G.R. No.

211145, October 14, 2015

SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD REP. BY ITS PRESIDENT, ALFIE

ALIPIO, Petitioner, v. BUREAU OF LABOR RELATIONS, HANJIN HEAVY INDUSTRIES AND
CONSTRUCTION CO., LTD. (HHIC-PHIL.), Respondents.

DECISION

MENDOZA, J.:

The right to self-organization is not limited to unionism. Workers may also form or join an association for
mutual aid and protection and for other legitimate purposes.

This is a petition for review on certiorari seeking to reverse and set aside the July 4, 2013 Decision1 and the
January 28, 2014 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 123397, which reversed the
November 28, 2011 Resolution3 of the Bureau of Labor Relations (BLR) and reinstated the April 20, 2010
Decision4 of the Department of Labor and Employment (DOLE) Regional Director, cancelling the registration of
Samahan ng Manggagawa sa Hanjin Shipyard (Samahan) as a worker's association under Article 243 (now
Article 249) of the Labor Code.

The Facts

On February 16, 2010, Samahan, through its authorized representative, Alfie F. Alipio, filed an application for
registration5 of its name "Samahan ng Mga Manggagawa sa Hanjin Shipyard" with the DOLE. Attached to the
application were the list of names of the association's officers and members, signatures of the attendees of the
February 7, 2010 meeting, copies of their Constitution and By-laws. The application stated that the association
had a total of 120 members.

On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando, Pampanga (DOLE-Pampanga),
issued the corresponding certificate of registration6 in favor of Samahan.

On March 15, 2010, respondent Hanjin Heavy Industries and Construction Co., Ltd. Philippines (Hanjin), with
offices at Greenbeach 1, Renondo Peninsula, Sitio Agustin, Barangay Cawag, Subic Bay Freeport Zone, filed
a petition7 with DOLE-Pampanga praying for the cancellation of registration of Samahan's association on the
ground that its members did not fall under any of the types of workers enumerated in the second sentence of
Article 243 (now 249).

Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self-employed, and those without
definite employers may form a workers' association. It further posited that one third (1/3) of the members of the
association had definite employers and the continued existence and registration of the association would
prejudice the company's goodwill.

On March 18, 2010, Hanjin filed a supplemental petition, 8 adding the alternative ground that Samahan
committed a misrepresentation in connection with the list of members and/or voters who took part in the
ratification of their constitution and by-laws in its application for registration. Hanjin claimed that Samahan
made it appear that its members were all qualified to become members of the workers' association.

On March 26, 2010, DOLE-Pampanga called for a conference, wherein Samahan requested for a 10-day
period to file a responsive pleading. No pleading, however, was submitted. Instead, Samahan filed a motion to
dismiss on April 14, 2010.9

The Ruling of the DOLE Regional Director

On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of Hanjin. He found that the preamble,
as stated in the Constitution and By-Laws of Samahan, was an admission on its part that all of its members
were employees of Hanjin, to wit:
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay naglalayong na isulong ang pagpapabuti
ng kondisyon sa paggawa at katiyakan sa hanapbuhay sa pamamagitan ng patuloy na pagpapaunlad ng
kasanayan ng para sa mga kasapi nito. Naniniwala na sa pamamagitan ng aming mga angking lakas,
kaalaman at kasanayan ay anting maitataguyod at makapag-aambag sa kaunlaran ng isang lipunan. Na
mararating at makakamit ang antas ng pagkilala, pagdakila at pagpapahalaga sa mga tulad naming mga
manggagawa.

x x x10
The same claim was made by Samahan in its motion to dismiss, but it failed to adduce evidence that the
remaining 63 members were also employees of Hanjin. Its admission bolstered Hanjin's claim that Samahan
committed misrepresentation in its application for registration as it made an express representation that all of
its members were employees of the former. Having a definite employer, these 57 members should have
formed a labor union for collective bargaining.11 The dispositive portion of the decision of the Dole Regional
Director, reads:
WHEREFORE, premises considered, the petition is hereby GRANTED. Consequently, the Certificate of
Registration as Legitimate Workers Association (LWA) issued to the SAMAHAN NG MGA MANGGAGAWA SA
HANJIN SHIPYARD (SAMAHAN) with Registration Numbers R0300-1002-WA-009 dated February 26, 2010 is
hereby CANCELLED, and said association is dropped from the roster of labor organizations of this Office.

SO DECIDED.12
The Ruling of the Bureau of Labor Relations

Aggrieved, Samahan filed an appeal13 before the BLR, arguing that Hanjin had no right to petition for the
cancellation of its registration. Samahan pointed out that the words "Hanjin Shipyard," as used in its application
for registration, referred to a workplace and not as employer or company. It explained that when a shipyard
was put up in Subic, Zambales, it became known as Hanjin Shipyard. Further, the remaining 63 members
signed the Sama-Samang Pagpapatunay which stated that they were either working or had worked at Hanjin.
Thus, the alleged misrepresentation committed by Samahan had no leg to stand on. 14

In its Comment to the Appeal, 15 Hanjin averred that it was a party-in-interest. It reiterated that Samahan
committed misrepresentation in its application for registration before DOLE Pampanga. While Samahan
insisted that the remaining 63 members were either working, or had at least worked in Hanjin, only 10 attested
to such fact, thus, leaving its 53 members without any workplace to claim.

On September 6, 2010, the BLR granted Samahan's appeal and reversed the ruling of the Regional Director. It
stated that the law clearly afforded the right to self-organization to all workers including those without definite
employers.16 As an expression of the right to self-organization, industrial, commercial and self-employed
workers could form a workers' association if they so desired but subject to the limitation that it was only for
mutual aid and protection.17 Nowhere could it be found that to form a workers' association was prohibited or
that the exercise of a workers' right to self-organization was limited to collective bargaining. 18

The BLR was of the opinion that there was no misrepresentation on the part of Samahan. The phrase, "KAMI,
ang mga Manggagawa sa Hanjin Shipyard" if translated, would be: "We, the workers at Hanjin Shipyard." The
use of the preposition "at" instead of "of " would indicate that "Hanjin Shipyard" was intended to describe a
place.19 Should Hanjin feel that the use of its name had affected the goodwill of the company, the remedy was
not to seek the cancellation of the association's registration. At most, the use by Samahan of the name "Hanjin
Shipyard" would only warrant a change in the name of the association. 20 Thus, the dispositive portion of the
BLR decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III Director Ernesto C. Bihis dated
20 April 2010 is REVERSED and SET ASIDE.

Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain in the roster of legitimate
workers' association.21
On October 14, 2010, Hanjin filed its motion for reconsideration.22
In its Resolution,23 dated November 28, 2011, the BLR affirmed its September 6, 2010 Decision, but directed
Samahan to remove the words "Hanjin Shipyard" from its name. The BLR explained that the Labor Code had
no provision on the use of trade or business name in the naming of a worker's association, such matters being
governed by the Corporation Code. According to the BLR, the most equitable relief that would strike a balance
between the contending interests of Samahan and Hanjin was to direct Samahan to drop the name "Hanjin
Shipyard" without delisting it from the roster of legitimate labor organizations. The fallo reads:
WHEREFORE, premises considered, our Decision dated 6 September 2010 is hereby AFFIRMED with a
DIRECTIVE for SAMAHAN to remove "HANJIN SHIPYARD" from its name.

SO RESOLVED.24
Unsatisfied, Samahan filed a petition for certiorari25 under Rule 65 before the CA, docketed as CA-G.R. SP No.
123397.

In its March 21, 2012 Resolution,26 the CA dismissed the petition because of Samahan's failure to file a motion
for reconsideration of the assailed November 28, 2011 Resolution.

On April 17, 2012, Samahan filed its motion for reconsideration 27 and on July 18, 2012, Hanjin filed its
comment28 to oppose the same. On October 22, 2012, the CA issued a resolution granting Samahan's motion
for reconsideration and reinstating the petition. Hanjin was directed to file a comment five (5) days from receipt
of notice.29

On December 12, 2012, Hanjin filed its comment on the petition,30 arguing that to require Samahan to change
its name was not tantamount to interfering with the workers' right to self-organization. 31 Thus, it prayed, among
others, for the dismissal of the petition for Samahan's failure to file the required motion for reconsideration. 32

On January 17, 2013, Samahan filed its reply.33

On March 22, 2013, Hanjin filed its memorandum.34

The Ruling of the Court of Appeals

On July 4, 2013, the CA rendered its decision, holding that the registration of Samahan as a legitimate
workers' association was contrary to the provisions of Article 243 of the Labor Code. 35 It stressed that only 57
out of the 120 members were actually working in Hanjin while the phrase in the preamble of Samahan's
Constitution and By-laws, "KAMI, ang mga Manggagawa sa Hanjin Shipyard" created an impression that all its
members were employees of HHIC. Such unqualified manifestation which was used in its application for
registration, was a clear proof of misrepresentation which warranted the cancellation of Samahan's
registration.

It also stated that the members of Samahan could not register it as a legitimate worker's association because
the place where Hanjin's industry was located was not a rural area. Neither was there any evidence to show
that the members of the association were ambulant, intermittent or itinerant workers.36

At any rate, the CA was of the view that dropping the words "Hanjin Shipyard" from the association name
would not prejudice or impair its right to self-organization because it could adopt other appropriate names. The
dispositive portion reads:
WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering that the words "Hanjin Shipyard"
be removed from petitioner association's name, is AFFIRMED. The Decision dated April 20, 2010 of the DOLE
Regional Director in Case No. R0300-1003-CP-001, which ordered the cancellation of petitioner association's
registration is REINSTATED.

SO ORDERED.37
Hence, this petition, raising the following
ISSUES

I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT SAMAHAN CANNOT FORM A
WORKERS' ASSOCIATION OF EMPLOYEES IN HANJIN AND INSTEAD SHOULD HAVE FORMED A
UNION, HENCE THEIR REGISTRATION AS A WORKERS' ASSOCIATION SHOULD BE CANCELLED.

II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE REMOVAL/DELETION OF THE
WORD "HANJIN" IN THE NAME OF THE UNION BY REASON OF THE COMPANY'S PROPERTY RIGHT
OVER THE COMPANY NAME "HANJIN."38
Samahan argues that the right to form a workers' association is not exclusive to intermittent, ambulant and
itinerant workers. While the Labor Code allows the workers "to form, join or assist labor organizations of their
own choosing" for the purpose of collective bargaining, it does not prohibit them from forming a labor
organization simply for purposes of mutual aid and protection. All members of Samahan have one common
place of work, Hanjin Shipyard. Thus, there is no reason why they cannot use "Hanjin Shipyard" in their
name.39

Hanjin counters that Samahan failed to adduce sufficient basis that all its members were employees of Hanjin
or its legitimate contractors, and that the use of the name "Hanjin Shipyard" would create an impression that all
its members were employess of HHIC.40

Samahan reiterates its stand that workers with a definite employer can organize any association for purposes
of mutual aid and protection. Inherent in the workers' right to self-organization is its right to name its own
organization. Samahan referred "Hanjin Shipyard" as their common place of work. Therefore, they may adopt
the same in their association's name.41

The Court's Ruling

The petition is partly meritorious.

Right to self-organization includes right to form a union, workers' association and labor management councils

More often than not, the right to self-organization connotes unionism. Workers, however, can also form and
join a workers' association as well as labor-management councils (LMC). Expressed in the highest law of the
land is the right of all workers to self-organization. Section 3, Article XIII of the 1987 Constitution states:
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all
workers to self-organization,

collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. xxx

[Emphasis Supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall not be abridged.
In relation thereto, Article 3 of the Labor Code provides:
Article 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers
and employers. The State shall assure the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work.

[Emphasis Supplied]
As Article 246 (now 252) of the Labor Code provides, the right to self-organization includes the right to form,
join or assist labor organizations for the purpose of collective bargaining through representatives of their own
choosing and to engage in lawful concerted activities for the same purpose for their mutual aid and protection.
This is in line with the policy of the State to foster the free and voluntary organization of a strong and united
labor movement as well as to make sure that workers participate in policy and decision-making processes
affecting their rights, duties and welfare.42
The right to form a union or association or to self-organization comprehends two notions, to wit: (a) the liberty
or freedom, that is, the absence of restraint which guarantees that the employee may act for himself without
being prevented by law; and (b) the power, by virtue of which an employee may, as he pleases, join or refrain
from joining an association.43

In view of the revered right of every worker to self-organization, the law expressly allows and even encourages
the formation of labor organizations. A labor organization is defined 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."44 A labor organization has two broad rights: (1) to bargain collectively
and (2) to deal with the employer concerning terms and conditions of employment. To bargain collectively is a
right given to a union once it registers itself with the DOLE. Dealing with the employer, on the other hand, is a
generic description of interaction between employer and employees concerning grievances, wages, work hours
and other terms and conditions of employment, even if the employees' group is not registered with the DOLE. 45

A union refers to any labor organization in the private sector organized for collective bargaining and for other
legitimate purpose,46 while a workers' association is an organization of workers formed for the mutual aid and
protection of its members or for any legitimate purpose other than collective bargaining.47

Many associations or groups of employees, or even combinations of only several persons, may qualify as a
labor organization yet fall short of constituting a labor union. While every labor union is a labor organization,
not every labor organization is a labor union. The difference is one of organization, composition and
operation.48

Collective bargaining is just one of the forms of employee participation. Despite so much interest in and the
promotion of collective bargaining, it is incorrect to say that it is the device and no other, which secures
industrial democracy. It is equally misleading to say that collective bargaining is the end-goal of employee
representation. Rather, the real aim is employee participation in whatever form it may appear, bargaining or
no bargaining, union or no union. 49 Any labor organization which may or may not be a union may deal with the
employer. This explains why a workers' association or organization does not always have to be a labor union
and why employer-employee collective interactions are not always collective bargaining.50

To further strengthen employee participation, Article 255 (now 261)51 of the Labor Code mandates that workers
shall have the right to participate in policy and decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose,
workers and employers may form LMCs.

A cursory reading of the law demonstrates that a common element between unionism and the formation of
LMCs is the existence of an employer-employee relationship. Where neither party is an employer nor an
employee of the other, no duty to bargain collectively would exist. 52 In the same manner, expressed in Article
255 (now 261) is the requirement that such workers be employed in the establishment before they can
participate in policy and decision making processes.

In contrast, the existence of employer-employee relationship is not mandatory in the formation of workers'
association. What the law simply requires is that the members of the workers' association, at the very least,
share the same interest. The very definition of a workers' association speaks of "mutual aid and protection."

Right to choose whether to form or join a union or workers' association belongs to workers themselves

In the case at bench, the Court cannot sanction the opinion of the CA that Samahan should have formed a
union for purposes of collective bargaining instead of a workers' association because the choice belonged to it.
The right to form or join a labor organization necessarily includes the right to refuse or refrain from exercising
the said right. It is self-evident that just as no one should be denied the exercise of a right granted by law, so
also, no one should be compelled to exercise such a conferred right.53 Also inherent in the right to self-
organization is the right to choose whether to form a union for purposes of collective bargaining or a workers'
association for purposes of providing mutual aid and protection.
The right to self-organization, however, is subject to certain limitations as provided by law. For instance, the
Labor Code specifically disallows managerial employees from joining, assisting or forming any labor union.
Meanwhile, supervisory employees, while eligible for membership in labor organizations, are proscribed from
joining the collective bargaining unit of the rank and file employees.54 Even government employees have the
right to self-organization. It is not, however, regarded as existing or available for purposes of collective
bargaining, but simply for the furtherance and protection of their interests. 55

Hanjin posits that the members of Samahan have definite employers, hence, they should have formed a union
instead of a workers' association. The Court disagrees. There is no provision in the Labor Code that states that
employees with definite employers may form, join or assist unions only.

The Court cannot subscribe either to Hanjin's position that Samahan's members cannot form the association
because they are not covered by the second sentence of Article 243 (now 249), to wit:
Article 243. Coverage and employees' right to self-organization. All persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether
operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations
of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers,
self-employed people, rural workers and those without any definite employers may form labor
organizations for their mutual aid and protection. (As amended by Batas Pambansa Bilang 70, May 1,
1980)

[Emphasis Supplied]
Further, Article 243 should be read together with Rule 2 of Department Order (D.O.) No. 40-03, Series of 2003,
which provides:
RULE II

COVERAGE OF THE RIGHT TO SELF-ORGANIZATION

Section 1. Policy. - It is the policy of the State to promote the free and responsible exercise of the right to self-
organization through the establishment of a simplified mechanism for the speedy registration of labor unions
and workers associations, determination of representation status and resolution of inter/intra-union and other
related labor relations disputes. Only legitimate or registered labor unions shall have the right to represent their
members for collective bargaining and other purposes. Workers' associations shall have the right to represent
their members for purposes other than collective bargaining.

Section 2. Who may join labor unions and workers' associations. - All persons employed in commercial,
industrial and agricultural enterprises, including employees of government owned or controlled corporations
without original charters established under the Corporation Code, as well as employees of religious, charitable,
medical or educational institutions whether operating for profit or not, shall have the right to self-organization
and to form, join or assist labor unions for purposes of collective bargaining: provided, however, that
supervisory employees shall not be eligible for membership in a labor union of the rank-and-file employees but
may form, join or assist separate labor unions of their own. Managerial employees shall not be eligible to form,
join or assist any labor unions for purposes of collective bargaining. Alien employees with valid working permits
issued by the Department may exercise the right to self-organization and join or assist labor unions for
purposes of collective bargaining if they are nationals of a country which grants the same or similar rights to
Filipino workers, as certified by the Department of Foreign Affairs.

For purposes of this section, any employee, whether employed for a definite period or not, shall beginning on
the first day of his/her service, be eligible for membership in any labor organization.

All other workers, including ambulant, intermittent and other workers, the self-employed, rural workers and
those without any definite employers may form labor organizations for their mutual aid and protection and other
legitimate purposes except collective bargaining.

[Emphases Supplied]
Clearly, there is nothing in the foregoing implementing rules which provides that workers, with definite
employers, cannot form or join a workers' association for mutual aid and protection. Section 2 thereof even
broadens the coverage of workers who can form or join a workers' association. Thus, the Court agrees with
Samahan's argument that the right to form a workers' association is not exclusive to ambulant, intermittent and
itinerant workers. The option to form or join a union or a workers' association lies with the workers themselves,
and whether they have definite employers or not.

No misrepresentation on the part of Samahan to warrant cancellation of registration

In this case, Samahan's registration was cancelled not because its members were prohibited from forming a
workers' association but because they allegedly committed misrepresentation for using the phrase, "KAMI, ang
mga Manggagawa sa HAN JIN Shipyard."

Misrepresentation, as a ground for the cancellation of registration of a labor organization, is committed "in
connection with the adoption, or ratification of the constitution and by-laws or amendments thereto, the minutes
of ratification, the list of members who took part in the ratification of the constitution and by-laws or
amendments thereto, and those in connection with the election of officers, minutes of the election of officers,
and the list of voters, xxx."56

In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director granted the petition for the
cancellation of certificate of registration of Samahang Lakas Manggagawa sa Takata (Salamat) after finding
that the employees who attended the organizational meeting fell short of the 20% union registration
requirement. The BLR, however, reversed the ruling of the DOLE Regional Director, stating that petitioner
Takata Corporation (Takata) failed to prove deliberate and malicious misrepresentation on the part of
respondent Salamat. Although Takata claimed that in the list of members, there was an employee whose name
appeared twice and another was merely a project employee, such facts were not considered
misrepresentations in the absence of showing that the respondent deliberately did so for the purpose of
increasing their union membership. The Court ruled in favor of Salamat.

