SECOND DIVISION

[G.R. No. 110399. August 15, 1997]
SAN MIGUEL CORPORATION SUPERVISORS
AND EXEMPT UNION AND ERNESTO L.
PONCE, President, petitioners, vs.
HONARABLE BIENVENIDO E.
LAGUESMA IN HIS CAPACITY AS
UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO
L. REYNANTE IN HIS CAPACITY AS
MED-ARBITER AND SAN MIGUEL
CORPORATION, respondents.
D E C I S I O N
ROMERO, J .:
This is a Petition for Certiorari with Prayer for the
Issuance of Preliminary Injunction seeking to reverse and
set aside the Order of public respondent, Undersecretary
of the Department of Labor and Employment, Bienvenido
E. Laguesma, dated March 11, 1993, in Case No. OS MA
A-2-70-91[1] entitled ―In Re: Petition for Certification
Election Among the Supervisory and Exempt Employees
of the San Miguel Corporation Magnolia Poultry Plants of
Cabuyao, San Fernando and Otis, San Miguel
Corporation Supervisors and Exempt Union, Petitioner.‖
The Order excluded the employees under supervisory
levels 3 and 4 and the so-called exempt employees from
the proposed bargaining unit and ruled out their
participation in the certification election.
The antecedent facts are undisputed:

On October 5, 1990, petitioner union filed before the
Department of Labor and Employment (DOLE) a Petition
for District Certification or Certification Election among the
supervisors and exempt employees of the SMC Magnolia
Poultry Products Plants of Cabuyao, San Fernando and
Otis.
On December 19, 1990, Med-Arbiter Danilo L.
Reynante issued an Order ordering the conduct of
certification among the supervisors and exempt
employees of the SMC Magnolia Poultry Products Plants
of Cabuyao, San Fernando and Otis as one bargaining
unit.
On January 18, 1991, respondent San Miguel
Corporation filed a Notice of Appeal with Memorandum on
Appeal, pointing out, among others, the Med-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:
“x x x Confidential employees, like managerial employees, are
not allowed to form, join or assist a labor union for purposes of
collective bargaining.
In this case, S3 and S4 and the so-called exempt employees are
admittedly confidential employees and therefore, they are not
allowed to form, join or assist a labor union for purposes of
collective bargaining following the above 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 employees and his
supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations.[6]
The exclusion from bargaining units of employees
who, in the normal course of their duties, become aware
of management policies relating to labor relations is a
principal objective sought to be accomplished by the
―confidential employee rule.‖ The broad rationale behind
this rule is that employees should not be placed in a
position involving a potential conflict of interests.[7]
―Management should not be required to handle labor
relations matters through employees who are represented
by the union with the company is required to deal and who
in the normal performance of their duties may obtain
advance information of the company’s position with regard
to contract negotiations, the disposition of grievances, or
other labor relations matters.‖[8]

There have been ample precedents in this regard,
thus in Bulletin Publishing Company v. Hon. Augusto
Sanchez,[9] the Court held that ―if these managerial
employees would belong to or be affiliated with a Union,
the latter might not be assured of their loyalty to the Union
in view of evident conflict of interest. The Union can also
become company-dominated with the presence of
managerial employees in Union membership.‖ The same
rationale was applied to confidential employees in ―Golden
Farms, Inc. v. Ferrer-Calleja‖[10] and in the more recent
case of ―Philips Industrial Development, Inc. v. NLRC‖[11]
which held that confidential employees, by the very nature
of their functions, assist and act in a confidential capacity
to, or have access to confidential matters of, persons who
exercise managerial functions in the field of labor
relations. Therefore, the rationale behind the ineligibility of
managerial employees to form, assist or join a labor union
was held equally applicable to them.[12]
An important element of the ―confidential employee
rule‖ is the employee’s need to use labor relations
information. Thus, in determining the confidentiality of
certain employees, a key questions frequently considered
is the employees’ necessary access to confidential labor
relations information.[13]
It is the contention of respondent corporation that
Supervisory employees 3 and 4 and the exempt
employees come within the meaning of the term
―confidential employees‖ primarily because they answered
in the affirmative when asked ―Do you handle confidential
data or documents?‖ in the Position Questionnaires
submitted by the Union.[14] In the same questionnaire,
however, it was also stated that the confidential
information handled by questioned employees relate to
product formulation, product standards and product
specification which by no means relate to ―labor
relations.‖[15]

Granting arguendo that an employee has access to
confidential labor relations information but such is merely
incidental to his duties and knowledge thereof is not
necessary in the performance of such duties, said access
does not render the employee a confidential employee.[16]
―If access to confidential labor relations information is to
be a factor in the determination of an 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 information with respect to his
employer, the union, or the association, to be regarded a
confidential employee, and knowledge of labor relations
information pertaining to the companies with which the
union deals, or which the association represents, will not
clause an employee to be excluded from the bargaining
unit representing employees of the union or
association.‖[17] ―Access to information which is regarded
by the employer to be confidential from the business
standpoint, such as financial information[18] or technical
trade secrets, will not render an employee a confidential
employee.‖[19]
Herein listed are the functions of supervisors 3 and
higher:
1. To undertake decisions to discontinue/temporarily
stop shift operations when situations require.
2. To effectively oversee the quality control function
at the processing lines in the storage of chicken
and other products.
3. To administer efficient system of evaluation of
products in the outlets.
4. To be directly responsible for the recall, holding
and rejection of direct manufacturing materials.
5. To recommend and initiate actions in the
maintenance of sanitation and hygiene throughout

the plant.[20]
It is evident that whatever confidential data the
questioned employees may handle will have to relate to
their functions. From the foregoing functions, it can be
gleaned that the confidential information said employees
have access to concern the 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 bargain
collectively through representatives of their choosing.[22]
In the case at bar, supervisors 3 and above may not
be considered confidential employees merely because
they handle ―confidential data‖ as such must first be
strictly classified as pertaining to labor relations for them
to fall under said restrictions. The information they handle
are properly classifiable as technical and internal business
operations data which, to our mind, has no relevance to
negotiations and settlement of grievances wherein the
interests of a union and the management are invariably
adversarial. Since the employees are not classifiable
under the confidential type, this Court rules that they may
appropriately form a bargaining unit for purposes of
collective bargaining. Furthermore, even assuming that
they are confidential employees, jurisprudence has
established that there is no legal prohibition against
confidential employees who are not performing
managerial functions to form and join a union.[23]

In this connection, the issue of whether the employees
of San Miguel Corporation Magnolia Poultry Products
Plants of Cabuyao, San Fernando, and Otis constitute a
single bargaining unit needs to be threshed out.
It is the contention of the petitioner union that the
creation of three (3) separate bargaining units, one each
for Cabuyao Otis and San Fernando as ruled by the
respondent Undersecretary, is contrary to the one-
company, one-union policy. It adds that Supervisors level
1 to 4 and exempt employees of the three plants have a
similarity or a community of interests.
This Court finds the contention of the petitioner
meritorious.
An appropriate bargaining unit may be defined as ―a
group of employees of a given employer, comprised of all
or less than all of the entire body of employees, which the
collective interest of all the employees, consistent with
equity to the employer, indicate to be best suited to serve
the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law.‖[24]
A unit to be appropriate must effect a grouping of
employees who have substantial, mutual interests in
wages, hours, working conditions and other subjects of
collective bargaining.[25]
It is readily seen that the employees in the instant
case have ―community or mutuality of interest,‖ which is
the standard in determining the proper constituency of a
collective bargaining unit.[26] It is undisputed that they all
belong to the Magnolia Poultry Division of San Miguel
Corporation. This means that, although they belong to
three different plants, they perform work of the same
nature, receive the same wages and compensation, and
most importantly, share a common stake in concerted
activities.
In light of these considerations, the Solicitor General

has opined that separate bargaining units in the three
different plants of the division will fragmentize the
employees of the said division, thus greatly diminishing
their bargaining leverage. Any concerted activity held
against the private respondent for a labor grievance in one
bargaining unit will, in all probability, not create much
impact on the operations of the private respondent. The
two other plants still in operation can well step up their
production and make up for the slack caused by the
bargaining unit engaged in the concerted activity. This
situation will clearly frustrate the provisions of the Labor
Code and the Mandate of the Constitution.[27]
The fact that the three plants are located in three
different places, namely, in Cabuyao, Laguna, in Otis,
Pandacan, Metro Manila, and in San Fernando,
Pampanga is immaterial. Geographical location can be
completely disregarded if the communal or mutual
interests of the employees are not sacrificed as
demonstrated in UP v. Calleja-Ferrer where all non-
academic rank and file employees of the University of the
Philippines inDiliman, Quezon City, Padre Faura, Manila,
Los 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.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr.,
JJ., concur.
SECOND DIVISION
[G.R. No. 116194. February 2, 2000]
SUGBUANON RURAL BANK, INC., Petitioner, v. 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 OF THE PHILIPPINES,
Respondents.
D E C I S I O N
QUISUMBING, J.:
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, 1993, which denied petitioner's
motion to dismiss respondent union's petition for certification
election.
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,ining, or assisting any labor organization. Petitioner
attached theb 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,in, 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 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
fromining 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
canceling 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.
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 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 fromining 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 petitioners appeal
pending before the DOLE Secretary against the issuance of the
unions registration?
The other issues based on the assigned errors could be resolved
easily after the core issues are settled.
Respecting the first issue, Article 212 (m) of the Labor Code defines
the terms "managerial employee" and "supervisory employees" as
follows:
"Art. 212. Definitions-
x x x
(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 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 (Italic
supplied)."
Petitioner submitted detailedb descriptions to support its contention
that the union members are managerial employees and/or
confidential employees proscribed from engaging in labor activities.
3

