EN BANC The right of the people, including those employed in the public and private sectors,

to form unions, associations, or societies for the purposes not contrary to law shall
[G.R. No. 122226. March 25, 1998]
not be abridged.
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON.
For this reason, the petition was referred to the Court en banc.
BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES,
The Issues in this Case
INC. respondents.

DECISION Two question are presented by the petition: (1) whether the route managers at Pepsi-
Cola Products Philippines, Inc. are managerial employees and (2) whether Art. 245,
MENDOZA, J.:
insofar as it prohibits managerial employees from forming, joining or assisting labor
Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the unions, violates Art. III, 8 of the Constitution.
union filed a petition for certification election on behalf of the route managers at
In resolving these issues it would be useful to begin by defining who are managerial
Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the med-
employees and considering the types of managerial employees.
arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that
Types of Managerial Employees
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:
The term manager generally refers to anyone who is responsible for subordinates and
Ineligibility of managerial employees to join any labor organization; right of other organization resources.[1] As a class, managers constitute three levels of a
supervisory employees. Managerial employees are not eligible to join, assist or form pyramid:
any labor organization. Supervisory employees shall not be eligible for membership
Top Management
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, Middle Management
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 First Line
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 Management
to form, assist or join unions, contravenes Art. III 8 of the Constitution which provides: (also called Supervisor)

____________________

____________________
Operatives 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
Or Operating Employees
supervisors who form the latter group. Whether they belong to the first or second
FIRST-LINE MANAGERS The lowest level in an organization at which individuals are category, managers, vis--vis employers, are, likewise, employees.[3]
responsible for the work of others is called first-line or first-level management. First-
The first question is whether route managers are managers are managerial
line managers direct operating employees only; they do not supervise other
employees or supervisors.
managers. Example of first-line managers are the foreman or production supervisor
Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees
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.
It appears that this question was the subject of two previous determinations by the
MIDDLE MANAGERS The term middle management can refer to more than one level Secretary of Labor and Employment, in accordance with which this case was decided
in an organization. Middle managers direct the activities of other managers and by the med-arbiter.
sometimes also those of operating employees. Middle managers principal
In Case No. OS-MA-10318-91, entitled Workerss Alliance Trade Union (WATU) v.
responsibilities are to direct the activities that implement their organizations policies
Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the Secretary
and to balance the demands of their superiors with the capacities of their
of Labor found:
subordinates. A plant manager in an electronics firm is an example of a middle
manager. We examined carefully the pertinent job description of the subject employees and
other documentary evidence on record vis--vis paragraph (m), Article 212 of the Labor
TOP MANAGERS Composed of a comparatively small group of executives, top
Code, as amended, and we find that only those employees occupying the position of
management is responsible for the overall management of the organization. It
route manager and accounting manager are managerial employees. The rest i.e.
establishes operating policies and guides the organizations interactions with its
quality control manager, yard/transport manager and warehouse operations
environment. Typical titles of top managers are chief executive officer, president, and
manager are supervisory employees.
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] 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
As can be seen from this description, a distinction exist between those who have the
amended. Designations or titles of positions are not controlling. In the instant case,
authority to devise, implement and control strategic and operational policies (top and
nothing on record will support the claim that the quality control manager,
middle managers) and those whose task is simply to ensure that such polices are
yard/transport manager and warehouse operations manager are vested with said
carried out by the rank-and-file employees of an organization (first-level
attributes. The warehouse operations manager, for example, merely assists the plant
managers/supervisors). What distinguishes them from the rank-and file employees is
finance manager in planning, organizing, directing and controlling all activities relative
that they act in the interest of the employer in supervising such rank-and-file
to development and implementation of an effective management control
employees.
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 of the Rules and Regulations Implementing the Labor Code. The fact that said rule
managerial employees. Their job descriptions clearly reveal so. 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
On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92, entitled In
summary nature of the proceeding. The clearance requirement was therefore
Re: Petition for Direct Certification and/or Certification Election-Route
necessary only as an expeditious shield against arbitrary dismissal without the
Managers/Supervisory Employees of Pepsi-Cola Products Phils. Inc., as follows:
knowledge and supervision of the Department of Labor. Hence, a duly approved
The issue brought before us is not of first impression. At one time, we had the clearance implied that the dismissal was legal or for cause (Sec. 2).[7]v. National Labor
occasion to rule upon the status of route manager in the same company vis a vis the Relations Commission, 177 SCRA 93, 100 (1989).7
issue as to whether or not it is supervisory employee or a managerial employee. In
But the doctrine of res judicata certainly applies to adversary administrative
the case of Workers Alliance Trade Unions (NATU) vs. Pepsi Cola Products, Phils.,
proceedings. As early as 1956, in Brillantes v. Castro,[8]8 we sustained the dismissal of
Inc. (OS-MA-A-10-318-91), 15 November 1991, we ruled that a route manager is a
an action by a trial court on the basis of a prior administrative determination of the
managerial employee within the context of the definition of the law, and hence,
same case by the Wage Administration Service, applying the principle of res
ineligible to join, form or assist a union. We have once more passed upon the logic of
judicata. Recently, in Abad v. NLRC[9]9 we applied the related doctrine of stare decisis
our Decision aforecited in the light of the issues raised in the instant appeal, as well
in holding that the prior determination that certain jobs at the Atlantic Gulf and Pacific
as the available documentary evidence on hand, and have come to the view that
Co. were project employments was binding in another case involving another group
there is no cogent reason to depart from our earlier holding. Route Managers are, by
of employees of the same company. Indeed, in Nasipit Lumber Co., this Court clarified
the very nature of their functions and the authority they wield over their
toward the end of its opinion that "the doctrine of res judicata applies . . . to judicial
subordinates, managerial employees. The prescription found in Art. 245 of the Labor
or quasi judicial proceedings and not to the exercise of administrative
Code, as amended therefore, clearly applies to them.[4]4
powers."[10]v. National Labor Relations Commission, supra note 7.10 Now
Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission,[5]5 proceedings for certification election, such as those involved in Case No. OS-M-A-10-
however, petitioner argues that these previous administrative determinations do not 318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore,
have the effect of res judicata in this case, because "labor relations proceedings" are decisions rendered in such proceedings can attain finality.[11]v. B.F. Goodrich
"non-litigious and summary in nature without regard to legal technicalities."[6] Nasipit (Marikina Factory) Confidential and Salaries Employees Union-NATU, 49 SCRA 532
Lumber Co. involved a clearance to dismiss an employee issued by the Department of (1973).11
Labor.The question was whether in a subsequent proceeding for illegal dismissal, the
Thus, we have in this case an expert's view that the employees concerned are
clearance was res judicata. In holding it was not, this Court made it clear that it was
managerial employees within the purview of Art. 212 which provides:
referring to labor relations proceedings of a non-adversary character, thus:
(m) "managerial employee" is one who is vested with powers or prerogatives to lay
The requirement of a clearance to terminate employment was a creation of the
down and execute management policies and/or to hire, transfer, suspend, lay off,
Department of labor to carry out the Labor Code provisions on security of tenure and
recall, discharge, assign or discipline employees.Supervisory employees are those
termination of employment. The proceeding subsequent to the filing of an
who, in the interest of the employer, effectively recommend such managerial actions
application for clearance to terminate employment was outlined in Book V, Rule XIV
if the exercise of such authority is not merely routinary or clerical in nature but The Route Manager is accountable for the following:
requires the use of independent judgment. All employees not falling within any of the
1.1 SALES DEVELOPMENT
above definitions are considered rank-and-file employees for purposes of this Book.
1.1.1 Achieve the sales plan.
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 1.1.2 Achieve all distribution and new account objectives.
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, 1.1.3 Develop new business opportunities thru personal contacts with dealers.
concerned that employees who are otherwise supervisors may wittingly or 1.1.4 Inspect and ensure that all merchandizing [sic] objectives are achieved in all
unwittingly be classified as managerial personnel and thus denied the right of self- outlets.
organization, has decided to review the record of this case.
1.1.5 maintain and improve productivity of all cooling equipment and kiosks.
DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record

1.1.6 Execute and control all authorized promotions.

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
1.1.7 Develop and maintain dealer goodwill.
1.1.8 Ensure all accounts comply with company suggested retail pricing.
1.1.9 Study from time to time individual route coverage and productivity for possible
adjustments to maximize utilization of resources.
1.2 Administration
1.2.1 Ensure the proper loading of route trucks before check-out and the proper
sorting of bottles before check-in.
1.2.2 Ensure the upkeep of all route sales reports and all other related reports and
forms required on an accurate and timely basis.
1.2.3 Ensure proper implementation of the various company policies and procedures
incl. but not limited to shakedown; route shortage; progressive discipline; sorting;
spoilages; credit/collection; accident; attendance.
1.2.4 Ensure collection of receivables and delinquent accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate and develop all assigned route salesmen
and helpers at least 3 days a week, to be supported by required route ride
documents/reports & back check/spot check at least 2 days a week to be supported
by required documents/reports.
2.1.2 Conduct sales meetings and morning huddles. Training should focus on the
enhancement of effective sales and merchandizing [sic] techniques of the salesmen
and helpers. Conduct group training at least 1 hour each week on a designated day
and of specific topic.
2.2 Code of Conduct
2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of
conduct and the universal standards of unquestioned business ethics.[12]12
Earlier in this opinion, reference was made to the distinction between managers per
se (top managers and middle managers) and supervisors (first-line managers). That
distinction is evident in the work of the route managers which sets them apart from
supervisors in general. Unlike supervisors who basically merely direct operating
employees in line with set tasks assigned to them, route managers are responsible
for the success of the company's main line of business through management of their
respective sales teams. Such management necessarily involves the planning,
direction, operation and evaluation of their individual teams and areas whichthe work
of supervisors does not entail.
The route managers cannot thus possibly be classified as mere supervisors because
their work does not only involve, but goes far beyond, the simple direction or
supervision of operating employees to accomplish objectives set by those above
them. They are not mere functionaries with simple oversight functions but business
administrators in their own right. An idea of the role of route managers as
managers per se can be gotten from a memo sent by the director of metro sales
operations of respondent company to one of the route managers. It reads:[13]
03 April 1995
To : CESAR T. REOLADA
From : REGGIE M. SANTOS
Subj : SALARY INCREASE
Effective 01 April 1995, your basic monthly salary of P11,710 will be increased
to P12,881 or an increase of 10%. This represents the added managerial
responsibilities you will assume due to the recent restructuring and streamlining of
Metro Sales Operations brought about by the continuous losses for the last nine (9)
months.
Let me remind you that for our operations to be profitable, we have to sustain the
intensity and momentum that your group and yourself have shown last March. You
just have to deliver the desired volume targets, better negotiated concessions,
rationalized sustaining deals, eliminate or reduced overdues, improved collections,
more cash accounts, controlled operating expenses, etc. Also, based on the agreed
set targets, your monthly performance will be closely monitored.
You have proven in the past that your capable of achieving your targets thru better
planning, managing your group as a fighting team, and thru aggressive selling. I am
looking forward to your success and I expect that you just have to exert your doubly
best in turning around our operations from a losing to a profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers, quoted in the separate opinion
of Justice Vitug, although entitled "RM's Job Description," is only a summary of
performance standards. It does not show whether route managers are managers per
se or supervisors. Obviously, these performance standards have to be related to the
specific tasks given to route managers in the four-page "Route Manager Position
Description," and, when this is done, the managerial nature of their jobs is fully
revealed. Indeed, if any, the card indicates the great latitude and discretion given to
route managers - from servicing and enhancing company goodwill to supervising and
auditing accounts, from trade (new business) development to the discipline, training
and monitoring of performance of their respective sales teams, and so forth, - if they
are to fulfill the company's expectations in the "key result areas."
Article 212(m) says that "supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment." Thus, their only power is to recommend. Certainly, the
route managers in this case more than merely recommend effective management
action. They perform operational, human resource, financial and marketing functions
for the company, all of which involve the laying down of operating policies for
themselves and their teams. For example, with respect to marketing, route managers,
in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are
charged, among other things, with expanding the dealership base of their respective
sales areas, maintaining the goodwill of current dealers, and distributing the
company's various promotional items as they see fit. It is difficult to see how
supervisors can be given such responsibility when this involves not just the routine
supervision of operating employees but the protection and expansion of the
company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire people (the
evidence shows that they only "recommended" or "endorsed" the taking of
disciplinary action against certain employees), this is because this is a function of the
Human Resources or Personnel Department of the company.[14]14 And neither should
it be presumed that just because they are given set benchmarks to observe, they
are ipso factosupervisors. Adequate control methods (as embodied in such concepts
as "Management by Objectives [MBO]" and "performance appraisals") which require
a delineation of the functions and responsibilities of managers by means of ready
reference cards as here, have long been recognized in management as effective tools
for keeping businesses competitive.
This brings us to the second question, whether the first sentence of Art. 245 of the
Labor Code, prohibiting managerial employees from forming, assisting or joining any
labor organization, is constitutional in light of Art. III, 8 of the Constitution which
provides:
The right of the people, including those employed in the public and private sectors,
to form unions, associations, or societies for purposes not contrary to law shall not
be abridged.
As already stated, whether they belong to the first category (managers per se) or the
second category (supervisors), managers are employees. Nonetheless, in the United
States, as Justice Puno's separate opinion notes, supervisors have no right to form
unions. They are excluded from the definition of the term "employee" in 2(3) of the
Labor-Management Relations Act of 1947.[15]v. Bell Aerospace Co., 416 U.S. 281, n 11,
40 L.Ed.2d 134, 147, n. 11 (1974), thus:
Supervisors are management people. They have distinguished themselves in their
work. They have demonstrated their ability to take care of themselves without
depending upon the pressure of collective action. No one forced them to become
supervisors. They abandoned the "collective security" of the rank and file voluntarily,
because they believed the opportunities thus opened to them to be more valuable to
them than such "security". It seems wrong, and it is wrong, to subject people of this
kind, who have demonstrated their initiative, their ambition and their ability to get
ahead, to the leveling processes of seniority, uniformity and standardization that the
Supreme Court recognizes as being fundamental principles of unionism. (J.I. Case
Co. v. National Labor Relations Board, 321 U.S. 332, 88 L.Ed. 762, 64 S. Ct. 576
(1994). It is wrong for the foremen, for it discourages the things in them that made
them foremen in the first place. For the same reason, that it discourages those best
qualified to get ahead, it is wrong for industry, and particularly for the future strength
and productivity of our country.15 In the Philippines, the question whether
managerial employees have a right of self-organization has arisen with respect to
first-level managers or supervisors, as shown by a review of the course of labor
legislation in this country.
Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws
Before the promulgation of the Labor Code in 1974, the field of labor relations was
governed by the Industrial Peace Act (R.A. No. 875).
In accordance with the general definition above, this law defined "supervisor" as
follows:
SECTION 2. . . .
(k) "Supervisor" means any person having authority in the interest of an employer, to
hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline
other employees, or responsibly to direct them, and to adjust their grievances, or
effectively to recommend such acts, if, in connection with the foregoing, the exercise
of such authority is not of a merely routinary or clerical nature but requires the use
of independent judgment.[16]16
The right of supervisors to form their own organizations was affirmed:
SEC. 3. Employees' Right to Self-Organization. -- Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for
the purpose of collective bargaining through representatives of their own choosing
and to engage in concerted activities for the purpose of collective bargaining and
other mutual aid and protection. Individuals employed as supervisors shall not be
eligible for membership in a labor organization of employees under their supervision
but may form separate organizations of their own.[17]
For its part, the Supreme Court upheld in several of its decisions the right of
supervisors to organize for purposes of labor relations.[18]v. Filoil Supervisory and
Confidential Employees Association, 6 SCRA 522 (1972); Kapisanan ng mga
Manggagawa sa Manila Railroad Co. v. CIR, 106 Phil 607 (1959).18
Although it had a definition of the term "supervisor," the Industrial Peace Act did not
define the term "manager." But, using the commonly-understood concept of
"manager," as above stated, it is apparent that the law used the term "supervisors"
to refer to the 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]J.)19 the right of all managerial employees to self-organization
was upheld as a general proposition, thus:
It would be going too far to dismiss summarily the point raised by respondent
Company - that of the alleged identity of interest between the managerial staff and
the employing firm. That should ordinarily be the case, especially so where the
dispute is between management and the rank and file. It does not necessarily follow
though that what binds the managerial staff to the corporation forecloses the
possibility of conflict between them.There could be a real difference between what
the welfare of such group requires and the concessions the firm is willing to
grant. Their needs might not be attended to then in the absence of any organization
of their own. Nor is this to indulge in empty theorizing. The record of respondent
Company, even the very case cited by it, is proof enough of their uneasy and troubled
relationship. Certainly the impression is difficult to erase that an alien firm failed to
manifest sympathy for the claims of its Filipino executives. To predicate under such
circumstances that agreement inevitably marks their relationship, ignoring that
discord would not be unusual, is to fly in the face of reality.
. . . The basic question is whether the managerial personnel can organize. What
respondent Company failed to take into account is that the right to self-organization
is not merely a statutory creation. It is fortified by our Constitution. All are free to
exercise such right unless their purpose is contrary to law. Certainly it would be to
attach unorthodoxy to, not to say an emasculation of, the concept of law if managers
as such were precluded from organizing. Having done so and having been duly
registered, as did occur in this case, their union is entitled to all the rights under
Republic Act No. 875. Considering what is denominated as unfair labor practice under Purchasing Assistant
Section 4 of such Act and the facts set forth in our decision, there can be only one
Jr. Construction Engineer
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 St. Sales Supervisor
obvious, in the negative.[20]20
Deport Supervisor A
Actually, the case involved front-line managers or supervisors only, as the plantilla of
employees, quoted in the main opinion,[21]J.) (emphasis added).21 clearly indicates: Terminal Accountant B

CAFIMSA members holding the following Supervisory Payroll Position Title are Merchandiser
Recognized by the Company Dist. Sales Prom. Supvr.
Payroll Position Title Instr. - Merchandising
Assistant to Mgr. - National Acct. Sales Asst. Dist. Accountant B
Jr. Sales Engineer Sr. Opers. Supervisor
Retail Development Asst. Jr. Sales Engineer A
Staff Asst. - 0 Marketing Asst. Bulk Ter. Supt.
Sales Supervisor Sr. Opers. Supvr.
Supervisory Assistant Credit Supervisor A
Jr. Supervisory Assistant Asst. Stores Supvr. A
Credit Assistant Ref. Supervisory Draftsman
Lab. Supvr. - Pandacan Refinery Shift Supvr. B
Jr. Sales Engineer B Asst. Supvr. A - Operations (Refinery)
Operations Assistant B Refinery Shift Supvr. B
Field Engineer Asst. Lab. Supvr. A (Refinery)
Sr. Opers. Supvr. - MIA A/S St. Process Engineer B (Refinery)
Asst. Supvr. A - Maintenance (Refinery)
Asst. Supvr. B - Maintenance (Refinery)
Supervisory Accountant (Refinery)
Communications Supervisor (Refinery)
Finally, also deemed included are all other employees excluded from the rank and file
unions but not classified as managerial or otherwise excludable by law or applicable
judicial precedents.
Right of Self-Organization of Managerial Employees under the Labor Code
Thus, the dictum in the Caltex case which allowed at least for the theoretical
unionization of top and middle managers by assimilating them with the supervisory
group under the broad phrase "managerial personnel," provided the lynchpin for
later laws denying the right of self-organization not only to top and middle
management employees but to front line managers or supervisors as well. Following
the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the
distinction between the first and second sub-groups of managerial
employees. Instead of treating the terms "supervisor" and "manager" separately, the
law lumped them together and called them "managerial employees," as follows:
ART. 212. Definitions . . . .
(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay off,
recall, discharge, assign or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this definition are considered
rank and file employees for purposes of this Book.[22]22
The definition shows that it is actually a combination of the commonly understood
definitions of both groups of managerial employees, grammatically joined by the
phrase "and/or."
This general definition was perhaps legally necessary at that time for two reasons.
First, the 1974 Code denied supervisors their right to 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 cancelled. However, existing collective agreements with such unions,
the life of which extends beyond the date of effectivity of the Code, shall be respected
until their expiry date insofar as the economic benefits granted therein are
concerned.
Members of supervisory unions who do not fall within the definition of managerial
employees shall become eligible to join or assist the rank and file labor organization,
and if none exists, to form or assist in the forming of such rank and file
organization. The determination of who are managerial employees and who are not
shall be the subject of negotiation between representatives of the supervisory union
and the employer. If no agreement is reached between the parties, either or both of
them may bring the issue to the nearest Regional Office for determination.
The Department of Labor continued to use the term "supervisory unions" despite the
demise of the legal definition of "supervisor" apparently because these were the
unions of front line managers which were then allowed as a result of the statutory
grant of the right of 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]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]28
Implications of the Lerum Proposal
In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by including
labor unions in the guarantee of organizational right should be taken in the context
of statements that his aim was the removal of the statutory ban against security
guards and supervisory employees joining labor organizations. The approval by the
Constitutional Commission of his proposal can only mean, therefore, that the
Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. By
implication, no similar absolute constitutional right to organize for labor purposes
should be deemed to have been granted to top-level and middle managers. As to
them the right of self-organization may be regulated and even abridged conformably
to Art. III, 8.
Constitutionality of Art. 245
Finally, the question is whether the present ban against managerial employees, as
embodied in Art. 245 (which superseded Art. 246) of the Labor Code, is valid. This
provision reads:
ART. 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. - Managerial employees are not eligible to join, assist or form
any labor organization. Supervisory employees shall not be eligible for membership
in a labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own.[29]29
This provision is the result of the amendment of the Labor Code in 1989 by R.A. No.
6715, otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace Act or
the provisions of the Labor Code which it superseded, R.A. No. 6715 provides
separate definitions of the terms "managerial" and "supervisory employees," as
follows:
ART. 212. Definitions. . . .
(m) "managerial employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire transfer, suspend, lay off,
recall, discharge, assign or discipline employees.Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions
if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of the
above definitions are considered rank-and-file employees for purposes of this Book.
Although the definition of "supervisory employees" seems to have been unduly
restricted to the last phrase of the definition in the Industrial Peace Act, the legal
significance given to the phrase "effectively recommends" remains the same. In fact,
the distinction between top and middle managers, who set management policy, and
front-line supervisors, who are merely responsible for ensuring that such policies are
carried out by the rank and file, is articulated in the present definition.[30]30 When
read in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully
carries out the intent of the Constitutional Commission in framing Art. III, 8 of the
fundamental law.
Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against
managerial employees forming a union. The right guaranteed in Art. III, 8 is subject to
the condition that its exercise should be for purposes "not contrary to law." In the
case of Art. 245, there is a rational basis for prohibiting managerial employees from
forming or joining labor organizations. As Justice Davide, Jr., himself a constitutional
commissioner, said in his ponencia in Philips Industrial Development, Inc. v.
NLRC:[31]31
In the first place, all these employees, with the exception of the service engineers and
the sales force personnel, are confidential employees. Their classification as such is
not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-
FFW explicitly considered them as confidential employees. By the very nature of their
functions, they assist and act in a confidential capacity to, or have access to
confidential matters of, persons who exercise managerial functions in the field of
labor relations. As such, the rationale behind the ineligibility of managerial employees
to form, assist or joint a labor union equally applies to them.

In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this
rationale, thus:

". . . The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the latter might
not be assured of their loyalty to the Union in view of evident conflict of interests. The
Union can also become company-dominated with the presence of managerial
employees in Union membership."[32]

To be sure, the Court in Philips Industrial was dealing with the right of confidential
employees to organize. But the same reason for denying them the right to organize
justifies even more the ban on managerial employees from forming unions. After all,
those who qualify as top or middle managers are executives who receive from their
employers information that not only is confidential but also is not generally available
to the public, or to their competitors, or to other employees. It is hardly necessary to
point out that to say that the first sentence of Art. 245 is unconstitutional would be
to contradict the decision in that case.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.
THIRD DIVISION

CAINTA CATHOLIC SCHOOL G.R. No. 151021 TINGA, J.:

and MSGR. MARIANO

T. BALBAGO, The main issue for resolution hinges on the validity of a stipulation in a Collective
Bargaining Agreement (CBA) that allows management to retire an employee in its
Petitioners, Present:
employ for a predetermined lengthy period but who has not yet reached the
minimum compulsory retirement age provided in the Labor Code. Jurisprudence has
answered the question in the affirmative a number of times and our duty calls for the
QUISUMBING, J., application of the principle of stare decisis. As a consequence, we grant the petition
Chairperson, and reverse the Court of Appeals.

