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Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 100485 September 21, 1994

SAN MIGUEL CORPORATION, petitioner,

vs.

THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH LUZON MAGNOLIA SALES LABOR UNION-
INDEPENDENT, respondents.

Siguion Reyna, Montecillo & Ongsiako for petitioner.

E.N.A. Cruz & Associates for private respondent.

PUNO, J.:

Petitioner San Miguel Corporation (SMC) prays that the Resolution dated March 19, 1991 and the Order
dated April 12, 1991 of public respondent Undersecretary Bienvenido E. Laguesma declaring respondent
union as the sole and exclusive bargaining agent of all the Magnolia sales personnel in northern Luzon be
set aside for having been issued in excess of jurisdiction and/or with grave abuse of discretion.

On June 4, 1990, the North Luzon Magnolia Sales Labor Union (respondent union for brevity) filed with
the Department of Labor a petition for certification election among all the regular sales personnel of
Magnolia Dairy Products in the North Luzon Sales Area. 1

Petitioner opposed the petition and questioned the appropriateness of the bargaining unit sought to be
represented by respondent union. It claimed that its bargaining history in its sales offices, plants and
warehouses is to have a separate bargaining unit for each sales office.

The petition was heard on November 9, 1990 with petitioner

being represented by Atty. Alvin C. Batalla of the Siguion Reyna law office. Atty. Batalla withdrew
petitioner's opposition to a certification election and agreed to consider all the sales offices in northern
Luzon as one bargaining unit. At the pre-election conference, the parties agreed inter alia, on the date,
time and place of the consent election. Respondent union won the election held on November 24, 1990.
In an Order dated December 3, 1990, 2 Mediator-Arbiter Benalfre J. Galang certified respondent union
as the sole and exclusive bargaining agent for all the regular sales personnel in all the sales offices of
Magnolia Dairy Products in the North Luzon Sales Area.

Petitioner appealed to the Secretary of Labor. It claimed that

Atty. Batalla was only authorized to agree to the holding of certification elections subject to the following
conditions: (1) there would only be one general election; (2) in this general election, the individual sales
offices shall still comprise separate bargaining units. 3

In a Resolution dated March 19, 1991, 4 public respondent, by authority of the Secretary of Labor,
denied SMC's appeal and affirmed the Order of the Med- Arbiter.
Hence this petition for certiorari.

Petitioner claims that:

THE HONORABLE UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION WHEN HE
IGNORED AND TOTALLY DISREGARDED PETITIONER'S VALID AND JUSTIFIABLE GROUNDS WHY THE ERROR
MADE IN GOOD FAITH BY PETITIONER'S COUNSEL BE CORRECTED, AND INSTEAD RULED:

THAT PRIVATE RESPONDENT IS "THE SOLE AND EXCLUSIVE BARGAINING AGENT FOR ALL THE REGULAR
SALES OFFICES OF MAGNOLIA DAIRY PRODUCTS, NORTH LUZON SALES AREA", COMPLETELY IGNORING
THE ESTABLISHED BARGAINING HISTORY OF PETITIONER SMC.

THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE "AGREEMENT" ENTERED INTO AT THE
HEARING ON

9 NOVEMBER 1990, IN CONTRAVENTION OF THE ESTABLISHED FACTS OF THE CASE AND THE APPLICABLE
LAW ON THE MATTER.

We find no merit in the petition.

The issues for resolution are: (1) whether or not respondent union represents an appropriate bargaining
unit, and (2) whether or not petitioner is bound by its lawyer's act of agreeing to consider the sales
personnel in the north Luzon sales area as one bargaining unit.

Petitioner claims that in issuing the impugned Orders, public respondent disregarded its collective
bargaining history which is to have a separate bargaining unit for each sales office. It insists that its prior
collective bargaining history is the most persuasive criterion in determining the appropriateness of the
collective bargaining unit.

There is no merit in the contention.

A bargaining unit is a "group of employees of a given employer, comprised of all or less than all of the
entire body of employees, consistent with equity to the employer, indicate to be the best suited to serve
the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 5

The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the
employees (Globe Doctrine); 6 (2) affinity and unity of the employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 7

Contrary to petitioner's 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. 8

Indeed, the test of grouping is mutuality or commonality of interests. The employees sought to be
represented by the collective bargaining agent must have substantial mutual interests in terms of
employment and working conditions as evinced by the type of work they perform.

In the case at bench, respondent union sought to represent the sales personnel in the various Magnolia
sales offices in northern Luzon. There is similarity of employment status for only the regular sales
personnel in the north Luzon area are covered. They have the same duties and responsibilities and
substantially similar compensation and working conditions. The commonality of interest among he sales
personnel in the north Luzon sales area cannot be gainsaid. In fact, in the certification election held on
November 24, 1990, the employees concerned accepted respondent union as their exclusive bargaining
agent. Clearly, they have expressed their desire to be one.

Petitioner cannot insist that each of the sales office of Magnolia should constitute only one bargaining
unit. What greatly militates against this position is the meager number of sales personnel in each of the
Magnolia sales office in northern Luzon. Even the bargaining unit sought to be represented by
respondent union in the entire north Luzon sales area consists only of approximately

fifty-five (55) employees. 9 Surely, it would not be for the best interest of these employees if they would
further be fractionalized. The adage "there is strength in number" is the very rationale underlying the
formation of a labor union.