Petitioner vehemently argues that the functions and responsibilities
of the employees involved constitute the "very core of the bank's
business, lending of money to clients and borrowers, evaluating
their capacity to pay, approving the loan and its amount, scheduling
the terms of repayment, and endorsing delinquent accounts to
counsel for collection."
4
Hence, they must be deemed managerial
employees. Petitioner cites Tabacalera Insurance Co. v. National
Labor Relations Commission,[5] and Panday v. National Labor
Relations Commission,
6
to sustain its submission. In Tabacalera, we
sustained the 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. Theb 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 the power to recommend any
promotion and/or increase.
8

Here, we find that 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 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, orining 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 or 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 problem 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 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.
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
membership.
WHEREFORE, the instant petition is hereby DISMISSED. No
pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ.,
concur.
G.R. No. 110854 February 13, 1995
PIER 8 ARRASTRE & STEVEDORING SERVICES, INC.,
petitioner, 
 vs.
 HON. MA. NIEVES ROLDAN-CONFESOR, in
her capacity as Secretary of Labor and Employment, and
GENERAL MARITIME & STEVEDORES UNION (GMSU),
respondents.

PUNO, J .:
Petitioner corporation and private respondent labor union entered
into a three-year Collective Bargaining Agreement (CBA) with
expiry date on November 27, 1991. During the freedom period the
National Federation of Labor Unions (NAFLU) questioned the
majority status of Private respondent through a petition for
certification election. The election conducted on February 27, 1992
was won by private respondent. On March 19, 1992, private
respondent was certified as the sole and exclusive bargaining
agent of petitioner's rank-and-file employees.
On June 22, 1992, private respondent's CBA proposals were
received by petitioner. Counter-proposals were made by petitioner.
Negotiations collapsed, and on August 24, 1992, private-

respondent filed a Notice of Strike with the National Conciliation
and Mediation Board (NCMB). The NCMB tried but failed to settle
the parties' controversy.
On September 30, 1992, public respondent Secretary of Labor
assumed jurisdiction over the dispute. She resolved the bargaining
deadlock between the parties through an Order, dated March 4,
1993, which reads, in part:
xxx xxx xxx
A. The non-economic issues
1. Scope/coverage of the CBA. Article I of the 1988 CBA provides:
The Company recognizes the Union as the sole and exclusive
collective bargaining representative of all the stevedores,
dockworkers, gang bosses, foremen, rank and file employees
working at Pier 8, North Harbor and its offices and said positions
are [sic] listed in ANNEX "A" hereof.
As such representative the UNION is designated as the collective
bargaining agent with respect to and concerning the terms and
conditions of employment and the interpretations and
implementation of the provisions and conditions of this Agreement.
Annex "A" of the CBA is the listing of positions covered thereby.
These are:
1. Foremen;
 2. Gang bosses;
 3. Winchmen;
 4. Signalmen;
 5.
Stevedores;
 6. Dockworkers;
 7. Tallymen;
 8. Checkers;
 9.
Forklift and crane operators;
 10. Sweepers;
 11. Mechanics;
 12.
Utilitymen;
 13. Carpenters; and
 14. Other rank and file
employees;
The company argues in the first instance that under Article 212(m)
in relation to Article 245 of the Labor Code, supervisors are
ineligible for. membership in a labor organization of rank and file.
Being supervisors, foremen should be excluded from the
bargaining unit.
The Company likewise seeks the exclusion on the ground of lack
of community of interest and divergence in functions, mode of
compensation and working conditions of the following:

1. Accounting clerk;
 2. Audit clerk;
 3. Collector;
 4. Payroll
clerk;
 5. Nurse;
 6. Chief biller;
 7. Biller;
 8. Teller/biller;
 9.
Personnel clerk;
 10. Timekeeper;
 11. Asst. timekeeper;
 12.
Legal secretary;
 13. Telephone operator;
 14. Janitor/Utility;
and
 15. Clerk
These positions, the Company argues, cannot be lumped together
with the stevedores or dockworkers who mostly comprise the
bargaining unit. Further, notwithstanding the check-off provisions
of the CBA, the incumbents in these positions have never paid
union dues. Finally, some of them occupy confidential positions
and therefore ought to be excluded from the bargaining unit.
The Union generally argues that the Company's proposed
exclusions retrogressive. . . .
We see no compelling justification to order the modification of
Article I of the 1988 CBA as worded. For by lumping together
stevedores and other rank and file employees, the obvious intent
of the parties was to treat all employees not disqualified from union
membership as members of one bargaining unit. This is regardless
of working conditions, mode of compensation, place of work, or
other considerations. In the absence of mutual agreement of the
parties or evidence that the present compositions of the bargaining
unit is detrimental to the individual and organizational rights either
of the employees or of the Company, this expressed intent cannot
be set aside.
It may well be that as a consequence of Republic Act No. 6715,
foremen are ineligible to join the union of the rank and file. But this
provision can be invoked only upon proof that the foremen sought
to be excluded from the bargaining unit are cloaked with effective
recommendatory powers such as to qualify them under the legal
definitions of supervisors.
xxx xxx xxx
7. Effectivity of the CBA. The Union demands that the CBA should
be fully retroactive to 28 November 1991. The Company is
opposed on the ground that under Article 253-A of the labor code,
the six-month period within which the parties must come to an
agreement so that the same will be automatically retroactive is
long past.

The Union's demand for full retroactivity, we note, will result in
undue financial burden to the Company. On the other hand, the
Company's reliance on Article 253-A is misplaced as this applies
only to the renegotiated terms of an existing CBA. Here, the
deadlock arose from negotiations for a new CBA.
These considered, the CBA shall be effective from the time we
assumed jurisdiction over the dispute, that is, on 22 September
1992, and shall remain e effective for five (5) years thereafter. It
shall be understood that except for the representation aspect all
other provisions thereof shall be renegotiated not later than three
(3) years after its effectivity, consistently with Article 253-A of the
Labor Code.
B. The economic issues
The comparative positions of the parties are:

COMPANY UNION

xxx xxx xxx
5
. Vacation and sick leave
17 days vacation and sick leave i) For all covered employees

17 days sick leave per year and 17 days sick than gang

for employment with at least gang bosses:

five years of service.


15 working days vacation and

15 working days sick leave

for those with at least 1 year

of service


20 working days vacation and


20 working days sick leave

for those with more than one

year of service up to 5 years

of service


25 working days vacation and

25 working days sick leave

for those with more than 5

years of service up to 10

years of service


30 working days vacation and

30 working days sick leave

for those with more than 10

years of service


Provided that in the case Provided that in the case of a

of a rotation worker, he rotation worker, he must have

must have work for at worked for 140 days in a

least 160 days in a year calendar year as a condition

for availment for availment.


Provided, further that in the


event a rotation worker fails

to complete 140 days work in

a calendar year, he shall still

be entitled to vacation and

sick leave with pay, as follows:

139 - 120 days worked: 90%

119 - 110 days worked: 50%


ii) For Gang bosses:

Same as the above schedule

except that:


1) the condition that a gang

bosses must have worked for at

least 120 days in a calendar

year shall be reduced to 110

days; and


2) where the above number of

days worked is not met, the

gang boss shall still be entitled

to vacation and sick leave with

pay, as follows:


109 - 90 days worked: 90%

89 - 75 days worked: 50%
xxx xxx xxx
7
. Death aid
P1,500.00 to heirs P10,000.00 to heirs of covered

of covered employees employees


P5,000.00 assistance for death

of immediate member of

covered employee's family
xxx xxx xxx
12
. Emergency
loan


a) amount of P700.00 but damage 30 days salary payable through

entitlement to dwelling by fire
shall
payroll deduction in twelve

be included monthly installments


b) cash bond None The company shall put up a
cash

for loss, damage

bond of not less than
P40,000.00

or accident

for winchmen, crane and forklift

operators.

xxx xxx xxx
Balancing the right of the Company to remain viable and to just
returns to its investments with right of the Union members to just

rewards for their labors, we find the following award to be fair and
reasonable:
xxx xxx xxx
6
. Vacation and Sick
Leave


a) Non-rotation workers 17 days vacation/17 days sick
leave

for those with at least 1 year of
service


b) Rotation workers other 17 days vacation/17 days sick
leave,

than gang boss provided that the covered
worker

must have worked for at least
155 days

in a calendar year


c) Gang bosses 17 days vacation/17 days sick
leave,

provided that the gang boss
must have

worked for at least 115 days in
a

calendar year

xxx xxx xxx
8. Death aid P3,000.00 to the heirs of each covered employee
xxx xxx xxx
12. Emergency loan 30 days pay, payable through payroll
deductions of 1/12 of monthly salary

