SECOND DIVISION

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

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

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

Sycip Salazar Hernandez & Gatmaitan for petitioner.

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

SYNOPSIS

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

Office, and Technical Employees Union (APSOTEU), a union in petitioner
Sugbuanon Rural Bank (SRB), filed a petition for certification election of the
supervisory employees of SRBI. On October 28, 1993, the Med-Arbiter gave
due course to the petition, but SRBI filed a motion to dismiss the union's
petition. It sought to prevent the holding of a certification election on the
grounds that the members of APSOTEU-TUCP were in fact managerial or
confidential employees and ALU-TUCP was representing the union. The union
filed its opposition to the motion to dismiss arguing that its members were
not managerial but merely supervisory employees. On December 9, 1993,
the Med-Arbiter denied petitioner's motion to dismiss. SRBI appealed the
Med-Arbiter's decision to the Secretary of Labor and Employment, but the
appeal was denied. On December 22, 1993, petitioner proceeded to file a
petition with the DOLE Regional Office seeking the cancellation of the
respondent union's registration. It averred that APSOTEU-TUCP members
were actually managerial employees who were prohibited by law from joining
or organizing unions. On April 22, 1994, the respondent DOLE
Undersecretary denied SRBI's appeal for lack of merit. SRBI moved for
reconsideration, but the same was denied. Hence, the instant petition.
The Supreme Court found the petition bereft of merit. The Court ruled
that the Undersecretary of Labor committed no reversible error or grave
abuse of discretion when he found the order of the Med-Arbiter scheduling a
certification election in order. The list of employees eligible to vote in said
certification was also found in order, for none of the members of the
respondent union came into the rank-and-file employees of the bank.
Likewise, the claim that the members of respondent union are managerial
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 are not true as the Cashiers, Accountants and Acting Chiefs of the Loans
Department of the petitioner did not possess the managerial powers or
duties. Neither of the respondent employees' fell under the category of
confidential employees prohibited from joining the union as not one of them
had any duties specifically connected to labor relations. Accordingly, the
instant petition was dismissed. CacTSI

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; MANAGERIAL EMPLOYEES;

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

3. ID.; ID.; WHEN THE EMPLOYEE DOES NOT HAVE ACCESS TO

CONFIDENTIAL LABOR RELATIONS INFORMATION, THERE IS NO LEGAL
PROHIBITION AGAINST CONFIDENTIAL EMPLOYEES FROM FORMING,
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 ASSISTING OR JOINING A UNION. — Article 245 of the Labor Code does not
directly prohibit confidential employees from engaging in union activities.
However, under the doctrine of necessary implication, the disqualification of
managerial employees equally applies to confidential employees. The
confidential-employee rule justifies exclusion of confidential employees
because in the normal course of their duties they become aware of
management policies relating to labor relations. It must be stressed,
however, that when the employee does not have access to confidential labor
relations information, there is no legal prohibition against confidential
employees from forming, assisting, or joining a union.
4. ID.; LABOR UNIONS; CERTIFICATION ELECTION; APPEAL BY THE
MANAGEMENT ON THE ISSUE OF THE VALIDITY OF THE UNION'S
REGISTRATION DOES NOT DETER THE CONDUCT OF THE CERTIFICATION
ELECTION. — One of the rights of a legitimate labor organization under
Article 242 (b) of the Labor Code is the right to be certified as the exclusive
representative of all employees in an appropriate bargaining unit for
purposes of collective bargaining. Having complied with the requirements of
Art. 234, it is our view that respondent union is legitimate labor union.
Article 257 of the Labor Code mandates that a certification election shall
automatically be conducted by the Med-Arbiter upon the filing of a petition
by a legitimate labor organization. Nothing is said therein that prohibits such
automatic conduct of the certification election if the management appeals
on the issue of the validity of the union's registration. On this score,
petitioner's appeal was correctly dismissed.
5. ID.; ID.; A LOCAL UNION MAINTAINS ITS SEPARATE PERSONALITY
DESPITE AFFILIATION WITH A LARGER NATIONAL FEDERATION. — Petitioner
argues that giving due course to respondent union's petition for certification
election would violate the separation of unions doctrine. Note that the
petition was filed by APSOTEU-TUCP, a legitimate labor organization. It was
not filed by ALU. Nor was it filed by TUCP, which is a national labor
federation of which respondent union is affiliated. Petitioner says that
respondent union is a mere alter ego of ALU. The records show nothing to
this effect. What the records instead reveal is that respondent union was
initially assisted by ALU during its preliminary stages of organization. A local
union maintains its separate personality despite affiliation with a larger
national federation. Petitioner alleges that ALU seeks to represent both
respondent union and the rank-and-file union. Again, we find nothing in the
records to support this bare assertion.