- versus - CARPIO,

CARPIO-MORALES, Before us is a petition for review on certiorari under Rule 45 of the Rules of Court,
assailing the Decision[1] dated 20 August 2001 of the Court of Appeals in CA-G.R. SP
TINGA, and No. 50851, which reversed the Resolutions dated 31 January 1997,[2] and 30 April
VELASCO, JR., JJ. 1997[3] of the National Labor Relations Commission (NLRC), Third Division in NLRC
NCR CC No. L-000028-93 (NLRC RAB-IV-7-6827-94-R), as well as the
CAINTA CATHOLIC SCHOOL Resolution[4] dated 6 December 2001.
EMPLOYEES UNION Promulgated:

(CCSEU), The antecedent facts follow:

Respondent. May 4, 2006

x------------------------------------------------------------------------------------x
DECISION
On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into
between Cainta Catholic School (School) and the Cainta Catholic School Employees
Union (Union) effective 1 January 1986 to 31 May 1989. This CBA provided, among
others, that:
ARTICLE IX On 15 October 1993, the School retired Llagas and Javier, who had rendered more
than twenty (20) years of continuous service, pursuant to Section 2, Article X of the
DURATION OF AGREEMENT
CBA, to wit:

This Collective Bargaining Agreement shall become effective and binding upon the
parties from January 1, 1986 up to May 31, 1989. At least sixty (60) days before the
expiration of this Agreement, the parties hereto shall submit written proposals which
shall be made the basis of negotiations for the execution of a new agreement.
An employee may be retired, either upon application by the employee himself or by
the decision of the Director of the School, upon reaching the age of sixty (60)
or after having rendered at

If no new agreement is reached by the parties at the expiration of this agreement, all
the provisions of this Agreement shall remain full force and in effect, up to the time
a new Agreement shall be executed.[5]

least twenty (20) years of service to the School the last three (3) years of which must
be continuous.[7]
Msgr. Mariano Balbago (Balbago) was appointed School Director in April 1987. From
this time, the Union became inactive.

It was only in 10 September 1993 that the Union held an election of officers, with
Mrs. Rosalina Llagas (Llagas) being elected as President; Paz Javier (Javier), Vice-
President; Fe Villegas (Villegas), Treasurer; and Maria Luisa Santos (Santos),
Secretary. Llagas was then the Dean of the Student Affairs while Villegas
and Santos were Year-Level Chairmen. The other elected officers were Rizalina
Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer; Gilda Galange and
Jimmy del Rosario, auditors; Filomeno Dacanay and Adelina Andres, P.R.O.s; and
Danilo Amigo and Arturo Guevarra, business managers.[6]
Three (3) days later, the Union filed a notice of strike with the National Conciliation
and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-93.
On 8 November 1993, the Union struck and picketed the Schools entrances.
On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued an
Order certifying the labor dispute to the National Labor Relations Commission
(NLRC). The dispositive portion reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby certifies the labor dispute at
the Cainta Catholic School to the National Labor Relations Commission for
compulsory arbitration, pursuant to Article 263(g) of the Labor Code as amended.
Accordingly, all striking teachers and employees are directed to return to work within
24 hours from receipt of this Order and the School Administrator to accept all
returning employees under the same terms and conditions prevailing prior to the
strike.
Furthermore, the effects of the termination of Ms. Rosalinda Llagas and Paz A. Javier
are hereby suspended. In line with this Order, the School Administration is ordered
to reinstate them to their former positions without loss of seniority rights and
privileges pending determination of the validity of their dismissal.
Both parties are further directed to cease and desist from committing any acts that
might aggravate the situation.
SO ORDERED.[8]
On 20 December 1993, the School filed a petition directly with the NLRC to declare
the strike illegal.
On 27 July 1994, the Union filed a complaint[9] for unfair labor practice before the
NLRC docketed as NLRC Case No. RAB-IV-7-6827-94-R, entitled, Cainta Catholic School
Employees Union v. Cainta Catholic School, et. al., before Arbitration Branch IV. Upon
motion, then Labor Arbiter Oswald Lorenzo ordered the consolidation of this unfair
labor practice case with the above-certified case.
On 31 January 1997, the NLRC rendered a Resolution favoring the School.
Three (3) issues were passed upon by the NLRC, namely: (1) whether the retirement
of Llagas and Javier is legal; (2) whether the School is guilty of unfair labor practice;
and (3) whether the strike is legal.
The NLRC ruled that the retirement of Llagas and Javier is legal as the School was
merely exercising an option given to it under the CBA.[10] The NLRC dismissed the
unfair labor practice charge against the School for insufficiency of
evidence. Furthermore, it was found that the strike declared by the Union from 8 to
12 November 1993 is illegal, thereby declaring all union officers to have lost their
employment status.[11]
The Union moved for reconsideration but it was denied in a Resolution dated 30 April
1997.
Hence, on 9 July 1997, the Union filed a petition for certiorari before this Court
docketed as G.R. No. 129548. The Court issued a temporary restraining order (TRO)
against the enforcement of the subject resolutions effective as of 23 July 1997. The
School, however, filed a motion for clarification considering that it had already
enforced the 31 January 1997 NLRC Resolution.
On 28 July 1997, ten (10) regular teachers, who were declared to have lost their
employment status under the aforesaid NLRC Resolution reported back to work but
the School refused to accept them by reason of its pending motion for
clarification. This prompted the Union to file a petition for contempt against Balbago
and his agents before this Court, docketed as G.R. No. 130004, which was later on
consolidated with G.R. No. 129548.
inclusive of allowances and other benefits or their monetary equivalent from 9 June
1997 up to the time of the finality of this decision; b) moral and exemplary damages
in the amount of ten thousand pesos (P10,000.00) and five thousand (P5,000.00),
respectively; 3) to pay Paz Javier, or her heirs: a) unpaid salaries, inclusive of
allowances and other benefits, including death benefits, or their monetary equivalent
from the time her compensation was withheld from her up to the time of her death;
b) separation pay equivalent to one (1) months salary for every year of service; and
c) moral and exemplary damages in the amount of ten thousand pesos (P10,000.00)
and five thousand pesos (P5,000.00), respectively.

Private respondents are also ordered to pay petitioner union attorneys fees
[12]
Pursuant to the ruling of this Court in St. Martin Funeral Homes v. NLRC, the case equivalent to five percent (5%) of the total judgment award.
was referred to the Court of Appeals and re-docketed as CA-G.R. SP No. 50851.

The petition for contempt, however, is DISMISSED for lack of merit.

On 20 August 2001, the Court of Appeals rendered a decision giving due course and
granting the petition to annul and set aside the 31 January 1997 and 30 April 1997
Resolutions of the NLRC; while dismissing the petition for contempt for lack of No pronouncement as to costs.
merit. The decretal portion of the decision reads:

SO ORDERED.[13]
WHEREFORE, premises considered, the petition to annul and set aside the 31 January
In reversing the decision of the NLRC, the Court of Appeals construed the retirement
1997 and the 30 April 1997 resolutions of the National Labor Relations Commission
of Llagas and Javier as an act amounting to unfair labor practice when viewed against
is GRANTED. Judgment is hereby RENDERED directing private respondents: 1)
the backdrop of the relevant circumstances obtaining in the case. The appellate court
to REINSTATE the terminated union officers, except Rosalinda Llagas, Paz Javier, Gilda
pointed out, thus:
Galange and Ester Amigo, to their former positions without loss of seniority rights and
other privileges with full backwages, inclusive of allowances and other benefits or
their monetary equivalent from 9 June 1997 up to the time of their actual
reinstatement; 2) to pay Rosalinda Llagas: a) separation pay equivalent to one (1)
month pay for every year of service, in lieu of reinstatement, with full backwages,
The two happened to be the most vocal, dynamic and influential of all union officers
and members and they held considerable suasion over the other
employees. Rosalinda Llagas objected to the signing of the prepared form distributed
by the school, as a consequence of which, no one accomplished the form, and
opposed the formation of the high school faculty club as the teachers already had
sufficient representation through the union. Paz Javier, on the other hand, demanded
that she be given the floor during the faculty club organizational meeting and went
on to win the presidency of the faculty club, conclusively showing that she enjoyed
the support of the high school teachers. They were therefore a new and different
breed of union leaders assertive, militant and independent the exact opposite of
former union president Victor Javier who seemed to be passive, cooperative and
pacific.The school saw the two as threats which it could not control, and faced with a
very uncomfortable situation of having to contend with an aggressive union which
just dominated the high school faculty club (except for Joel Javeniar, all of the faculty
clubs officers were union members; Rollo, p. 418), the school decided to nip in the
bud the reactivated union by retiring its most prominent leaders.
xxxx
It is not difficult to see the anti-union bias of the school. One of the first acts of private
respondent Msgr. Balbago immediately after his assumption of office as school
director was to ask for a moratorium on all union activities. With the union in inactive
status, the school felt secure and comfortable but when the union reactivated, the
school became apprehensive and reacted by retiring the unions two topmost officers
by invoking the provisions of the CBA. When the union furnished the school, through
counsel, a copy of a proposed CBA on 3 November 1993, the school in a cavalier
fashion ignored it on the pretext that the union no longer enjoyed the majority status
among the employees x x x[14]
The appellate court concluded that the retirement of the two (2) union officers was
clearly to bust the reactivated union.
Having established that the School committed unfair labor practice, the Court of
Appeals declared that the no-strike, no-lockout clause in the CBA was not violated
when the union members staged a strike from 8 to 12 November 1993.[15] It further
held that minor disorders or isolated incidents of perceived coercion attending the
strike do not categorize it as illegal:
We studied carefully the available records and found that the existence of force
during the strike was certainly not pervasive and widespread, or consistently and
deliberately resorted to as a matter of policy, so as to stamp the strike with illegality,
or to cause the loss of employment of the guilty party x x x [16]
The motion for reconsideration subsequently filed by the School was denied in a
Resolution dated 6 December 2001, save in case of some union officers where the
appellate court modified its ruling granting them separation pay instead of
reinstatement because of their retirement or death.[17]
Thereafter, petitioners filed this petition for review on certiorari raising three main
issues, summarized as: (1) whether the Schools decision to retire Llagas and Javier
constitutes unfair labor practice; (2) whether the strike was legal; and (3) whether
some union officers ordered dismissed are entitled to backwages.[18]
The School avers that the retirement of Llagas and Javier was clearly in accordance
with a specific right granted under the CBA. The School justifies its actions by invoking
our rulings in Pantranco North Express, Inc. v. NLRC[19] and Bulletin Publishing
Corporation v. Sanchez[20] that no unfair labor practice is committed by management
if the retirement was made in accord with management prerogative or in case of
voluntary retirement, upon approval of management.
The Union, relying on the findings made by the Court of Appeals,[21] argues that the
retirement of the two union officers is a mere subterfuge to bust the union.[22]
The NLRC, however, gave another justification to sustain the validity of the two union
officers forcible retirement, viz:
The retirement of Rosalinda Llagas has become inevitable because, being a
managerial employee by reason of her position as Dean of Student Affairs, she
accepted the Union presidency. She lost the trust and confidence on her by the
SCHOOL as she occupied a managerial position as Dean of Student Affairs. . . Being
also the union president, she has allowed her loyalties to be divided between the
administration and the union.
As to Paz Javier, her retirement was decided upon after an evaluation shows that she
was not performing well as her students were complaining about her brusque
attitude and bad language, aside from being habitually absent and late. [23]
At the outset, only questions of law are entertained by this Court through a petition
for review on certiorari. There are, however, well-recognized exceptions such as in
this case when the factual findings of the NLRC and the Court of Appeals are
contradictory.[24] A re-evaluation of the records of this case is necessary for its proper
resolution.
The key issue remains whether the forced retirement of Llagas and Javier was a valid
exercise of management prerogative. Undoubtedly, the retirement of the two (2)
union officers triggered the declaration of strike by the Union, and the ruling on
whether the strike was legal is highly dependent on whether the retirement was valid.
We are impelled to reverse the Court of Appeals and affirm the validity of the
termination of employment of Llagas and Javier, arising as it did from a management
prerogative granted by the mutually-negotiated CBA between the School and
the Union.
Pursuant to the existing CBA,[25] the School has the option to retire an employee upon
reaching the age limit of sixty (60) or after having rendered at least twenty (20) years
of service to the School, the last three (3) years of which must be continuous.
Retirement is a different specie of termination of employment from dismissal for just
or authorized causes under Articles 282 and 283 of the Labor Code. While in all three
cases, the employee to be terminated may be unwilling to part from service, there
are eminently higher standards to be met by the employer validly exercising the
prerogative to dismiss for just or authorized causes. In those two instances, it is
indispensable that the employer establish the existence of just or authorized causes
for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the
result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter after reaching a certain age agrees and/or
consents to sever his employment with the former.[26]
Article 287 of the Labor Code, as amended, governs retirement of employees, stating:
ART. 287. Retirement.
Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employees retirement
benefits under any collective bargaining agreement and other agreements shall not
be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
The CBA in the case at bar established 60 as the compulsory retirement age. However,
it is not alleged that either Javier or Llagas had reached the compulsory retirement
age of 60 years, but instead that they had rendered at least 20 years of service in the
School, the last three (3) years continuous. Clearly, the CBA provision allows the
employee to be retired by the School even before reaching the age of 60, provided
that he/she had rendered 20 years of service. Would such a stipulation be valid?
Jurisprudence affirms the position of the School.
Pantranco North Express, Inc. v. NLRC, cited by petitioners, finds direct application in
this case. The CBA involved in Pantranco allowed the employee to be compulsorily
retired upon reaching the age of 60 or upon completing [25] years of service to
[Pantranco]. On the basis of the CBA, private respondent was compulsorily retired by
Pantranco at the age of 52, after 25 years of service. Interpreting Article 287, the
Court ruled that the Labor Code permitted employers and employees to fix the
applicable retirement age at below 60 years of age. Moreover, the Court also held
that there was no illegal dismissal since it was the CBA itself that incorporated the
agreement reached between the employer and the bargaining agent with respect to
the terms and conditions of employment; hence, when the private respondent
ratified the CBA with his union, he concurrently agreed to conform to and abide by
its provisions. Thus, the Court asserted, [p]roviding in a CBA for compulsory
retirement of employees after twenty-five (25) years of service is legal and
enforceable so long as the parties agree to be governed by such CBA.[27]
A similar set of facts informed our decision in Progressive Development Corporation
v. NLRC.[28] The CBA therein stipulated that an employee with [20] years of service,
regardless of age, may be retired at his option or at the option of the company. The
stipulation was used by management to compulsorily retire two employees with
more than 20 years of service, at the ages of 45 and 38. The Court affirmed the validity
of the stipulation on retirement as consistent with Article 287 of the Labor Code.
 benefits less than what is guaranteed under Article 287 of the Labor Code, pursuant
to the provisions express proviso thereto in the provision.
Philippine Airlines, Inc. v. Airline Pilots Association of the Phils.[29] further bolsters the
Schools position. At contention therein was a provision of the PAL-ALPAP Retirement
Plan, the Plan having subsequently been misquoted in the CBA mutually negotiated
Yet the CBA in the case at bar contains no such infirmities which must be stricken
by the parties. The Plan authorized PAL to exercise the option of retirement over
down. There is no essential difference between the CBA provision in this case and
pilots who had chosen not to retire after completing 20 years of service or logging
those we affirmed in Pantranco and Progressive. Twenty years is a more than ideal
over 20,000 hours for PAL. After PAL exercised such option over a pilot, ALPAP
length of service an employee can render to one employer. Under ordinary
charged PAL with illegal dismissal and union-busting. While the Secretary of Labor
contemplation, a CBA provision entitling an employee to retire after 20 years of
upheld the unilateral retirement, it nonetheless ruled that PAL should first consult
service and accordingly collect retirement benefits is reward for services rendered
with the pilot to be retired before it could exercise such option. The Court struck
since it enables an employee to reap the fruits of his labor particularly retirement
down that proviso, ruling that the requirement to consult the pilots prior to their
benefits, whether lump-sum or otherwise at an earlier age, when said employee, in
retirement defeats the exercise by management of its option to retire the said
presumably better physical and mental condition, can enjoy them better and
employees, [giving] the pilot concerned an undue prerogative to assail the decision
longer.[30]
of management.

We affirm the continued validity of Pantranco and its kindred cases, and thus
By their acceptance of the CBA, the Union and its members are obliged to abide by
reiterate that under Article 287 of the Labor Code, a CBA may validly accord
the commitments and limitations they had agreed to cede to management. The
management the prerogative to optionally retire an employee under the terms and
questioned retirement provisions cannot be deemed as an imposition foisted on the
conditions mutually agreed upon by management and the bargaining union, even if
Union, which very well had the right to have refused to agree to allowing
such agreement allows for retirement at an age lower than the optional retirement
management to retire retire employees with at least 20 years of service.
age or the compulsory retirement age. The Court of Appeals gravely erred in refusing
to consider this case from the perspective of Pantranco, or from the settled doctrine
enunciated therein.
It should not be taken to mean that retirement provisions agreed upon in the CBA are
absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor
contract, is not merely contractual in nature but impressed with public interest. If the
What the Court of Appeals did instead was to favorably consider the claim of
retirement provisions in the CBA run contrary to law, public morals, or public policy,
the Union that the real purpose behind the retirement of Llagas and Javier was to
such provisions may very well be voided. Certainly, a CBA provision or employment
bust the union, they being its president and vice-president, respectively. To that end,
contract that would allow management to subvert security of tenure and allow it to
the appellate court favorably adopted the citation by the Union of the American
unilaterally retire employees after one month of service cannot be upheld. Neither
will the Court sustain a retirement clause that entitles the retiring employee to

case of NLRB v. Ace Comb, Co.,[31] which in turn was taken from a popular local labor
law textbook. The citation stated that [f]or the purpose of determining whether or
not a discharge is discriminatory, it is necessary that the underlying reason for the
discharge be established. The fact that a lawful cause for discharge is available is not
a defense where the employee is actually discharged because of his union
activities.[32]
Reliance on NLRB v. Ace Comb, Co. was grossly inapropos. The case did not involve an
employee sought to be retired, but one who cited for termination from employment
for cause, particularly for violating Section 8(a)(3) of the National Labor Relations Act,
or for insubordination. Moreover, the United States Court of Appeals Eighth Circuit,
which decided the case, ultimately concluded that here the evidence abounds that
there was a justifiable cause for [the employees] discharge,[33] his union activities
notwithstanding. Certainly, the Union and the Court of Appeals would have been
better off citing a case wherein the decision actually concluded that the employee
was invalidly dismissed for union activities despite the ostensible existence of a valid
cause for termination.
Nonetheless, the premise warrants considering whether management may be
precluded from retiring an employee whom it is entitled to retire upon a
determination that the true cause for compulsory retirement is the employees union
activities.
The law and this Court frowns upon unfair labor practices by management, including
so-called union-busting. Such illegal practices will not be sustained by the Court, even
if guised under ostensibly legal premises. But with respect to an active unionized
employee who claims having lost his/her job for union activities, there are different
considerations presented if the termination is justified under just or authorized cause
under the Labor Code; and if separation from service is effected through the exercise
of a duly accorded management prerogative to retire an employee. There is perhaps
a greater imperative to recognize the management prerogative on retirement than
the prerogative to dismiss employees for just or authorized causes. For one, there is
a greater subjectivity, not to mention factual dispute, attached to the concepts of just
or authorized cause than retirement which normally contemplates merely the
attainment of a certain age or a certain number of years in the service. It would be
easier for management desirous to eliminate pesky union members to abuse the
prerogative of termination for such purpose since the determination of just or
authorized cause is rarely a simplistic question, but involves facts highly prone to
dispute and subjective interpretation.
On the other hand, the exercise by management of its retirement prerogative is less
susceptible to dubitability as to the question whether an employee could be validly
retired. The only factual matter to consider then is whether the employee concerned
had attained the requisite age or number of years in service pursuant to the CBA or
employment agreement, or if none, pursuant to Article 287 of the Labor Code. In fact,
the question of the amount of retirement benefits is more likely to be questioned
than the retirement itself. Evidently, it more clearly emerges in the case of retirement
that management would anyway have the right to retire an employee, no matter the
degree of involvement of said employee in union activities.
There is another point that militates against the Union. A ruling in its favor is
tantamount to a concession that a validly drawn management prerogative to retire
its employees can be judicially interfered on a showing that the employee in question
is highly valuable to the union. Such a rule would be a source of mischief, even if
narrowly carved out by the Court, for it would imply that an active union member or
officer may be, by reason of his/her importance to the union, somehow exempted
from the normal standards of retirement applicable to the other, perhaps less vital a. Manages the High School Department with the Registrar and Guidance
members of the union. Indeed, our laws protection of the right to organize labor does Counselors (acting as a COLLEGIAL BODY) in the absence of the Director or Principal.
not translate into perpetual job security for union leaders by reason of their
leadership role alone. Should we entertain such a notion, the detriment is ultimately
to the union itself, promoting as it would a stagnating entrenched leadership. b. Enforces the school rules and regulations governing students to maintain
discipline.

We can thus can comfortably uphold the principle, as reiterated in Philippine

Airlines,[34] that the exercise by the employer of a valid and duly established xxxx
prerogative to retire an employee does not constitute unfair labor practice.

g. Plans with the Guidance Counselors student leadership training programs to

encourage dynamic and responsible leadership among the students and submits the
same for the approval of the Principal/Director.
There are other arguments raised by petitioners. We need to discuss them only in
brief, as they are no longer central to the resolution of this case.

The School insisted that Llagas and Javier were actually managerial employees, and it
was illegal for the Union to have called a strike on behalf of two employees who were
not legally qualified to be members of the Union in the first place.[35] The Union, on
the other hand, maintains that they are rank-and-file employees.
xxxx
i. Studies proposals on extra-curricular or co-curricular activities and projects
proposed by teachers and students and recommends to the Principal/Director the
necessary approval.

Article 212(m) of the Labor Code defines a managerial employee as "one who is
vested with powers or prerogatives to lay down and execute management policies j. Implements and supervises activities and projects approved by the
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline Principal/Director so that the activities and projects follow faithfully the conditions
employees, or to effectively recommend such managerial actions." The functions of set forth by the Principal/Director in the approval.
the Dean of Student Affairs, as occupied by Llagas, are enumerated in the Faculty
Manual. The salient portions are hereby enumerated:
k. Assists in the planning, supervising and evaluating of programs of co-curricular
activities in line with the philosophy and objectives of the School for the total
development of the students.
l. Recommends to the Principal policies and rules to serve as guides to effective
implementation of the student activity program.[36]
xxxx
It is fairly obvious from a perusal of the list that the Dean of Student Affairs exercises
managerial functions, thereby classifying Llagas as a managerial employee.
Javier was occupying the position of Subject Area Coordinator. Her duties and
responsibilities include:
1. Recommends to the principals consideration the appointment of faculty
members in the department, their promotion, discipline and even termination;
2. Recommends advisory responsibilities of faculty members;
3. Recommends to the principal curricular changes, purchase the books and
periodicals, supplies and equipment for the growth of the school;
4. Recommends his/her colleagues and serves as channel between
teachers in the department the principal and/or director.[37]
Supervisory employees, as defined in Article 212(m) 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.
In the same vein, a reading of the above functions leads us to conclude that Javier
was a supervisory employee. Verily, Javier made recommendations as to what actions
to take in hiring, termination, disciplinary actions, and management policies, among
others.
We can concede, as the Court of Appeals noted, that such job descriptions or
appellations are meaningless should it be established that the actual duties
performed by the employees concerned are neither managerial nor supervisory in
nature. Yet on this point, we defer to the factual finding of the NLRC, the proximate
trier of facts, that Llagas and Javier were indeed managerial and supervisory
employees, respectively.
Having established that Llagas is a managerial employee, she is proscribed from
joining a labor union,[38] more so being elected as union officer. In the case of Javier,
a supervisory employee, she may join a labor union composed only of supervisory
employees.[39] Finding both union officers to be employees not belonging to the rank-
and-file, their membership in the Union has become questionable, rendering
the Union inutile to represent their cause.

Since the strike has been declared as illegal based on the foregoing discussion, we
need not dwell on its legality with respect to the means employed by the Union.

Finally, there is neither legal nor factual justification in awarding backwages to some
union officers who have lost their employment status, in light of our finding that the
strike is illegal. The ruling of the NLRC is thus upheld on this point. We are also
satisfied with the disposition of the NLRC that mandates that Llagas and Javier (or her
heirs) receive their retirement benefits.

WHEREFORE, the petition is GRANTED. The Resolution dated 31 January 1997 of the
National Labor Relations Commission in NLRC NCR CC No. L-000028-93 is
REINSTATED.