In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition for cancellation of certificate of
registration was denied. The Court wrote:
If the union's application is infected by falsification and like serious irregularities, especially those
appearing on the face of the application and its attachments, a union should be denied recognition as a
legitimate labor organization. Prescinding from these considerations, the issuance to the Union of Certificate
of Registration No. RO300-00-02-UR-0003 necessarily implies that its application for registration and the
supporting documents thereof are prima facie free from any vitiating irregularities. Another factor which
militates against the veracity of the allegations in the Sinumpaang Petisyon is the lack of particularities on
how, when and where respondent union perpetrated the alleged fraud on each member. Such
details are crucial for in the proceedings for cancellation of union registration on the ground of fraud or
misrepresentation, what needs to be established is that the specific act or omission of the union deprived the
complaining employees-members of their right to choose.

[Emphases Supplied]
Based on the foregoing, the Court concludes that misrepresentation, to be a ground for the cancellation of the
certificate of registration, must be done maliciously and deliberately. Further, the mistakes appearing in the
application or attachments must be grave or refer to significant matters. The details as to how the alleged fraud
was committed must also be indubitably shown.

The records of this case reveal no deliberate or malicious intent to commit misrepresentation on the part of
Samahan. The use of such words "KAMI, ang mga Manggagawa sa HANJIN Shipyard" in the preamble of the
constitution and by-laws did not constitute misrepresentation so as to warrant the cancellation of Samahan's
certificate of registration. Hanjin failed to indicate how this phrase constitutes a malicious and deliberate
misrepresentation. Neither was there any showing that the alleged misrepresentation was serious in character.
Misrepresentation is a devious charge that cannot simply be entertained by mere surmises and conjectures.

Even granting arguendo that Samahan's members misrepresented themselves as employees or workers of
Hanjin, said misrepresentation does not relate to the adoption or ratification of its constitution and by-laws or to
the election of its officers.

Removal of the word "Hanjin Shipyard" from the association's name, however, does not infringe on Samahan's
right to self-organization

Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be removed in the name of the
association. A legitimate workers' association refers to an association of workers organized for mutual aid and
protection of its members or for any legitimate purpose other than collective bargaining registered with the
DOLE.59 Having been granted a certificate of registration, Samahan's association is now recognized by law as
a legitimate workers' association.

According to Samahan, inherent in the workers' right to self-organization is its right to name its own
organization. It seems to equate the dropping of words "Hanjin Shipyard" from its name as a restraint in its
exercise of the right to self-organization. Hanjin, on the other hand, invokes that "Hanjin Shipyard" is a
registered trade name and, thus, it is within their right to prohibit its use.

As there is no provision under our labor laws which speak of the use of name by a workers' association, the
Court refers to the Corporation Code, which governs the names of juridical persons. Section 18 thereof
provides:
No corporate name may be allowed by the Securities and Exchange Commission if the proposed name
is identical or deceptively or confusingly similar to that of any existing corporation or to any other name
already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the
corporate name is approved, the Commission shall issue an amended certificate of incorporation under the
amended name.

[Emphases Supplied]
The policy underlying the prohibition in Section 18 against the registration of a corporate name which is
"identical or deceptively or confusingly similar" to that of any existing corporation or which is "patently
deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud upon the public which
would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the
reduction of difficulties of administration and supervision over corporations.60

For the same reason, it would be misleading for the members of Samahan to use "Hanjin Shipyard" in its name
as it could give the wrong impression that all of its members are employed by Hanjin.

Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:
The change of name of a labor organization shall not affect its legal personality. All the rights and obligations of
a labor organization under its old name shall continue to be exercised by the labor organization under its new
name.
Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no abridgement of Samahan's right to
self-organization was committed.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013 Decision and the January 28, 2014
Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE. The September 6, 2010
Resolution of the Bureau of Labor Relations, as modified by its November 28, 2011 Resolution,
is REINSTATED.

SO ORDERED
G.R. No. 171153             September 12, 2007

SAN MIGUEL CORPORATION EMPLOYEES UNION–PHILIPPINE TRANSPORT AND GENERAL

WORKERS ORGANIZATION (SMCEU–PTGWO), petitioner,
vs.
SAN MIGUEL PACKAGING PRODUCTS EMPLOYEES UNION–PAMBANSANG DIWA NG
MANGGAGAWANG PILIPINO (SMPPEU–PDMP), respondent1.

DECISION

CHICO-NAZARIO, J.:

In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, petitioner SAN MIGUEL
CORPORATION EMPLOYEES UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (SMCEU-PTGWO) prays that this Court reverse and set aside the (a) Decision 2 dated 9
March 2005 of the Court of Appeals in CA-G.R. SP No. 66200, affirming the Decision3 dated 19 February 2001
of the Bureau of Labor Relations (BLR) of the Department of Labor and Employment (DOLE) which upheld the
Certificate of Registration of respondent SAN MIGUEL PACKAGING PRODUCTS EMPLOYEES UNION–
PAMBANSANG DIWA NG MANGGAGAWANG PILIPINO (SMPPEU–PDMP); and (b) the Resolution4 dated 16
January 2006 of the Court of Appeals in the same case, denying petitioner's Motion for Reconsideration of the
aforementioned Decision.

The following are the antecedent facts:

Petitioner is the incumbent bargaining agent for the bargaining unit comprised of the regular monthly-paid rank
and file employees of the three divisions of San Miguel Corporation (SMC), namely, the San Miguel Corporate
Staff Unit (SMCSU), San Miguel Brewing Philippines (SMBP), and the San Miguel Packaging Products
(SMPP), in all offices and plants of SMC, including the Metal Closure and Lithography Plant in Laguna. It had
been the certified bargaining agent for 20 years – from 1987 to 1997.

Respondent is registered as a chapter of Pambansang Diwa ng Manggagawang Pilipino (PDMP). PDMP

issued Charter Certificate No. 112 to respondent on 15 June 1999.5 In compliance with registration
requirements, respondent submitted the requisite documents to the BLR for the purpose of acquiring legal
personality.6 Upon submission of its charter certificate and other documents, respondent was issued Certificate
of Creation of Local or Chapter PDMP-01 by the BLR on 6 July 1999. 7 Thereafter, respondent filed with the
Med-Arbiter of the DOLE Regional Officer in the National Capital Region (DOLE-NCR), three separate
petitions for certification election to represent SMPP, SMCSU, and SMBP. 8 All three petitions were dismissed,
on the ground that the separate petitions fragmented a single bargaining unit.9

On 17 August 1999, petitioner filed with the DOLE-NCR a petition seeking the cancellation of respondent's
registration and its dropping from the rolls of legitimate labor organizations. In its petition, petitioner accused
respondent of committing fraud and falsification, and non-compliance with registration requirements in
obtaining its certificate of registration. It raised allegations that respondent violated Articles 239(a), (b) and
(c)10 and 234(c)11 of the Labor Code. Moreover, petitioner claimed that PDMP is not a legitimate labor
organization, but a trade union center, hence, it cannot directly create a local or chapter. The petition was
docketed as Case No. NCR-OD-9908-007-IRD.12

On 14 July 2000, DOLE-NCR Regional Director Maximo B. Lim issued an Order dismissing the allegations of
fraud and misrepresentation, and irregularity in the submission of documents by respondent. Regional Director
Lim further ruled that respondent is allowed to directly create a local or chapter. However, he found that
respondent did not comply with the 20% membership requirement and, thus, ordered the cancellation of its
certificate of registration and removal from the rolls of legitimate labor organizations. 13 Respondent appealed to
the BLR. In a Decision dated 19 February 2001, it declared:
 As a chartered local union, appellant is not required to submit the number of employees and names of
all its members comprising at least 20% of the employees in the bargaining unit where it seeks to
operate. Thus, the revocation of its registration based on non-compliance with the 20% membership
requirement does not have any basis in the rules.

Further, although PDMP is considered as a trade union center, it is a holder of Registration Certificate
No. FED-11558-LC issued by the BLR on 14 February 1991, which bestowed upon it the status of a
legitimate labor organization with all the rights and privileges to act as representative of its members for
purposes of collective bargaining agreement. On this basis, PDMP can charter or create a local, in
accordance with the provisions of Department Order No. 9.

WHEREFORE, the appeal is hereby GRANTED. Accordingly, the decision of the Regional Director
dated July 14, 2000, canceling the registration of appellant San Miguel Packaging Products Employees
Union-Pambansang Diwa ng Manggagawang Pilipino (SMPPEU-PDMP) is REVERSED and SET
ASIDE. Appellant shall hereby remain in the roster of legitimate labor organizations.14

While the BLR agreed with the findings of the DOLE Regional Director dismissing the allegations of fraud and
misrepresentation, and in upholding that PDMP can directly create a local or a chapter, it reversed the
Regional Director's ruling that the 20% membership is a requirement for respondent to attain legal personality
as a labor organization. Petitioner thereafter filed a Motion for Reconsideration with the BLR. In a Resolution
rendered on 19 June 2001 in BLR-A-C-64-05-9-00 (NCR-OD-9908-007-IRD), the BLR denied the Motion for
Reconsideration and affirmed its Decision dated 19 February 2001.15

Invoking the power of the appellate court to review decisions of quasi-judicial agencies, petitioner filed with the
Court of Appeals a Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure docketed as CA-
G.R. SP No. 66200. The Court of Appeals, in a Decision dated 9 March 2005, dismissed the petition and
affirmed the Decision of the BLR, ruling as follows:

In Department Order No. 9, a registered federation or national union may directly create a local by
submitting to the BLR copies of the charter certificate, the local's constitution and by-laws, the principal
office address of the local, and the names of its officers and their addresses. Upon complying with the
documentary requirements, the local shall be issued a certificate and included in the roster of legitimate
labor organizations. The [herein respondent] is an affiliate of a registered federation PDMP, having
been issued a charter certificate. Under the rules we have reviewed, there is no need for SMPPEU to
show a membership of 20% of the employees of the bargaining unit in order to be recognized as a
legitimate labor union.

xxxx

In view of the foregoing, the assailed decision and resolution of the BLR are AFFIRMED, and the
petition is DISMISSED.16

Subsequently, in a Resolution dated 16 January 2006, the Court of Appeals denied petitioner's Motion for
Reconsideration of the aforementioned Decision.

Hence, this Petition for Certiorari under Rule 45 of the Revised Rules of Court where petitioner raises the sole
issue of:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR

IN RULING THAT PRIVATE RESPONDENT IS NOT REQUIRED TO SUBMIT THE NUMBER OF
EMPLOYEES AND NAMES OF ALL ITS MEMBERS COMPRISING AT LEAST 20% OF THE
EMPLOYEES IN THE BARGAINING UNIT WHERE IT SEEKS TO OPERATE.

The present petition questions the legal personality of respondent as a legitimate labor organization.
Petitioner posits that respondent is required to submit a list of members comprising at least 20% of the
employees in the bargaining unit before it may acquire legitimacy, citing Article 234(c) of the Labor Code which
stipulates that any applicant labor organization, association or group of unions or workers 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 based on the following requirements:

a. Fifty pesos (P50.00) registration fee;

b. The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such meetings;

c. The names of all its members comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;

d. If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and

e. Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification and the list of the members who participated in it.17

Petitioner also insists that the 20% requirement for registration of respondent must be based not on the
number of employees of a single division, but in all three divisions of the company in all the offices and plants
of SMC since they are all part of one bargaining unit. Petitioner refers to Section 1, Article 1 of the Collective
Bargaining Agreement (CBA),18 quoted hereunder:

ARTICLE 1

SCOPE

Section 1. Appropriate Bargaining Unit. The appropriate bargaining unit covered by this Agreement
consists of all regular rank and file employees paid on the basis of fixed salary per month and
employed by the COMPANY in its Corporate Staff Units (CSU), San Miguel Brewing Products (SMBP)
and San Miguel Packaging Products (SMPP) and in different operations existing in the City of Manila
and suburbs, including Metal Closure and Lithography Plant located at Canlubang, Laguna subject to
the provisions of Article XV of this Agreement provided however, that if during the term of this
Agreement, a plant within the territory covered by this Agreement is transferred outside but within a
radius of fifty (50) kilometers from the Rizal Monument, Rizal Park, Metro Manila, the employees in the
transferred plant shall remain in the bargaining unit covered by this Agreement. (Emphasis supplied.)

Petitioner thus maintains that respondent, in any case, failed to meet this 20% membership requirement since
it based its membership on the number of employees of a single division only, namely, the SMPP.

There is merit in petitioner's contentions.

A legitimate labor organization19 is defined as "any labor organization duly registered with the Department of
Labor and Employment, and includes any branch or local thereof."20 The mandate of the Labor Code is to
ensure strict compliance with the requirements on registration because a legitimate labor organization is
entitled to specific rights under the Labor Code,21 and are involved in activities directly affecting matters of
public interest. Registration requirements are intended to afford a measure of protection to unsuspecting
employees who may be lured into joining unscrupulous or fly-by-night unions whose sole purpose is to control
union funds or use the labor organization for illegitimate ends. 22 Legitimate labor organizations have exclusive
rights under the law which cannot be exercised by non-legitimate unions, one of which is the right to be
certified as the exclusive representative23 of all the employees in an appropriate collective bargaining unit for
purposes of collective bargaining.24 The acquisition of rights by any union or labor organization, particularly the
right to file a petition for certification election, first and foremost, depends on whether or not the labor
organization has attained the status of a legitimate labor organization.25

A perusal of the records reveals that respondent is registered with the BLR as a "local" or "chapter" of PDMP
and was issued Charter Certificate No. 112 on 15 June 1999. Hence, respondent was directly chartered by
PDMP.

The procedure for registration of a local or chapter of a labor organization is provided in Book V of the
Implementing Rules of the Labor Code, as amended by Department Order No. 9 which took effect on 21 June
1997, and again by Department Order No. 40 dated 17 February 2003. The Implementing Rules as amended
by D.O. No. 9 should govern the resolution of the petition at bar since respondent's petition for certification
election was filed with the BLR in 1999; and that of petitioner on 17 August 1999.26

The applicable Implementing Rules enunciates a two-fold procedure for the creation of a chapter or a local.
The first involves the affiliation of an independent union with a federation or national union or industry union.
The second, finding application in the instant petition, involves the direct creation of a local or a chapter
through the process of chartering.27

A duly registered federation or national union may directly create a local or chapter by submitting to the DOLE
Regional Office or to the BLR two copies of the following:

(a) A charter certificate issued by the federation or national union indicating the creation or
establishment of the local/chapter;

(b) The names of the local/chapter's officers, their addresses, and the principal office of the
local/chapter; and

(c) The local/chapter's constitution and by-laws; Provided, That where the local/chapter's constitution
and by-laws is the same as that of the federation or national union, this fact shall be indicated
accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the
Treasurer of the local/chapter and attested to by its President.28

The Implementing Rules stipulate that a local or chapter may be directly created by a federation or national
union. A duly constituted local or chapter created in accordance with the foregoing shall acquire legal
personality from the date of filing of the complete documents with the BLR. 29 The issuance of the certificate of
registration by the BLR or the DOLE Regional Office is not the operative act that vests legal personality upon a
local or a chapter under Department Order No. 9. Such legal personality is acquired from the filing of the
complete documentary requirements enumerated in Section 1, Rule VI.30

Petitioner insists that Section 3 of the Implementing Rules, as amended by Department Order No. 9, violated
Article 234 of the Labor Code when it provided for less stringent requirements for the creation of a chapter or
local. This Court disagrees.

Article 234 of the Labor Code provides that an independent labor organization acquires legitimacy only upon
its registration with the BLR:

Any applicant labor organization, association or group of unions or workers 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 based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

 (b) The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it. (Italics supplied.)

It is emphasized that the foregoing pertains to the registration of an independent labor organization,
association or group of unions or workers.

However, the creation of a branch, local or chapter is treated differently. This Court, in the landmark case
of Progressive Development Corporation v. Secretary, Department of Labor and Employment,31 declared that
when an unregistered union becomes a branch, local or chapter, some of the aforementioned requirements for
registration are no longer necessary or compulsory. Whereas an applicant for registration of an independent
union is mandated to submit, among other things, the number of employees and names of all its members
comprising at least 20% of the employees in the bargaining unit where it seeks to operate, as provided under
Article 234 of the Labor Code and Section 2 of Rule III, Book V of the Implementing Rules, the same is no
longer required of a branch, local or chapter.32 The intent of the law in imposing less requirements in the case
of a branch or local of a registered federation or national union is to encourage the affiliation of a local union
with a federation or national union in order to increase the local union's bargaining powers respecting terms
and conditions of labor.33

Subsequently, in Pagpalain Haulers, Inc. v. Trajano34 where the validity of Department Order No. 9 was directly
put in issue, this Court was unequivocal in finding that there is no inconsistency between the Labor Code and
Department Order No. 9.

As to petitioner's claims that respondent obtained its Certificate of Registration through fraud and
misrepresentation, this Court finds that the imputations are not impressed with merit. In the instant case, proof
to declare that respondent committed fraud and misrepresentation remains wanting. This Court had, indeed,
on several occasions, pronounced that registration based on false and fraudulent statements and documents
confer no legitimacy upon a labor organization irregularly recognized, which, at best, holds on to a mere scrap
of paper. Under such circumstances, the labor organization, not being a legitimate labor organization, acquires
no rights.35

This Court emphasizes, however, that a direct challenge to the legitimacy of a labor organization based on
fraud and misrepresentation in securing its certificate of registration is a serious allegation which deserves
careful scrutiny. Allegations thereof should be compounded with supporting circumstances and evidence. The
records of the case are devoid of such evidence. Furthermore, this Court is not a trier of facts, and this doctrine
applies with greater force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies,
such as the BLR, which have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only great respect but even finality.36

Still, petitioner postulates that respondent was not validly and legitimately created, for PDMP cannot create a
local or chapter as it is not a legitimate labor organization, it being a trade union center.

Petitioner's argument creates a predicament as it hinges on the legitimacy of PDMP as a labor organization.
Firstly, this line of reasoning attempts to predicate that a trade union center is not a legitimate labor
organization. In the process, the legitimacy of PDMP is being impugned, albeit indirectly. Secondly, the same
contention premises that a trade union center cannot directly create a local or chapter through the process of
chartering.
Anent the foregoing, as has been held in a long line of cases, the legal personality of a legitimate labor
organization, such as PDMP, cannot be subject to a collateral attack. The law is very clear on this matter.
Article 212 (h) of the Labor Code, as amended, defines a legitimate labor organization37 as "any labor
organization duly registered with the DOLE, and includes any branch or local thereof."38 On the other hand, a
trade union center is any group of registered national unions or federations organized for the mutual aid and
protection of its members; for assisting such members in collective bargaining; or for participating in the
formulation of social and employment policies, standards, and programs, and is duly registered with the DOLE
in accordance with Rule III, Section 2 of the Implementing Rules.39

The Implementing Rules stipulate that a labor organization shall be deemed registered and vested with legal
personality on the date of issuance of its certificate of registration. Once a certificate of registration is issued to
a union, its legal personality cannot be subject to collateral attack.40 It may be questioned only in an
independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing
Rules. The aforementioned provision is enunciated in the following:

Sec. 5. Effect of registration. The labor organization or workers' association shall be deemed registered
and vested with legal personality on the date of issuance of its certificate of registration. Such legal
personality cannot thereafter be subject to collateral attack, but may be questioned only in an
independent petition for cancellation in accordance with these Rules.

