1. BELYCA CORP. V.

CALLEJA

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 77395 November 29, 1988

BELYCA CORPORATION, petitioner,

vs.
DIR. PURA FERRER CALLEJA, LABOR RELATIONS, MANILA, MINISTRY OF LABOR AND
EMPLOYMENT; MED-ARBITER, RODOLFO S. MILADO, MINISTRY OF LABOR AND
EMPLOYMENT, REGIONAL OFFICE NO. 10 AND ASSOCIATED LABOR UNION (ALU-TUCP),
MINDANAO REGIONAL OFFICE, CAGAYAN DE ORO CITY, respondents.

Soriano and Arana Law Offices for petitioner.

The Solicitor General for public respondent.

Francisco D. Alas for respondent Associated Labor Unions-TUCP.

PARAS, J.:

This is a petition for certiorari and prohibition with preliminary injunction seeking to annul or to set
aside the resolution of the Bureau of Labor Relations dated November 24, 1986 and denying the
appeal, and the Bureau's resolution dated January 13, 1987 denying petitioner's motion for
reconsideration.

The dispositive portion of the questioned resolution dated November 24, 1986 (Rollo, p. 4) reads as
follows:

WHEREFORE, in view of all the foregoing considerations, the Order is affirmed and the
appeal therefrom denied.

Let, therefore, the pertinent records of the case be remanded to the office of origin for
the immediate conduct of the certification election.

The dispositive portion of the resolution dated January 13, 1987 (Rollo, p. 92) reads, as follows:

WHEREFORE, the Motion for Reconsideration filed by respondent Belyca Corporation

(Livestock Agro-Division) is hereby dismissed for lack of merit and the Bureau's
 Resolution dated 24 November 1986 is affirmed. Accordingly, let the records of this
case be immediately forwarded to the Office of origin for the holding of the certification
elections.

No further motion shall hereafter be entertained.

The antecedents of the case are as follows:

On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a legitimate labor
organization duly registered with the Ministry of Labor and Employment under Registration Certificate
No. 783-IP, filed with the Regional Office No. 10, Ministry of Labor and Employment at Cagayan de
Oro City, a petition for direct certification as the sole and exclusive bargaining agent of all the rank
and file employees/workers of Belyca Corporation (Livestock and Agro-Division), a duly organized,
registered and existing corporation engaged in the business of poultry raising, piggery and planting of
agricultural crops such as corn, coffee and various vegetables, employing approximately 205 rank
and file employees/workers, the collective bargaining unit sought in the petition, or in case of doubt of
the union's majority representation, for the issuance of an order authorizing the immediate holding of
a certification election (Rollo, p. 18). Although the case was scheduled for hearing at least three
times, no amicable settlement was reached by the parties. During the scheduled hearing of July 31,
1986 they, however, agreed to submit simultaneously their respective position papers on or before
August 11, 1986 (rollo. p. 62).

Petitioner ALU-TUCP, private respondent herein, in its petition and position paper alleged, among
others, (1) that there is no existing collective bargaining agreement between the respondent
employer, petitioner herein, and any other existing legitimate labor unions; (2) that there had neither
been a certification election conducted in the proposed bargaining unit within the last twelve (12)
months prior to the filing of the petition nor a contending union requesting for certification as the. sole
and exclusive bargaining representative in the proposed bargaining unit; (3) that more than a majority
of respondent employer's rank-and-file employees/workers in the proposed bargaining unit or one
hundred thirty-eight (138) as of the date of the filing of the petition, have signed membership with the
ALU-TUCP and have expressed their written consent and authorization to the filing of the petition; (4)
that in response to petitioner union's two letters to the proprietor/ General Manager of respondent
employer, dated April 21, 1986 and May 8, 1 986, requesting for direct recognition as the sole and
exclusive bargaining agent of the rank-and-file workers, respondent employer has locked out 119 of
its rank-and-file employees in the said bargaining unit and had dismissed earlier the local union
president, vice-president and three other active members of the local unions for which an unfair labor
practice case was filed by petitioner union against respondent employer last July 2, 1986 before the
NLRC in Cagayan de Oro City (Rollo, pp. 18; 263).<äre||anº•1àw>

Respondent employer, on the other hand, alleged in its position paper, among others, (1) that due to
the nature of its business, very few of its employees are permanent, the overwhelming majority of
which are seasonal and casual and regular employees; (2) that of the total 138 rank-and-file
employees who authorized, signed and supported the filing of the petition (a) 14 were no longer
working as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their membership from
petitioner union (d) 5 were retrenched on June 23, 1986 (e) 12 were dismissed due to malicious
insubordination and destruction of property and (f) 100 simply abandoned their work or stopped
working; (3) that the 128 incumbent employees or workers of the livestock section were merely
transferred from the agricultural section as replacement for those who have either been dismissed,
retrenched or resigned; and (4) that the statutory requirement for holding a certification election has
not been complied with by the union (Rollo, p. 26).

The Labor Arbiter granted the certification election sought for by petitioner union in his order dated
August 18, 1986 (Rollo, p. 62).

On February 4, 1987, respondent employer Belyca Corporation, appealed the order of the Labor
Arbiter to the Bureau of Labor Relations in Manila (Rollo, p. 67) which denied the appeal (Rollo, p. 80)
and the motion for reconsideration (Rollo, p. 92). Thus, the instant petition received in this Court by
mail on February 20, 1987 (Rollo, p. 3).

In the resolution of March 4, 1987, the Second Division of this Court required respondent Union to
comment on the petition and issued a temporary restraining order (,Rollo, p. 95).

Respondent union filed its comment on March 30, 1987 (Rollo, p. 190); public respondents filed its
comment on April 8, 1987 (Rollo, p. 218).

On May 4, 1987, the Court resolved to give due course to the petition and to require the parties to
submit their respective memoranda within twenty (20) days from notice (Rollo, p. 225).

The Office of the Solicitor General manifested on June 11, 1987 that it is adopting the comment for
public respondents as its memorandum (Rollo, p. 226); memorandum for respondent ALU was filed
on June 30, 1987 (Rollo, p. 231); and memorandum for petitioner, on July 30, 1987 (Rollo, p. 435).

The issues raised in this petition are:

WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN APPROPRIATE

BARGAINING UNIT.

II

WHETHER OR NOT THE STATUTORY REQUIREMENT OF 30% (NOW 20%) OF

THE EMPLOYEES IN THE PROPOSED BARGAINING UNIT, ASKING FOR A
CERTIFICATION ELECTION HAD BEEN STRICTLY COMPLIED WITH.

In the instant case, respondent ALU seeks direct certification as the sole and exclusive bargaining
agent of all the rank-and-file workers of the livestock and agro division of petitioner BELYCA
Corporation (Rollo, p. 232), engaged in piggery, poultry raising and the planting of agricultural crops
such as corn, coffee and various vegetables (Rollo, p. 26). But petitioner contends that the bargaining
unit must include all the workers in its integrated business concerns ranging from piggery, poultry, to
supermarts and cinemas so as not to split an otherwise single bargaining unit into fragmented
bargaining units (Rollo, p. 435).<äre||anº•1àw>
The Labor Code does not specifically define what constitutes an appropriate collective bargaining
unit. Article 256 of the Code provides:

Art. 256. Exclusive bargaining representative.—The labor organization

designated or selected by the majority of the employees in an appropriate
collective bargaining unit shall be exclusive representative of the
employees in such unit for the purpose of collective bargaining. However,
an individual employee or group of employee shall have the right at any
time to present grievances to their employer.

According to Rothenberg, a proper bargaining unit maybe said to be 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, indicate to be best suited to
serve reciprocal rights and duties of the parties under the collective bargaining provisions of the law
(Rothenberg in Labor Relations, p. 482).

This Court has already taken cognizance of the crucial issue of determining the proper constituency
of a collective bargaining unit.

Among the factors considered in Democratic Labor Association v. Cebu Stevedoring Co. Inc. (103
Phil 1103 [1958]) are: "(1) will of employees (Glove Doctrine); (2) affinity and unity of employee's
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".

Under the circumstances of that case, the Court stressed the importance of the fourth factor and
sustained the trial court's conclusion that two separate bargaining units should be formed in dealing
with respondent company, one consisting of regular and permanent employees and another
consisting of casual laborers or stevedores. Otherwise stated, temporary employees should be
treated separately from permanent employees. But more importantly, this Court laid down the test of
proper grouping, which is community and mutuality of interest.

Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al. v. Alhambra
Employees' Association 107 Phil. 28 [1960]) where the employment status was not at issue but the
nature of work of the employees concerned; the Court stressed the importance of the second factor
otherwise known as the substantial-mutual-interest test and found no reason to disturb the finding of
the lower Court that the employees in the administrative, sales and dispensary departments perform
work which has nothing to do with production and maintenance, unlike those in the raw leaf, cigar,
cigarette and packing and engineering and garage departments and therefore community of interest
which justifies the format or existence as a separate appropriate collective bargaining unit.

Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment status of the
employees concerned was again challenged, the Court reiterating the rulings, both in Democratic
Labor Association v. Cebu Stevedoring Co. Inc. supra and Alhambra Cigar and Cigarette Co. et al. v.
Alhambra Employees' Association (supra) held that among the factors to be considered are:
employment status of the employees to be affected, that is the positions and categories of work to
which they belong, and the unity of employees' interest such as substantial similarity of work and
duties.

In any event, whether importance is focused on the employment status or the mutuality of interest of
the employees concerned "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 (Democratic Labor Association v. Cebu Stevedoring Co. Inc. supra)

Hence, still later following the substantial-mutual interest test, the Court ruled that there is a
substantial difference between the work performed by musicians and that of other persons who
participate in the production of a film which suffice to show that they constitute a proper bargaining
unit. (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).

Coming back to the case at bar, it is beyond question that the employees of the livestock and agro
division of petitioner corporation perform work entirely different from those performed by employees in
the supermarts and cinema. Among others, the noted difference are: their working conditions, hours
of work, rates of pay, including the categories of their positions and employment status. As stated by
petitioner corporation in its position paper, due to the nature of the business in which its livestock-
agro division is engaged very few of its employees in the division are permanent, the overwhelming
majority of which are seasonal and casual and not regular employees (Rollo, p. 26). Definitely, they
have very little in common with the employees of the supermarts and cinemas. To lump all the
employees of petitioner in its integrated business concerns cannot result in an efficacious bargaining
unit comprised of constituents enjoying a community or mutuality of interest. Undeniably, the rank and
file employees of the livestock-agro division fully constitute a bargaining unit that satisfies both
requirements of classification according to employment status and of the substantial similarity of work
and duties which will ultimately assure its members the exercise of their collective bargaining rights.

II

It is undisputed that petitioner BELYCA Corporation (Livestock and Agro Division) employs more or
less two hundred five (205) rank-and-file employees and workers. It has no existing duly certified
collective bargaining agreement with any legitimate labor organization. There has not been any
certification election conducted in the proposed bargaining unit within the last twelve (12) months
prior to the filing of the petition for direct certification and/or certification election with the Ministry of
Labor and Employment, and there is no contending union requesting for certification as the sole and
exclusive bargaining representative in the proposed bargaining unit.

The records show that on the filing of the petition for certification and/or certification election on June
3, 1986; 124 employees or workers which are more than a majority of the rank-and-file employees or
workers in the proposed bargaining unit had signed membership with respondent ALU-TUCP and had
expressed their written consent and authorization to the filing of the petition. Thus, the Labor Arbiter
ordered the certification election on August 18, 1986 on a finding that 30% of the statutory
requirement under Art. 258 of the Labor Code has been met.

But, petitioner corporation contends that after June 3, 1986 four (4) employees resigned; six (6)
subsequently withdrew their membership; five (5) were retrenched; twelve (12) were dismissed for
illegally and unlawfully barricading the entrance to petitioner's farm; and one hundred (100) simply
abandoned their work.

Petitioner's claim was however belied by the Memorandum of its personnel officer to the 119
employees dated July 28, 1986 showing that the employees were on strike, which was confirmed by
the finding of the Bureau of Labor Relations to the effect that they went on strike on July 24, 1986
(Rollo, p. 419). Earlier the local union president, Warrencio Maputi; the Vice-president, Gilbert
Redoblado and three other active members of the union Carmen Saguing, Roberto Romolo and
Iluminada Bonio were dismissed and a complaint for unfair labor practice, illegal dismissal etc. was
filed by the Union in their behalf on July 2, 1986 before the NLRC of Cagayan de Oro City (Rollo, p.
415).<äre||anº•1àw> The complaint was amended on August 20, 1986 for respondent Union to
represent Warrencio Maputi and 137 others against petitioner corporation and Bello Casanova
President and General Manager for unfair labor practice, illegal dismissal, illegal lockout, etc. (Rollo,
p. 416).

Under Art. 257 of the Labor Code once the statutory requirement is met, the Director of Labor
Relations has no choice but to call a certification election (Atlas Free Workers Union AFWU PSSLU
Local v. Noriel, 104 SCRA 565 [1981]; Vismico Industrial Workers Association (VIWA) v. Noriel, 131
SCRA 569 [1984]) It becomes in the language of the New Labor Code "Mandatory for the Bureau to
conduct a certification election for the purpose of determining the representative of the employees in
the appropriate bargaining unit and certify the winner as the exclusive bargaining representative of all
employees in the unit." (Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de
Filipinas v. Noriel, 72 SCRA 24 [1976]; Kapisanan Ng Mga Manggagawa v. Noriel, 77 SCRA 414
[1977]); more so when there is no existing collective bargaining agreement. (Samahang Manggagawa
Ng Pacific Mills, Inc. v. Noriel, 134 SCRA 152 [1985]); and there has not been a certification election
in the company for the past three years (PLUM Federation of Industrial and Agrarian Workers v.
Noriel, 119 SCRA 299 [1982]) as in the instant case.

It is significant to note that 124 employees out of the 205 employees of the Belyca Corporation have
expressed their written consent to the certification election or more than a majority of the rank and file
employees and workers; much more than the required 30% and over and above the present
requirement of 20% by Executive Order No. 111 issued on December 24, 1980 and applicable only to
unorganized establishments under Art. 257, of the Labor Code, to which the BELYCA Corporation
belong (Ass. Trade Unions (ATU) v. Trajano, G.R. No. 75321, June 20, 1988).) More than that, any
doubt cast on the authenticity of signatures to the petition for holding a certification election cannot be
a bar to its being granted (Filipino Metals Corp. v. Ople 107 SCRA 211 [1981]). Even doubts as to the
required 30% being met warrant holding of the certification election (PLUM Federation of Industrial
and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]). In fact, once the required percentage
requirement has been reached, the employees' withdrawal from union membership taking place after
the filing of the petition for certification election will not affect said petition. On the contrary, the
presumption arises that the withdrawal was not free but was procured through duress, coercion or for
a valuable consideration (La Suerte Cigar and Cigarette Factory v. Director of the Bureau of Labor
Relations, 123 SCRA 679 [1983]). Hence, the subsequent disaffiliation of the six (6) employees from
the union will not be counted against or deducted from the previous number who had signed up for
certification elections Vismico Industrial Workers Association (VIWA) v. Noriel 131 SCRA 569
[1984]).<äre||anº•1àw> Similarly, until a decision, final in character, has been issued declaring the
strike illegal and the mass dismissal or retrenchment valid, the strikers cannot be denied participation
in the certification election notwithstanding, the vigorous condemnation of the strike and the fact that
the picketing were attended by violence. Under the foregoing circumstances, it does not necessarily
follow that the strikers in question are no longer entitled to participate in the certification election on
the theory that they have automatically lost their jobs. (Barrera v. CIR, 107 SCRA 596 [1981]). For
obvious reasons, the duty of the employer to bargain collectively is nullified if the purpose of the
dismissal of the union members is to defeat the union in the consent requirement for certification
election. (Samahang Manggagawa Ng Via Mare v. Noriel, 98 SCRA 507 [1980]). As stressed by this
Court, the holding of a certification election is a statutory policy that should not be circumvented.
(George and Peter Lines Inc. v. Associated Labor Unions (ALU), 134 SCRA 82 [1986]).

Finally, as a general rule, a certification election is the sole concern of the workers. The only
exception is where the employer has to file a petition for certification election pursuant to Art. 259 of
the Labor Code because the latter was requested to bargain collectively. But thereafter the role of the
employer in the certification process ceases. The employer becomes merely a bystander (Trade
Union of the Phil. and Allied Services (TUPAS) v. Trajano, 120 SCRA 64 [1983]).

There is no showing that the instant case falls under the above mentioned exception. However, it will
be noted that petitioner corporation from the outset has actively participated and consistently taken
the position of adversary in the petition for direct certification as the sole and exclusive bargaining
representative and/or certification election filed by respondent Associated Labor Unions (ALU)-TUCP
to the extent of filing this petition for certiorari in this Court. Considering that a petition for certification
election is not a litigation but a mere investigation of a non-adversary character to determining the
bargaining unit to represent the employees (LVN Pictures, Inc. v. Philippine Musicians Guild, supra;
Bulakena Restaurant & Caterer v. Court of Industrial Relations, 45 SCRA 88 [1972]; George Peter
Lines, Inc. v. Associated Labor Union, 134 SCRA 82 [1986]; Tanduay Distillery Labor Union v. NLRC,
149 SCRA 470 [1987]), and its only purpose is to give the employees true representation in their
collective bargaining with an employer (Confederation of Citizens Labor Unions CCLU v. Noriel, 116
SCRA 694 [1982]), there appears to be no reason for the employer's objection to the formation of
subject union, much less for the filing of the petition for a certification election.

PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit (b) resolution of the
Bureau of Labor Relations dated Nov. 24, 1986 is AFFIRMED; and the temporary restraining order
issued by the Court on March 4, 1987 is LIFTED permanently.

SO ORDERED.
 2. INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS V. QUISUMBING

FIRST DIVISION

[G.R. No. 128845. June 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON.

LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting
Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the
Superintendent of International School-Manila; and INTERNATIONAL SCHOOL,
INC., respondents.

DECISION

KAPUNAN, J.:

Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent
School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their
colleagues in other schools is, of course, beside the point. The point is that employees should be
given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a
principle that rests on fundamental notions of justice. That is the principle we uphold today.

Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree
732, is a domestic educational institution established primarily for dependents of foreign diplomatic
personnel and other temporary residents.[1] To enable the School to continue carrying out its
educational program and improve its standard of instruction, Section 2(c) of the same decree
authorizes the School to

employ its own teaching and management personnel selected by it either locally or
abroad, from Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their employment, except laws that
have been or will be enacted for the protection of employees.

Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying
the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine
whether a faculty member should be classified as a foreign-hire or a local hire:

a.....What is one's domicile?

b.....Where is one's home economy?

c.....To which country does one owe economic allegiance?

 d.....Was the individual hired abroad specifically to work in the School and was the
School responsible for bringing that individual to the Philippines?[2]

Should the answer to any of these queries point to the Philippines, the faculty member is classified as
a local hire; otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor"
and (b) limited tenure. The School explains:

A foreign-hire would necessarily have to uproot himself from his home country, leave his
family and friends, and take the risk of deviating from a promising career path-all for the
purpose of pursuing his profession as an educator, but this time in a foreign land. The
new foreign hire is faced with economic realities: decent abode for oneself and/or for
one's family, effective means of transportation, allowance for the education of one's
children, adequate insurance against illness and death, and of course the primary
benefit of a basic salary/retirement compensation.

Because of a limited tenure, the foreign hire is confronted again with the same
economic reality after his term: that he will eventually and inevitably return to his home
country where he will have to confront the uncertainty of obtaining suitable employment
after a long period in a foreign land.

The compensation scheme is simply the School's adaptive measure to remain

competitive on an international level in terms of attracting competent professionals in
the field of international education.[3]

When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members"[4] of the School, contested the difference in salary rates
between foreign and local-hires. This issue, as well as the question of whether foreign-hires should
be included in the appropriate bargaining unit, eventually caused a deadlock between the parties.

On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and
Mediation Board to bring the parties to a compromise prompted the Department of Labor and
Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting
Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in
favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's
motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this Court.

Petitioner claims that the point-of-hire classification employed by the School is discriminatory to
Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.
The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all,
with nationalities other than Filipino, who have been hired locally and classified as local hires. [5]The
Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the
Filipino local-hires:

The compensation package given to local-hires has been shown to apply to all, regardless of race.
Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino
local hires.[6]

The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates:

The principle "equal pay for equal work" does not find application in the present case.
The international character of the School requires the hiring of foreign personnel to deal
with different nationalities and different cultures, among the student population.

We also take cognizance of the existence of a system of salaries and benefits accorded
to foreign hired personnel which system is universally recognized. We agree that certain
amenities have to be provided to these people in order to entice them to render their
services in the Philippines and in the process remain competitive in the international
market.

Furthermore, we took note of the fact that foreign hires have limited contract of
employment unlike the local hires who enjoy security of tenure. To apply parity
therefore, in wages and other benefits would also require parity in other terms and
conditions of employment which include the employment contract.

A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for
salary and professional compensation wherein the parties agree as follows:

All members of the bargaining unit shall be compensated only in

accordance with Appendix C hereof provided that the Superintendent of
the School has the discretion to recruit and hire expatriate teachers from
abroad, under terms and conditions that are consistent with accepted
international practice.

Appendix C of said CBA further provides:

The new salary schedule is deemed at equity with the Overseas Recruited
Staff (OSRS) salary schedule. The 25% differential is reflective of the
agreed value of system displacement and contracted status of the OSRS
as differentiated from the tenured status of Locally Recruited Staff (LRS).

To our mind, these provisions demonstrate the parties' recognition of the difference in
the status of two types of employees, hence, the difference in their salaries.
 The Union cannot also invoke the equal protection clause to justify its claim of parity. It
is an established principle of constitutional law that the guarantee of equal protection of
the laws is not violated by legislation or private covenants based on reasonable
classification. A classification is reasonable if it is based on substantial distinctions and
apply to all members of the same class. Verily, there is a substantial distinction between
foreign hires and local hires, the former enjoying only a limited tenure, having no
amenities of their own in the Philippines and have to be given a good compensation
package in order to attract them to join the teaching faculty of the School.[7]

We cannot agree.

That public policy abhors inequality and discrimination is beyond contention. Our Constitution and
laws reflect the policy against these evils. The Constitution [8] in the Article on Social Justice and
Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect
and enhance the right of all people to human dignity, reduce social, economic, and political
inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of his
rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe
honesty and good faith."

International law, which springs from general principles of law, [9] likewise proscribes discrimination.
General principles of law include principles of equity,[10] i.e., the general principles of fairness and
justice, based on the test of what is reasonable. [11] The Universal Declaration of Human Rights,[12] the
International Covenant on Economic, Social, and Cultural Rights,[13] the International Convention on
the Elimination of All Forms of Racial Discrimination, [14] the Convention against Discrimination in
Education,[15] the Convention (No. 111) Concerning Discrimination in Respect of Employment and
Occupation[16] - all embody the general principle against discrimination, the very antithesis of fairness
and justice. The Philippines, through its Constitution, has incorporated this principle as part of its
national laws.

In the workplace, where the relations between capital and labor are often skewed in favor of capital,
inequality and discrimination by the employer are all the more reprehensible.

The Constitution[17] specifically provides that labor is entitled to "humane conditions of work." These
conditions are not restricted to the physical workplace - the factory, the office or the field - but include
as well the manner by which employers treat their employees.

The Constitution[18] also directs the State to promote "equality of employment opportunities for all."
Similarly, the Labor Code[19] provides that the State shall "ensure equal work opportunities regardless
of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the
State, in spite of its primordial obligation to promote and ensure equal employment opportunities,
closes its eyes to unequal and discriminatory terms and conditions of employment. [20]

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for
example, prohibits and penalizes[21] the payment of lesser compensation to a female employee as
against a male employee for work of equal value. Article 248 declares it an unfair labor practice for an
employer to discriminate in regard to wages in order to encourage or discourage membership in any
labor organization.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7
thereof, provides:

The States Parties to the present Covenant recognize the right of everyone to the
enjoyment of just and favourable conditions of work, which ensure, in particular:

a.....Remuneration which provides all workers, as a minimum, with:

i.....Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of
work not inferior to those enjoyed by men, with equal pay for equal work;

x x x.

The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism
of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort
and responsibility, under similar conditions, should be paid similar salaries. [22] This rule applies to the
School, its "international character" notwithstanding.