SO ORDERED.
Republic of the Philippines

Supreme Court August 1, 2011

Manila x---------------------------------------------------------------------------------x

THIRD DIVISION

DECISION

SAN MIGUEL FOODS, INCORPORATED, G.R. No. 146206 PERALTA, J.:

Petitioner,

Present: The issues in the present case, relating to the inclusion of employees in supervisor
levels 3 and 4 and the exempt employees in the proposed bargaining unit, thereby
allowing their participation in the certification election; the application of the
CARPIO,* J., community or mutuality of interests test; and the determination of the employees
who belong to the category of confidential employees, are not novel.
VELASCO, J., Chairperson,
In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v.
-versus- PERALTA, Laguesma,[1] the Court held that even if they handle confidential data regarding
ABAD, and technical and internal business operations, supervisory employees 3 and 4 and the
exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be
SERENO,**JJ. considered confidential employees, because the same do not pertain to labor
relations, particularly, negotiation and settlement of grievances. Consequently, they
were allowed to form an appropriate bargaining unit for the purpose of collective
SAN MIGUEL CORPORATION SUPERVISORS bargaining. The Court also declared that the employees belonging to the three
and EXEMPT UNION, different plants of San Miguel Corporation Magnolia Poultry Products Plants in
Promulgated:
Cabuyao, San Fernando, and Otis, having community or mutuality of interests,
Respondent.
constitute a single bargaining unit. They perform work of the same nature, receive
the same wages and compensation, and most importantly, share a common stake in
concerted activities. It was immaterial that the three plants have different locations
as they did not impede the operations of a single bargaining representative.[2]
Pursuant to the Court's decision in G.R. No. 110399, the Department of Labor and
Employment National Capital Region (DOLE-NCR) conducted pre-election
conferences.[3] However, there was a discrepancy in the list of eligible voters, i.e.,
petitioner submitted a list of 23 employees for the San Fernando plant and 33 for the
Cabuyao plant, while respondent listed 60 and 82, respectively.[4]
On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order[5] directing
Election Officer Cynthia Tolentino to proceed with the conduct of certification
election in accordance with Section 2, Rule XII of Department Order No. 9.
On September 30, 1998, a certification election was conducted and it yielded the
following results,[6] thus:
Cabuyao San Fernando Total
Plant Plant
Yes 23 23 46
No 0 0 0
Spoiled 2 0 2
Segregated 41 35 76
Total Votes
Cast 66 58 124
On the date of the election, September 30, 1998, petitioner filed the Omnibus
Objections and Challenge to Voters,[7] questioning the eligibility to vote by some of its
employees on the grounds that some employees do not belong to the bargaining unit
which respondent seeks to represent or that there is no existence of employer-
employee relationship with petitioner. Specifically, it argued that certain employees
should not be allowed to vote as they are: (1) confidential employees; (2) employees
assigned to the live chicken operations, which are not covered by the bargaining unit;
(3) employees whose job grade is level 4, but are performing managerial work and
scheduled to be promoted; (4) employees who belong to the Barrio Ugong plant; (5)
non-SMFI employees; and (6) employees who are members of other unions.
On October 21, 1998, the Med-Arbiter issued an Order directing respondent to
submit proof showing that the employees in the submitted list are covered by the
original petition for certification election and belong to the bargaining unit it seeks to
represent and, likewise, directing petitioner to substantiate the allegations contained
in its Omnibus Objections and Challenge to Voters.[8]
In compliance thereto, respondent averred that (1) the bargaining unit contemplated
in the original petition is the Poultry Division of San Miguel Corporation, now known
as San Miguel Foods, Inc.; (2) it covered the operations in Calamba, Laguna, Cavite,
and Batangas and its home base is either in Cabuyao, Laguna or San Fernando,
Pampanga; and (3) it submitted individual and separate declarations of the
employees whose votes were challenged in the election.[9]
Adding the results to the number of votes canvassed during the September 30, 1998
certification election, the final tally showed that: number of eligible voters 149;
number of valid votes cast 121; number of spoiled ballots - 3; total number of votes
cast 124, with 118 (i.e., 46 + 72 = 118 ) Yes votes and 3 No votes.[10]
The Med-Arbiter issued the Resolution[11] dated February 17, 1999 directing the Relations, and San Miguel Corporation Supervisors and Exempt Union, the Court of
parties to appear before the Election Officer of the Labor Relations Division on March Appeals (CA) affirmed with modification the Resolution dated July 30, 1999 of the
9, 1999, 10:00 a.m., for the opening of the segregated ballots. Thereafter, on April 12, DOLE Undersecretary, stating that those holding the positions of Human Resource
1999, the segregated ballots were opened, showing that out of the 76 segregated Assistant and Personnel Assistant are excluded from the bargaining unit.

votes, 72 were cast for Yes and 3 for No, with one spoiled ballot.[12] Petitioners Motion for Partial Reconsideration[18] dated May 23, 2000 was denied by
the CA in the Resolution[19] dated November 28, 2000.

Based on the results, the Med-Arbiter issued the Order[13] dated April 13, 1999,
stating that since the Yes vote received 97% of the valid votes cast, respondent is Hence, petitioner filed this present petition raising the following issues:
certified to be the exclusive bargaining agent of the supervisors and exempt
employees of petitioner's Magnolia Poultry Products Plants in Cabuyao, San
Fernando, and Otis. I.

WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE WHEN IT

EXPANDED THE SCOPE OF THE BARGAINING UNIT DEFINED BY THIS COURT'S RULING
On appeal, the then Acting DOLE Undersecretary, in the Resolution[14] dated July 30,
IN G.R. NO. 110399.
1999, in OS-A-2-70-91 (NCR-OD-M-9010-017), affirmed the Order dated April 13,
1999, with modification that George C. Matias, Alma Maria M. Lozano, Joannabel T.
Delos Reyes, and Marilyn G. Pajaron be excluded from the bargaining unit which
respondent seeks to represent. She opined that the challenged voters should be II.
excluded from the bargaining unit, because Matias and Lozano are members of WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE - SPECIFICALLY,
Magnolia Poultry Processing Plants Monthly Employees Union, while Delos Reyes and THIS COURT'S DEFINITION OF A CONFIDENTIAL EMPLOYEE - WHEN IT RULED FOR THE
Pajaron are employees of San Miguel Corporation, which is a separate and distinct INCLUSION OF THE PAYROLL MASTER POSITION IN THE BARGAINING UNIT.
entity from petitioner.

Petitioners Partial Motion for Reconsideration[15] dated August 14, 1999 was denied
by the then Acting DOLE Undersecretary in the Order[16] dated August 27, 1999. III.

WHETHER THIS PETITION IS A REHASH OR A RESURRECTION OF THE ISSUES RAISED IN

G.R. NO. 110399, AS ARGUED BY PRIVATE RESPONDENT.
In the Decision[17] dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San Miguel
Foods, Inc. v. The Honorable Office of the Secretary of Labor, Bureau of Labor
Petitioner contends that with the Court's ruling in G.R. No. 110399[20] identifying the
specific employees who can participate in the certification election, i.e., the
supervisors (levels 1 to 4) and exempt employees of San Miguel Poultry Products
Plants in Cabuyao, San Fernando, and Otis, the CA erred in expanding the scope of
the bargaining unit so as to include employees who do not belong to or who are not
based in its Cabuyao or San Fernando plants. It also alleges that the employees of the
Cabuyao, San Fernando, and Otis plants of petitioners predecessor, San Miguel
Corporation, as stated in G.R. No. 110399, were engaged in dressed chicken
processing, i.e., handling and packaging of chicken meat, while the new bargaining
unit, as defined by the CA in the present case, includes employees engaged in live
chicken operations, i.e., those who breed chicks and grow chickens.
Respondent counters that petitioners proposed exclusion of certain employees from
the bargaining unit was a rehashed issue which was already settled in G.R. No.
110399. It maintains that the issue of union membership coverage should no longer
be raised as a certification election already took place on September 30, 1998,
wherein respondent won with 97% votes.
Petitioners contentions are erroneous. In G.R. No. 110399, the Court explained that
the employees of San Miguel Corporation Magnolia Poultry Products Plants of
Cabuyao, San Fernando, and Otis constitute a single bargaining unit, which is not
contrary to the one-company, one-union policy. An appropriate bargaining unit is
defined as a group of employees of a given employer, comprised of all or less than all
of the entire body of employees, which the collective interest of all the employees,
consistent with equity to the employer, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions
of the law.[21]
In National Association of Free Trade Unions v. Mainit Lumber Development Company
Workers Union United Lumber and General Workers of the Phils,[22] the Court, taking
into account the community or mutuality of interests test, ordered the formation of
a single bargaining unit consisting of the Sawmill Division in Butuan City and the
Logging Division in Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit
Lumber Development Company. It held that while the existence of a bargaining
history is a factor that may be reckoned with in determining the appropriate
bargaining unit, the same is not decisive or conclusive. Other factors must be
considered. The test of grouping is community or mutuality of interest. This is so
because the basic test of an asserted bargaining units acceptability is whether or not
it is fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights.[23] Certainly, there is a mutuality of
interest among the employees of the Sawmill Division and the Logging Division. Their
functions mesh with one another. One group needs the other in the same way that
the company needs them both. There may be differences as to the nature of their
individual assignments, but the distinctions are not enough to warrant the formation
of a separate bargaining unit.[24]
Thus, applying the ruling to the present case, the Court affirms the finding of the CA
that there should be only one bargaining unit for
the employees in Cabuyao, San Fernando, and Otis[25] of Magnolia Poultry Products
Plant involved in dressed chicken processing and Magnolia Poultry Farms engaged in
live chicken operations. Certain factors, such as specific line of work, working
conditions, location of work, mode of compensation, and other relevant conditions
do not affect or impede their commonality of interest. Although they seem separate
and distinct from each other, the specific tasks of each division are actually
interrelated and there exists mutuality of interests which warrants the formation of
a single bargaining unit.
Petitioner asserts that the CA erred in not excluding the position of Payroll Master in Corollarily, although Article 245[30] of the Labor Code limits the ineligibility to join,
the definition of a confidential employee and, thus, prays that the said position and form and assist any labor organization to managerial employees, jurisprudence has
all other positions with access to salary and compensation data be excluded from the extended this prohibition to
bargaining unit.
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.[31] Confidential
This argument must fail. Confidential employees are defined as those who (1) assist
employees are thus excluded from the rank-and-file bargaining unit. The rationale for
or act in a confidential capacity, in regard (2) to persons who formulate, determine,
their separate category and disqualification to join any labor organization is similar to
and effectuate management policies in the field of labor relations.[26] The two criteria
the inhibition for managerial employees, because if allowed to be affiliated with a
are cumulative, and both must be met if an employee is to be considered a
union, the latter might not be assured of their loyalty in view of evident conflict of
confidential employee - that is, the confidential relationship must exist between the
interests and the union can also become company-denominated with the presence
employee and his supervisor, and the supervisor must handle the prescribed
of managerial employees in the union membership.[32] Having access to confidential
responsibilities relating to labor relations. The exclusion from bargaining units of
information, confidential employees may also become the source of undue
employees who, in the normal course of their duties, become aware of management
advantage. Said employees may act as a spy or spies of either party to a collective
policies relating to labor relations is a principal objective sought to be accomplished
bargaining agreement.[33]
by the confidential employee rule.[27]

In this regard, the CA correctly ruled that the positions of Human Resource Assistant
A confidential employee is one entrusted with confidence on delicate, or with the
and Personnel Assistant belong to the category of confidential employees and, hence,
custody, handling or care and protection of the employers property.[28] Confidential
are excluded from the bargaining unit, considering their respective positions and job
employees, such as accounting personnel, should be excluded from the bargaining
descriptions. As Human Resource Assistant,[34] the scope of ones work necessarily
unit, as their access to confidential information may become the source of undue
involves labor relations, recruitment and selection of employees, access to
advantage.[29] However, such fact does not apply to the position of Payroll Master and
employees' personal files and compensation package, and human resource
the whole gamut of employees who, as perceived by petitioner, has access to salary
management. As regards a Personnel Assistant,[35] one's work includes the recording
and compensation data. The CA correctly held that the position of Payroll
of minutes for management during collective bargaining negotiations, assistance to
Master does not involve dealing with confidential labor relations information in the
management during grievance meetings and administrative investigations, and
course of the performance of his functions. Since the nature of his work does not
securing legal advice for labor issues from the petitioners team of lawyers, and
pertain to company rules and regulations and confidential labor relations, it follows
implementation of company programs. Therefore, in the discharge of their functions,
that he cannot be excluded from the subject bargaining unit.
both gain access to vital labor relations information which outrightly disqualifies them
from union membership.
The proceedings for certification election are quasi-judicial in nature and, therefore, SO ORDERED.
decisions rendered in such proceedings can attain finality.[36] Applying the doctrine
of res judicata, the issue in the

present case pertaining to the coverage of the employees who would constitute the
bargaining unit is now a foregone conclusion.

It bears stressing that a certification election is the sole concern of the workers;
hence, an employer lacks the personality to dispute the same. The general rule is that
an employer has no standing to question the process of certification election, since
this is the sole concern of the workers.[37] Law and policy demand that employers take
a strict, hands-off stance in certification elections. The bargaining representative of
employees should be chosen free from any extraneous influence of management. A
labor bargaining representative, to be effective, must owe its loyalty to the
employees alone and to no other.[38] The only exception is where the employer itself
has to file the petition pursuant to Article 258[39] of the Labor Code because of a
request to bargain collectively.[40]

With the foregoing disquisition, the Court writes finis to the issues raised so as to
forestall future suits of similar nature.

WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and
Resolution dated November 28, 2000 of the Court of Appeals, in CA-G.R. SP No.
55510, which affirmed with modification the Resolutions dated July 30, 1999 and
August 27, 1999 of the Secretary of Labor, are AFFIRMED.
Republic of the Philippines BERSAMIN,

Supreme Court DEL CASTILLO,

Manila ABAD,

VILLARAMA, JR.,

PEREZ, and

EN BANC BPI EMPLOYEES UNION-DAVAO MENDOZA, JJ.

CHAPTER-FEDERATION OF UNIONS

IN BPI UNIBANK,

Respondent.
BANK OF THE PHILIPPINE ISLANDS, G.R. No. 164301 Promulgated:

Petitioner,

Present: August 10, 2010

x------------------------------------------------x

CORONA, C.J.,

CARPIO,

CARPIO MORALES, DECISION

VELASCO, JR.,*

NACHURA,

- versus - LEONARDO-DE CASTRO, LEONARDO-DE CASTRO, J.:

BRION,

PERALTA,
May a corporation invoke its merger with another corporation as a valid ground to
exempt its absorbed employees from the coverage of a union shop clause contained
in its existing Collective Bargaining Agreement (CBA) with its own certified labor
union? That is the question we shall endeavor to answer in this petition for review
filed by an employer after the Court of Appeals decided in favor of respondent union,
which is the employees recognized collective bargaining representative.
At the outset, we should call to mind the spirit and the letter of the Labor Code
provisions on union security clauses, specifically Article 248 (e), which states, x x
x Nothing in this Code or in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement.[1] This case which
involves the application of a collective bargaining agreement with a union shop clause
should be resolved principally from the standpoint of the clear provisions of our labor
laws, and the express terms of the CBA in question, and not by inference from the
general consequence of the merger of corporations under the Corporation Code,
which obviously does not deal with and, therefore, is silent on the terms and
conditions of employment in corporations or juridical entities.
This issue must be resolved NOW, instead of postponing it to a future time when the
CBA is renegotiated as suggested by the Honorable Justice Arturo D. Brion because
the same issue may still be resurrected in the renegotiation if the absorbed
employees insist on their privileged status of being exempt from any union shop
clause or any variant thereof.
We find it significant to note that it is only the employer, Bank of the Philippine Islands
(BPI), that brought the case up to this Court via the instant petition for review; while
the employees actually involved in the case did not pursue the same relief, but had
instead chosen in effect to acquiesce to the decision of the Court of Appeals which
effectively required them to comply with the union shop clause under the existing
CBA at the time of the merger of BPI with Far East Bank and Trust Company
(FEBTC), which decision had already become final and executory as to the aforesaid
employees. By not appealing the decision of the Court of Appeals, the aforesaid
employees are bound by the said Court of Appeals decision to join BPIs duly certified
labor union. In view of the apparent acquiescence of the affected FEBTC employees
in the Court of Appeals decision, BPI should not have pursued this petition for
review. However, even assuming that BPI may do so, the same still cannot prosper.
What is before us now is a petition for review under Rule 45 of the Rules of Court of
the Decision[2] dated September 30, 2003 of the Court of Appeals, as reiterated in its
Resolution[3] of June 9, 2004, reversing and setting aside the Decision[4] dated
November 23, 2001 of Voluntary Arbitrator Rosalina Letrondo-Montejo, in CA-G.R. SP
No. 70445, entitled BPI Employees Union-Davao Chapter-Federation of Unions in BPI
Unibank v. Bank of the Philippine Islands, et al.
The antecedent facts are as follows:
On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger
executed on January 20, 2000 by and between BPI, herein petitioner, and
FEBTC.[5] This Article and Plan of Merger was approved by the Securities and Exchange
Commission on April 7, 2000.[6]
Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were
transferred to and absorbed by BPI as the surviving corporation. FEBTC employees,
including those in its different branches across the country, were hired by petitioner
as its own employees, with their status and tenure recognized and salaries and
benefits maintained.
ARTICLE II

Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI

Section 1. Maintenance of Membership All employees within the bargaining unit who
Unibank (hereinafter the Union, for brevity) is the exclusive bargaining agent of BPIs
are members of the Union on the date of the effectivity of this Agreement as well as
rank and file employees in Davao City. The former FEBTC rank-and-file employees in
employees within the bargaining unit who subsequently join or become members of
Davao City did not belong to any labor union at the time of the merger. Prior to the
the Union during the lifetime of this Agreement shall as a condition of their continued
effectivity of the merger, or on March 31, 2000, respondent Union invited said FEBTC
employment with the Bank, maintain their membership in the Union in good
employees to a meeting regarding the Union Shop Clause (Article II, Section 2) of the
standing.
existing CBA between petitioner BPI and respondent Union.[7]

Section 2. Union Shop - New employees falling within the bargaining unit as defined
The parties both advert to certain provisions of the existing CBA, which are quoted
in Article I of this Agreement, who may hereafter be regularly employed by the Bank
below:
shall, within thirty (30) days after they become regular employees, join the Union as
a condition of their continued employment. It is understood that membership in good
standing in the Union is a condition of their continued employment with the
ARTICLE I
Bank.[8] (Emphases supplied.)
Section 1. Recognition and Bargaining Unit The BANK recognizes the UNION as the
sole and exclusive collective bargaining representative of all the regular rank and file
employees of the Bank offices in Davao City.

After the meeting called by the Union, some of the former FEBTC employees joined
the Union, while others refused. Later, however, some of those who initially joined
Section 2. Exclusions
retracted their membership.[9]

Section 3. Additional Exclusions

Respondent Union then sent notices to the former FEBTC employees who refused to
join, as well as those who retracted their membership, and called them to a hearing
regarding the matter. When these former FEBTC employees refused to attend the
Section 4. Copy of Contract
hearing, the president of the Union requested BPI to implement the Union Shop
Clause of the CBA and to terminate their employment pursuant thereto.[10]
The Court of Appeals pertinently ruled in its Decision:

After two months of management inaction on the request, respondent Union

A union-shop clause has been defined as a form of union security provision wherein
informed petitioner BPI of its decision to refer the issue of the implementation of the
non-members may be hired, but to retain employment must become union members
Union Shop Clause of the CBA to the Grievance Committee. However, the issue
after a certain period.
remained unresolved at this level and so it was subsequently submitted for voluntary
arbitration by the parties.[11]

Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision[12] dated November
23, 2001, ruled in favor of petitioner BPIs interpretation that the former FEBTC
employees were not covered by the Union Security Clause of the CBA between the
Union and the Bank on the ground that the said employees were not new employees
who were hired and subsequently regularized, but were absorbed employees by
operation of law because the former employees of FEBTC can be considered assets
and liabilities of the absorbed corporation. The Voluntary Arbitrator concluded that
the former FEBTC employees could not be compelled to join the Union, as it was their
constitutional right to join or not to join any organization.
There is no question as to the existence of the union-shop clause in the CBA between
the petitioner-union and the company. The controversy lies in its application to the
absorbed employees.
This Court agrees with the voluntary arbitrator that the ABSORBED employees are
distinct and different from NEW employees BUT only in so far as their employment
service is concerned. The distinction ends there. In the case at bar, the absorbed
employees length of service from its former employer is tacked with their
employment with BPI. Otherwise stated, the absorbed employees service is
continuous and there is no gap in their service record.

Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator
denied the same in an Order dated March 25, 2002.[13] This Court is persuaded that the similarities of new and absorbed employees far
outweighs the distinction between them. The similarities lies on the following, to
wit: (a) they have a new employer; (b) new working conditions; (c) new terms of
employment and; (d) new company policy to follow. As such, they should be
Dissatisfied, respondent then appealed the Voluntary Arbitrators decision to the
considered as new employees for purposes of applying the provisions of the CBA
Court of Appeals. In the herein assailed Decision dated September 30, 2003, the Court
regarding the union-shop clause.
of Appeals reversed and set aside the Decision of the Voluntary
Arbitrator.[14] Likewise, the Court of Appeals denied herein petitioners Motion for
Reconsideration in a Resolution dated June 9, 2004.
To rule otherwise would definitely result to a very awkward and unfair situation
wherein the absorbed employees shall be in a different if not, better situation than
Hence, the voluntary arbitrator erred in construing the CBA literally at the expense of
the existing BPI employees. The existing BPI employees by virtue of the union-shop
industrial peace in the company.
clause are required to pay the monthly union dues, remain as members in good
standing of the union otherwise, they shall be terminated from the company, and
other union-related obligations. On the other hand, the absorbed employees shall
enjoy the fruits of labor of the petitioner-union and its members for nothing in With the foregoing ruling from this Court, necessarily, the alternative prayer of the
exchange. Certainly, this would disturb industrial peace in the company which is the petitioner to require the individual respondents to become members or if they refuse,
paramount reason for the existence of the CBA and the union. for this Court to direct respondent BPI to dismiss them, follows.[15]

The voluntary arbitrators interpretation of the provisions of the CBA concerning the
coverage of the union-shop clause is at war with the spirit and the rationale why the Hence, petitioners present recourse, raising the following issues:
Labor Code itself allows the existence of such provision.