PDMP was registered as a trade union center and issued Registration Certificate No. FED-11558-LC by the
BLR on 14 February 1991. Until the certificate of registration of PDMP is cancelled, its legal personality as a
legitimate labor organization subsists. Once a union acquires legitimate status as a labor organization, it
continues to be recognized as such until its certificate of registration is cancelled or revoked in an independent
action for cancellation.41 It bears to emphasize that what is being directly challenged is the personality of
respondent as a legitimate labor organization and not that of PDMP. This being a collateral attack, this Court is
without jurisdiction to entertain questions indirectly impugning the legitimacy of PDMP.

Corollarily, PDMP is granted all the rights and privileges appurtenant to a legitimate labor organization,42 and
continues to be recognized as such until its certificate of registration is successfully impugned and thereafter
cancelled or revoked in an independent action for cancellation.

We now proceed to the contention that PDMP cannot directly create a local or a chapter, it being a trade union
center.

This Court reverses the finding of the appellate court and BLR on this ground, and rules that PDMP cannot
directly create a local or chapter.

After an exhaustive study of the governing labor law provisions, both statutory and regulatory, 43 we find no
legal justification to support the conclusion that a trade union center is allowed to directly create a local or
chapter through chartering. Apropos, we take this occasion to reiterate the first and fundamental duty of this
Court, which is to apply the law. The solemn power and duty of the Court to interpret and apply the law does
not include the power to correct by reading into the law what is not written therein.44

Presidential Decree No. 442, better known as the Labor Code, was enacted in 1972. Being a legislation on
social justice,45 the provisions of the Labor Code and the Implementing Rules have been subject to several
amendments, and they continue to evolve, considering that labor plays a major role as a socio-economic force.
The Labor Code was first amended by Republic Act No. 6715, and recently, by Republic Act No. 9481.
Incidentally, the term trade union center was never mentioned under Presidential Decree No. 442, even as it
was amended by Republic Act No. 6715. The term trade union center was first adopted in the Implementing
Rules, under Department Order No. 9.

Culling from its definition as provided by Department Order No. 9, a trade union center is any group of
registered national unions or federations organized for the mutual aid and protection of its members; for
assisting such members in collective bargaining; or for participating in the formulation of social and
employment policies, standards, and programs, and is duly registered with the DOLE in accordance with Rule
III, Section 2 of the Implementing Rules.46 The same rule provides that the application for registration of an
industry or trade union center shall be supported by the following:

(a) The list of its member organizations and their respective presidents and, in the case of an industry
union, the industry where the union seeks to operate;

(b) The resolution of membership of each member organization, approved by the Board of Directors of
such union;

(c) The name and principal address of the applicant, the names of its officers and their addresses, the
minutes of its organizational meeting/s, and the list of member organizations and their representatives
who attended such meeting/s; and

(d) A copy of its constitution and by-laws and minutes of its ratification by a majority of the presidents of
the member organizations, provided that where the ratification was done simultaneously with the
organizational meeting, it shall be sufficient that the fact of ratification be included in the minutes of the
organizational meeting.47

Evidently, while a "national union" or "federation" is a labor organization with at least ten locals or chapters or
affiliates, each of which must be a duly certified or recognized collective bargaining agent; 48 a trade union
center, on the other hand, is composed of a group of registered national unions or federations.49

The Implementing Rules, as amended by Department Order No. 9, provide that "a duly registered federation or
national union" may directly create a local or chapter. The provision reads:

Section 1. Chartering and creation of a local/chapter. – A duly registered federation or national union
may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies
of the following:

(a) A charter certificate issued by the federation or national union indicating the creation or
establishment of the local/chapter;

(b) The names of the local/chapter's officers, their addresses, and the principal office of the
local/chapter; and

(c) The local/chapter's constitution and by-laws; provided that where the local/chapter's constitution and
by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the
Treasurer of the local/chapter and attested to by its President.50

Department Order No. 9 mentions two labor organizations either of which is allowed to directly create a local or
chapter through chartering – a duly registered federation or a national union. Department Order No. 9 defines a
"chartered local" as a labor organization in the private sector operating at the enterprise level that acquired
legal personality through a charter certificate, issued by a duly registered federation or national union and
reported to the Regional Office in accordance with Rule III, Section 2-E of these Rules.51

Republic Act No. 9481 or "An Act Strengthening the Workers' Constitutional Right to Self-Organization,
Amending for the Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of
the Philippines" lapsed52 into law on 25 May 2007 and became effective on 14 June 2007. 53 This law further
amends the Labor Code provisions on Labor Relations.

Pertinent amendments read as follows:

 SECTION 1. Article 234 of Presidential Decree No. 442, as amended, otherwise known as the Labor
Code of the Philippines, is hereby further amended to read as follows:

ART. 234. Requirements of Registration. — A federation, national union or industry or trade

union center or an independent union 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 based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such
meetings;

(c) In case the applicant is an independent union, the names of all its members comprising at
least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual
financial reports; and

(e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it.

SECTION 2. A new provision is hereby inserted into the Labor Code as Article 234-A to read as follows:

ART. 234-A. Chartering and Creation of a Local Chapter. — A duly registered federation or

national union may directly create a local chapter by issuing a charter certificate indicating the
establishment of the local chapter. The chapter shall acquire legal personality only for purposes
of filing a petition for certification election from the date it was issued a charter certificate.

The chapter shall be entitled to all other rights and privileges of a legitimate labor organization
only upon the submission of the following documents in addition to its charter certificate:

(a) The names of the chapter's officers, their addresses, and the principal office of the chapter;
and

(b) The chapter's constitution and by-laws: Provided, That where the chapter's constitution and
by-laws are the same as that of the federation or the national union, this fact shall be indicated
accordingly.

The additional supporting requirements shall be certified under oath by the secretary or treasurer of the
chapter and attested by its president. (Emphasis ours.)

Article 234 now includes the term trade union center, but interestingly, the provision indicating the procedure
for chartering or creating a local or chapter, namely Article 234-A, still makes no mention of a "trade union
center."

Also worth emphasizing is that even in the most recent amendment of the implementing rules, 54 there was no
mention of a trade union center as being among the labor organizations allowed to charter.

This Court deems it proper to apply the Latin maxim expressio unius est exclusio alterius. Under this maxim of
statutory interpretation, the expression of one thing is the exclusion of another. When certain persons or things
are specified in a law, contract, or will, an intention to exclude all others from its operation may be inferred. If a
statute specifies one exception to a general rule or assumes to specify the effects of a certain provision, other
exceptions or effects are excluded.55 Where the terms are expressly limited to certain matters, it may not, by
interpretation or construction, be extended to other matters.56 Such is the case here. If its intent were
otherwise, the law could have so easily and conveniently included "trade union centers" in identifying the labor
organizations allowed to charter a chapter or local. Anything that is not included in the enumeration is excluded
therefrom, and a meaning that does not appear nor is intended or reflected in the very language of the statute
cannot be placed therein.57 The rule is restrictive in the sense that it proceeds from the premise that the
legislating body would not have made specific enumerations in a statute if it had the intention not to restrict its
meaning and confine its terms to those expressly mentioned. 58 Expressium facit cessare tacitum.59 What is
expressed puts an end to what is implied. Casus omissus pro omisso habendus est. A person, object or thing
omitted must have been omitted intentionally.

Therefore, since under the pertinent status and applicable implementing rules, the power granted to labor
organizations to directly create a chapter or local through chartering is given to a federation or national union,
then a trade union center is without authority to charter directly.

The ruling of this Court in the instant case is not a departure from the policy of the law to foster the free and
voluntary organization of a strong and united labor movement,60 and thus assure the rights of workers to self-
organization.61 The mandate of the Labor Code in ensuring strict compliance with the procedural requirements
for registration is not without reason. It has been observed that the formation of a local or chapter becomes a
handy tool for the circumvention of union registration requirements. Absent the institution of safeguards, it
becomes a convenient device for a small group of employees to foist a not-so-desirable federation or union on
unsuspecting co-workers and pare the need for wholehearted voluntariness, which is basic to free
unionism.62 As a legitimate labor organization is entitled to specific rights under the Labor Code and involved in
activities directly affecting public interest, it is necessary that the law afford utmost protection to the parties
affected.63 However, as this Court has enunciated in Progressive Development Corporation v. Secretary of
Department of Labor and Employment, it is not this Court's function to augment the requirements prescribed by
law. Our only recourse, as previously discussed, is to exact strict compliance with what the law provides as
requisites for local or chapter formation.64

In sum, although PDMP as a trade union center is a legitimate labor organization, it has no power to directly
create a local or chapter. Thus, SMPPEU-PDMP cannot be created under the more lenient requirements for
chartering, but must have complied with the more stringent rules for creation and registration of an
independent union, including the 20% membership requirement.

WHEREFORE, the instant Petition is GRANTED. The Decision dated 09 March 2005 of the Court of Appeals
in CA-GR SP No. 66200 is REVERSED and SET ASIDE. The Certificate of Registration of San Miguel
Packaging Products Employees Union–Pambansang Diwa ng Manggagawang Pilipino is ORDERED
CANCELLED, and SMPPEU-PDMP DROPPED from the rolls of legitimate labor organizations.

Costs against petitioner.

SO ORDERED.
G.R. No. 196276               June 4, 2014

TAKATA (PHILIPPINES) CORPORATION, Petitioner,

vs.
BUREAU OF LABOR RELATIONS and SAMAHANG LAKAS MANGGAGAWA NG TAKATA
(SALAMAT), Respondents.

DECISION

PERALTA, J.:

Before us is a petition for review on certiorari filed by petitioner TAKATA Philippines Corporation assailing the
Decision1 dated December 22, 2010 and the Resolution2 dated March 28, 2011 of the Court of Appeals in CA-
G.R. SP No. 112406.

On July 7, 2009, petitioner filed with the Department of Labor and Employment (DOLE) Regional Office a
Petition3 for Cancellation of the Certificate of Union Registration of Respondent Samahang Lakas
Manggagawa ng Takata (SALAMA1) on the ground that the latter is guilty of misrepresentation, false
statement and fraud with respect to the number of those who participated in the organizational meeting, the
adoption and ratification of its Constitution and By-Laws, and in the election of its officers. It contended that in
the May 1, 2009 organizational meeting of respondent, only 68 attendees signed the attendance sheet, and
which number comprised only 17% of the total number of the 396 regular rank- and-file employees which
respondent sought to represent, and hence, respondent failed to comply with the 20% minimum membership
requirement. Petitioner insisted that the document "Pangalan ng mga Kasapi ng Unyon" bore no signatures of
the alleged 119 union members; and that employees were not given sufficient information on the documents
they signed; that the document "Sama-Samang Pahayag ng Pagsapi" was not submitted at the time of the
filing of respondent's application for union registration; that the 119 union members were actually only 117;
and, that the total number of petitioner's employees as of May 1, 2009 was 470, and not 396 as respondent
claimed.4

Respondent denied the charge and claimed that the 119 union members were more than the 20% requirement
for union registration. The document "Sama-Samang Pahayag ng Pagsapi sa Unyon" which it presented in its
petition for certification election5 supported their claim of 119 members. Respondent also contended that
petitioner was estopped from assailing its legal personality as it agreed to a certification election and actively
participated in the pre-election conference of the certification election proceedings. 6 Respondent argued that
the union members were informed of the contents of the documents they signed and that the 68 attendees to
the organizational meeting constituted more than 50% of the total union membership, hence, a quo rumexisted
for the conduct of the said meeting.7

On August 27, 2009, DOLE Regional Director, Atty. Ricardo S. Martinez, Sr., issued a Decision 8 granting the
petition for cancellation of respondent's certificate of registration, the dispositive portion of which reads:

WHEREFORE, from the foregoing considerations, the petition is hereby GRANTED. Accordingly, the
respondent Union Certificate of Registration No. RO400A-2009-05-01-UR-LAG, dated May 19, 2009 is hereby
REVOCKED (sic) and /or CANCELLED pursuant to paragraph (a) & (b), Section 3, Rule XIV of Department
Order No. 40-03 and the Samahang Lakas ng Manggagawa ng TAKATA (SALAMAT) is hereby delisted from
the roll of legitimate labor organization of this office.9

In revoking respondent's certificate of registration, the Regional Director found that the 68 employees who
attended the organizational meeting was obviously less than 20% of the total number of 396 regular rank-and-
file employees which respondent sought to represent, hence, short of the union registration requirement; that
the attendance sheet which contained the signatures and names of the union members totalling to 68
contradicted the list of names stated in the document denominated as "Pangalan ng mga Kasaping Unyon."
The document "Sama-Samang Pahayag ng Pagsapi" was not attached to the application for registration as it
was only submitted in the petition for certification election filed by respondent at a later date. The Regional
Director also found that the proceedings in the cancellation of registration and certification elections are two
different and entirely separate and independent proceedings which were not dependent on each other.

Dissatisfied, respondent, through Bukluran ng Manggagawang Pilipino (BMP) Paralegal Officer, Domingo P.
Mole, filed a Notice and Memorandum of Appeal 10 with the Bureau of Labor Relations (BLR). However, on
September 28,2009, respondent, through its counsels, Attys.

Napoleon C. Banzuela, Jr. and Jehn Louie W. Velandrez, filed an Appeal Memorandum with Formal Entry of
Appearance11 to the Office of the DOLE Secretary, which the latter eventually referred to the BLR. Petitioner
filed an Opposition to the Appeals12 praying for their dismissal on the ground of forum shopping as respondent
filed two separate appeals in two separate venues; and for failing to avail of the correct remedy within the
period; and that the certificate of registration was tainted with fraud, misrepresentation and falsification.

In its Answer,13 respondent claimed that there was no forum shopping as BMP's Paralegal Officer was no
longer authorized to file an appeal on behalf of respondent as the latter's link with BMP was already terminated
and only the Union President was authorized to file the appeal; and that it complied with Department Order No.
40-03.

On December 9, 2009, after considering respondent's Appeal Memorandum with Formal Entry of Appearance
and petitioner's Answer, the BLR rendered its Decision14 reversing the Order of the Regional Director, the
decretal portion of which reads:

WHEREFORE, the appeal is hereby GRANTED. The Decision of Regional Director Ricardo S. Martinez, Sr.,
dated 27 August 2009, is hereby REVERSEDand SET ASIDE.

Accordingly, Samahang Lakas Manggagawa ng TAKATA (SALAMAT) shall remain in the roster of labor
organizations.15

In reversing, the BLR found that petitioner failed to prove that respondent deliberately and maliciously
misrepresented the number of rank-and-file employees. It pointed out petitioner's basis for the alleged
noncompliance with the minimum membership requirement for registration was the attendance of 68 members
to the May 1, 2009 organizational meeting supposedly comprising only 17% of the total 396 regular rank-and-
file employees. However, the BLR found that the list of employees who participated in the organizational
meeting was a separate and distinct requirement from the list of the names of members comprising at least
20% of the employees in the bargaining unit; and that there was no requirement for signatures opposite the
names of the union members; and there was no evidence showing that the employees assailed their inclusion
in the list of union members.

Petitioner filed a motion for reconsideration, which was denied by the BLR in a Resolution 16 dated January 8,
2010.

Undaunted, petitioner went to the CA via a petition for certiorari under Rule 65.

After the submission of the parties' respective pleadings, the case was submitted for decision.

On December 22, 2010, the CA rendered its assailed decision which denied the petition and affirmed the
decision of the BLR. Petitioner's motion for reconsideration was denied in a Resolution dated March 29, 2011.

Hence this petition for review filed by petitioner raising the following issues, to wit:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR IN AFFIRMING
THE DECISION OF PUBLIC RESPONDENT BLR AND NOT FINDING ANY VIOLATION BY SAMAHANG
LAKAS MANGGAGAWA SA TAKATA (SALAMAT) OF THE RULE ON FORUM SHOPPING IN THE FILING
OF TWO VERIFIED APPEALS FOR AND ITS BEHALF. BOTH OF THE APPEALS SHOULD HAVE BEEN
DISMISSED OUTRIGHT BY PUBLIC RESPONDENT BLR, ON GROUND OF FORUM SHOPPING.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE APPLICATION FOR
REGISTRATION OF SAMAHANG LAKAS MANGGAGAWA SA TAKATA (SALAMAT) WAS COMPLIANT
WITH THE LAW. CONSIDERING THE CIRCUMSTANCES OBTAINING IN THE REGISTRATION OF
SALAMAT, IT IS CLEAR THAT THE SAME IS TAINTED WITH FRAUD, MISREPRESENTATION AND
FALSIFICATION. SALAMAT DID NOT POSSESS THE REQUIREDNUMBER OF MEMBERS AT THE TIME
OF FILING OF ITS APPLICATION FOR REGISTRATION, HENCE, IT SHOULD BE HELD GUILTY OF
MISREPRESENTATION, AND FALSE STATEMENTS AND FRAUD IN CONNECTION THEREWITH.17

Anent the first issue, petitioner contends that respondent had filed two separate appeals with two different
representations at two different venues, in violation of the rule on multiplicity of suits and forum shopping, and
instead of dismissing both appeals, the appeal erroneously filed before the Labor Secretary was the one held
validly filed, entertained and even granted; that it is not within the discretion of BLR to choose which between
the two appeals should be entertained, as it is the fact of the filing of the two appeals that is being prohibited
and not who among the representatives therein possessed the authority.

We are not persuaded.

We find no error committed by the CA in finding that respondent committed no forum shopping. As the CA
correctly concluded, to wit:

It is undisputed that BMP Paralegal Officer Domingo P. Mole was no longer authorized to file an appeal on
behalf of union SALAMAT and that BMP was duly informed that its services was already terminated.
SALAMAT even submitted before the BLR its "Resolusyon Blg. 01-2009" terminating the services of BMP and
revoking the representation of Mr. Domingo Mole in any of the pending cases being handled by him on behalf
of the union. So, considering that BMP Paralegal Officer Domingo P. Mole was no longer authorized to file an
appeal when it filed the Notice and Memorandum of Appeal to DOLE Regional Office No. IV-A, the same can
no longer be treated as an appeal filed by union SALAMAT. Hence, there is no forum shopping to speak of in
this case as only the Appeal Memorandum with Formal Entry of Appearance filed by Atty. Napoleon C.
Banzuela, Jr. and Atty. Jehn Louie W. Velandrez is sanctioned by SALAMAT.18

Since Mole's appeal filed with the BLR was not specifically authorized by respondent, such appeal is
considered to have not been filed at all. It has been held that "if a complaint is filed for and in behalf of the
plaintiff who is not authorized to do so, the complaint is not deemed filed.

An unauthorized complaint does not produce any legal effect."19

Respondent through its authorized representative filed its Appeal Memorandum with Formal Entry of
Appearance before the Labor Secretary, and not with the BLR. As the appeal emanated from the petition for
cancellation of certificate of registration filed with the Regional Office, the decision canceling the registration is
appealable to the BLR, and not with the Labor Secretary. However, since the Labor Secretary motu propio
referred the appeal with the BLR, the latter can now act on it. Considering that Mole's appeal with the BLR was
not deemed filed, respondent’s appeal, through Banzuela and Associates, which the Labor Secretary referred
to the BLR was the only existing appeal with the BLR for resolution. There is, therefore, no merit to petitioner's
claim that BLR chose the appeal of Banzuela and Associates over Mole's appeal.