WHEREFORE, the Pier 8 Arrastre and Stevedoring Services and the
General Maritime Services Union are hereby ordered to execute new
collective bargaining agreement the incorporating the dispositions
herein contained. These shall be in addition to all other existing terms,
conditions and benefits of employment, except those specifically
deleted herein, which have previously governed the relations of the
parties. All other disputed items not specifically touched upon herein are
deemed denied, without prejudice to such other agreements as the
parties may have reached in the meantime. The collective bargaining
agreement so executed shall be effective from 22 September 1992 and
up to five years thereafter, subject to renegotiation on the third year of
its effectivity pursuant to Article 253-A of the Labor Code.
1

Petitioner sought partial reconsideration of the Order. On June 8,
1993, public respondent affirmed her findings, except for the date
of effectivity of the Collective Bargaining Agreement which was
changed to September 30, 1992. This is the date when she
assumed jurisdiction over the deadlock.
Petitioner now assails the Order as follows:
I
THE HONORABLE SECRETARY OF LABOR COMMITTED
GRAVE ABUSE OF DISCRETION IN NOT EXCLUDING
CERTAIN POSITIONS FROM THE BARGAINING AGREEMENT
UNIT
II
THE HONORABLE SECRETARY OF LABOR COMMITTED
GRAVE ABUSE OF DISCRETION IN MAKING THE CBA
EFFECTIVE ON SEPTEMBER 30, 1992 WHEN SHE ASSUMED
JURISDICTION OVER THE LABOR DISPUTE AND NOT MARCH
4, 1993 WHEN SHE RENDERED JUDGMENT OVER THE
DISPUTE
III
THE HONORABLE SECRETARY OF LABOR COMMITTED
GRAVE ABUSE OF DISCRETION IN REDUCING THE NUMBER
OF DAYS AN EMPLOYEE SHOULD ACTUALLY WORK TO BE
ENTITLED TO VACATION AND SICK LEAVE BENEFITS
IV

THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE
ABUSE OF DISCRETION IN INCREASING WITHOUT FACTUAL
BASIS THE DEATH AID AND EMERGENCY LOAN
2

The petition is partially meritorious.
Firstly, petitioner questions public respondent for not excluding
four (4) foremen, a legal secretary, a timekeeper and an assistant
timekeeper from the bargaining unit composed of rank-and-file
employees represented by private respondent. Petitioner argues
that: (1) the failure of private respondent to object when the
foremen and legal secretary were prohibited from voting in the
certification election constitutes an admission that such employees
hold supervisory/confidential positions; and (2) the primary duty
and responsibility of the timekeeper and assistant timekeeper is "to
enforce company rules and regulations by reporting to petitioner . .
. those workers who committed infractions, such as those caught
abandoning their posts." and hence, they should not be considered
as rank-and-file employees.
The applicable law governing the proper composition of bargaining
unit is Article 245 of the labor Code, as amended, which provides
as follows:
Art. 245. Ineligibility of managerial employees to join any labor
organization; 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 212(m) of the same Code, as well as Book V, Rule 1,
Section 1(o) of the Omnibus Rules Implementing the Labor Code,
as amended by the Rules and Regulations Implementing R.A..
6715, differentiate managerial, supervisory, and rank-and-file
employees, thus:
"Managerial Employee" is one who is vested with powers or
prerogatives to lay down and execute management policies and/or
to hire, transfer, suspend, layoff 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
the Book.
This Court has ruled on numerous occasions that the test of
supervisory or managerial status is whether an employee
possesses authority to act in the interest of his employer which
authority is not merely routinary or clerical in nature but requires
use of independent judgment.
3
What governs the determination of
the nature of employment is not the employee's title, but his job
description. If the nature of the employee's job does not fall under
the definition of "managerial" or "supervisory" in the Labor Code,
he is eligible to be a member of the rank-and-file bargaining unit.
4

Foremen are chief and often especially-trained workmen who work
with and commonly are in charge of a group of employees in an
industrial plant or in construction work.
5
They are the persons
designated by the employer-management to direct the work of
employees and to superintend and oversee them.
6
They are
representatives of the employer-management with authority over
particular groups of workers, processes, operations, or sections of
a plant or an entire organization. In the modern industrial plant,
they are at once a link in the chain of command and the bridge
between the management and labor.
7
In the performance their
work, foremen definitely use their independent judgment and are
empowered to make recommendations for managerial action with
respect to those employees under their control. Foremen fall
squarely under the category of supervisory employees, and cannot
be part of rank-and-file unions.
Upon the other hand, legal secretaries are neither managers nor
supervisors. Their work is basically routinary and clerical.
However, they should be differentiated from rank-and-file
employees because they, are tasked with, among others, the
typing of legal documents, memoranda and correspondence, the
keeping of records and files, the giving of and receiving notices
and such other duties as required by the legal personnel of the
corporation.
8
Legal secretaries therefore fall under the category of
confidential employees. Thus, to them applies our holding in the
case of Philips Industrial Development, Inv., v. NLRC, 210 SCRA
339 (1992), that:

. . . By the very functions, they assist confidential capacity to, or
have access to confidential. matters of, persons to, exercise
managerial functions in the field of labor relations. As such, the
rationale behind the ineligibility of managerial employees to form,
assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc., vs. 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
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.
In Golden Farms, Inc., vs. Ferrer-Calleja,
9
this court explicitly made this
rationale applicable to confidential employees:
This rationale holds true also for confidential employees . . ., who
having access to confidential information, may become the source
of undue advantage. Said employee(s) may act as a spy or spies
of either party to a collective bargaining agreement. . . .
We thus hold that public respondent acted with grave abuse of
discretion in not excluding the four foremen and legal secretary
from the bargaining unit composed of rank-and-file employees.
As for the timekeeper and assistant timekeeper it is clear from
petitioner's own pleadings that they are, neither managerial nor
supervisory employees. They are merely tasked to report those
who commit infractions against company rules and regulations.
This reportorial function is routinary and clerical. They do not
determine the fate of those who violate company policy rules and
regulations function. It follows that they cannot be excluded from
the subject bargaining unit.
The next issue is the date when the new CBA of the parties should
be given effect. Public respondent fixed the effectivity date on
September 30, 1992. when she assumed jurisdiction over the
dispute. Petitioner maintains it should be March 4. 1993, when
public respondent rendered judgment over the dispute.
The applicable laws are Articles 253 and 253- A of the Labor

Code, thus:
Art. 253. Duty to bargain collectively when there exists a collective
bargaining agreement. — When there is a collective bargaining
agreement, the duty to bargain collectively shall also mean that
neither party shall terminate nor modify such agreement during its
lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to
its expiration date. It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties.
and;
Art. 253-A. Terms of a collective bargaining agreement. — Any
Collective Bargaining Agreement that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a
term of five (5) years. No petition questioning the majority status of
the incumbent bargaining agent shall be entertained and no
certification election shall be conducted by the Department of
Labor and Employment outside the sixty-day period immediately
before the date of expiry of such five year term of the Collective
Bargaining Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three
(3) years after its execution. Any agreement on such other
provisions of the Collective Bargaining Agreement entered into
within six (6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining Agreement,
shall retroact to the day immediately following such date. If any
such agreement is entered into beyond six months, the parties
shall agree on the duration of collective bargaining agreement, the
parties may exercise their rights under this Code.
In Union of Filipino Employees v. NLRC, 192 SCRA 414 (1990),
this court interpreted the above law as follows:
In light of the foregoing, this Court upholds the pronouncement of
the NLRC holding the CBA to be signed by the parties effective
upon the promulgation of the assailed resolution. It is clear and
explicit from Article 253-A that any agreement on such other
provisions of the CBA shall be given retroactive effect only when it
is entered into within six (6) months from its expiry date. If the
agreement was entered into outside the six (6) month period, then

the parties shall agree on the duration of the retroactivity thereof.
The assailed resolution which incorporated the CBA to be signed
by the parties was promulgated June 5, 1989, the expiry date of
the past CBA. Based on the provision of Section 253-A, its
retroactivity should be agreed upon. by the parties. But since no
agreement to that effect was made, public respondent did not
abuse its discretion in giving the said CBA a prospective effect.
The action of the public respondent is within the ambit of its
authority vested by existing law.
In the case of Lopez Sugar Corporation v. Federation of Free
Workers, 189 SCRA 179 (1991), this Court reiterated the rule that
although a CBA has expired, it continues to have legal effects as
between the parties until a new CBA has been entered into. It is
the duty of both parties to the to keep the status quo, and to
continue in full force and effect the terms and conditions of the
existing agreement during the 60-day freedom period and/or until a
new agreement is reached by the parties.
10
Applied to the case at
bench, the legal effects of the immediate past CBA between
petitioner and private respondent terminated, and the effectivity of
the new CBA began, only on March 4, 1993 when public
respondent resolved their dispute.
Finally, we find no need to discuss at length the merits of the third
and fourth assignments of error. The questioned Order relevantly
states:
In the resolution of the economic issues, the Company urges us to
consider among others, present costs of living, its financial
capacity, the present wages being paid by the other cargo
handlers at the North Harbor, and the fact that the present average
wage of its workers is P127.75 a day, which is higher than the
statutory minimum wage of P118.00 a day. The Company's
evidence, consisting of its financial statements for the past three
years, shows that its net income was P743,423.45 for 1989,
P2,108,569.03 for 1990, and P1,479,671.84 for 1991, or an
average of P1,443,885.10 over the three-year period. It argues
that for just the first year of effectivity of the CBA, the Company's
proposals on wages, effect thereof on overtime, 13th month pay,
and vacation and sick leave commutation, will cost about
P520,723,44, or 35.19% of its net income for 1991. The Company
likewise urges us to consider the multiplier effect of its proposals

on the second and third years of the CBA. As additional argument,
the Company manifests that a portion of its pier will undergo a six-
month to one-year renovation starting January 1993.
On the other hand, the Union's main line of argument — that is,
aside from being within the financial capacity of the Company to
grant, its demands are fair and reasonable — is not supported by
evidence controverting the Company's own presentation of its
financial capacity. The Union in fact uses statements of the
Company for 1989-1991, although it interprets these data as
sufficient justification for its own proposals. It also draws our
attention to the bargaining history of the parties, particularly the
1988 negotiations during which the company was able to grant
wage increases despite operational losses.
Balancing the right of the Company to remain viable and to just returns
to its investments with right of the Union members to just 
 rewards for
their labors, we find the following award to be fair and reasonable . . . .
11

