SECOND DIVISION

[G.R. No. 116194. February 2, 2000.]

SUGBUANON RURAL BANK, INC. , petitioner, vs . HON.

UNDERSECRETARY BIENVENIDO E. LAGUESMA, DEPARTMENT OF
LABOR AND EMPLOYMENT, MED-ARBITER ACHILLES MANIT,
DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE
NO. 7, CEBU CITY, AND SUGBUANON RURAL BANK, INC.-
ASSOCIATION OF PROFESSIONAL, SUPERVISORY, OFFICE, AND
TECHNICAL EMPLOYEES UNION-TRADE UNIONS CONGRESS THE
PHILIPPINES , respondents.

Sycip Salazar Hernandez & Gatmaitan for petitioner.

The Solicitor General for public respondent.
Seno Mendoza & Associates for private respondent.

SYNOPSIS

On October 26, 1993, the SRBI-Association of Professional, Supervisory, O ce, and

Technical Employees Union (APSOTEU), a union in petitioner Sugbuanon Rural Bank (SRB),
led a petition for certi cation election of the supervisory employees of SRBI. On October
28, 1993, the Med-Arbiter gave due course to the petition, but SRBI led a motion to
dismiss the union's petition. It sought to prevent the holding of a certi cation election on
the grounds that the members of APSOTEU-TUCP were in fact managerial or con dential
employees and ALU-TUCP was representing the union. The union led its opposition to the
motion to dismiss arguing that its members were not managerial but merely supervisory
employees. On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment, but
the appeal was denied. On December 22, 1993, petitioner proceeded to le a petition with
the DOLE Regional O ce seeking the cancellation of the respondent union's registration. It
averred that APSOTEU-TUCP members were actually managerial employees who were
prohibited by law from joining or organizing unions. On April 22, 1994, the respondent
DOLE Undersecretary denied SRBI's appeal for lack of merit. SRBI moved for
reconsideration, but the same was denied. Hence, the instant petition.
The Supreme Court found the petition bereft of merit. The Court ruled that the
Undersecretary of Labor committed no reversible error or grave abuse of discretion when
he found the order of the Med-Arbiter scheduling a certi cation election in order. The list
of employees eligible to vote in said certi cation was also found in order, for none of the
members of the respondent union came into the rank-and- le employees of the bank.
Likewise, the claim that the members of respondent union are managerial are not true as
the Cashiers, Accountants and Acting Chiefs of the Loans Department of the petitioner did
not possess the managerial powers or duties. Neither of the respondent employees' fell
under the category of con dential employees prohibited from joining the union as not one
of them had any duties speci cally connected to labor relations. Accordingly, the instant
petition was dismissed. CacTSI

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 SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; MANAGERIAL EMPLOYEES; CASHIERS,

ACCOUNTANT AND ACTING CHIEF OF THE LOANS DEPARTMENT NOT MANAGERIAL
EMPLOYEES. — Petitioner submitted detailed job descriptions to support its contention
that the union members are managerial employees and/or con dential employees
proscribed from engaging in labor activities. Petitioner vehemently argues that the
functions and responsibilities of the employees involved constitute the "very core of the
bank's business, lending of money to clients and borrowers, evaluating their capacity to
pay, approving the loan and its amount, scheduling the terms of repayment, and endorsing
delinquent accounts to counsel for collection." Hence, they must be deemed managerial
employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations
Commission, and Panday v. National Labor Relations Commission , to sustain its
submission. In Tabacalera, we sustained the classi cation of a credit and collection
supervisor by management as a managerial/supervisory personnel. But in that case, the
credit and collection supervisor "had the power to recommend the hiring and appointment
of his subordinates, as well as the power to recommend any promotion and/or increase."
For this reason he was deemed to be a managerial employee. In the present case, however,
petitioner failed to show that the employees in question were vested with similar powers.
At best they only had recommendatory powers subject to evaluation review, and nal
decision by the bank's management. The job description forms submitted by petitioner
clearly show that the union members in question may not transfer, suspend, lay-off, recall,
discharge, assign, or discipline employees. Moreover, the forms also do not show that the
Cashiers, Accountants, and Acting Chiefs of the Loans Department formulate expected
management policies which are normally expected of management officers.
2. ID.; CONFIDENTIAL EMPLOYEES; CRITERIA. — Con dential employees are
those who (1) assist or act in a con dential capacity, in regard (2) to persons who
formulate, determine, and effectuate management policies [specially in the eld of labor
relations]. The two criteria are cumulative, and both must be met if an employee is to be
considered a con dential employee — that is, the con dential relationship must exist
between the employee and his superior o cer; and that o cer must handle the
prescribed responsibilities relating to labor relations.
TEcCHD