The Supreme Court in the case of Manila Mandarin Employees Union vs. NLRC (G.R.
No. 76989, September 29, 1987) rule, to quote:
This Court has held that a valid form of union security, and such a provision in a
collective bargaining agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution.
I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
FORMER FEBTC EMPLOYEES SHOULD BE CONSIDERED NEW EMPLOYEES OF BPI FOR
PURPOSES OF APPLYING THE UNION SHOP CLAUSE OF THE CBA
II

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE
VOLUNTARY ARBITRATORS INTERPRETATION OF THE COVERAGE OF THE UNION SHOP
A closed-shop agreement is an agreement whereby an employer binds himself to hire CLAUSE IS AT WAR WITH THE SPIRIT AND THE RATIONALE WHY THE LABOR CODE
only members of the contracting union who must continue to remain members in ITSELF ALLOWS THE EXISTENCE OF SUCH PROVISION[16]
good standing to keep their jobs. It is THE MOST PRIZED ACHIEVEMENT OF
UNIONISM. IT ADDS MEMBERSHIP AND COMPULSORY DUES. By holding out to loyal
members a promise of employment in the closed-shop, it wields group
solidarity. (Emphasis supplied)
In essence, the sole issue in this case is whether or not the former FEBTC employees
that were absorbed by petitioner upon the merger between FEBTC and BPI should be
covered by the Union Shop Clause found in the existing CBA between petitioner and
respondent Union.
Petitioner is of the position that the former FEBTC employees are not new employees
of BPI for purposes of applying the Union Shop Clause of the CBA, on this note,
petitioner points to Section 2, Article II of the CBA, which provides:
New employees falling within the bargaining unit as defined in Article I of this
Agreement, who may hereafter be regularly employed by the Bank shall, within
thirty (30) days after they become regularemployees, join the Union as a condition
of their continued employment. It is understood that membership in good standing
in the Union is a condition of their continued employment with the
Bank.[17] (Emphases supplied.)
Petitioner argues that the term new employees in the Union Shop Clause of the CBA
is qualified by the phrases who may hereafter be regularly employed and after they
become regular employees which led petitioner to conclude that the new employees
referred to in, and contemplated by, the Union Shop Clause of the CBA were only
those employees who were new to BPI, on account of having been hired initially on a
temporary or probationary status for possible regular employment at some future
date. BPI argues that the FEBTC employees absorbed by BPI cannot be considered as
new employees of BPI for purposes of applying the Union Shop Clause of the CBA.[18]
According to petitioner, the contrary interpretation made by the Court of Appeals of
this particular CBA provision ignores, or even defies, what petitioner assumes as its
clear meaning and scope which allegedly contradicts the Courts strict and restrictive
enforcement of union security agreements.
We do not agree.
Section 2, Article II of the CBA is silent as to how one becomes a regular employee of
the BPI for the first time. There is nothing in the said provision which requires that
a new regular employee first undergo a temporary or probationary status before
being deemed as such under the union shop clause of the CBA.
Union security is a generic term which is applied to and comprehends closed shop,
union shop, maintenance of membership or any other form of agreement which
imposes upon employees the obligation to acquire or retain union membership as a
condition affecting employment. There is union shop when all new regular employees
are required to join the union within a certain period for their continued
employment. There is maintenance of membership shop when employees, who are
union members as of the effective date of the agreement, or who thereafter become
members, must maintain union membership as a condition for continued
employment until they are promoted or transferred out of the bargaining unit or the
agreement is terminated. A closed-shop, on the other hand, may be defined as an
enterprise in which, by agreement between the employer and his employees or their
representatives, no person may be employed in any or certain agreed departments
of the enterprise unless he or she is, becomes, and, for the duration of the agreement,
remains a member in good standing of a union entirely comprised of or of which the
employees in interest are a part.[19]
In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,[20] we ruled that:
It is the policy of the State to promote unionism to enable the workers to negotiate
with management on the same level and with more persuasiveness than if they
were to individually and independently bargain for the improvement of their
respective conditions. To this end, the Constitution guarantees to them the rights to
self-organization, collective bargaining and negotiations and peaceful concerted
actions including the right to strike in accordance with law. There is no question that
these purposes could be thwarted if every worker were to choose to go his own
separate way instead of joining his co-employees in planning collective action and
presenting a united front when they sit down to bargain with their employers. It is for
this reason that the law has sanctioned stipulations for the union shop and the closed
shop as a means of encouraging the workers to join and support the labor union of
their own choice as their representative in the negotiation of their demands and the
protection of their interest vis--vis the employer. (Emphasis ours.)
In other words, the purpose of a union shop or other union security arrangement is
to guarantee the continued existence of the union through enforced membership for
the benefit of the workers.
All employees in the bargaining unit covered by a Union Shop Clause in their CBA with
management are subject to its terms. However, under law and jurisprudence, the
following kinds of employees are exempted from its coverage, namely, employees
who at the time the union shop agreement takes effect are bona fide members of a
religious organization which prohibits its members from joining labor unions on
religious grounds;[21] employees already in the service and already members of a
union other than the majority at the time the union shop agreement took
effect;[22] confidential employees who are excluded from the rank and file bargaining
unit;[23] and employees excluded from the union shop by express terms of the
agreement.
When certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of Union Security Clauses, this condition is a
valid restriction of the freedom or right not to join any labor organization because it
is in favor of unionism. This Court, on occasion, has even held that a union security
clause in a CBA is not a restriction of the right of freedom of association guaranteed
by the Constitution.[24]
Moreover, a closed shop agreement is an agreement whereby an employer binds
himself to hire only members of the contracting union who must continue to remain
members in good standing to keep their jobs. It is the most prized achievement of
unionism. It adds membership and compulsory dues. By holding out to loyal
members a promise of employment in the closed shop, it wields group solidarity.[25]
Indeed, the situation of the former FEBTC employees in this case clearly does not fall
within the first three exceptions to the application of the Union Shop Clause discussed
earlier. No allegation or evidence of religious exemption or prior membership in
another union or engagement as a confidential employee was presented by both
parties. The sole category therefore in which petitioner may prove its claim is the
fourth recognized exception or whether the former FEBTC employees are excluded
by the express terms of the existing CBA between petitioner and respondent.
To reiterate, petitioner insists that the term new employees, as the same is used in
the Union Shop Clause of the CBA at issue, refers only to employees hired by BPI
as non-regular employees who later qualify for regular employment and become
regular employees, and not those who, as a legal consequence of a merger, are
allegedly automatically deemed regular employees of BPI. However, the CBA does
not make a distinction as to how a regular employee attains such a status. Moreover,
there is nothing in the Corporation Law and the merger agreement mandating the
automatic employment as regular employees by the surviving corporation in the
merger.

It is apparent that petitioner hinges its argument that the former FEBTC employees
were absorbed by BPI merely as a legal consequence of a merger based on the
characterization by the Voluntary Arbiter of these absorbed employees as included in
the assets and liabilities of the dissolved corporation - assets because they help the
Bank in its operation and liabilities because redundant employees may be terminated
and company benefits will be paid to them, thus reducing the Banks financial
status. Based on this ratiocination, she ruled that the same are not new employees of
BPI as contemplated by the CBA at issue, noting that the Certificate of Filing of the
Articles of Merger and Plan of Merger between FEBTC and BPI stated that x x x the
entire assets and liabilities of FAR EASTERN BANK & TRUST COMPANY will be
transferred to and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x
(underlining supplied).[26] In sum, the Voluntary Arbiter upheld the reasoning of
petitioner that the FEBTC employees became BPI employees by operation of law
because they are included in the term assets and liabilities.
Absorbed FEBTC Employees are Neither Assets nor Liabilities
In legal parlance, however, human beings are never embraced in the term assets and
liabilities. Moreover, BPIs absorption of former FEBTC employees was neither by
operation of law nor by legal consequence of contract. There was no government
regulation or law that compelled the merger of the two banks or the absorption of
the employees of the dissolved corporation by the surviving corporation.Had there
been such law or regulation, the absorption of employees of the non-surviving
entities of the merger would have been mandatory on the surviving corporation.[27] In
the present case, the merger was voluntarily entered into by both banks presumably
for some mutually acceptable consideration. In fact, the Corporation Code does not
also mandate the absorption of the employees of the non-surviving corporation by
the surviving corporation in the case of a merger. Section 80 of the Corporation Code
provides:
SEC. 80. Effects of merger or consolidation. The merger or consolidation, as provided
in the preceding sections shall have the following effects:
1. The constituent corporations shall become a single corporation which, in case of
merger, shall be the surviving corporation designated in the plan of merger; and, in
case of consolidation, shall be the consolidated corporation designated in the plan of
consolidation;
2. The separate existence of the constituent corporations shall cease, except that of
the surviving or the consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of a
corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter
possess all the rights, privileges, immunities and franchises of each of the constituent
corporations; and all property, real or personal, and all receivables due on whatever
account, including subscriptions to shares and other choses in action, and all and
every other interest of, or belonging to, or due to each constituent corporation, shall
be taken and deemed to be transferred to and vested in such surviving or
consolidated corporation without further act or deed; and
5. The surviving or the consolidated corporation shall be responsible and liable for all
the liabilities and obligations of each of the constituent corporations in the same
manner as if such surviving or consolidated corporation had itself incurred such
liabilities or obligations; and any claim, action or proceeding pending by or against Furthermore, this Court believes that it is contrary to public policy to declare the
any of such constituent corporations may be prosecuted by or against the surviving former FEBTC employees as forming part of the assets or liabilities of FEBTC that were
or consolidated corporation, as the case may be. Neither the rights of creditors nor transferred and absorbed by BPI in the Articles of Merger. Assets and liabilities, in this
any lien upon the property of any of such constituent corporations shall be impaired instance, should be deemed to refer only to property rights and obligations of FEBTC
by such merger or consolidated. and do not include the employment contracts of its personnel. A corporation cannot
unilaterally transfer its employees to another employer like chattel. Certainly, if BPI
as an employer had the right to choose who to retain among FEBTCs employees,
FEBTC employees had the concomitant right to choose not to be absorbed by
BPI. Even though FEBTC employees had no choice or control over the merger of their
Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000
employer with BPI, they had a choice whether or not they would allow themselves to
did not contain any specific stipulation with respect to the employment contracts of
be absorbed by BPI. Certainly nothing prevented the FEBTCs employees from
existing personnel of the non-surviving entity which is FEBTC. Unlike the Voluntary
resigning or retiring and seeking employment elsewhere instead of going along with
Arbitrator, this Court cannot uphold the reasoning that the general stipulation
the proposed absorption.
regarding transfer of FEBTC assets and liabilities to BPI as set forth in the Articles of
Merger necessarily includes the transfer of all FEBTC employees into the employ of
BPI and neither BPI nor the FEBTC employees allegedly could do anything about
Employment is a personal consensual contract and absorption by BPI of a former
it. Even if it is so, it does not follow that the absorbed employees should not be
FEBTC employee without the consent of the employee is in violation of an individuals
subject to the terms and conditions of employment obtaining in the surviving
freedom to contract. It would have been a different matter if there was an express
corporation.
provision in the articles of merger that as a condition for the merger, BPI was being
required to assume all the employment contracts of all existing FEBTC employees
with the conformity of the employees. In the absence of such a provision in the
The rule is that unless expressly assumed, labor contracts such as employment
articles of merger, then BPI clearly had the business management decision as to
contracts and collective bargaining agreements are not enforceable against a
whether or not employ FEBTCs employees. FEBTC employees likewise retained the
transferee of an enterprise, labor contracts being in personam, thus binding only
prerogative to allow themselves to be absorbed or not; otherwise, that would be
between the parties. A labor contract merely creates an action in personam and does
tantamount to involuntary servitude.
not create any real right which should be respected by third parties. This conclusion
draws its force from the right of an employer to select his employees and to decide
when to engage them as protected under our Constitution, and the same can only be
There appears to be no dispute that with respect to FEBTC employees that BPI chose
restricted by law through the exercise of the police power.[28]
not to employ or FEBTC employees who chose to retire or be separated from
employment instead of being absorbed, BPIs assumed liability to these employees
pursuant to the merger is FEBTCs liability to them in terms of separation
pay,[29] retirement pay[30] or other benefits that may be due them depending on the
circumstances.
Legal Consequences of Mergers
Although not binding on this Court, American jurisprudence on the consequences of
voluntary mergers on the right to employment and seniority rights is persuasive and
illuminating. We quote the following pertinent discussion from the American Law
Reports:
Several cases have involved the situation where as a result of mergers,
consolidations, or shutdowns, one group of employees, who had accumulated
seniority at one plant or for one employer, finds that their jobs have been
discontinued except to the extent that they are offered employment at the place or
by the employer where the work is to be carried on in the future. Such cases have
involved the question whether such transferring employees should be entitled to carry
with them their accumulated seniority or whether they are to be compelled to start
over at the bottom of the seniority list in the "new" job. It has been recognized in some
cases that the accumulated seniority does not survive and cannot be transferred to
the "new" job.
In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work of three
formerly separate railroad corporations, which had previously operated separate
facilities, was consolidated in the shops of one of the roads. Displaced employees of
the other two roads were given preference for the new jobs created in the shops of
the railroad which took over the work. A controversy arose between the employees
as to whether the displaced employees were entitled to carry with them to the new
jobs the seniority rights they had accumulated with their prior employers, that is,
whether the rosters of the three corporations, for seniority purposes, should be
"dovetailed" or whether the transferring employees should go to the bottom of the
roster of their new employer. Labor representatives of the various systems involved
attempted to work out an agreement which, in effect, preserved the seniority status
obtained in the prior employment on other roads, and the action was for specific
performance of this agreement against a demurring group of the original employees
of the railroad which was operating the consolidated shops. The relief sought was
denied, the court saying that, absent some specific contract provision otherwise,
seniority rights were ordinarily limited to the employment in which they were earned,
and concluding that the contract for which specific performance was sought was not
such a completed and binding agreement as would support such equitable relief,
since the railroad, whose concurrence in the arrangements made was essential to
their effectuation, was not a party to the agreement.
Where the provisions of a labor contract provided that in the event that a
trucker absorbed the business of another private contractor or common carrier, or
was a party to a merger of lines, the seniority of the employees absorbed or affected
thereby should be determined by mutual agreement between the trucker and the
unions involved, it was held in Moore v International Brotherhood of Teamsters, etc.
(1962, Ky) 356 SW2d 241, that the trucker was not required to absorb the affected
employees as well as the business, the court saying that they could find no such
meaning in the above clause, stating that it dealt only with seniority, and not with
initial employment.Unless and until the absorbing company agreed to take the
employees of the company whose business was being absorbed, no seniority problem
was created, said the court, hence the provision of the contract could have no
application. Furthermore, said the court, it did not require that the absorbing
company take these employees, but only that if it did take them the question of
seniority between the old and new employees would be worked out by agreement or
else be submitted to the grievance procedure.[31] (Emphasis ours.)
 Moreover, assuming for the sake of argument that there is an obligation to hire or
absorb all employees of the non-surviving corporation, there is still no basis to
conclude that the terms and conditions of employment under a valid collective
Indeed, from the tenor of local and foreign authorities, in voluntary mergers, bargaining agreement in force in the surviving corporation should not be made to
absorption of the dissolved corporations employees or the recognition of the apply to the absorbed employees.
absorbed employees service with their previous employer may be demanded from
the surviving corporation if required by provision of law or contract. The dissent of
Justice Arturo D. Brion tries to make a distinction as to the terms and conditions of The Corporation Code and the Subject Merger Agreement are Silent on Efficacy,
employment of the absorbed employees in the case of a corporate merger or Terms and Conditions of Employment Contracts
consolidation which will, in effect, take away from corporate management the
prerogative to make purely business decisions on the hiring of employees or will give
it an excuse not to apply the CBA in force to the prejudice of its own employees and
their recognized collective bargaining agent. In this regard, we disagree with Justice
Brion. The lack of a provision in the plan of merger regarding the transfer of employment
contracts to the surviving corporation could have very well been deliberate on the
part of the parties to the merger, in order to grant the surviving corporation the
freedom to choose who among the dissolved corporations employees to retain, in
Justice Brion takes the position that because the surviving corporation continues the
accordance with the surviving corporations business needs. If terminations, for
personality of the dissolved corporation and acquires all the latters rights and
instance due to redundancy or labor-saving devices or to prevent losses, are done in
obligations, it is duty-bound to absorb the dissolved corporations employees, even in
good faith, they would be valid. The surviving corporation too is duty-bound to
the absence of a stipulation in the plan of merger. He proposes that this
protect the rights of its own employees who may be affected by the merger in terms
interpretation would provide the necessary protection to labor as it spares workers
of seniority and other conditions of their employment due to the merger. Thus, we
from being left in legal limbo.
are not convinced that in the absence of a stipulation in the merger plan the surviving
corporation was compelled, or may be judicially compelled, to absorb all employees
under the same terms and conditions obtaining in the dissolved corporation as the
However, there are instances where an employer can validly discontinue or terminate
surviving corporation should also take into consideration the state of its business and
the employment of an employee without violating his right to security of
its obligations to its own employees, and to their certified collective bargaining agent
tenure. Among others, in case of redundancy, for example, superfluous employees
or labor union.
may be terminated and such termination would be authorized under Article 283 of
the Labor Code.[32]

Even assuming we accept Justice Brions theory that in a merger situation the surviving
corporation should be compelled to absorb the dissolved corporations employees as
a legal consequence of the merger and as a social justice consideration, it bears to
emphasize his dissent also recognizes that the employee may choose to end his
employment at any time by voluntarily resigning. For the employee to be absorbed
by BPI, it requires the employees implied or express consent. It is because of this
human element in employment contracts and the personal, consensual nature
thereof that we cannot agree that, in a merger situation, employment contracts are
automatically transferable from one entity to another in the same manner that a
contract pertaining to purely proprietary rights such as a promissory note or a deed
of sale of property is perfectly and automatically transferable to the surviving
corporation.
That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as
a tool to adjudicate rights and obligations between and among the merged
corporations and the persons that deal with them. Although in a merger it is as if
there is no change in the personality of the employer, there is in reality a change in
the situation of the employee. Once an FEBTC employee is absorbed, there are
presumably changes in his condition of employment even if his previous tenure and
salary rate is recognized by BPI. It is reasonable to assume that BPI would have
different rules and regulations and company practices than FEBTC and it is incumbent
upon the former FEBTC employees to obey these new rules and adapt to their new
environment. Not the least of the changes in employment condition that the
absorbed FEBTC employees must face is the fact that prior to the merger they were
employees of an unorganized establishment and after the merger they became
employees of a unionized company that had an existing collective bargaining
agreement with the certified union. This presupposes that the union who is party to
the collective bargaining agreement is the certified union that has, in the appropriate
certification election, been shown to represent a majority of the members of the
bargaining unit.
Likewise, with respect to FEBTC employees that BPI chose to employ and who also
chose to be absorbed, then due to BPIs blanket assumption of liabilities and
obligations under the articles of merger, BPI was bound to respect the years of service
of these FEBTC employees and to pay the same, or commensurate salaries and other
benefits that these employees previously enjoyed with FEBTC.
As the Union likewise pointed out in its pleadings, there were benefits under the CBA
that the former FEBTC employees did not enjoy with their previous employer. As
BPI employees, they will enjoy all these CBA benefits upon their absorption. Thus,
although in a sense BPI is continuing FEBTCs employment of these absorbed
employees, BPIs employment of these absorbed employees was not under exactly
the same terms and conditions as stated in the latters employment contracts with
FEBTC. This further strengthens the view that BPI and the former FEBTC employees
voluntarily contracted with each other for their employment in the surviving
corporation.
Proper Appreciation of the Term New Employees Under the CBA
In any event, it is of no moment that the former FEBTC employees retained the
regular status that they possessed while working for their former employer upon their
absorption by petitioner. This fact would not remove them from the scope of the
phrase new employees as contemplated in the Union Shop Clause of the CBA,
contrary to petitioners insistence that the term new employees only refers to those
who are initially hired as non-regular employees for possible regular employment.
The Union Shop Clause in the CBA simply states that new employees who during the
effectivity of the CBA may be regularly employed by the Bank must join the union
within thirty (30) days from their regularization. There is nothing in the said clause
that limits its application to only new employees who possess non-regular
status, meaning probationary status, at the start of their employment. Petitioner
likewise failed to point to any provision in the CBA expressly excluding from the Union
Shop Clause new employees who are absorbed as regular employees from the
beginning of their employment. What is indubitable from the Union Shop Clause is
that upon the effectivity of the CBA, petitioners new regular employees (regardless
of the manner by which they became employees of BPI) are required to join the
Union as a condition of their continued employment.
The dissenting opinion of Justice Brion dovetails with Justice Carpios view only in their
restrictive interpretation of who are new employees under the CBA. To our dissenting
colleagues, the phrase new employees (who are covered by the union shop clause)
should only include new employees who were hired as probationary during the life of
the CBA and were later granted regular status. They propose that the former FEBTC
employees who were deemed regular employees from the beginning of their
employment with BPI should be treated as a special class of employees and be
excluded from the union shop clause.
Justice Brion himself points out that there is no clear, categorical definition of new
employee in the CBA. In other words, the term new employee as used in the union
shop clause is used broadly without any qualification or distinction. However, the
Court should not uphold an interpretation of the term new employee based on the
general and extraneous provisions of the Corporation Code on merger that would
defeat, rather than fulfill, the purpose of the union shop clause. To reiterate, the
provision of the Article 248(e) of the Labor Code in point mandates that nothing in
the said Code or any other law should stop the parties from requiring membership
in a recognized collective bargaining agent as a condition of employment.
Significantly, petitioner BPI never stretches its arguments so far as to state that the
absorbed employees should be deemed old employees who are not covered by the
Union Shop Clause. This is not surprising.
By law and jurisprudence, a merger only becomes effective upon approval by the
Securities and Exchange Commission (SEC) of the articles of merger. In Associated
Bank v. Court of Appeals,[33] we held:
The procedure to be followed is prescribed under the Corporation Code. Section 79
of said Code requires the approval by the Securities and Exchange Commission (SEC)
of the articles of merger which, in turn, must have been duly approved by a majority
of the respective stockholders of the constituent corporations. The same provision
further states that the merger shall be effective only upon the issuance by the SEC of
a certificate of merger. The effectivity date of the merger is crucial for determining
when the merged or absorbed corporation ceases to exist; and when its rights,
privileges, properties as well as liabilities pass on to the surviving
corporation.(Emphasis ours.)
In other words, even though BPI steps into the shoes of FEBTC as the surviving
corporation, BPI does so at a particular point in time, i.e., the effectivity of the merger
upon the SECs issuance of a certificate of merger. In fact, the articles of merger
themselves provided that both BPI and FEBTC will continue their respective business
operations until the SEC issues the certificate of merger and in the event SEC does not
issue such a certificate, they agree to hold each other blameless for the non-
consummation of the merger.
Considering the foregoing principle, BPI could have only become the employer of the
FEBTC employees it absorbed after the approval by the SEC of the merger. If the SEC
However, in law or even under the express terms of the CBA, there is no special class
did not approve the merger, BPI would not be in the position to absorb the employees
of employees called absorbed employees. In order for the Court to apply or not apply
of FEBTC at all. Indeed, there is evidence on record that BPI made the assignments of
the Union Shop Clause, we can only classify the former FEBTC employees as either old
its absorbed employees in BPI effective April 10, 2000, or after the SECs approval of
or new. If they are not old employees, they are necessarily new employees. If they
the merger.[34] In other words, BPI became the employer of the absorbed employees
are new employees, the Union Shop Clause did not distinguish between new
only at some point after the effectivity of the merger, notwithstanding the fact that
employees who are non-regular at their hiring but who subsequently become regular
the absorbed employees years of service with FEBTC were voluntarily recognized by
and new employees who are absorbed as regular and permanent from the beginning
BPI.
of their employment. The Union Shop Clause did not so distinguish, and so neither
must we.

Even assuming for the sake of argument that we consider the absorbed FEBTC
employees as old employees of BPI who are not members of any union (i.e., it is their
date of hiring by FEBTC and not the date of their absorption that is considered), this
does not necessarily exclude them from the union security clause in the CBA. The CBA
subject of this case was effective from April 1, 1996 until March 31, 2001. Based on
the allegations of the former FEBTC employees themselves, there were former FEBTC
employees who were hired by FEBTC after April 1, 1996 and if their date of hiring by
FEBTC is considered as their date of hiring by BPI, they would undeniably be
considered new employees of BPI within the contemplation of the Union Shop Clause
of the said CBA. Otherwise, it would lead to the absurd situation that we would
discriminate not only between new BPI employees (hired during the life of the CBA)
and former FEBTC employees (absorbed during the life of the CBA) but also among
the former FEBTC employees themselves. In other words, we would be treating
employees who are exactly similarly situated (i.e., the group of absorbed FEBTC
employees) differently. This hardly satisfies the demands of equality and justice.
Petitioner limited itself to the argument that its absorbed employees do not fall
within the term new employees contemplated under the Union Shop Clause with the
apparent objective of excluding all, and not just some, of the former FEBTC employees
from the application of the Union Shop Clause.
No Substantial Distinction Under the CBA Between Regular Employees Hired After
Probationary Status and Regular Employees Hired After the Merger
Verily, we agree with the Court of Appeals that there are no substantial differences
between a newly hired non-regular employee who was regularized weeks or months
after his hiring and a new employee who was absorbed from another bank as a
regular employee pursuant to a merger, for purposes of applying the Union Shop
Clause. Both employees were hired/employed only after the CBA was signed. At the
time they are being required to join the Union, they are both already regular rank and
file employees of BPI. They belong to the same bargaining unit being represented by
the Union. They both enjoy benefits that the Union was able to secure for them under
the CBA. When they both entered the employ of BPI, the CBA and the Union Shop
Clause therein were already in effect and neither of them had the opportunity to
express their preference for unionism or not. We see no cogent reason why the Union
Shop Clause should not be applied equally to these two types of new employees, for
they are undeniably similarly situated.