The case of Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union20 cited by petitioner
is not at all applicable in this case as the issue therein is the authority of the Labor Secretary to review the
decision of the Bureau of Labor Relations rendered in the exercise of its appellate jurisdiction over decision of
the Regional Director in cases involving cancellations of certificate of registration of labor unions. We found no
grave abuse of discretion committed by the Secretary of Labor in not acting on therein petitioner's appeal. The
decision of the Bureau of Labor Relations on cases brought before it on appeal from the Regional Director are
final and executory. Hence, the remedy of the aggrieved party is to seasonably avail of the special civil action
of certiorari under Rule 65 and the Rules of Court. In this case, after the Labor Secretary motu propio referred
respondent's appeal filed with it to the BLR which rendered its decision reversing the Regional Director,
petitioner went directly to the CA via a petition for certiorari under Rule 65.

As to the second issue, petitioner seeks the cancellation of respondent's registration on grounds offraud and
misrepresentation bearing on the minimum requirement of the law as to its membership, considering the big
disparity in numbers, between the organizational meeting and the list of members, and so misleading the BLR
that it obtained the minimum required number of employees for purposes of organization and registration.

We find no merit in the arguments.

Art. 234 of the Labor Code provides:

ART. 234. Requirements of Registration. - A federation, national union or industry or trade union center or an
independent union 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 based on the following
requirements:

(a) Fifty pesos (₱50.00)registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such meetings;

(c) In case the applicant is an independent union, the names of all its members comprising at least
twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and

(e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it."

And after the issuance of the certificate of registration, the labor organization's registration could be assailed
directly through cancellation of registration proceedings in accordance with Articles 238 and 239 of the Labor
Code. And the cancellation of union certificate of registration and the grounds thereof are as follows:

ART. 238. Cancellation of Registration. - The certificate of registration of any legitimate labor organization,
whether national or local, may be cancelled by the Bureau, after due hearing, only on the grounds specified in
Article 239 hereof.

ART. 239. Grounds for Cancellation of Union Registration. - The following may constitute grounds for
cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members
who took part in the ratification;

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of
the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

Petitioner's charge that respondent committed misrepresentation and fraud in securing its certificate of
registration is a serious charge and must be carefully evaluated. Allegations thereof should be compounded
with supporting circumstances and evidence.21 We find no evidence on record to support petitioner's
accusation.

Petitioner's allegation of misrepresentation and fraud is based on its claim that during the organizational
meeting on May 1, 2009, only 68 employees attended, while respondent claimed that it has 119 members as
shown in the document denominated as "Pangalan ng mga Kasapi ng Unyon;" hence, respondent
misrepresented on the 20% requirement of the law as to its membership.

We do not agree.

It does not appear in Article 234 (b) of the Labor Code that the attendees in the organizational meeting must
comprise 20% of the employees in the bargaining unit. In fact, even the Implementing Rules and Regulations
of the Labor Code does not so provide. It is only under Article 234 (c) that requires the names of all its
members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to
operate. Clearly, the 20% minimum requirement pertains to the employees’ membership in the union and not
to the list of workers who participated in the organizational meeting. Indeed, Article 234 (b) and (c) provide for
separate requirements, which must be submitted for the union's registration, and which respondent did submit.
Here, the total number of employees in the bargaining unit was 396, and 20% of which was about 79.
Respondent submitted a document entitled "Pangalan ng Mga Kasapi ng Unyon" showing the names of 119
employees as union members, thus respondent sufficiently complied even beyond the 20% minimum
membership requirement. Respondent also submitted the attendance sheet of the organizational meeting
which contained the names and signatures of the 68 union members who attended the meeting. Considering
that there are 119 union members which are more than 20% of all the employees of the bargaining unit, and
since the law does not provide for the required number of members to attend the organizational meeting, the
68 attendees which comprised at least the majority of the 119 union members would already constitute a
quorum for the meeting to proceed and to validly ratify the Constitution and By-laws of the union. There is,
therefore, no basis for petitioner to contend that grounds exist for the cancellation of respondent's union
registration. For fraud and misrepresentation to be grounds for cancellation of union registration under Article
239 of the Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough to
vitiate the consent of a majority of union members.22

Petitioner's claim that the alleged union members signed documents without adequate information is not
persuasive. The one who alleges a fact has the burden of proving it and a mere allegation is not evidence. 23 In
fact, we note that not one of those listed in the document denominated as "Pangalan ng Mga Kasaping Unyon"
had come forward to deny their membership with respondent. Notably, it had not been rebutted that the same
union members had signed the document entitled "Sama-Samang Pahayag ng Pagsapi," thus,
strengtheningtheir desire to be members of the respondent union.

Petitioner claims that in the list of members, there was an employee whose name appeared twice and another
employee who was merely a project employee. Such could not be considered a misrepresentation in the
absence of showing that respondent deliberately did so for the purpose of increasing their union membership.
In fact, even if those two names were not included in the list of union members, there would still be 117
members which was still more than 20% of the 396 rank-and-file employees.

As to petitioner's argument that the total number of its employees as of May 1, 2009 was 470, and not396 as
respondent claimed, still the 117 union members comprised more than the 20% membership requirement for
respondent's registration.

In Mariwasa Siam Ceramics v. Secretary of the Department of Labor and Employment,24 we said:

For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and
by-laws or amendments thereto, the minutes of ratification; or, in connection with the election of officers, the
minutes of the election of officers, the list of voters, or failure to submit these documents together with the list
of the newly elected-appointed officers and their postal addresses to the BLR.
The bare fact that two signatures appeared twice on the list of those who participated in the organizational
meeting would not, to our mind, provide a valid reason to cancel respondent’s certificate of registration. The
cancellation of a union’s registration doubtless has an impairing dimension on the right of labor to self-
organization. For fraud and misrepresentation to be grounds for cancellation of union registration under the
Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the
consent of a majority of union members.1âwphi1

In this case, we agree with the BLR and the CA that respondent could not have possibly committed
misrepresentation, fraud, or false statements. The alleged failure of respondent to indicate with mathematical
precision the total number of employees in the bargaining unit is of no moment, especially as it was able to
comply with the 20% minimum membership requirement. Even if the total number of rank-and-file employees
of petitioner is 528, while respondent declared that it should only be 455, it still cannot be denied that the latter
would have more than complied with the registration requirement.25

WHEREFORE, premises considered, the petition for review is DENIED. The Decision dated December 22,
2010 and the Resolution dated March 28, 2011 of the Court of Appeals, in CA-G.R. SP No. 112406, are
AFFIRMED.

SO ORDERED.
G.R. No. 122226 March 25, 1998

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner,

vs.
HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.

MENDOZA, J.:

Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for
certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its
petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the
ground that the route managers are managerial employees and, therefore, ineligible for union membership
under the first sentence of Art. 245 of the Labor Code, which provides:

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.

Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in the order
dated September 22, 1995, of the Secretary of Labor and Employment. Its petition was dismissed by the Third
Division for lack of showing that respondent committed grave abuse of discretion. But petitioner filed a motion
for reconsideration, pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code,
so far as it declares managerial employees to be ineligible to form, assist or join unions, contravenes Art. III, §8
of the Constitution which provides:

The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall not be abridged.

For this reason, the petition was referred to the Court en banc.

The Issues in this Case

Two questions are presented by the petition: (1) whether the route managers at Pepsi-Cola Products
Philippines, Inc. are managerial employees and (2) whether Art. 245, insofar as it prohibits managerial
employees from forming, joining or assisting labor unions, violates Art. III, §8 of the Constitution.

In resolving these issues it would be useful to begin by defining who are "managerial employees" and
considering the types of "managerial employees."

Types of Managerial Employees

The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational
resources."1 As a class, managers constitute three levels of a pyramid:

Top management

————————

Middle
 Management

——————————

First-Line

Management

(also called

Supervisor)

====================

Operatives

or

Operating

Employees

FIRST-LINE MANAGERS — The lowest level in an organization at which individuals are

responsible for the work of others is called first-line or first-level management. First-line
managers direct operating employees only; they do not supervise other managers. Examples of
first-line managers are the "foreman" or production supervisor in a manufacturing plant, the
technical supervisor in a research department, and the clerical supervisor in a large
office. First-level managers are often called supervisors.

MIDDLE MANAGERS — The term middle management can refer to more than one level in an
organization. Middle managers direct the activities of other managers and sometimes also those
of operating employees. Middle managers' principal responsibilities are to direct the activities
that implement their organizations' policies and to balance the demands of their superiors with
the capacities of their subordinates. A plant manager in an electronics firm is an example of a
middle manager.

TOP MANAGERS — Composed of a comparatively small group of executives, top

management is responsible for the overall management of the organization. It establishes
operating policies and guides the organization's interactions with its environment. Typical titles
of top managers are "chief executive officer," "president," and "senior vice-president." Actual
titles vary from one organization to another and are not always a reliable guide to membership
in the highest management classification.2

As can be seen from this description, a distinction exists between those who have the authority to
devise, implement and control strategic and operational policies (top and middle managers) and those
whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an
organization (first-level managers/supervisors). What distinguishes them from the rank-and-file
employees is that they act in the interest of the employer in supervising such rank-and-file employees.

"Managerial employees" may therefore be said to fall into two distinct categories: the "managers" per
se, who compose the former group described above, and the "supervisors" who form the latter group.
Whether they belong to the first or the second category, managers, vis-a-vis employers, are, likewise,
employees.3

The first question is whether route managers are managerial employees or supervisors.
Previous Administrative Determinations of
the Question Whether Route Managers
are Managerial Employees

It appears that this question was the subject of two previous determinations by the Secretary of Labor
and Employment, in accordance with which this case was decided by the med-arbiter.

In Case No. OS-MA-10-318-91, entitled Worker's Alliance Trade Union (WATU) v. Pepsi-Cola Products
Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found:

We examined carefully the pertinent job descriptions of the subject employees and other
documentary evidence on record vis-a-vis paragraph (m), Article 212 of the Labor Code, as
amended, and we find that only those employees occupying the position of route manager and
accounting manager are managerial employees. The rest i.e. quality control manager,
yard/transport manager and warehouse operations manager are supervisory employees.

To qualify as managerial employee, there must be a clear showing of the exercise of managerial
attributes under paragraph (m), Article 212 of the Labor Code as amended. Designations or
titles of positions are not controlling. In the instant case, nothing on record will support the
claim that the quality control manager, yard/transport manager and warehouse operations
manager are vested with said attributes. The warehouse operations manager, for example,
merely assists the plant finance manager in planning, organizing, directing and controlling all
activities relative to development and implementation of an effective management control
information system at the sale offices. The exercise of authority of the quality control manager,
on the other hand, needs the concurrence of the manufacturing manager.

As to the route managers and accounting manager, we are convinced that they are managerial
employees. Their job descriptions clearly reveal so.

On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92. entitled In Re: Petition for Direct
Certification and/or Certification Election-Route Managers/Supervisory Employees of Pepsi-Cola
Products Phils. Inc., as follows:

The issue brought before us is not of first impression. At one time, we had the occasion to rule
upon the status of route manager in the same company vis a vis the issue as to whether or not
it is supervisory employee or a managerial employee. In the case of Workers Alliance Trade
Unions (WATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-10-318-91 ), 15 November 1991,
we ruled that a route manager is a managerial employee within the context of the definition of
the law, and hence, ineligible to join, form or assist a union. We have once more passed upon
the logic of our Decision aforecited in the light of the issues raised in the instant appeal, as well
as the available documentary evidence on hand, and have come to the view that there is no
cogent reason to depart from our earlier holding. Route Managers are, by the very nature of
their functions and the authority they wield over their subordinates, managerial employees. The
prescription found in Art. 245 of the Labor Code, as amended therefore, clearly applies to them.4

Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission,5 however, petitioner
argues that these previous administrative determinations do not have the effect of res judicata in this
case, because "labor relations proceedings" are "non-litigious and summary in nature without regard
to legal technicalities."6 Nasipit Lumber Co. involved a clearance to dismiss an employee issued by the
Department of Labor. The question was whether in a subsequent proceeding for illegal dismissal, the
clearance was res judicata. In holding it was not, this Court made it clear that it was referring to labor
relations proceedings of a non-adversary character, thus:

The requirement of a clearance to terminate employment was a creation of the Department of

labor to carry out the Labor Code provisions on security of tenure and termination of
 employment. The proceeding subsequent to the filing of an application for clearance to
terminate employment was outlined in Book V, Rule XIV of the Rules and Regulations
Implementing the Labor Code. The fact that said rule allowed a procedure for the approval of the
clearance with or without the opposition of the employee concerned (Secs. 7 & 8), demonstrates
the non-litigious and summary nature of the proceeding. The clearance requirement was
therefore necessary only as an expeditious shield against arbitrary dismissal without the
knowledge and supervision of the Department of Labor. Hence, a duly approved clearance
implied that the dismissal was legal or for cause (Sec. 2).7

But the doctrine of res judicata certainly applies to adversary administrative proceedings. As early as
1956, in Brillantes v. Castro,8 we sustained the dismissal of an action by a trial court on the basis of a
prior administrative determination of the same case by the Wage Administration Service, applying the
principle of res judicata. Recently, in Abad v. NLRC9 we applied the related doctrine of stare decisis in
holding that the prior determination that certain jobs at the Atlantic Gulf and Pacific Co., were project
employments was binding in another case involving another group of employees of the same
company. Indeed, in Nasipit Lumber Co., this Court clarified toward the end of its opinion that "the
doctrine of res judicata applies . . . to judicial or quasi judicial proceedings and not to the exercise of
administrative powers."10 Now proceedings for certification election, such as those involved in Case
No. OS-M-A-10-318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore, decisions
rendered in such proceedings can attain finality.11

Thus, we have in this case an expert's view that the employees concerned are managerial employees
within the purview of Art. 212 which provides:

(m) "managerial employee" is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign
or discipline employees. Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file employees for purposes
of this Book.

At the very least, the principle of finality of administrative determination compels respect for the
finding of the Secretary of Labor that route managers are managerial employees as defined by law in
the absence of anything to show that such determination is without substantial evidence to support it.
Nonetheless, the Court, concerned that employees who are otherwise supervisors may wittingly or
unwittingly be classified as managerial personnel and thus denied the right of self-organization, has
decided to review the record of this case.

DOLE's Finding that Route Managers are

Managerial Employees Supported by
Substantial Evidence in the Record

The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by
substantial evidence. The nature of the job of route managers is given in a four-page pamphlet,
prepared by the company, called "Route Manager Position Description," the pertinent parts of which
read:

A. BASIC PURPOSE

A Manager achieves objectives through others.

As a Route Manager, your purpose is to meet the sales plan; and you achieve this
objective through the skillful MANAGEMENT OF YOUR JOB AND THE
MANAGEMENT OF YOUR PEOPLE.
 These then are your functions as Pepsi-Cola Route Manager. Within these
functions — managing your job and managing your people — you are accountable
to your District Manager for the execution and completion of various tasks and
activities which will make it possible for you to achieve your sales objectives.

B. PRINCIPAL ACCOUNTABILITIES

1.0 MANAGING YOUR JOB

The Route Manager is accountable for the following:

1.1 SALES DEVELOPMENT

1.1.1 Achieve the sales plan.

1.1.2 Achieve all distribution and new account

objectives.

1.1.3 Develop new business opportunities thru

personal contacts with dealers.

1.1.4 Inspect and ensure that all merchandizing [sic]

objectives are achieved in all outlets.

1.1.5 maintain and improve productivity of all cooling

equipment and kiosks.

1.1.6 Execute and control all authorized promotions.

1.1.7 Develop and maintain dealer goodwill.

1.1.8 Ensure all accounts comply with company

suggested retail pricing.

1.1.9 Study from time to time individual route coverage

and productivity for possible adjustments to maximize
utilization of resources.

1.2 Administration

1.2.1 Ensure the proper loading of route trucks before

check-out and the proper sorting of bottles before
check-in.

1.2.2 Ensure the upkeep of all route sales reports and

all other related reports and forms required on an
accurate and timely basis.

1.2.3 Ensure proper implementation of the various

company policies and procedures incl. but not limited
to shakedown; route shortage; progressive discipline;
sorting; spoilages; credit/collection; accident;
attendance.
 1.2.4 Ensure collection of receivables and delinquent
accounts.

2.0 MANAGING YOUR PEOPLE

The Route Manager is accountable for the following:

2.1 Route Sales Team Development

2.1.2 Conduct route rides to train, evaluate and

develop all assigned route salesmen and helpers at
least 3 days a week, to be supported by required route
ride documents/reports & back check/spot check at
least 2 days a week to be supported by required
documents/reports.

2.1.2 Conduct sales meetings and morning huddles.

Training should focus on the enhancement of effective
sales and merchandizing [sic] techniques of the
salesmen and helpers. Conduct group training at least
1 hour each week on a designated day and of specific
topic.

2.2 Code of Conduct

2.2.1 Maintain the company's reputation through strict

adherence to PCPPI's code of conduct and the
universal standards of unquestioned business
ethics.12

Earlier in this opinion, reference was made to the distinction between managers per se (top managers
and middle managers) and supervisors (first-line managers). That distinction is evident in the work of
the route managers which sets them apart from supervisors in general. Unlike supervisors who
basically merely direct operating employees in line with set tasks assigned to them, route managers
are responsible for the success of the company's main line of business through management of their
respective sales teams. Such management necessarily involves the planning, direction, operation and
evaluation of their individual teams and areas which the work of supervisors does not entail.

The route managers cannot thus possibly be classified as mere supervisors because their work does
not only involve, but goes far beyond, the simple direction or supervision of operating employees to
accomplish objectives set by those above them. They are not mere functionaries with simple oversight
functions but business administrators in their own right. An idea of the role of route managers as
managers per se can be gotten from a memo sent by the director of metro sales operations of
respondent company to one of the route managers. It reads:13

03 April 1995

To : CESAR T . REOLADA

From : REGGIE M. SANTOS

Subj : SALARY INCREASE

Effective 01 April 1995, your basic monthly salary of P11,710 will be increased to P12,881 or an
increase of 10%. This represents the added managerial responsibilities you will assume due to
 the recent restructuring and streamlining of Metro Sales Operations brought about by the
continuous losses for the last nine (9) months.

Let me remind you that for our operations to be profitable, we have to sustain the intensity and
momentum that your group and yourself have shown last March. You just have to deliver the
desired volume targets, better negotiated concessions, rationalized sustaining deals, eliminate
or reduced overdues, improved collections, more cash accounts, controlled operating
expenses, etc. Also, based on the agreed set targets, your monthly performance will be closely
monitored.

You have proven in the past that your capable of achieving your targets thru better planning,
managing your group as a fighting team, and thru aggressive selling. I am looking forward to
your success and I expect that you just have to exert your doubly best in turning around our
operations from a losing to a profitable one!

Happy Selling!!