3. ID.; ID.; WHEN THE EMPLOYEE DOES NOT HAVE ACCESS TO CONFIDENTIAL
LABOR RELATIONS INFORMATION, THERE IS NO LEGAL PROHIBITION AGAINST
CONFIDENTIAL EMPLOYEES FROM FORMING, ASSISTING OR JOINING A UNION. — Article
245 of the Labor Code does not directly prohibit con dential employees from engaging in
union activities. However, under the doctrine of necessary implication, the disquali cation
of managerial employees equally applies to con dential employees. The con dential-
employee rule justi es exclusion of con dential employees because in the normal course
of their duties they become aware of management policies relating to labor relations. It
must be stressed, however, that when the employee does not have access to con dential
labor relations information, there is no legal prohibition against con dential employees
from forming, assisting, or joining a union.
4. ID.; LABOR UNIONS; CERTIFICATION ELECTION; APPEAL BY THE
MANAGEMENT ON THE ISSUE OF THE VALIDITY OF THE UNION'S REGISTRATION DOES
NOT DETER THE CONDUCT OF THE CERTIFICATION ELECTION. — One of the rights of a
legitimate labor organization under Article 242 (b) of the Labor Code is the right to be
certi ed as the exclusive representative of all employees in an appropriate bargaining unit
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 for purposes of collective bargaining. Having complied with the requirements of Art. 234, it
is our view that respondent union is legitimate labor union. Article 257 of the Labor Code
mandates that a certi cation election shall automatically be conducted by the Med-Arbiter
upon the ling of a petition by a legitimate labor organization. Nothing is said therein that
prohibits such automatic conduct of the certi cation election if the management appeals
on the issue of the validity of the union's registration. On this score, petitioner's appeal was
correctly dismissed.
5. ID.; ID.; A LOCAL UNION MAINTAINS ITS SEPARATE PERSONALITY DESPITE
AFFILIATION WITH A LARGER NATIONAL FEDERATION. — Petitioner argues that giving
due course to respondent union's petition for certi cation election would violate the
separation of unions doctrine. Note that the petition was led by APSOTEU-TUCP, a
legitimate labor organization. It was not led by ALU. Nor was it led by TUCP, which is a
national labor federation of which respondent union is a liated. Petitioner says that
respondent union is a mere alter ego of ALU. The records show nothing to this effect. What
the records instead reveal is that respondent union was initially assisted by ALU during its
preliminary stages of organization. A local union maintains its separate personality despite
a liation with a larger national federation. Petitioner alleges that ALU seeks to represent
both respondent union and the rank-and- le union. Again, we nd nothing in the records to
support this bare assertion.

DECISION

QUISUMBING , J : p

In this special civil action for certiorari and prohibition, petitioner seeks the
annulment of the April 27, 1994 Resolution of the Department of Labor and Employment,
a rming the order of the Med-Arbiter, dated December 9, 1993, which denied petitioner's
motion to dismiss respondent union's petition for certification election. cdrep

Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking
institution with principal o ce in Cebu City and a branch in Mandaue City. Private
respondent SRBI — Association of Professional, Supervisory, O ce, and Technical
Employees Union (APSOTEU) is a legitimate labor organization a liated with the Trade
Unions Congress of the Philippines (TUCP).
On October 8, 1993, the DOLE Regional O ce in Cebu City granted Certi cate of
Registration No. R0700-9310-UR-0064 to APSOTEU-TUCP, hereafter referred to as the
union.
On October 26, 1993, the union led a petition for certi cation election of the
supervisory employees of SRBI. It alleged, among others, that: (1) APSOTEU-TUCP was a
labor organization duly-registered with the Labor Department; (2) SRBI employed 5 or
more supervisory employees; (3) a majority of these employees supported the petition; (4)
there was no existing collective bargaining agreement (CBA) between any union and SRBI;
and (5) no certi cation election had been held in SRBI during the past 12 months prior to
the petition.
On October 28, 1993, the Med-Arbiter gave due course to the petition. The pre-
certification election conference between SRBI and APSOTEU-TUCP was set for November
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 15, 1993.
On November 12, 1993, SRBI led a motion to dismiss the union's petition. It sought
to prevent the holding of a certification election on two grounds: First, that the members of
APSOTEU-TUCP were in fact managerial or con dential employees. Thus, following the
doctrine in Philips Industrial Development Corporation v. National Labor Relations
Commission, 1 they were disquali ed from forming, joining, or assisting any labor
organization. Petitioner attached the job descriptions of the employees concerned to its
motion. Second, the Association of Labor Unions-Trade Unions Congress of the
Philippines or ALU-TUCP was representing the union. Since ALU-TUCP also sought to
represent the rank-and- le employees of SRBI, there was a violation of the principle of
separation of unions enunciated in Atlas Lithographic Services, Inc. v. Laguesma. 2
The union led its opposition to the motion to dismiss on December 1, 1993. It
argued that its members were not managerial employees but merely supervisory
employees. The members attached their a davits describing the nature of their
respective duties. The union pointed out that Article 245 of the Labor Code expressly
allowed supervisory employees to form, join, or assist their own unions.
On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. He
scheduled the inclusion-exclusion proceedings in preparation for the certi cation election
on December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and
Employment. The appeal was denied for lack of merit. The certi cation election was
ordered.
On June 16, 1994, the Med-Arbiter scheduled the holding of the certi cation election
for June 29, 1994. His order identi ed the following SRBI personnel as the voting
supervisory employees in the election: the Cashier of the Main O ce, the Cashier of the
Mandaue Branch, the Accountant of the Mandaue Branch, and the Acting Chief of the
Loans Department.
On June 17, 1994, SRBI led with the Med-Arbiter an urgent motion to suspend
proceedings. The Med-Arbiter denied the same on June 21, 1994. SRBI then led a motion
for reconsideration. Two days later, the Med-Arbiter cancelled the certi cation election
scheduled for June 29, 1994 in order to address the motion for reconsideration.
The Med-Arbiter later denied petitioner's motion for reconsideration. SRBI appealed
the order of denial to the DOLE Secretary on December 16, 1993.
On December 22, 1993, petitioner proceeded to le a petition with the DOLE
Regional O ce seeking the cancellation of the respondent union's registration. It averred
that the APSOTEU-TUCP members were actually managerial employees who were
prohibited by law from joining or organizing unions.
On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal for lack of
merit. He ruled that APSOTEU-TUCP was a legitimate labor organization. As such, it was
fully entitled to all the rights and privileges granted by law to a legitimate labor
organization, including the right to le a petition for certi cation election. He also held that
until and unless a nal order is issued cancelling APSOTEU-TUCP's registration certi cate,
it had the legal right to represent its members for collective bargaining purposes.
Furthermore, the question of whether the APSOTEU-TUCP members should be considered
as managerial or con dential employees should not be addressed in the proceedings
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 involving a petition for certi cation election but best threshed out in other appropriate
proceedings. prLL

On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's decision
which was denied on July 7, 1994. The Med-Arbiter scheduled the holding of certi cation
elections on August 12, 1994.
Hence the instant petition grounded on the following assignments of error:
I
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE
ABUSE OF DISCRETION AND PALPABLY ERRED:

A. IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE

MED-ARBITER TO CONDUCT A CERTIFICATION ELECTION IN ANY UNORGANIZED
ESTABLISHMENT EVEN WHEN THE PETITIONING UNION DOES NOT POSSESS
THE QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT; AND

B. IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER'S

APPEAL AND TO DISMISS THE RESPONDENT UNION'S PETITION FOR
CERTIFICATION ELECTION.
II.
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE
ABUSE OF DISCRETION AND PALPABLY ERRED IN DENYING THE PETITIONER'S
APPEAL DESPITE THE FACT THAT:

A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE

MANAGERIAL EMPLOYEES WHO ARE LEGALLY DISQUALIFIED FROM JOINING
ANY LABOR ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT
UNION ARE OCCUPYING HIGHLY CONFIDENTIAL POSITIONS IN PETITIONER
AND, THUS, THE LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES
EQUALLY APPLY TO THEM.

III
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT
RESOLUTIONS ARE CONTRARY TO LAW AND ARE DIAMETRICALLY OPPOSED
TO RESPONDENT UNION'S RECORDED ADMISSIONS AND REPRESENTATIONS.

Considering petitioner's assigned errors, we nd two core issues for immediate

resolution:
(1) Whether or not the members of the respondent union are managerial
employees and/or highly-placed con dential employees, hence
prohibited by law from joining labor organizations and engaging in
union activities?
(2) Whether or not the Med-Arbiter may validly order the holding of a
certi cation election upon the ling of a petition for certi cation
election by a registered union, despite the petitioner's appeal pending
before the DOLE Secretary against the issuance of the union's
registration?
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 The other issues based on the assigned errors could be resolved easily after the
core issues are settled. LLpr

Respecting the rst issue, Article 212 (m) of the Labor Code de nes the terms
"managerial employee" and "supervisory employees" as follows:
"Art. 212. Definitions —
xxx xxx xxx
(m) 'Managerial employee' is one who is vested with powers or
prerogatives to lay down and execute management policies and/or 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 note merely routinary
or clerical in nature but requires the use of independent judgment. All employees
not falling within any of the above de nitions are considered rank-and- le
employees for purposes of this Book (Emphasis supplied)."