The effect or consequence of BPIs so-called absorption of former FEBTC employees
should be limited to what they actually agreed to, i.e. recognition of the FEBTC
employees years of service, salary rate and other benefits with their previous
employer. The effect should not be stretched so far as to exempt former FEBTC
employees from the existing CBA terms, company policies and rules which apply to
employees similarly situated. If the Union Shop Clause is valid as to other new regular
BPI employees, there is no reason why the same clause would be a violation of the
absorbed employees freedom of association.
Non-Application of Union Shop Clause Contrary to the Policy of the Labor Code and
Inimical to Industrial Peace
It is but fair that similarly situated employees who enjoy the same privileges of a CBA
should be likewise subject to the same obligations the CBA imposes upon them. A
contrary interpretation of the Union Shop Clause will be inimical to industrial peace
and workers solidarity. This unfavorable situation will not be sufficiently addressed
by asking the former FEBTC employees to simply pay agency fees to the Union in lieu
of union membership, as the dissent of Justice Carpio suggests. The fact remains that
other new regular employees, to whom the absorbed employees should be
compared, do not have the option to simply pay the agency fees and they must join
the Union or face termination.
Petitioners restrictive reading of the Union Shop Clause could also inadvertently open
an avenue, which an employer could readily use, in order to dilute the membership
base of the certified union in the collective bargaining unit (CBU). By entering into a
voluntary merger with a non-unionized company that employs more workers, an
employer could get rid of its existing union by the simple expedient of arguing that
the absorbed employees are not new employees, as are commonly understood to be
covered by a CBAs union security clause. This could then lead to a new majority within
the CBU that could potentially threaten the majority status of the existing union and,
ultimately, spell its demise as the CBUs bargaining representative. Such a dreaded but
not entirely far-fetched scenario is no different from the ingenious and creative
union-busting schemes that corporations have fomented throughout the years, which
this Court has foiled time and again in order to preserve and protect the valued place
of labor in this jurisdiction consistent with the Constitutions mandate of insuring
social justice.
There is nothing in the Labor Code and other applicable laws or the CBA provision at
issue that requires that a new employee has to be of probationary or non-regular
status at the beginning of the employment relationship. An employer may confer
upon a new employee the status of regular employment even at the onset of his
engagement. Moreover, no law prohibits an employer from voluntarily recognizing
the length of service of a new employee with a previous employer in relation to
computation of benefits or seniority but it should not unduly be interpreted to
exclude them from the coverage of the CBA which is a binding contractual obligation
of the employer and employees.
Indeed, a union security clause in a CBA should be interpreted to give meaning and
effect to its purpose, which is to afford protection to the certified bargaining agent
and ensure that the employer is dealing with a union that represents the interests of
the legally mandated percentage of the members of the bargaining unit.
The union shop clause offers protection to the certified bargaining agent by ensuring
that future regular employees who (a) enter the employ of the company during the
life of the CBA; (b) are deemed part of the collective bargaining unit; and (c) whose
number will affect the number of members of the collective bargaining unit will be
compelled to join the union. Such compulsion has legal effect, precisely because the
employer by voluntarily entering in to a union shop clause in a CBA with the certified
bargaining agent takes on the responsibility of dismissing the new regular employee
who does not join the union.
Without the union shop clause or with the restrictive interpretation thereof as
proposed in the dissenting opinions, the company can jeopardize the majority status
of the certified union by excluding from union membership all new regular employees
whom the Company will absorb in future mergers and all new regular employees
whom the Company hires as regular from the beginning of their employment without
undergoing a probationary period. In this manner, the Company can increase the
number of members of the collective bargaining unit and if this increase is not
accompanied by a corresponding increase in union membership, the certified union
may lose its majority status and render it vulnerable to attack by another union who
wishes to represent the same bargaining unit.[35]
Or worse, a certified union whose membership falls below twenty percent (20%) of
the total members of the collective bargaining unit may lose its status as a legitimate
labor organization altogether, even in a situation where there is no competing
union.[36] In such a case, an interested party may file for the cancellation of the unions
certificate of registration with the Bureau of Labor Relations.[37]
Plainly, the restrictive interpretation of the union shop clause would place the
certified unions very existence at the mercy and control of the employer. Relevantly,
only BPI, the employer appears to be interested in pursuing this case. The former
FEBTC employees have not joined BPI in this appeal.
For the foregoing reasons, Justice Carpios proposal to simply require the former
FEBTC to pay agency fees is wholly inadequate to compensate the certified union for
the loss of additional membership supposedly guaranteed by compliance with the
union shop clause. This is apart from the fact that treating these absorbed employees
as a special class of new employees does not encourage worker solidarity in the
company since another class of new employees (i.e. those whose were hired as
probationary and later regularized during the life of the CBA) would not have the
option of substituting union membership with payment of agency fees.
Justice Brion, on the other hand, appears to recognize the inherent unfairness of
perpetually excluding the absorbed employees from the ambit of the union shop
clause. He proposes that this matter be left to negotiation by the parties in the next
CBA. To our mind, however, this proposal does not sufficiently address the
issue. With BPI already taking the position that employees absorbed pursuant to its
voluntary mergers with other banks are exempt from the union shop clause, the
chances of the said bank ever agreeing to the inclusion of such employees in a future
CBA is next to nil more so, if BPIs narrow interpretation of the union shop clause is
sustained by this Court.
Right of an Employee not to Join a Union is not Absolute and Must Give Way to the
Collective Good of All Members of the Bargaining Unit
The dissenting opinions place a premium on the fact that even if the former FEBTC
employees are not old employees, they nonetheless were employed as regular and
permanent employees without a gap in their service. However, an employees
permanent and regular employment status in itself does not necessarily exempt him
from the coverage of a union shop clause.
In the past this Court has upheld even the more stringent type of union security
clause, i.e., the closed shop provision, and held that it can be made applicable to old
employees who are already regular and permanent but have chosen not to join a
union. In the early case of Juat v. Court of Industrial Relations,[38] the Court held that
an old employee who had no union may be compelled to join the union even if the
collective bargaining agreement (CBA) imposing the closed shop provision was only
entered into seven years after of the hiring of the said employee. To quote from that
decision:
A closed-shop agreement has been considered as one form of union security whereby
only union members can be hired and workers must remain union members as a
condition of continued employment. The requirement for employees or workers to
become members of a union as a condition for employment redounds to the benefit
and advantage of said employees because by holding out to loyal members a
promise of employment in the closed-shop the union wields group solidarity. In fact,
it is said that "the closed-shop contract is the most prized achievement of unionism."
xxxx
This Court had categorically held in the case of Freeman Shirt Manufacturing Co., Inc.,
et al. vs. Court of Industrial Relations, et al., G.R. No. L-16561, Jan. 28, 1961, that
the closed-shop proviso of a collective bargaining agreement entered into between
an employer and a duly authorized labor union is applicable not only to the
employees or laborers that are employed after the collective bargaining agreement
had been entered into but also to old employees who are not members of any labor
union at the time the said collective bargaining agreement was entered into. In
other words, if an employee or laborer is already a member of a labor union different
from the union that entered into a collective bargaining agreement with the employer
providing for a closed-shop, said employee or worker cannot be obliged to become a
member of that union which had entered into a collective bargaining agreement with
the employer as a condition for his continued employment. (Emphasis and
underscoring supplied.)
Although the present case does not involve a closed shop provision that included even
old employees, the Juat example is but one of the cases that laid down the doctrine
that the right not to join a union is not absolute. Theoretically, there is nothing in law
or jurisprudence to prevent an employer and a union from stipulating that existing
employees (who already attained regular and permanent status but who are not
members of any union) are to be included in the coverage of a union security
clause. Even Article 248(e) of the Labor Code only expressly exempts old employees
who already have a union from inclusion in a union security clause.[39]
Contrary to the assertion in the dissent of Justice Carpio, Juat has not been
overturned by Victoriano v. Elizalde Rope Workers Union[40] nor by Reyes v.
Trajano.[41] The factual milieus of these three cases are vastly different.
In Victoriano, the issue that confronted the Court was whether or not employees who
were members of the Iglesia ni Kristo (INK) sect could be compelled to join the union
under a closed shop provision, despite the fact that their religious beliefs prohibited
them from joining a union. In that case, the Court was asked to balance the
constitutional right to religious freedom against a host of other constitutional
provisions including the freedom of association, the non-establishment clause, the
non-impairment of contracts clause, the equal protection clause, and the social
justice provision. In the end, the Court held that religious freedom, although not
unlimited, is a fundamental personal right and liberty, and has a preferred position in
the hierarchy of values.[42]
However, Victoriano is consistent with Juat since they both affirm that the right to
refrain from joining a union is not absolute. The relevant portion of Victoriano is
quoted below:
The right to refrain from joining labor organizations recognized by Section 3 of the
Industrial Peace Act is, however, limited. The legal protection granted to such right
to refrain from joining is withdrawn by operation of law, where a labor union and
an employer have agreed on a closed shop, by virtue of which the employer may
employ only member of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract in order to
keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it would be an unfair
labor practice for an employer "to discriminate in regard to hire or tenure of
employment or any term or condition of employment to encourage or discourage
membership in any labor organization" the employer is, however, not precluded
"from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative
of the employees." By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs,
wishes to be employed or to keep his employment, he must become a member of the
collective bargaining union. Hence, the right of said employee not to join the labor
union is curtailed and withdrawn.[43] (Emphases supplied.)
If Juat exemplified an exception to the rule that a person has the right not to join a
union, Victoriano merely created an exception to the exception on the ground of
religious freedom.
Reyes, on the other hand, did not involve the interpretation of any union security
clause. In that case, there was no certified bargaining agent yet since the controversy
arose during a certification election. In Reyes, the Court highlighted the idea that the
freedom of association included the right not to associate or join a union in resolving
the issue whether or not the votes of members of the INK sect who were part of the
bargaining unit could be excluded in the results of a certification election, simply
because they were not members of the two contesting unions and were expected to
have voted for NO UNION in view of their religious affiliation. The Court upheld the
inclusion of the votes of the INK members since in the previous case of Victoriano we
held that INK members may not be compelled to join a union on the ground of
religious freedom and even without Victoriano every employee has the right to vote
no union in a certification election as part of his freedom of
association. However, Reyes is not authority for Justice Carpios proposition that an
employee who is not a member of any union may claim an exemption from an existing
union security clause because he already has regular and permanent status but simply
prefers not to join a union.
The other cases cited in Justice Carpios dissent on this point are likewise
inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros
Trabajadores de Filipinas,[44] Anucension v. National Labor Union,[45] and Gonzales v.
Central Azucarera de Tarlac Labor Union[46] all involved members of the INK. In line
with Victoriano, these cases upheld the INK members claimed exemption from the
union security clause on religious grounds. In the present case, the former FEBTC
employees never claimed any religious grounds for their exemption from the Union
Shop Clause. As for Philips Industrial Development, Inc. v. National Labor Relations
Corporation[47] and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja,[48] the employees
who were exempted from joining the respondent union or who were excluded from
participating in the certification election were found to be not members of the
bargaining unit represented by respondent union and were free to form/join their
own union. In the case at bar, it is undisputed that the former FEBTC employees were
part of the bargaining unit that the Union represented. Thus, the rulings
in Philips and Knitjoy have no relevance to the issues at hand.
Time and again, this Court has ruled that the individual employees right not to join a
union may be validly restricted by a union security clause in a CBA[49] and such union
security clause is not a violation of the employees constitutional right to freedom of
association.[50]
It is unsurprising that significant provisions on labor protection of the 1987
Constitution are found in Article XIII on Social Justice. The constitutional guarantee
given the right to form unions[51] and the State policy to promote unionism[52] have
social justice considerations. In Peoples Industrial and Commercial Employees and
Workers Organization v. Peoples Industrial and Commercial Corporation,[53] we
recognized that [l]abor, being the weaker in economic power and resources than
capital, deserve protection that is actually substantial and material.
The rationale for upholding the validity of union shop clauses in a CBA, even if they
impinge upon the individual employees right or freedom of association, is not to
protect the union for the unions sake. Laws and jurisprudence promote unionism and
afford certain protections to the certified bargaining agent in a unionized company
because a strong and effective union presumably benefits all employees in the
bargaining unit since such a union would be in a better position to demand improved
benefits and conditions of work from the employer. This is the rationale behind the
State policy to promote unionism declared in the Constitution, which was elucidated
in the above-cited case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.[54]
In the case at bar, since the former FEBTC employees are deemed covered by the
Union Shop Clause, they are required to join the certified bargaining agent, which
supposedly has gathered the support of the majority of workers within the bargaining
unit in the appropriate certification proceeding. Their joining the certified union
would, in fact, be in the best interests of the former FEBTC employees for it unites
their interests with the majority of employees in the bargaining unit. It encourages
employee solidarity and affords sufficient protection to the majority status of the
union during the life of the CBA which are the precisely the objectives of union
security clauses, such as the Union Shop Clause involved herein. We are indeed not
being called to balance the interests of individual employees as against the State
policy of promoting unionism, since the employees, who were parties in the court
below, no longer contested the adverse Court of Appeals decision. Nonetheless,
settled jurisprudence has already swung the balance in favor of unionism, in
recognition that ultimately the individual employee will be benefited by that policy. In
the hierarchy of constitutional values, this Court has repeatedly held that the right to
abstain from joining a labor organization is subordinate to the policy of encouraging
unionism as an instrument of social justice.
Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire
consequences to the former FEBTC employees who refuse to join the union is the
forfeiture of their retirement benefits. This is clearly not the case precisely because
BPI expressly recognized under the merger the length of service of the absorbed
employees with FEBTC. Should some refuse to become members of the union, they
may still opt to retire if they are qualified under the law, the applicable retirement
plan, or the CBA, based on their combined length of service with FEBTC and
BPI. Certainly, there is nothing in the union shop clause that should be read as to
curtail an employees eligibility to apply for retirement if qualified under the law, the
existing retirement plan, or the CBA as the case may be.
In sum, this Court finds it reasonable and just to conclude that the Union Shop Clause SO ORDERED.
of the CBA covers the former FEBTC employees who were hired/employed by BPI
during the effectivity of the CBA in a manner which petitioner describes as
absorption. A contrary appreciation of the facts of this case would, undoubtedly, lead
to an inequitable and very volatile labor situation which this Court has consistently
ruled against.

In the case of former FEBTC employees who initially joined the union but later
withdrew their membership, there is even greater reason for the union to request
their dismissal from the employer since the CBA also contained a Maintenance of
Membership Clause.

A final point in relation to procedural due process, the Court is not unmindful that the
former FEBTC employees refusal to join the union and BPIs refusal to enforce the
Union Shop Clause in this instance may have been based on the honest belief that the
former FEBTC employees were not covered by said clause. In the interest of fairness,
we believe the former FEBTC employees should be given a fresh thirty (30) days from
notice of finality of this decision to join the union before the union demands BPI to
terminate their employment under the Union Shop Clause, assuming said clause has
been carried over in the present CBA and there has been no material change in the
situation of the parties.

WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30,
2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice
requirement imposed herein.Former FEBTC employees who opt not to become union
members but who qualify for retirement shall receive their retirement benefits in
accordance with law, the applicable retirement plan, or the CBA, as the case may be.
THIRD DIVISION
G.R. No. 160352 July 23, 2008
REPUBLIC OF THE PHILIPPINES, represented by Department of Labor and
Employment (DOLE), Petitioner,
vs.
KAWASHIMA TEXTILE MFG., PHILIPPINES, INC., Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The Republic of the Philippines assails by way of Petition for Review
on Certiorari under Rule 45 of the Rules of Court, the December 13, 2002 Decision1 of
the Court of Appeals (CA), which reversed the August 18, 2000 Decision2 of the
Department of Labor and Employment (DOLE), and reinstated the May 17, 2000
Order3 of Med-Arbiter Anastacio L. Bactin, dismissing the petition of Kawashima Free
Workers Union-PTGWO Local Chapter No. 803 (KFWU) for the conduct of a
certification election in Kawashima Textile Mfg. Phils., Inc. (respondent); and the
October 7, 2003 CA Resolution4 which denied the motion for reconsideration.
The relevant facts are of record.
On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for
Certification Election to be conducted in the bargaining unit composed of 145 rank-
and-file employees of respondent.5 Attached to its petition are a Certificate of
Creation of Local/Chapter6 issued on January 19, 2000 by DOLE Regional Office No.
IV, stating that it [KFWU] submitted to said office a Charter Certificate issued to it by
the national federation Phil. Transport & General Workers Organization (PTGWO),
and a Report of Creation of Local/Chapter.7
Respondent filed a Motion to Dismiss8 the petition on the ground that KFWU did not
acquire any legal personality because its membership of mixed rank-and-file and
supervisory employees violated Article 245 of the Labor Code, and its failure to submit
its books of account contravened the ruling of the Court in Progressive Development
Corporation v. Secretary, Department of Labor and Employment.9
In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWU’s legal personality
defective and dismissed its petition for certification election, thus:
We scrutinize the facts and evidences presented by the parties and arrived at a
decision that at least two (2) members of [KFWU], namely: Dany I. Fernandez and
Jesus R. Quinto, Jr. are supervisory employees, having a number of personnel under
them. Being supervisory employees, they are prohibited under Article 245 of the
Labor Code, as amended, to join the union of the rank and file employees. Dany I.
Fernandez and Jesus R. Quinto, Jr., Chief Engineers of the Maintenance and
Manufacturing Department, respectively, act as foremen to the line engineers,
mechanics and other non-skilled workers and responsible [for] the preparation and
organization of maintenance shop fabrication and schedules, inventory and control
of materials and supplies and tasked to implement training plans on line engineers
and evaluate the performance of their subordinates. The above-stated actual
functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that
they are supervisory employees.
xxxx
Since petitioner’s members are mixture of rank and file and supervisory employees,
petitioner union, at this point [in] time, has not attained the status of a legitimate
labor organization. Petitioner should first exclude the supervisory employees from
it membership before it can attain the status of a legitimate labor organization. The
above judgment is supported by the decision of the Supreme Court in the Toyota
Case10 wherein the High Tribunal ruled:
"As respondent union’s membership list contains the names of at least twenty seven
(27) supervisory employees in Level Five Positions, the union could not prior to
purging itself of its supervisory employee members, attain the status of a legitimate
labor organization. Not being one, it cannot possess the requisite personality to file a
petition for certification election." (Underscoring omitted.)
xxxx
Furthermore, the commingling of rank and file and supervisory employees in one (1)
bargaining unit cannot be cured in the exclusion-inclusion proceedings [at] the pre-
election conference. The above ruling is supported by the Decision of the Supreme
Court in Dunlop Slazenger (Phils.), Inc. vs. Honorable Secretary of Labor and
Employment, et al., G.R. No. 131248 dated December 11, 199811 x x x.
xxxx
WHEREFORE, premises considered, the petition for certification election is hereby
dismissed for lack of requisite legal status of petitioner to file this instant petition.
SO ORDERED.12 (Emphasis supplied)
On the basis of the aforecited decision, respondent filed with DOLE Regional Office
No. IV a Petition for Cancellation of Charter/Union Registration of KFWU,13 the final
outcome of which, unfortunately, cannot be ascertained from the records.
Meanwhile, KFWU appealed14 to the DOLE which issued a Decision on August 18,
2000, the dispositive portion of which reads:
WHEREFORE, the appeal is GRANTED. The Order dated 17 May 2000 of the Med-
Arbiter is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be
remanded to the office of origin for the immediate conduct of certification election,
subject to the usual pre-election conference, among the rank-and-file employees of
Kawashima Textile Manufacturing Philippines, Inc. with the following choices:
1. Kawashima Free Workers Union-PTGWO Local Chapter No. 803; and
2. No union.
Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the employer is
hereby directed to submit to the office of origin the certified list of current employees
in the bargaining unit for the last three months prior to the issuance of this decision.
SO DECIDED.15
The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court
in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation
Labor Union16 and Dunlop Slazenger, Inc. v. Secretary of Labor and Employment17 was
misplaced, for while Article 245 declares supervisory employees ineligible for
membership in a labor organization for rank-and-file employees, the provision did not
state the effect of such prohibited membership on the legitimacy of the labor
organization and its right to file for certification election. Neither was such mixed
membership a ground for cancellation of its registration. Section 11, Paragraph II,
Rule XI of Department Order No. 9 "provides for the dismissal of a petition for
certification election based on lack of legal personality of a labor organization only on
the following grounds: (1) [KFWU] is not listed by the Regional Office or the Bureau
of Labor Relations in its registry of legitimate labor organizations; or (2) [KFWU's] legal
personality has been revoked or canceled with finality."18 The DOLE noted that
neither ground existed; on the contrary, KFWU's legal personality was well-
established, for it held a certificate of creation and had been listed in the registry of
legitimate labor organizations.
As to the failure of KFWU to file its books of account, the DOLE held that such omission
was not a ground for revocation of union registration or dismissal of petition for
certification election, for under Section 1, Rule VI of Department Order No. 9, a local
or chapter like KFWU was no longer required to file its books of account.19
Respondent filed a Motion for Reconsideration20 but the DOLE denied the same in its
September 28, 2000 Resolution.21
However, on appeal by respondent, the CA rendered the December 13, 2002 Decision
assailed herein, reversing the August 18, 2000 DOLE Decision, thus:
Since respondent union clearly consists of both rank and file and supervisory
employees, it cannot qualify as a legitimate labor organization imbued with the
requisite personality to file a petition for certification election. This infirmity in
union membership cannot be corrected in the inclusion-exclusion proceedings
during the pre-election conference.
Finally, contrary to the pronouncement of public respondent, the application of the
doctrine enunciated in Toyota Motor Philippines Corporation vs. Toyota Motor
Philippines Corporation Labor Union was not construed in a way that effectively
denies the fundamental right of respondent union to organize and seek bargaining
representation x x x.
For ignoring jurisprudential precepts on the matter, the Court finds that the
Undersecretary of Labor, acting under the authority of the Secretary of Labor, acted
with grave abuse of discretion amounting to lack or excess of jurisdiction.
WHEREFORE, premises considered, the Petition is hereby GRANTED. The Decision
dated 18 August 2000 of the Undersecretary of Labor, acting under the authority of
the Secretary, is hereby REVERSED and SET ASIDE. The Order dated 17 May 2000 of
the Med-Arbiter dismissing the petition for certification election filed by Kawashima
Free Workers Union-PTGWO Local Chapter No. 803 is REINSTATED.
SO ORDERED.22 (Emphasis supplied)
23
KFWU filed a Motion for Reconsideration but the CA denied it.
The Republic of the Philippines (petitioner) filed the present petition to
seek closure on two issues:
First, whether a mixed membership of rank-and-file and supervisory employees in a
union is a ground for the dismissal of a petition for certification election in view of the
amendment brought about by D.O. 9, series of 1997, which deleted the phraseology
in the old rule that "[t]he appropriate bargaining unit of the rank-and-file employee
shall not include the supervisory employees and/or security guards;" and
Second, whether the legitimacy of a duly registered labor organization can be
collaterally attacked in a petition for a certification election through a motion to
dismiss filed by an employer such as Kawashima Textile Manufacturing Phils., Inc.24
The petition is imbued with merit.
The key to the closure that petitioner seeks could have been Republic Act (R.A.) No.
9481.25 Sections 8 and 9 thereof provide:
Section 8. Article 245 of the Labor Code is hereby amended to read as follows:
"Art. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right
of Supervisory Employees. - Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall not be eligible for
membership in the collective bargaining unit of the rank-and-file employees but may
join, assist or form separate collective bargaining units and/or legitimate labor
organizations of their own. The rank and file union and the supervisors' union
operating within the same establishment may join the same federation or national
union."
Section 9. A new provision, Article 245-A is inserted into the Labor Code to read as
follows:
"Art. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit.
- The inclusion as union members of employees outside the bargaining unit shall
not be a ground for the cancellation of the registration of the union. Said employees
are automatically deemed removed from the list of membership of said union."
(Emphasis supplied)
Moreover, under Section 4, a pending petition for cancellation of registration
will not hinder a legitimate labor organization from initiating a certification
election, viz:
Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-A to read
as follows:
"Art. 238-A. Effect of a Petition for Cancellation of Registration. - A petition for
cancellation of union registration shall not suspend the proceedings for certification
election nor shall it prevent the filing of a petition for certification election.
In case of cancellation, nothing herein shall restrict the right of the union to seek just
and equitable remedies in the appropriate courts." (Emphasis supplied)
Furthermore, under Section 12 of R.A. No. 9481, employers have no personality to
interfere with or thwart a petition for certification election filed by a legitimate labor
organization, to wit:
Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code to read
as follows:
"Art. 258-A. Employer as Bystander. - In all cases, whether the petition for
certification election is filed by an employer or a legitimate labor organization, the
employer shall not be considered a party thereto with a concomitant right to
oppose a petition for certification election. The employer's participation in such
proceedings shall be limited to: (1) being notified or informed of petitions of such
nature; and (2) submitting the list of employees during the pre-election conference
should the Med-Arbiter act favorably on the petition." (Emphasis supplied)
However, R.A. No. 9481 took effect only on June 14, 2007;26 hence, it applies only to
labor representation cases filed on or after said date.27 As the petition for certification
election subject matter of the present petition was filed by KFWU on January 24,
2000,28 R.A. No. 9481 cannot apply to it. There may have been curative labor
legislations29that were given retrospective effect,30 but not the aforecited provisions
of R.A. No. 9481, for otherwise, substantive rights and interests already vested would
be impaired in the process.31
Instead, the law and rules in force at the time of the filing by KFWU of the petition for
certification election on January 24, 2000 are R.A. No. 6715,32 amending Book V of
Presidential Decree (P.D.) No. 442 (Labor Code),33 as amended, and the Rules and
Regulations Implementing R.A. No. 6715,34 as amended by Department Order No. 9,
series of 1997.35
It is within the parameters of R.A. No. 6715 and the Implementing Rules that the Court
will now resolve the two issues raised by petitioner.
If there is one constant precept in our labor laws – be it Commonwealth Act No. 213
(1936),36 R.A. No. 875 (1953),37 P.D. No. 442 (1974), Executive Order (E.O.) No. 111
(1986)38 or R.A. No. 6715 (1989) - it is that only a legitimate labor organization may
exercise the right to be certified as the exclusive representative of all the employees
in an appropriate collective bargaining unit for purposes of collective
bargaining.39 What has varied over the years has been the degree of enforcement of
this precept, as reflected in the shifting scope of administrative and judicial scrutiny
of the composition of a labor organization before it is allowed to exercise the right of
representation.
One area of contention has been the composition of the membership of a labor
organization, specifically whether there is a mingling of supervisory and rank-and-file
employees and how such questioned mingling affects its legitimacy.
It was in R.A. No. 875, under Section 3, that such questioned mingling was first
prohibited,40 to wit:
Sec. 3. Employees’ right to self-organization. – Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for
the purpose of collective bargaining through representatives of their own choosing
and to engage in concerted activities for the purpose of collective bargaining and
other mutual aid or protection. Individuals employed as supervisors shall not be
eligible for membership in a labor organization of employees under their supervision
but may form separate organizations of their own. (Emphasis supplied)
Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect the
legitimacy of the labor organization. Under Section 15, the only instance when a labor
organization loses its legitimacy is when it violates its duty to bargain collectively; but
there is no word on whether such mingling would also result in loss of legitimacy.
Thus, when the issue of whether the membership of two supervisory employees
impairs the legitimacy of a rank-and-file labor organization came before the Court En
Banc in Lopez v. Chronicle Publication Employees Association,41 the majority
pronounced:
It may be observed that nothing is said of the effect of such ineligibility upon the union
itself or on the status of the other qualified members thereof should such prohibition
be disregarded. Considering that the law is specific where it intends to divest a
legitimate labor union of any of the rights and privileges granted to it by law, the
absence of any provision on the effect of the disqualification of one of its organizers
upon the legality of the union, may be construed to confine the effect of such
ineligibility only upon the membership of the supervisor. In other words, the invalidity
of membership of one of the organizers does not make the union illegal, where the
requirements of the law for the organization thereof are, nevertheless, satisfied and
met.42 (Emphasis supplied)
Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No. 875.
The provision in the Labor Code closest to Sec. 3 is Article 290,43 which is deafeningly
silent on the prohibition against supervisory employees mingling with rank-and-file
employees in one labor organization. Even the Omnibus Rules Implementing Book V
of the Labor Code44 (Omnibus Rules) merely provides in Section 11, Rule II, thus:
Sec. 11. Supervisory unions and unions of security guards to cease operation. – All
existing supervisory unions and unions of security guards shall, upon the effectivity of
the Code, cease to operate as such and their registration certificates shall be deemed
automatically cancelled. However, existing collective agreements with such unions,
the life of which extends beyond the date of effectivity of the Code shall be respected
until their expiry date insofar as the economic benefits granted therein are
concerned.
Members of supervisory unions who do not fall within the definition of managerial
employees shall become eligible to join or assist the rank and file organization. The
determination of who are managerial employees and who are not shall be the subject
of negotiation between representatives of supervisory union and the employer. If no
agreement s reached between the parties, either or both of them ma bring the issue
to the nearest Regional Office for determination. (Emphasis supplied)
The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to
declare in Bulletin v. Sanchez45that supervisory employees who do not fall under the
category of managerial employees may join or assist in the formation of a labor
organization for rank-and-file employees, but they may not form their own labor
organization.
While amending certain provisions of Book V of the Labor Code, E.O. No. 111 and its
implementing rules46continued to recognize the right of supervisory employees, who
do not fall under the category of managerial employees, to join a rank-and-file labor
organization.47
Effective 1989, R.A. No. 6715 restored the prohibition against the questioned
mingling in one labor organization, viz:
Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to read
as follows
"Art. 245. Ineligibility of managerial employees to join any labor organization; right
of supervisory employees. Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own." (Emphasis supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact effect
any violation of the prohibition would bring about on the legitimacy of a labor
organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended
Omnibus Rules) which supplied the deficiency by introducing the following
amendment to Rule II (Registration of Unions):
Sec. 1. Who may join unions. – x x x Supervisory employees and security guards shall
not be eligible for membership in a labor organization of the rank-and-file employees
but may join, assist or form separate labor organizations of their own; Provided, that
those supervisory employees who are included in an existing rank-and-file bargaining
unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x.
(Emphasis supplied)
and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules,
viz:
Sec. 1. Where to file. – A petition for certification election may be filed with the
Regional Office which has jurisdiction over the principal office of the employer. The
petition shall be in writing and under oath.
Sec. 2. Who may file. – Any legitimate labor organization or the employer, when
requested to bargain collectively, may file the petition.
The petition, when filed by a legitimate labor organization, shall contain, among
others:
xxxx
(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; and provided further, that the appropriate
bargaining unit of the rank-and-file employees shall not include supervisory
employees and/or security guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and
duly registered labor organization from exercising its right to file a petition for
certification election.
Thus, when the issue of the effect of mingling was brought to the fore in Toyota,48 the
Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held:
Clearly, based on this provision, a labor organization composed of both rank-and-file
and supervisory employees is no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees cannot possess any of
the rights of a legitimate labor organization, including the right to file a petition for
certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to
inquire into the composition of any labor organization whenever the status of the
labor organization is challenged on the basis of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the names of at
least twenty-seven (27) supervisory employees in Level Five positions, the union
could not, prior to purging itself of its supervisory employee members, attain the
status of a legitimate labor organization. Not being one, it cannot possess the
requisite personality to file a petition for certification election.49 (Emphasis supplied)
In Dunlop,50 in which the labor organization that filed a petition for certification
election was one for supervisory employees, but in which the membership included
rank-and-file employees, the Court reiterated that such labor organization had no
legal right to file a certification election to represent a bargaining unit composed of
supervisors for as long as it counted rank-and-file employees among its members.51
It should be emphasized that the petitions for certification election involved in Toyota
and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively;
hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended
by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules).
Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules -
that the petition for certification election indicate that the bargaining unit of rank-
and-file employees has not been mingled with supervisory employees - was removed.
Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the
bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath
and shall contain, among others, the following: x x x (c) The description of the
bargaining unit.52
53
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity
of the 1997 Amended Omnibus Rules, although the specific provision involved therein
was only Sec. 1, Rule VI, to wit:
Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or
national union may directly create a local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the following: a) a charter certificate issued
by the federation or national union indicating the creation or establishment of the
local/chapter; (b) the names of the local/chapter’s officers, their addresses, and the
principal office of the local/chapter; and (c) the local/ chapter’s constitution and by-
laws; provided that where the local/chapter’s constitution and by-laws is the same as
that of the federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President.
which does not require that, for its creation and registration, a local or chapter submit
a list of its members.
Then came Tagaytay Highlands Int’l. Golf Club, Inc. v. Tagaytay Highlands Employees
Union-PGTWO54 in which the core issue was whether mingling affects the legitimacy
of a labor organization and its right to file a petition for certification election. This
time, given the altered legal milieu, the Court abandoned the view in Toyota and
Dunlop and reverted to its pronouncement in Lopez that while there is a prohibition
against the mingling of supervisory and rank-and-file employees in one labor
organization, the Labor Code does not provide for the effects thereof.55 Thus, the
Court held that after a labor organization has been registered, it may exercise all the
rights and privileges of a legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its membership cannot affect its
legitimacy for that is not among the grounds for cancellation of its registration, unless
such mingling was brought about by misrepresentation, false statement or fraud
under Article 239 of the Labor Code.56
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing
Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-
and-File Union-FFW,57 the Court explained that since the 1997 Amended Omnibus
Rules does not require a local or chapter to provide a list of its members, it would be
improper for the DOLE to deny recognition to said local or chapter on account of any
question pertaining to its individual members.58
More to the point is Air Philippines Corporation v. Bureau of Labor Relations,59 which
involved a petition for cancellation of union registration filed by the employer in 1999
against a rank-and-file labor organization on the ground of mixed membership:60 the
Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union
of disqualified employees is not among the grounds for cancellation, unless such
inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor
Code.61lavvphil
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules,
as interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had
already set the tone for it. Toyota and Dunlop no longer hold sway in the present
altered state of the law and the rules.
Consequently, the Court reverses the ruling of the CA and reinstates that of the DOLE
granting the petition for certification election of KFWU.
Now to the second issue of whether an employer like respondent may collaterally
attack the legitimacy of a labor organization by filing a motion to dismiss the latter’s
petition for certification election.
Except when it is requested to bargain collectively,62 an employer is a mere bystander
to any petition for certification election; such proceeding is non-adversarial and
merely investigative, for the purpose thereof is to determine which organization will
represent the employees in their collective bargaining with the employer.63 The
choice of their representative is the exclusive concern of the employees; the
employer cannot have any partisan interest therein; it cannot interfere with, much
less oppose, the process by filing a motion to dismiss or an appeal from it;64 not even
a mere allegation that some employees participating in a petition for certification
election are actually managerial employees will lend an employer legal personality to
block the certification election.65 The employer's only