The School contends that petitioner has not adduced evidence that local-hires perform work equal to
that of foreign-hires.[23] The Court finds this argument a little cavalier. If an employer accords
employees the same position and rank, the presumption is that these employees perform equal work.
This presumption is borne by logic and human experience. If the employer pays one employee less
than the rest, it is not for that employee to explain why he receives less or why the others receive
more. That would be adding insult to injury. The employer has discriminated against that employee; it
is for the employer to explain why the employee is treated unfairly.

The employer in this case has failed to discharge this burden. There is no evidence here that foreign-
hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar
functions and responsibilities, which they perform under similar working conditions.

The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the
distinction in salary rates without violating the principle of equal work for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration
paid at regular intervals for the rendering of services." In Songco v. National Labor Relations
Commission,[24] we said that:

"salary" means a recompense or consideration made to a person for his pains or

industry in another man's business. Whether it be derived from "salarium," or more
fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea
of compensation for services rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not be used as an
enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires
and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation
factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in
salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately
compensated by certain benefits accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave travel allowances.

The Constitution enjoins the State to "protect the rights of workers and promote their welfare,"[25] "to
afford labor full protection."[26] The State, therefore, has the right and duty to regulate the relations
between labor and capital.[27] These relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining agreements included, must yield to the
common good.[28] Should such contracts contain stipulations that are contrary to public policy, courts
will not hesitate to strike down these stipulations.

In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no
reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of
the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does
not deserve the sympathy of this Court.

We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires.

A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the
entire body of employees, consistent with equity to the employer indicate to be the best suited to
serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the
law."[29] The factors in determining the appropriate collective bargaining unit are (1) the will of the
employees (Globe Doctrine); (2) affinity and unity of the employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. [30] The
basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their collective bargaining rights.[31]

It does not appear that foreign-hires have indicated their intention to be grouped together with local-
hires for purposes of collective bargaining. The collective bargaining history in the School also shows
that these groups were always treated separately. Foreign-hires have limited tenure; local-hires enjoy
security of tenure. Although foreign-hires perform similar functions under the same working conditions
as the local-hires, foreign-hires are accorded certain benefits not granted to local-hires. These
benefits, such as housing, transportation, shipping costs, taxes, and home leave travel allowance, are
reasonably related to their status as foreign-hires, and justify the exclusion of the former from the
latter. To include foreign-hires in a bargaining unit with local-hires would not assure either group the
exercise of their respective collective bargaining rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART.
The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are
hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of
according foreign-hires higher salaries than local-hires.

SO ORDERED.

Puno, and Pardo, JJ., concur.

Davide, Jr., C.J., (Chairman), on official leave.

Ynares-Santiago, J., on leave.

3. STA. LUCIA EAST COMMERCIAL CORP V. SEC OF LABOR

FIRST DIVISION

STA. LUCIA EAST COMMERCIAL G.R. No. 162355

CORPORATION,
Petitioner,
Present:
- versus -
PUNO, C.J., Chairperson,
CARPIO,
HON. SECRETARY OF LABOR AND CORONA,
EMPLOYMENT and CHICO-NAZARIO,*and
STA. LUCIA EAST COMMERCIAL LEONARDO-DE CASTRO, JJ.
CORPORATION WORKERS
ASSOCIATION (CLUP LOCAL
CHAPTER), Promulgated:
Respondents.
August 14, 2009
x--------------------------------------------------x

DECISION

CARPIO, J.:

The Case

This is a petition for review[1]assailing the Decision[2]promulgated on 14 August 2003 as well as the
Resolution[3]promulgated on 24 February 2004 of the Court of Appeals (appellate court) in CA-G.R.
SP No. 77015. The appellate court denied Sta. Lucia East Commercial Corporations (SLECC)
petition for certiorari with prayer for writ of preliminary injunction and temporary restraining order. The
appellate court further ruled that the Secretary of Labor and Employment (Secretary) was correct
when she held that the subsequent negotiations and registration of a collective bargaining agreement
(CBA) executed by SLECC with Samahang Manggagawa sa Sta. Lucia East Commercial (SMSLEC)
could not bar Sta. Lucia East Commercial Corporation Workers Associations (SLECCWA) petition for
direct certification.

The Facts

The Secretary narrated the facts as follows:

On 27 February 2001, Confederated Labor Union of the Philippines (CLUP), in behalf of
its chartered local, instituted a petition for certification election among the regular rank-
and-file employees of Sta. Lucia East Commercial Corporation and its Affiliates,
docketed as Case No. RO400-0202-RU-007. The affiliate companies included in the
petition were SLE Commercial, SLE Department Store, SLE Cinema, Robsan East
Trading, Bowling Center, Planet Toys, Home Gallery and Essentials.

On 21 August 2001, Med-Arbiter Bactin ordered the dismissal of the petition due to
inappropriateness of the bargaining unit. CLUP-Sta. Lucia East Commercial Corporation
and its Affiliates Workers Union appealed the order of dismissal to this Office on 14
September 2001. On 20 November 2001, CLUP-Sta. Lucia East Commercial
Corporation and its Affiliates Workers Union [CLUP-SLECC and its Affiliates Workers
Union] moved for the withdrawal of the appeal. On 31 January 2002, this Office granted
the motion and affirmed the dismissal of the petition.

In the meantime, on 10 October 2001, [CLUP-SLECC and its Affiliates Workers Union]
reorganized itself and re-registered as CLUP-Sta. Lucia East Commercial Corporation
Workers Association (herein appellant CLUP-SLECCWA), limiting its membership to the
rank-and-file employees of Sta. Lucia East Commercial Corporation. It was issued
Certificate of Creation of a Local Chapter No. RO400-0110-CC-004.

On the same date, [CLUP-SLECCWA] filed the instant petition. It alleged that [SLECC]
employs about 115 employees and that more than 20% of employees belonging to the
rank-and-file category are its members. [CLUP-SLECCWA] claimed that no certification
election has been held among them within the last 12 months prior to the filing of the
petition, and while there is another union registered with DOLE-Regional Office No. IV
on 22 June 2001 covering the same employees, namely [SMSLEC], it has not been
recognized as the exclusive bargaining agent of [SLECCs] employees.

On 22 November 2001, SLECC filed a motion to dismiss the petition. It averred that it
has voluntarily recognized [SMSLEC] on 20 July 2001 as the exclusive bargaining agent
of its regular rank-and-file employees, and that collective bargaining negotiations
already commenced between them. SLECC argued that the petition should be
dismissed for violating the one year and negotiation bar rules under pars. (c) and (d),
Section 11, Rule XI, Book V of the Omnibus Rules Implementing the Labor Code.
 On 29 November 2001, a CBA between [SMSLEC] and [SLECC] was ratified by its
rank-and-file employees and registered with DOLE-Regional Office No. IV on 9 January
2002.

In the meantime, on 19 December 2001, [CLUP-SLECCWA] filed its Opposition and

Comment to [SLECCS] Motion to Dismiss. It assailed the validity of the voluntary
recognition of [SMSLEC] by [SLECC] and their consequent negotiations and execution
of a CBA. According to [CLUP-SLECCWA], the same were tainted with malice, collusion
and conspiracy involving some officials of the Regional Office. Appellant contended that
Chief LEO Raymundo Agravante, DOLE Regional Office No. IV, Labor Relations
Division should have not approved and recorded the voluntary recognition of
[SMSLEC] by [SLECC] because it violated one of the major requirements for voluntary
recognition, i.e., non-existence of another labor organization in the same bargaining
unit. It pointed out that the time of the voluntary recognition on 20 July 2001, appellants
registration as [CLUP-SLECC and its Affiliates Workers Union], which covers the same
group of employees covered by Samahang Manggagawa sa Sta. Lucia East
Commercial, was existing and has neither been cancelled or abandoned. [CLUP-
SLECCWA] also accused Med-Arbiter Bactin of malice, collusion and conspiracy with
appellee company when he dismissed the petition for certification election filed by
[SMSLEC] for being moot and academic because of its voluntary recognition, when he
was fully aware of the pendency of [CLUP-SLECCWAs] earlier petition for certification
election.

Subsequent pleadings filed by [CLUP-SLECCWA] and [SLECC] reiterated their

respective positions on the validity and invalidity of the voluntary recognition. On 29 July
2002, Med-Arbiter Bactin issued the assailed Order.[4]

The Med-Arbiters Ruling

In his Order dated 29 July 2002, Med-Arbiter Anastacio L. Bactin dismissed CLUP-SLECCWAs
petition for direct certification on the ground of contract bar rule.The prior voluntary recognition of
SMSLEC and the CBA between SLECC and SMSLEC bars the filing of CLUP-SLECCWAs petition
for direct certification.SMSLEC is entitled to enjoy the rights, privileges, and obligations of an
exclusive bargaining representative from the time of the recording of the voluntary
recognition. Moreover, the duly registered CBA bars the filing of the petition for direct certification.

CLUP-SLECCWA filed a Memorandum of Appeal of the Med-Arbiters Order before the Secretary.

The Ruling of the Secretary of Labor and Employment

In her Decision promulgated on 27 December 2002, the Secretary found merit in CLUP-SLECCWAs
appeal. The Secretary held that the subsequent negotiations and registration of a CBA executed by
SLECC with SMSLEC could not bar CLUP-SLECCWAs petition. CLUP-SLECC and its Affiliates
Workers Union constituted a registered labor organization at the time of SLECCs voluntary
recognition of SMSLEC. The dispositive portion of the Secretarys Decision reads:

WHEREFORE, the appeal is hereby GRANTED and the Order of the Med-Arbiter dated
29 July 2002 is REVERSED and SET ASIDE. Accordingly, let the entire records of the
case be remanded to the Regional Office of origin for the immediate conduct of a
certification election, subject to the usual pre-election conference, among the regular
rank-and-file employees of [SLECC], with the following choices:

1. Sta. Lucia East Commercial Corporation Workers Association CLUP Local Chapter;
2. Samahang Manggagawa sa Sta. Lucia East Commercial; and
3. No Union.

Pursuant to Rule XI, Section II.1 of Department Order No. 9, appellee corporation is
hereby directed to submit to the office of origin, within ten (10) days from receipt hereof,
the certified list of its employees in the bargaining unit or when necessary a copy of its
payroll covering the same employees for the last three (3) months preceding the
issuance of this Decision.

Let a copy of this Decision be furnished the Bureau of Labor Relations and Labor
Relations Division of Regional Office No. IV for the cancellation of the recording of
voluntary recognition in favor of Samahang Manggagawa sa Sta. Lucia East
Commercial and the appropriate annotation of re-registration of CLUP-Sta. Lucia East
Commercial Corporation and its Affiliates Workers Union to Sta. Lucia East Commercial
Corporation Workers Association-CLUP Local Chapter.

SO DECIDED.[5]

SLECC filed a motion for reconsideration which the Secretary denied for lack of merit in a
Resolution dated 27 March 2003. SLECC then filed a petition for certiorari before the appellate court.

The Ruling of the Appellate Court

The appellate court affirmed the ruling of the Secretary and quoted extensively from the Secretarys
decision. The appellate court agreed with the Secretarys finding that the workers sought to be
represented by CLUP-SLECC and its Affiliates Workers Union included the same workers in the
bargaining unit represented by SMSLEC. SMSLEC was not the only legitimate labor organization
operating in the subject bargaining unit at the time of SMSLECs voluntary recognition on 20 July
2001. Thus, SMSLECs voluntary recognition was void and could not bar CLUP-SLECCWAs petition
for certification election.

The Issue

SLECC raised only one issue in its petition. SLECC asserted that the appellate court commited a
reversible error when it affirmed the Secretarys finding that SLECCs voluntary recognition of
SMSLEC was done while a legitimate labor organization was in existence in the bargaining unit.

The Ruling of the Court

The petition has no merit. We see no reason to overturn the rulings of the Secretary and of the
appellate court.

Legitimate Labor Organization

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.[6] 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.[7]
Bargaining Unit
The concepts of a union and of a legitimate labor organization are different from, but related to, the
concept of a bargaining unit. We explained the concept of a bargaining unit in San Miguel Corporation
v. Laguesma,[8]where we stated that:

A bargaining unit is a group of employees of a given employer, comprised of all or less

than all of the entire body of employees, consistent with equity to the employer,
indicated to be the best suited to serve the reciprocal rights and duties of the parties
under the collective bargaining provisions of the law.

The fundamental factors in determining the appropriate collective bargaining unit are:
(1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees
interest, such as substantial similarity of work and duties, or similarity of compensation
and working conditions (Substantial Mutual Interests Rule); (3) prior collective
bargaining history; and (4) similarity of employment status.
 Contrary to petitioners assertion, this Court has categorically ruled that the existence of
a prior collective bargaining history is neither decisive nor conclusive in the
determination of what constitutes an appropriate bargaining unit.

However, employees in two corporations cannot be treated as a single bargaining unit even if the
businesses of the two corporations are related.[9]

A Legitimate Labor Organization Representing

An Inappropriate Bargaining Unit

CLUP-SLECC and its Affiliates Workers Unions initial problem was that they constituted a legitimate
labor organization representing a non-appropriate bargaining unit. However, CLUP-SLECC and its
Affiliates Workers Union subsequently re-registered as CLUP-SLECCWA, limiting its members to the
rank-and-file of SLECC. SLECC cannot ignore that CLUP-SLECC and its Affiliates Workers Union
was a legitimate labor organization at the time of SLECCs voluntary recognition of SMSLEC. SLECC
and SMSLEC cannot, by themselves, decide whether CLUP-SLECC and its Affiliates Workers Union
represented an appropriate bargaining unit.

The inclusion in the union of disqualified employees is not among the grounds for cancellation of
registration, unless such inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) to (c) of Article 239 of the Labor Code.[10] THUS, CLUP-
SLECC AND ITS AFFILIATES WORKERS UNION, HAVING BEEN VALIDLY ISSUED A
CERTIFICATE OF REGISTRATION, SHOULD BE CONSIDERED AS HAVING ACQUIRED
JURIDICAL PERSONALITY WHICH MAY NOT BE ATTACKED COLLATERALLY. THE PROPER
PROCEDURE FOR SLECC IS TO FILE A PETITION FOR CANCELLATION OF CERTIFICATE OF
REGISTRATION[11]OF CLUP-SLECC AND ITS AFFILIATES WORKERS UNION AND NOT TO
IMMEDIATELY COMMENCE VOLUNTARY RECOGNITION PROCEEDINGS WITH SMSLEC.

SLECCs Voluntary Recognition of SMSLEC

The employer may voluntarily recognize the representation status of a union

in unorganized establishments.[12] SLECC WAS NOT AN UNORGANIZED ESTABLISHMENT
WHEN IT VOLUNTARILY RECOGNIZED SMSLEC AS ITS EXCLUSIVE BARGAINING
REPRESENTATIVE ON 20 JULY 2001. CLUP-SLECC AND ITS AFFILIATES WORKERS UNION
FILED A PETITION FOR CERTIFICATION ELECTION ON 27 FEBRUARY 2001 AND THIS
PETITION REMAINED PENDING AS OF 20 JULY 2001. THUS, SLECCS VOLUNTARY
RECOGNITION OF SMSLEC ON 20 JULY 2001, THE SUBSEQUENT NEGOTIATIONS AND
RESULTING REGISTRATION OF A CBA EXECUTED BY SLECC AND SMSLEC ARE VOID AND
CANNOT BAR CLUP-SLECCWAS PRESENT PETITION FOR CERTIFICATION ELECTION.
EMPLOYERS PARTICIPATION IN A PETITION FOR CERTIFICATION ELECTION

We find it strange that the employer itself, SLECC, filed a motion to oppose CLUP-SLECCWAs
petition for certification election. In petitions for certification election, the employer is a mere
bystander and cannot oppose the petition or appeal the Med-Arbiters decision. The exception to this
rule, which happens when the employer is requested to bargain collectively, is not present in the case
before us.[13]

WHEREFORE, we DENY the petition. We AFFIRM the Decision promulgated on 14 August 2003 as
well as the Resolution promulgated on 24 February 2004 of the Court of Appeals in CA-G.R. SP No.
77015.
SO ORDERED.

4. UP V FERRER-CALLEJA

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 96189 July 14, 1992

UNIVERSITY OF THE PHILIPPINES, petitioner,

vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, Department of
Labor and Employment, and THE ALL U.P. WORKERS' UNION, represented by its President,
Rosario del Rosario, respondent.

NARVASA, C.J.:

In this special civil action of certiorari the University of the Philippines seeks the nullification of the
Order dated October 30, 1990 of Director Pura Ferrer-Calleja of the Bureau of Labor Relations
holding that "professors, associate professors and assistant professors (of the University of the
Philippines) are . . rank-and-file employees . . ;" consequently, they should, together with the so-
called non-academic, non-teaching, and all other employees of the University, be represented by only
one labor organization. 1 The University is joined in this undertaking by the Solicitor General who "has
taken a position not contrary to that of petitioner and, in fact, has manifested . . that he is not
opposing the petition . . ." 2

The case 3 was initiated in the Bureau of Labor Relations by a petition filed on March 2, 1990 by a
registered labor union, the "Organization of Non-Academic Personnel of UP" (ONAPUP). 4 Claiming
to have a membership of 3,236 members — comprising more than 33% of the 9,617 persons
constituting the non-academic personnel of UP-Diliman, Los Baños, Manila, and Visayas, it sought
the holding of a certification election among all said non-academic employees of the University of the
Philippines. At a conference thereafter held on March 22, 1990 in the Bureau, the University stated
that it had no objection to the election.

On April 18, 1990, another registered labor union, the "All UP Workers' Union," 5 filed a comment, as
intervenor in the certification election proceeding. Alleging that its membership covers both academic
and non-academic personnel, and that it aims to unite all UP rank-and-file employees in one union, it
declared its assent to the holding of the election provided the appropriate organizational unit was first
clearly defined. It observed in this connection that the Research, Extension and Professional Staff
(REPS), who are academic non-teaching personnel, should not be deemed part of the organizational
unit.

For its part, the University, through its General Counsel, 6 made of record its view that there should
be two (2) unions: one for academic, the other for non-academic or administrative, personnel
considering the dichotomy of interests, conditions and rules governing these employee groups.

Director Calleja ruled on the matter on August 7, 1990. 7 She declared that "the appropriate
organizational unit . . should embrace all the regular rank-and-file employees, teaching and non-
teaching, of the University of the Philippines, including all its branches" and that there was no
sufficient evidence "to justify the grouping of the non-academic or administrative personnel into an
organization unit apart and distinct from that of the academic or teaching personnel." Director Calleja
adverted to Section 9 of Executive Order No. 180, viz.:

Sec. 9. The appropriate organizational unit shall be the employer unit consisting of rank-
and-file employees, unless circumstances otherwise require.

and Section 1, Rule IV of the Rules Implementing said EO 180 (as amended by SEC. 2,
Resolution of Public Sector Labor Management Council dated May 14, 1989, viz.:

xxx xxx xxx

For purposes of registration, an appropriate organizational unit may refer to:

xxx xxx xxx

d. State universities or colleges, government-owned or controlled corporations with

original charters.

She went on to say that the general intent of EO 180 was "not to fragmentize the employer
unit, as "can be gleaned from the definition of the term "accredited employees' organization,"
which refers to:

. . a registered organization of the rank-and-file employees as defined in these rules

recognized to negotiate for the employees in an organizational unit headed by an officer
with sufficient authority to bind the agency, such as . . . . . . state colleges and
universities.
The Director thus commanded that a certification election be "conducted among rank-and-file
employees, teaching and non-teaching" in all four autonomous campuses of the UP, and that
management appear and bring copies of the corresponding payrolls for January, June, and July,
1990 at the "usual pre-election conference . . ."

At the pre-election conference held on March 22, 1990 at the Labor Organizational Division of the
DOLE, 8 the University sought further clarification of the coverage of the term, "rank-and-file"
personnel, asserting that not every employee could properly be embraced within both teaching and
non-teaching categories since there are those whose positions are in truth managerial and policy-
determining, and hence, excluded by law.

At a subsequent hearing (on October 4, 1990), the University filed a Manifestation seeking the
exclusion from the organizational unit of those employees holding supervisory positions among non-
academic personnel, and those in teaching staff with the rank of Assistant Professor or higher,
submitting the following as grounds therefor:

1) Certain "high-level employees" with policy-making, managerial, or confidential functions, are

ineligible to join rank-and-file employee organizations under Section 3, EO 180:

Sec. 3. High-level employees whose functions are normally considered as policy-

making or managerial or whose duties are of a highly confidential nature shall not be
eligible to join the organization of rank-and file government employees;

2) In the University hierarchy, not all teaching and non-teaching personnel belong the rank-and file:
just as there are those occupying managerial positions within the non-teaching roster, there is also a
dichotomy between various levels of the teaching or academic staff;

3) Among the non-teaching employees composed of Administrative Staff and Research personnel,
only those holding positions below Grade 18 should be regarded as rank-and-file, considering that
those holding higher grade positions, like Chiefs of Sections, perform supervisory functions including
that of effectively recommending termination of appointments or initiating appointments and
promotions; and

4) Not all teaching personnel may be deemed included in the term, "rank-and-file;" only those holding
appointments at the instructor level may be so considered, because those holding appointments from
Assistant Professor to Associate Professor to full Professor take part, as members of the University
Council, a policy-making body, in the initiation of policies and rules with respect to faculty tenure and
promotion. 9

The ONAPUP quite categorically made of record its position; that it was not opposing the University's
proferred classification of rank-and file employees. On the other hand, the "All UP Workers' Union"
opposed the University's view, in a Position Paper presented by it under date of October 18, 1990.

Director Calleja subsequently promulgated an Order dated October 30, 1990, resolving the "sole
issue" of "whether or not professors, associate professors and assistant professors are included in
the definition of high-level employee(s)" in light of Rule I, Section (1) of the Implementing Guidelines
of Executive Order No. 180, defining "high level employee" as follows:

1. High Level Employee — is one whose functions are normally considered policy
determining, managerial or one whose duties are highly confidential in nature. A
managerial function refers to the exercise of powers such as:

1. To effectively recommend such managerial actions;

2. To formulate or execute management policies and decisions; or

3. To hire, transfer, suspend, lay-off, recall, dismiss, assign or discipline

employees.

The Director adjudged that said teachers are rank-and-file employees "qualified to join unions and
vote in certification elections." According to her —

A careful perusal of the University Code . . shows that the policy-making powers of the
Council are limited to academic matters, namely, prescribing courses of study and rules
of discipline, fixing student admission and graduation requirements, recommending to
the Board of Regents the conferment of degrees, and disciplinary power over students.
The policy-determining functions contemplated in the definition of a high-level employee
pertain to managerial, executive, or organization policies, 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. They are the usual
issues in collective bargaining negotiations so that whoever wields these powers would
be placed in a situation of conflicting interests if he were allowed to join the union of
rank-and-file employees.

The University seasonably moved for reconsideration, seeking to make the following points, to wit:

1) UP professors do "wield the most potent managerial powers: the power to rule on tenure, on the
creation of new programs and new jobs, and conversely, the abolition of old programs and the
attendant re-assignment of employees.

2) To say that the Council is "limited to (acting on) academic matters" is error, since academic
decisions "are the most important decisions made in a University . . (being, as it were) the heart, the
core of the University as a workplace.

3) Considering that the law regards as a "high level" employee, one who performs either policy-
determining, managerial, or confidential functions, the Director erred in applying only the "managerial
functions" test, ignoring the "policy-determining functions" test.

4) The Director's interpretation of the law would lead to absurd results, e.g.: "an administrative officer
of the College of Law is a high level employee, while a full Professor who has published several
treatises and who has distinguished himself in argument before the Supreme Court is a mere rank-
and-file employee. A dormitory manager is classified as a high level employee, while a full Professor
or Political Science with a Ph. D. and several Honorary doctorates is classified as rank-and-file." 10

The motion for reconsideration was denied by Director Calleja, by Order dated November 20, 1990.

The University would now have this Court declare void the Director's Order of October 30, 1990 as
well as that of November 20, 1990. 11 A temporary restraining order was issued by the Court, by
Resolution dated December 5, 1990 conformably to the University's application therefor.