DECISION

QUISUMBING, J : p

In this special civil action for certiorari and prohibition, petitioner seeks
the annulment of the April 27, 1994 Resolution of the Department of Labor
and Employment, affirming the order of the Med-Arbiter, dated December 9,
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 1993, which denied petitioner's motion to dismiss respondent union's
petition for certification election.
cdrep

Petitioner Sugbuanon Rural Bank, Inc., ( SRBI, for brevity) is a duly-

registered banking institution with principal office in Cebu City and a branch
in Mandaue City. Private respondent SRBI — Association of Professional,
Supervisory, Office, and Technical Employees Union (APSOTEU) is a
legitimate labor organization affiliated with the Trade Unions Congress of the
Philippines (TUCP).
On October 8, 1993, the DOLE Regional Office in Cebu City granted
Certificate of Registration No. R0700-9310-UR-0064 to APSOTEU-TUCP,
hereafter referred to as the union.
On October 26, 1993, the union filed a petition for certification election
of the supervisory employees of SRBI. It alleged, among others, that: (1)
APSOTEU-TUCP was a labor organization duly-registered with the Labor
Department; (2) SRBI employed 5 or more supervisory employees; (3) a
majority of these employees supported the petition; (4) there was no
existing collective bargaining agreement (CBA) between any union and SRBI;
and (5) no certification election had been held in SRBI during the past 12
months prior to the petition.
On October 28, 1993, the Med-Arbiter gave due course to the petition.
The pre-certification election conference between SRBI and APSOTEU-TUCP
was set for November 15, 1993.
On November 12, 1993, SRBI filed a motion to dismiss the union's
petition. It sought to prevent the holding of a certification election on two
grounds: First, that the members of APSOTEU-TUCP were in fact managerial
or confidential employees. Thus, following the doctrine in Philips Industrial
Development Corporation v. National Labor Relations Commission, 1 they
were disqualified from forming, joining, or assisting any labor organization.
Petitioner attached the job descriptions of the employees concerned to its
motion. Second, the Association of Labor Unions-Trade Unions Congress of
the Philippines or ALU-TUCP was representing the union. Since ALU-TUCP
also sought to represent the rank-and-file employees of SRBI, there was a
violation of the principle of separation of unions enunciated in Atlas
Lithographic Services, Inc. v. Laguesma. 2
The union filed its opposition to the motion to dismiss on December 1,
1993. It argued that its members were not managerial employees but
merely supervisory employees. The members attached their affidavits
describing the nature of their respective duties. The union pointed out that
Article 245 of the Labor Code expressly allowed supervisory employees to
form, join, or assist their own unions.
On December 9, 1993, the Med-Arbiter denied petitioner's motion to
dismiss. He scheduled the inclusion-exclusion proceedings in preparation for
the certification election on December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and
Employment. The appeal was denied for lack of merit. The certification
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 election was ordered.
On June 16, 1994, the Med-Arbiter scheduled the holding of the
certification election for June 29, 1994. His order identified the following SRBI
personnel as the voting supervisory employees in the election: the Cashier of
the Main Office, the Cashier of the Mandaue Branch, the Accountant of the
Mandaue Branch, and the Acting Chief of the Loans Department.
On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to
suspend proceedings. The Med-Arbiter denied the same on June 21, 1994.
SRBI then filed a motion for reconsideration. Two days later, the Med-Arbiter
cancelled the certification election scheduled for June 29, 1994 in order to
address the motion for reconsideration.
The Med-Arbiter later denied petitioner's motion for reconsideration.
SRBI appealed the order of denial to the DOLE Secretary on December 16,
1993.
On December 22, 1993, petitioner proceeded to file a petition with the
DOLE Regional Office seeking the cancellation of the respondent union's
registration. It averred that the APSOTEU-TUCP members were actually
managerial employees who were prohibited by law from joining or organizing
unions.
On April 22, 1994, respondent DOLE Undersecretary denied SRBI's
appeal for lack of merit. He ruled that APSOTEU-TUCP was a legitimate labor
organization. As such, it was fully entitled to all the rights and privileges
granted by law to a legitimate labor organization, including the right to file a
petition for certification election. He also held that until and unless a final
order is issued cancelling APSOTEU-TUCP's registration certificate, it had the
legal right to represent its members for collective bargaining purposes.
Furthermore, the question of whether the APSOTEU-TUCP members should
be considered as managerial or confidential employees should not be
addressed in the proceedings involving a petition for certification election
but best threshed out in other appropriate proceedings. prLL