(Sgd.) R.M. S
ANTOS

The plasticized card given to route managers, quoted in the separate opinion of Justice Vitug,
although entitled "RM's Job Description," is only a summary of performance standards. It does not
show whether route managers are managers per se or supervisors. Obviously, these performance
standards have to be related to the specific tasks given to route managers in the four-page "Route
Manager Position Description," and, when this is done, the managerial nature of their jobs is fully
revealed. Indeed, if any, the card indicates the great latitude and discretion given to route managers —
from servicing and enhancing company goodwill to supervising and auditing accounts, from trade
(new business) development to the discipline, training and monitoring of performance of their
respective sales teams, and so forth, — if they are to fulfill the company's expectations in the "key
result areas."

Article 212(m) says that "supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment." Thus, their only power is
to recommend. Certainly, the route managers in this case more than merely recommend effective
management action. They perform operational, human resource, financial and marketing functions for
the company, all of which involve the laying down of operating policies for themselves and their
teams. For example, with respect to marketing, route managers, in accordance with B.1.1.1 to B.1.1.9
of the Route Managers Job Description, are charged, among other things, with expanding the
dealership base of their respective sales areas, maintaining the goodwill of current dealers, and
distributing the company's various promotional items as they see fit. It is difficult to see how
supervisors can be given such responsibility when this involves not just the routine supervision of
operating employees but the protection and expansion of the company's business vis-a-vis its
competitors.

While route managers do not appear to have the power to hire and fire people (the evidence shows
that they only "recommended" or "endorsed" the taking of disciplinary action against certain
employees), this is because this
is a function of the Human Resources or Personnel Department of the company. 14 And neither should
it be presumed that just because they are given set benchmarks to observe, they are ipso
facto supervisors. Adequate control methods (as embodied in such concepts as "Management by
Objectives [MBO]" and "performance appraisals") which require a delineation of the functions and
responsibilities of managers by means of ready reference cards as here, have long been recognized in
management as effective tools for keeping businesses competitive.
This brings us to the second question, whether the first sentence of Art. 245 of the Labor Code,
prohibiting managerial employees from forming, assisting or joining any labor organization, is
constitutional in light of Art. III, §8 of the Constitution which provides:

The right of the people, including those employed in the public and private sectors, to form
unions, associations, or societies for purposes not contrary to law shall not be abridged.

As already stated, whether they belong to the first category (managers per se) or the second category
(supervisors), managers are employees. Nonetheless, in the United States, as Justice Puno's separate
opinion notes, supervisors have no right to form unions. They are excluded from the definition of the
term "employee" in §2(3) of the Labor-Management Relations Act of 1947. 15 In the Philippines, the
question whether managerial employees have a right of self-organization has arisen with respect to
first-level managers or supervisors, as shown by a review of the course of labor legislation in this
country.

Right of Self-Organization of Managerial

Employees under Pre-Labor Code Laws

Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the
Industrial Peace Act (R.A. No. 875).

In accordance with the general definition above, this law defined "supervisor" as follows:

Sec. 2. . . .

(k) "Supervisor" means any person having authority in the interest of an employer, to hire,
transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees,
or responsibly to direct them, and to adjust their grievances, or effectively to recommend such
acts, if, in connection with the foregoing, the exercise of such authority is not of a merely
routinary or clerical nature but requires the use of independent judgment.16

The right of supervisors to form their own organizations was affirmed:

Sec. 3. Employees' Right to Self-Organization. — Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing and to engage
in concerted activities for the purpose of collective bargaining and other mutual aid and
protection. Individuals employed as supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form separate organizations of their
own.17

For its part, the Supreme Court upheld in several of its decisions the right of supervisors to organize
for purposes of labor relations.18

Although it had a definition of the term "supervisor," the Industrial Peace Act did not define the term
"manager." But, using the commonly-understood concept of "manager," as above stated, it is
apparent that the law used the term "supervisors" to refer to the sub-group of "managerial employees"
known as front-line managers. The other sub-group of "managerial employees," known as
managers per se, was not covered.

However, in Caltex Filipino Managers and Supervisors Association v. Court of Industrial

Relations,19 the right of all managerial employees to self-organization was upheld as a general
proposition, thus:
 It would be going too far to dismiss summarily the point raised by respondent Company — that
of the alleged identity of interest between the managerial staff and the employing firm. That
should ordinarily be the case, especially so where the dispute is between management and the
rank and file. It does not necessarily follow though that what binds the managerial staff to the
corporation forecloses the possibility of conflict between them. There could be a real difference
between what the welfare of such group requires and the concessions the firm is willing to
grant. Their needs might not be attended to then in the absence of any organization of their
own. Nor is this to indulge in empty theorizing. The record of respondent Company, even the
very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the
impression is difficult to erase that an alien firm failed to manifest sympathy for the claims of its
Filipino executives. To predicate under such circumstances that agreement inevitably marks
their relationship, ignoring that discord would not be unusual, is to fly in the face of reality.

. . . The basic question is whether the managerial personnel can organize. What respondent
Company failed to take into account is that the right to self-organization is not merely a
statutory creation. It is fortified by our Constitution. All are free to exercise such right unless
their purpose is contrary to law. Certainly it would be to attach unorthodoxy to, not to say an
emasculation of, the concept of law if managers as such were precluded from organizing.
Having done so and having been duly registered, as did occur in this case, their union is
entitled to all the rights under Republic Act No. 875. Considering what is denominated as unfair
labor practice under Section 4 of such Act and the facts set forth in our decision, there can be
only one answer to the objection raised that no unfair labor practice could be committed by
respondent Company insofar as managerial personnel is concerned. It is, as is quite obvious, in
the negative.20

Actually, the case involved front-line managers or supervisors only, as the plantilla of employees,
quoted in the main opinion,21 clearly indicates:

CAFIMSA members holding the following Supervisory Payroll Position Title are Recognized by
the Company

Payroll Position Title

Assistant to Mgr. — National Acct. Sales

Jr. Sales Engineer

Retail Development Asst.

Staff Asst. — 0 Marketing

Sales Supervisor

Supervisory Assistant

Jr. Supervisory Assistant

Credit Assistant

Lab. Supvr. — Pandacan

Jr. Sales Engineer B

Operations Assistant B
Field Engineer

Sr. Opers. Supvr. — MIA A/S

Purchasing Assistant

Jr. Construction Engineer

Sr. Sales Supervisor

Deport Supervisor A

Terminal Accountant B

Merchandiser

Dist. Sales Prom. Supvr.

Instr. — Merchandising

Asst. Dist. Accountant B

Sr. Opers. Supervisor

Jr. Sales Engineer A

Asst. Bulk Ter. Supt.

Sr. Opers. Supvr.

Credit Supervisor A

Asst. Stores Supvr. A

Ref. Supervisory Draftsman

Refinery Shift Supvr. B

Asst. Supvr. A — Operations (Refinery)

Refinery Shift Supvr. B

Asst. Lab. Supvr. A (Refinery)

St. Process Engineer B (Refinery)

Asst. Supvr. A — Maintenance (Refinery)

Asst. Supvr. B — Maintenance (Refinery)

Supervisory Accountant (Refinery)

Communications Supervisor (Refinery)

 Finally, also deemed included are all other employees excluded from the rank and file unions
but not classified as managerial or otherwise excludable by law or applicable judicial
precedents.

Right of Self-Organization of Managerial

Employees under the Labor Code

Thus, the dictum in the Caltex case which allowed at least for the theoretical unionization of top and
middle managers by assimilating them with the supervisory group under the broad phrase "managerial
personnel," provided the lynchpin for later laws denying the right of self-organization not only to top
and middle management employees but to front line managers or supervisors as well. Following the
Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the distinction between
the first and second sub-groups of managerial employees. Instead of treating the terms "supervisor"
and "manager" separately, the law lumped them together and called them "managerial employees," as
follows:

Art. 212. Definitions . . . .

(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign
or discipline employees, or to effectively recommend such managerial actions. All employees
not falling within this definition are considered rank and file employees for purposes of this
Book.22

The definition shows that it is actually a combination of the commonly understood definitions of both
groups of managerial employees, grammatically joined by the phrase "and/or."

This general definition was perhaps legally necessary at that time for two reasons. First, the 1974 Code
denied supervisors their right to self-organize as theretofore guaranteed to them by the Industrial
Peace Act. Second, it stood the dictum in the Caltex case on its head by prohibiting all types of
managers from forming unions. The explicit general prohibition was contained in the then Art. 246 of
the Labor Code.

The practical effect of this synthesis of legal concepts was made apparent in the Omnibus Rules
Implementing the Labor Code which the Department of Labor promulgated on January 19, 1975. Book
V, Rule II, §11 of the Rules provided:

Supervisory unions and unions of security guards to cease operation. — All existing
supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease
to operate as such and their registration certificates shall be deemed automatically canceled.
However, existing collective agreements with such unions, the life of which extends beyond the
date of effectivity of the Code, shall be respected until their expiry date insofar as the economic
benefits granted therein are concerned.

Members of supervisory unions who do not fall within the definition of managerial employees
shall become eligible to join or assist the rank and file labor organization, and if none exists, to
form or assist in the forming of such rank and file organization. The determination of who are
managerial employees and who are not shall be the subject of negotiation between
representatives of the supervisory union and the employer. If no agreement is reached between
the parties, either or both of them may bring the issue to the nearest Regional Office for
determination.

The Department of Labor continued to use the term "supervisory unions" despite the demise of the
legal definition of "supervisor" apparently because these were the unions of front line managers which
were then allowed as a result of the statutory grant of the right of self-organization under the Industrial
Peace Act. Had the Department of Labor seen fit to similarly ban unions of top and middle managers
which may have been formed following the dictum in Caltex, it obviously would have done so. Yet it
did not, apparently because no such unions of top and middle managers really then existed.

Real Intent of the 1986 Constitutional Commission

This was the law as it stood at the time the Constitutional Commission considered the draft of Art. III,
§8. Commissioner Lerum sought to amend the draft of what was later to become Art. III, §8 of the
present Constitution:

MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert between the
words "people" and "to" the following: WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS. In other words, the section will now read as follows: "The right of the
people WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS to form
associations, unions, or societies for purposes not contrary to law shall not be abridged." 23

Explaining his proposed amendment, he stated:

MR. LERUM. Under the 1935 Bill of Rights, the right to form associations is granted to all
persons whether or not they are employed in the government. Under that provision, we allow
unions in the government, in government-owned and controlled corporations and in other
industries in the private sector, such as the Philippine Government Employees' Association,
unions in the GSIS, the SSS, the DBP and other government-owned and controlled
corporations. Also, we have unions of supervisory employees and of security guards. But what
is tragic about this is that after the 1973 Constitution was approved and in spite of an express
recognition of the right to organize in P.D. No. 442, known as the Labor Code, the right of
government workers, supervisory employees and security guards to form unions was
abolished.

And we have been fighting against this abolition. In every tripartite conference attended by the
government, management and workers, we have always been insisting on the return of these
rights. However, both the government and employers opposed our proposal, so nothing came
out of this until this week when we approved a provision which states:

Notwithstanding any provision of this article, the right to self-organization shall

not be denied to government employees.

We are afraid that without any corresponding provision covering the private sector, the security
guards, the supervisory employees or majority employees [sic] will still be excluded, and that is
the purpose of this amendment.

I will be very glad to accept any kind of wording as long as it will amount to absolute
recognition of private sector employees, without exception, to organize.

THE PRESIDENT. What does the Committee say?

FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by Commissioner
Rodrigo is well-taken. Perhaps, we can lengthen this a little bit more to read: "The right of the
people WHETHER UNEMPLOYED OR EMPLOYED BY STATE OR PRIVATE ESTABLISHMENTS.

I want to avoid also the possibility of having this interpreted as applicable only to the employed.

MR. DE LOS REYES. Will the proponent accept an amendment to the amendment, Madam
President?
 MR. LERUM. Yes, as long as it will carry the idea that the right of the employees in the private
sector is recognized.24

Lerum thus anchored his proposal on the fact that (1) government employees, supervisory employees,
and security guards, who had the right to organize under the Industrial Peace Act, had been denied
this right by the Labor Code, and (2) there was a need to reinstate the right of these employees. In
consonance with his objective to reinstate the right of government, security, and supervisory
employees to organize, Lerum then made his proposal:

MR. LERUM. Mr. Presiding Officer, after a consultation with several Members of this
Commission, my amendment will now read as follows: "The right of the people INCLUDING
THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS to form associations, unions, or
societies for purposes not contrary to law shall not be abridged. In proposing that amendment I
ask to make of record that I want the following provisions of the Labor Code to be automatically
abolished, which read:

Art. 245. Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employers shall not be
eligible for membership in a labor organization.

Art. 246. Managerial employees are not eligible to join, assist, and form any labor
organization.

THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say?

FR. BERNAS. The Committee accepts.

THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has accepted the amendment, as
amended.

Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is
approved.25

The question is what Commissioner Lerum meant in seeking to "automatically abolish" the then Art.
246 of the Labor Code. Did he simply want "any kind of wording as long as it will amount to absolute
recognition of private sector employees, without exception, to organize"?26 Or, did he instead intend to
have his words taken in the context of the cause which moved him to propose the amendment in the
first place, namely, the denial of the right of supervisory employees to organize, because he said, "We
are afraid that without any corresponding provision covering the private sector, security guards,
supervisory employees or majority [of] employees will still be excluded, and that is the purpose of this
amendment"?27

It would seem that Commissioner Lerum simply meant to restore the right of supervisory employees to
organize. For even though he spoke of the need to "abolish" Art. 246 of the Labor Code which, as
already stated, prohibited "managerial employees" in general from forming unions, the fact was that in
explaining his proposal, he repeatedly referred to "supervisory employees" whose right under the
Industrial Peace Act to organize had been taken away by Art. 246. It is noteworthy that Commissioner
Lerum never referred to the then definition of "managerial employees" in Art. 212(m) of the Labor Code
which put together, under the broad phrase "managerial employees," top and middle managers and
supervisors. Instead, his repeated use of the term "supervisory employees," when such term then was
no longer in the statute books, suggests a frame of mind that remained grounded in the language of
the Industrial Peace Act.

Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all managerial employees to
organize, despite the fact that the Industrial Peace Act did not expressly provide for the right of top
and middle managers to organize. If Lerum was aware of the Caltex dictum, then his insistence on the
use of the term "supervisory employees" could only mean that he was excluding other managerial
employees from his proposal. If, on the other hand, he was not aware of the Caltex statement
sustaining the right to organize to top and middle managers, then the more should his repeated use of
the term "supervisory employees" be taken at face value, as it had been defined in the then Industrial
Peace Act.

At all events, that the rest of the Commissioners understood his proposal to refer solely to supervisors
and not to other managerial employees is clear from the following account of Commissioner Joaquin
G. Bernas, who writes:

In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R. Lerum
explained that the modification included three categories of workers: (1) government
employees, (2) supervisory employees, and (3) security guards. Lerum made of record the
explicit intent to repeal provisions of P.D. 442, the Labor Code. The provisions referred to were:

Art. 245. Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employers shall not be
eligible for membership in a labor organization.

Art. 246. Managerial employees are not eligible to join, assist, and form any labor
organization.28

Implications of the Lerum Proposal

In sum, Lerum's proposal to amend Art. III, §8 of the draft Constitution by including labor unions in the
guarantee of organizational right should be taken in the context of statements that his aim was the
removal of the statutory ban against security guards and supervisory employees joining labor
organizations. The approval by the Constitutional Commission of his proposal can only mean,
therefore, that the Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. By implication, no
similar absolute constitutional right to organize for labor purposes should be deemed to have been
granted to top-level and middle managers. As to them the right of self-organization may be regulated
and even abridged conformably to Art. III, §8.

Constitutionality of Art. 245

Finally, the question is whether the present ban against managerial employees, as embodied in Art.
245 (which superseded Art. 246) of the Labor Code, is valid. This provision reads:

Art. 245. Ineligibility of managerial employees to join any labor organization; right of

supervisory employees. — Managerial employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own.29

This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise
known as the Herrera-Veloso Law. Unlike the Industrial Peace Act or the provisions of the Labor Code
which it superseded, R.A. No. 6715 provides separate definitions of the terms "managerial" and
"supervisory employees," as follows:

Art. 212. Definitions. . . .

(m) "managerial employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire transfer, suspend, lay off, recall,
 discharge, assign or discipline employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are considered rank-
and-file employees for purposes of this Book.

Although the definition of "supervisory employees" seems to have been unduly restricted to the last
phrase of the definition in the Industrial Peace Act, the legal significance given to the phrase
"effectively recommends" remains the same. In fact, the distinction between top and middle managers,
who set management policy, and front-line supervisors, who are merely responsible for ensuring that
such policies are carried out by the rank and file, is articulated in the present definition. 30 When read in
relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the intent of
the Constitutional Commission in framing Art. III, §8 of the fundamental law.

Nor is the guarantee of organizational right in Art. III, §8 infringed by a ban against managerial
employees forming a union. The right guaranteed in Art. III, §8 is subject to the condition that its
exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis
for prohibiting managerial employees from forming or joining labor organizations. As Justice Davide,
Jr., himself a constitutional commissioner, said in his ponencia in Philips Industrial Development,
Inc. v. NLRC:31

In the first place, all these employees, with the exception of the service engineers and the sales
force personnel, are confidential employees. Their classification as such is not seriously
disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly
considered them as confidential employees. By the very nature of their functions, they assist
and act in a confidential capacity to, or have access to confidential matters of, persons who
exercise managerial functions in the field of labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or joint a labor union equally applies to
them.

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

rationale, thus:

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

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

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez and Purisima, JJ., concur.
 Separate Opinions

DAVIDE, JR., J., concurring and dissenting;

I concur with the majority that the "route managers" of private respondent Pepsi-Cola Products
Philippines, Inc. are managerial employees. However, I respectfully submit that contrary to the
majority's holding, Article 245 of the Labor Code is unconstitutional, as it abridges Section 8, Article III
of the Constitution.

Section 8, Article III of the 1987 Constitution was taken from Section 7, Article IV of the 1973
Constitution which, in turn, was lifted from Section 6, Article III of the 1935 Constitution. Section 7 of
the 1973 Constitution provided as follows:

Sec. 7. The right to form associations or societies for purpose not contrary to law shall not be
abridged.

This Section was adopted in Section 7 of Proposed Resolution No. 486 of the 1986 Constitutional
Commission, entitled Resolution to Incorporate in the New Constitution an Article on the Bill of
Rights,1 submitted by the Committee on Citizenship, Bill of Rights, Political Rights and Obligations,
and Human Rights, with a modification, however, consisting of the insertion of the word union
between the words "associations" and "societies." Thus the proposed Section 7 provided as follows:

Sec. 7. The right of the people to form associations, unions, or societies for purposes not
contrary to law shall not be abridged (emphasis supplied).

Commissioner Joaquin G. Bernas, in his sponsorship speech on the proposed Article on the Bill of
Rights, expounded on the nature of the proposed provision, in this wise:

Section 7 preserves the old provision not because it is strictly needed but because its removal
might be subject to misinterpretation. It reads:

x x x           x x x          x x x

It strictly does not prepare the old provision because it adds the word UNION, and in the
explanation we received from Commissioner Lerum, the term envisions not just unions in
private corporations but also in the government. This preserves our link with the Malolos
Constitution as far as the right to form associations or societies for purposes not contrary to
law is concerned.2

During the period of individual amendments, Commissioner Lerum introduced an amendment to the
proposed section consisting of the insertion of the clause "WHETHER EMPLOYED BY THE STATE OR
PRIVATE ESTABLISHMENTS, which, after consulting other Commissioners, he modified his proposed
amendment to read: "INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At
that time, the section read:

Sec. 7. The right of the people including those employed in the public and private sectors to
form associations, unions or societies for purposes not contrary to law shall not be abridged.