right in the proceeding is to be notified or informed thereof.66

The amendments to the Labor Code and its implementing rules have buttressed that
policy even more.

WHEREFORE, the petition is GRANTED. The December 13, 2002 Decision and October
7, 2003 Resolution of the Court of Appeals and the May 17, 2000 Order of Med-
Arbiter Anastacio L. Bactin are REVERSED and SET ASIDE,while the August 18, 2000
Decision and September 28, 2000 Resolution of the Department of Labor and
Employment are REINSTATED.

No costs.

SO ORDERED.
FIRST DIVISION
G.R. No. 169717 March 16, 2011
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN
THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS
JERRY VICTORIO-Union President,Petitioner,
vs.
CHARTER CHEMICAL and COATING CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
The right to file a petition for certification election is accorded to a labor organization
provided that it complies with the requirements of law for proper registration. The
inclusion of supervisory employees in a labor organization seeking to represent the
bargaining unit of rank-and-file employees does not divest it of its status as a
legitimate labor organization. We apply these principles to this case.
This Petition for Review on Certiorari seeks to reverse and set aside the Court of
Appeal’s March 15, 2005 Decision1 in CA-G.R. SP No. 58203, which annulled and set
aside the January 13, 2000 Decision2 of the Department of Labor and Employment
(DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and the September 16, 2005
Resolution3 denying petitioner union’s motion for reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of
Unions in the Philippines for Empowerment and Reforms (petitioner union) filed a
petition for certification election among the regular rank-and-file employees of
Charter Chemical and Coating Corporation (respondent company) with the Mediation
Arbitration Unit of the DOLE, National Capital Region.
On April 14, 1999, respondent company filed an Answer with Motion to Dismiss4 on
the ground that petitioner union is not a legitimate labor organization because of (1)
failure to comply with the documentation requirements set by law, and (2) the
inclusion of supervisory employees within petitioner union.5
Med-Arbiter’s Ruling
On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision6 dismissing the
petition for certification election. The Med-Arbiter ruled that petitioner union is not
a legitimate labor organization because the Charter Certificate, "Sama-samang
Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa
Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were
not executed under oath and certified by the union secretary and attested to by the
union president as required by Section 235 of the Labor Code7 in relation to Section
1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The union registration
was, thus, fatally defective.
The Med-Arbiter further held that the list of membership of petitioner union
consisted of 12 batchman, mill operator and leadman who performed supervisory
functions. Under Article 245 of the Labor Code, said supervisory employees are
prohibited from joining petitioner union which seeks to represent the rank-and-file
employees of respondent company.
As a result, not being a legitimate labor organization, petitioner union has no right to
file a petition for certification election for the purpose of collective bargaining.
Department of Labor and Employment’s Ruling
On July 16, 1999, the DOLE initially issued a Decision8 in favor of respondent company
dismissing petitioner union’s appeal on the ground that the latter’s petition for
certification election was filed out of time. Although the DOLE ruled, contrary to the
findings of the Med-Arbiter, that the charter certificate need not be verified and that
there was no independent evidence presented to establish respondent company’s
claim that some members of petitioner union were holding supervisory positions, the
DOLE sustained the dismissal of the petition for certification after it took judicial
notice that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical
and Coating Corporation, previously filed a petition for certification election on
January 16, 1998. The Decision granting the said petition became final and executory
on September 16, 1998 and was remanded for immediate implementation. Under
Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention involving a
certification election in an unorganized establishment should be filed prior to the
finality of the decision calling for a certification election. Considering that petitioner
union filed its petition only on February 14, 1999, the same was filed out of time.
On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its
January 13, 2000 Decision, the DOLE found that a review of the records indicates that
no certification election was previously conducted in respondent company. On the
contrary, the prior certification election filed by Pinag-isang Lakas Manggagawa sa
Charter Chemical and Coating Corporation was, likewise, denied by the Med-Arbiter
and, on appeal, was dismissed by the DOLE for being filed out of time. Hence, there
was no obstacle to the grant of petitioner union’s petition for certification
election, viz:
WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of
this Office dated 16 July 1999 is MODIFIED to allow the certification election among
the regular rank-and-file employees of Charter Chemical and Coating Corporation
with the following choices:
1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the Philippines
for Empowerment and Reform (SMCC-SUPER); and
2. No Union.
Let the records of this case be remanded to the Regional Office of origin for the
immediate conduct of a certification election, subject to the usual pre-election
conference.
SO DECIDED.9
Court of Appeal’s Ruling
On March 15, 2005, the CA promulgated the assailed Decision, viz:
WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution
dated January 13, 2000 and February 17, 2000 are hereby [ANNULLED] and SET
ASIDE.
SO ORDERED.10
In nullifying the decision of the DOLE, the appellate court gave credence to the
findings of the Med-Arbiter that petitioner union failed to comply with the
documentation requirements under the Labor Code. It, likewise, upheld the Med-
Arbiter’s finding that petitioner union consisted of both rank-and-file and supervisory
employees. Moreover, the CA held that the issues as to the legitimacy of petitioner
union may be attacked collaterally in a petition for certification election and the
infirmity in the membership of petitioner union cannot be remedied through the
exclusion-inclusion proceedings in a pre-election conference pursuant to the ruling
in Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor
Union.11 Thus, considering that petitioner union is not a legitimate labor organization,
it has no legal right to file a petition for certification election.
Issues
I
Whether x x x the Honorable Court of Appeals committed grave abuse of discretion
tantamount to lack of jurisdiction in granting the respondent [company’s] petition
for certiorari (CA G.R. No. SP No. 58203) in spite of the fact that the issues subject of
the respondent company[’s] petition was already settled with finality and barred from
being re-litigated.
II
Whether x x x the Honorable Court of Appeals committed grave abuse of discretion
tantamount to lack of jurisdiction in holding that the alleged mixture of rank-and-file
and supervisory employee[s] of petitioner [union’s] membership is [a] ground for the
cancellation of petitioner [union’s] legal personality and dismissal of [the] petition for
certification election.
III Respondent company asserts that it cannot be precluded from challenging the July
16, 1999 Decision of the DOLE. The said decision did not attain finality because the
Whether x x x the Honorable Court of Appeals committed grave abuse of discretion
DOLE subsequently reversed its earlier ruling and, from this decision, respondent
tantamount to lack of jurisdiction in holding that the alleged failure to certify under
company timely filed its motion for reconsideration.
oath the local charter certificate issued by its mother federation and list of the union
membership attending the organizational meeting [is a ground] for the cancellation On the issue of lack of verification of the charter certificate, respondent company
of petitioner [union’s] legal personality as a labor organization and for the dismissal notes that Article 235 of the Labor Code and Section 1, Rule VI of the Implementing
of the petition for certification election.12 Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly requires that the
charter certificate be certified under oath.
Petitioner Union’s Arguments
It also contends that petitioner union is not a legitimate labor organization because
Petitioner union claims that the litigation of the issue as to its legal personality to file
its composition is a mixture of supervisory and rank-and-file employees in violation
the subject petition for certification election is barred by the July 16, 1999 Decision
of Article 245 of the Labor Code. Respondent company maintains that the ruling
of the DOLE. In this decision, the DOLE ruled that petitioner union complied with all
in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union14 continues to
the documentation requirements and that there was no independent evidence
be good case law. Thus, the illegal composition of petitioner union nullifies its legal
presented to prove an illegal mixture of supervisory and rank-and-file employees in
personality to file the subject petition for certification election and its legal
petitioner union. After the promulgation of this Decision, respondent company did
personality may be collaterally attacked in the proceedings for a petition for
not move for reconsideration, thus, this issue must be deemed settled.
certification election as was done here.
Petitioner union further argues that the lack of verification of its charter certificate
Our Ruling
and the alleged illegal composition of its membership are not grounds for the
dismissal of a petition for certification election under Section 11, Rule XI of D.O. No. The petition is meritorious.
9, series of 1997, as amended, nor are they grounds for the cancellation of a union’s
The issue as to the legal personality of petitioner union is not barred by the July 16,
registration under Section 3, Rule VIII of said issuance. It contends that what is
1999 Decision of the DOLE.
required to be certified under oath by the local union’s secretary or treasurer and
attested to by the local union’s president are limited to the union’s constitution and A review of the records indicates that the issue as to petitioner union’s legal
by-laws, statement of the set of officers, and the books of accounts. personality has been timely and consistently raised by respondent company before
the Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the DOLE
Finally, the legal personality of petitioner union cannot be collaterally attacked but
found that petitioner union complied with the documentation requirements of the
may be questioned only in an independent petition for cancellation pursuant to
Labor Code and that the evidence was insufficient to establish that there was an
Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the doctrine
illegal mixture of supervisory and rank-and-file employees in its membership.
enunciated in Tagaytay Highlands International Golf Club Incoprorated v. Tagaytay
Nonetheless, the petition for certification election was dismissed on the ground that
Highlands Empoyees Union-PTGWO.13
another union had previously filed a petition for certification election seeking to
Respondent Company’s Arguments represent the same bargaining unit in respondent company.
Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE
reversed its previous ruling. It upheld the right of petitioner union to file the subject
petition for certification election because its previous decision was based on a
mistaken appreciation of facts.15 From this adverse decision, respondent company
timely moved for reconsideration by reiterating its previous arguments before the
Med-Arbiter that petitioner union has no legal personality to file the subject petition
for certification election.
The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the
parties timely moved for reconsideration. The issue then as to the legal personality of
petitioner union to file the certification election was properly raised before the DOLE,
the appellate court and now this Court.
The charter certificate need not be certified under oath by the local union’s secretary
or treasurer and attested to by its president.
Preliminarily, we must note that Congress enacted Republic Act (R.A.) No.
948116 which took effect on June 14, 2007.17 This law introduced substantial
amendments to the Labor Code. However, since the operative facts in this case
occurred in 1999, we shall decide the issues under the pertinent legal provisions then
in force (i.e., R.A. No. 6715,18 amending Book V of the Labor Code, and the rules and
regulations19 implementing R.A. No. 6715, as amended by D.O. No. 9,20
series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg.,
Philippines, Inc.21
In the main, the CA ruled that petitioner union failed to comply with the requisite
documents for registration under Article 235 of the Labor Code and its implementing
rules. It agreed with the Med-Arbiter that the Charter Certificate, Sama-samang
Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang
Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas were not executed
under oath. Thus, petitioner union cannot be accorded the status of a legitimate labor
organization.
We disagree.
The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as
amended by D.O. No. 9, series of 1997, provides:
Section 1. Chartering and creation of a local chapter — A duly registered federation
or national union may directly create a local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the following:
(a) A charter certificate issued by the federation or national union indicating the
creation or establishment of the local/chapter;
(b) The names of the local/chapter’s officers, their addresses, and the principal office
of the local/chapter; and
(c) The local/chapter’s constitution and by-laws provided that where the
local/chapter’s constitution and by-laws [are] the same as [those] of the federation
or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President.
As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan
ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa
Saligang Batas are not among the documents that need to be submitted to the
Regional Office or Bureau of Labor Relations in order to register a labor organization.
As to the charter certificate, the above-quoted rule indicates that it should be
executed under oath. Petitioner union concedes and the records confirm that its
charter certificate was not executed under oath. However, in San Miguel Corporation
(Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San
Miguel Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFU-
FFW),22 which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled
–
In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996),
the Court ruled that it was not necessary for the charter certificate to be certified and
attested by the local/chapter officers. Id. While this ruling was based on the
interpretation of the previous Implementing Rules provisions which were supervisory employees under Article 212(m)30 of the Labor Code. For this reason, we
supplanted by the 1997 amendments, we believe that the same doctrine obtains in are constrained to agree with the Med-Arbiter, as upheld by the appellate court, that
this case. Considering that the charter certificate is prepared and issued by the petitioner union consisted of both rank-and-file and supervisory employees.
national union and not the local/chapter, it does not make sense to have the
Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union
local/chapter’s officers x x x certify or attest to a document which they had no hand
does not divest it of its status as a legitimate labor organization. The appellate court’s
in the preparation of.23 (Emphasis supplied)
reliance on Toyota is misplaced in view of this Court’s subsequent ruling in Republic
In accordance with this ruling, petitioner union’s charter certificate need not be v. Kawashima Textile Mfg., Philippines, Inc.31 (hereinafter Kawashima).
executed under oath. Consequently, it validly acquired the status of a legitimate labor In Kawashima, we explained at length how and why the Toyota doctrine no longer
organization upon submission of (1) its charter certificate,24 (2) the names of its holds sway under the altered state of the law and rules applicable to this case, viz:
officers, their addresses, and its principal office,25 and (3) its constitution and by-
R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition
laws26— the last two requirements having been executed under oath by the proper
[on the co-mingling of supervisory and rank-and-file employees] would bring about
union officials as borne out by the records.
on the legitimacy of a labor organization.
The mixture of rank-and-file and supervisory employees in petitioner union does not
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended
nullify its legal personality as a legitimate labor organization.
Omnibus Rules) which supplied the deficiency by introducing the following
The CA found that petitioner union has for its membership both rank-and-file and amendment to Rule II (Registration of Unions):
supervisory employees. However, petitioner union sought to represent the
"Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall
bargaining unit consisting of rank-and-file employees. Under Article 24527 of the
not be eligible for membership in a labor organization of the rank-and-file
Labor Code, supervisory employees are not eligible for membership in a labor
employees but may join, assist or form separate labor organizations of their own;
organization of rank-and-file employees. Thus, the appellate court ruled that
Provided, that those supervisory employees who are included in an existing rank-and-
petitioner union cannot be considered a legitimate labor organization pursuant
file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that
to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor
unit x x x. (Emphasis supplied) and Rule V (Representation Cases and Internal-Union
Union28 (hereinafter Toyota).
Conflicts) of the Omnibus Rules, viz:
Preliminarily, we note that petitioner union questions the factual findings of the Med-
"Sec. 1. Where to file. - A petition for certification election may be filed with the
Arbiter, as upheld by the appellate court, that 12 of its members, consisting of
Regional Office which has jurisdiction over the principal office of the employer. The
batchman, mill operator and leadman, are supervisory employees. However,
petition shall be in writing and under oath.
petitioner union failed to present any rebuttal evidence in the proceedings below
after respondent company submitted in evidence the job descriptions29 of the Sec. 2. Who may file. - Any legitimate labor organization or the employer, when
aforesaid employees. The job descriptions indicate that the aforesaid employees requested to bargain collectively, may file the petition.
exercise recommendatory managerial actions which are not merely routinary but
require the use of independent judgment, hence, falling within the definition of
The petition, when filed by a legitimate labor organization, shall contain, among
others:
xxxx
(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; and provided further, that the appropriate
bargaining unit of the rank-and-file employees shall not include supervisory
employees and/or security guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and
duly registered labor organization from exercising its right to file a petition for
certification election.
Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the
Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held:
"Clearly, based on this provision, a labor organization composed of both rank-and-file
and supervisory employees is no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees cannot possess any of
the rights of a legitimate labor organization, including the right to file a petition for
certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to
inquire into the composition of any labor organization whenever the status of the
labor organization is challenged on the basis of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the names of at
least twenty-seven (27) supervisory employees in Level Five positions, the union
could not, prior to purging itself of its supervisory employee members, attain the
status of a legitimate labor organization. Not being one, it cannot possess the
requisite personality to file a petition for certification election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for certification
election was one for supervisory employees, but in which the membership included
rank-and-file employees, the Court reiterated that such labor organization had no
legal right to file a certification election to represent a bargaining unit composed of
supervisors for as long as it counted rank-and-file employees among its members.
It should be emphasized that the petitions for certification election involved
in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995,
respectively; hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended
by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules).
Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules –
that the petition for certification election indicate that the bargaining unit of rank-
and-file employees has not been mingled with supervisory employees – was
removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain
description of the bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath
and shall contain, among others, the following: x x x (c) The description of the
bargaining unit.
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of
the 1997 Amended Omnibus Rules, although the specific provision involved therein
was only Sec. 1, Rule VI, to wit:
"Section. 1. Chartering and creation of a local/chapter.- A duly registered federation
or national union may directly create a local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the following: a) a charter certificate issued
by the federation or national union indicating the creation or establishment of the
local/chapter; (b) the names of the local/chapter's officers, their addresses, and the against a rank-and-file labor organization on the ground of mixed membership: the
principal office of the local/chapter; and (c) the local/ chapter's constitution and by- Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union
laws; provided that where the local/chapter's constitution and by-laws is the same as of disqualified employees is not among the grounds for cancellation, unless such
that of the federation or national union, this fact shall be indicated accordingly. inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code.
All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President." All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules,
as interpreted by the Court in Tagaytay Highlands, San Miguel and Air
which does not require that, for its creation and registration, a local or chapter submit
Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in
a list of its members.
the present altered state of the law and the rules.32 [Underline supplied]
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees
The applicable law and rules in the instant case are the same as those
Union-PGTWO in which the core issue was whether mingling affects the legitimacy of
in Kawashima because the present petition for certification election was filed in 1999
a labor organization and its right to file a petition for certification election. This time,
when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashimaapplies with
given the altered legal milieu, the Court abandoned the view
equal force here. As a result, petitioner union was not divested of its status as a
in Toyota and Dunlopand reverted to its pronouncement in Lopez that while there is
legitimate labor organization even if some of its members were supervisory
a prohibition against the mingling of supervisory and rank-and-file employees in one
employees; it had the right to file the subject petition for certification election.
labor organization, the Labor Code does not provide for the effects thereof. Thus, the
Court held that after a labor organization has been registered, it may exercise all the The legal personality of petitioner union cannot be collaterally attacked by respondent
rights and privileges of a legitimate labor organization. Any mingling between company in the certification election proceedings.
supervisory and rank-and-file employees in its membership cannot affect its
Petitioner union correctly argues that its legal personality cannot be collaterally
legitimacy for that is not among the grounds for cancellation of its registration, unless
attacked in the certification election proceedings. As we explained in Kawashima:
such mingling was brought about by misrepresentation, false statement or fraud
under Article 239 of the Labor Code. Except when it is requested to bargain collectively, an employer is a mere bystander
to any petition for certification election; such proceeding is non-adversarial and
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing
merely investigative, for the purpose thereof is to determine which organization will
Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-
represent the employees in their collective bargaining with the employer. The choice
and-File Union-FFW, the Court explained that since the 1997 Amended Omnibus
of their representative is the exclusive concern of the employees; the employer
Rules does not require a local or chapter to provide a list of its members, it would be
cannot have any partisan interest therein; it cannot interfere with, much less oppose,
improper for the DOLE to deny recognition to said local or chapter on account of any
the process by filing a motion to dismiss or an appeal from it; not even a mere
question pertaining to its individual members.
allegation that some employees participating in a petition for certification election
More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which are actually managerial employees will lend an employer legal personality to block
involved a petition for cancellation of union registration filed by the employer in 1999
the certification election. The employer's only right in the proceeding is to be notified
or informed thereof.