On May 25, 1994, SRBI moved for reconsideration of the

Undersecretary's decision which was denied on July 7, 1994. The Med-Arbiter
scheduled the holding of certification elections on August 12, 1994.
Hence the instant petition grounded on the following assignments of
error:
I
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH
GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED:
A. IN HOLDING THAT ART. 257 OF THE LABOR CODE
REQUIRES THE MED-ARBITER TO CONDUCT A CERTIFICATION
ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN WHEN THE
PETITIONING UNION DOES NOT POSSESS THE QUALIFICATION FOR AN
APPROPRIATE BARGAINING AGENT; AND
B. IN REFUSING TO ASSUME JURISDICTION OVER THE
PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT UNION'S
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 PETITION FOR CERTIFICATION ELECTION.
II.
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH
GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN DENYING
THE PETITIONER'S APPEAL DESPITE THE FACT THAT:
A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE
MANAGERIAL EMPLOYEES WHO ARE LEGALLY DISQUALIFIED FROM
JOINING ANY LABOR ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF
RESPONDENT UNION ARE OCCUPYING HIGHLY CONFIDENTIAL
POSITIONS IN PETITIONER AND, THUS, THE LEGAL DISQUALIFICATION
OF MANAGERIAL EMPLOYEES EQUALLY APPLY TO THEM.
III
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT
RESOLUTIONS ARE CONTRARY TO LAW AND ARE DIAMETRICALLY
OPPOSED TO RESPONDENT UNION'S RECORDED ADMISSIONS AND
REPRESENTATIONS.
Considering petitioner's assigned errors, we find two core issues for
immediate resolution:
(1) Whether or not the members of the respondent union are
managerial employees and/or highly-placed confidential
employees, hence prohibited by law from joining labor
organizations and engaging in union activities?
(2) Whether or not the Med-Arbiter may validly order the
holding of a certification election upon the filing of a petition
for certification election by a registered union, despite the
petitioner's appeal pending before the DOLE Secretary
against the issuance of the union's registration?
The other issues based on the assigned errors could be resolved easily
after the core issues are settled. LLpr