Petitioner submitted detailed job descriptions to support its contention that the
union members are managerial employees and/or confidential employees proscribed from
engaging in labor activities. 3 Petitioner vehemently argues that the functions and
responsibilities of the employees involved constitute the "very core of the bank's business,
lending of money to clients and borrowers, evaluating their capacity to pay, approving the
loan and its amount, scheduling the terms of repayment, and endorsing delinquent
accounts to counsel for collection." 4 Hence, they must be deemed managerial employees.
Petitioner cites Tabacalera Insurance Co . v. National Labor Relations Commission, 5 and
Panday v. National Labor Relations Commission, 6 to sustain its submission. In Tabacalera,
we sustained the classi cation of a credit and collection supervisor by management as a
managerial/supervisory personnel. But in that case, the credit and collection supervisor
"had the power to recommend the hiring and appointment of his subordinates, as well as
the power to recommend any promotion and/or increase." 7 For this reason he was
deemed to be a managerial employee. In the present case, however, petitioner failed to
show that the employees in question were vested with similar powers. At best they only
had recommendatory powers subject to evaluation, review, and nal decision by the bank's
management. The job description forms submitted by petitioner clearly show that the
union members in question may not transfer, suspend, lay-off, recall, discharge, assign, or
discipline employees. Moreover, the forms also do not show that the Cashiers,
Accountants, and Acting Chiefs of the Loans Department formulate and execute
management policies which are normally expected of management officers.
Petitioner's reliance on Panday is equally misplaced. There, we held that a branch
accountant is a managerial employee because the said employee had managerial powers,
similar to the supervisor in Tabacalera. Their powers included recommending the hiring
and appointment of his subordinates, as well as the power to recommend any promotion
and/or increase. 8
Here, we nd that the Cashiers, Accountant, and Acting Chief of the Loans
Department of the petitioner did not possess managerial powers and duties. We are,
therefore, constrained to conclude that they are not managerial employees.
Now may the said bank personnel be deemed con dential employees? Con dential
employees are those who (1) assist or act in a con dential capacity, in regard (2) to
persons who formulate, determine, and effectuate management policies [speci cally in the
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 eld of labor relations]. 9 The two criteria are cumulative, and both must be met if an
employee is to be considered a con dential employee — that is, the con dential
relationship must exist between the employee and his superior o cer; and that o cer
must handle the prescribed responsibilities relating to labor relations. 10
Article 245 of the Labor Code 1 1 does not directly prohibit con dential employees
from engaging in union activities. However, under the doctrine of necessary implication,
the disquali cation of managerial employees equally applies to con dential employees. 1 2
The confidential-employee rule justifies exclusion of confidential employees because in the
normal course of their duties, they become aware of management policies relating to labor
relations. 1 3 It must be stressed, however, that when the employee does not have access
to con dential labor relations information, there is no legal prohibition against con dential
employees from forming, assisting, or joining a union. 1 4
Petitioner contends that it has only 5 o cers running its day-to-day affairs. They
assist in con dential capacities and have complete access to the bank's con dential data.
They form the core of the bank's management team. Petitioner explains that:
" . . . Speci cally: (1) the Head of the Loans Department initially approves
the loan applications before they are passed on to the Board for con rmation. As
such, no loan application is even considered by the Board and approved by
petitioner without his stamp of approval based upon his interview of the applicant
and determination of his (applicant's) credit standing and nancial capacity. The
same holds true with respect to renewals or restructuring of loan accounts. He
himself determines what account should be collected, whether extrajudicially or
judicially, and settles the problems or complaints of borrowers regarding their
accounts;
"(2) the Cashier is one of the approving o cers and authorized
signatories of petitioner. He approves the opening of accounts, withdrawals and
encashment, and acceptance of check deposits. He deals with other banks and, in
the absence of the regular Manager, manages the entire o ce or branch and
approves disbursements of funds for expenses; and
"(3) the Accountant, who heads the Accounting Department, is also
one of the authorized signatories of petitioner and, in the absence of the Manager
or Cashier, acts as substitute approving o cer and assumes the management of
the entire o ce. She handles the nancial reports and reviews the debit/credit
tickets submitted by the other departments." 15