Two issues arise from these undisputed facts. One is whether or not professors, associate professors
and assistant professors are "high-level employees" "whose functions are normally considered policy
determining, managerial or . . highly confidential in nature." The other is whether or not, they, and
other employees performing academic functions, 12 should comprise a collective bargaining unit
distinct and different from that consisting of the non-academic employees of the
University, 13 considering the dichotomy of interests, conditions and rules existing between them.

As regards the first issue, the Court is satisfied that it has been correctly resolved by the respondent
Director of Bureau Relations. In light of Executive Order No. 180 and its implementing rules, as well
as the University's charter and relevant regulations, the professors, associate professors and
assistant professors (hereafter simply referred to as professors) cannot be considered as exercising
such managerial or highly confidential functions as would justify their being categorized as "high-level
employees" of the institution.

The Academic Personnel Committees, through which the professors supposedly exercise managerial
functions, were constituted "in order to foster greater involvement of the faculty and other academic
personnel in appointments, promotions, and other personnel matters that directly affect
them." 14 Academic Personnel Committees at the departmental and college levels were organized
"consistent with, and demonstrative of the very idea of consulting the faculty and other academic
personnel on matters directly affecting them" and to allow "flexibility in the determination of guidelines
peculiar to a particular department or college." 15

Personnel actions affecting the faculty and other academic personnel should, however, "be
considered under uniform guidelines and consistent with the Resolution of the Board (of Regents)
adopted during its 789th Meeting (11-26-69) creating the University Academic Personnel
Board." 16 Thus, the Departmental Academic Personnel Committee is given the function of
"assist(ing) in the review of the recommendations initiated by the Department Chairman with regard to
recruitment, selection, performance evaluation, tenure and staff development, in accordance with the
general guidelines formulated by the University Academic Personnel Board and the implementing
details laid down by the College Academic Personnel Committee;" 17 while the College Academic
Personnel Committee is entrusted with the following functions: 18

1. Assist the Dean in setting up the details for the implementation of policies, rules,
standards or general guidelines as formulated by the University Academic Personnel
Board;
 2. Review the recommendation submitted by the DAPCs with regard to recruitment,
selection, performance evaluation, tenure, staff development, and promotion of the
faculty and other academic personnel of the College;

3. Establish departmental priorities in the allocation of available funds for promotion;

4. Act on cases of disagreement between the Chairman and the members of the DAPC
particularly on personnel matters covered by this Order;

5. Act on complaints and/or protests against personnel actions made by the Department
Chairman and/or the DAPC.

The University Academic Personnel Board, on the other hand, performs the following functions: 19

1. Assist the Chancellor in the review of the recommendations of the CAPC'S.

2. Act on cases of disagreement between the Dean and the CAPC.

3. Formulate policies, rules, and standards with respect to the selection, compensation,
and promotion of members of the academic staff.

4. Assist the Chancellor in the review of recommendations on academic promotions and

on other matters affecting faculty status and welfare.

From the foregoing, it is evident that it is the University Academic Personnel Committee, composed of
deans, the assistant for academic affairs and the chief of personnel, which formulates the policies,
rules and standards respecting selection, compensation and promotion of members of the academic
staff. The departmental and college academic personnel committees' functions are purely
recommendatory in nature, subject to review and evaluation by the University Academic Personnel
Board. In Franklin Baker Company of the Philippines vs. Trajano, 20 this Court reiterated the principle
laid down in National Merchandising Corp. vs. Court of Industrial Relations, 21 that the power to
recommend, in order to qualify an employee as a supervisor or managerial employee "must not only
be effective but the exercise of such authority should not be merely of a routinary or clerical nature
but should require the use of independent judgment." Where such recommendatory powers, as in the
case at bar, are subject to evaluation, review and final action by the department heads and other
higher executives of the company, the same, although present, are not effective and not an exercise
of independent judgment as required by law.

Significantly, the personnel actions that may be recommended by the departmental and college
academic personnel committees must conform with the general guidelines drawn up by the university
personnel academic committee. This being the case, the members of the departmental and college
academic personnel committees are not unlike the chiefs of divisions and sections of the National
Waterworks and Sewerage Authority whom this Court considered as rank-and-file employees
in National Waterworks & Sewerage Authority vs. NWSA Consolidated Unions, 22because "given
ready policies to execute and standard practices to observe for their execution, . . . they have little
freedom of action, as their main function is merely to carry out the company's orders, plans and
policies."

The power or prerogative pertaining to a high-level employee "to effectively recommend such
managerial actions, to formulate or execute management policies or decisions and/or to hire, transfer,
suspend, lay-off, recall, dismiss, assign or discipline employees" 23 is exercised to a certain degree by
the university academic personnel board/committees and ultimately by the Board of Regents in
accordance with Section 6 of the University
24
Charter, thus:

(e) To appoint, on the recommendation of the President of the University, professors,

instructors, lecturers and other employees of the University; to fix their compensation,
hours of service, and such other duties and conditions as it may deem proper; to grant
them in its discretion leave of absence under such regulations as it may promulgate,
any other provision of law to the contrary notwithstanding, and to remove them for
cause after investigation and hearing shall have been had.

Another factor that militates against petitioner's espousal of managerial employment status for all its
professors through membership in the departmental and college academic personnel committees is
that not all professors are members thereof. Membership and the number of members in the
committees are provided as follows: 25

Sec. 2. Membership in Committees. — Membership in committees may be made either

through appointment, election, or by some other means as may be determined by the
faculty and other academic personnel of a particular department or college.

Sec. 3. Number of Members. — In addition to the Chairman, in the case of a

department, and the Dean in the case of a college, there shall be such number of
members representing the faculty and academic personnel as will afford a fairly
representative, deliberative and manageable group that can handle evaluation of
personnel actions.

Neither can membership in the University Council elevate the professors to the status of high-level
employees. Section 6 (f) and 9 of the UP Charter respectively provide: 26

Sec. 6. The Board of Regents shall have the following powers and duties . . . ;

xxx xxx xxx

(f) To approve the courses of study and rules of discipline drawn up by the University
Council as hereinafter provided; . . .

Sec. 9. There shall be a University Council consisting of the President of the University
and of all instructors in the university holding the rank of professor, associate professor,
or assistant professor. The Council shall have the power to prescribe the courses of
study and rules of discipline, subject to the approval of the Board of Regents. It shall fix
 the requirements for admission to any college of the university, as well as for graduation
and the receiving of a degree. The Council alone shall have the power to recommend
students or others to be recipients of degrees. Through its president or committees, it
shall have disciplinary power over the students within the limits prescribed by the rules
of discipline approved by the Board of Regents. The powers and duties of the President
of the University, in addition to those specifically provided in this Act shall be those
usually pertaining to the office of president of a university.

It is readily apparent that the policy-determining functions of the University Council are subject to
review, evaluation and final approval by the Board of Regents. The Council's power of discipline is
likewise circumscribed by the limits imposed by the Board of Regents. What has been said about the
recommendatory powers of the departmental and college academic personnel committees applies
with equal force to the alleged policy-determining functions of the University Council.

Even assuming arguendo that UP professors discharge policy-determining functions through the
University Council, still such exercise would not qualify them as high-level employees within the
context of E.O. 180. As correctly observed by private respondent, "Executive Order No. 180 is a law
concerning public sector unionism. It must therefore be construed within that context. Within that
context, the University of the Philippines represents the government as an employer. 'Policy-
determining' refers to policy-determination in university mattes that affect those same matters that
may be the subject of negotiation between public sector management and labor. The reason why
'policy-determining' has been laid down as a test in segregating rank-and-file from management is to
ensure that those who lay down policies in areas that are still negotiable in public sector collective
bargaining do not themselves become part of those employees who seek to change these policies for
their collective welfare." 27

The policy-determining functions of the University Council refer to academic matters, i.e. those
governing the relationship between the University and its students, and not the University as an
employer and the professors as employees. It is thus evident that no conflict of interest results in the
professors being members of the University Council and being classified as rank-and-file employees.

Be that as it may, does it follow, as public respondent would propose, that all rank-and-file employees
of the university are to be organized into a single collective bargaining unit?

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 interest of all the employees,
consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law. 28

Our labor laws do not however provide the criteria for determining the proper collective bargaining
unit. Section 12 of the old law, Republic Act No. 875 otherwise known as the Industrial Peace Act,
simply reads as follows: 29

Sec. 12. Exclusive Collective Bargaining Representation for Labor Organizations. —

The labor organization designated or selected for the purpose of collective bargaining
by the majority of the employees in an appropriate collective bargaining unit shall be the
 exclusive representative of all the employees in such unit for the purpose of collective
bargaining in respect to rates of pay, wages, hours of employment, or other conditions
of employment; Provided, That any individual employee or group of employees shall
have the right at any time to present grievances to their employer.

Although said Section 12 of the Industrial Peace Act was subsequently incorporated into the Labor
Code with minor changes, no guidelines were included in said Code for determination of an
appropriate bargaining unit in a given case. 30 Thus, apart from the single descriptive word
"appropriate," no specific guide for determining the proper collective bargaining unit can be found in
the statutes.

Even Executive Order No. 180 already adverted to is not much help. All it says, in its Section 9, is that
"(t)he appropriate organizational unit shall be the employer unit consisting of rank-and-file employees,
unless circumstances otherwise require." Case law fortunately furnishes some guidelines.

When first confronted with the task of determining the proper collective bargaining unit in a particular
controversy, the Court had perforce to rely on American jurisprudence. In Democratic Labor
Association vs. Cebu Stevedoring Company, Inc., decided on February 28, 1958, 31 the Court
observed that "the issue of how to determine the proper collective bargaining unit and what unit would
be appropriate to be the collective bargaining
agency" . . . "is novel in this jurisdiction; however, American precedents on the matter abound . . (to
which resort may be had) considering that our present Magna Carta has been patterned after the
American law on the subject." Said the Court:

. . . Under these precedents, there are various factors which must be satisfied and
considered in determining the proper constituency of a bargaining unit. No one
particular factor is itself decisive of the determination. The weight accorded to any
particular factor varies in accordance with the particular question or questions that may
arise in a given case. What are these factors? Rothenberg mentions a good number,
but the most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2)
affinity and unit 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 probationary
employees. . . .

xxx xxx xxx

An enlightening appraisal of the problem of defining an appropriate bargaining unit is

given in the 10th Annual Report of the National Labor Relations Board wherein it is
emphasized that the factors which said board may consider and weigh in fixing
appropriate units are: the history, extent and type of organization of employees; the
history of their collective bargaining; the history, extent and type of organization of
employees in other plants of the same employer, or other employers in the same
industry; the skill, wages, work, and working conditions of the employees; the desires of
the employees; the eligibility of the employees for membership in the union or unions
 involved; and the relationship between the unit or units proposed and the employer's
organization, management, and operation. . . .

. . In said report, it is likewise emphasized that the basic test in determining the
appropriate bargaining unit is that a unit, to be appropriate, must affect a grouping of
employees who have substantial, mutual interests in wages, hours, working conditions
and other subjects of collective bargaining (citing Smith on Labor Laws, 316-317;
Francisco, Labor Laws, 162). . . .

The Court further explained that "(t)he test of the grouping is community or mutuality of interests. And
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' (Rothenberg on Labor Relations, 490)." Hence, in that case, the Court upheld the
trial court's conclusion that two separate bargaining units should be formed, one consisting of regular
and permanent employees and another consisting of casual laborers or stevedores.

Since then, the "community or mutuality of interests" test has provided the standard in determining
the proper constituency of a collective bargaining unit. In Alhambra Cigar & Cigarette Manufacturing
Company, et al. vs. Alhambra Employees' Association (PAFLU), 107 Phil. 23, the Court, noting that
the employees in the administrative, sales and dispensary departments of a cigar and cigarette
manufacturing firm perform work which have nothing to do with production and maintenance, unlike
those in the raw lead (malalasi), cigar, cigarette, packing (precintera) and engineering and garage
departments, authorized the formation of the former set of employees into a separate collective
bargaining unit. The ruling in the Democratic Labor Association case, supra, was reiterated
in Philippine Land-Air-Sea Labor Unit vs. Court of Industrial Relations, 110 Phil. 176, where casual
employees were barred from joining the union of the permanent and regular employees.

Applying the same "community or mutuality of interests" test, but resulting in the formation of only one
collective bargaining units is the case of National Association of Free Trade Unions vs. Mainit Lumber
Development Company Workers Union-United Lumber and General Workers of the Phils., G.R. No.
79526, December 21, 1990, 192 SCRA 598. In said case, the Court 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 Norte of the Mainit Lumber Development Company. The Court reasoned:

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 difference as
to the nature of their individual assignments but the distinctions are not enough to
warrant the formation of a separate bargaining unit.

In the case at bar, the University employees may, as already suggested, quite easily be categorized
into two general classes: one, the group composed of employees whose functions are non-
academic, i.e., janitors, messengers, typists, clerks, receptionists, carpenters, electricians, grounds-
keepers, chauffeurs, mechanics, plumbers; 32 and two, the group made up of those performing
academic functions, i.e., full professors, associate professors, assistant professors, instructors — who
may be judges or government executives — and research, extension and professorial staff. 33 Not
much reflection is needed to perceive that the community or mutuality of interests which justifies the
formation of a single collective bargaining unit is wanting between the academic and non-academic
personnel of the university. It would seem obvious that teachers would find very little in common with
the University clerks and other non-academic employees as regards responsibilities and functions,
working conditions, compensation rates, social life and interests, skills and intellectual pursuits,
cultural activities, etc. On the contrary, the dichotomy of interests, the dissimilarity in the nature of the
work and duties as well as in the compensation and working conditions of the academic and non-
academic personnel dictate the separation of these two categories of employees for purposes of
collective bargaining. The formation of two separate bargaining units, the first consisting of the rank-
and-file non-academic personnel, and the second, of the rank-and-file academic employees, is the
set-up that will best assure to all the employees the exercise of their collective bargaining rights.
These special circumstances, i.e., the dichotomy of interests and concerns as well as the dissimilarity
in the nature and conditions of work, wages and compensation between the academic and non-
academic personnel, bring the case at bar within the exception contemplated in Section 9 of
Executive Order No. 180. It was grave abuse of discretion on the part of the Labor Relations Director
to have ruled otherwise, ignoring plain and patent realities.

WHEREFORE, the assailed Order of October 30, 1990 is hereby AFFIRMED in so far as it declares
the professors, associate professors and assistant professors of the University of the Philippines as
rank-and-file employees. The Order of August 7, 1990 is MODIFIED in the sense that the non-
academic rank-and-file employees of the University of the Philippines shall constitute a bargaining
unit to the exclusion of the academic employees of the institution — i.e., full professors, associate
professors, assistant professors, instructors, and the research, extension and professorial staff, who
may, if so minded, organize themselves into a separate collective bargaining unit; and that, therefore,
only said non-academic rank-and-file personnel of the University of the Philippines in Diliman, Manila,
Los Baños and the Visayas are to participate in the certification election.

SO ORDERED.

5. SAN MIGUEL CORP V. LAGUESMA

SECOND DIVISION

[G.R. No. 110399. August 15, 1997]

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE,
President, petitioners, vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY
AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L.
REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL
CORPORATION, respondents.

DECISION
ROMERO, J.:

This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to
reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and
Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-
91[1] entitled In Re: Petition for Certification Election Among the Supervisory and Exempt Employees
of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San
Miguel Corporation Supervisors and Exempt Union, Petitioner. The Order excluded the employees
under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining
unit and ruled out their participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor and Employment
(DOLE) a Petition for District Certification or Certification Election among the supervisors and exempt
employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of
certification among the supervisors and exempt employees of the SMC Magnolia Poultry Products
Plants of Cabuyao, San Fernando and Otis as one bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with
Memorandum on Appeal, pointing out, among others, the Med-Arbiters error in grouping together all
three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including
supervisory levels 3 and above whose positions are confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent
companys Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination
of the true classification of each of the employees sought to be included in the appropriate bargaining
unit.
Upon petitioner-unions motion dated August 7, 1991, Undersecretary Laguesma granted the
reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification
elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt
employees in each of the three plants at Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for
Reconsideration with Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the
doctrine enunciated in Philips Industrial Development, Inc. v. NLRC[2]case. Said Order reads in part:

x x x Confidential employees, like managerial employees, are not allowed to form, join or assist a
labor union for purposes of collective bargaining.

In this case, S3 and S4 and the so-called exempt employees are admittedly confidential employees
and therefore, they are not allowed to form, join or assist a labor union for purposes of collective
bargaining following the above courts ruling. Consequently, they are not allowed to participate in the
certification election.
WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03 September
1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4)
and the so-called exempt employees are not allowed to join the proposed bargaining unit and are
therefore excluded from those who could participate in the certification election.[3]

Hence this petition.

For resolution in this case are the following issues:

1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are
considered confidential employees, hence ineligible from joining a union.
2. If they are not confidential employees, do the employees of the three plants constitute an
appropriate single bargaining unit.
On the first issue, this Court rules that said employees do not fall within the term confidential
employees who may be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt employees, are not
vested with the powers and prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not
qualified to be classified as managerial employees who, under Article 245[4] of the Labor Code, are
not eligible to join, assist or form any labor organization. In the very same provision, they are not
allowed membership in a labor organization of the rank-and-file employees but may join, assist or
form separate labor organizations of their own. The only question that need be addressed is whether
these employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons
who formulate, determine, and effectuate management policies in the field of labor relations. [5] The
two criteria are cumulative, and both must be met if an employee is to be considered a confidential
employee that is, the confidential relationship must exist between the employees and his supervisor,
and the supervisor must handle the prescribed responsibilities relating to labor relations. [6]
The exclusion from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal objective sought to be
accomplished by the confidential employee rule. The broad rationale behind this rule is that
employees should not be placed in a position involving a potential conflict of interests. [7] Management
should not be required to handle labor relations matters through employees who are represented by
the union with the company is required to deal and who in the normal performance of their duties may
obtain advance information of the companys position with regard to contract negotiations, the
disposition of grievances, or other labor relations matters.[8]
There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon.
Augusto Sanchez,[9] the Court held that if these managerial employees would belong to or be
affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident
conflict of interest. The Union can also become company-dominated with the presence of managerial
employees in Union membership. The same rationale was applied to confidential employees in
Golden Farms, Inc. v. Ferrer-Calleja[10] and in the more recent case of Philips Industrial Development,
Inc. v. NLRC[11] which held that confidential employees, by the very nature of their functions, assist
and act in a confidential capacity to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of
managerial employees to form, assist or join a labor union was held equally applicable to them. [12]
An important element of the confidential employee rule is the employees need to use labor
relations information. Thus, in determining the confidentiality of certain employees, a key questions
frequently considered is the employees necessary access to confidential labor relations
information.[13]
It is the contention of respondent corporation that Supervisory employees 3 and 4 and the exempt
employees come within the meaning of the term confidential employees primarily because they
answered in the affirmative when asked Do you handle confidential data or documents? in the
Position Questionnaires submitted by the Union.[14] In the same questionnaire, however, it was also
stated that the confidential information handled by questioned employees relate to product
formulation, product standards and product specification which by no means relate to labor
relations.[15]
Granting arguendo that an employee has access to confidential labor relations information but
such is merely incidental to his duties and knowledge thereof is not necessary in the performance of
such duties, said access does not render the employee a confidential employee. [16] If access to
confidential labor relations information is to be a factor in the determination of an employees
confidential status, such information must relate to the employers labor relations policies. Thus, an
employee of a labor union, or of a management association, must have access to confidential labor
information with respect to his employer, the union, or the association, to be regarded a confidential
employee, and knowledge of labor relations information pertaining to the companies with which the
union deals, or which the association represents, will not clause an employee to be excluded from the
bargaining unit representing employees of the union or association. [17] Access to information which is
regarded by the employer to be confidential from the business standpoint, such as financial
information[18] or technical trade secrets, will not render an employee a confidential employee.[19]
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift operations when situations
require.
2. To effectively oversee the quality control function at the processing lines in the storage of
chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct manufacturing
materials.
5. To recommend and initiate actions in the maintenance of sanitation and hygiene
throughout the plant.[20]
It is evident that whatever confidential data the questioned employees may handle will have to
relate to their functions. From the foregoing functions, it can be gleaned that the confidential
information said employees have access to concern the employers internal business operations. As
held in Westinghouse Electric Corporation v. National Labor Relations Board,[21] an employee may
not be excluded from appropriate bargaining unit merely because he has access to confidential
information concerning employers internal business operations and which is not related to the field of
labor relations.
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State
to guarantee to all workers the right to self-organization. Hence, confidential employees who may be
excluded from bargaining unit must be strictly defined so as not to needlessly deprive many
employees of their right bargain collectively through representatives of their choosing. [22]
In the case at bar, supervisors 3 and above may not be considered confidential employees
merely because they handle confidential data as such must first be strictly classified as pertaining to
labor relations for them to fall under said restrictions. The information they handle are properly
classifiable as technical and internal business operations data which, to our mind, has no relevance
to negotiations and settlement of grievances wherein the interests of a union and the management
are invariably adversarial. Since the employees are not classifiable under the confidential type, this
Court rules that they may appropriately form a bargaining unit for purposes of collective
bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has
established that there is no legal prohibition against confidential employees who are not performing
managerial functions to form and join a union.[23]
In this connection, the issue of whether the employees of San Miguel Corporation Magnolia
Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit
needs to be threshed out.
It is the contention of the petitioner union that the creation of three (3) separate bargaining units,
one each for Cabuyao Otis and San Fernando as ruled by the respondent Undersecretary, is contrary
to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of
the three plants have a similarity or a community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interest of all the
employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal
rights and duties of the parties under the collective bargaining provisions of the law. [24]
A unit to be appropriate must effect a grouping of employees who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective bargaining.[25]
It is readily seen that the employees in the instant case have community or mutuality of interest,
which is the standard in determining the proper constituency of a collective bargaining unit. [26] It is
undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This
means that, although they belong to three different plants, they perform work of the same nature,
receive the same wages and compensation, and most importantly, share a common stake in
concerted activities.
In light of these considerations, the Solicitor General has opined that separate bargaining units in
the three different plants of the division will fragmentize the employees of the said division, thus
greatly diminishing their bargaining leverage. Any concerted activity held against the private
respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact
on the operations of the private respondent. The two other plants still in operation can well step up
their production and make up for the slack caused by the bargaining unit engaged in the concerted
activity. This situation will clearly frustrate the provisions of the Labor Code and the Mandate of the
Constitution.[27]
The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna,
in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical
location can be completely disregarded if the communal or mutual interests of the employees are not
sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of
the University of the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and
the Visayas were allowed to participate in a certification election. We rule that the distance among the
three plants is not productive of insurmountable difficulties in the administration of union
affairs. Neither are there regional differences that are likely to impede the operations of a single
bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the
Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the
supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted.
SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

6. UP V. CALLEJA FERRER

7. INDOPHIL TEXTILE MILLS WORKERS UNION V. CALICA

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 96490 February 3, 1992

INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO, petitioner,

vs.
VOLUNTARY ARBITRATOR TEODORICO P. CALICA and INDOPHIL TEXTILE MILLS,
INC., respondents.

Romeo C. Lagman for petitioner.

Borreta, Gutierrez & Leogardo for respondent Indophil Textile Mills, Inc.
MEDIALDEA, J.:

This is a petition for certiorari seeking the nullification of the award issued by the respondent
Voluntary Arbitrator Teodorico P. Calica dated December 8, 1990 finding that Section 1 (c), Article I of
the Collective Bargaining Agreement between Indophil Textile Mills, Inc. and Indophil Textile Mill
Workers Union-PTGWO does not extend to the employees of Indophil Acrylic Manufacturing
Corporation as an extension or expansion of Indophil Textile Mills, Incorporated.

The antecedent facts are as follows:

Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization duly
registered with the Department of Labor and Employment and the exclusive bargaining agent of all
the rank-and-file employees of Indophil Textile Mills, Incorporated. Respondent Teodorico P. Calica is
impleaded in his official capacity as the Voluntary Arbitrator of the National Conciliation and Mediation
Board of the Department of Labor and Employment, while private respondent Indophil Textile Mills,
Inc. is a corporation engaged in the manufacture, sale and export of yarns of various counts and
kinds and of materials of kindred character and has its plants at Barrio Lambakin. Marilao, Bulacan.