Respecting the first issue, Article 212 (m) of the Labor Code defines the
terms "managerial employee" and "supervisory employees" as follows:
"Art. 212. Definitions —
xxx xxx xxx
(m) 'Managerial employee' is one who is vested with powers
or prerogatives to lay down and execute management policies and/or
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of
the employer, effectively recommend such managerial actions if the
exercise of such authority is note merely routinary or clerical in
nature but requires the use of independent judgment. All employees
not falling within any of the above definitions are considered rank-
and-file employees for purposes of this Book (Emphasis supplied)."
Petitioner submitted detailed job descriptions to support its contention
that the union members are managerial employees and/or confidential
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 employees proscribed from engaging in labor activities. 3 Petitioner
vehemently argues that the functions and responsibilities of the employees
involved constitute the "very core of the bank's business, lending of money
to clients and borrowers, evaluating their capacity to pay, approving the loan
and its amount, scheduling the terms of repayment, and endorsing
delinquent accounts to counsel for collection." 4 Hence, they must be
deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v.
National Labor Relations Commission, 5 a n d Panday v. National Labor
Relations Commission , 6 to sustain its submission. In Tabacalera, we
sustained the classification of a credit and collection supervisor by
management as a managerial/supervisory personnel. But in that case, the
credit and collection supervisor "had the power to recommend the hiring and
appointment of his subordinates, as well as the power to recommend any
promotion and/or increase." 7 For this reason he was deemed to be a
managerial employee. In the present case, however, petitioner failed to show
that the employees in question were vested with similar powers. At best they
only had recommendatory powers subject to evaluation, review, and final
decision by the bank's management. The job description forms submitted by
petitioner clearly show that the union members in question may not transfer,
suspend, lay-off, recall, discharge, assign, or discipline employees. Moreover,
the forms also do not show that the Cashiers, Accountants, and Acting Chiefs
of the Loans Department formulate and execute management policies which
are normally expected of management officers.
Petitioner's reliance on Panday is equally misplaced. There, we held
that a branch accountant is a managerial employee because the said
employee had managerial powers, similar to the supervisor in Tabacalera.
Their powers included recommending the hiring and appointment of his
subordinates, as well as the power to recommend any promotion and/or
increase. 8
Here, we find that the Cashiers, Accountant, and Acting Chief of the
Loans Department of the petitioner did not possess managerial powers and
duties. We are, therefore, constrained to conclude that they are not
managerial employees.
Now may the said bank personnel be deemed confidential employees?
Confidential employees are those who (1) assist or act in a confidential
capacity, in regard (2) to persons who formulate, determine, and effectuate
management policies [specifically in the field of labor relations]. 9 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 superior officer; and that officer
must handle the prescribed responsibilities relating to labor relations. 10
Article 245 of the Labor Code 11 does not directly prohibit confidential
employees from engaging in union activities. However, under the doctrine of
necessary implication, the disqualification of managerial employees equally
applies to confidential employees. 12 The confidential-employee rule justifies
exclusion of confidential employees because in the normal course of their
duties, they become aware of management policies relating to labor
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 relations. 13 It must be stressed, however, that when the employee does not
have access to confidential labor relations information, there is no legal
prohibition against confidential employees from forming, assisting, or joining
a union. 14
Petitioner contends that it has only 5 officers running its day-to-day
affairs. They assist in confidential capacities and have complete access to
the bank's confidential data. They form the core of the bank's management
team. Petitioner explains that:
" . . . Specifically: (1) the Head of the Loans Department initially
approves the loan applications before they are passed on to the
Board for confirmation. As such, no loan application is even
considered by the Board and approved by petitioner without his
stamp of approval based upon his interview of the applicant and
determination of his (applicant's) credit standing and financial
capacity. The same holds true with respect to renewals or
restructuring of loan accounts. He himself determines what account
should be collected, whether extrajudicially or judicially, and settles
the problems or complaints of borrowers regarding their accounts;
"(2) the Cashier is one of the approving officers and
authorized signatories of petitioner. He approves the opening of
accounts, withdrawals and encashment, and acceptance of check
deposits. He deals with other banks and, in the absence of the regular
Manager, manages the entire office or branch and approves
disbursements of funds for expenses; and
"(3) the Accountant, who heads the Accounting Department,
is also one of the authorized signatories of petitioner and, in the
absence of the Manager or Cashier, acts as substitute approving
officer and assumes the management of the entire office. She handles
the financial reports and reviews the debit/credit tickets submitted by
the other departments." 15
Petitioner's explanation, however, does not state who among the
employees has access to information specifically relating to its labor
relations policies. Even Cashier Patricia Maluya, who serves as the secretary
of the bank's Board of Directors may not be so classified. True, the board of
directors is responsible for corporate policies, the exercise of corporate
powers, and the general management of the business and affairs of the
corporation. As secretary of the bank's governing body, Patricia Maluya
serves the bank's management, but could not be deemed to have access to
confidential information specifically relating to SRBI's labor relations policies,
absent a clear showing on this matter. Thus, while petitioner's explanation
confirms the regular duties of the concerned employees, it shows nothing
about any duties specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate labor
organization under Article 242(b) of the Labor Code is the right to be
certified as the exclusive representative of all employees in an appropriate
bargaining unit for purposes of collective bargaining. Having complied with
the requirements of Art. 234, it is our view that respondent union is a
legitimate labor union. Article 257 of the Labor Code mandates that a
CD Technologies Asia, Inc. © 2023 cdasiaonline.com
 certification election shall automatically be conducted by the Med-Arbiter
upon the filing of a petition by a legitimate labor organization. 16 Nothing is
said therein that prohibits such automatic conduct of the certification
election if the management appeals on the issue of the validity of the union's
registration. On this score, petitioner's appeal was correctly dismissed. prLL