It is evident that the above portion of the impugned Order is based
on well-studied evidence. The conclusions reached by public
respondent in the discharge of her statutory duty as compulsory
arbitrator, demand the high respect of this Court. The study and
settlement of these disputes fall within public respondent's distinct
administrative expertise. She is especially trained for this delicate
task, and she has within her cognizance such data and information
as will assist her in striking the equitable balance between the
needs of management, labor and the public. Unless there is clear
showing of grave abuse of discretion, this Court cannot and will not
interfere with the labor expertise of public respondent Secretary of
Labor.
IN VIEW WHEREOF, public respondents Order, dated March 4,
1993, and Resolution, dated June 8, 1993, are hereby MODIFIED
to exclude foremen and legal secretaries from the rank-and-file
bargaining unit represented by private respondent union, and to fix
the date of effectivity of the five-year collective bargaining
agreement between petitioner corporation and private respondent
union on March 4, 1993. No costs.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.

G.R. No. 85750 September 28, 1990
INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION,
petitioner 
 vs
 HON. PURA CALLEJA IN HER CAPACITY AS
DIRECTOR OF THE BUREAU OF LABOR RELATIONS AND
TRADE UNIONS OF THE PHILIPPINES AND ALLIED
SERVICES (TUPAS) WFTU respondents.
G.R. No. 89331 September 28, 1990
KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-
ORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES
AND AGRICULTURE, petitioner, 
 vs
 SECRETARY OF LABOR
AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH
INSTITUTE, INC., respondents.
Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.
Dominguez, Armamento, Cabana & Associates for petitioner in
G.R. No. 89331.
Jimenez & Associates for IRRI.
Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J .:
Consolidated on 11 December 1989, these two cases involve the
validity of the claim of immunity by the International Catholic
Migration Commission (ICMC) and the International Rice Research
Institute, Inc. (IRRI) from the application of Philippine labor laws.
I
Facts and Issues
A. G.R. No. 85750 — the International Catholic Migration
Commission (ICMC) Case.
As an aftermath of the Vietnam War, the plight of Vietnamese
refugees fleeing from South Vietnam's communist rule confronted
the international community.

In response to this crisis, on 23 February 1981, an Agreement was
forged between the Philippine Government and the United Nations
High Commissioner for Refugees whereby an operating center for
processing Indo-Chinese refugees for eventual resettlement to
other countries was to be established in Bataan (Annex "A", Rollo,
pp. 22-32).
ICMC was one of those accredited by the Philippine Government
to operate the refugee processing center in Morong, Bataan. It was
incorporated in New York, USA, at the request of the Holy See, as
a non-profit agency involved in international humanitarian and
voluntary work. It is duly registered with the United Nations
Economic and Social Council (ECOSOC) and enjoys Consultative
Status, Category II. As an international organization rendering
voluntary and humanitarian services in the Philippines, its activities
are parallel to those of the International Committee for Migration
(ICM) and the International Committee of the Red Cross (ICRC)
[DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol.
1].
On 14 July 1986, Trade Unions of the Philippines and Allied
Services (TUPAS) filed with the then Ministry of Labor and
Employment a Petition for Certification Election among the rank
and file members employed by ICMC The latter opposed the
petition on the ground that it is an international organization
registered with the United Nations and, hence, enjoys diplomatic
immunity.
On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained
ICMC and dismissed the petition for lack of jurisdiction.
On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor
Relations (BLR), reversed the Med-Arbiter's Decision and ordered
the immediate conduct of a certification election. At that time,
ICMC's request for recognition as a specialized agency was still
pending with the Department of Foreign Affairs (DEFORAF).
Subsequently, however, on 15 July 1988, the Philippine
Government, through the DEFORAF, granted ICMC the status of a
specialized agency with corresponding diplomatic privileges and
immunities, as evidenced by a Memorandum of Agreement
between the Government and ICMC (Annex "E", Petition, Rollo,
pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition
for Certification Election invoking the immunity expressly granted
but the same was denied by respondent BLR Director who, again,
ordered the immediate conduct of a pre-election conference.
ICMC's two Motions for Reconsideration were denied despite an
opinion rendered by DEFORAF on 17 October 1988 that said BLR
Order violated ICMC's diplomatic immunity.
Thus, on 24 November 1988, ICMC filed the present Petition for
Certiorari with Preliminary Injunction assailing the BLR Order.
On 28 November 1988, the Court issued a Temporary Restraining
Order enjoining the holding of the certification election.
On 10 January 1989, the DEFORAF, through its Legal Adviser,
retired Justice Jorge C. Coquia of the Court of Appeals, filed a
Motion for Intervention alleging that, as the highest executive
department with the competence and authority to act on matters
involving diplomatic immunity and privileges, and tasked with the
conduct of Philippine diplomatic and consular relations with foreign
governments and UN organizations, it has a legal interest in the
outcome of this case.
Over the opposition of the Solicitor General, the Court allowed
DEFORAF intervention.
On 12 July 1989, the Second Division gave due course to the
ICMC Petition and required the submittal of memoranda by the
parties, which has been complied with.
As initially stated, the issue is whether or not the grant of
diplomatic privileges and immunites to ICMC extends to immunity
from the application of Philippine labor laws.
ICMC sustains the affirmative of the proposition citing (1) its
Memorandum of Agreement with the Philippine Government giving
it the status of a specialized agency, (infra); (2) the Convention on
the Privileges and Immunities of Specialized Agencies, adopted by
the UN General Assembly on 21 November 1947 and concurred in
by the Philippine Senate through Resolution No. 91 on 17 May
1949 (the Philippine Instrument of Ratification was signed by the
President on 30 August 1949 and deposited with the UN on 20
March 1950) infra; and (3) Article II, Section 2 of the 1987
Constitution, which declares that the Philippines adopts the

generally accepted principles of international law as part of the law
of the land.
Intervenor DEFORAF upholds ICMC'S claim of diplomatic
immunity and seeks an affirmance of the DEFORAF determination
that the BLR Order for a certification election among the ICMC
employees is violative of the diplomatic immunity of said
organization.
Respondent BLR Director, on the other hand, with whom the
Solicitor General agrees, cites State policy and Philippine labor
laws to justify its assailed Order, particularly, Article II, Section 18
and Article III, Section 8 of the 1987 Constitution, infra; and
Articles 243 and 246 of the Labor Code, as amended, ibid. In
addition, she contends that a certification election is not a litigation
but a mere investigation of a non-adversary, fact-finding character.
It is not a suit against ICMC its property, funds or assets, but is the
sole concern of the workers themselves.
B. G.R. No. 89331 — (The International Rice Research Institute
[IRRI] Case).
Before a Decision could be rendered in the ICMC Case, the Third
Division, on 11 December 1989, resolved to consolidate G.R. No.
89331 pending before it with G.R. No. 85750, the lower-numbered
case pending with the Second Division, upon manifestation by the
Solicitor General that both cases involve similar issues.
The facts disclose that on 9 December 1959, the Philippine
Government and the Ford and Rockefeller Foundations signed a
Memorandum of Understanding establishing the International Rice
Research Institute (IRRI) at Los Baños, Laguna. It was intended to
be an autonomous, philanthropic, tax-free, non-profit, non-stock
organization designed to carry out the principal objective of
conducting "basic research on the rice plant, on all phases of rice
production, management, distribution and utilization with a view to
attaining nutritive and economic advantage or benefit for the
people of Asia and other major rice-growing areas through
improvement in quality and quantity of rice."
Initially, IRRI was organized and registered with the Securities and
Exchange Commission as a private corporation subject to all laws
and regulations. However, by virtue of Pres. Decree No. 1620,
promulgated on 19 April 1979, IRRI was granted the status,