In April, 1987, petitioner Indophil Textile Mill Workers Union-PTGWO and private respondent Indophil
Textile Mills, Inc. executed a collective bargaining agreement effective from April 1, 1987 to March 31,
1990.

On November 3, 1967 Indophil Acrylic Manufacturing Corporation was formed and registered with the
Securities and Exchange Commission. Subsequently, Acrylic applied for registration with the Board of
Investments for incentives under the 1987 Omnibus Investments Code. The application was
approved on a preferred non-pioneer status.

In 1988, Acrylic became operational and hired workers according to its own criteria and standards.
Sometime in July, 1989, the workers of Acrylic unionized and a duly certified collective bargaining
agreement was executed.

In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed, the petitioner
union claimed that the plant facilities built and set up by Acrylic should be considered as an extension
or expansion of the facilities of private respondent Company pursuant to Section 1(c), Article I of the
CBA, to wit,.

c) This Agreement shall apply to the Company's plant facilities and

installations and to any extension and expansion thereat. (Rollo, p.4)

In other words, it is the petitioner's contention that Acrylic is part of the Indophil bargaining unit.

The petitioner's contention was opposed by private respondent which submits that it is a juridical
entity separate and distinct from Acrylic.

The existing impasse led the petitioner and private respondent to enter into a submission agreement
on September 6, 1990. The parties jointly requested the public respondent to act as voluntary
arbitrator in the resolution of the pending labor dispute pertaining to the proper interpretation of the
CBA provision.

After the parties submitted their respective position papers and replies, the public respondent
Voluntary Arbitrator rendered its award on December 8, 1990, the dispositive portion of which
provides as follows:
 PREMISES CONSIDERED, it would be a strained interpretation and application of the
questioned CBA provision if we would extend to the employees of Acrylic the coverage
clause of Indophil Textile Mills CBA. Wherefore, an award is made to the effect that the
proper interpretation and application of Sec. l, (c), Art. I, of the 1987 CBA do (sic) not
extend to the employees of Acrylic as an extension or expansion of Indophil Textile
Mills, Inc. (Rollo, p.21)

Hence, this petition raising four (4) issues, to wit:

1. WHETHER OR NOT THE RESPONDENT ARBITRATOR ERRED IN

INTERPRETING SECTION 1(c), ART I OF THE CBA BETWEEN
PETITIONER UNION AND RESPONDENT COMPANY.

2. WHETHER OR NOT INDOPHIL ACRYLIC IS A SEPARATE AND

DISTINCT ENTITY FROM RESPONDENT COMPANY FOR PURPOSES
OF UNION REPRESENTATION.

3. WHETHER OR NOT THE RESPONDENT ARBITRATOR GRAVELY

ABUSED HIS DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
HIS JURISDICTION.

4. WHETHER OR NOT THE RESPONDENT ARBITRATOR VIOLATED

PETITIONER UNION'S CARDINAL PRIMARY RIGHT TO DUE
PROCESS. (Rollo, pp. 6-7)

The central issue submitted for arbitration is whether or not the operations in Indophil Acrylic
Corporation are an extension or expansion of private respondent Company. Corollary to the
aforementioned issue is the question of whether or not the rank-and-file employees working at
Indophil Acrylic should be recognized as part of, and/or within the scope of the bargaining unit.

Petitioner maintains that public respondent Arbitrator gravely erred in interpreting Section l(c), Article I
of the CBA in its literal meaning without taking cognizance of the facts adduced that the creation of
the aforesaid Indophil Acrylic is but a devise of respondent Company to evade the application of the
CBA between petitioner Union and respondent Company.

Petitioner stresses that the articles of incorporation of the two corporations establish that the two
entities are engaged in the same kind of business, which is the manufacture and sale of yarns of
various counts and kinds and of other materials of kindred character or nature.

Contrary to petitioner's assertion, the public respondent through the Solicitor General argues that the
Indophil Acrylic Manufacturing Corporation is not an alter ego or an adjunct or business conduit of
private respondent because it has a separate legitimate business purpose. In addition, the Solicitor
General alleges that the primary purpose of private respondent is to engage in the business of
manufacturing yarns of various counts and kinds and textiles. On the other hand, the primary purpose
of Indophil Acrylic is to manufacture, buy, sell at wholesale basis, barter, import, export and otherwise
deal in yarns of various counts and kinds. Hence, unlike private respondent, Indophil Acrylic cannot
manufacture textiles while private respondent cannot buy or import yarns.

Furthermore, petitioner emphasizes that the two corporations have practically the same incorporators,
directors and officers. In fact, of the total stock subscription of Indophil Acrylic, P1,749,970.00 which
represents seventy percent (70%) of the total subscription of P2,500,000.00 was subscribed to by
respondent Company.
On this point, private respondent cited the case of Diatagon Labor Federation v. Ople, G.R. No. L-
44493-94, December 3, 1980, 10l SCRA 534, which ruled that two corporations cannot be treated as
a single bargaining unit even if their businesses are related. It submits that the fact that there are as
many bargaining units as there are companies in a conglomeration of companies is a positive proof
that a corporation is endowed with a legal personality distinctly its own, independent and separate
from other corporations (see Rollo, pp. 160-161).

Petitioner notes that the foregoing evidence sufficiently establish that Acrylic is but an extension or
expansion of private respondent, to wit:

(a) the two corporations have their physical plants, offices and facilities
situated in the same compound, at Barrio Lambakin, Marilao, Bulacan;

(b) many of private respondent's own machineries, such as dyeing

machines, reeling, boiler, Kamitsus among others, were transferred to and
are now installed and being used in the Acrylic plant;

(c) the services of a number of units, departments or sections of private

respondent are provided to Acrylic; and

(d) the employees of private respondent are the same persons manning
and servicing the units of Acrylic. (see Rollo, pp. 12-13)

Private respondent insists that the existence of a bonafide business relationship between Acrylic and
private respondent is not a proof of being a single corporate entity because the services which are
supposedly provided by it to Acrylic are auxiliary services or activities which are not really essential in
the actual production of Acrylic. It also pointed out that the essential services are discharged
exclusively by Acrylic personnel under the control and supervision of Acrylic managers and
supervisors.

In sum, petitioner insists that the public respondent committed grave abuse of discretion amounting to
lack or in excess of jurisdiction in erroneously interpreting the CBA provision and in failing to
disregard the corporate entity of Acrylic.

We find the petition devoid of merit.

Time and again, We stress that the decisions of voluntary arbitrators are to be given the highest
respect and a certain measure of finality, but this is not a hard and fast rule, it does not preclude
judicial review thereof where want of jurisdiction, grave abuse of discretion, violation of due process,
denial of substantial justice, or erroneous interpretation of the law were brought to our attention.
(see Ocampo, et al. v. National Labor Relations Commission, G.R. No. 81677, 25 July 1990, First
Division Minute Resolution citing Oceanic Bic Division (FFW) v. Romero, G.R. No. L-43890, July 16,
1984, 130 SCRA 392)

It should be emphasized that in rendering the subject arbitral award, the voluntary arbitrator
Teodorico Calica, a professor of the U.P. Asian Labor Education Center, now the Institute for
Industrial Relations, found that the existing law and jurisprudence on the matter, supported the private
respondent's contentions. Contrary to petitioner's assertion, public respondent cited facts and the law
upon which he based the award. Hence, public respondent did not abuse his discretion.

Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist, the legal
fiction that a corporation is an entity with a juridical personality separate and distinct from its members
or stockholders may be disregarded. In such cases, the corporation will be considered as a mere
association of persons. The members or stockholders of the corporation will be considered as the
corporation, that is liability will attach directly to the officers and stockholders. The doctrine applies
when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the
mere alter ego or business conduit of a person, or where the corporation is so organized and
controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or
adjunct of another corporation. (Umali et al. v. Court of Appeals, G.R. No. 89561, September 13,
1990, 189 SCRA 529, 542)

In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the
creation of the corporation is a devise to evade the application of the CBA between petitioner Union
and private respondent Company. While we do not discount the possibility of the similarities of the
businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by
petitioner in granting the relief sought. The fact that the businesses of private respondent and Acrylic
are related, that some of the employees of the private respondent are the same persons manning and
providing for auxilliary services to the units of Acrylic, and that the physical plants, offices and
facilities are situated in the same compound, it is our considered opinion that these facts are not
sufficient to justify the piercing of the corporate veil of Acrylic.

In the same case of Umali, et al. v. Court of Appeals (supra), We already emphasized that "the legal
corporate entity is disregarded only if it is sought to hold the officers and stockholders directly liable
for a corporate debt or obligation." In the instant case, petitioner does not seek to impose a claim
against the members of the Acrylic.

Furthermore, We already ruled in the case of Diatagon Labor Federation Local 110 of the ULGWP
v. Ople (supra) that it is grave abuse of discretion to treat two companies as a single bargaining unit
when these companies are indubitably distinct entities with separate juridical personalities.

Hence, the Acrylic not being an extension or expansion of private respondent, the rank-and-file
employees working at Acrylic should not be recognized as part of, and/or within the scope of the
petitioner, as the bargaining representative of private respondent.

All premises considered, the Court is convinced that the public respondent Voluntary Arbitrator did
not commit grave abuse of discretion in its interpretation of Section l(c), Article I of the CBA that the
Acrylic is not an extension or expansion of private respondent.

ACCORDINGLY, the petition is DENIED and the award of the respondent Voluntary Arbitrator are
hereby AFFIRMED.

SO ORDERED.
 8. SAN MIGUEL CORP. EMPLOYEES UNION V CONFESSOR

FIRST DIVISION

[G.R. No. 111262. September 19, 1996]

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President

RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR, Secretary
of Labor, Dept. of Labor & Employment, SAN MIGUEL CORPORATION, MAGNOLIA
CORPORATION (Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC. (Formerly, B-
Meg Plant), respondents.

DECISION
KAPUNAN, J.:

This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February
15, 1993 involving a labor dispute at San Miguel Corporation.
The facts are as follows:
On June 28, 1990, petitioner-union San Miguel Corporation Employees Union - PTGWO entered
into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation (SMC)
to take effect upon the expiration of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:

ARTICLE XIV

DURATION OF AGREEMENT

SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.

SEC. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement
insofar as the representation aspect is concerned, shall be for five (5) years from July 1, 1989 to June
30, 1994. Hence, the freedom period for purposes of such representation shall be sixty (60) days
prior to June 30, 1994.

SEC. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of
this Agreement, except insofar as the representation aspect is concerned. If no agreement is reached
in such negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent
agreement is reached by the parties.[1]
 In keeping with their vision and long term strategy for business expansion, SMC management
informed its employees in a letter dated August 13, 1991[2]that the company which was composed of
four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and
Agri-business would undergo a restructuring.[3]
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and became
two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods, Inc.
(SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and
Article 253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two parties
submitting their respective proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still
include the employees of the spun-off corporations: Magnolia and SMFI; and that the renegotiated
terms of the CBA shall be effective only for the remaining period of two years or until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had moved to Magnolia
and SMFI, automatically ceased to be part of the bargaining unit at the SMC.Furthermore, the CBA
should be effective for three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and duration of the CBA,
petitioner-union declared a deadlock on September 29, 1990.
On October 2, 1992, a Notice of Strike was filed against SMC.
In order to avert a strike, SMC requested the National Conciliation and Mediation Board (NCMB)
to conduct preventive mediation. No settlement was arrived at despite several meetings held between
the parties.
On November 3, 1992, a strike vote was conducted which resulted in a yes vote in favor of a
strike.
On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital industry.
As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November
10, 1992.[4] Several conciliation meetings were held but still no agreement/settlement was arrived at
by both parties.
After the parties submitted their respective position papers, the Secretary of Labor issued the
assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of the CBA
shall be effective for the period of three (3) years from June 30, 1992; and that such CBA shall cover
only the employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of
Labor.
Subsequently, on March 30, 1995,[5] petitioner-union filed a Motion for Issuance of a Temporary
Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections in
the different companies, maintaining that the employees of Magnolia and SMFI fall within the
bargaining unit of SMC.
 On March 29, 1995, the Court issued a resolution granting the temporary restraining order prayed
for.[6]
Meanwhile, an urgent motion for leave to intervene[7]in the case was filed by the Samahan ng
Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW)
through its authorized representiative, Elmer S. Armando, alleging that it is one of the contending
parties adversely effected by the temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma,[8] G.R. No.
101766, March 5, 1993, where the Court recognized the separation of the employees of Magnolia
from the SMC bargaining unit. It then prayed for the lifting of the temporary restraining order.
Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the
withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized the
employees right to conclude a new CBA. At the same time, he challenged the legal personality of Mr.
Raymundo Hipolito, Jr. to represent the Union as its president when the latter was already officially
dismissed from the company on October 4, 1994.
Amidst all these pleadings, the following primordial issues arise:
1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three
years or for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees of Magnolia and
SMFI.
Petitioner-union contends that the duration for the non-representation provisions of the CBA
should be coterminous with the term of the bargaining agency which in effect shall be for the
remaining two years of the current CBA, citing a previous decision of the Secretary of Labor
on December 14, 1992 in the matter of the labor dispute at Philippine Refining Company.[9]
However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the
renegotiated terms of the CBA at SMC should run for a period of three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:

ART. 253-A. Terms of a Collective Bargaining Agreement. Any Collective Bargaining Agreement that
the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of
five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of such five year
term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on
such other provisions of the Collective Bargaining Agreement entered into within six (6) months from
the date of expiry of the term of such other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case
of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise
their rights under this Code. (underlining supplied.)
 Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715
(the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the
CBA has a term of five (5) years instead of three years, before the amendment of the law as far as
the representation aspect is concerned. All other provisions of the CBA shall be negotiated not later
than three (3) years after its execution. The representation aspect refers to the identity and majority
status of the union that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned. All other provisions simply refers to the rest of the CBA,
economic as well as non-economic provisions, except representation.[10]
As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the
duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous with
the terms of the other provisions of the CBA. It is a cardinal principle of statutory construction that the
Court must ascertain the legislative intent for the purpose of giving effect to any statute. The history of
the times and state of the things existing when the act was framed or adopted must be followed and
the conditions of the things at the time of the enactment of the law should be considered to determine
the legislative intent.[11] We look into the discussions leading to the passage of the law:
THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar as the economic provisions are
concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
THE CHAIRMAN (SEN. VELOSO): Maximum of three years.
THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after three years puwede nang magnegotiate
in that CBA for the remaining two years.
THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years
but assuming three years which, I think, thats the likelihood. . . .
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a
change of agent, at least he has one year to administer and to adjust, to develop rapport with
the management. Yan ang importante.
You know, for us na nagne-negotiate, and hazard talaga sa negotiation, when we negotiate
with somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer
ng Labor; ang mga employer, ito bayaran ko lang ito okay na.
Yan ang nangyayari, but let us give that allowance for one year to let them know.
Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you
encourage union to fight each other. Yan ang problema.[12]
xxxxxxxxx
HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to
provide some doubts later on in the implementation. Sabi kasi rito, insofar as representation
issue is concerned, seven years ang lifetime . . .
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.
HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later than
three years.
HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan
then, seven years . . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the period three years nang three years, but
under this law with respect to representation five years, ano? Now, after three years,
nagkaroon ng bagong terms, tapos na iyong term, renewed na iyong terms, ang karapatan
noon sa representation issue mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus three.
HON ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So,
another CBA was formed and this CBA mayroon na naman siyang bagong five years with
respect to representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for three
years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: On the third year you can start negotiating to change the terms
and conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be
questioned, so baka puwedeng magkaroon ng certification election. If the incumbent union
loses, then the new union administers the contract for one year to give him time to know his
counterpart the employer, before he can negotiate for a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and
conditions and then, so you have to renew that in three years you renew for another three
years, mayroon na naman another five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa representation.
HON. ANIAG: So that if they changed the union, iyong last year. . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then,
voluntary arbitration na kayo and then mayroon ka nang probisyon retroact on the date of the
expiry date. Pagnatalo and incumbent unyon, mag-aassume and new union, administer the
contract. As far as the term ang condition, for one year, and that will give him time and the
employer to know each other.
HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it would
not want to administer a CBA which has not been negotiated by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening now
in the country is that the term ng contract natin, duon din mage-expire ang
representation.Iyon and nangyari. That is where you have the gulo. Ganoon and
nangyari. So, ang nangyari diyan, pag-mayroon certification election, expire ang contract,
ano ang usual issue - company union. I can you (sic) give you more what the incumbent
union is giving. So ang mangyayari diyan, pag-negotiate mo hardline na agad.
HON. CHAIRMAN VELOSO: Mon, for four years?
HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the representation
aspect why do we have to distinguish between three and five? Whats wrong with having a
uniform expiration period?
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan,
Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, thats the average,
aabot pa minsan ng one year. Pagkatapos ng negotiation mo, signing kayo. There will be an
allowed period of one year. Third year na, uumpisahan naman ang organizations, papasok
na ang ibang unyon because the reality in Trade Union committee, they organize, we
organize. So, actually, you have only industrial peace for one year, effective industrial
peace. That is what we are trying to change. Otherwise, we will continue to discourage the
investors and the union will never grow because every other year it has to use its money for
the certification election. Ang grabe pang practice diyan, mag-a-advance ang federation for
three years union dues para panggastos lang sa certification election. That is what we are
trying to avoid.
HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility here is to create a legal framework to promote
industrial peace and to develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . .
xxx
HON. CHAIRMAN VELOSO. (continuing) . . in other words, the longer the period of effectivity of
the CBA, the better for industrial peace.
HON. CHAIRMAN HERRERA: representation status.
 HON. CHAIRMAN VELOSO: Only on
HON. CHAIRMAN HERRERA: the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga, mag-negotiate
when the company is (interrupted)[13]
xxx
From the aforesaid discussions, the legislators were more inclined to have the period of effectivity
for three (3) years insofar as the economic as well as non-economic provisions are concerned, except
representation.
Obviously, the framers of the law wanted to maintain industrial peace and stability by having both
management and labor work harmoniously together without any disturbance. Thus, no outside union
can enter the establishment within five (5) years and challenge the status of the incumbent union as
the exclusive bargaining agent.Likewise, the terms and conditions of employment (economic and
non-economic) can not be questioned by the employers or employees during the period of effectivity
of the CBA. The CBA is a contract between the parties and the parties must respect the terms and
conditions of the agreement.[14] Notably, the framers of the law did not give a fixed term as to the
effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it
was left to the parties to fix the period.
In the instant case, it is not difficult to determine the period of effectivity for the non-representation
provisions of the CBA. Taking it from the history of their CBAs, SMC intended to have the terms of the
CBA effective for three (3) years reckoned from the expiration of the old or previous CBA which was
on June 30, 1989, as it provides:

SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.

The argument that the PRC case is applicable is indeed misplaced. We quote with favor the
Order of the Secretary of Labor in the light of SMCs peculiar situation as compared with PRCs
company situation.

It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic), Labor Dispute at
Philippine Refining Company), we ruled that the term of the renegotiated provisions of the CBA
should coincide with the remaining term of the agency. In doing so, we placed premium on the fact
that PRC has only two (2) unions and no other union had yet executed a renewed term of 3 years.
Nonetheless, in ruling for a shortened term, we were guided by our considered perception that the
said term would improve, rather than ruin, the general welfare of both the workers and the
company. It is equally true that once the economic provisions of the CBA expire, the residual
representative status of the union is effective for only 2 more years. However, if circumstances
warrant that the contract duration which it is soliciting from the company for the benefit of the workers,
shall be a little bit longer than its lifespan, then this Office cannot stand in the way of a more ideal
situation. We must not lose sight of the fact that the primordial purpose of a collective contract is to
promote industrial harmony and stability in the terms and conditions of employment. To our mind, this
objective cannot be achieved without giving due consideration to the peculiarities and unique
characteristics of the employer. In the case at bar, there is no dispute that the mother corporation
(SMC) spun-off two of its divisions and thereby gave birth to two (2) other entities now known as
Magnolia Corporation and San Miguel Foods, Inc. In order to effect a smooth transition, the
companies concerned continued to recognize the existing unions as the bargaining agents of their
respective bargaining units. In the meantime, the other unions in these companies eventually
concluded their CBA negotiations on the remaining term and all of them agreed on a 3-year
cycle. Notably, the following CBAs were forged incorporating a term of 3-years on the renegotiated
provisions, to wit:

1. SMC - daily-paid employees union (IBM)

2. SMF - monthly-paid employees and daily-paid employees at the Cabuyao Plant.

There is a direct link between the voluntary recognition by the company of the continuing
representative status of the unions after the aforementioned spin-offs and the stand of the company
for a 3-year renegotiated cycle when the economic provisions of the existing CBAs expired, i.e., to
maintain stability and avoid confusion when the umbilical cord of the two divisions were severed from
their parent. These two cannot be considered independently of each other for they were intended to
reinforce one another. Precisely, the company conceded to face the same union notwithstanding the
spin-offs in order to preserve industrial peace during the infancy of the two corporations. If the union
would insist on a shorter renegotiated term, then all the advantages gained by both parties in this
regard, would have gone to naught. With this in mind, this office feels that it will betray its mandate
should we order the parties to execute a 2-year renegotiated term for then chaos and confusion,
rather than tranquility, would be the order of the day. Worse, there is a strong likelihood that such a
ruling might spawn discontent and possible mass actions against the company coming from the other
unions who had already agreed to a 3-year renegotiated terms. If this happens, the purpose of this
Offices intervention into the parties controversy would have been defeated.[15]

The issue as to the term of the non-representation provisions of the CBA need not belabored
especially when we take note of the Memorandum of the Secretary of Labor dated February 24, 1994
which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January 16,
1995 in the certification election case involving the SMC employees. [16] In said memorandum, the
Secretary of Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the
term of the bargaining agent, to wit:

As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term
which would coincidde (sic) with the aforesaid five (5) year term of the bargaining representative.

In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a
term of three (3) years or one which does not coincide with the said 5-year term, and said agreement
is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal and
therefore, binds the contracting parties. The same will however not adversely affect the right of
another union to challenge the majority status of the incumbent bargaining agent within sixty (60)
days before the lapse of the original five (5) year term of the CBA.

Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling
that the effectivity of the renegotiated terms of the CBA shall be for three (3) years.
With respect to the second issue, there is, likewise, no merit in petitioner-unions assertion that the
employees of Magnolia and SMFI should still be considered part of the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct companies on October 1,
1991. Management saw the need for these transformations in keeping with its vision and long term
strategy as it explained in its letter addressed to the employees dated August 13, 1991:

x x x As early as 1986, we announced the decentralization program and spoke of the need for
structures that can react fast to competition, a changing environment, shorter product life cycles and
shifts in consumer preference. We further stated in the 1987 Annual Report to Stockholders that San
Miguels businesses will be more autonomous and self sufficient so as to better acquire and master
new technologies, cope with a labor force with different expertises and expectations, and master and
satisfy the changing needs of our customers and end-consumers. As subsidiaries, Magnolia and FLD
will gain better industry focus and flexibility, greater awareness of operating results, and speedier,
more responsive decision making.

xxx

We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this company
was organized about ten years ago, to see the benefits that arise from restructuring a division of San
Miguel into a more competitive organization. As a stand-alone enterprise, CCBPI engineered a
dramatic turnaround and has sustained its sales and market share leadership ever since.

We are confident that history will repeat itself, and the transformation of Magnolia and FLD will be
successful as that of CCBPI.[17]

Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or
morals. Neither can we impute any bad faith on the part of SMC so as to justify the application of the
doctrine of piercing the corporate veil.[18] Ever mindful of the employees interests, management has
assured the concerned employees that they will be absorbed by the new corporations without loss of
tenure and retaining their present pay and benefits according to the existing CBAs. [19] They were
advised that upon the expiration of the CBAs, new agreements will be negotiated between the
management of the new corporations and the bargaining representatives of the employees
concerned. As a result of the spin-offs:
1. Each of the companies are run by, supervised and controlled by different management
teams including separate human resource/personnel managers.
2. Each Company enforces its own administrative and operational rules and policies and are
not dependent on each other in their operations.
 3. Each entity maintains separate financial statements and are audited separately from each
other.[20]
Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical
personalities. Thus, they can not belong to a single bargaining unit as held in the case of Diatagon
Labor Federation Local 110 of the ULGWP v. Ople.[21] We elucidate:

The fact that their businesses are related and that the 236 employees of Georgia Pacific International
Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a justification for
disregarding their separate personalities. Hence, the 236 employees, who are now attached to
Georgia Pacific International Corporation, should not be allowed to vote in the certification election at
the Lianga Bay Logging Co., Inc. They should vote at a separate certification election to determine
the collective bargaining representative of the employees of Georgia Pacific International Corporation.