Petitioner argues that giving due course to respondent union's petition

for certification election would violate the separation of unions doctrine. 17
Note that the petition was filed by APSOTEU-TUCP, a legitimate labor
organization. It was not filed by ALU. Nor was it filed by TUCP, which is a
national labor federation of with which respondent union is affiliated.
Petitioner says that respondent union is a mere alter ego of ALU. The records
show nothing to this effect. What the records instead reveal is that
respondent union was initially assisted by ALU during its preliminary stages
of organization. A local union maintains its separate personality despite
affiliation with a larger national federation. 18 Petitioner alleges that ALU
seeks to represent both respondent union and the rank-and-file union. Again,
we find nothing in the records to support this bare assertion.
The law frowns on a union where the membership is composed of both
supervisors and rank-and-file employees, for fear that conflicts of interest
may arise in the areas of discipline, collective bargaining, and strikes. 19
However, in the present case, none of the members of the respondent union
came from the rank-and-file employees of the bank.
Taking into account the circumstances in this case, it is our view that
respondent Undersecretary committed no reversible error nor grave abuse
of discretion when he found the order of the Med-Arbiter scheduling a
certification election in order. The list of employees eligible to vote in said
certification election was also found in order, for none was specifically
disqualified from union membership.
WHEREFORE, the instant petition is hereby DISMISSED. No
pronouncement as to costs.
SO ORDERED. cdphil

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

Footnotes

1. 210 SCRA 339 (1992).

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

6. 209 SCRA 122 (1992).

7. 152 SCRA 667, 674 (1987).

CD Technologies Asia, Inc. © 2023 cdasiaonline.com

 8. Supra; 209 SCRA 122, 126 (1992).
9. San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma ,
277 SCRA 370, 374 (1997) citing Westinghouse Electric Corp. v. NLRB (CAS),
398 F2d. 689; Ladish Co., 178 NLRB 90 (1969), B.F. Goodrich Co., 115 NLRB
722.
10. Supra.
11. ART 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees. — Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of the
rank-and-file employees but may join, assist or form separate labor
organizations of their own.
12. Golden Farms, Inc. v. Ferrer-Calleja , 175 SCRA 471, 477 (1989); Bulletin
Publishing Co. Inc. vs. Hon. Augusto Sanchez, etc., 144 SCRA 628, 634
(1986).
13. San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma,
supra, 375.
14. Id. at 376; National Association of Trade Unions- Republic Planters Bank
Supervisor Chapter v. Torres, 239 SCRA 546, 560 (1994).
15. Rollo , pp. 13-14.
16. Emphasis supplied. Furusawa Rubber Philippines, Inc. v. Secretary of Labor
and Employment , 282 SCRA 635, 641 (1997); California Manufacturing Corp.
v. Laguesma, 209 SCRA 606, 610-11 (1992).
17. Atlas Lithographic Services, Inc. v. Bienvenido Laguesma, et al ., 205 SCRA
12 (1992).
18. Pambansang Kapatiran Ng Mga Anak Pawis sa Formey Plastic National
Workers Brotherhood v. Secretary of Labor, 253 SCRA 96, 103 (1995).
19. Philippine Phosphate Corporation v. Torres, 231 SCRA 335, 342 (1994).

CD Technologies Asia, Inc. © 2023 cdasiaonline.com