Pertinently to this dispute Commissioner Lerum's intention that the amendment "automatically
abolish" Articles 245 and 246 of the Labor Code. The Committee accepted the amendment, and there
having been no objection from the floor, the Lerum amendment was approved, thus:
 MR. LERUM: . . . In proposing that amendment I ask to make of record that I want the following
provisions of the Labor Code to be automatically abolished, which read:

Art. 245. Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employers shall not be
eligible for membership in a labor organization.

Art. 246. Managerial employees are not eligible to join, assist, and form any labor
organization.

THE PRESIDING OFFICER (Mr. Bengzon):

What does the Committee say?

FR. BERNAS: The Committee accepts.

THE PRESIDING OFFICER (Mr. Bengzon):

The Committee has accepted the amendment, as amended.

Is there any objection? (Silence) The Chair hears none; the amendment, as
amended, is approved.3

The Committee on Style then recommended that commas be placed after the words people and
sectors, while Commissioner Lerum likewise moved to place the word unions before the word
associations.4 Section 7, which was subsequently renumbered as Section 8 as presently appearing in
the text ratified in the plebiscite of 2 February 1987, then read as follows:

The right of the people, including those employed in the public and private sectors, to form
unions, associations, or societies for purposes not contrary to law shall not be abridged.

It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to
abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor
organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the
1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or
vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is
clear and written in simple language; neither were there any confusing debates thereon. More
importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely
intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval
of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the
Constitutional Commission, that all employees meaning rank-and-file, supervisory and managerial —
whether from the public or the private sectors, have the right to form unions for purposes not contrary
to law.

The Labor Code referred to by Commissioner Lerum was P.D. No. 442, promulgated on 1 May 1974.
With the repeal of Article 239 by Executive Order No. 111 issued on 24 December 1986, 5 Article 246 (as
mentioned by Commissioner Lerum) became Article 245. Thereafter, R.A. No. 6715  6 amended the new
Article 245 (originally Article 246) to read, as follows:

Sec. 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.7
With the abrogation of the former Article 246 of the Labor Code, 8 and the constitutional prohibition
against any law prohibiting managerial employees from joining, assisting or forming unions or labor
organizations, the first sentence then of the present Article 245 of the Labor Code must be struck
down as unconstitutional.9 However, due to an obvious conflict of interest — being closely identified
with the interests of management in view of the inherent nature of their functions, duties and
responsibilities — managerial employees may only be eligible to join, assist or form unions or labor
organizations of their own rank, and not those of the supervisory employees nor the rank-and-file
employees.

In the instant case, the petitioner's name — United Pepsi-Cola Supervisory Union (UPSU) —
indubitably attests that it is a union of supervisory employees. In light of the earlier discussion,
the route managers who are managerial employees, cannot join or assist UPSU. Accordingly, the Med-
Arbiter and public respondent Laguesma committed no error in denying the petition for direct
certification or for certification election.

I thus vote to GRANT, IN PART, the instant petition. That portion of the challenged resolution of public
respondent holding that since the route managers of private respondent Pepsi-Cola Products
Philippines, Inc., are managerial employees, they are "not eligible to assist, join or form a union or any
other organization" should be SET ASIDE for being violative of Section 8 of Article III of the
Constitution, while that portion thereof denying petitioner's appeal from the Med-Arbiter's decision
dismissing the petition for direct certification or for a certification election should be AFFIRMED.

PUNO, J., separate concurring;

With due respect, it is my submission that Article 245 of the Labor Code was not repealed by section 8,
Article III of the 1987 Constitution for reasons discussed below.

A. Types of Employees.

For purposes of applying the law on labor relations, the Labor Code in Article 212 (m) defines three (3)
categories of employees. They are managerial, supervisory and rank-and-file, thus:

Art. 212 (m). "Managerial Employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees. "Supervisory employees" are those who, in the
interest of the employer, effectively recommended 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.

The test of "managerial" or "supervisory" status depends on whether a person possesses authority to
act in the interest of his employer and whether such authority is not routinary or clerical in nature but
requires the use of independent judgment.1 The rank-and-file employee performs work that is routinary
and clerical in nature. The distinction between these employees is significant because supervisory and
rank-and-file employees may form, join or assist labor organizations. Managerial employees cannot.

B. The Exclusion of Managerial Employees: Its Historical Roots in the United States.

The National Labor Relations Act (NLRA), also known as the Wagner Act, enacted by the U.S.
Congress in 1935, was the first law that regulated labor relations in the United States and embodied its
national labor policy.2 The purpose of the NLRA was to eliminate obstructions to the free flow of
commerce through the practice of collective bargaining. The NLRA also sought to protect the workers'
full freedoms of association, self-organization, and designation of representatives of their own
choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual
aid and protection.3 The NLRA established the right of employees to organize, required employers to
bargain with employees collectively through employee-elected representatives, gave employees the
right to engage in concerted activities for collective bargaining purposes or other mutual aid or
protection, and created the National Labor Relations Board (NLRB) as the regulatory agency in labor-
management matters.4

The NLRA was amended in 1947 by the Labor Management Relations Act (LMRA), also known as the
Taft-Hartley Act. This Act sought to lessen industrial disputes and placed employers in a more nearly
equal position with unions in bargaining and labor relations procedures.5

The NLRA did not make any special provision for "managerial employees." 6 The privileges and
benefits of the Act were conferred on "employees." Labor organizations thus clamored for the
inclusion of supervisory personnel in the coverage of the Act on the ground that supervisors were
also employees. Although traditionally, supervisors were regarded as part of management, the NLRB
was constrained to recognize supervisors as employees under the coverage of the law. Supervisors
were then granted collective bargaining rights. 7 Nonetheless, the NLRB refused to consider managers
as covered by the law.8

The LMRA took away the collective bargaining rights of supervisors. The sponsors of the amendment
feared that their unionization would break down industrial discipline as it would blur the traditional
distinction between management and labor. They felt it necessary to deny supervisory personnel the
right of collective bargaining to preserve their loyalty to the interests of their employers. 9

Several amendments were later made on the NLRA but the exclusion of managers and supervisors
from its coverage was preserved. Until now managers and supervisors are excluded from the
law.10 Their exclusion hinges on the theory that the employer is entitled to the full loyalty of those
whom it chooses for positions of responsibility, entailing action on the employers' behalf. A
supervisor's and manager's ability to control the work of others would be compromised by his sharing
of employee status with them.11

C. Historical Development in the Philippines.

Labor-management relations in the Philippines were first regulated under the Industrial Peace
Act12 which took effect in 1953. Hailed as the Magna Carta of Labor, it was modelled after the NLRA
and LMRA of the United States.13 Most of the basic principles of the NLRA have been carried over to
the Industrial Peace Act and the Labor Code. 14 This is significant because we have ruled that where
our labor statutes are based on statutes in foreign jurisdiction, the decisions of the high courts in
those jurisdictions construing and interpreting the Act are given persuasive effects in the application
of Philippine law.15

The Industrial Peace Act did not carry any provision prohibiting managerial employees from joining
labor organizations. Section 3 of said law merely provided:

Sec. 3. Employees' Right to Self-Organization. — Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing and to engage
in concerted activities for the purpose of collective bargaining and other mutual aid and
protection. Individuals employed as supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form separate organizations of their
own.

Significantly, the Industrial Peace Act did not define a manager or managerial employee. It defined a
"supervisor" but not a "manager." Thus:

Sec. 2. . . .
 (k) "Supervisor" means any person having authority in the interest of an employer, to hire,
transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees,
or responsibly to direct them, and to adjust their grievances, or effectively to recommend such
acts, if, in connection with the foregoing, the exercise of such authority is not of a merely
routinary or clerical nature but requires the use of independent judgment.

In 1972, we interpreted Section 3 of the Industrial Peace Act to give supervisors the right to join and
form labor organizations of their own. 16 Soon we grappled with the right of managers to organize. In a
case involving Caltex managers, we recognized their right to organize, viz:

It would be going too far to dismiss summarily the point raised by respondent company, that of
the alleged identity of interest between the managerial staff and the employing firm. That should
ordinarily be the case, especially so where the dispute is between management and the rank-
and-file. It does not necessarily follow though that what binds the managerial staff to the
corporation forecloses the possibility of conflict between them. There could be a real difference
between what the welfare of such group requires and the concessions the firm is willing to
grant. Their needs might not be attended to then in the absence of any organization of their
own. Nor is this to indulge in empty theorizing. The records of respondent company, even the
very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the
impression is difficult to erase that an alien firm failed to manifest sympathy for the claims of its
Filipino executives.17

The Industrial Peace Act was repealed in 1975 by P.D. 442, the Labor Code of the Philippines. The
Labor Code changed existing jurisprudence when it prohibited supervisory and managerial employees
from joining labor organizations. Supervisory unions were no longer recognized nor allowed to exist
and operate as such.18 We affirmed this statutory change in Bulletin Publishing
19
Corp. v. Sanchez.  Similarly, Article 246 of the Labor Code expressly prohibited managerial
employees from forming, assisting and joining labor organizations, to wit:

Art. 246. Ineligibility of managerial employees to join any labor organization. — Managerial

employees are not eligible to join, assist or form any labor organization.

In the same Bulletin case, the Court applied Article 246 and held that managerial employees are the
very type of employees who, by the nature of their positions and functions, have been decreed
disqualified from bargaining with management. This prohibition is based on the rationale that if
managerial employees were to belong or be affiliated with a union, the union might not be assured of
their loyalty in view of evident conflict of interest or that the union can be company-dominated with the
presence of managerial employees in the union membership. 20 In the collective bargaining process,
managerial employees are supposed to be on the side of the employer, to act as its representative, and
to see to it that its interests are well protected. The employer is not assured of such protection if these
employees themselves become union members.21

The prohibition on managerial employees to join, assist or form labor organizations was retained in
the Labor Code despite substantial amendments made in 1989 by R.A. 6715, the Herrera-Veloso
Law. R.A. 6715 was passed after the effectivity of the 1987 Constitution and this law did not abrogate,
much less amend the prohibition on managerial employees to join labor organizations. The express
prohibition in Article 246 remained. However, as an addendum to this same Article, R.A. 6715 restored
to supervisory employees the right to join labor organizations of their own.22 Article 246 now reads:

Art. 246. 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.
Article 246 became Article 245 after then Article 244 was repealed by E.O. 111. Article 246 is presently
Article 245 of the Labor Code.

Indeed, Article 245 of the Labor Code prohibiting managerial employees from joining labor
organizations has a social and historical significance in our labor relations law. This significance
should be considered in deciphering the intent of the framers of the 1987 Constitution vis-a-vis the
said Article.

With due respect, I do not subscribe to the view that section 8, Article III of the Constitution abrogated
Article 245 of the Labor Code. A textual analysis of section 8, Article III of the Constitution will not
justify this conclusion. With due respect, the resort by Mr. Justice Davide to the deliberations of the
Constitutional Commission does not suffice. It is generally recognized that debates and other
proceedings in a constitutional convention are of limited value and are an unsafe guide to the intent of
the people.23 Judge Cooley has stated that:

When the inquiry is directed to ascertaining the mischief designed to be remedied, or the
purpose sought to be accomplished by a particular provision, it may be proper to examine the
proceedings of the convention which framed the instrument. Where the proceedings clearly
point out the purpose of the provision, the aid will be valuable and satisfactory; but where the
question is one of abstract meaning, it will be difficult to derive from this source much reliable
assistance in interpretation. Every member of such a convention acts upon such motives and
reasons as influence him personally, and the motions and debates do not necessarily indicate
the purpose of a majority of a convention in adopting a particular clause. It is quite possible for
a particular clause to appear so clear and unambiguous to the members of the convention as to
require neither discussion nor illustration; and the few remarks made concerning it in the
convention might have a plain tendency to lead directly away from the meaning in the minds of
the majority. It is equally possible for a part of the members to accept a clause in one sense and
a part in another. And even if we were certain we had attained to the meaning of the convention,
it is by no means to be allowed a controlling force, especially if that meaning appears not to be
the one which the words would most naturally and obviously convey. For as the constitution
does not derive its force from the convention which framed, but from the people who ratified it,
the intent to be arrived at is that of the people, and it is not to be supposed that they have
looked for any dark and abstruse meaning in the words employed, but rather that they have
accepted them in the sense most obvious to the common understanding, and ratified the
instrument in the belief that was the sense designed to be conveyed.24

It is for this reason that proceedings of constitutional conventions are less conclusive of the proper
construction of the instrument than are legislative proceedings of the proper construction of the
statute.25 In the statutes, it is the intent of the legislature that is being sought, while in constitutions, it
is the intent of the people that is being ascertained through the discussions and deliberations of their
representatives.26 The proper interpretation of constitutional provisions depends more on how it was
understood by the people adopting it than in the framers' understanding thereof.27

Thus, debates and proceedings of the constitutional convention are never of binding force. They may
be valuable but are not necessarily decisive.28 They may shed a useful light upon the purpose sought
to be accomplished or upon the meaning attached to the words employed. And the courts are free to
avail themselves of any light that may be derived from such sources, but they are not bound to adopt
it as the sole ground of their decision.29

Clearly then, a statute cannot be declared void on the sole ground that it is repugnant to a supposed
intent or spirit declared in constitutional convention proceedings.

D. Freedom of Association

The right of association flows from freedom of expression. 30 Like the right of expression, the exercise
of the right of association is not absolute. It is subject to certain limitations.
Article 243 of the Labor Code reiterates the right of association of people in the labor sector. Article
243 provides:

Art. 243. Coverage of employees' right to self-organization. — All persons employed in

commercial, industrial and agricultural enterprises and in religious, charitable, medical, or
educational institutions whether operating for profit or not, shall have the right to self-
organization and to form, join, or assist labor organizations of their own choosing for purposes
of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people,
rural workers and those without any definite employers may form labor organizations for their
mutual aid and protection.

Article 243 guarantees the right to self-organization and association to "all persons." This seemingly
all-inclusive coverage of "all persons," however, actually admits of exceptions.

Article 24431 of the Labor Code mandates that all employees in the civil service, i.e, those not
employed in government corporations established under the Corporation Code, may only form
associations but may not collectively bargain on terms and conditions fixed by law. An employee of a
cooperative who is a member and co-owner thereof cannot invoke the right of collective bargaining
and negotiation vis-a-vis the cooperative.32 An owner cannot bargain with himself or his co-
owners.33 Employees in foreign embassies or consulates or in foreign international organizations
granted international immunities are also excluded from the right to form labor
organizations.  34 International organizations are organized mainly as a means for conducting general
international business in which the member-states have an interest and the immunities granted them
shield their affairs from political pressure or control by the host country and assure the unimpeded
performance of their functions.35

Confidential employees have also been denied the right to form labor-organizations. Confidential
employees do not constitute a distinct category for purposes of organizational right. Confidentiality
may attach to a managerial or non-managerial position. We have, however, excluded confidential
employees from joining labor organizations following the rationale behind the disqualification of
managerial employees in Article 245. In the case of National Association of Trade Unions-Republic
Planters' Bank Supervisors Chapter v. Torres,36 we held:

In the collective bargaining process, managerial employees are supposed to be on the side of
the employer, to act as its representatives, and to see to it that its interests are well protected.
The employer is not assured of such protection if these employees themselves are union
members. Collective bargaining in such a situation can become one-sided. It is the same reason
that impelled this Court to consider the position of confidential employees as included in the
disqualification found in Article 245 as if the disqualification of confidential employees were
written in the provision. If confidential employees could unionize in order to bargain for
advantages for themselves, then they could be governed by their own motives rather than the
interest of the employers. Moreover, unionization of confidential employees for the purpose of
collective bargaining would mean the extension of the law to persons or individuals who are
supposed to act "in the interest of" the employers. It is not farfetched that in the course of
collective bargaining, they might jeopardize that interest which they are duty-bound to protect. 37

E. The disqualification extends only to labor organizations.

It must be noted that Article 245 of the Labor Code deprives managerial employees of their right to join
"labor organizations." A labor organization is defined under the Labor Code as:

Art. 212 (g). "Labor organization" means any union or association of employees which exists in
whole or in part for the purpose of collective bargaining or of dealing with the employer
concerning terms and conditions of employment.
A labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer
concerning terms and conditions of employment. To bargain collectively is a right given to a labor
organization once it registers itself with the Department of Labor and Employment (DOLE). Dealing
with the employer, on the other hand, is a generic description of interaction between employer and
employees concerning grievances, wages, work hours and other terms and conditions of employment,
even if the employees' group is not registered with the DOLE. 38 Any labor organization which may or
may not be a union may deal with the employer. This explains why a workers' Organization does not
always have to be a labor union and why employer-employee collective interactions are not always
collective bargaining.39

In the instant case, it may be argued that managerial employees' labor organization will merely "deal
with the employer concerning terms and conditions of employment" especially when top management
is composed of aliens, following the circumstances in the Caltex case.

Although the labor organization may exist wholly for the purpose of dealing with the employer
concerning terms and conditions of employment, there is no prohibition in the Labor Code for it to
become a legitimate labor organization and engage in collective bargaining. Once a labor organization
registers with the DOLE and becomes legitimate, it is entitled to the rights accorded under Articles 242
and 263 (b) of the Labor Code. And these include the right to strike and picket.

Notably, however, Article 245 does not absolutely disqualify managerial employees from exercising
their right of association. What it prohibits is merely the right to join labor organizations. Managerial
employees may form associations or organizations so long as they are not labor organizations. The
freedom of association guaranteed under the Constitution remains and has not been totally abrogated
by Article 245.

To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing industrial life and
will open the floodgates to unionization at all levels of the industrial hierarchy. Such a ruling will wreak
havoc on the existing set-up between management and labor. If all managerial employees will be
allowed to unionize, then all who are in the payroll of the company, starting from the president, vice-
president, general managers and everyone, with the exception of the directors, may go on strike or
picket the
40
employer.  Company officers will join forces with the supervisors and rank-and-file. Management and
labor will become a solid phalanx with bargaining rights that could be enforced against the owner of
the company.41 The basic opposing forces in the industry will not be management and labor but the
operating group on the one hand and the stockholder and bondholder group on the other. The
industrial problem defined in the Labor Code comes down to a contest over a fair division of the gross
receipts of industry between these two groups. 42 And this will certainly bring ill-effects on our
economy.

The framers of the Constitution could not have intended a major upheaval of our labor and socio-
economic systems. Their intent cannot be made to override substantial policy considerations and
create absurd or impossible situations.43 A constitution must be viewed as a continuously operative
charter of government. It must not be interpreted as demanding the impossible or the impracticable; or
as effecting the unreasonable or absurd.44 Courts should always endeavour to give such interpretation
that would make the constitutional provision and the statute consistent with reason, justice and the
public interest.45

I vote to dismiss the petition.

VITUG, J., separate concurring and dissenting;

The pivotal issues raised in the case at bar, aptly stated by the Office of the Solicitor General, are:
(1) Whether or not public respondent, Undersecretary of the Department of Labor and Employment
("DOLE") Bienvenido E. Laguesma, gravely abused his discretion in categorizing the members of
petitioner union to be managerial employees and thus ineligible to form or join labor organizations;
and

(2) Whether or not the provision of Article 245 of the Labor Code, disqualifying managerial employees
from joining, assisting or forming any labor organization, violates Section 8, Article III, of the 1987
Constitution, which expresses that "(t)he right of the people, including those employed in public and
private sectors to form unions, associations or societies for purposes not contrary to law shall not be
abridged."