The amendments to the Labor Code and its implementing rules have buttressed that
policy even more.33

WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September
16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 58203
are REVERSED and SET ASIDE. The January 13, 2000 Decision of the Department of
Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED.

No pronouncement as to costs.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:
EN BANC
G.R. No. 179146 July 23, 2013
HOLY CHILD CATHOLIC SCHOOL, Petitioner,
vs.
HON. PATRICIA STO. TOMAS, in her official capacity as Secretary of the Department
of Labor and Employment, and PINAG-ISANG TINIG AT LAKAS NG ANAKPAWIS –
HOLY CHILD CATHOLIC SCHOOL TEACHERS AND EMPLOYEES LABOR UNION (HCCS-
TELU-PIGLAS), Respondents.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure are the April 18, 2007 Decision1 and July 31, 2007 Resolution2 of the Court
of Appeals in CA-G.R. SP No. 76175, which affirmed the December 27, 2002
Decision3 and February 13, 2003 Resolution4 of the Secretary of the Department of
Labor and Employment (SOLE) that set aside the August 10, 2002 Decision5 of the
Med-Arbiter denying private respondent’s petition for certification election.
The factual antecedents are as follows:
On May 31, 2002, a petition for certification election was filed by private respondent
Pinag-Isang Tinig at Lakas ng Anakpawis – Holy Child Catholic School Teachers and
Employees Labor Union (HCCS-TELUPIGLAS), alleging that: PIGLAS is a legitimate labor
organization duly registered with the Department of Labor and Employment (DOLE)
representing HCCS-TELU-PIGLAS; HCCS is a private educational institution duly
registered and operating under Philippine laws; there are approximately one hundred
twenty (120) teachers and employees comprising the proposed appropriate
bargaining unit; and HCCS is unorganized, there is no collective bargaining agreement
or a duly certified bargaining agent or a labor organization certified as the sole and
exclusive bargaining agent of the proposed bargaining unit within one year prior to
the filing of the petition.6 Among the documents attached to the petition were the
certificate of affiliation with Pinag-Isang Tinig at Lakas ng Anakpawis Kristiyanong
Alyansa ng Makabayang Obrero (PIGLAS-KAMAO) issued by the Bureau of Labor
Relations (BLR), charter certificate issued by PIGLASKAMAO, and certificate of
registration of HCCS-TELU as a legitimate labor organization issued by the DOLE.7
In its Comment8 and Position Paper,9 petitioner HCCS consistently noted that it is a
parochial school with a total of 156 employees as of June 28, 2002, broken down as
follows: ninety-eight (98) teaching personnel, twenty-five (25) non-teaching
academic employees, and thirty-three (33) non-teaching non-academic workers. It
averred that of the employees who signed to support the petition, fourteen (14)
already resigned and six (6) signed twice. Petitioner raised that members of private
respondent do not belong to the same class; it is not only a mixture of managerial,
supervisory, and rank-and-file employees – as three (3) are vice-principals, one (1) is
a department head/supervisor, and eleven (11) are coordinators – but also a
combination of teaching and non-teaching personnel – as twenty-seven (27) are non-
teaching personnel. It insisted that, for not being in accord with Article 24510 of the
Labor Code, private respondent is an illegitimate labor organization lacking in
personality to file a petition for certification election, as held in Toyota Motor
Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union;11 and
an inappropriate bargaining unit for want of community or mutuality of interest, as
ruled in Dunlop Slazenger (Phils.), Inc. v. Secretary of Labor and Employment12 and De
La Salle University Medical Center and College of Medicine v. Laguesma.13
Private respondent, however, countered that petitioner failed to substantiate its
claim that some of the employees included in the petition for certification election
holds managerial and supervisory positions.14 Assuming it to be true, it argued that
Section 11 (II),15 Rule XI of DOLE Department Order (D.O.) No. 9, Series of 1997,
provided for specific instances in which a petition filed by a legitimate organization
shall be dismissed by the Med-Arbiter and that "mixture of employees" is not one of
those enumerated. Private respondent pointed out that questions pertaining to
qualifications of employees may be threshed out in the inclusion-exclusion
proceedings prior to the conduct of the certification election, pursuant to Section
2,16 Rule XII of D.O. No. 9. Lastly, similar to the ruling in In Re: Globe Machine and
Stamping Company,17 it contended that the will of petitioner’s employees should be
respected as they had manifested their desire to be represented by only one
bargaining unit. To back up the formation of a single employer unit, private
respondent asserted that even if the teachers may receive additional pay for an
advisory class and for holding additional loads, petitioner’s academic and non-
academic personnel have similar working conditions. It cited Laguna College v. Court
of Industrial Relations,18 as well as the case of a union in West Negros College in
Bacolod City, which allegedly represented both academic and non-academic
employees.
On August 10, 2002, Med-Arbiter Agatha Ann L. Daquigan denied the petition for
certification election on the ground that the unit which private respondent sought to
represent is inappropriate. She resolved:
A certification election proceeding directly involves two (2) issues namely: (a) the
proper composition and constituency of the bargaining unit; and (b) the validity of
majority representation claims. It is therefore incumbent upon the Med-Arbiter to
rule on the appropriateness of the bargaining unit once its composition and
constituency is questioned.
Section 1 (q), Rule I, Book V of the Omnibus Rules defines a "bargaining unit" as a
group of employees sharing mutual interests within a given employer unit comprised
of all or less than all of the entire body of employees in the employer unit or any
specific occupational or geographical grouping within such employer unit. This
definition has provided the "community or mutuality of interest" test as the standard
in determining the constituency of a collective bargaining unit. This is so because 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. The application of this test may either result in
the formation of an employer unit or in the fragmentation of an employer unit.
In the case at bar, the employees of petitioner, may, as already suggested, quite easily
be categorized into (2) general classes: one, the teaching staff; and two, the non-
teaching-staff. Not much reflection is needed to perceive that the community or
mutuality of interest is wanting between the teaching and the non-teaching staff. It
would seem obvious that the teaching staff would find very little in common with the
non-teaching staff as regards responsibilities and function, working conditions,
compensation rates, social life and interests, skills and intellectual pursuits, etc. These
are plain and patent realities which cannot be ignored. These dictate the separation
of these two categories of employees for purposes of collective bargaining.
(University of the Philippines vs. Ferrer-Calleja, 211 SCRA 451)19
Private respondent appealed before the SOLE, who, on December 27, 2002, ruled
against the dismissal of the petition and directed the conduct of two separate
certification elections for the teaching and the non-teaching personnel, thus:
We agree with the Med-Arbiter that there are differences in the nature of work, hours
and conditions of work and salary determination between the teaching and non-
teaching personnel of petitioner. These differences were pointed out by petitioner in
its position paper. We do not, however, agree with the Med-Arbiter that these
differences are substantial enough to warrant the dismissal of the petition. First, as
pointed out by private respondent, "inappropriateness of the bargaining unit sought
to be represented is not a ground for the dismissal of the petition." In fact, in the cited
case of University of the Philippines v. Ferrer-Calleja, supra, the Supreme Court did
not order the dismissal of the petition but ordered the conduct of a certification
election, limiting the same among the non-academic personnel of the University of
the Philippines.
It will be recalled that in the U.P. case, there were two contending unions, the
Organization of Non-Academic Personnel of U.P. (ONAPUP) and All U.P. Workers
Union composed of both academic and nonacademic personnel of U.P. ONAPUP
sought the conduct of certification election among the rank-and-file non-academic
personnel only while the all U.P. Workers Union sought the conduct of certification
election among all of U.P.’s rank-and-file employees covering academic and
nonacademic personnel. While the Supreme Court ordered a separate bargaining unit
for the U.P. academic personnel, the Court, however, did not order them to organize
a separate labor organization among themselves. The All U.P. Workers Union was not
directed to divest itself of its academic personnel members and in fact, we take
administrative notice that the All U.P. Workers Union continue to exist with a
combined membership of U.P. academic and non-academic personnel although
separate bargaining agreements is sought for the two bargaining units. Corollary,
private respondent can continue to exist as a legitimate labor organization with the
combined teaching and non-teaching personnel in its membership and representing
both classes of employees in separate bargaining negotiations and agreements.
WHEREFORE, the Decision of the Med-Arbiter dated 10 August 2002 is hereby
REVERSED and SET ASIDE. In lieu thereof, a new order is hereby issued directing the
conduct of two certification elections, one among the non-teaching personnel of Holy
Child Catholic School, and the other, among the teaching personnel of the same
school, subject to the usual pre-election conferences and inclusion-exclusion
proceedings, with the following choices:
A. Certification Election Among Petitioner’s Teaching Personnel:
1. Holy Child Catholic School Teachers and Employees Labor Union; and
2. No Union.
B. Certification Election Among Petitioner’s Non-Teaching Personnel:
1. Holy Child Catholic School Teachers and Employees Labor Union; and
2. No Union.
Petitioner is hereby directed to submit to the Regional Office of origin within ten (10)
days from receipt of this Decision, a certified separate list of its teaching and non-
teaching personnel or when necessary a separate copy of their payroll for the last
three (3) months prior to the issuance of this Decision.20
Petitioner filed a motion for reconsideration21 which, per Resolution dated February
13, 2003, was denied. Consequently, petitioner filed before the CA a Petition for
Certiorari with Prayer for Temporary Restraining Order and Preliminary
Injunction.22 The CA resolved to defer action on the prayer for TRO pending the filing
of private respondent’s Comment.23 Later, private respondent and petitioner filed
their Comment24 and Reply,25 respectively.
On July 23, 2003, petitioner filed a motion for immediate issuance of a TRO, alleging
that Hon. Helen F. Dacanay of the Industrial Relations Division of the DOLE was set to
implement the SOLE Decision when it received a summons and was directed to
submit a certified list of teaching and non-teaching personnel for the last three
months prior to the issuance of the assailed Decision.26 Acting thereon, on August 5,
2003, the CA issued the TRO and ordered private respondent to show cause why the
writ of preliminary injunction should not be granted.27 Subsequently, a Manifestation
and Motion28 was filed by private respondent, stating that it repleads by reference
the arguments raised in its Comment and that it prays for the immediate lifting of the
TRO and the denial of the preliminary injunction. The CA, however, denied the
manifestation and motion on November 21, 200329 and, upon motion of
petitioner,30 granted the preliminary injunction on April 21, 2005.31 Thereafter, both
parties filed their respective Memorandum.32
On April 18, 2007, the CA eventually dismissed the petition. As to the purported
commingling of managerial, supervisory, and rank-and-file employees in private
respondent’s membership, it held that the Toyota ruling is inapplicable because the
vice-principals, department head, and coordinators are neither supervisory nor
managerial employees. It reasoned:
x x x While it may be true that they wield power over other subordinate employees
of the petitioner, it must be stressed, however, that their functions are not confined
with policy-determining such as hiring, firing, and disciplining of employees, salaries,
teaching/working hours, other monetary and non-monetary benefits, and other
terms and conditions of employment. Further, while they may formulate policies or
guidelines, nonetheless, such is merely recommendatory in nature, and still subject
to review and evaluation by the higher executives, i.e., the principals or executive
officers of the petitioner. It cannot also be denied that in institutions like the
petitioner, company policies have already been pre-formulated by the higher
executives and all that the mentioned employees have to do is carry out these
company policies and standards. Such being the case, it is crystal clear that there is
no improper commingling of members in the private respondent union as to preclude
its petition for certification of (sic) election.33
Anent the alleged mixture of teaching and non-teaching personnel, the CA agreed
with petitioner that the nature of the former’s work does not coincide with that of
the latter. Nevertheless, it ruled that the SOLE did not commit grave abuse of
discretion in not dismissing the petition for certification election, since it directed the
conduct of two separate certification elections based on Our ruling in University of
the Philippines v. Ferrer-Calleja.34
A motion for reconsideration35 was filed by petitioner, but the CA denied the
same;36 hence, this petition assigning the alleged errors as follows:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RULING IN THE
CASE OF TOYOTA MOTOR PHILIPPINES CORPORATION VS. TOYOTA MOTOR
PHILIPPINES CORPORATION LABOR UNION (268 SCRA 573) DOES NOT APPLY IN THE
CASE AT BAR DESPITE THE [COMMINGLING] OF BOTH SUPERVISORY OR MANAGERIAL
AND RANK-AND-FILE EMPLOYEES IN THE RESPONDENT UNION;
II
THE HONORABLE COURT OF APPEALS ERRED IN ITS CONFLICTING RULING ALLOWING
THE CONDUCT OF CERTIFICATION ELECTION BY UPHOLDING THAT THE RESPONDENT
UNION REPRESENTED A BARGAINING UNIT DESPITE ITS OWN FINDINGS THAT THERE
IS NO MUTUALITY OF INTEREST BETWEEN THE MEMBERS OF RESPONDENT UNION
APPLYING THE TEST LAID DOWN IN THE CASE OF UNIVERSITY OF THE PHILIPPINES VS.
FERRER-CALLEJA (211 SCRA 451).37
We deny.
Petitioner claims that the CA contradicted the very definition of managerial and
supervisory employees under existing law and jurisprudence when it did not classify
the vice-principals, department head, and coordinators as managerial or supervisory
employees merely because the policies and guidelines they formulate are still subject
to the review and evaluation of the principal or executive officers of petitioner. It
points out that the duties of the vice-principals, department head, and coordinators
include the evaluation and assessment of the effectiveness and capability of the
teachers under them; that such evaluation and assessment is independently made
without the participation of the higher Administration of petitioner; that the fact that
their recommendation undergoes the approval of the higher Administration does not
take away the independent nature of their judgment; and that it would be difficult
for the vice-principals, department head, and coordinators to objectively assess and
evaluate the performances of teachers under them if they would be allowed to be
members of the same labor union.
On the other hand, aside from reiterating its previous submissions, private
respondent cites Sections 9 and 1238 of Republic Act (R.A.) No. 9481 to buttress its
contention that petitioner has no standing to oppose the petition for certification
election. On the basis of the statutory provisions, it reasons that an employer is not a
party-in-interest in a certification election; thus, petitioner does not have the
requisite right to protect even by way of restraining order or injunction.
First off, We cannot agree with private respondent’s invocation of R.A. No. 9481. Said
law took effect only on June 14, 2007; hence, its applicability is limited to labor
representation cases filed on or after said date.39 Instead, the law and rules in force
at the time private respondent filed its petition for certification election on May 31,
2002 are R.A. No. 6715, which amended Book V of Presidential Decree (P.D.) No. 442
(the Labor Code), as amended, and the Rules and Regulations Implementing R.A. No.
6715, as amended by D.O. No. 9, which was dated May 1, 1997 but took effect on
June 21, 1997.40
However, note must be taken that even without the express provision of Section 12
of RA No. 9481, the "Bystander Rule" is already well entrenched in this jurisdiction. It
has been consistently held in a number of cases that a certification election is the sole
concern of the workers, except when the employer itself has to file the petition
pursuant to Article 259 of the Labor Code, as amended, but even after such filing its
role in the certification process ceases and becomes merely a bystander.41 The
employer clearly lacks the personality to dispute the election and has no right to
interfere at all therein.42 This is so since any uncalled-for concern on the part of the
employer may give rise to the suspicion that it is batting for a company
union.43 Indeed, the demand of the law and policy for an employer to take a strict,
hands-off stance in certification elections is based on the rationale that the
employees’ bargaining representative should be chosen free from any extraneous
influence of the management; that, to be effective, the bargaining representative
must owe its loyalty to the employees alone and to no other.44
Now, going back to petitioner’s contention, the issue of whether a petition for
certification election is dismissible on the ground that the labor organization’s
membership allegedly consists of supervisory and rank-and-file employees is actually
not a novel one. In the 2008 case of Republic v. Kawashima Textile Mfg., Philippines,
Inc.,45 wherein the employer-company moved to dismiss the petition for certification
election on the ground inter alia that the union membership is a mixture of rank-and-
file and supervisory employees, this Court had conscientiously discussed the
applicability of Toyota and Dunlop in the context of R.A. No. 6715 and D.O. No. 9, viz.:
It was in R.A. No. 875, under Section 3, that such questioned mingling was first
prohibited, to wit:
Sec. 3. Employees' right to self-organization. - Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for
the purpose of collective bargaining through representatives of their own choosing
and to engage in concerted activities for the purpose of collective bargaining and
other mutual aid or protection. Individuals employed as supervisors shall not be
eligible for membership in a labor organization of employees under their supervision
but may form separate organizations of their own. (Emphasis supplied)
Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect the
legitimacy of the labor organization. Under Section 15, the only instance when a labor
organization loses its legitimacy is when it violates its duty to bargain collectively; but
there is no word on whether such mingling would also result in loss of legitimacy.
Thus, when the issue of whether the membership of two supervisory employees
impairs the legitimacy of a rank-and-file labor organization came before the Court En
Banc in Lopez v. Chronicle Publication Employees Association, the majority
pronounced:
It may be observed that nothing is said of the effect of such ineligibility upon the union
itself or on the status of the other qualified members thereof should such prohibition
be disregarded. Considering that the law is specific where it intends to divest a
legitimate labor union of any of the rights and privileges granted to it by law, the
absence of any provision on the effect of the disqualification of one of its organizers
upon the legality of the union, may be construed to confine the effect of such
ineligibility only upon the membership of the supervisor. In other words, the invalidity
of membership of one of the organizers does not make the union illegal, where the
requirements of the law for the organization thereof are, nevertheless, satisfied and
met. (Emphasis supplied)
Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No. 875.
The provision in the Labor Code closest to Sec. 3 is Article 290, which is deafeningly
silent on the prohibition against supervisory employees mingling with rank-and-file
employees in one labor organization. Even the Omnibus Rules Implementing Book V
of the Labor Code (Omnibus Rules) merely provides in Section 11, Rule II, thus:
Sec. 11. Supervisory unions and unions of security guards to cease operation. - All
existing supervisory unions and unions of security guards shall, upon the effectivity of
the Code, cease to operate as such and their registration certificates shall be deemed
automatically cancelled. However, existing collective agreements with such unions,
the life of which extends beyond the date of effectivity of the Code shall be respected
until their expiry date insofar as the economic benefits granted therein are
concerned.
Members of supervisory unions who do not fall within the definition of managerial
employees shall become eligible to join or assist the rank and file organization. The
determination of who are managerial employees and who are not shall be the subject
of negotiation between representatives of supervisory union and the employer. If no
agreement s reached between the parties, either or both of them may bring the issue
to the nearest Regional Office for determination. (Emphasis supplied)
The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to
declare in Bulletin v. Sanchez that supervisory employees who do not fall under the
category of managerial employees may join or assist in the formation of a labor
organization for rank-and-file employees, but they may not form their own labor
organization.
While amending certain provisions of Book V of the Labor Code, E.O. No. 111 and its
implementing rules continued to recognize the right of supervisory employees, who
do not fall under the category of managerial employees, to join a rank- and-file labor
organization.
Effective 1989, R.A. No. 6715 restored the prohibition against the questioned
mingling in one labor organization, viz.:
Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to read
as follows:
Art. 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. Managerial employees are not eligible to join, assist or form
any labor organization. Supervisory employees shall not be eligible for membership
in a labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own (Emphasis supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact effect
any violation of the prohibition would bring about on the legitimacy of a labor
organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended
Omnibus Rules) which supplied the deficiency by introducing the following
amendment to Rule II (Registration of Unions):
Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall
not be eligible for membership in a labor organization of the rank-and-file employees
but may join, assist or form separate labor organizations of their own; Provided, that
those supervisory employees who are included in an existing rank-and-file bargaining
unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x.
(Emphasis supplied)
and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules,
viz.;
Sec. 1. Where to file. - A petition for certification election may be filed with the
Regional Office which has jurisdiction over the principal office of the employer. The
petition shall be in writing and under oath.
Sec. 2. Who may file. - Any legitimate labor organization or the employer, when
requested to bargain collectively, may file the petition.
The petition, when filed by a legitimate labor organization, shall contain, among
others:
xxxx
(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; and provided further, that the appropriate
bargaining unit of the rank-and-file employees shall not include supervisory
employees and/or security guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and
duly registered labor organization from exercising its right to file a petition for
certification election.
Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the
Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held:
Clearly, based on this provision, a labor organization composed of both rank-and-file
and supervisory employees is no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees cannot possess any of
the rights of a legitimate labor organization, including the right to file a petition for
certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to
inquire into the composition of any labor organization whenever the status of the
labor organization is challenged on the basis of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the names of at
least twenty-seven (27) supervisory employees in Level Five positions, the union
could not, prior to purging itself of its supervisory employee members, attain the
status of a legitimate labor organization. Not being one, it cannot possess the
requisite personality to file a petition for certification election. (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for certification
election was one for supervisory employees, but in which the membership included
rank-and-file employees, the Court reiterated that such labor organization had no
legal right to file a certification election to represent a bargaining unit composed of
supervisors for as long as it counted rank-and-file employees among its members.
It should be emphasized that the petitions for certification election involved in Toyota
and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively;
hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended
by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules).
Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules -
that the petition for certification election indicate that the bargaining unit of rank-
and-file employees has not been mingled with supervisory employees - was removed.
Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the
bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under
oath and shall contain, among others, the following: x x x (c) The description of the
bargaining unit."
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of
the 1997 Amended Omnibus Rules, although the specific provision involved therein
was only Sec. 1, Rule VI, to wit:
Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or
national union may directly create a local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the following: a) a charter certificate issued
by the federation or national union indicating the creation or establishment of the
local/chapter; (b) the names of the local/chapter's officers, their addresses, and the
principal office of the local/chapter; and (c) the local/ chapter's constitution and by-
laws; provided that where the local/chapter's constitution and by-laws is the same as
that of the federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President.
which does not require that, for its creation and registration, a local or chapter submit
a list of its members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees
Union-PTGWO in which the core issue was whether mingling affects the legitimacy of
a labor organization and its right to file a petition for certification election. This time,
given the altered legal milieu, the Court abandoned the view in Toyota and Dunlop
and reverted to its pronouncement in Lopez that while there is a prohibition against
the mingling of supervisory and rank-and-file employees in one labor organization,
the Labor Code does not provide for the effects thereof. Thus, the Court held that
after a labor organization has been registered, it may exercise all the rights and
privileges of a legitimate labor organization. Any mingling between supervisory and
rank-and-file employees in its membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration, unless such mingling was
brought about by misrepresentation, false statement or fraud under Article 239 of
the Labor Code.
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing
Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-
and-File Union-FFW, the Court explained that since the 1997 Amended Omnibus
Rules does not require a local or chapter to provide a list of its members, it would be
improper for the DOLE to deny recognition to said local or chapter on account of any
question pertaining to its individual members.
More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which
involved a petition for cancellation of union registration filed by the employer in 1999
against a rank-and-file labor organization on the ground of mixed membership: the
Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union
of disqualified employees is not among the grounds for cancellation, unless such
inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code.
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules,
as interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had
already set the tone for it. Toyota and Dunlop no longer hold sway in the present
altered state of the law and the rules.46
When a similar issue confronted this Court close to three years later, the above ruling
was substantially quoted in Samahang Manggagawa sa Charter Chemical Solidarity of
Unions in the Philippines for Empowerment and Reforms (SMCC-Super) v. Charter
Chemical and Coating Corporation.47 In unequivocal terms, We reiterated that the
alleged inclusionof supervisory employees in a labor organization seeking to
represent the bargaining unit of rank-and-file employees does not divest it of its
status as a legitimate labor organization.48
Indeed, Toyota and Dunlop no longer hold true under the law and rules governing the
instant case. The petitions for certification election involved in Toyota and Dunlop
were filed on November 26, 1992 and September 15, 1995, respectively; hence, the
1989 Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus
Rules) was applied. In contrast, D.O. No. 9 is applicable in the petition for certification
election of private respondent as it was filed on May 31, 2002.
Following the doctrine laid down in Kawashima and SMCC-Super, it must be stressed
that petitioner cannot collaterally attack the legitimacy of private respondent by
praying for the dismissal of the petition for certification election:
Except when it is requested to bargain collectively, an employer is a mere bystander
to any petition for certification election; such proceeding is non-adversarial and
merely investigative, for the purpose thereof is to determine which organization will
represent the employees in their collective bargaining with the employer. The choice
of their representative is the exclusive concern of the employees; the employer
cannot have any partisan interest therein; it cannot interfere with, much less oppose,
the process by filing a motion to dismiss or an appeal from it; not even a mere
allegation that some employees participating in a petition for certification election
are actually managerial employees will lend an employer legal personality to block
the certification election. The employer's only right in the proceeding is to be notified
or informed thereof.
The amendments to the Labor Code and its implementing rules have buttressed that
policy even more.49
Further, the determination of whether union membership comprises managerial
and/or supervisory employees is a factual issue that is best left for resolution in the
inclusion-exclusion proceedings, which has not yet happened in this case so still
premature to pass upon. We could only emphasize the rule that factual findings of
labor officials, who are deemed to have acquired expertise in matters within their
jurisdiction, are generally accorded not only with respect but even finality by the
courts when supported by substantial evidence.50 Also, the jurisdiction of this Court
in cases brought before it from the CA via Rule 45 is generally limited to reviewing
errors of law or jurisdiction. The findings of fact of the CA are conclusive and binding.
Except in certain recognized instances,51 We do not entertain factual issues as it is not
Our function to analyze or weigh evidence all over again; the evaluation of facts is
best left to the lower courts and administrative agencies/quasi-judicial bodies which
are better equipped for the task.52
Turning now to the second and last issue, petitioner argues that, in view of the
improper mixture of teaching and non-teaching personnel in private respondent due
to the absence of mutuality of interest among its members, the petition for
certification election should have been dismissed on the ground that private
respondent is not qualified to file such petition for its failure to qualify as a legitimate
labor organization, the basic qualification of which is the representation of an
appropriate bargaining unit.
We disagree.
The concepts of a union and of a legitimate labor organization are different from, but
related to, the concept of a bargaining unit:
Article 212(g) of the Labor Code defines a labor organization as "any union or
association of employees which exists in whole or in part for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of
employment." Upon compliance with all the documentary requirements, the
Regional Office or Bureau shall issue in favor of the applicant labor organization a
certificate indicating that it is included in the roster of legitimate labor organizations.
Any applicant labor organization shall acquire legal personality and shall be entitled
to the rights and privileges granted by law to legitimate labor organizations upon
issuance of the certificate of registration.53
In case of alleged inclusion of disqualified employees in a union, the proper procedure
for an employer like petitioner is to directly file a petition for cancellation of the
union’s certificate of registration due to misrepresentation, false statement or fraud
under the circumstances enumerated in Article 239 of the Labor Code, as
amended.54 To reiterate, private respondent, having been validly issued a certificate
of registration, should be considered as having acquired juridical personality which
may not be attacked collaterally.
On the other hand, a bargaining unit has been defined as a "group of employees of a
given employer, comprised of all or less than all of the entire body of employees,
which the collective interests of all the employees, consistent with equity to the
employer, indicated to be best suited to serve reciprocal rights and duties of the
parties under the collective bargaining provisions of the law."55 In determining the
proper collective bargaining unit and what unit would be appropriate to be the
collective bargaining agency, the Court, in the seminal case of Democratic Labor
Association v. Cebu Stevedoring Company, Inc.,56 mentioned several factors that
should be considered, to wit: (1) will of employees (Globe Doctrine); (2) affinity and
unity of employees' interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions; (3) prior collective bargaining
history; and (4) employment status, such as temporary, seasonal and probationary
employees. We stressed, however, that the test of the grouping is community or
mutuality of interest, because "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."57
As the SOLE correctly observed, petitioner failed to comprehend the full import of
Our ruling in U.P. It suffices to quote with approval the apt disposition of the SOLE
when she denied petitioner’s motion for reconsideration:
Petitioner likewise claimed that we erred in interpreting the decision of the Supreme
Court in U.P. v. Ferrer-Calleja, supra. According to petitioner, the Supreme Court
stated that the non-academic rank-andfile employees of the University of the
Philippines shall constitute a bargaining unit to the exclusion of the academic
employees of the institution. Hence, petitioner argues, it sought the creation of
separate bargaining units, namely: (1) petitioner’s teaching personnel to the
exclusion of non-teaching personnel; and (2) petitioner’s non-teaching personnel to
the exclusion of teaching personnel.
Petitioner appears to have confused the concepts of membership in a bargaining unit
and membership in a union. In emphasizing the phrase "to the exclusion of academic
employees" stated in U.P. v. Ferrer-Calleja, petitioner believed that the petitioning
union could not admit academic employees of the university to its membership. But
such was not the intention of the Supreme Court.
A bargaining unit is a group of employees sought to be represented by a petitioning
union. Such employees need not be members of a union seeking the conduct of a
certification election. A union certified as an exclusive bargaining agent represents
not only its members but also other employees who are not union members. As
pointed out in our assailed Decision, there were two contending unions in the U.P.
case, namely, the Organization of Non-Academic Personnel of U.P. (ONAPUP) and the
All U.P. Worker’s Union composed of both U.P. academic and non-academic
personnel. ONAPUP sought the conduct of a certification election among the rank-
and-file non-academic personnel only, while the All U.P. Workers Union intended to
cover all U.P. rank-and-file employees, involving both academic and non-academic
personnel.
The Supreme Court ordered the "non-academic rank-and-file employees of U.P. to
constitute a bargaining unit to the exclusion of the academic employees of the
institution", but did not order them to organize a separate labor organization. In the
U.P. case, the Supreme Court did not dismiss the petition and affirmed the order for
the conduct of a certification election among the non-academic personnel of U.P.,
without prejudice to the right of the academic personnel to constitute a separate
bargaining unit for themselves and for the All U.P. Workers Union to institute a
petition for certification election.
In the same manner, the teaching and non-teaching personnel of petitioner school
must form separate bargaining units.1âwphi1 Thus, the order for the conduct of two
separate certification elections, one involving teaching personnel and the other
involving non-teaching personnel. It should be stressed that in the subject petition,
private respondent union sought the conduct of a certification election among all the
rank-and-file personnel of petitioner school. Since the decision of the Supreme Court
in the U.P. case prohibits us from commingling teaching and non-teaching personnel
in one bargaining unit, they have to be separated into two separate bargaining units
with two separate certification elections to determine whether the employees in the
respective bargaining units desired to be represented by private respondent. In the
U.P. case, only one certification election among the non-academic personnel was
ordered, because ONAPUP sought to represent that bargaining unit only. No petition
for certification election among the academic personnel was instituted by All U.P.
Workers Union in the said case; thus, no certification election pertaining to its
intended bargaining unit was ordered by the Court.58
Indeed, the purpose of a certification election is precisely to ascertain the majority of
the employees’ choice of an appropriate bargaining unit – to be or not to be
represented by a labor organization and, if in the affirmative case, by which one.59
At this point, it is not amiss to stress once more that, as a rule, only questions of law
may be raised in a Rule 45 petition. In Montoya v. Transmed Manila Corporation,60 the
Court discussed the particular parameters of a Rule 45 appeal from the CA’s Rule 65
decision on a labor case, as follows:
x x x In a Rule 45 review, we consider the correctness of the assailed CA decision, in
contrast with the review for jurisdictional error that we undertake under Rule 65.
Furthermore, Rule 45 limits us to the review of questions of law raised against the
assailed CA decision. In ruling for legal correctness, we have to view the CA decision
in the same context that the petition for certiorari it ruled upon was presented to it;
we have to examine the CA decision from the prism of whether it correctly
determined the presence or absence of grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC decision on the merits of the case was
correct. In other words, we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged before it. This is the
approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In
question form, the question to ask is: Did the CA correctly determine whether the
NLRC committed grave abuse of discretion in ruling on the case?61
Our review is, therefore, limited to the determination of whether the CA correctly
resolved the presence or absence of grave abuse of discretion in the decision of the
SOLE, not on the basis of whether the latter's decision on the merits of the case was
strictly correct. Whether the CA committed grave abuse of discretion is not what is
ruled upon but whether it correctly determined the existence or want of grave abuse
of discretion on the part of the SOLE.