Petitioner-unions attempt to include the employees of Magnolia and SMFI in the SMC bargaining
unit so as to have a bigger mass base of employees has, therefore, no more valid ground.
Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or
commonality of interests. The employees sought to be represented by the collective bargaining agent
must have substantial mutual interests in terms of employment and working conditions as evinced by
the type of work they performed.[22]Considering the spin-offs, the companies would consequently
have their respective and distinctive concerns in terms of the nature of work, wages, hours of work
and other conditions of employment. Interests of employees in the different companies perforce
differ. SMC is engaged in the business of beer manufacturing. Magnolia is involved in the
manufacturing and processing of dairy products[23] while SMFI is involved in the production of feeds
and the processing of chicken.[24] The nature of their products and scales of business may require
different skills which must necessarily be commensurated by different compensation packages. The
different companies may have different volumes of work and different working conditions. For such
reason, the employees of the different companies see the need to group themselves together and
organize themselves into distinctive and different groups. It would then be best to have separate
bargaining units for the different companies where the employees can bargain separately according
to their needs and according to their own working conditions.
We reiterate what we have explained in the case of University of the Philippines v. Ferrer-
Calleja[25] that:

[T]here are various factors which must be satisfied and considered in determining the proper
constituency of a bargaining unit. No one particular factor is itself decisive of the determination. The
weight accorded to any particular factor varies in accordance with the particular question or questions
that may arise in a given case. What are these factors? Rothenberg mentions a good number, but the
most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2) affinity and unit 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 x x.

xxx
An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th
Annual Report of the National Labor Relations Board wherein it is emphasized that the factors which
said board may consider and weigh in fixing appropriate units are: the history, extent and type of
organization of employees; the history of their collective bargaining; the history, extent and type of
organization of employees in other plants of the same employer, or other employers in the same
industry; the skill wages, work, and working conditions of the employees; the desires of the
employees; the eligibility of the employees for membership in the union or unions involved; and the
relationship between the unit or units proposed and the employers organization, management, and
operation x x.

x x In said report, it is likewise emphasized that the basic test in determining the appropriate
bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and other subjects of collective
bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162) x x.

Finally, we take note of the fact that the separate interests of the employees of Magnolia and
SMFI from those of SMC has been recognized in the case of Daniel Borbon v. Laguesma.[26] We
quote:

Even assuming in gratia argumenti that at the time of the election they were regular employees of
San Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation in any
manner because Magnolia has ceased to be a division of San Miguel Corporation and has been
formed into a separate corporation with a personality of its own (p. 305, Rollo). This development,
which was brought to our attention by private respondents, necessarily renders moot and academic
any further discourse on the propriety of the elections which petitioners impugn via the present
recourse (p. 319, Rollo).

In view of all the foregoing, we do not find any grave abuse of discretion on the part of the
Secretary of Labor in rendering the assailed Order.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order
issued on March 29, 1995 is lifted.
SO ORDERED.

9. PHIL. SCOUTS VETERAN, ET AL. V. TORRES

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. 92357 July 21, 1993

PHILIPPINE SCOUT VETERANS SECURITY AND INVESTIGATION AGENCY (PSVSIA), GVM

SECURITY AND INVESTIGATION AGENCY (GVM) and ABAQUIN SECURITY AND DETECTIVE
AGENCY, INC. (ASDA), petitioners,
vs.
THE HON. SECRETARY OF LABOR RUBEN D. TORRES AND PGA BROTHERHOOD
ASSOCIATION-UNION OF FILIPINO WORKERS, respondents.

V.E. Del Rosario & Associates for petitioners.

German N. Pascua, Jr. for private respondent.

NOCON, J.:

The sole issue presented for resolution in this petition for certiorari with prayer for preliminary
injunction is whether or not a single petition for certification election or for recognition as the sole and
exclusive bargaining agent can validly or legally be filed by a labor union in three (3) corporations
each of which has a separate and distinct legal personality instead of filing three (3) separate
petitions.

On April 6, 1989, private respondent labor union, PGA Brotherhood Association - Union of Filipino
Workers (UFW), hereinafter referred to as "the Union " filed a petition for Direct
Certification/Certification Election among the rank and file employees of Philippine Scout Veterans
Security and Investigation Agency (PSVSIA), GVM Security and Investigations Agency, Inc. (GVM).
and Abaquin Security and Detective Agency, Inc. (ASDA). These three agencies were collectively
referred to by private respondent Union as the "PGA Security Agency," which is actually the first
letters of the corporate names of the agencies.

On April 11, 1989, summons was issued to the management of PSVSIA, GVM, ASDA (PGA Security
Agency) at 82 E. Rodriquez Avenue, Quezon City.

On April 11, 26, 1986, petitioners filed a single comment alleging therein that the said three security
agencies have separate and distinct corporate personalities while PGA Security Agency is not a
business or corporate entity and does not possess any personality whatsoever; the petition was
unclear as to whether the rank-and-file employees mentioned therein refer to those of the three
security agencies collectively and if so, the labor union cannot seek a certification election in three
separate bargaining units in one petition; the labor union included in their organization "security
supervisors," in violation of R.A. 6715; and though R.A. 6715 is already in effect, there were still no
implementing rules therefor.

On May 4, 1989, the security agencies filed a Consolidated Motion to Dismiss on the grounds that the
721 supporting signatures do not meet the 20% minimum requirement for certification election as the
number of employees totals 2374 and that there are no implementing rules yet of R.A. 6715.
On May 8, 1989, the Union filed an Omnibus Reply to Comment and Motion to Dismiss alleging that it
is clear that it is seeking a certification election in the three agencies; that the apparent separate
personalities of the three agencies were used merely to circumvent the prohibition in R.A. 5847, as
amended by P.D. 11 and P.D. 100, that a security agency must not have more than 1,000 guards in
its employ; that the three security agencies' administration, management and operations are so
intertwined that they can be deemed to be a single entity; and that the security supervisors cannot be
deemed part of management since they do not meet the definition of "supervisory employees" found
in Articles 212(m), Labor Code, as amended by Section 4, R.A. No. 6715.

On May 18, 1989, the security agencies filed a Rejoinder claiming that there is no violation of R.A.
5487, as amended by P.D. 11 and P.D. 100 since the three agencies were incorporated long before
the decrees' issuance; that mere duplication of incorporators does not prove that the three security
agencies are actually one single entity; and that security guard supervisors, most especially
detachment commanders, fall within the definition of the term "supervisors."

On July 6, 1989, Med-Arbiter Rasidali C. Abdullah issued an Order in favor of the labor union finding
that PSVSIA, GVM and ASDA should be deemed as a single entity and bargaining unit for the
purpose of union organizing and the holding of a certification election. The dispositive portion of the
Order reads as follows:

WHEREFORE, premises considered, let a certification election be conducted among

the rank and file security guards of PSVSIA, GVM and ASDA within twenty (20) days
from receipt hereof with the usual pre-election conference of the parties. The list of
eligible voters shall be based on the security agencies' payroll three (3) months prior to
the filing of this petition with the following choices:

a) PGA Brotherhood Association-Union of Filipino Workers (UFW); and

b) No union.

SO ORDERED.1

On July 21, 1989, the security agencies appealed the Med-Arbiter's Order to the Secretary of Labor
and Employment claiming that said Order was issued with grave abuse of discretion when it ruled that
the three security agencies could be considered as a single bargaining entity for purposes of the
holding of a certification election.

On December 15, 1989, the Labor Secretary Franklin M. Drilon denied the appeal for lack of merit
while at the same time affirming the Med-Arbiter's Order of July 6, 1989. He also ordered the
immediate conduct of a certification election. The dispositive portion of which reads as follows:

WHEREFORE, premises considered, the Appeal of respondents Security agencies is

hereby denied for lack of merit and the Order dated 6 July affirmed.

Let therefore, the pertinent records of this case be immediately forwarded to the
Regional Office for he immediate conduct of the certification election.
 SO ORDERED. 2

On January 5, 1990, the three security agencies filed a Motion for Reconsideration arguing that they
were denied their rights to due process and that jurisdiction was not acquired over them by the labor
authorities.

On January 26, 1990, the succeeding Labor Secretary, Ruben D. Torres, likewise denied the Motion
for Reconsideration for lack of merit and reiterated the directive that a certification election be
conducted without further delay.

On March 14, 1990, the instant petition was filed by the three security agencies, raising the following
grounds:

SERIOUS ERRORS IN THE FINDINGS OF FACTS.

II

GRAVE ABUSE OF DISCRETION ON THE PART OF THE SECRETARY OF LABOR. 3

Petitioners insist that there are three (3) corporations in this petition, each of which has a separate
and distinct corporate personality of its own with separate registrations with the Securities and
Exchange Commission (SEC) and different Articles of Incorporation and By-Laws; with separate sets
of corporate officers and directors; and no common business address except for GVM and ASDA
which are located at 1957 España corner Craig Streets, Sampaloc, Manila.

Petitioners claim that the facts and circumstances of the case of La Campana Coffee Factory, Inc. v.
Kaisahan Ng Mga Manggagawa sa La Campana 4 which public respondent claims to be on all fours
with the instant case, are very distinct from the facts and circumstance obtaining in the case at bar.
As to form of business organization, in theLa Campana case, only one of two (2) businesses was a
corporation i.e., the La Campana Coffee Factory, Inc. and the other, the La Campana Gaugau
Packing, is a "non-entity," being merely a business name. In the case at bar, all three (3) agencies
are incorporated. Moreover, the issue involved in the instant case is one of representation while in
the La Campana case, the issue involved is the validity of a demand for wage increases and other
labor standards benefits.

Petitioners likewise contend that it was error to hold that the three companies should be treated as
one in a single bargaining unit in one petition for certification elections resulting in a violation of the
right to due process of each corporation as no notice of hearing and other legal processes were
served on each of said corporations. Consequently, no jurisdiction was acquired on them by the
Department of Labor and Employment.

Petitioners' arguments deserve scant consideration. The facts and circumstances extant in the record
indicate that the Med-Arbiter and Secretaries Drilon and Torres were not mistaken in holding that the
three security companies are in reality a single business entity operating as a single company called
the "PGA Security Group" or "PGA Security Services Group." Factual findings of labor officials are
conclusive and binding on the Court when supported by substantial evidence. 5

The public repondent noted the following circumstances in the La Campana case similar to the case
at bar, as indicative of the fact that the La Campana Coffee Factory and La Campana Gaugau
Packing were in reality only one business with two trade names: (1) the two factories occupied the
same address, wherein they had their principal place of business; (2) their signboards,
advertisements, packages of starch, delivery truck and delivery forms all use one appellation, "La
Campana Starch and Coffee Factory"; (3) the workers in either company received their pay from a
single cashier, and (4) the workers in one company could easily transfer to the other company, and
vice-versa. This Court held therein that the veil of corporate fiction of the coffee factory may be
pierced to thwart the attempt to consider it part from the other business owned by the same family.
Thus, the fact that one of the businesses is not incorporated was not the decisive factor that led the
Court to consider the two factories as one. Moreover, we do not find any materiality in the fact that the
La Campana case was instituted to demand wage increases and other labor standards benefits while
this case was filed by the labor union to seek recognition as the sole bargaining agent in the
establishment. If businesses operating under one management are treated as one for bargaining
purposes, there is not much difference in treating such businesses also as one for the preliminary
purpose of labor organizing.

Indeed, the three agencies in the case at bar failed to rebut the fact that they are managed through
the Utilities Management Corporation with all of their employees drawing their salaries and wages
from said entity; that the agencies have common and interlocking incorporators and officers; and that
the PSVSIA, GVM and ASDA employees have a single Mutual Benefit System and followed a single
system of compulsory retirement.

No explanation was also given by petitioners why the security guards of one agency could easily
transfer from one agency to another and then back again by simply filling-up a common pro forma slip
called "Request for Transfer". Records also shows that the PSVSIA, GVM and ASDA always hold
joint yearly ceremonies such as the "PGA Annual Awards Ceremony". In emergencies, all PSVSIA
Detachment Commanders were instructed in a memorandum dated November 10, 1988 to get in
touch with the officers not only of PSVSIA but also of GVM and ASDA. All of these goes to show that
the security agencies concerned do not exist and operate separately and distinctly from each other
with different corporate directions and goals. On the contrary, all the cross-linking of the three
agencies' command, control and communication systems indicate their unitary corporate personality.
Accordingly, the veil of corporate fiction of the three agencies should be lifted for the purpose of
allowing the employees of the three agencies to form a single labor union. As a single bargaining unit,
the employees therein need not file three separate petitions for certification election. All of these could
be covered in a single petition.

Petitioners' claim of alleged defect in the petition for certification election which although addressed to
the three security agencies merely alleged that there are only 1,000 employees when the total
number of employees in said security agencies is about 2,374 (PSVSIA - 1252; GVM - 807; and
ASDA - 315) thereby failing to comply with the legal requirement that at least twenty percent (20%) of
the employees in the bargaining unit must support the petition, betrays lack of knowledge of the
amendments introduced by R.A 6715 which became effective on March 21, 1989, prior to the filing of
the petition for certification election on April 6, 1989. Under the amendments, there is no need for the
labor union to prove that at least 20% of the security guards in the three agencies supported the
petition. When a duly organized union files a petition for certification election, the Med-Arbiter has the
duty to automatically conduct an election. He has no discretion on the matter. This is clearly the
mandate of Article 257 of the Labor Code, as amended by Section 24 of R.A. 6715, which now reads:

Art. 257. Petitions in unorganized establishments. — In any establishment where there

is no certified bargaining agent, a certification election shall automatically be conducted
by the Med-Arbiter upon the filing of a petition by a legitimate labor organization.

The designation of the three agencies collectively as "PGA Security Agency" and the service of
summons to the management thereof at 82 E. Rodriguez Avenue, Quezon City did not render the
petition defective. Labor Secretary Franklin Drilon correctly noted the fact that the affidavits executed
separately and under oath by the three managers of the three security agencies indicated their office
address to be at PSVSIA Center II, E. Rodriguez Sr. Blvd., Quezon City. Besides, even if there was
improper service of summons by the Med-Arbiter, the three (3) security agencies voluntarily
submitted themselves to the jurisdiction of the labor authorities. The summons were clearly sent to
and received by their lawyer who filed motions and pleadings on behalf of the three security agencies
and who always appeared as their legal counsel. It puzzles this Court why petitioners, who claim to
be separate entities, continue to be represented by one counsel even in this instant petition.

Finally, except where the employer has to file a petition for certification election pursuant to Article
258 of the Labor Code because of a request to bargain collectively, it has nothing to do with a
certification election which is the sole concern of the workers. Its role in a certification election has
aptly been described in Trade Unions of the Philippines and Allied Services (TUPAS) v. Trajano,6 as
that of a mere by-stander. It has no legal standing in a certification election as it cannot oppose the
petition or appeal the Med-Arbiter's orders related thereto. An employer that involves itself in a
certification election lends suspicion to the fact that it wants to create a company union.

This Court's disapprobation of management interference in certification elections is even more

forceful in Consolidated Farms, Inc. v. Noriel,7 where we held:

On a matter that should be the exclusive concern of labor, the choice of a collective
bargaining representative, the employer is definitely an intruder. His participation, to say
the least, deserves no encouragement. This Court should be the last agency to lend
support to such an attempt at interference with a purely internal affair of labor.

Indeed, the three security agencies should not even be adverse parties in the certification election
itself. We note with disapproval the title given to the petition for certification election of the Union by
the Med-Arbiter and the Secretary of Labor naming the three security agencies as respondents. Such
is clearly an error. While employers may rightfully be notified or informed of petitions of such nature,
they should not, however, be considered parties thereto with concomitant right to oppose it. Sound
policy dictates that they should maintain a strictly hands-off policy.
WHEREFORE, finding no reversible error in the questioned decision of the Secretary of Labor, the
instant petition for certiorari is hereby DISMISSED for utter lack of merit.

SO ORDERED.

10. SMC V. LAGUESMA

11. GOLDEN FARMS INC. V. SEC OF LABOR

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 102130 July 26, 1994

GOLDEN FARMS, INC., petitioner,

vs.
THE HONORABLE SECRETARY OF LABOR and THE PROGRESSIVE FEDERATION OF
LABOR, respondents.

J.V. Yap Law Office for petitioner.

PUNO, J.:

The sole issue for resolution in this Petition for Certiorari with prayer for the issuance of preliminary
injunction and/or restraining order is whether or not petitioner's monthly paid rank-and file employees
can constitute a bargaining unit separate from the existing bargaining unit of its daily paid rank-and-
file employees.

Petitioner Golden Farms, Inc., is a corporation engaged in the production and marketing of bananas
for export. On February 27, 1992, private respondent Progressive Federation of Labor (PFL) filed a
petition before the Med-Arbiter praying for the holding of a certification election among the monthly
paid office and technical rank-and-file employees of petitioner Golden Farms.

Petitioner moved to dismiss the petition on three (3) grounds. First, respondent PFL failed to show
that it was organized as a chapter within petitioner's establishment. Second, there was already an
existing collective bargaining agreement between the rank-and-file employees represented by the
National Federation of Labor (NFL) and petitioner. And third, the employees represented by PFL had
allegedly been disqualified by this Court from bargaining with management in Golden Farms, Inc., vs.
Honorable Director Pura Ferrer-Calleja, G.R. No. 78755, July 19, 1989. 1

Respondent PFL opposed petitioner's Motion to Dismiss. It countered that the monthly paid office and
technical employees should be allowed to form a separate bargaining unit because they were
expressly excluded from coverage in the Collecting Bargaining Agreement (CBA) between petitioner
and NFL. It also contended that the case invoked by petitioner was inapplicable to the present case.

In its reply, petitioner argued that the monthly paid office and technical employees should have joined
the existing collective bargaining unit of the rank-and-file employees if they are not manegerial
employees.

On April 18, 1991, the Med-Arbiter granted the petition and ordered that a certification election be
conducted, viz:

WHEREFORE, premises considered, the present petition filed by the Progressive

Federation of Labor, for certification election among the office and technical employees
of Golden Farms, Inc., is, as it is hereby, GRANTED with the following choices:

1. Progressive Federation of Labor (PFL);

2. No. union.

The designated representation officer is hereby directed to call the parties to a pre-
election conference to thresh out the mechanics of the election and to conduct and
supervise the same within twenty (20) days from receipt by the parties of this Order.
The "Masterlist of Office and Technical Employees" shall be the basis in determining the
employees qualified to vote during the certification election.

SO ORDERED. 2

Petitioner seasonably appealed to public respondent Secretary of Labor. On August 6, 1991,

respondent Secretary of Labor issued the assailed Decision denying the appeal for lack of
merit. 3 Petitioner filed a Motion for Reconsideration but the same was also denied on September 13,
1991.

Thus, this petition for certiorari interposing two (2) issues.

THE CREATION OF AN ADDITIONAL BARGAINING UNIT FOR CERTAIN RANK AND

FILE EMPLOYEES WILL NOT ONLY SPLIT THE EXISTING ONE BUT WILL ALSO
NEGATE THE PRINCIPLE OF RES JUDICATA.

II
 THE PROGRESSIVE FEDERATION OF LABOR BEING THE EXCLUSIVE
BARGAINING AGENT OF THE SUPERVISORY EMPLOYEES IS DISQUALIFIED
FROM REPRESENTING THE OFFICE AND TECHNICAL EMPLOYEES.

The petition is devoid of merit.

The monthly paid office and technical rank-and-file employees of petitioner Golden Farms enjoy the
constitutional right to self-organization and collective bargaining. 4 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 interest of all the employees, consistent with equity to the
employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under
the collective bargaining provisions of the law. 5 The community or mutuality of interest is therefore
the essential criterion in the grouping. "And 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.' 6

In the case at bench, the evidence established that the monthly paid rank-and-file employees of
petitioner primarily perform administrative or clerical work. In contradistinction, the petitioner's daily
paid rank-and-file employees mainly work in the cultivation of bananas in the fields. It is crystal clear
the monthly paid rank-and-file employees of petitioner have very little in common with its daily paid
rank-and-file employees in terms of duties and obligations, working conditions, salary rates, and
skills. To be sure, the said monthly paid rank-and-file employees have even been excluded from the
bargaining unit of the daily paid rank-and-file employees. This dissimilarity of interests warrants the
formation of a separate and distinct bargaining unit for the monthly paid rank-and-file employees of
the petitioner. To rule otherwise would deny this distinct class of employees the right to self-
organization for purposes of collective bargaining. Without the shield of an organization, it will also
expose them to the exploitations of management. So we held in University of the Philippines vs.
Ferrer-Calleja, 7 where we sanctioned the formation of two (2) separate bargaining units within the
establishment, viz:

[T]he dichotomy of interests, the dissimilarity in the nature of the work and duties as well
as in the compensation and working conditions of the academic and non-academic
personnel dictate the separation of these two categories of employees for purposes of
collective bargaining. The formation of two separate bargaining units, the first consisting
of the rank-and-file non-academic employees, and the second, of the rank-and-file
academic employees, is the set-up that will best assure to all the employees the
exercise of their collective bargaining rights.

Petitioner next contends that these monthly paid office and technical employees are managerial
employees. They allegedly include those in the accounting and personnel department, cashier, and
other employees holding positions with access to classified information.

We are not persuaded. Article 212, paragraph (m) of the Labor Code, as amended, defines as
managerial employee as follows:
 "Managerial employee" is one who is vested with power 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.

Given this definition, the monthly paid office and technical employees, accountants, and
cashiers of the petitioner are not managerial employees for they do not participate in policy-
making but are given cut out policies to execute and standard practices to observe. 8 In the
main, the discharge of their duties does not involve the use of independent judgment. As
factually found by the Med-Arbiter, to wit:

A perusal of the list of the office and technical employees sought to be represented in
the instant case, with their corresponding designation does not show that said Office
and Technical employees exercises supervisory or managerial functions.

The office believes and so hold that the employees whose names appear in the
"Masterlist of Office and Technical Employees" submitted during the hearing are eligible
to join/form a labor organization of their own choice. 9

Our decision in Golden Farms, Inc., vs. Honorable Pura Ferrer-Calleja, op. cit., does not pose any
obstacle in holding a certification election among petitioner's monthly paid rank-and-file employees.
The issue brought to fore in that case was totally different, i.e., whether or not petitioner's confidential
employees, considering the nature of their work, should be included in the bargaining unit of the daily
paid rank-and-file employees. In the case at bench, the monthly paid rank-and-file employees of
petitioner are being separated as a bargaining unit from its daily paid rank-and-file employees, on the
ground that they have different interest to protect. The principle of res judicata is,therefore,
inapplicable.

The second assigned error which was not raised in the proceedings below must necessarily fail. The
alleged error involves a question of fact which this Court cannot resolve. Petitioner submitted this
contention only in its Memorandum dated February 12, 1993. 10 In this Memorandum, petitioner cited
LRD Case No. OXI-UR-70 for Direct Recognition/Certification Election. But even a side glance of the
cited case will reveal that it involves a petition for direct certification among the rank-and-file office
and technical employees of the Golden Farms Inc., (not supervisory employees) under the House of
Investment, Ladislawa Village, Buhaning, Davao City filed by the National Federation of Labor (not
the respondent Progressive Federation of Labor). The averment of petitioner is baseless and its
recklessness borders the contemptuous.

Finally, we note that it was petitioner company that filed the motion to dismiss the petition for election.
The general rule is that an employer has no standing to question a certification election since this is
the sole concern of the workers. 11 Law and policy demand that employers take a strick, 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.

WHEREFORE, the petition is DISMISSED for lack of merit. With costs against petitioner.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado and Mendoza, JJ. concur.

12. SAN MIGUEL CORP SUPERVISORS V. LAGUESMA

SECOND DIVISION

[G.R. No. 110399. August 15, 1997]

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE,
President, petitioners, vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY
AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L.
REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL
CORPORATION, respondents.