prerogatives, privileges and immunities of an international
organization.
The Organized Labor Association in Line Industries and
Agriculture (OLALIA), is a legitimate labor organization with an
existing local union, the Kapisanan ng Manggagawa at TAC sa
IRRI (Kapisanan, for short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct
Certification Election with Region IV, Regional Office of the
Department of Labor and Employment (DOLE).
IRRI opposed the petition invoking Pres. Decree No. 1620
conferring upon it the status of an international organization and
granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.
On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the
opposition on the basis of Pres. Decree No. 1620 and dismissed
the Petition for Direct Certification.
On appeal, the BLR Director, who is the public respondent in the
ICMC Case, set aside the Med-Arbiter's Order and authorized the
calling of a certification election among the rank-and-file
employees of IRRI. Said Director relied on Article 243 of the Labor
Code, as amended, infra and Article XIII, Section 3 of the 1987
Constitution,
1
and held that "the immunities and privileges granted
to IRRI do not include exemption from coverage of our Labor
Laws." Reconsideration sought by IRRI was denied.
On appeal, the Secretary of Labor, in a Resolution of 5 July 1989,
set aside the BLR Director's Order, dismissed the Petition for
Certification Election, and held that the grant of specialized agency
status by the Philippine Government to the IRRI bars DOLE from
assuming and exercising jurisdiction over IRRI Said Resolution
reads in part as follows:
Presidential Decree No. 1620 which grants to the IRRI the status,
prerogatives, privileges and immunities of an international
organization is clear and explicit. It provides in categorical terms
that:
Art. 3 — The Institute shall enjoy immunity from any penal, civil
and administrative proceedings, except insofar as immunity has

been expressly waived by the Director-General of the Institution or
his authorized representative.
Verily, unless and until the Institute expressly waives its immunity,
no summons, subpoena, orders, decisions or proceedings ordered
by any court or administrative or quasi-judicial agency are
enforceable as against the Institute. In the case at bar there was
no such waiver made by the Director-General of the Institute.
Indeed, the Institute, at the very first opportunity already
vehemently questioned the jurisdiction of this Department by filing
an ex-parte motion to dismiss the case.
Hence, the present Petition for Certiorari filed by Kapisanan
alleging grave abuse of discretion by respondent Secretary of
Labor in upholding IRRI's diplomatic immunity.
The Third Division, to which the case was originally assigned,
required the respondents to comment on the petition. In a
Manifestation filed on 4 August 1990, the Secretary of Labor
declared that it was "not adopting as his own" the decision of the
BLR Director in the ICMC Case as well as the Comment of the
Solicitor General sustaining said Director. The last pleading was
filed by IRRI on 14 August 1990.
Instead of a Comment, the Solicitor General filed a Manifestation
and Motion praying that he be excused from filing a comment "it
appearing that in the earlier case of International Catholic
Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the
Office of the Solicitor General had sustained the stand of Director
Calleja on the very same issue now before it, which position has
been superseded by respondent Secretary of Labor in G.R. No.
89331," the present case. The Court acceded to the Solicitor
General's prayer.
The Court is now asked to rule upon whether or not the Secretary
of Labor committed grave abuse of discretion in dismissing the
Petition for Certification Election filed by Kapisanan.
Kapisanan contends that Article 3 of Pres. Decree No. 1620
granting IRRI the status, privileges, prerogatives and immunities of
an international organization, invoked by the Secretary of Labor, is
unconstitutional in so far as it deprives the Filipino workers of their
fundamental and constitutional right to form trade unions for the
purpose of collective bargaining as enshrined in the 1987

Constitution.
A procedural issue is also raised. Kapisanan faults respondent
Secretary of Labor for entertaining IRRI'S appeal from the Order of
the Director of the Bureau of Labor Relations directing the holding
of a certification election. Kapisanan contends that pursuant to
Sections 7, 8, 9 and 10 of Rule V
2
of the Omnibus Rules
Implementing the Labor Code, the Order of the BLR Director had
become final and unappeable and that, therefore, the Secretary of
Labor had no more jurisdiction over the said appeal.
On the other hand, in entertaining the appeal, the Secretary of
Labor relied on Section 25 of Rep. Act. No. 6715, which took effect
on 21 March 1989, providing for the direct filing of appeal from the
Med-Arbiter to the Office of the Secretary of Labor and
Employment instead of to the Director of the Bureau of Labor
Relations in cases involving certification election orders.
III
Findings in Both Cases.
There can be no question that diplomatic immunity has, in fact,
been granted ICMC and IRRI.
Article II of the Memorandum of Agreement between the Philippine
Government and ICMC provides that ICMC shall have a status
"similar to that of a specialized agency." Article III, Sections 4 and
5 of the Convention on the Privileges and Immunities of
Specialized Agencies, adopted by the UN General Assembly on 21
November 1947 and concurred in by the Philippine Senate through
Resolution No. 19 on 17 May 1949, explicitly provides:
Art. III, Section 4. The specialized agencies, their property and
assets, wherever located and by whomsoever held, shall enjoy
immunity from every form of legal process except insofar as in any
particular case they have expressly waived their immunity. It is,
however, understood that no waiver of immunity shall extend to
any measure of execution.
Sec. 5. — The premises of the specialized agencies shall be
inviolable. The property and assets of the specialized agencies,
wherever located and by whomsoever held shall be immune from
search, requisition, confiscation, expropriation and any other form

of interference, whether by executive, administrative, judicial or
legislative action. (Emphasis supplied).
IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is
explicit in its grant of immunity, thus:
Art. 3. Immunity from Legal Process. — The Institute shall enjoy
immunity from any penal, civil and administrative proceedings,
except insofar as that immunity has been expressly waived by the
Director-General of the Institute or his authorized representatives.
Thus it is that the DEFORAF, through its Legal Adviser, sustained
ICMC'S invocation of immunity when in a Memorandum, dated 17
October 1988, it expressed the view that "the Order of the Director
of the Bureau of Labor Relations dated 21 September 1988 for the
conduct of Certification Election within ICMC violates the
diplomatic immunity of the organization." Similarly, in respect of
IRRI, the DEFORAF speaking through The Acting Secretary of
Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to
the Secretary of Labor, maintained that "IRRI enjoys immunity
from the jurisdiction of DOLE in this particular instance."
The foregoing opinions constitute a categorical recognition by the
Executive Branch of the Government that ICMC and IRRI enjoy
immunities accorded to international organizations, which
determination has been held to be a political question conclusive
upon the Courts in order not to embarrass a political department of
Government.
It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determination by
the executive branch of the government, and where the plea of
diplomatic immunity is recognized and affirmed by the executive branch
of the government as in the case at bar, it is then the duty of the courts
to accept the claim of immunity upon appropriate suggestion by the
principal law officer of the government . . . or other officer acting under
his direction. Hence, in adherence to the settled principle that courts
may not so exercise their jurisdiction . . . as to embarrass the executive
arm of the government in conducting foreign relations, it is accepted
doctrine that in such cases the judicial department of (this) government
follows the action of the political branch and will not embarrass the latter
by assuming an antagonistic jurisdiction.
3

A brief look into the nature of international organizations and

specialized agencies is in order. The term "international
organization" is generally used to describe an organization set up
by agreement between two or more states.
4
Under contemporary
international law, such organizations are endowed with some
degree of international legal personality
5
such that they are
capable of exercising specific rights, duties and powers.
6
They are
organized mainly as a means for conducting general international
business in which the member states have an interest.
7
The
United Nations, for instance, is an international organization
dedicated to the propagation of world peace.
"Specialized agencies" are international organizations having
functions in particular fields. The term appears in Articles 57
8
and
63
9
of the Charter of the United Nations:
The Charter, while it invests the United Nations with the general task of
promoting progress and international cooperation in economic, social,
health, cultural, educational and related matters, contemplates that
these tasks will be mainly fulfilled not by organs of the United Nations
itself but by autonomous international organizations established by
inter-governmental agreements outside the United Nations. There are
now many such international agencies having functions in many
different fields, e.g. in posts, telecommunications, railways, canals,
rivers, sea transport, civil aviation, meteorology, atomic energy, finance,
trade, education and culture, health and refugees. Some are virtually
world-wide in their membership, some are regional or otherwise limited
in their membership. The Charter provides that those agencies which
have "wide international responsibilities" are to be brought into
relationship with the United Nations by agreements entered into
between them and the Economic and Social Council, are then to be
known as "specialized agencies."
10

The rapid growth of international organizations under
contemporary international law has paved the way for the
development of the concept of international immunities.
It is now usual for the constitutions of international organizations to
contain provisions conferring certain immunities on the organizations
themselves, representatives of their member states and persons acting
on behalf of the organizations. A series of conventions, agreements and
protocols defining the immunities of various international organizations
in relation to their members generally are now widely in force; . . .
11