WHEREFORE, the pet1t1on is DENIED. The April 18, 2007 Decision and July 31, 2007,
Resolution of the Court of Appeals in CA-G.R. SP No. 76175, which affirmed the
December 27, 2002 Decision of the Secretary of the Department of Labor and
Employment that set aside the

August 10, 2002 Decision of the Med-Arbiter denying private respondent's petition
for certification election are hereby AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:
THIRD DIVISION
September 8, 2015
G.R. No. 193798
COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,
vs.
ILOCOS PROFESSIONAL AND TECHNICAL EMPLOYESS UNION (IPTEU), Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure (Rules) seeks to reverse and set aside the March 17, 2010 Decision1 and
September 16, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
104043, which affirmed the May 6, 2008 Resolution3 of the Secretary of Labor and
Employment (SOLE) dismissing petitioner's appeal that assailed the Decision (On the
Challenged Voters )4 and Proclamation of the Winner,5 both dated October 22, 2007,
of the Mediator-Arbiter.
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation duly
organized and operating under the Philippine laws. It is primarily engaged in the
beverage business, which includes the manufacture of carbonated soft drinks. On the
other hand, respondent Ilocos Professional and Technical Employees Union (IPTEU) is
a registered independent labor organization with address at CCBPI Ilocos Plant in
Barangay Catuguing, San Nicolas, Ilocos Norte.
On July 9, 2007, IPTEU filed a verified Petition6 for certification election seeking to
represent a bargaining unit consisting of approximately twenty-two (22) rank-and-file
professional and technical employees of CCBPI Ilocos Norte Plant. CCBPI prayed for
the denial and dismissal of the petition, arguing that the Sales Logistics Coordinator
and Maintenance Foreman are supervisory employees, while the eight (8) Financial
Analysts, five (5) Quality Assurance Specialists, Maintenance Manager Secretary,
Trade Promotions and Merchandising Assistant (TPMA), Trade Asset Controller and
Maintenance Coordinator (TACMC), Sales Information Analyst (SIA), Sales Logistics
Assistant, Product Supply Coordinator, Buyer, Inventory Planner, and Inventory
Analyst are confidential employees;7hence, ineligible for inclusion as members of
IPTEU. It also sought to cancel and revoke the registration of IPTEU for failure to
comply with the twenty percent (20%) membership requirement based on all the
supposed employees in the bargaining unit it seeks to operate.
A preliminary hearing of the petition was scheduled and held on July 19, 2007. The
possibility of voluntary recognition or consent election was not acceded to by CCBPI.
Convinced that the union members are rank-and-file employees and not occupying
positions that are supervisory or confidential in nature, Mediator-Arbiter Florence
Marie A. Gacad-Ulep granted IPTEU’S petition. The dispositive portion of the August
23, 2007 Decision8 ordered:
WHEREFORE, premises considered, the Petition is GRANTED. The bargaining unit
shall be all the rank-and-file Exempt (Professional and Technical) Workers of CCBPI
who are now excluded from the existing bargaining units of the Coca-Cola Bottlers
Philippines, Inc. – Ilocos Plant. The choices in the election shall be:
ILOCOS PROFESSIONAL AND TECHNICAL
[EMPLOYEES] UNION (IPTEU)
No Union
The Labor Relations Division of this office is hereby directed to conduct the Pre-
election Conference(s) within the periods set by law. The CCBPI is hereby ordered to
submit, not later than the date of the first pre-election conference, its Certified List
of Exempt (Professional and Technical) rankand- file workers, or in its absence, the
employee payrolls from May to June 2007. In case Management fails or refuses to
submit the same, the Union’s list shall be allowed, as provided for under the Rules.
SO ORDERED.9
On September 3, 2007, CCBPI filed an appeal before the SOLE.10 The Mediator-Arbiter
acknowledged having received the Memorandum of Appeal but informed that,
pursuant to the Implementing Rules and Regulations of the Labor Code, as amended,
"[the] order granting the conduct of a certification election in an unorganized
establishment shall not be subject to appeal. Any issue arising therefrom may be
raised by means of protest on the conduct and results of the certification
election."11 On September 5, 2007, CCBPI then filed an Urgent Motion to Suspend
Proceedings,12 alleging that the notice issued by the Assistant Regional Director for
the conduct of pre-election conference is premature since the decision of the
Mediator-Arbiter is not yet final and executory and that the Mediator-Arbiter already
lost jurisdiction over the case with the filing of an appeal. Two days after, CCBPI filed
a Manifestation,13 stating that its participation in the pre-election conference,
certification election, and other proceedings is not a waiver, withdrawal or
abandonment of the pending appeal and motion to suspend proceedings.
In the Pre-election Conference held on September 10, 2007, CCBPI and IPTEU
mutually agreed to conduct the certification election on September 21, 2007. On
election day, only sixteen (16) of the twenty-two (22) employees in the IPTEU list
voted. However, no votes were canvassed. CCBPI filed and registered a Protest14
questioning the conduct and mechanics of the election and a Challenge to Votes15
on the ground that the voters are supervisory and confidential employees.
By agreement, the parties met on September 26, 2007 for the opening and counting
of the challenged votes. On said date, CCBPI filed a motion for inhibition, which the
Mediator-Arbiter verbally denied on the grounds that it was not verified and would
cause undue delay on the proceedings as there are no other Mediators-Arbiters in
the Region. The parties were informed that their agreement to have the ballots
opened could not bind the Mediator-Arbiter. Instead, they were directed to submit
additional evidence that would aid in the resolution of the challenged votes.
On October 22, 2007, the Mediator-Arbiter denied CCBPI’s challenge to the 16 votes.
She found that the voters are rank-and-file employees holding positions that are not
confidential in nature, and who are not, or used to be, members of Ilocos Monthlies
Union (IMU) due to the reclassification of their positions by CCBPI and have been
excluded from the CBA entered into by IMU and CCBPI from 1997 to 2005.
Consequently, the challenged votes were opened and canvassed. After garnering 14
out of the 16 votes cast, IPTEU was proclaimed as the sole and exclusive bargaining
agent of the rank-and-file exempt workers in CCBPI Ilocos Norte Plant.
CCBPI elevated the case to the SOLE, raising the following grounds:
1. The Honorable public [appellee] erred in disregarding the fact that there is already
an existing bargaining representative of the rank-andfile professional and technical
employees at the Ilocos Plant of appellant, namely, the Ilocos Monthlies Union (IMU)
[to] which the sixteen (16) challenged voters should be members as long as they are
not disqualified by law [for] being confidential employees.
2. The Honorable public appellee erred in denying the challenge to the sixteen (16)
actual voters, and subsequently declaring that private appellee is the sole and
exclusive [bargaining] agent of the rank-andfile exempt employees.
3. The Honorable public appellee erred in disregarding the fact that there is a pending
earlier appeal filed by appellant with the Honorable Secretary of Labor, and so the
Regional Office No. 1 of the Department of Labor and Employment lost jurisdiction
over the case including the certification election conducted by the Election Officer.
4. The Honorable public appellee erred in disregarding the fact that there is a pending
Motion to Suspend Proceedings filed by appellant with the Department of Labor and
Employment, Regional Office No. 1, San Fernando City, La Union[,] due to the
pendency of its appeal with the Honorable Secretary of Labor, and the same is not
yet resolved.
5. The Honorable public appellee erred in disregarding the fact that there is a need to
suspend the conduct of election and other proceedings to await for the final result of
the earlier appeal made by herein appellant.
6. The Honorable public appellee erred in not declaring the certification election on
September 21, 2007 null and void.16
On May 6, 2008, the appeal of CCBPI was denied. The SOLE held that, as shown by
the certification of the IMU President and the CBAs forged between CCBPI and IMU
from 1997 to 2007, the 22 employees sought to be represented by IPTEU are not part
of IMU and are excluded from its CBA coverage; that even if the 16 challenged voters
may have access to information which are confidential from the business standpoint,
the exercise of their right to self-organization could not be defeated because their
common functions do not show that there exist a confidential relationship within the
realm of labor relations; and that the order granting the certification election and
sustaining its validity despite the pendency of appeal and motion to suspend is proper
in view of Section 17, Rule VIII of Department Order No. 40, Series of 2003, which
states that the order granting the conduct of a certification election in an unorganized
establishment is not subject to appeal and that any issue arising therefrom may be
raised by means of protest on the conduct and results of the certification election.
Confronted with an adverse ruling, CCBPI filed before the CA a petition
for certiorari with prayer for temporary restraining order and writ of preliminary
injunction.17 It reiterated that:
a. There is already an existing and incumbent sole and exclusive bargaining agent in
the bargaining unit which respondent IPTEU seeks to represent, namely, the Ilocos
Monthlies Union (IMU). The bargaining unit which IPTEU seeks to represent is rank-
and-file professional and technical employees which the incumbent union, the IMU,
presently represents.
b. Respondent IPTEU never sought to represent the alleged rank-and-file Exempt
employees because it is clearly indicated in its petition for certification election that
it seeks to represent rank-and-file professional and technical employees only. Its
Constitution and bylaws includes solely and only professional and technical
employees of CCBPI-ILOCOS PLANT to its membership, and nothing more.
c. The sixteen (16) voters are not eligible for Union membership because they are
confidential employees occupying confidential positions.
d. The bargaining unit is organized due to the presence of the IMU, the sole and
exclusive bargaining unit of the rank-and-file professional and technical employees at
the Ilocos Plant of petitioner, and so the appeal of the earlier decision of the
respondent Med-Arbiter dated August 23, 2007 is in order, proper, valid and should
have been given due course in accordance with Sec. 17, Rule [VIII] of the Rules
Implementing Book V of the Labor Code.
e. The earlier appeal x x x together with the motion for suspension of the proceedings
x x x filed by petitioner on September 5, 2007 remain unresolved to date, and there
is a need to await for their final resolution before any further action including the
certification election could validly proceed.18
On March 17, 2010, the Court of Appeals denied the petition. CCBPI filed a motion for
reconsideration,19 which was also denied in the September 16, 2010 Resolution;
hence, this petition.
CCBPI contends that the CA Decision and Resolution are based on misapprehension
of facts relative to the proceedings before the Mediator- Arbiter and that its
pronouncement consists of inferences which are manifestly mistaken and without
factual/legal basis. It is argued that a petition for certiorari was filed before the CA
because the orders of the SOLE and Mediator-Arbiter were issued in patent disregard
of established facts and existing jurisprudence, thus, tainted with grave abuse of
discretion
–
1) In considering respondent IPTEU as the sole and exclusive bargaining agent of the
purported rank-and-file exempt employees in the Ilocos Plant; 2) In not declaring the
certification election held on September 21, 2007 improper and void; 3) In
disregarding the fact that the Ilocos Monthlies Union (IMU) is the existing sole
bargaining agent of the rank-and-[file] professional and technical employees at the
Ilocos Plant, to which the sixteen (16) challenged voters should be members, if
allowed by law[;] and 4) [In] ruling that the concerned employees should not be
prohibited by joining any union.20
The petition is unmeritorious.
As proven by the certification of the IMU President as well as the CBAs executed
between IMU and CCBPI, the 22 employees sought to be represented by IPTEU are
not IMU members and are not included in the CBAs due to reclassification of their
positions. If these documents were false, the IMU should have manifested its vigorous
opposition.1âwphi1 In fact, the Mediator-Arbiter noted:
The most tenacious resistance to the granting of the Petition as well as the holding of
the CE has been Management. On the other hand, the existing unions at CCBPI,
especially the IMU of which most of the IPTEU members were once part (until they
were considered outside the ambit of its existing bargaining unit) never once opposed
the Petition and the Certification election, whether verbally or in written Opposition.
Between Management and IMU, it is the latter which has more to lose, as the creation
of a separate bargaining unit would reduce the scope of IMU’s bargaining unit. Yet
through all these proceedings, we take note of the substantial moral support that has
been extended to the Petitioner by the other Unions of CCBPI, so much so that, until
objected to by Management, they were even willing to be present during the
Certification Election of 21 September 2007.21
As to whether the 16 voters sought to be excluded from the appropriate bargaining
unit are confidential employees,22 such query is a question of fact, which is not a
proper issue in a petition for review under Rule 45 of the Rules.23 This holds more true
in the present case in view of the consistent findings of the Mediator-Arbiter, the
SOLE, and the CA.
We reiterate that:
[T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court
requires that it shall raise only questions of law. The factual findings by quasi-judicial
agencies, such as the Department of Labor and Employment, when supported by
substantial evidence, are entitled to great respect in view of their expertise in their
respective fields. Judicial review of labor cases does not go so far as to evaluate the
sufficiency of evidence on which the labor official's findings rest. It is not our function
to assess and evaluate all over again the evidence, testimonial and documentary,
adduced by the parties to an appeal, particularly where the findings of both the trial
court (here, the DOLE Secretary) and the appellate court on the matter coincide, as
in this case at bar. The Rule limits that function of the Court to the review or revision
of errors of law and not to a second analysis of the evidence. x x x Thus, absent any
showing of whimsical or capricious exercise of judgment, and unless lack of any basis
for the conclusions made by the appellate court be amply demonstrated, we may not
disturb such factual findings.24
The determination of factual issues is vested in the Mediator-Arbiter and the
Department of Labor and Employment. Pursuant to the doctrine of primary
jurisdiction, the Court should refrain from resolving such controversies unless the
case falls under recognized and well-established exceptions. 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.25
In this case, organizational charts, detailed job descriptions, and training programs
were presented by CCBPI before the Mediator-Arbiter, the SOLE, and the CA. Despite
these, the Mediator-Arbiter ruled that employees who encounter or handle trade
secrets and financial information are not automatically classified as confidential
employees. It was admitted that the subject employees encounter and handle
financial as well as physical production data and other information which are
considered vital and important from the business operations’ standpoint.
Nevertheless, it was opined that such information is not the kind of information that
is relevant to collective bargaining negotiations and settlement of grievances as
would classify them as confidential employees. The SOLE, which the CA affirmed,
likewise held that the questioned voters do not have access to confidential labor
relations information.
We defer to the findings of fact of the Mediator-Arbiter, the SOLE, and the CA.
Certainly, access to vital labor information is the imperative consideration. An
employee must assist or act in a confidential capacity and obtain confidential
information relating to labor relations policies. Exposure to internal business
operations of the company is not per se a ground for the exclusion in the bargaining
unit.26

The Court sees no need to belabor the effects of the unresolved notice of appeal and
motion to suspend proceedings filed by CCBPI in September 2007. Suffice it to say
that the substantial merits of the issues raised in said pleadings are the same as what
were already brought to and passed upon by the Mediator-Arbiter, the SOLE, and the
CA.

WHEREFORE, premises considered, the petition is DENIED. The March 17, 2010
Decision and September 16, 2010 Resolution of the Court of Appeals in CA-G.R. SP
No. 104043, which affirmed the May 6, 2008 Resolution of the Secretary of Labor and
Employment, dismissing petitioner's appeal that assailed the Decision (On the
Challenged Voters) and Proclamation of the Winner, both dated October 22, 2007, of
the Mediator-Arbiter, are hereby AFFIRMED.

SO ORDERED.