DECISION
ROMERO, J.:

This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to
reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and
Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-
91[1] entitled In Re: Petition for Certification Election Among the Supervisory and Exempt Employees
of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San
Miguel Corporation Supervisors and Exempt Union, Petitioner. The Order excluded the employees
under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining
unit and ruled out their participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor and Employment
(DOLE) a Petition for District Certification or Certification Election among the supervisors and exempt
employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of
certification among the supervisors and exempt employees of the SMC Magnolia Poultry Products
Plants of Cabuyao, San Fernando and Otis as one bargaining unit.
 On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with
Memorandum on Appeal, pointing out, among others, the Med-Arbiters error in grouping together all
three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including
supervisory levels 3 and above whose positions are confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent
companys Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination
of the true classification of each of the employees sought to be included in the appropriate bargaining
unit.
Upon petitioner-unions motion dated August 7, 1991, Undersecretary Laguesma granted the
reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification
elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt
employees in each of the three plants at Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for
Reconsideration with Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the
doctrine enunciated in Philips Industrial Development, Inc. v. NLRC[2]case. Said Order reads in part:

x x x Confidential employees, like managerial employees, are not allowed to form, join or assist a
labor union for purposes of collective bargaining.

In this case, S3 and S4 and the so-called exempt employees are admittedly confidential employees
and therefore, they are not allowed to form, join or assist a labor union for purposes of collective
bargaining following the above courts ruling. Consequently, they are not allowed to participate in the
certification election.

WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03 September
1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4)
and the so-called exempt employees are not allowed to join the proposed bargaining unit and are
therefore excluded from those who could participate in the certification election.[3]

Hence this petition.

For resolution in this case are the following issues:

1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are
considered confidential employees, hence ineligible from joining a union.
2. If they are not confidential employees, do the employees of the three plants constitute an
appropriate single bargaining unit.
On the first issue, this Court rules that said employees do not fall within the term confidential
employees who may be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt employees, are not
vested with the powers and prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not
qualified to be classified as managerial employees who, under Article 245 [4] of the Labor Code, are
not eligible to join, assist or form any labor organization. In the very same provision, they are not
allowed membership in a labor organization of the rank-and-file employees but may join, assist or
form separate labor organizations of their own. The only question that need be addressed is whether
these employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons
who formulate, determine, and effectuate management policies in the field of labor relations. [5] The
two criteria are cumulative, and both must be met if an employee is to be considered a confidential
employee that is, the confidential relationship must exist between the employees and his supervisor,
and the supervisor must handle the prescribed responsibilities relating to labor relations.[6]
The exclusion from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal objective sought to be
accomplished by the confidential employee rule. The broad rationale behind this rule is that
employees should not be placed in a position involving a potential conflict of interests. [7] Management
should not be required to handle labor relations matters through employees who are represented by
the union with the company is required to deal and who in the normal performance of their duties may
obtain advance information of the companys position with regard to contract negotiations, the
disposition of grievances, or other labor relations matters.[8]
There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon.
Augusto Sanchez,[9] the Court held that if these managerial employees would belong to or be
affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident
conflict of interest. The Union can also become company-dominated with the presence of managerial
employees in Union membership. The same rationale was applied to confidential employees in
Golden Farms, Inc. v. Ferrer-Calleja[10] and in the more recent case of Philips Industrial Development,
Inc. v. NLRC[11] which held that confidential employees, by the very nature of their functions, assist
and act in a confidential capacity to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of
managerial employees to form, assist or join a labor union was held equally applicable to them.[12]
An important element of the confidential employee rule is the employees need to use labor
relations information. Thus, in determining the confidentiality of certain employees, a key questions
frequently considered is the employees necessary access to confidential labor relations
information.[13]
It is the contention of respondent corporation that Supervisory employees 3 and 4 and the exempt
employees come within the meaning of the term confidential employees primarily because they
answered in the affirmative when asked Do you handle confidential data or documents? in the
Position Questionnaires submitted by the Union.[14] In the same questionnaire, however, it was also
stated that the confidential information handled by questioned employees relate to product
formulation, product standards and product specification which by no means relate to labor
relations.[15]
Granting arguendo that an employee has access to confidential labor relations information but
such is merely incidental to his duties and knowledge thereof is not necessary in the performance of
such duties, said access does not render the employee a confidential employee.[16] If access to
confidential labor relations information is to be a factor in the determination of an employees
confidential status, such information must relate to the employers labor relations policies. Thus, an
employee of a labor union, or of a management association, must have access to confidential labor
information with respect to his employer, the union, or the association, to be regarded a confidential
employee, and knowledge of labor relations information pertaining to the companies with which the
union deals, or which the association represents, will not clause an employee to be excluded from the
bargaining unit representing employees of the union or association.[17] Access to information which is
regarded by the employer to be confidential from the business standpoint, such as financial
information[18] or technical trade secrets, will not render an employee a confidential employee. [19]
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift operations when situations
require.
2. To effectively oversee the quality control function at the processing lines in the storage of
chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct manufacturing
materials.
5. To recommend and initiate actions in the maintenance of sanitation and hygiene
throughout the plant.[20]
It is evident that whatever confidential data the questioned employees may handle will have to
relate to their functions. From the foregoing functions, it can be gleaned that the confidential
information said employees have access to concern the employers internal business operations. As
held in Westinghouse Electric Corporation v. National Labor Relations Board,[21] an employee may
not be excluded from appropriate bargaining unit merely because he has access to confidential
information concerning employers internal business operations and which is not related to the field of
labor relations.
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State
to guarantee to all workers the right to self-organization. Hence, confidential employees who may be
excluded from bargaining unit must be strictly defined so as not to needlessly deprive many
employees of their right bargain collectively through representatives of their choosing. [22]
In the case at bar, supervisors 3 and above may not be considered confidential employees
merely because they handle confidential data as such must first be strictly classified as pertaining to
labor relations for them to fall under said restrictions. The information they handle are properly
classifiable as technical and internal business operations data which, to our mind, has no relevance
to negotiations and settlement of grievances wherein the interests of a union and the management
are invariably adversarial. Since the employees are not classifiable under the confidential type, this
Court rules that they may appropriately form a bargaining unit for purposes of collective
bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has
established that there is no legal prohibition against confidential employees who are not performing
managerial functions to form and join a union.[23]
 In this connection, the issue of whether the employees of San Miguel Corporation Magnolia
Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit
needs to be threshed out.
It is the contention of the petitioner union that the creation of three (3) separate bargaining units,
one each for Cabuyao Otis and San Fernando as ruled by the respondent Undersecretary, is contrary
to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of
the three plants have a similarity or a community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interest of all the
employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal
rights and duties of the parties under the collective bargaining provisions of the law.[24]
A unit to be appropriate must effect a grouping of employees who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective bargaining. [25]
It is readily seen that the employees in the instant case have community or mutuality of interest,
which is the standard in determining the proper constituency of a collective bargaining unit. [26] It is
undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This
means that, although they belong to three different plants, they perform work of the same nature,
receive the same wages and compensation, and most importantly, share a common stake in
concerted activities.
In light of these considerations, the Solicitor General has opined that separate bargaining units in
the three different plants of the division will fragmentize the employees of the said division, thus
greatly diminishing their bargaining leverage. Any concerted activity held against the private
respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact
on the operations of the private respondent. The two other plants still in operation can well step up
their production and make up for the slack caused by the bargaining unit engaged in the concerted
activity. This situation will clearly frustrate the provisions of the Labor Code and the Mandate of the
Constitution.[27]
The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna,
in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical
location can be completely disregarded if the communal or mutual interests of the employees are not
sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of
the University of the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and
the Visayas were allowed to participate in a certification election. We rule that the distance among the
three plants is not productive of insurmountable difficulties in the administration of union
affairs. Neither are there regional differences that are likely to impede the operations of a single
bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the
Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the
supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted.
 SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

13. MECHANICAL DEPARTMENT LABOR UNION V. CIR

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-28223 August 30, 1968

MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE NATIONAL

RAILWAYS, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and SAMAHAN NG MGA MANGGAGAWA SA
CALOOCAN SHOPS,respondents.

Sisenando Villaluz for petitioner.

Gregorio E. Fajardo for respondent Samahan ng mga Manggagawa sa Caloocan Shops.

REYES, J.B.L., J.:

Petition by the "Mechanical Department Labor Union sa PNR" for a review of an order of the Court of
Industrial Relations, in its Case No. 1475-MC, directing the holding of a plebiscite election to
determine whether the employees at the Caloocan Shops desire the respondent union, "Samahan ng
mga Manggagawa sa Caloocan Shops", to be separated from the Mechanical Department Labor
Union, with a view to the former being recognized as a separate bargaining unit.

The case began on 13 February 1965 by a petition of the respondent "Samahan ng mga
Manggagawa, etc." calling attention to the fact that there were three unions in the Caloocan shops of
the Philippine National Railways: the "Samahan", the "Kapisanan ng Manggagawa sa Manila Railroad
Company", and the Mechanical Department Labor Union; that no certification election had been held
in the last 12 months in the Caloocan shops; that both the "Samahan" and the Mechanical
Department Labor Union had submitted different labor demands upon the management for which
reason a certification election was needed to determine the proper collective bargaining agency for
the Caloocan shop workers.

The petition was opposed by the management as well as by the Mechanical Department Labor
Union, the latter averring that it had been previously certified in two cases as sole and exclusive
bargaining agent of the employees and laborers of the PNR'S mechanical department, and had
negotiated two bargaining agreements with management in 1961 and 1963; that before the expiration
of the latter, a renewal thereof had been negotiated and the contract remained to be signed; that the
"Samahan" had been organized only in 21 January 1965; that the Caloocan shops unit was not
established nor separated from the Mechanical Department unit; that the "Samahan" is composed
mainly of supervisors who had filed a pending case to be declared non-supervisors; and that the
purpose of the petition was to disturb the present smooth working labor management relations.

By an order of 18 August 1967, Judge Arsenio Martinez, after receiving the evidence, made the
following findings:.1äwphï1.ñët

The Court, after a cursory examination of the evidence presented made the following findings:
That petitioner union is composed of workers exclusively at the Caloocan shops of the
Philippine National Railways charged with the maintenance of rolling stocks for repairs; major
repairs of locomotive, engines, etc. are done in the Caloocan shops while minor ones in the
Manila sheds; workers in the Caloocan shops do not leave their station unlike Manila shop
workers who go out along the routes and lines for repairs; workers both in the Caloocan shops
and Manila sheds are exposed to hazards occasioned by the nature of their work; that with
respect to wages and salaries of employees, categories under the Job Classification and
Evaluation Plan of the company apply to all workers both in the Caloocan Shops and Manila
sheds; administration over employees, members of petitioner union as well as oppositor is
under the Administrative Division of the company; that from the very nature of their work,
members of petitioner union and other workers of the Mechanical Department have been
under the coverage of the current collective bargaining agreement which was a result of a
certification by this Court of the Mechanical Department Labor union, first in 1960 and later in
1963. Subsequently, when the latter contract expired, negotiations for its renewal were had
and at the time of the filing of this petition was already consummated, the only act remaining to
be done was to affix the signatures of the parties thereto; that during the pendency of this
petition, on June 14, 1965, the aforesaid collective bargaining agreement was signed between
the Philippine National Railways and the Mechanical Department Labor Union sa Philippine
National Railways (Manila Railroad Company).

The main issue involved herein is: Whether or not a new unit should be established, the
Caloocan shops, separate and distinct from the rest of the workers under the Mechanical
Department now represented by the Mechanical Department Labor Union.

The Caloocan Shops, all located at Caloocan City have 360 workers more or less. It is part
and parcel of the whole Mechanical Department of the Philippine National Railways. The
department is composed of four main divisions or units, namely: Operations, Manila Area and
Lines; Locomotive Crew; Motor Car Crew; and the Shops Rolling Stocks Maintenance.
(Exhibits "D" and "D-1").

The Locomotive crew and Motor Car Crew, though part of the Mechanical Department, is a
separate unit, and is represented by the Union de Maquinistas, Fogoneros Y Motormen. The
workers under the other two main units of the departments are represented by the Mechanical
Department Labor Union. The workers of the Shops Rolling Stocks Maintenance Division or
the Caloocan Shops now seek to be separated from the rest of the workers of the department
and to be represented by the "Samahan Ng Mga Manggagawa sa Caloocan Shops." .
 There is certainly a community of interest among the workers of the Caloocan Shops. They are
grouped in one place. They work under one or same working condition, same working time or
schedule and are exposed to same occupational risk.

Though evidence on record shows that workers at the Caloocan Shops perform the same
nature of work as their counterparts in the Manila Shed, the difference lies in the fact that
workers at the Caloocan Shops perform major repairs of locomotives, rolling stocks, engines,
etc., while those in the Manila Shed, works on minor repairs. Heavy equipment and
machineries are found in the Caloocan Shops.

The trial judge then reviewed the collective bargaining history of the Philippine National Railways, as
follows: 1äwphï1.ñët

On several similar instances, this Court allowed the establishment of new and separate
bargaining unit in one company, even in one department of the same company, despite the
existence of the same facts and circumstances as obtaining in the case at bar.

The history of the collective bargaining in the Manila Railroad Company, now the Philippine
National Railways shows that originally, there was only one bargaining unit in the company,
represented by the Kapisanan Ng Manggagawa sa MRR. Under Case No. 237-MC, this Court
ordered the establishment of two additional units, the engine crew and the train crew to be
represented by the Union de Maquinistas, Fogoneros, Ayudante Y Motormen and Union de
Empleados de Trenes, respectively. Then in 1961, under Cases Nos. 491-MC, 494-MC and
507-MC three new separate units were established, namely, the yard crew unit, station
employees unit and engineering department employees unit, respectively, after the employees
concerned voted in a plebiscite conducted by the court for the separation from existing
bargaining units in the company. Then again, under Case No. 763-MC, a new unit, composed
of the Mechanical Department employees, was established to be represented by the
Mechanical Department Labor Union. Incidentally, the first attempt of the employees of the
Mechanical Department to be separated as a unit was dismissed by this Court of Case No.
488-MC.

In the case of the yard crew, station employees and the Engineering Department employees,
the Supreme Court sustained the order of this Court in giving the employees concerned the
right to vote and decide whether or not they desire to be separate units (See G.R. Nos. L-
16292-94, L-16309 and L-16317-18, November, 1965).

In view of its findings and the history of "union representation" in the railway company, indicating that
bargaining units had been formed through separation of new units from existing ones whenever
plebiscites had shown the workers' desire to have their own representatives, and relying on the
"Globe doctrine" (Globe Machine & Stamping Co., 3 NLRB 294) applied in Democratic Labor Union
vs. Cebu Stevedoring Co., L-10321, 28 February 1958, Judge Martinez held that the employees in
the Caloocan Shops should be given a chance to vote on whether their group should be separated
from that represented by the Mechanical Department Labor Union, and ordered a plebiscite held for
the purpose. The ruling was sustained by the Court en banc; wherefore, the Mechanical Department
Labor Union appealed to this Court questioning the applicability under the circumstances of the
"Globe doctrine" of considering the will of the employees in determining what union should represent
them.

Technically, this appeal is premature, since the result of the ordered plebiscite among the workers of
the Caloocan shops may be adverse to the formation of a separate unit, in which event, as stated in
the appealed order, all questions raised in this case would be rendered moot and academic.
Apparently, however, the appellant Mechanical Department Labor Union takes it for granted that the
plebiscite would favor separation.

We find no grave abuse of discretion in the issuance of the ruling under appeal as would justify our
interfering with it. Republic Act No. 875 has primarily entrusted the prosecution of its policies to the
Court of Industrial Relations, and, in view of its intimate knowledge concerning the facts and
circumstances surrounding the cases brought before it, this Court has repeatedly upheld the exercise
of discretion of the Court of Industrial Relations in matters concerning the representation of employee
groups (Manila Paper Mills Employees & Workers' Association vs. C.I.R. 104 Phil. 10; Benguet
Consolidated vs. Bobok Lumber Jack Association, 103 Phil. 1150).

Appellant contends that the application of the "Globe doctrine" is not warranted because the workers
of the Caloocan shops do not require different skills from the rest of the workers in the Mechanical
Department of the Railway Company. This question is primarily one of facts. The Industrial Court has
found that there is a basic difference, in that those in the Caloocan shops not only have a community
of interest and working conditions but perform major repairs of railway rolling stock, using heavy
equipment and machineries found in said shops, while the others only perform minor repairs. It is
easy to understand, therefore, that the workers in the Caloocan shops require special skill in the use
of heavy equipment and machinery sufficient to set them apart from the rest of the workers. In
addition, the record shows that the collective bargaining agreements negotiated by the appellant
union have been in existence for more than two (2) years; hence, such agreements can not constitute
a bar to the determination, by proper elections, of a new bargaining representative (PLDT Employees'
Union vs. Philippine Long Distance Telephone Co., 51 Off. Gaz., 4519).

As to the charge that some of the members of the appellee, "Samahan Ng Manggagawa", are
actually supervisors, it appears that the question of the status of such members is still pending final
decision; hence, it would not constitute a legal obstacle to the holding of the plebiscite. At any rate,
the appellant may later question whether the votes of those ultimately declared to be supervisors
should be counted.

Whether or not the agreement negotiated by the appellant union with the employer, during the
pendency of the original petition in the Court of Industrial Relations, should be considered valid and
binding on the workers of the Caloocan shops is a question that should be first passed upon by the
Industrial Court.

IN VIEW OF THE FOREGOING, the order appealed from is affirmed, with costs against appellant
Mechanical Department Labor Union sa Philippine National Railways.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ.,
concur. 1äwphï1.ñët
 14. FILOIL REFINERY CORP V. FILOIL SUPERVISORY,ET AL.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-26736 August 18, 1972

FILOIL REFINERY CORPORATION, petitioner,

vs.
FILOIL SUPERVISORY & CONFIDENTIAL EMPLOYEES ASSOCIATION AND COURT OF
INDUSTRIAL RELATIONS, respondents.

Beltran, Lacson & Associates for petitioner.

Lanting, Morabe Law Offices for private respondent.

TEEHANKEE, J.:p

The present appeal questions the right of supervisors and confidential employees to organize the
respondent labor association and to bargain collectively with their employer, petitioner corporation
herein, as upheld by respondent court of industrial relations in its appealed orders and resolution.

Respondent association is a labor organization duly registered with the Department of Labor. It is
composed exclusively of the supervisory and confidential employees of petitioner corporation. There
exists another entirely distinct labor association composed of the corporation's rank-and-file
employees, the Filoil Employees & Workers Association (FEWA) with which petitioner executed a
collective bargaining agreement. This collective bargaining agreement expressly excluded from its
coverage petitioner's supervisory and confidential employees, who in turn organized their own labor
association, respondent herein.

Respondent association filed on February 18, 1965 with the industrial court its petition for certification
as the sole and exclusive collective bargaining agent of all of petitioner's supervisory and confidential
employees working at its refinery in Rosario, Cavite.

Petitioner corporation filed a motion to dismiss the petition on the grounds of lack of cause of action
and of respondent court's lack of jurisdiction over the subject-matter, under its claim that supervisors
are not employees within the meaning of Republic Act 875, the Industrial Peace Act, and that since
they are part of management, they do not have the right to bargain collectively although they may
organize an organization of their own.

Respondent court in its order of May 26, 1965 denied the dismissal motion. It ruled that under the
express provisions of section 3 of the Industrial Peace Act, "(I)ndividuals employed as supervisors
shall not be eligible for membership in a labor organization of employees under their supervision
but may form separate organizations their own."1

It rejected petitioner's claim against respondent association's right to bargain collectively, holding that
such was expressly granted under section 24 of the Industrial Peace Act, and asserting that "if
Congress deemed it wise for supervisors not to have the right to strike, then it should have been so
expressly stated as in the case of government employees. Section 11 of the Industrial Peace Act
gives government employees the right to belong to any labor organization provided no obligation to
strike or join a strike is imposed by such labor organization. The denial to government employees of
the right to strike is significant in the controversy before this Court because it manifests to all that
Congress in enacting Republic Act No. 875 was aware of the implications that when supervisors were
given the right to organize themselves into a labor organization, they have correlative right to declare
a strike. In the case of supervisors, they were enfranchised by Congress to organize themselves into
a labor organization and were denied the right to strike. This means that the right to strike was not
denied them since no special reason obtains among the supervisors as it does obtain among
government employees."2

The industrial court likewise dismissed petitioner's objection against the composition of respondent
association in that it included as members technical men and confidential employees in this wise:
"(A)t this point, it may be stressed that supervisors as a general rule should form an association of
their own and should exclude all other types of personnel unless a special consideration exists, like
example, that they are so few in number and that there are other technical men or confidential men
equally few in number. In the latter case, the supervisors, technical men and confidential employees
may be constituted into one unit."3

Petitioner's motion for reconsideration of said order of May 26, 1965 was denied by respondent
court en banc per its resolution dated September 7, 1965 which affirmed the said order. No appeal
having been taken from the resolution, the petition was accordingly set for hearing and the parties
submitted their stipulation of facts, stipulating inter aliathat respondent association "has forty-seven
(47) members among the supervisory, technical men and confidential employees of the company"
and that "all the forty seven (47) members of the (respondent association) are being checked-off by
the company for union dues pursuant to the individual check-off authorization submitted to the
company."

The parties could not agree, however, on the composition of the appropriate bargaining unit with
petitioner corporation proposing that the 47 members of respondent association should be broken up
into five (5) separate collective bargaining units, viz, the supervisors should form a distinct unit
separate from the rest of the personnel who in turn would be divided into separate and independent
units or confidential employees, professional personnel, "fringe" employees consisting of five firemen,
and twelve (12) office and clerical employees.
Evidence was received by respondent court and it was satisfied that executive personnel handling
personnel matters for the employer were duly excluded from respondent association. Thus, per
respondent court's order of July 23, 1966, it is noted that "not one of the employees listed under
Groups I and II including (their supervisor) Leonardo R. Santos under Group III, is a member of
(respondent association)", since "(I)t appears that the personnel listed under Groups I and Group II ...
are in the category of executives who have supervision over the supervisors who are members of
(respondent association) and that Marcelo Bernardo handles personnel matters of the employer ... All
of them should, therefore, be excluded from the appropriate bargaining unit. 4

Respondent court in its said order of July 23, 1966 consequently cast aside petitioner's sedulous
objections against the inclusion of the confidential employees in the supervisors respondent
association, thus: "(F)rom the memorandum and manifestation of the company, a persistent assault
against the inclusion of the confidential emloyees with supervisors under one bargaining unit would
seem to be evident. Although this inclusion has already been raised in the motion to dismiss filed by
the company and has already been resolved by the Court en banc, with no appeal to the Supreme
Court having been taken by the company, we shall try once more to show why such inclusion. It is
admitted by the company that confidential employees are outside the coverage of the existing
collective bargaining agreement between the respondent company and the rank and file union
(FEWA) by specific agreement. Since the confidential employees are very few and are, by practice
and tradition, identified with management, the NLRB, because of such "identity of interest" (Wilson &
Co., 68 NLRB 84), has allowed their inclusion in the bargaining unit of supervisors who are likewise
identified with management. This Court, a counterpart of the NLRB, for same reason, should also
allow the inclusion of the confedential employees in the bargaining unit of supervisor except of course
Marcelo Bernardo who, pursuant to Order of May 26, 1965, as affirmed by the Court en banc, should
be excluded because he handles personnel matters for the employer." 5

Respondent court pointed out that "in fact, out of forty-three (43), excluding the twelve (12) executive
personnel under Groups I and II, the company proposes five (5) bargaining units or eight (8)
employees per unit. This Court will be creating fragmentary units which would not serve the interest of
industrial peace, much less in an industry indispensable to the national interest like the one at bar, as
is now obtaining in the Philippine National Railways, also an industry indispensable to the national
interest (Union de Maquinistas, Fogoneros y Motormen vs. Philippine National Railways, Case No.
67-IPA), with thirteen (13) unions, if it breaks up the petitioner union into five (5) bargaining units. The
Court is likewise aware of the ineffectiveness of a small union with a scanty members as bargaining
unit. The breaking up of bargaining agents into tiny units will greatly impair their organizational value.
It has always been the policy of the United States National Labor Relations Board that, in deciding
upon whether to include or exclude a group of employees from a bargaining unit, the Board has
always allowed itself to be guided by the determination as to whether its action "will insure to the
employees of the Company the full benefit of their right to self-organization and to collective
bargaining and otherwise effectuate the policies of the Act" (20 NLRB 705). We see no reason why
this Tribunal whose basic functions are the same as that of the NLRB, should do less or otherwise
depart from this sound policy."6
Since respondent association "clearly represents the majority of the employees in the appropriate
bargaining unit," respondent court therefore certified it as the sole and exclusive bargaining agent for
all the employees in the unit.