Petitioner's explanation, however, does not state who among the employees has
access to information speci cally relating to its labor relations policies. Even Cashier
Patricia Maluya, who serves as the secretary of the bank's Board of Directors may not be
so classi ed. True, the board of directors is responsible for corporate policies, the
exercise of corporate powers, and the general management of the business and affairs of
the corporation. As secretary of the bank's governing body, Patricia Maluya serves the
bank's management, but could not be deemed to have access to con dential information
speci cally relating to SRBI's labor relations policies, absent a clear showing on this
matter. Thus, while petitioner's explanation con rms the regular duties of the concerned
employees, it shows nothing about any duties specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate labor organization under
Article 242(b) of the Labor Code is the right to be certi ed as the exclusive representative
of all employees in an appropriate bargaining unit for purposes of collective bargaining.
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 Having complied with the requirements of Art. 234, it is our view that respondent union is a
legitimate labor union. Article 257 of the Labor Code mandates that a certi cation election
shall automatically be conducted by the Med-Arbiter upon the ling of a petition by a
legitimate labor organization. 16 Nothing is said therein that prohibits such automatic
conduct of the certi cation election if the management appeals on the issue of the validity
of the union's registration. On this score, petitioner's appeal was correctly dismissed. prLL

Petitioner argues that giving due course to respondent union's petition for
certi cation election would violate the separation of unions doctrine. 1 7 Note that the
petition was led by APSOTEU-TUCP, a legitimate labor organization. It was not led by
ALU. Nor was it led by TUCP, which is a national labor federation of with which
respondent union is a liated. Petitioner says that respondent union is a mere alter ego of
ALU. The records show nothing to this effect. What the records instead reveal is that
respondent union was initially assisted by ALU during its preliminary stages of
organization. A local union maintains its separate personality despite a liation with a
larger national federation. 1 8 Petitioner alleges that ALU seeks to represent both
respondent union and the rank-and- le union. Again, we nd nothing in the records to
support this bare assertion.
The law frowns on a union where the membership is composed of both supervisors
and rank-and- le employees, for fear that con icts of interest may arise in the areas of
discipline, collective bargaining, and strikes. 1 9 However, in the present case, none of the
members of the respondent union came from the rank-and-file employees of the bank.
Taking into account the circumstances in this case, it is our view that respondent
Undersecretary committed no reversible error nor grave abuse of discretion when he
found the order of the Med-Arbiter scheduling a certi cation election in order. The list of
employees eligible to vote in said certi cation election was also found in order, for none
was specifically disqualified from union membership.
WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to
costs.
SO ORDERED. cdphil

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

Footnotes

1. 210 SCRA 339 (1992).

2. 205 SCRA 12 (1992).
3. Records, pp. 80-82.
4. Id. at 16.
5. 152 SCRA 667 (1987).

6. 209 SCRA 122 (1992).

7. 152 SCRA 667, 674 (1987).
8. Supra; 209 SCRA 122, 126 (1992).

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 9. San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma, 277 SCRA
370, 374 (1997) citing Westinghouse Electric Corp. v. NLRB (CAS), 398 F2d. 689; Ladish
Co., 178 NLRB 90 (1969), B.F. Goodrich Co., 115 NLRB 722.
10. Supra.
11. ART 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. — Managerial employees are not eligible to join, assist or form
any labor organization. Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own.
12. Golden Farms, Inc. v. Ferrer-Calleja, 175 SCRA 471, 477 (1989); Bulletin Publishing Co.
Inc. vs. Hon. Augusto Sanchez, etc., 144 SCRA 628, 634 (1986).
13. San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma, supra, 375.
14. Id. at 376; National Association of Trade Unions- Republic Planters Bank Supervisor
Chapter v. Torres, 239 SCRA 546, 560 (1994).
15. Rollo, pp. 13-14.
16. Emphasis supplied. Furusawa Rubber Philippines, Inc. v. Secretary of Labor and
Employment, 282 SCRA 635, 641 (1997); California Manufacturing Corp. v. Laguesma,
209 SCRA 606, 610-11 (1992).
17. Atlas Lithographic Services, Inc. v. Bienvenido Laguesma, et al., 205 SCRA 12 (1992).
18. Pambansang Kapatiran Ng Mga Anak Pawis sa Formey Plastic National Workers
Brotherhood v. Secretary of Labor, 253 SCRA 96, 103 (1995).
19. Philippine Phosphate Corporation v. Torres, 231 SCRA 335, 342 (1994).

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