The case originated from a petition for direct certification or certification election among route
managers/supervisory employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed by the United
Pepsi-Cola Supervisory Union ("Union"), claiming to be a legitimate labor organization duly registered
with the Department of Labor and Employment under Registration Certificate No. NCR-UR-3-1421-95.
Pepsi opposed the petition on the thesis that the case was no more than a mere duplication of a
previous petition for direct certification1 filed by the same route managers through the Pepsi-Cola
Employees Association (PCEA-Supervisory) which petition had already been denied by
Undersecretary Laguesma. The holding reiterated a prior decision in Workers Alliance Trade Unions
("WATU") vs. Pepsi-Cola Products Phils., Inc.,2 that route managers were managerial employees.

In its decision, dated 05 May 1995, Med-Arbiter Brigida C. Fadrigon dismissed for lack of merit the
petition of the Union, stating that the issue on the proper classification and status of route managers
had already been ruled with finality in the previous decisions, aforementioned, rendered by DOLE.

The union appealed the decision. In his resolution of 31 August 1995, Undersecretary Laguesma
dismissed the appeal, saying that there was no compelling reason to abandon the ruling in the two old
cases theretofore decided by DOLE. In his order of 22 September 1995, Undersecretary Laguesma
denied the Union's motion for reconsideration.

The Union went to this Court, via a petition for certiorari, assailing the cancellation of its certificate of
registration. The Court, after considering the petition and the comments thereon filed by both public
and private respondents, as well as the consolidated reply of petitioner, dismissed the case in its
resolution of 08 July 1996 on the premise that no grave abuse of discretion had been committed by
public respondent.

Undaunted, the Union moved, with leave, for the reconsideration of the dismissal of its petition by the
Court En Banc. In its resolution of 16 June 1997, the case was referred to the Court En Banc en
consulta with the movant's invocation of unconstitutionality of Article 245 of the Labor Code vis-a-
vis Section 8, Article III, of the 1987 Constitution.

There is merit, in my view, in petitioner's motion for reconsideration but not on constitutional grounds.

There are, in the hierarchy of management, those who fall below the level of key officers of an
enterprise whose terms and conditions of employment can well be, indeed are not infrequently,
provided for in collective bargaining agreements. To this group belong the supervisory employees.
The "managerial employees," upon the other hand, and relating the matter particularly to the Labor
Code, are those "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" as
distinguished from the supervisory employees whose duties in these areas are so designed as to
verily be implementary to the policies or rules and regulations already outstanding and priorly taken
up and passed upon by management. The managerial level is the source, as well as prescribes the
compliance, of broad mandates which, in the field of labor relations, are to be carried out through the
next rank of employees charged with actually seeing to the specific personnel action required. In fine,
the real authority, such as in hiring or firing of employees, comes from management and exercised by
means of instructions, given in general terms, by the "managerial employees;" the supervisory
employees, although ostensibly holding that power, in truth, however, only act in obedience to the
directives handed down to them. The latter unit, unlike the former, cannot be considered the alter
ego of the owner of enterprise.

The duties and responsibilities of the members of petitioner union, shown by their "job description"
below —

PCPPI

RM's JOB DESCRIPTION

A. GENERAL/OVERALL OBJECTIVE OF THIS POSITION

To contribute to the growth and profitability of PCPPI via well-selected, trained

and motivated Route Sales Team who sell, collect and merchandise, following the
Pepsi Way, and consistent with Company policies and procedures as well as the
corporate vision of Customer Satisfaction.

B. SPECIFIC JOB DESCRIPTION:

KEY RESULT AREAS STANDARD OR PERFORMANCE

SALES VOLUME *100% Vs. NRC Target

_____% NTG

DISTRIBUTION * Product Availability

70% Pepsi

80% Seven-Up

40% Mirinda

65% Mt. Dew

5% Out of Stock

ACCOUNTS RECEIVABLE 65% Current (Incl. Legal & Col.)

MANAGEMENT 80:20 Cash to Credit Ratio

DSO — assigned Std. to Division

by the District

ASSET MANAGEMENT 30 cases for ice-coolers

80 cases for electric coolers

BLOWAGA on Division Vehicles

60 cases on Rolling/Permanent
 Kiosks

TRADE DEVELOPMENT 100% Buying Customers Based

on master list that bought once

5 months payback on concessions

4 CED's/Rte.

EXPENSE MANAGEMENT a). 5% Absentism rate Excl. VL

b). 280 cases/route/day

c). 15% cost-to-sales ratio

ROUTE MANAGEMENT 3 Days on RR/Wk

— Days on BC-SC- Financial &

Co. Assets

— Days on TD

75% Load Factor

18 Productive Calls

CUSTOMER SATISFACTION Customer Complaint attended to within the next

working day

HUMAN RESOURCE 5% Absentism Excl. VL

MANAGEMENT (approved) 3 Documented RR/

Week using SLM's Training Log

ADMINISTRATIVE — Complete, timely and accurate

MANAGEMENT reports.

PCPPI

RM's BASIC DAILY ACTIVITIES

A. AT THE SALES OFFICE

1. PRACTICES BLOWAGA ON SERVICE VEHICLE (AT HOME)

2. REPORTS FOR WORK ON OR BEFORE 6:15 A.M.

3. REPORTS IN CLEAN AND NEAT UNIFORM (GOOD GROOMING)

4. DAILY BRIEFING WITH THE DM

 5. CONDUCTS SKILLS ENHANCEMENT OR HUDDLES WITH RST's

a). ATTENDANCE/GROOMING

b). OPERATIONAL DIRECTIONS & PRIORITIES

c). ANNOUNCEMENT

6. RM's PRESENCE DURING CHECK-OUT

a). SLM PRACTICES BLOWAGA ON ROUTE TRUCK

b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY)

c). PROPER HANDLING OF SELLING/MDSG. MATERIALS

d). YESTERDAY's FINAL SETTLEMENT REVIEW

7. UPDATE REPORTS, MONITORS, DOCUMENTS & TELEPHONE CONMATION

8. ATTENDS TO PRODUCT COMPLAINTS (GFM)

9. CONDUCTS ADMINISTRATIVE INVESTIGATION OR ATTENDS DM's MEETING

(on Saturdays)

B. FIELD WORK

ROUTE RIDE

1. CHECKS SLMS. TRAINING LOG (PROGRESS & DEV'T.)

2. SALESMAN's CPC

3. ROUTE COVERAGE EVALUATION

4. LOAD FACTOR

5. SALESMAN's ROUTING SYSTEM EVALUATION

BC/SC

1. FINANCIAL & ASSET VERIFICATION, CONFIRMATION & AUDIT

2. BACKCHECKS FIRST 5 CUSTOMERS SERVED FOR THE DAY

a). MERCHANDISING

b). SERVICING

c). RM's TERRITORY FAMILIARITY

d). KEY ACCOUNTS GOODWILL

TRADE DEVELOPMENT
 1. PREPARATION PRIOR TO CALL

2. ACTUAL CALL

3. POST CALL ANALYSIS

(HOW DID I FARE? WHY? WHAT ACTIONS TO TAKE)

4. FOLLOW-UP ACTION

C. AT CLOSE OF DAY

1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS & REPORTS

2. RM-SLM DEBRIEFING

3. SLR DISCUSSION (BASED ON A.M. SLR)

4. COORDINATES WITH DM ON PLANS & PROGRAMS

5. PREPARATIONS FOR NEXT DAY's ACTIVITIES3

— convey no more than those that are aptly consigned to the "supervisory" group by the relatively
small unit of "managerial" employees. Certain portions of a pamphlet, the so-called "Route Manager
Position Description" referred to by Mr. Justice Vicente Mendoza, in his ponencia, hereunder
reproduced for easy reference, thus —

A. BASIC PURPOSE

A Manager achieves objectives through others.

As a Route Manager, your purpose is to meet the sales plan; and you achieve this
objective through the skillful management of your job and the management of
your people.

These then are your functions as Pepsi-Cola Route Manager. Within these
functions — managing your job and managing your people — you are
accountable to your District Manager for the execution and completion of various
tasks and activities which will make it possible for you to achieve your sales
objectives.

B. PRINCIPAL ACCOUNTABILITIES

1.0 MANAGING YOUR JOB

The Route Manager is accountable for the following:

1.1 SALES DEVELOPMENT

1.1.1 Achieve the sales plan.

1.1.2 Achieve all distribution and new account

objectives.
 1.1.3 Develop new business opportunities thru
personal contacts with dealers.

1.1.4 Inspect and ensure that all merchandising

objectives are achieved in all outlets.

1.1.5 Maintain and improve productivity of all cooling

equipment and kiosks.

1.1.6 Execute and control all authorized promotions.

1.1.7 Develop and maintain dealer goodwill.

1.1.8 Ensure all accounts comply with company

suggested retail pricing.

1.1.9 Study from time to time individual route coverage

and productivity for possible adjustments to maximize
utilization of resources.

1.2 Administration

1.2.1 Ensure the proper loading of route trucks before

check-out and the proper sorting of bottles before
check-in.

1.2.2 Ensure the upkeep of all route sales reports and

all other related reports and forms required on an
accurate and timely basis.

1.2.3 Ensure proper implementation of the various

company policies and procedures include but not
limited to shakedown; route shortage; progressive
discipline; sorting; spoilages; credit/collection;
accident; attendance.

1.2.4 Ensure collection of receivables and delinquent

accounts.

2.0 MANAGING YOUR PEOPLE

The Route Manager is accountable for the following:

2.1 Route Sales Team Development

2.1.1 Conduct route rides to train, evaluate and

develop all assigned route salesmen and helpers at
least 3 days a week, to be supported by required route
ride documents/reports & back check/spot check at
least 2 days a week to be supported by required
documents/reports.

2.1.2 Conduct sales meetings and morning huddles.

Training should focus on the enhancement of effective
sales and merchandising techniques of the salesmen
 and helpers. Conduct group training at least 1 hour
each week on a designated day and of specific topic.

2.2 Code of Conduct

2.2.1 Maintain the company's reputation through strict

adherence to PCPPI's code of conduct and the
universal standards of unquestioned business ethics.
—

offer nothing at all that can approximate the authority and functions of those who actually and
genuinely hold the reins of management.

I submit, with due respect, that the members of petitioning union, not really being "managerial
employees" in the true sense of the term, are not disqualified from forming or joining labor
organizations under Article 245 of the Labor Code.

I shall now briefly touch base on the constitutional question raised by the parties on Article 245 of the
Labor Code.

The Constitution acknowledges "the right of the people, including those employed in the public and
private sectors, to form unions, associations or societies for purposes not contrary to
law . . . ."4 Perforce, petitioner claims, that part of Article 245  5 of the Labor Code which states:
"Managerial employees are not eligible to join, assist or form any labor organization," being in direct
collision with the Constitutional provision, must now be declared abrogated in the law.

Frankly, I do not see such a "direct collision." The Constitution did not obviously grant a limitless right
"to form unions, associations or societies" for it has clearly seen it fit to subject its exercise to
possible legislative judgment such as may be appropriate or, to put it in the language of the
Constitution itself, to "purposes not contrary to law."

Freedom of association, like freedom of expression, truly occupies a choice position in the hierarchy
of constitutional values. Even while the Constitution itself recognizes the State's prerogative to qualify
this right, heretofore discussed, any limitation, nevertheless, must still be predicated on the existence
of a substantive evil sought to be addressed. 6 Indeed, in the exercise of police power, the State may,
by law, prescribe proscriptions, provided reasonable and legitimate of course, against even the most
basic rights of individuals.

The restriction embodied in Article 245 of the Labor Code is not without proper rationale. Concededly,
the prohibition to form labor organizations on the part of managerial employees narrows down their
freedom of association. The very nature of managerial functions, however, should preclude those who
exercise them from taking a position adverse to the interest they are bound to serve and protect. The
mere opportunity to undermine that interest can validly be restrained. To say that the right of
managerial employees to form a "labor organization" within the context and ambit of the Labor Code
should be deemed totally separable from the right to bargain collectively is not justified by related
provisions of the Code. For instance —

Art. 212. Definitions.7 — . . .

(g) "Labor organization" means 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.

x x x           x x x          x x x
 (m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign
or discipline employees. Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinely 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.

Art. 263. . . .

(b) Workers shall have the right to engage in concerted activities for purposes of collective
bargaining or for their mutual benefit and protection. The right of legitimate labor organizations
to strike and picket and of employers to lockout, consistent with the national interest, shall
continue to be recognized and respected.

The maxim "ut res magis quam pereat" requires not merely that a statute should be given such a
consequence as to be deemed whole but that each of its express provisions equally should be given
the intended effect.

I find it hard to believe that the fundamental law could have envisioned the use by managerial
employees of coercive means against their own employers over matters entrusted by the latter to the
former. Whenever trust and confidence is a major aspect of any relationship, a conflict of interest on
the part of the person to whom that trust and confidence is reposed must be avoided and when,
unfortunately, it does still arise its containment can rightly be decreed.

Article 245 of the Labor Code indeed aligns itself to the Corporation Code, the basic law on by far the
most commonly used business vehicle — the corporation — which prescribes the tenure of office, as
well as the duties and functions, including terms of employment (governed in most part by the Articles
of Incorporation, the By-laws of the Corporation, or resolutions of the Board of Directors), of corporate
officers for both the statutory officers, i.e., the president, the treasurer and the corporate secretary,
and the non-statutory officers, i.e., those who occupy positions created by the corporate by-laws who
are deemed essential for effective management of the enterprise. I cannot imagine these officers as
being legally and morally capable of associating themselves into a labor organization and asserting
collective bargaining rights against the very entity in whose behalf they act and are supposed to act.

I submit, accordingly, that, firstly, the members of petitioner union or the so-called route managers,
being no more than supervisory employees, can lawfully organize themselves into a labor union within
the meaning of the Labor Code, and that, secondly, the questioned provision of Article 245 of the
Labor Code has not been revoked by the 1987 Constitution.

WHEREFORE, I vote, given all the foregoing, for the reversal of the resolution of 31 August 1995, and
the order of 22 September 1995, of public respondent.
G.R. No. 110399 August 15, 1997

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE,
President, petitioners,
vs.
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, respondents.

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-2-70-911 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 Direct 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
election 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-Arbiter's error in grouping together all three (3) separate plants,
Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above
whose positions are confidential in nature.

On July 23, 1991, 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 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:

. . . 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 Supervisors and the so-called exempt employees are admittedly
confidential employees and therefore, they are not allowed to form, join or assist a labor union
for purposes of collective bargaining following the above court's ruling. Consequently, they are
not allowed to participate in the certification election.

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 employee and his supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor relations. 6

The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of
management policies relating to labor relations is a principal objective sought to be accomplished by the
''confidential employee rule." The broad rationale behind this rule is that employees should not be placed in a
position involving a potential conflict of interests.  7 "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." 8

There have been precedents in this regards, 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 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. 13

It is the contention of respondent corporation that Supervisor 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 employee's confidential status, such information must relate to the
employer's labor relations policies. Thus, an employee of a labor union, or of a management association, must
have access to confidential labor relations information with respect to his employer, the union, or the
association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to
the companies with which the union deals, or which the association represents, will not cause an employee to
be excluded from the bargaining unit representing employees of the union or association." 17 "Access to
information which is regarded by the employer to be confidential from the business standpoint, such as
financial information 18 or technical trade secrets, will not render an employee a confidential employee." 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 employer's 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 employer's 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 to
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 interests," 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 employee of the University of the
Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baños, 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.

G.R. No. 172132               July 23, 2014

THE HERITAGE HOTEL MANILA, ACTING THROUGH ITS OWNER, GRAND PLAZA HOTEL
CORPORATION, Petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT; MED-ARBITER TOMAS F. FALCONITIN; and NATIONAL
UNION OF WORKERS IN THE HOTEL, RESTAURANT and ALLIED INDUSTRIES-HERITAGE HOTEL
MANILA SUPERVISORS CHAPTER (NUWHRAINHHMSC), Respondents.

DECISION

BERSAMIN, J.:

Although case law has repeatedly held that the employer was but a bystander in respect of the conduct of the
certification election to decide the labor organization to represent the employees in the bargaining unit, and
that the pendency of the cancellation of union registration brought against the labor organization applying for
the certification election should not prevent the conduct of the certification election, this review has to look
again at the seemingly never-ending quest of the petitioner employer to stop the conduct of the certification
election on the ground of the pendency of proceedings to cancel the labor organization's registration it had
initiated on the ground that the membership of the labor organization was a mixture of managerial and
supervisory employees with the rank-and-file employees.

Under review at the instance ofthe employer is the decision promulgated on December 13, 2005, 1 whereby the
Court of Appeals (CA) dismissed its petition for certiorari to assail the resolutions of respondent Secretary of
Labor and Employment sanctioning the conduct of the certification election initiated by respondent labor
organization.2

Antecedents

On October 11, 1995, respondent National Union of Workers in Hotel Restaurant and Allied Industries-
HeritageHotel Manila Supervisors Chapter (NUWHRAIN-HHMSC) filed a petition for certification
election,3 seeking to represent all the supervisory employees of Heritage Hotel Manila. The petitioner filed its
opposition, but the opposition was deemed denied on February 14, 1996 when Med-Arbiter Napoleon V.
Fernando issued his order for the conduct of the certification election.

The petitioner appealed the order of Med-Arbiter Fernando, but the appeal was also denied. A pre-election
conference was then scheduled. On February 20, 1998, however, the pre-election conference was suspended
until further notice because of the repeated non-appearance of NUWHRAIN-HHMSC.4

On January 29, 2000, NUWHRAIN-HHMSC moved for the conduct of the pre-election conference. The
petitioner primarily filed its comment on the list of employees submitted by NUWHRAIN-HHMSC, and
simultaneously sought the exclusion ofsome from the list of employees for occupying either confidential or
managerial positions.5 The petitioner filed a motion to dismiss on April 17, 2000,6 raising the prolonged lack of
interest of NUWHRAIN-HHMSC to pursue its petition for certification election.

On May 12, 2000, the petitioner filed a petition for the cancellation of NUWHRAIN-HHMSC’s registration as a
labor union for failing to submit its annual financial reports and an updated list of members as required by
Article 238 and Article 239 of the Labor Code, docketed as Case No. NCROD-0005-004-IRD entitled The
Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel Corporation v. National Union of Workers in
the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-
HHSMC).7 It filed another motion on June 1, 2000 to seek either the dismissal or the suspension of the
proceedings on the basis of its pending petition for the cancellation of union registration.8

The following day, however, the Department of Labor and Employment (DOLE) issued a notice scheduling the
certification elections on June 23, 2000.9

Dissatisfied, the petitioner commenced in the CA on June 14, 2000 a special civil action for certiorari,10 alleging
that the DOLE gravely abused its discretion in not suspending the certification election proceedings. On June
23, 2000, the CA dismissed the petition for certiorarifor nonexhaustion of administrative remedies.11

The certification election proceeded as scheduled, and NUWHRAINHHMSC obtained the majority vote of the
bargaining unit.12 The petitioner filed a protest (with motion to defer the certification of the election results and
the winner),13 insisting on the illegitimacy of NUWHRAIN-HHMSC.