Respondent court per its resolution en banc dated September 15, 1966 dismissed petitioner's motion
for reconsideration, holding that "as to the question of the right of supervisors and confidential
employees to compel their employer to bargain collectively, this has already been passed upon by the
Trial Court in its Order dated May 26, 1965 which Order was affirmed by the Court en banc in a
resolution dated September 7, 1965. The Company did not appeal this resolution to the Supreme
Court. Hence, this matter, as far as we are concerned, has already been resolved. We find it,
therefore, unnecessary to pass upon the same again," and that it found no sufficient justification to
alter or modify the trial court's order upholding the appropriateness of the bargaining unit. On this
latter point, Judge Salvador, while concurring with the supervisors' right of self-organization and
collective bargaining, cast a dissenting vote on the ground that the Industrial Peace Act did not
contemplate nor provide for supervisors and confidential employees to be under one bargaining unit
and as to "executive personnel" who have supervision over the supervisors being excluded from any
representation, urged that "another supervisors' unit must be created for these executive personnel."
The second point is not in contention at bar since the "executive personnel" concerned have not
appealed their exclusion.

In this appeal, petitioner pursues anew its contention that supervisors form part of management and
are not considered as employees entitled to bargain collectively, arguing that "as supervisors form
part and parcel of management, it is absurd for management to bargain collectively with itself."
Petitioner further argues that under the American concept, supervisors are not considered employees
and that since our Congress copied verbatim the Taft-Hartley Act's definition of supervisor,7 its act of
"incorporating the definition in the Taft-Hartley Act" must be deemed an expression of its intention "to
follow the intendment of said Act."

Petitioner's contentions are untenable, prescinding from the fact of its failure to appeal in due course
respondent court's en banc resolution of September 7, 1965 upholding the right of the supervisors
and confidential employees to organize respondent association and to compel petitioner to negotiate
and bargain collectively with it. Petitioner's argument that since supervisors form part of management,
to allow them to bargain collectively would be tantamount to management bargaining with itself may
be a well-turned phrase but ignores the dual status of a supervisor as a representative of
management and as an employee.

If indeed the supervisor is absolutely undistinguishable from management, then he would be beyond
removal or dismissal, for as respondent association counters, "how can management remove or
dismiss itself?"

As stated for the Court by the now Chief Justice in AG & P Co. of Manila, Inc. vs. C.I.R.,8 section 3 of
the Industrial Peace Act "explicitly provides that "employees" — and this term includes supervisors —
"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 representations of their own choosing and
to engage in concerted activities for the purpose of collective bargaining and other mutual aid or
protection" and that "individuals employed as supervisors ... may form separate organizations of their
own". Indeed, it is well settled that "in relation to his employer," a foreman or supervisor "is an
employee within the meaning of the Act" ... For this reason, supervisors are entitled to engage in
union activities and any discrimination against them by reason thereof constitutes an unfair labor
practice."

Petitioner's arguments go in reality to the wisdom and policy of the Industrial Peace Act which
expressly grants supervisors the right to organize and bargain collectively, which are beyond the
Court's power of review. Thus, the argument that "it is axiomatic in the law of self-interest that an
employer must give a "better deal" to those who act in his interest and in whom he has trust and
confidence. These are the supervisors and confidential employees"9 and that "In the United States
there was a move to have a part of the supervisory group to be aligned with labor. But the enactment
of the Taft-Hartley Act put an end to this move." 10

So with petitioner's thesis that "(T)o then give supervisors the right to compel employers to bargain
would in effect align labor and management together against stockholders and bondholders (capital)
and inexorably tilt the balance of power in favor of these hitherto confliction forces. This is contrary to
the nature and philosophy of free enterprise." 11 This further serves to point up the validity and
rationale of the Industrial Peace Act's provision, since the supervisors and confidential employees,
even though they may exercise the prerogatives of management as regards the rank and file
employees are indeed employees in relation to their employer, the company which is owned by the
"stockholders and bondholders (capital)" in petitioner's own words, and should therefore be entitled
under the law to bargain collectively with the top management with respect to their terms and
conditions of employment.

Petitioner's argument that the express provisions of section 3 of our Industrial Peace Act must give
way to the intendment of the Taft-Hartley Act which exempts employers from the legal obligation to
recognize and negotiate with supervisors is tenuous and groundless. The language of our own statute
is plain and unambiguous and admits of no other interpretation.

The other principal ground of petitioner's appeal questioning the confidential employees' inclusion in
the supevisors bargaining unit is equally untenable. Respondent court correctly held that since the
confidential employee are very few in number and are by practice and tradition identified with the
supervisors in their role as representives of management vis-a-vis the rank and file employee such
identity of interest has allowed their inclusion in the bargaining unit of supervisors-managers for
purposes of collective bargaining in turn as employees in relation to the company as their employer.

No arbitrariness or grave abuse of discretion can be attributed against respondent court's allowing the
inclusion of the confidential employees in the supervisors' association for as admitted by petitioner
itself, supra, the supervisors and confidential emplyees enjoy its trust and confidence. Thisidentity of
interest logically calls for their inclusion in the same bargaining unit and at the same time fulfills the
law's objective of insuring to them the full benefit of their right to self-organization and to collective
bargaining, which could hardly be accomplished if the respondent association's membership were to
be broken up into five separate ineffective tiny units, as urged by petitioner.

Respondent court's action not being vulnerable to challenge as being arbitrary or capricious is
therefore sustained, in line with the Court's consistent rulings that the industrial court "enjoys a wide
discretion in determining the procedure necessary to insure the fair and free choice of bargaining
representations by employees," and that its action "in deciding upon an appropriate unit for collective
bargaining purposes is discretionary ... and (that) its judgment in this respect is entitled to almost
complete finality, unless its action is arbitrary or capricious" 12 and that absent any grave abuse of
discretion as to justify the Court's intervention, "this Court has repeatedly upheld the exercise of the
Court of Industrial Relations in matters concerning the representation of employee groups." 13

ACCORDINGLY, the orders and resolution appealed from are hereby affirmed and the petition at bar
is dismissed. No pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Fernando, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.

Castro, J., concurs in the result.

15. NEGROS ORIENTAL ELECTRIC CORP V. SEC OF DOLE

THIRD DIVISION

G.R. No. 143616 May 9, 2001

NEGROS ORIENTAL ELECTRIC COOPERATIVE 1 (NORECO1), represented by ATTY. SUNNY

R.A. MADAMBA, as General Manager, petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE), and
PACIWU-NACUSIP, NORECO 1 Chapter of Bindoy, Negros Oriental, respondents.

GONZAGA-REYES, J.:

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

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

"It appears that on December 4, 1997, some employees of the petitioner organized themselves
into a local chapter of the Philippine Agricultural Commercial and Industrial Workers' Union -
Trade Union Congress of the Philippines (PACIWU-TUCP). The private respondent-union
submitted its charter certificate and supporting documents on the same date.1âwphi1.nêt
 On December 10, 1997, PACIWU-TUCP filed a petition for certification election on behalf of
the NORECO 1 chapter, seeking to represent the seventy-seven (77) rank-and-file employees
of NORECO 1. PACIWU-TUCP alleged in its petition that it had created a local chapter in
NORECO 1 which had been duly reported to the DOLE Regional Office (Region VII) on
December 4, 1997. It was further averred therein that NORECO 1 is an unorganized
establishment, and that there is no other labor organization presently existing at the said
employer establishment.

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

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

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

WHEREFORE, this case is DISMISSED.1âwphi1.nêt

SO ORDERED.'

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

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

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

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

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

III. THE COURT OF APPEALS ERRED IN ALLOWING CERTIFICATION ELECTIONS

WHEN ALL THE MEMBERS OF THE UNION ARE MEMBERS OF THE
COOPERATIVE."4

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

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

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

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

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

The issue was raised for the first time in petitioner's Motion for Reconsideration of the Decision of the
Secretary of Labor dated July 13, 1998 which set aside the Order of the Med-Arbiter dated December
23, 1997 dismissing the PACIWU-TUCP's petition for certification election.7 In its Resolution dated
September 21, 1998, denying the Motion for Reconsideration, the Secretary of Labor categorically
stated:

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

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

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

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

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

The petitioner questions the remedy suggested by the Court of Appeals i.e., to file a petition for
cancellation of registration before the appropriate Regional Office arguing that the membership of
supervisory employees in the rank-and-file is not one of the grounds for cancellation of registration
under the Omnibus Rules. Whether the inclusion of the prohibited mix of rank-and-file and
supervisory employees in the roster of officers and members of the union can be cured by
cancellation of registration under Article 238 et seq. of the Labor Code vis-à-vis Rule VIII of the
Omnibus Rules, or by simple inclusion-exclusion proceedings in the pre-election conference,10 the
fact remains that the determination of whether there are indeed supervisory employees in the roster
of members of the rank-and-file union has never been raised nor resolved by the appropriate fact
finding body, and the petition for certiorari filed in the Court of Appeals cannot cure the procedural
lapse. It bears notice that unlike in Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Corp.
Labor Union11 where the objection that "the union was composed of both rank-and-file and
supervisory employees in violation of law" was promptly raised in the position paper to oppose the
petition for certification election, and this objection was resolved by the Med-Arbiter, this issue was
belatedly raised in the case at bar and was sought to be ventilated only before the Court of Appeals in
the petition for certiorari. Time and again, this Court has ruled that factual matters are not proper
subjects for certiorari.12

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

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

'However, in so far as it involves cooperatives with employees who are not members or
co-owners thereof, certainly such employees are entitled to exercise the rights of all
workers to organization, collective bargaining, negotiations and others as are enshrined
in the constitution and existing laws of the country.

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

upheld in so far as it refers to the employees of petitioner who are not members or co-
owners of petitioner.'

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

The ruling was upheld by the appellate court thus:

"The petitioner is indeed correct in stating that employees of a cooperative who are members-
consumers or members-owners, are not qualified to form, join or assist labor organizations for
purposes of collective bargaining, because of the principle that an owner cannot bargain with
himself. However, the petitioner failed to mention that the Supreme Court has also declared
that in so far as it involves cooperatives with employees who are not members or co-owners
thereof, certainly such employees are entitled to exercise the rights of all workers to
 organization, collective bargaining, negotiations and others as are enshrined in the
Constitution and existing laws of the country.

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

In the instant petition, NORECO 1 fails to controvert the statement of the Court of Appeals that the
petitioner "failed to show any proof that any member of the private respondent was also a member or
co-owner of the petitioner cooperative." More important, the factual issue is not for the Court of
Appeals to resolve in a petition for certiorari. Finally, the instant petition ambiguously states that
"NORECO1 is an electric cooperative and all the employees of the subject union are members of the
cooperative", but submitted "a certified list of employees who are members-co-owners of the
petitioner electric cooperative." Impliedly, there are rank-and-file employees of the petitioner who are
not themselves members-co-owners, or who are the ones qualified to form or join a labor
organization. Again, the core issue raises a question of fact that the appellate court correctly declined
to resolve in the first instance.1âwphi1.nêt

WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.

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

16. GENERAL RUBBER AND FOOTWEAR CORP. V. BLR

FIRST DIVISION

[G.R. No. 74262. October 29, 1987.]

GENERAL RUBBER AND FOOTWEAR CORPORATION, Petitioner, v. BUREAU OF LABOR

RELATIONS, NATIONAL ASSOCIATION OF TRADE UNION OF MONTHLY PAID EMPLOYEES —
NATU, Respondents.

DECISION

PARAS, J.:

Petitioner is a corporation engaged in the business of manufacturing rubber sandals and other rubber
products. In 1985, the Samahang Manggagawa sa General Rubber Corporation — ANGLO was
formed by the daily paid — rank and file employees as their union for collective bargaining, after the
expiration on October 15, 1985 of the collective bargaining agreement previously executed by
petitioner with General Rubber Workers Union (Independent) on October 15, 1982. Be it noted
however that on July 17, 1985, the monthly-paid employees of the petitioner-corporation, after
forming their own collective bargaining unit — the National Association of Trade Unions of Monthly
Paid Employees-NATU, filed a petition for direct certification with the Bureau of Labor Relations which
petition was opposed by herein petitioner. On September 2, 1985, the Med-Arbiter issued an Order
for the holding of a certification election after finding that a certification election is in order in this case
and observing that it is the fairest remedy to determine whether employees of petitioner desire to
have a union or not. On appeal, the Bureau of Labor Relations denied both the appeal and motion for
reconsideration interposed by petitioner and affirmed the ruling of the Med-Arbiter. Hence, the
present petition, imputing serious errors of law and grave abuse of discretion on the part of the
Bureau of Labor Relations in issuing the assailed order which sanctioned the creation of two (2)
bargaining units within petitioner-corporation with the following:chanrobles lawlibrary : rednad

GROUNDS FOR REVIEW

The Bureau of Labor Relations committed serious error of law and grave abuse of discretion in
ordering the creation of a new bargaining unit at petitioner, notwithstanding that there is already an
existing bargaining unit, whose members are represented for collective bargaining purposes by
Samahang Manggagawa sa General Rubber Corporation-ANGLO.

II

The Bureau of Labor Relations committed serious error of law in holding that managerial employees
or those employees exercising managerial functions can legally form and join a labor organization
and be members of the new bargaining unit.

III

The Bureau of Labor Relations committed grave abuse of discretion in holding that supervisors,
employees performing managerial, confidential and technical functions and office personnel, who are
negotiated by petitioner to be excluded from the existing bargaining unit because they are performing
vital functions to management, can form and join a labor organization and be members of the new
bargaining unit.

Expounding on its position, petitioner argues that:chanrob1es virtual 1aw library

1. The order violates the thrust of the Labor Code insofar as formation of a bargaining unit is
concerned. A policy is in favor of a larger unit and not the creation of smaller units in one
establishment which might lead to formentation, thus impractical.

2. Article 246 of the Labor Code explicitly provides that managerial employees are ineligible to join or
form any labor organization. Since it has been shown by the petitioners that 30% of the monthly-paid
employees are managers or employees exercising managerial functions, it was grave error for the
Bureau of Labor Relations to allow these monthly paid employees to form a union and/or a bargaining
unit.
3. The Bureau of Labor Relations overlooked the fact that these monthly-paid-employees are
excluded from the first existing bargaining unit of the daily-paid rank and file employees because in
the year 1963, when the employees of petitioner initially started to exercise their right to self-
organization, herein petitioner bargained for the exclusion of the monthly-paid employees from the
existing bargaining unit because they are performing vital functions of management. In view of this
exclusion, petitioner took upon itself to take care of them and directly gave them the benefits or
privileges without having to bargain for them or without the aid of the bargaining arm or force of a
union.

Petitioner’s contentions are devoid of merit.

Among other issues answered in the assailed order are the following findings of fact:cralawnad

"Regarding the second issue, we deem it necessary to examine the respective functions of the
employees. It appears therefrom that they perform supervisory functions. Verily they make
recommendations as to what Managerial actions to take in disciplinary cases. However, that fact
alone does not make them managerial employees already. It is more a question of how effective are
those recommendations which aspect has not been clearly established in this case. As defined in the
Labor Code, a ‘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.’ Thus, employees who
do not fall within this definition are considered rank-and-file employees.

"Lastly, we find that the third issue has been raised for the first time on appeal. It has been the policy
of the Bureau to encourage the formation of an employer unit ‘unless circumstances otherwise
require. The proliferation of unions in an employer unit is discouraged as a matter of policy unless
there are compelling reasons which would deny a certain class of employees the right to self-
organization for purposes of collective bargaining. This case does not fall squarely within the
exception. It is undisputed that the monthlies who are rank-and-file have been historically excluded
from the bargaining unit composed of daily-paid rank-and-filers that is, since 1963 when the existing
rank-and-file union was recognized. In fact, the collective bargaining agreement (CBA) which expired
last 15 October 1985 provides as follows:chanrob1es virtual 1aw library

ARTICLE I

SCOPE

‘Section 1. Appropriate bargaining unit. — This Agreement covers all regular employees and workers
employed by the company at its factory in Malabon, Metro Manila. The words ‘employee,’ ‘laborer’
and ‘workers’ when used in this Agreement shall be deemed to refer to those employees within the
bargaining unit. Employees who occupy managerial, confidential or technical positions, supervisors,
contract employees, monthly-paid employees, security as well as office personnel are excluded from
the appropriate bargaining unit (Emphasis supplied).’

"In view of the above, the monthly-paid rank-and-file employees can form a union of their own,
separate and distinct from the existing rank-and-file union composed of daily-paid workers." (Rollo,
pp. 19-20)

Thus, it can be readily seen from the above findings of the Bureau of Labor Relations that the
members of private respondent are not managerial employees as claimed by petitioners but merely
considered as rank-and-file employees who have every right to self-organization or to be heard
through a duly certified collective bargaining union. The Supervisory power of the members of private
respondent union consists merely in recommending as to what managerial actions to take in
disciplinary cases. These members of private respondent union do not fit the definition of managerial
employees which We laid down in the case of Bulletin Publishing Corporation v. Sanchez (144 SCRA
628). These members of private respondent union are therefore not prohibited from forming their own
collective bargaining unit since it has not been shown by petitioner that "the responsibilities (of these
monthly-paid-employees) inherently require the exercise of discretion and independent judgment as
supervisors" or that "they possess the power and authority to lay down or exercise management
policies." Similarly, We held in the same case that "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
organizations."cralaw virtua1aw library

Perhaps it is unusual for the petitioner to have to deal with two (2) collective bargaining unions but
there is no one to blame except petitioner itself for creating the situation it is in. From the beginning of
the existence in 1963 of a bargaining unit for the employees up to the present, petitioner had sought
to indiscriminately suppress the members of the private respondent’s right to self-organization
provided for by law. Petitioner, in justification of its action, maintained that the exclusion of the
members of the private respondent from the bargaining union of the rank-and-file or from forming
their own union was agreed upon by petitioner corporation with the previous bargaining
representatives namely: the General "Rubber Workers Union-PTGWO, the General Workers Union-
NAFLU and the General Rubber Workers Union (independent). Such posture has no leg to stand on.
It has not been shown that private respondent was privy to this agreement. And even if it were so, it
can never bind subsequent federations and unions particularly private respondent-union because it is
a curtailment of the right to self-organization guaranteed by the labor laws. However, to prevent any
difficulty and to avoid confusion to all concerned and, more importantly, to fulfill the policy of the New
Labor Code as well as to be consistent with Our ruling in the Bulletin case, supra, the monthly-paid
rank-and-file employees should be allowed to join the union of the daily-paid-rank-and-file employees
of petitioner so that they can also avail of the CBA benefits or to form their own rank-and-file union,
without prejudice to the certification election that has been ordered.chanroblesvirtualawlibrary

WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit.

SO ORDERED.

17. DE LA SALLE V DE LA SALLE EMPLOYEES

SECOND DIVISION

[G.R. No. 109002. April 12, 2000]

DELA SALLE UNIVERSITY, petitioner, vs. DELA SALLE UNIVERSITY EMPLOYEES

ASSOCIATION (DLSUEA) and BUENAVENTURA MAGSALIN, respondents.

[G.R. No. 110072. April 12, 2000]

DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION-NATIONAL FEDERATION OF

TEACHERS AND EMPLOYEES UNION (DLSUEA-NAFTEU), petitioner, vs. DELA SALLE
UNIVERSITY and BUENAVENTURA MAGSALIN, respondents.
DECISION

BUENA, J.:

Filed with this Court are two petitions for certiorari,[1] the first petition with preliminary injunction and/or
temporary restraining order,[2] assailing the decision of voluntary arbitrator Buenaventura Magsalin,
dated January 19, 1993, as having been rendered with grave abuse of discretion amounting to lack or
excess of jurisdiction. These two petitions have been consolidated inasmuch as the factual
antecedents, parties involved and issues raised therein are interrelated.[3] Missc

The facts are not disputed and, as summarized by the voluntary arbitrator, are as follows. On
December 1986, Dela Salle University (hereinafter referred to as UNIVERSITY) and Dela Salle
University Employees Association - National Federation of Teachers and Employees Union
(DLSUEA-NAFTEU), which is composed of regular non-academic rank and file
employees,[4] (hereinafter referred to as UNION) entered into a collective bargaining agreement with a
life span of three (3) years, that is, from December 23, 1986 to December 22, 1989. [5] During the
freedom period, or 60 days before the expiration of the said collective bargaining agreement, the
Union initiated negotiations with the University for a new collective bargaining agreement [6] which,
however, turned out to be unsuccessful, hence, the Union filed a Notice of Strike with the National
Conciliation and Mediation Board, National Capital Region.[7] After several conciliation-mediation
meetings, five (5) out of the eleven (11) issues raised in the Notice of Strike were resolved by the
parties. A partial collective bargaining agreement was thereafter executed by the parties.[8] On March
18, 1991, the parties entered into a Submission Agreement, identifying the remaining six (6)
unresolved issues for arbitration, namely: "(1) scope of the bargaining unit, (2) union security clause,
(3) security of tenure, (4) salary increases for the third and fourth years [this should properly read
second and third years][9] of the collective bargaining agreement, (5) indefinite union leave, reduction
of the union presidents workload, special leave, and finally, (6) duration of the agreement."[10] The
parties appointed Buenaventura Magsalin as voluntary arbitrator. [11] On January 19, 1993, the
voluntary arbitrator rendered the assailed decision.[12] Spped

In the said decision, the voluntary arbitrator, on the first issue involving the scope of the bargaining
unit, ruled that "the Computer Operators assigned at the CSC [Computer Services Center], just like
any other Computer Operators in other units, [should be] included as members of the bargaining
unit,"[13] after finding that "[e]vidently, the Computer Operators are presently doing clerical and
routinary work and had nothing to do with [the] setting of management policies for the University, as
[may be] gleaned from the duties and responsibilities attached to the position and embodied in the
CSC [Computer Services Center] brochure. They may have, as argued by the University, access to
vital information regarding the Universitys operations but they are not necessarily
confidential."[14] Regarding the discipline officers, the voluntary arbitrator "believes that this type of
employees belong (sic) to the rank-and-file on the basis of the nature of their job."[15] With respect to
the employees of the College of St. Benilde, the voluntary arbitrator found that the College of St.
Benilde has a personality separate and distinct from the University and thus, held "that the employees
therein are outside the bargaining unit of the Universitys rank-and-file employees."[16]

On the second issue regarding the propriety of the inclusion of a union shop clause in the collective
bargaining agreement, in addition to the existing maintenance of membership clause, the voluntary
arbitrator opined that a union shop clause "is not a restriction on the employees right of (sic) freedom
of association but rather a valid form of union security while the CBA is in force and in accordance
with the Constitutional policy to promote unionism and collective bargaining and negotiations. The
parties therefore should incorporate such union shop clause in their CBA." [17]

On the third issue with respect to the use of the "last-in-first-out" method in case of retrenchment and
transfer to other schools or units, the voluntary arbitrator upheld the "elementary right and prerogative
of the management of the University to select and/or choose its employees, a right equally
recognized by the Constitution and the law. The employer, in the exercise of this right, can adopt valid
and equitable grounds as basis for lay-off or separation, like performance, qualifications, competence,
etc. Similarly, the right to transfer or reassign an employee is an employers exclusive right and
prerogative."[18]

Regarding the fourth issue concerning salary increases for the second and third years of the
collective bargaining agreement, the voluntary arbitrator opined that the "proposed budget of the
University for SY 1992-93 could not sufficiently cope up with the demand for increases by the Union.
xxx xxx. With the present financial condition of the University, it cannot now be required to grant
another round of increases through collective bargaining without exhausting its coffers for other
legitimate needs of the University as an institution,"[19] thus, he ruled that "the University can no
longer be required to grant a second round of increase for the school years under consideration and
charge the same to the incremental proceeds."[20] Misspped

On the fifth issue as to the Unions demand for a reduction of the workload of the union president,
special leave benefits and indefinite union leave with pay, the voluntary arbitrator rejected the same,
ruling that unionism "is no valid reason for the reduction of the workload of its President," [21] and that
there is "no sufficient justification to grant an indefinite leave."[22] Finding that the Union and the
Faculty Association are not similarly situated, technically and professionally,[23] and that "[w]hile
professional growth is highly encouraged on the part of the rank-and-file employees, this educational
advancement would not serve in the same degree as demanded of the faculty members,"[24]the
voluntary arbitrator denied the Unions demand for special leave benefits.