There are basically three propositions underlying the grant of
international immunities to international organizations. These

principles, contained in the ILO Memorandum are stated thus: 1)
international institutions should have a status which protects them
against control or interference by any one government in the
performance of functions for the effective discharge of which they
are responsible to democratically constituted international bodies
in which all the nations concerned are represented; 2) no country
should derive any national financial advantage by levying fiscal
charges on common international funds; and 3) the international
organization should, as a collectivity of States members, be
accorded the facilities for the conduct of its official business
customarily extended to each other by its individual member
States.
12
The theory behind all three propositions is said to be
essentially institutional in character. "It is not concerned with the
status, dignity or privileges of individuals, but with the elements of
functional independence necessary to free international institutions
from national control and to enable them to discharge their
responsibilities impartially on behalf of all their members.
13
The
raison d'etre for these immunities is the assurance of unimpeded
performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is
clearly necessitated by their international character and respective
purposes. The objective is to avoid the danger of partiality and
interference by the host country in their internal workings. The
exercise of jurisdiction by the Department of Labor in these
instances would defeat the very purpose of immunity, which is to
shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and
to ensure the unhampered performance of their functions.
ICMC's and IRRI's immunity from local jurisdiction by no means
deprives labor of its basic rights, which are guaranteed by Article
II, Section 18,
14
Article III, Section 8,
15
and Article XIII, Section 3
(supra), of the 1987 Constitution; and implemented by Articles 243
and 246 of the Labor Code,
16
relied on by the BLR Director and by
Kapisanan.
For, ICMC employees are not without recourse whenever there are
disputes to be settled. Section 31 of the Convention on the
Privileges and Immunities of the Specialized Agencies of the
United Nations
17
provides that "each specialized agency shall
make provision for appropriate modes of settlement of: (a)

disputes arising out of contracts or other disputes of private
character to which the specialized agency is a party." Moreover,
pursuant to Article IV of the Memorandum of Agreement between
ICMC the the Philippine Government, whenever there is any abuse
of privilege by ICMC, the Government is free to withdraw the
privileges and immunities accorded. Thus:
Art. IV. Cooperation with Government Authorities. — 1. The
Commission shall cooperate at all times with the appropriate
authorities of the Government to ensure the observance of
Philippine laws, rules and regulations, facilitate the proper
administration of justice and prevent the occurrences of any abuse
of the privileges and immunities granted its officials and alien
employees in Article III of this Agreement to the Commission.
2. In the event that the Government determines that there has
been an abuse of the privileges and immunities granted under this
Agreement, consultations shall be held between the Government
and the Commission to determine whether any such abuse has
occurred and, if so, the Government shall withdraw the privileges
and immunities granted the Commission and its officials.
Neither are the employees of IRRI without remedy in case of
dispute with management as, in fact, there had been organized a
forum for better management-employee relationship as evidenced
by the formation of the Council of IRRI Employees and
Management (CIEM) wherein "both management and employees
were and still are represented for purposes of maintaining mutual
and beneficial cooperation between IRRI and its employees." The
existence of this Union factually and tellingly belies the argument
that Pres. Decree No. 1620, which grants to IRRI the status,
privileges and immunities of an international organization, deprives
its employees of the right to self-organization.
The immunity granted being "from every form of legal process
except in so far as in any particular case they have expressly
waived their immunity," it is inaccurate to state that a certification
election is beyond the scope of that immunity for the reason that it
is not a suit against ICMC. A certification election cannot be
viewed as an independent or isolated process. It could tugger off a
series of events in the collective bargaining process together with
related incidents and/or concerted activities, which could inevitably
involve ICMC in the "legal process," which includes "any penal,

civil and administrative proceedings." The eventuality of Court
litigation is neither remote and from which international
organizations are precisely shielded to safeguard them from the
disruption of their functions. Clauses on jurisdictional immunity are
said to be standard provisions in the constitutions of international
Organizations. "The immunity covers the organization concerned,
its property and its assets. It is equally applicable to proceedings in
personam and proceedings in rem."
18

We take note of a Manifestation, dated 28 September 1989, in the
ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the
case entitled "International Catholic Migration Commission v.
NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606),
and claims that, having taken cognizance of that dispute (on the
issue of payment of salary for the unexpired portion of a six-month
probationary employment), the Court is now estopped from
passing upon the question of DOLE jurisdiction petition over ICMC.
We find no merit to said submission. Not only did the facts of said
controversy occur between 1983-1985, or before the grant to
ICMC on 15 July 1988 of the status of a specialized agency with
corresponding immunities, but also because ICMC in that case did
not invoke its immunity and, therefore, may be deemed to have
waived it, assuming that during that period (1983-1985) it was
tacitly recognized as enjoying such immunity.
Anent the procedural issue raised in the IRRI Case, suffice it to
state that the Decision of the BLR Director, dated 15 February
1989, had not become final because of a Motion for
Reconsideration filed by IRRI Said Motion was acted upon only on
30 March 1989 when Rep. Act No. 6715, which provides for direct
appeals from the Orders of the Med-Arbiter to the Secretary of
Labor in certification election cases either from the order or the
results of the election itself, was already in effect, specifically since
21 March 1989. Hence, no grave abuse of discretion may be
imputed to respondent Secretary of Labor in his assumption of
appellate jurisdiction, contrary to Kapisanan's allegations. The
pertinent portion of that law provides:
Art. 259. — Any party to an election may appeal the order or
results of the election as determined by the Med-Arbiter directly to
the Secretary of Labor and Employment on the ground that the
rules and regulations or parts thereof established by the Secretary

of Labor and Employment for the conduct of the election have
been violated. Such appeal shall be decided within 15 calendar
days (Emphasis supplied).
En passant, the Court is gratified to note that the heretofore
antagonistic positions assumed by two departments of the
executive branch of government have been rectified and the
resultant embarrassment to the Philippine Government in the eyes
of the international community now, hopefully, effaced.
WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is
GRANTED, the Order of the Bureau of Labor Relations for
certification election is SET ASIDE, and the Temporary Restraining
Order earlier issued is made PERMANENT.
In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no
grave abuse of discretion having been committed by the Secretary
of Labor and Employment in dismissing the Petition for
Certification Election.
No pronouncement as to costs.
SO ORDERED.
Padilla, Sarmiento and Regalado, JJ., concur.
Paras, J., is on leave.
G.R. No. 79025. December 29, 1989.
BENGUET ELECTRIC COOPERATIVE, INC., petitioner,

 vs.
 HON. PURA FERRER-CALLEJA, Director of the Bureau
of Labor Relations, and BENECO EMPLOYEES LABOR
UNION, respondents.
E.L. Gayo & Associates for petitioner.

CORTES, J .:
On June 21, 1985 Beneco Worker's Labor Union-Association of
Democratic Labor Organizations (hereinafter referred to as BWLU-
ADLO) filed a petition for direct certification as the sole and
exclusive bargaining representative of all the rank and file

employees of Benguet Electric Cooperative, Inc. (hereinafter
referred to as BENECO) at Alapang, La Trinidad, Benguet
alleging, inter alia, that BENECO has in its employ two hundred
and fourteen (214) rank and file employees; that one hundred and
ninety-eight (198) or 92.5% of these employees have supported
the filing of the petition; that no certification election has been
conducted for the last 12 months; that there is no existing
collective bargaining representative of the rank and file employees
sought to represented by BWLU- ADLO; and, that there is no
collective bargaining agreement in the cooperative.
An opposition to the petition was filed by the Beneco Employees
Labor Union (hereinafter referred to as BELU) contending that it
was certified as the sole and exclusive bargaining representative
of the subject workers pursuant to an order issued by the med-
arbiter on October 20,1980; that pending resolution by the National
Labor Relations Commission are two cases it filed against
BENECO involving bargaining deadlock and unfair labor practice;
and, that the pendency of these cases bars any representation
question.
BENECO, on the other hand, filed a motion to dismiss the petition
claiming that it is a non-profit electric cooperative engaged in
providing electric services to its members and patron-consumers in
the City of Baguio and Benguet Province; and, that the employees
sought to be represented by BWLU-ADLO are not eligible to form,
join or assist labor organizations of their own choosing because
they are members and joint owners of the cooperative.
On September 2, 1985 the med-arbiter issued an order giving due
course to the petition for certification election. However, the med-
arbiter limited the election among the rank and file employees of
petitioner who are non-members thereof and without any
involvement in the actual ownership of the cooperative. Based on
the evidence during the hearing the med-arbiter found that there
are thirty-seven (37) employees who are not members and without
any involvement in the actual ownership of the cooperative. The
dispositive portion of the med-arbiter's order is as follows:
WHEREFORE, premises considered, a certification election
should be as it is hereby ordered to be conducted at the premises
of Benguet, Electric Cooperative, Inc., at Alapang, La Trinidad,
Benguet within twenty (20) days from receipt hereof among all the

rank and file employees (non-members/consumers and without
any involvement in the actual ownership of the cooperative) with
the following choices:
1. BENECO WORKERS LABOR UNION-ADLO
2. BENECO EMPLOYEES LABOR UNION
3. NO UNION
The payroll for the month of June 1985 shall be the basis in
determining the qualified voters who may participate in the
certification election to be conducted.
SO ORDERED. [Rollo, pp. 22-23.]
BELU and BENECO appealed from this order but the same was
dismissed for lack of merit on March 25,1986. Whereupon
BENECO filed with this Court a petition for certiorari with prayer for
preliminary injunction and /or restraining order, docketed as G.R.
No. 74209, which the Supreme Court dismissed for lack of merit in
a minute resolution dated April 28, 1986.
The ordered certification election was held on October 1, 1986.
Prior to the conduct thereof BENECO's counsel verbally
manifested that "the cooperative is protesting that employees who
are members-consumers are being allowed to vote when . . . they
are not eligible to be members of any labor union for purposes of
collective bargaining; much less, to vote in this certification
election." [Rollo, p. 28]. Petitioner submitted a certification showing
that only four (4) employees are not members of BENECO and
insisted that only these employees are eligible to vote in the
certification election. Canvass of the votes showed that BELU
garnered forty-nine (49) of the eighty-three (83) "valid" votes cast.
Thereafter BENECO formalized its verbal manifestation by filing a
Protest. Finding, among others, that the issue as to whether or not
member-consumers who are employees of BENECO could form,
assist or join a labor union has been answered in the affirmative by
the Supreme Court in G.R. No. 74209, the med-arbiter dismissed
the protest on February 17, 1987. On June 23, 1987, Bureau of
Labor Relations (BLR) director Pura Ferrer-Calleja affirmed the
med-arbiter's order and certified BELU as the sole and exclusive
bargaining agent of all the rank and file employees of BENECO.