Ruling of the Med-Arbiter

On January 26, 2001, Med-Arbiter Tomas F. Falconitin issued an order, 14 ruling that the petition for the
cancellation of union registration was not a bar to the holding of the certification election, and disposing thusly:

WHEREFORE, premises considered, respondent employer/protestant’s protest with motion to defer

certification of results and winner is hereby dismissed for lack of merit.

Accordingly, this Office hereby certify pursuant to the rules that petitioner/protestee, National Union of Workers
in Hotels, Restaurants and Allied Industries-Heritage Hotel Manila Supervisory Chapter (NUWHRAIN-HHSMC)
is the sole and exclusive bargaining agent of all supervisory employees of the Heritage Hotel Manila acting
through its owner, Grand Plaza Hotel Corporation for purposes of collective bargaining with respect to wages,
and hours of work and other terms and conditions of employment.

SO ORDERED.

The petitioner timely appealed to the DOLE Secretary claiming that: (a) the membership of NUWHRAIN-
HHMSC consisted of managerial, confidential, and rank-and-file employees; (b) NUWHRAIN-HHMSC failed to
comply with the reportorial requirements; and (c) Med-Arbiter Falconitin simply brushed aside serious
questions on the illegitimacy of NUWHRAINHHMSC. 15 It contended that a labor union of mixed membership of
supervisory and rank-and-file employees had no legal right to petition for the certification election pursuant to
the pronouncements in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor
Union16 (Toyota Motor) and Dunlop Slazenger (Phils.) v. Secretary of Labor and Employment 17 (Dunlop
Slazenger).

Ruling of the DOLE Secretary

On August 21, 2002, then DOLE Secretary Patricia A. Sto. Tomas issued a resolution denying the
appeal,18 and affirming the order of MedArbiter Falconitin, viz:

WHEREFORE, the appeal is DENIED. The order of the Med- Arbiter dated 26 January 2001 is hereby
AFFIRMED.

SO RESOLVED.

DOLE Secretary Sto. Tomas observed that the petitioner’s reliance on Toyota Motor and Dunlop Slazenger
was misplaced because both rulings were already overturned by SPI Technologies, Inc. v. Department of
Labor and Employment,19 to the effect that once a union acquired a legitimate status as a labor organization, it
continued as such until its certificate of registration was cancelled or revoked in an independent action for
cancellation.
The petitioner moved for reconsideration.

In denying the motion on October 21, 2002, the DOLE Secretary declared that the mixture or co-mingling of
employees in a union was not a ground for dismissing a petition for the certification election under Section 11,
par. II, Rule XI of Department Order No. 9; that the appropriate remedy was to exclude the ineligible
employees from the bargaining unit during the inclusion-exclusion proceedings; 20 that the dismissal of the
petition for the certification election based on the legitimacy of the petitioning union would be inappropriate
because it would effectively allow a collateral attack against the union’s legal personality; and that a collateral
attack against the personality of the labor organization was prohibited under Section 5, Rule V of Department
Order No. 9, Series of 1997.21

Upon denial of its motion for reconsideration, the petitioner elevated the matter to the CA by petition for
certiorari.22

Ruling of the CA

On December 13, 2005,23 the CA dismissed the petition for certiorari, giving its following disquisition:

The petition for certiorari filed by the petitioner is, in essence, a continuation of the debate on the relevance of
the Toyota Motor, Dunlop Slazenger and Progressive Developmentcases to the issues raised.

Toyota Motor and Dunlop Slazengerare anchored on the provisions of Article 245 of the Labor Code which
prohibit managerial employees from joining any labor union and permit supervisory employees to form a
separate union oftheir own. The language naturally suggests that a labor organization cannot carry a mixture of
supervisory and rank-and-file employees. Thus, courts have held that a union cannot become a legitimate
labor union if it shelters under its wing both types of employees. But there are elements of an elliptical
reasoning in the holding of these two cases that a petition for certification election may not prosper until the
composition of the union is settled therein. Toyota Motor, in particular, makes the blanket statement that a
supervisory union has no right to file a certification election for as long asit counts rank-and-file employees
among its ranks. More than four years after Dunlop Slazenger, the Court clarified in Tagaytay Highlands
International Golf Club Inc vs Tagaytay Highlands Employees Union-PTGWO that while Article 245 prohibits
supervisory employees from joining a rank-and-file union, it does not provide what the effect is if a rank-and-
fileunion takes in supervisory employees as members, or vice versa. Toyota Motorand Dunlop Slazenger jump
into an unnecessary conclusion when they foster the notion that Article 245 carries with it the authorization to
inquire collaterally into the issue wherever it rears its ugly head.

Tagaytay Highlands proclaims, in the light of Department Order 9, that after a certificate of registration is
issued to a union, its legal personality cannot be subject to a collateral attack. It may be questioned only in an
independent petition for cancellation. In fine, Toyota and Dunlop Slazengerare a spent force. Since Tagaytay
Highlands was handed down after these two cases, it constitutes the latest expression of the will of the
Supreme Court and supersedes or overturns previous rulings inconsistent with it. From this perspective, it is
needless to discuss whether SPI Technologiesas a mere resolution of the Court may prevail over a full-blown
decision that Toyota Motor or Dunlop Slazenger was. The ruling in SPI Technologies has been echoed in
Tagaytay Highlands, for which reason it is with Tagaytay Highlands, not SPI Technologies,that the petitioner
must joust.

The fact that the cancellation proceeding has not yet been resolved makes it obvious that the legal personality
of the respondent union is still very much in force. The DOLE has thus every reason to proceed with the
certification election and commits no grave abuse of discretion in allowing it to prosper because the right to be
certified as collective bargaining agent is one of the legitimate privileges of a registered union. It is for the
petitioner to expedite the cancellation case if it wants to put an end to the certification case, but it cannot place
the issue of the union’s legitimacy in the certification case, for that would be tantamount to making the
collateral attack the DOLE has staunchly argued to be impermissible.
The reference made by the petitioner to another Progressive Development case that it would be more prudent
for the DOLE to suspend the certification case until the issue of the legality of the registration is resolved, has
also been satisfactorily answered. Section 11, Rule XI of Department Order 9 provides for the grounds for the
dismissal of a petition for certification election, and the pendency of a petition for cancellation of union
registration is not one of them. Like Toyota Motor and Dunlop Slazenger, the second Progressive case came
before Department Order 9.

IN VIEW OF THE FOREGOING, the disputed resolutions of the Secretary of Labor and Employment are
AFFIRMED, and the petition is DISMISSED.

SO ORDERED.

The petitioner sought reconsideration,24 but its motion was denied.

Issues

Hence, this appeal, with the petitioner insisting that:

THE COURT OF APPEALS ERRED IN RULING THAT TAGAYTAY HIGHLANDSAPPLIES TO THE CASE AT
BAR

II

[THE HONORABLE COURT OF APPEALS] SERIOUSLY ERRED WHEN IT DISREGARDED PROGRESSIVE

DEVELOPMENT CORPORATION – PIZZA HUT V. LAGUESMA WHICH HELD THAT IT WOULD BE MORE
PRUDENT TO SUSPEND THE CERTIFICATION CASE UNTIL THE ISSUE OF THE LEGALITY OF THE
REGISTRATION OF THE UNION IS FINALLY RESOLVED

III

BECAUSE OF THE PASSAGE OFTIME, RESPONDENT UNION NO LONGER POSSESSES THE

MAJORITY STATUS SUCH THAT A NEW CERTIFICATION ELECTION IS IN ORDER25

The petitioner maintains that the ruling in Tagaytay Highlands International Golf Club Inc v. Tagaytay
Highlands Employees Union PTGWO26 (Tagaytay Highlands) was inapplicable because it involved the co-
mingling of supervisory and rank-and-file employees in one labor organization, while the issue here related to
the mixture of membership between two employee groups — one vested with the right to selforganization (i.e.,
the rank-and-file and supervisory employees), and the other deprived of such right (i.e., managerial and
confidential employees); that suspension of the certification election was appropriate because a finding of
"illegal mixture" of membership during a petition for the cancellation of union registration determined whether
or not the union had met the 20% representation requirement under Article 234(c) of the Labor Code; 27 and
that in holding that mixed membership was not a ground for canceling the union registration, except when such
was done through misrepresentation, false representation or fraud under the circumstances enumerated in
Article 239(a) and (c) of the Labor Code, the CA completely ignored the 20% requirement under Article 234(c)
of the Labor Code.

The petitioner posits that the grounds for dismissing a petition for the certification election under Section 11,
Rule XI of Department Order No. 9, Series of 1997, were not exclusive because the other grounds available
under the Rules of Courtcould be invoked; that in Progressive Development Corporation v. Secretary,
Department of Labor and Employment,28 the Court ruled that prudence could justify the suspension of the
certification election proceedings until the issue of the legality of the union registration could be finally resolved;
that the non-submission of the annual financial statements and the list of members in the period from 1996 to
1999 constituted a serious challenge to NUWHRAIN-HHMSC’s right to file its petition for the certification
election; and that from the time of the conduct of the certification election on June 23, 2000, the composition of
NUWHRAINHHMSC had substantially changed, thereby necessitating another certification election to
determine the true will of the bargaining unit.

In short, should the petition for the cancellation of union registration based on mixed membership of
supervisors and managers in a labor union, and the non-submission of reportorial requirements to the DOLE
justify the suspension of the proceedings for the certification elections or even the denial of the petition for the
certification election?

Ruling

We deny the petition for review on certiorari.

Basic in the realm of labor unionrights is that the certification election is the sole concern of the workers, 29 and
the employer is deemed an intruder as far as the certification election is concerned. 30 Thus, the petitioner
lacked the legal personality to assail the proceedings for the certification election,31 and should stand aside as
a mere bystander who could not oppose the petition, or even appeal the Med-Arbiter’s orders relative to the
conduct of the certification election.32 As the Court has explained in Republic v. Kawashima Textile Mfg.,
Philippines, Inc.33 (Kawashima):

Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for
certification election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to
determine which organization will represent the employees in their collective bargaining with the employer. The
choice of their representative is the exclusive concern of the employees; the employer cannot have any
partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or
an appeal from it; not even a mere allegation that some employees participating in a petition for certification
election are actually managerial employees will lend an employer legal personality to block the certification
election. The employer's only right in the proceeding is to be notified or informed thereof.

The petitioner’s meddling in the conduct of the certification election among its employees unduly gave rise to
the suspicion that it intended to establish a company union. 34 For that reason, the challenges it posed against
the certification election proceedings were rightly denied.

Under the long established rule, too, the filing of the petition for the cancellation of NUWHRAIN-HHMSC’s
registration should not bar the conduct of the certification election.35 In that respect, only a final order for the
cancellation of the registration would have prevented NUWHRAINHHMSC from continuing to enjoy all the
rights conferred on it as a legitimate labor union, including the rightto the petition for the certification
election.36 This rule is now enshrined in Article 238-A of the Labor Code, as amended by Republic Act No.
9481,37 which reads:

Article 238-A. Effect of a Petition for Cancellation of Registration. – A petition for cancellation of union
registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition
for certification election.

xxxx

Still, the petitioner assails the failure of NUWHRAIN-HHMSC to submit its periodic financial reports and
updated list of its members pursuant to Article 238 and Article 239 of the Labor Code. It contends that the
serious challenges against the legitimacy of NUWHRAIN-HHMSC as a union raised in the petition for the
cancellation of union registration should have cautioned the Med-Arbiter against conducting the certification
election.

The petitioner does not convince us.

In The Heritage Hotel Manila v. National Union of Workers in the Hotel, Restaurant and Allied Industries-
Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC),38 the Court declared that the dismissal of
the petition for the cancellation of the registration of NUWHRAIN-HHMSC was proper when viewed against the
primordial right of the workers to self organization, collective bargaining negotiations and peaceful concerted
actions, viz:

xxxx

[Articles 238 and 239 of the Labor Code] give the Regional Director ample discretion in dealing with a petition
for cancellation of a union's registration, particularly, determining whether the union still meets the
requirements prescribed by law. It is sufficient to give the Regional Director license to treat the late filing of
required documents as sufficient compliance with the requirements of the law. After all, the law requires the
labor organization to submit the annual financial report and list of members in order to verify if it is still viable
and financially sustainable as an organization so as to protect the employer and employees from fraudulent or
fly-by-night unions. With the submission of the required documents by respondent, the purpose of the law has
been achieved, though belatedly.

We cannot ascribe abuse of discretion to the Regional Director and the DOLE Secretary in denying the petition
for cancellation of respondent's registration. The union members and, in fact, all the employees belonging to
the appropriate bargaining unit should not be deprived of a bargaining agent, merely because of the
negligence of the union officers who were responsible for the submission of the documents to the BLR.

Labor authorities should, indeed, act with circumspection in treating petitions for cancellation ofunion
registration, lest they be accused of interfering withunion activities. In resolving the petition, consideration must
be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the rights of all
workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities. Labor
authorities should bear in mind that registration confers upon a union the status of legitimacy and the
concomitant right and privileges granted by law to a legitimate labor organization, particularly the right to
participate inor ask for certification election in a bargaining unit. Thus, the cancellation of a certificate of
registration is the equivalent of snuffing out the lifeof a labor organization. For without such registration, it loses
- as a rule - its rights under the Labor Code.

It is worth mentioning that the Labor Code's provisions on cancellation of union registration and on reportorial
requirements have been recently amended by Republic Act (R.A.) No. 9481, An Act Strengthening the
Workers’ Constitutional Right to Self-Organization, Amending for the Purpose Presidential Decree No. 442, As
Amended, Otherwise Known as the Labor Code of the Philippines, which lapsed into law on May 25, 2007 and
became effective on June 14, 2007. The amendment sought to strengthen the workers’ right to self-
organization and enhance the Philippines' compliance with its international obligations as embodied in the
International Labor Organization (ILO) Convention No. 87, pertaining to the non-dissolution of workers’
organizations by administrative authority. Thus, R.A. No. 9481 amended Article 239 to read:

ART. 239. Grounds for Cancellation of Union Registration.--The following may constitute grounds for
cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members
who took part in the ratification;

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of
the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

R.A. No. 9481 also inserted inthe Labor Code Article 242-A, which provides:
ART. 242-A. Reportorial Requirements.--The following are documents required to be submitted to the Bureau
by the legitimate labor organization concerned:

(a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of
members who took part in the ratification of the constitution and by-laws within thirty (30) days from
adoption or ratification of the constitution and by-laws or amendments thereto;

(b) Its list of officers, minutesof the election of officers, and list of voters within thirty (30) days from
election;

(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and

(d) Its list of members at least once a year or whenever required by the Bureau.

Failure to comply with the above requirements shall not be a ground for cancellation of union registration but
shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate
penalty.

xxxx

The ruling thereby wrote finisto the challenge being posed by the petitioner against the illegitimacy of
NUWHRAIN-HHMSC.

The remaining issue to be resolved is which among Toyota Motor, Dunlop Slazenger and Tagaytay Highlands
applied in resolving the dispute arising from the mixed membership in NUWHRAIN-HHMSC.

This is not a novel matter. In Kawashima, 39 we have reconciled our rulings in Toyota Motor, Dunlop
Slazengerand Tagaytay Highlands by emphasizing on the laws prevailing at the time of filing of the petition for
the certification election.

Toyota Motorand Dunlop Slazenger involved petitions for certification election filed on November 26, 1992 and
September 15, 1995, respectively. In both cases, we applied the Rules and Regulations Implementing R.A. No.
6715 (also known as the 1989 Amended Omnibus Rules), the prevailing rule then.

The 1989 Amended Omnibus Ruleswas amended on June 21, 1997 by Department Order No. 9, Series of
1997. Among the amendments was the removal of the requirement of indicating in the petition for the
certification election that there was no co-mingling of rank-and-fileand supervisory employees in the
membership of the labor union. This was the prevailing rule when the Court promulgated Tagaytay Highlands,
declaring therein that mixed membership should have no bearing on the legitimacy of a registered labor
organization, unless the co-mingling was due to misrepresentation, false statement or fraud as provided in
Article 239 of the Labor Code.40 Presently, then, the mixed membership does not result in the illegitimacy of the
registered labor union unless the same was done through misrepresentation, false statement or fraud
according to Article 239 of the Labor Code. In Air Philippines Corporation v. Bureau of Labor Relations, 41 we
categorically explained that—

Clearly, then, for the purpose of de-certifying a union, it is not enough to establish that the rank-and-file union
includes ineligible employees in its membership. Pursuantto Article 239 (a) and (c) of the Labor Code, it must
be shown that there was misrepresentation, false statement or fraud in connection withthe adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, or in connection
with the election of officers, minutes of the election of officers, the list of voters, or failure to submit these
documents together with the list of the newly elected-appointed officers and their postal addresses to the BLR.

We note that NUWHRAIN-HHMSC filed its petition for the certification election on October 11, 1995.
Conformably with Kawashima, the applicable law was the 1989 Amended Omnibus Rules, and the prevailing
rule was the pronouncement in Toyota Motorand Dunlop Slazenger to the effect that a labor union of mixed
membership was not possessed with the requisite personality to file a petition for the certification election.

Nonetheless, we still rule in favor of NUWHRAIN-HHMSC. We expound.

In both Toyota Motorand Dunlop Slazenger, the Court was convinced that the concerned labor unions were
comprised by mixed rank-and-file and supervisory employees. In Toyota Motor, the employer submitted the job
descriptions of the concerned employees to prove that there were supervisors in the petitioning union for rank-
and-file employees. In Dunlop Slazenger, the Court observed that the labor union of supervisors included
employees occupying positions that apparently belonged to the rank-and-file. In both Toyota Motorand Dunlop
Slazenger, the employers were able to adduce substantial evidence to prove the existence of the mixed
membership. Based on the records herein, however, the petitioner failed in that respect. To recall, it raised the
issue of the mixed membership in its comment on the list of members submitted by NUWHRAIN-HHMSC, and
in its protest. In the comment, it merely identified the positions that were either confidential or managerial, but
did not present any supporting evidence to prove or explain the identification. In the protest, it only enumerated
the positions that were allegedly confidential and managerial, and identified two employees that belonged to
the rank-and-file, but did notoffer any description to show that the positions belonged to different employee
groups.

Worth reiterating is that the actualfunctions of an employee, not his job designation, determined whether the
employee occupied a managerial, supervisory or rank-and-file position. 42 As to confidential employees who
were excluded from the right to self-organization, they must (1) assist or act in a confidential capacity, in
regard(2) to persons who formulated, determined, and effectuated management policies in the field of labor
relations.43 In that regard, mere allegations sanssubstance would not be enough, most especially because the
constitutional right of workers to selforganization would be compromised.

At any rate, the members of NUWHRAIN-HHSMC had already spoken, and elected it as the bargaining
agent.1âwphi1 As between the rigid application of Toyota Motorsand Dunlop Slazenger, and the right of the
workers to self-organization, we preferthe latter. For us, the choice is clear and settled. "What is important is
that there is an unmistakeable intent of the members of [the] union to exercise their right to organize. We
cannot impose rigorous restraints on such right if we are to give meaning to the protection to labor and social
justice clauses of the Constitution."44

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on
December 13, 2005 by the Court of Appeals; and ORDERS the petitioner to pay the costs of suit.