On the last issue regarding the duration of the collective bargaining agreement, the voluntary
arbitrator ruled that "when the parties forged their CBA and signed it on 19 November 1990, where a
provision on duration was explicitly included, the same became a binding agreement between them.
Notwithstanding the Submission Agreement, thereby reopening this issue for resolution, this
Voluntary Arbitrator is constrained to respect the original intention of the parties, the same being not
contrary to law, morals or public policy."[25] As to the economic aspect of the collective bargaining
agreement, the voluntary arbitrator opined that the "economic provisions of the CBA shall be re-
opened after the third year in compliance with the mandate of the Labor Code, as amended." [26]

Subsequently, both parties filed their respective motions for reconsideration which, however, were not
entertained by the voluntary arbitrator "pursuant to existing rules and jurisprudence governing
voluntary arbitration cases."[27] Josp-ped

On March 5, 1993, the University filed with the Second Division of this Court, a petition
for certiorari with temporary restraining order and/or preliminary injunction assailing the decision of
the voluntary arbitrator, as having been rendered "in excess of jurisdiction and/or with grave abuse of
discretion."[28] Subsequently, on May 24, 1993, the Union also filed a petition for certiorari with the
First Division.[29] Without giving due course to the petition pending before each division, the First and
Second Divisions separately resolved to require the respondents in each petition, including the
Solicitor General on behalf of the voluntary arbitrator, to file their respective Comments. [30] Upon
motion by the Solicitor General dated July 29, 1993, both petitions were consolidated and transferred
to the Second Division.[31]

In his consolidated Comment[32] filed on September 9, 1993 on behalf of voluntary arbitrator

Buenaventura C. Magsalin, the Solicitor General agreed with the voluntary arbitrators assailed
decision on all points except that involving the employees of the College of St. Benilde. According to
the Solicitor General, the employees of the College of St. Benilde should have been included in the
bargaining unit of the rank-and-file employees of the University.[33] The Solicitor General came to this
conclusion after finding "sufficient evidence to justify the Unions proposal to consider the University
and the CSB [College of St. Benilde] as only one entity because the latter is but a mere integral part
of the University," to wit:[34]

"1. One of the duties and responsibilities of the CSBs Director of Academic Services is
to coordinate with the Universitys Director of Admissions regarding the admission of
freshmen, shiftees and transferees (Annex "3" of the Universitys Reply);

"2. Some of the duties and responsibilities of the CSBs Administrative Officer are as
follows:

A. xxx xxx xxx.

4. Recommends and implements personnel policies and guidelines (in

accordance with the Staff Manual) as well as pertinent existing general
policies of the university as a whole. xxx.

12. Conducts and establishes liaison with all the offices concerned at the
Main Campus as well (sic) with other government agencies on all
administrative-related matters. xxx Spp-edjo

B. xxx xxx xxx

7. Handles processing, canvassing and direct purchasing of all

requisitions worth more than P10,000 or less. Coordinates and canvasses
with the Main Campus all requisitions worth more than P10,000. xxx

C. xxx xxx xxx

7. Plans and coordinates with the Security and Safety Committee at the
Main Campus the development of a security and safety program during
times of emergency or occurrence of fire or other natural calamities. xxx
(Annex "4" of the Universitys Reply).
"3. The significant role which the University assumes in the admission of students at the
CSB is revealed in the following provisions of the CSBs Bulletin for Arts and Business
Studies Department for the schoolyear 1992-1993, thus:

Considered in the process of admission for a (sic) high school graduate

applicants are the following criteria: results of DLSU College Entrance
Examination xxx.

Admission requirements for transferees are: xxx and an acceptable score

in the DLSU admission test. xxx

Shiftees from DLSU who are still eligible to enroll may be admitted in
accordance with the DLSU policy on shifting. Considering that there
sometimes exist exceptional cases where a very difficult but temporary
situation renders a DLSU student falling under this category a last chance
to be re-admitted provided he meets the cut-off scores required in the
qualifying examination administered by the university. xxx

He may not be remiss in his study obligations nor incur any violation
whatsoever, as such will be taken by the University to be an indication of
his loss of initiative to pursue further studies at DLSU. In sch (sic) a case,
he renders himself ineligible to continue studying at DLSU. DLSU thus
reserves the right to the discontinuance of the studies of any enrolee
whose presence is inimical to the objectives of the CSB/DLSU. xxx Mi-so

As a college within the university, the College of St. Benilde subscribes to

the De La Salle Mission." (Annexes "C-1," "C-2," and "C-3" of the Unions
Consolidated Reply and Rejoinder)

"4. The academic programs offered at the CSB are likewise presented in the Universitys
Undergraduate Prospectus for schoolyear 1992-1993 (Annex "D" of the Unions
Consolidated Reply and Rejoinder).

"5. The Leave Form Request (Annex "F" of the Unions Position Paper) at the CSB
requires prior permission from the University anent leaves of CSB employees, to wit:

AN EMPLOYEE WHO GOES ON LEAVE WITHOUT PRIOR

PERMISSION FROM THE UNIVERSITY OR WHO OVEREXTENDS THE
PERIOD OF HIS APPROVED LEAVE WITHOUT SECURING
AUTHORITY FROM THE UNIVERSITY, OR WHO REFUSE TO BE
RECALLED FROM AN APPROVED LEAVE SHALL BE CONSIDERED
ABSENT WITHOUT LEAVE AND SHALL BE SUBJECT TO
DISCIPLINARY ACTION.
 "6. The University officials themselves claimed during the 1990 University Athletic
Association of the Philippines (UAAP) meet that the CSB athletes represented the
University since the latter and the CSB comprise only one entity."

On February 9, 1994, this Court resolved to give due course to these consolidated petitions and to
require the parties to submit their respective memoranda.[35]

In its memorandum filed on April 28, 1994,[36] pursuant to the above-stated Resolution,[37] the
University raised the following issues for the consideration of the Court:[38] Ne-xold

I.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE

VOLUNTARY ARBITRATOR WHEN HE INCLUDED, WITHIN THE BARGAINING UNIT
COMPRISING THE UNIVERSITYS RANK-AND-FILE EMPLOYEES, THE COMPUTER
OPERATORS ASSIGNED AT THE UNIVERSITYS COMPUTER SERVICES CENTER
AND THE UNIVERSITYS DISCIPLINE OFFICERS, AND WHEN HE EXCLUDED THE
COLLEGE OF SAINT BENILDE EMPLOYEES FROM THE SAID BARGAINING UNIT.

II.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE

VOLUNTARY ARBITRATOR WHEN HE UPHELD THE UNIONS DEMAND FOR THE
INCLUSION OF A UNION SHOP CLAUSE IN THE PARTIES COLLECTIVE
BARGAINING AGREEMENT.

III.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE

VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNIONS PROPOSAL FOR THE
"LAST-IN-FIRST-OUT" METHOD OF LAY-OFF IN CASES OF RETRENCHMENT. Sc

IV.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE

VOLUNTARY ARBITRATOR WHEN HE RULED THAT THE UNIVERSITY CAN NO
LONGER BE REQUIRED TO GRANT A SECOND ROUND OF WAGE INCREASES
FOR THE SCHOOL YEARS 1991-92 AND 1992-93 AND CHARGE THE SAME TO
THE INCREMENTAL PROCEEDS.

V.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE

VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNIONS PROPOSALS ON THE
DELOADING OF THE UNION PRESIDENT, IMPROVED LEAVE BENEFITS AND
INDEFINITE UNION LEAVE WITH PAY."
The Union, on the other hand, raised the following issues, in its memorandum, [39] filed pursuant to
Supreme Court Resolution dated February 9, 1994,[40] to wit; that the voluntary arbitrator committed
grave abuse of discretion in:

"(1)......FAILING AND/OR REFUSING TO PIERCE THE VEIL OF CORPORATE

FICTION OF THE COLLEGE OF ST. BENILDE-DLSU DESPITE THE PRESENCE OF
SUFFICIENT BASIS TO DO SO AND IN FINDING THAT THE EMPLOYEES THEREAT
ARE OUTSIDE OF THE BARGAINING UNIT OF THE DLSUS RANK-AND-FILE
EMPLOYEES. HE ALSO ERRED IN HIS INTERPRETATION OF THE APPLICATION
OF THE DOCTRINE; x-sc

"(2)......DENYING THE PETITIONERS PROPOSAL FOR THE LAST-IN FIRST-OUT

METHOD OF LAY-OFF IN CASE OF RETRENCHMENT AND IN UPHOLDING THE
ALLEGED MANAGEMENT PREROGATIVE TO SELECT AND CHOOSE ITS
EMPLOYEES DISREGARDING THE BASIC TENETS OF SOCIAL JUSTICE AND
EQUITY UPON WHICH THIS PROPOSAL WAS FOUNDED;

"(3)......FINDING THAT THE MULTISECTORAL COMMITTEE IN THE RESPONDENT

UNIVERSITY IS THE LEGITIMATE GROUP WHICH DETERMINES AND
SCRUTINIZES ANNUAL SALARY INCREASES AND FRINGE BENEFITS OF THE
EMPLOYEES;

"(4)......HOLDING THAT THE 70% SHARE IN THE INCREMENTAL TUITION

PROCEEDS IS THE ONLY SOURCE OF SALARY INCREASES AND FRINGE
BENEFITS OF THE EMPLOYEES;

"(5)......FAILING/REFUSING/DISREGARDING TO CONSIDER THE RESPONDENT

UNIVERSITYS FINANCIAL STATEMENTS FACTUALLY TO DETERMINE THE
FORMERS CAPABILITY TO GRANT THE PROPOSED SALARY INCREASES OVER
AND ABOVE THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS AND IN
GIVING WEIGHT AND CONSIDERATION TO THE RESPONDENT UNIVERSITYS
PROPOSED BUDGET WHICH IS MERELY AN ESTIMATE.

"(6)......FAILING TO EQUATE THE POSITION AND RESPONSIBILITIES OF THE

UNION PRESIDENT WITH THOSE OF THE PRESIDENT OF THE FACULTY
ASSOCIATION WHICH IS NOT EVEN A LEGITIMATE LABOR ORGANIZATION AND
IN SPECULATING THAT THE PRESIDENT OF THE FACULTY ASSOCIATION
SUFFERS A CORRESPONDING REDUCTION IN SALARY ON THE ACCOUNT OF
THE REDUCTION OF HIS WORKLOAD; IN FAILING TO APPRECIATE THE EQUAL
RIGHTS OF THE MEMBERS OF THE UNION AND OF THE FACULTY FOR
PROFESSIONAL ADVANCEMENT AS WELL AS THE DESIRABLE EFFECTS OF THE
INSTITUTIONALIZATION OF THE SPECIAL LEAVE AND WORKLOAD REDUCTION
BENEFITS."[41] xl-aw

The question which now confronts us is whether or not the voluntary arbitrator committed grave
abuse of discretion in rendering the assailed decision, particularly, in resolving the following issues:
(1) whether the computer operators assigned at the Universitys Computer Services Center and the
Universitys discipline officers may be considered as confidential employees and should therefore be
excluded from the bargaining unit which is composed of rank and file employees of the University,
and whether the employees of the College of St. Benilde should also be included in the same
bargaining unit; (2) whether a union shop clause should be included in the parties collective
bargaining agreement, in addition to the existing maintenance of membership clause; (3) whether the
denial of the Unions proposed "last-in-first-out" method of laying-off employees, is proper; (4) whether
the ruling that on the basis of the Universitys proposed budget, the University can no longer be
required to grant a second round of wage increases for the school years 1991-92 and 1992-93 and
charge the same to the incremental proceeds, is correct; (5) whether the denial of the Unions
proposals on the deloading of the union president, improved leave benefits and indefinite union leave
with pay, is proper; (6) whether the finding that the multi-sectoral committee in the University is the
legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of
the employees of the University, is correct; and (7) whether the ruling that the 70% share in the
incremental tuition proceeds is the only source of salary increases and fringe benefits of the
employees, is proper.

Now, before proceeding to the discussion and resolution of the issues raised in the pending petitions,
certain preliminary matters call for disposition. As we reiterated in the case of Caltex Refinery
Employees Association (CREA) vs. Jose S. Brillantes,[42] the following are the well-settled rules in a
petition for certiorari involving labor cases. "First, the factual findings of quasi-judicial agencies (such
as the Department of Labor and Employment), when supported by substantial evidence, are binding
on this Court and entitled to great respect, considering the expertise of these agencies in their
respective fields. It is well-established that findings of these administrative agencies are generally
accorded not only respect but even finality.[43] Man-ikx

"Second, substantial evidence in labor cases is such amount of relevant evidence which a reasonable
mind will accept as adequate to justify a conclusion.[44]

"Third, in Flores vs. National Labor Relations Commission,[45] we explained the role and function of
Rule 65 as an extraordinary remedy:

"It should be noted, in the first place, that the instant petition is a special civil action for
certiorari under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use
is available only and restrictively in truly exceptional cases those wherein the action of
an inferior court, board or officer performing judicial or quasi-judicial acts is challenged
for being wholly void on grounds of jurisdiction. The sole office of the writ of certiorari is
the correction of errors of jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction. It does not include correction of
public respondent NLRC's evaluation of the evidence and factual findings based
thereon, which are generally accorded not only great respect but even finality.

"No question of jurisdiction whatsoever is being raised and/or pleaded in the case at
bench. Instead, what is being sought is a judicial re-evaluation of the adequacy or
inadequacy of the evidence on record, which is certainly beyond the province of the
extraordinary writ of certiorari. Such demand is impermissible for it would involve this
 Court in determining what evidence is entitled to belief and the weight to be assigned
it. As we have reiterated countless times, judicial review by this Court in labor
cases does not go so far as to evaluate the sufficiency of the evidence upon
which the proper labor officer or office based his or its determination but is
limited only to issues of jurisdiction or grave abuse of discretion amounting to
lack of jurisdiction." (emphasis supplied).

With the foregoing rules in mind, we shall now proceed to discuss the merit of these consolidated
petitions.

We affirm in part and modify in part. Scl-aw

On the first issue involving the classification of the computer operators assigned at the Universitys
Computer Services Center and discipline officers, the University argues that they are confidential
employees and that the Union has already recognized the confidential nature of their functions when
the latter agreed in the parties 1986 collective bargaining agreement to exclude the said employees
from the bargaining unit of rank-and-file employees. As far as the said computer operators are
concerned, the University contends that " the parties have already previously agreed to exclude all
positions in the Universitys Computer Services Center (CSC), which include the positions of computer
operators, from the collective bargaining unit. xxx xxx." [46] The University further contends that "the
nature of the work done by these Computer Operators is enough justification for their exclusion from
the coverage of the bargaining unit of the Universitys rank-and-file employees. xxx xxx."[47] According
to the University, the Computer Services Center, where these computer operators work, "processes
data that are needed by management for strategic planning and evaluation of systems. It also houses
the Universitys confidential records and information [e.g. student records, faculty records, faculty and
staff payroll data, and budget allocation and expenditure related data] which are contained in
computer files and computer-generated reports. xxx xxx. Moreover, the Computer Operators are in
fact the repository of the Universitys confidential information and data, including those involving
and/or pertinent to labor relations. xxx xxx."[48]

As to the discipline officers, the University maintains that "they are likewise excluded from the
bargaining unit of the rank-and-file employees under the parties 1986 CBA. The Discipline Officers
are clearly alter egos of management as they perform tasks which are inherent in management
[e.g. enforce discipline, act as peace officers, secure peace and safety of the students inside the
campus, conduct investigations on violations of University regulations, or of existing criminal laws,
committed within the University or by University employees] xxx xxx." [49] The University also alleges
that "the Discipline Officers are privy to highly confidential information ordinarily accessible only to
management."[50] Manik-s

With regard to the employees of the College of St. Benilde, the Union, supported by the Solicitor
General at this point, asserts that the veil of corporate fiction should be pierced, thus, according to the
Union, the University and the College of St. Benilde should be considered as only one entity because
the latter is but a mere integral part of the University.[51]

The Universitys arguments on the first issue fail to impress us. The Court agrees with the Solicitor
General that the express exclusion of the computer operators and discipline officers from the
bargaining unit of rank-and-file employees in the 1986 collective bargaining agreement does not bar
any re-negotiation for the future inclusion of the said employees in the bargaining unit. During the
freedom period, the parties may not only renew the existing collective bargaining agreement but may
also propose and discuss modifications or amendments thereto. With regard to the alleged
confidential nature of the said employees functions, after a careful consideration of the pleadings filed
before this Court, we rule that the said computer operators and discipline officers are not confidential
employees. As carefully examined by the Solicitor General, the service record of a computer operator
reveals that his duties are basically clerical and non-confidential in nature.[52] As to the discipline
officers, we agree with the voluntary arbitrator that based on the nature of their duties, they are not
confidential employees and should therefore be included in the bargaining unit of rank-and-file
employees.

The Court also affirms the findings of the voluntary arbitrator that the employees of the College of St.
Benilde should be excluded from the bargaining unit of the rank-and-file employees of Dela Salle
University, because the two educational institutions have their own separate juridical personality and
no sufficient evidence was shown to justify the piercing of the veil of corporate fiction. [53] Man-ikan

On the second issue involving the inclusion of a union shop clause in addition to the existing
maintenance of membership clause in the collective bargaining agreement, the University avers that
"it is in the spirit of the exercise of the constitutional right to self-organization that every individual
should be able to freely choose whether to become a member of the Union or not. The right to join a
labor organization should carry with it the corollary right not to join the same. This position of the
University is but in due recognition of the individuals free will and capability for judgment." [54] The
University assails the Unions demand for a union shop clause as "definitely unjust and amounts to
oppression. Moreover, such a demand is repugnant to democratic principles and the constitutionally
guaranteed freedom of individuals to join or not to join an association as well as their right to security
of tenure, particularly, on the part of present employees."[55]

The Union, on the other hand, counters that the Labor Code, as amended, recognizes the validity of a
union shop agreement in Article 248 thereof which reads:

"ART. 248. Unfair labor practices of employers.

xxx......xxx......xxx

(e) To discriminate in regard to hire or tenure of employment or any term or condition of

employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall prevent the parties
from requiring membership in a recognized collective bargaining agent as a
condition for employment, except of those employees who are already members
of another union at the time of the signing of the collective bargaining
agreement. xxx xxx." (emphasis supplied) Ol-dmiso

We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop provision in addition to
the existing maintenance of membership clause in the collective bargaining agreement. As the
Solicitor General asserted in his consolidated Comment, the Universitys reliance on the case
of Victoriano vs. Elizalde Rope Workers Union[56]is clearly misplaced. In that case, we ruled that
"the right to join a union includes the right to abstain from joining any union. xxx xxx. 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 members 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.
xxx xxx."[57]

On the third issue regarding the Unions proposal for the use of the "last-in-first-out" method in case of
lay-off, termination due to retrenchment and transfer of employees, the Union relies on social justice
and equity to support its proposition, and submits that the Universitys prerogative to select and/or
choose the employees it will hire is limited, either by law or agreement, especially where the exercise
of this prerogative might result in the loss of employment.[58] The Union further insists that its proposal
is "in keeping with the avowed State policy (q) To ensure the participation of workers in decision and
policy-making processes affecting their rights, duties and welfare (Art. 211, Labor Code, as
amended)."[59]

On the other hand, the University asserts its management prerogative and counters that "[w]hile it is
recognized that this right of employees and workers to participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law has been enshrined in the
Constitution (Article III, [should be Article XIII], Section 3, par. 2), said participation, however, does
not automatically entitle the Union to dictate as to how an employer should choose the employees to
be affected by a retrenchment program. The employer still retains the prerogative to determine the
reasonable basis for selecting such employees."[60] Nc-m

We agree with the voluntary arbitrator that as an exercise of management prerogative, the University
has the right to adopt valid and equitable grounds as basis for terminating or transferring employees.
As we ruled in the case of Autobus Workers' Union (AWU) and Ricardo Escanlar vs. National Labor
Relations Commission,[61] "[a] valid exercise of management prerogative is one which, among others,
covers: work assignment, working methods, time, supervision of workers, transfer of employees,
work supervision, and the discipline, dismissal and recall of workers. Except as provided for, or
limited by special laws, an employer is free to regulate, according to his own discretion and
judgment, all aspects of employment." (emphasis supplied)

On the fourth issue involving the voluntary arbitrators ruling that on the basis of the Universitys
proposed budget, the University can no longer be required to grant a second round of wage increases
for the school years 1991-92 and 1992-93 and charge the same to the incremental proceeds, we find
that the voluntary arbitrator committed grave abuse of discretion amounting to lack or excess of
jurisdiction. As we ruled in the case of Caltex Refinery Employees Association (CREA) vs. Jose S.
Brillantes,[62] "xxx xxx. [w]e believe that the standard proof of a company's financial standing is its
financial statements duly audited by independent and credible external auditors."[63] Financial
statements audited by independent external auditors constitute the normal method of proof of profit
and loss performance of a company.[64] The financial capability of a company cannot be based on its
proposed budget because a proposed budget does not reflect the true financial condition of a
company, unlike audited financial statements, and more importantly, the use of a proposed budget as
proof of a companys financial condition would be susceptible to abuse by scheming employers who
might be merely feigning dire financial condition in their business ventures in order to avoid granting
salary increases and fringe benefits to their employees.

On the fifth issue involving the Unions proposals on the deloading of the union president, improved
leave benefits and indefinite union leave with pay, we agree with the voluntary arbitrators rejection of
the said demands, there being no justifiable reason for the granting of the same. Nc-mmis

On the sixth issue regarding the finding that the multi-sectoral committee in the University is the
legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of
the employees of the University, the Court finds that the voluntary arbitrator did not gravely abuse his
discretion on this matter. From our reading of the assailed decision, it appears that during the parties
negotiations for a new collective bargaining agreement, the Union demanded for a 25% and 40%
salary increase for the second and third years, respectively, of the collective bargaining
agreement.[65] The Universitys counter-proposal was for a 10% increase for the third year.[66] After the
meeting of the multi-sectoral committee on budget, which is composed of students, parents, faculty,
administration and union, the University granted across-the-board salary increases of 11.3% and 19%
for the second and third years, respectively.[67] While the voluntary arbitrator found that the said
committee "decided to grant the said increases based on the Universitys viability which were
exclusively sourced from the tuition fees. xxx xxx.," no finding was made as to the basis of the
committees decision. Be that as it may, assuming for the sake of argument that the said committee is
the group responsible for determining wage increases and fringe benefits, as ruled by the voluntary
arbitrator, the committees determination must still be based on duly audited financial statements
following our ruling on the fourth issue.

On the seventh and last issue involving the ruling that the 70% share in the incremental tuition
proceeds is the only source of salary increases and fringe benefits of the employees, the Court
deems that any determination of this alleged error is unnecessary and irrelevant, in view of our rulings
on the fourth and preceding issues and there being no evidence presented before the voluntary
arbitrator that the University held incremental tuition fee proceeds from which any wage increase or
fringe benefit may be satisfied.

WHEREFORE, premises considered, the petitions in these consolidated cases, G.R. No. 109002 and
G.R. No. 110072 are partially GRANTED. The assailed decision dated January 19, 1993 of voluntary
arbitrator Buenaventura Magsalin is hereby AFFIRMED with the modification that the issue on salary
increases for the second and third years of the collective bargaining agreement be REMANDED to
the voluntary arbitrator for definite resolution within one month from the finality of this Decision, on the
basis of the externally audited financial statements of the University already submitted by the Union
before the voluntary arbitrator and forming part of the records. Scnc-m

SO ORDERED.
18. FILOIL REFINERY V. FILOIL SUIPERVISORY AND CONFIDENTIAL EMPLOYEES ASSN