Alleging that the BLR director committed grave abuse of discretion
amounting to lack or excess of jurisdiction BENECO filed the
instant petition for certiorari. In his Comment the Solicitor General
agreed with BENECO's stance and prayed that the petition be
given due course. In view of this respondent director herself was
required by the Court to file a Comment. On April 19, 1989 the
Court gave due course to the petition and required the parties to
submit their respective memoranda.
The main issue in this case is whether or not respondent director
committed grave abuse of discretion in certifying respondent BELU
as the sole and exclusive bargaining representtative of the rank
and file employees of BENECO.
Under Article 256 of the Labor Code [Pres. Decree 442] to have a
valid certification election, "at least a majority of all eligible voters
in the unit must have cast their votes. The labor union receiving
the majority of the valid votes cast shall be certified as the
exclusive bargaining agent of all workers in the unit." Petitioner
BENECO asserts that the certification election held on October 1,
1986 was null and void since members-employees of petitioner
cooperative who are not eligible to form and join a labor union for
purposes of collective bargaining were allowed to vote therein.
Respondent director and private respondent BELU on the other
hand submit that members of a cooperative who are also rank and
file employees are eligible to form, assist or join a labor union
[Comment of Respondent Director, p. 4; Rollo, p. 125; Comment of
BELU, pp. 9-10; Rollo pp. 99-100].
The Court finds the present petition meritorious.
The issue of whether or not employees of a cooperative are
qualified to form or join a labor organization for purposes of
collective bargaining has already been resolved and clarified in the
case of Cooperative Rural Bank of Davao City, Inc. vs. Ferrer
Calleja, et al. [G.R. No. 7795, September 26,1988] and reiterated
in the cases of Batangas-Electric Cooperative Labor Union v.
Young, et al. [G.R. Nos. 62386, 70880 and 74560 November 9,
1988] and San Jose City Electric Service Cooperative, Inc. v.
Ministry of Labor and Employment, et al. [G.R. No. 77231, May 31,
1989] wherein the Court had stated that the right to collective
bargaining is not available to an employee of a cooperative who at
the same time is a member and co-owner thereof. With respect,

however, to employees who are neither members nor co-owners of
the cooperative they are entitled to exercise the rights to self-
organization, collective bargaining and negotiation as mandated by
the 1987 Constitution and applicable statutes.
Respondent director argues that to deny the members of petitioner
cooperative the right to form, assist or join a labor union of their
own choice for purposes of collective bargaining would amount to
a patent violation of their right to self-organization. She points out
that:
Albeit a person assumes a dual capacity as rank and file employee
and as member of a certain cooperative does not militate, as in the
instant case, against his/her exercise of the right to self-
organization and to collective bargaining guaranteed by the
Constitution and Labor Code because, while so doing, he/she is
acting in his/her capacity as rank and file employee thereof. It may
be added that while the employees concerned became members
of petitioner cooperative, their status employment as rank and
filers who are hired for fixed compensation had not changed. They
still do not actually participate in the management of the
cooperative as said function is entrusted to the Board of Directors
and to the elected or appointed officers thereof. They are not
vested with the powers and prerogatives to lay down and execute
managerial policies; to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees; and/or to effectively
recommend such managerial functions [Comment of Respondent
Director, p. 4; Rollo, p. 125.]
Private respondent BELU concurs with the above contention of
respondent director and, additionally, claims that since
membership in petitioner cooperative is only nominal, the rank and
file employees who are members thereof should not be deprived of
their right to self-organization.
The above contentions are untenable. Contrary to respondents'
claim, the fact that the members-employees of petitioner do not
participate in the actual management of the cooperative does not
make them eligible to form, assist or join a labor organization for
the purpose of collective bargaining with petitioner. The Court's
ruling in the Davao City case that members of cooperative cannot
join a labor union for purposes of collective bargaining was based
on the fact that as members of the cooperative they are co-owners

thereof. As such, they cannot invoke the right to collective
bargaining for "certainly an owner cannot bargain with himself or
his co-owners." [Cooperative Rural Bank of Davao City, Inc. v.
Ferrer-Calleja, et al., supra]. It is the fact of ownership of the
cooperative, and not involvement in the management thereof,
which disqualifies a member from joining any labor organization
within the cooperative. Thus, irrespective of the degree of their
participation in the actual management of the cooperative, all
members thereof cannot form, assist or join a labor organization
for the purpose of collective bargaining.
Respondent union further claims that if nominal ownership in a
cooperative is "enough to take away the constitutional protections
afforded to labor, then there would be no hindrance for employers
to grant, on a scheme of generous profit sharing, stock bonuses to
their employees and thereafter claim that since their employees
are not stockholders [of the corporation], albeit in a minimal and
involuntary manner, they are now also co-owners and thus
disqualified to form unions." To allow this, BELU argues, would be
"to allow the floodgates of destruction to be opened upon the rights
of labor which the Constitution endeavors to protect and which
welfare it promises to promote." [Comment of BELU, p. 10; Rollo,
p. 100].
The above contention of respondent union is based on the
erroneous presumption that membership in a cooperative is the
same as ownership of stocks in ordinary corporations. While
cooperatives may exercise some of the rights and privileges given
to ordinary corporations provided under existing laws, such
cooperatives enjoy other privileges not granted to the latter [See
Sections 4, 5, 6, and 8, Pres. Decree No. 175; Cooperative Rural
Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members of
cooperatives have rights and obligations different from those of
stockholders of ordinary corporations. It was precisely because of
the special nature of cooperatives, that the Court held in the Davao
City case that members-employees thereof cannot form or join a
labor union for purposes of collective bargaining. The Court held
that:
A cooperative ... is by its nature different from an ordinary business
concern being run either by persons, partnerships, or corporations.
Its owners and/or members are the ones who run and operate the
business while the others are its employees. As above stated,

irrespective of the number of shares owned by each member they
are entitled to cast one vote each in deciding upon the affairs of
the cooperative. Their share capital earn limited interest. They
enjoy special privileges as-exemption from income tax and sales
taxes, preferential right to supply their products to State agencies
and even exemption from the minimum wage laws.
An employee therefore of such a cooperative who is a member
and co-owner thereof cannot invoke the right to collective
bargaining for certainly an owner cannot bargain with himself or his
co-owners.
It is important to note that, in her order dated September 2, 1985,
med-arbiter Elnora V. Balleras made a specific finding that there
are only thirty-seven (37) employees of petitioner who are not
members of the cooperative and who are, therefore, the only
employees of petitioner cooperative eligible to form or join a labor
union for purposes of collective bargaining [Annex "A" of the
Petition, p. 12; Rollo, p. 22]. However, the minutes of the
certification election [Annex "C" of the Petition: Rollo, p. 28] show
that a total of eighty-three (83) employees were allowed to vote
and of these, forty-nine (49) voted for respondent union. Thus,
even if We agree with respondent union's contention that the thirty
seven (37) employees who were originally non-members of the
cooperative can still vote in the certification election since they
were only "forced and compelled to join the cooperative on pain of
disciplinary action," the certification election held on October 1,
1986 is still null and void since even those who were already
members of the cooperative at the time of the issuance of the
med-arbiter's order, and therefore cannot claim that they were
forced to join the union were allowed to vote in the election.
Article 256 of the Labor Code provides, among others, that:
To have a valid, election, at least a majority of all eligible voters in
the unit must have cast their votes. The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all workers in the unit . . . [Italics supplied.]
In this case it cannot be determined whether or not respondent
union was duly elected by the eligible voters of the bargaining unit
since even employees who are ineligible to join a labor union
within the cooperative because of their membership therein were
allowed to vote in the certification election. Considering the

foregoing, the Court finds that respondent director committed
grave abuse of discretion in certifying respondent union as the sole
and exclusive bargaining representative of the rank and file
employees of petitioner cooperative.
WHEREFORE, the petition is hereby GRANTED and the assailed
resolution of respondent director is ANNULLED. The certification
election conducted on October 1, 1986, is SET ASIDE. The
Regional Office No. 1 of San Fernando, La Union is hereby
directed to immediately conduct new certification election
proceedings among the rank and file employees of the petitioner
who are not members of the cooperative.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., and Bidin, JJ., concur.
Feliciano, J., on leave.