Anent the second issue, petitioner claims that Atty. Batalla was merely a substitute lawyer for Atty.
Christine Ona, who got stranded in Legaspi City. Atty. Batalla was allegedly unfamiliar with the collective
bargaining history of its establishment. Petitioner claims it should not be bound by the mistake
committed by its substitute lawyer.

We are not persuaded. As discussed earlier, the collective bargaining history of a company is not decisive
of what should comprise the collective bargaining unit. Insofar as the alleged "mistake" of the substitute
lawyer is concerned, we find that this mistake was the direct result of the negligence of petitioner's
lawyers. It will be noted that Atty. Ona was under the supervision of two (2) other lawyers, Attys. Jacinto
de la Rosa, Jr. and George C. Nograles. There is nothing in the records to show that these two (2)
counsels were likewise unavailable at that time. Instead of deferring the hearing, petitioner's counsels
chose to proceed therewith. Indeed, prudence dictates that, in such case, the lawyers allegedly actively
involved in SMC's labor case should have adequately and sufficiently briefed the substitute lawyer with
respect to the matters involved in the case and the specific limits of his authority. Unfortunately, this was
not done in this case. The negligence of its lawyers binds petitioner. As held by this Court in the case of
Villa Rhecar Bus v. De la Cruz: 10

. . . As a general rule, a client is bound by the mistakes of his counsel. Only when the application of the
general rule would result in serious injustice should an exception thereto be called for.

In the case at bench, petitioner insists that each of the sales offices in northern Luzon should be
considered as a separate bargaining unit for negotiations would be more expeditious. Petitioner
obviously chooses to follow the path of least resistance. It is not, however, the convenience of the
employer that constitutes the determinative factor in forming an appropriate bargaining unit. Equally, if
not more important, is the interest of the employees. In choosing and crafting an appropriate bargaining
unit, extreme care should be taken to prevent an employer from having any undue advantage over the
employees' bargaining representative. Our workers are weak enough and it is not our social policy to
further debilitate their bargaining representative.
In sum, we find that no arbitrariness or grave abuse of discretion can be attributed to public respondents
certification of respondent union as the sole and exclusive bargaining agent of all the regular Magnolia
sales personnel of the north Luzon sales area.

WHEREFORE, premises considered, the challenged Resolution and Order of public respondent are
hereby AFFIRMED in toto, there being no showing of grave abuse of discretion or lack of jurisdiction.

SO ORDERED.

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

Padilla, J., took no part.

#Footnotes

1 The Magnolia North Luzon Sales Area covers San Fernando, Pampanga, Cabanatuan City,
Olongapo City, Poro Point, La Union, Baguio City, Dagupan City, Laoag City and Ilagan, Isabela.

2 Annex "K", Petition, Rollo, pp. 94-97.

3 See Appeal, Annex "L", Petition, Rollo, pp. 98-103, at p. 101.

4 Annex "A", Petition, Rollo, pp. 30-36.

5 U.P. v. Ferre-Calleja, G.R. No. 96189, July 14, 1992, 211 SCRA 451; Belyca Corporation v. Ferrer-
Calleja, G.R. No. L-77395, November 29, 1988, 168 SCRA 184; both cases citing Rothenberg in Labor
Relations, at p. 482.

6 Mechanical Department Labor Union Sa Philippine National Railways v. Court of Industrial

Relations, No. L-28223, August 30, 1968, 24 SCRA 925.

7 Rothenberg on Labor Relations, pp. 482-510.

8 Free Trade Unions v. Mainit Lumber Development Company Workers Union,

G.R. No. 79526, December 21, 1990, 192 SCRA 598.

9 See Petition for Certification Election, Annex "C", Petition, Rollo, at p. 39.

10 No. L-78936, January 7, 1988, 157 SCRA 13.

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Digest

G.R. No. 110399 August 15, 1997

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President V.
HONORABLE 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

FACTS: Petitioner union filed before DOLE a Petition for Direct Certification or Certification Election
among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao,
San Fernando and Otis.

Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election among the
abovementioned employees of the different plants as one bargaining unit.

San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among
others, the Med-Arbiter’s error in grouping together all three (3) separate plants, into one bargaining
unit, and in including supervisory levels 3 and above whose positions are confidential in nature.

The public respondent, Undersecretary Laguesma, granted respondent company’s Appeal and ordered
the remand of the case to the Med-Arbiter of origin for determination of the true classification of each
of the employees sought to be included in the appropriate bargaining unit.

Upon petitioner-union’s motion, Undersecretary Laguesma granted the reconsideration prayed for 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.

ISSUE:

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.

RULING:

(1) 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.

They are not qualified to be classified as managerial employees who, under Article 245 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.

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. The two
criteria are cumulative, and both must be met if an employee is to be considered a confidential
employee — that is, the confidential relationship must exist between the employee and his supervisor,
and the supervisor must handle the prescribed responsibilities relating to labor relations.

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. “Management should not be
required to handle labor relations matters through employees who are represented by the union with
which the company is required to deal and who in the normal performance of their duties may obtain
advance information of the company’s position with regard to contract negotiations, the disposition of
grievances, or other labor relations matters.”

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.”
An important element of the “confidential employee rule” is the employee’s need to use labor relations
information. Thus, in determining the confidentiality of certain employees, a key question frequently
considered is the employee’s necessary access to confidential labor relations information.

(2) 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.

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.”

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.