity of
employment status for only the regular sales personnel in the north Luzon area are
covered. They have the same duties and responsibilities and substantially similar
compensation and working conditions. The commonality of interest among he sales
personnel in the north Luzon sales area cannot be gainsaid. In fact, in the
certification election held on November 24, 1990, the employees concerned
accepted respondent union as their exclusive bargaining agent. Clearly, they have
expressed their desire to be one.
Surely, it would not be for the best interest of these employees if they would further
be fractionalized. The adage "there is strength in number" is the very rationale
underlying the formation of a labor union.

COASTAL SUBIC BAY TERMINAL, INC. vs DOLE

FACTS:
> Private respondents Coastal Subic Bay Terminal, Inc. Rank-and-File Union
(CSBTI-RFU) and Coastal Subic Bay Terminal, Inc. Supervisory Union (CSBTI-SU)
filed separate petitions for certification election before Med-Arbiter.
> The rank-and-file union insists that it is a legitimate labor organization having been
issued a charter certificate by the Associated Labor Union (ALU), and the
supervisory union by the Associated Professional, Supervisory, Office and Technical
Employees Union (APSOTEU). Private respondents also alleged that the
establishment in which they sought to operate was unorganized.
> Petitioner Coastal Subic Bay Terminal, Inc. (CSBTI) opposed both petitions for
certification election alleging that the rank-and-file union and supervisory union were
not legitimate labor organizations, and that the proposed bargaining units were not
particularly described.

> The Med-Arbiter held that the ALU and APSOTEU are one and the same
federation having a common set of officers. Thus, the supervisory and the rank-andfile unions were in effect affiliated with only one federation.
> Both parties appealed to the Secretary of Labor and Employment, who reversed
the decision of the Med-Arbiter and ruled that CSBTI-SU and CSBTI-RFU have
separate legal personalities to file their separate petitions for certification election. It
further ruled that ALU and APSOTEU are separate and distinct labor unions having
separate certificates of registration from the DOLE. They also have different sets of
locals.
> On appeal, the Court of Appeals affirmed the decision of the Secretary.

separately petition for certification elections.

The purpose of affiliation of the local unions into a common enterprise is
to increase the collective bargaining power in respect of the terms and conditions of
labor. When there is commingling of officers of a rank-and-file union with a
supervisory union, the constitutional policy on labor is circumvented. Labor
organizations should ensure the freedom of employees to organize themselves for
the purpose of leveling the bargaining process but also to ensure the freedom of
workingmen and to keep open the corridor of opportunity to enable them to do it for
themselves.

ISSUE:
Whether or not the supervisory and the rank-and-file unions file separate petitions
for certification election?

HOME DEVELOPMENT MUTUAL FUND (HDMF) vs. COA

RULING:

FACTS:

We have to qualify.

> Republic Act No. 6971, An Act to Encourage Productivity and Maintain Industrial
Peace by Providing Incentives to Both Labor and Capital, was approved and took
effect on December 1990 which states that Act shall apply to all business
enterprises with or without existing and duly recognized or certified labor
organizations, including government-owned and controlled corporations performing
proprietary functions. It shall cover all employees and workers including casual,
regular, supervisory and managerial employees.
> Petitioner HDMF granted Productivity Incentive Bonus equivalent to one month
salary plus allowance to all its personnel pursuant to the said Act.
> The Department of Labor and Employment and the Department of Finance issued
the Supplemental Rules Implementing Republic Act No. 6971, which provides: All
business enterprises with or without existing duly certified labor organizations
including government-owned and controlled corporations performing proprietary
functions which are established solely for business or profit or gain and accordingly
excluding those created, maintained or acquired in pursuance of a policy of the
state, enunciated in the constitution or by law, and those whose officers and
employees are covered by the Civil Service.
> The grant of productivity incentive bonus to the HDMF personnel was disallowed,
stating that Republic Act No. 6971 does not apply to government-owned or
controlled corporations or to government financial institutions with original charters
performing proprietary functions, such as the HDMF.
> Commission on Audit affirmed the audit disallowance.

A word of caution though, under Article 245 of the Labor Code, supervisory
employees are not eligible for membership in a labor union of rank-and-file
employees. The supervisory employees are allowed to form their own union but they
are not allowed to join the rank-and-file union because of potential conflicts of
interest. Further, to avoid a situation where supervisors would merge with the rankand-file or where the supervisors labor union would represent conflicting interests, a
local supervisors union should not be allowed to affiliate with the national federation
of unions of rank-and-file employees where that federation actively participates in
the union activity within the company. Thus, the limitation is not confined to a case of
supervisors wanting to join a rank-and-file union. The prohibition extends to a
supervisors local union applying for membership in a national federation the
members of which include local unions of rank-and-file employees. In De La Salle
University Medical Center and College of Medicine v. Laguesma, we reiterated the
rule that for the prohibition to apply, it is not enough that the supervisory union and
the rank-and-file union are affiliated with a single federation. In addition, the
supervisors must have direct authority over the rank-and-file employees.
In the instant case, the national federations that exist as separate
entities to which the rank-and-file and supervisory unions are separately affiliated
with, do have a common set of officers. In addition, APSOTEU, the supervisory
federation, actively participates in the CSBTI-SU while ALU, the rank-and-file
federation, actively participates in the CSBTI-RFU, giving occasion to possible
conflicts of interest among the common officers of the federation of rank-and-file and
the federation of supervisory unions. For as long as they are affiliated with the
APSOTEU and ALU, the supervisory and rank-and-file unions both do not meet the
criteria to attain the status of legitimate labor organizations, and thus could not

ISSUE:
Whether or not the Supplemental Implementing Rules are valid? If so, whether it
may be given retroactive effect?

RULING:
YES. Petitioner is a government-owned and controlled corporation performing
proprietary functions with original charter or created by special law, therefore,
excluded from the coverage of Republic Act No. 6971.
Since Republic Act No. 6971 intended to cover only government-owned and
controlled corporations incorporated under the general corporation law, the power of
administrative officials to promulgate rules in the implementation of the statute is
necessarily limited to what is intended and provided for in the legislative enactment.
Hence, the Supplemental Rules clarified that government-owned and controlled
corporations performing proprietary functions which are created, maintained or
acquired in pursuance of a policy of the state, enunciated in the constitution or by
law, and those whose officers and employees are covered by the Civil Service are
excluded from the coverage of Republic Act No. 6971.
Therefore, even if petitioner HDMF granted the Productivity Incentive Bonus before
the Supplemental Rules were issued clarifying that petitioner was excluded from the
coverage of Republic Act No. 6971, the employees of HDMF did not acquire a
vested right over said bonus because they were not entitled to it under Republic Act
No. 6971.
The Board, therefore, was aware that possibly HDMF may not be covered by
Republic Act No. 6971. It should have exercised prudence by awaiting the definite
ruling on the coverage to prevent legal problems.
Regarding the validity of the Supplemental Rules Implementing Republic Act No.
6971, the Court held that said rules issued by the Secretary of Labor and
Employment and the Secretary of Finance were in accord with the intendment and
provisions of Republic Act No. 6971.