SECOND DIVISION
[G.R. No. 116066. January 24, 2000]
NUEVA ECIJA I ELECTRIC COOPERATIVE,
INC., (NEECO I) EMPLOYEES ASSOCIATION,
PRESIDENT RODOLFO JIMENEZ, and members,
REYNALDO FAJARDO, ERNESTO MARIN,
EVER GUEVARRA, PETRONILO BAGUISA,
VICTORINO CARILLO, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, NUEVA
ECIJA I ELECTRIC COOPERATIVE, INC.,
(NEECO I) and PATRICIO DELA PEÑA,
respondents. 0uµi÷oo_
D E C I S I O N
QUISUMBING, J .:

Petitioners assail the decision[1] of the National Labor Relations
Commission in NLRC RAB-III-03-2673-92, which modified the
ruling of the Labor Arbiter, by deleting the award of moral and
exemplary damages, as well as attorneys’ fees and costs of
litigation.
The facts, as found a quo, are as follows:
Petitioners Reynaldo Fajardo, Ernesto Marin, Ever Guevarra,
Petronilo Baguisa, Victorino Carillo, and Erdie Javate were
permanent employees of respondent Nueva Ecija I Electric
Cooperative (NEECO I). They were members of petitioner
NEECO I Employees Association, a labor organization
established for the mutual aid and protection of its members.
Petitioner Rodolfo Jimenez was the president of the association.
Respondent NEECO I is an electric cooperative under the
general supervision and control of the National Electrification
Administration (NEA). The management of NEECO I is vested
on the Board of Directors. Respondent Patricio dela Peña was
NEECO’s general manager on detail from NEA.
On February 7, 1987, the Board of Directors adopted Policy No.
3-33, which set the guidelines for NEECO I’s retirement
benefits. On October 28, 1987, all regular employees were
ordered by NEECO I to accomplish Form 87, which were
applications for either retirement, resignation, or separation
from service.
On October 5, 1991 and February 28, 1992, the applications of
Petronilo Baguisa and Ever Guevarra, respectively, were
approved. They were paid the appropriate separation pay.
These successive events, followed by the promotion of certain
union officers to supervisory rank, caused apprehension in the
labor association. They were considered as harassment
threatening the union members, and circumventing the
employees’ security of tenure. On February 29, 1992, to

strengthen and neutralize management’s arbitrary moves, the
union held a "snap election" of officers.[2] Reynaldo Fajardo was
elected Treasurer, while Evaristo Guevarra, Victorino Carillo
and Ernesto Marin were elected Public Relations Officers for
Jaen, Gapan A and Gapan B, respectively.
On March 3, 1992, petitioner labor association passed a
resolution withdrawing the applications for retirement of all its
members, thus:
"Upon popular request of all members and
officers of the association their manifestation of
willingness to retire on optional basis is hereby
WITHDRAWN by the ASSOCIATION for and
in behalf of all its members, EXCEPT those who
are willing to avail their retirement benefits with
all their hearts and mind. To avoid what had
happened to EVARISTO GUEVARRA. The
union officers and its members, claimed their
right to be protected under the security of tenure
clause under the Labor Code of the Philippines.
No employee shall be retired without his/her
consent or approval of the union.
On motion and duly seconded. Approved
unanimously. Let copies of the resolution be
furnished NEECO I PS/AGM Patricio S. dela
Peña, for his information and appropriate
action."[3] M÷io¢uµio
On March 4, March 17, and April 7, 1992, petitioners Ernesto
Marin, Reynaldo Fajardo and Victorino Carillo were
compulsorily retired by management. They received their
separation pay under protest on March 16, March 18, and April
15, 1992, respectively.
On August 21, 1991, Erdie Javate was terminated from
employment allegedly due to misappropriation of funds and

dishonesty. He was not paid separation or retirement benefits.
On March 29, 1992, petitioners and Erdie Javate instituted a
complaint for illegal dismissal and damages with the NLRC
Regional Arbitration Branch in San Fernando. They alleged they
were purposely singled out for retirement from a listing of
employees who were made to submit retirement forms, even if
they were not on top of the list because they were union officers,
past officers or active members of the association. Further,
petitioners claimed that their acceptance of the money offered
by NEECO I did not constitute estoppel nor waiver, since their
acceptances were with vehement objections and without
prejudice to all their rights resulting from an illegal dismissal.
Additionally, Javate averred he was framed up and dismissed
without due process.
On December 21, 1992, the labor arbiter decided the case as
follows:
"WHEREFORE, in view of all the foregoing
considerations, judgment is hereby rendered, as
follows:
1. Declaring respondents NEECO I and PS/AGM
Engr. Patricio dela Peña guilty of illegal
dismissal and unfair labor practice act, as
charged;
2. Ordering respondents to reinstate individual
complainants Reynaldo Fajardo, Ernesto Marin,
Ever Guevarra, Petronilo Baguisa, Victorino
Carillo, and Erdie Javate of their former positions
under the same terms and conditions of work
obtaining at the time of dismissal, without loss of
seniority rights and other privileges, either
physically or in the payroll, at the option of the
respondents, with payment of full backwages,

including all benefits and privileges that they
should have received if they were not illegally
dismissed, computed as follows:
1. Reynaldo Fajardo-
a.) Backwages as of
Dec. 31,
1992 P
36,306.55
b.) Bonus

1,000.00
c.) Medical
Allowance
1,000.00
d.) Clothing
Allowance
750.00
e.) Hospitalization
allowance since 1988
2,000.00

Total
P
41,056.55
2. Ernesto Marin -
a.) Backwages as of
Dec. 31,
1992 P
37,783.60

b.) Bonus

1,000.00
c.) Medical
Allowance
1,000.00
d.) Clothing
Allowance
750.00
e.) Hospitalization
allowance since 1988
2,000.00

Total
P
42,533.60
3. Ever Guevarra -
a.) Backwages as
of Dec. 31, 1992
P 37,783.60
b.) Bonus


1,000.00
c.) Medical
Allowance

1,000.00
d.) Clothing
Allowance


750.00
e.) Hospitalization
allowance since
1988 2,000.00

Total
P
42,533.60
4. Petronilo Baguisa -
a.) Backwages as of
Dec. 31,
1992 P
56,675.40
b.) Bonus

1,000.00
c.) Medical
Allowance
1,000.00
d.) Clothing
Allowance
750.00
e.) Hospitalization
allowance since
1988 2,000.00

Total
P
61,425.40

5. Victorino Carillo -
a.) Backwages as of
Dec. 31,
1992 P
32,162.78
b.)
Bonus

1,000.00
c.) Medical
Allowance
1,000.00
d.) Clothing
Allowance
750.00
e.) Hospitalization
allowance since 1988
2,000.00

Total
P 36, 912.78
6. Erdie Javate -
a.) Backwages as of Dec. 31,
1992 P 15,680.00
b.) Bonus

1,000.00
c.) Medical
Allowance

1,000.00
d.) Clothing
Allowance
750.00
e.) Hospitalization allowance
since 1999 2,000.00

Total
P 20,430.00
GRAND
TOTAL
P244,891.93
3. Ordering respondents to pay complainants
moral damages in the amount of P30,000.00 each
or in the total amount of P180,000.00 and
exemplary damages in the amount of
P120,000.00;
4. Ordering respondents to pay complainants
their attorney’s fees equivalent to ten (10%)
percent of their monetary claims in the sum of
P54,489.20; A__tµio
5. Ordering respondents to pay complainants
their cost of litigation in the amount of
P30,000.00
SO ORDERED."[4]
Thereafter, herein private respondents elevated the case to
respondent NLRC. They filed their appeal on December 28,
1992, and posted a surety bond on January 5, 1993, in the
amount of two hundred forty-four thousand, eight hundred
ninety one pesos and ninety three centavos (P244,891.93). But

herein petitioners filed an omnibus motion to dismiss on the
ground of late appeal, claiming that insufficient bond was filed
by NEECO I only on January 5, 1993. The bond excluded the
award of moral and exemplary damages, attorneys’ fees and
costs of litigation.
Respondent NLRC denied the motion and instead gave due
course to the appeal. On July 16, 1993, the NLRC modified the
decision, as follows:
"WHEREFORE, premises considered, the
appealed Decision is modified by deleting the
awards of moral and exemplary damages,
attorney’s fees and cost of litigation. The
amounts of retirement benefits received by the
individual complainants are to be applied to the
backwages that may be due to the herein
complainants. All other dispositions stand.
SO ORDERED."[5]
Meanwhile, on March 16, 1993, petitioners were reinstated by
NEECO I pending appeal.
On April 22, 1993, Erdie Javate withdrew his complaint and
opted to receive his retirement benefits amounting to forty-two
thousand, one hundred fourteen pesos and nine centavos
(P42,114.09).
Herein petitioners filed a motion for reconsideration, which the
NLRC denied on August 31, 1993. Likewise, herein private
respondents filed a motion for reconsideration but the same was
also denied on September 28, 1993.
Petitioners are now before us, via this special civil action under
Rule 65 of the Revised Rules of Court, raising three issues:
"I. WHETHER OR NOT THE APPEAL TAKEN

BY THE RESPONDENT NEECO I FROM THE
DECISION OF NLRC-RAB-III DOLE TO
NLRC THIRD DIVISION, MANILA, WAS
NOT PERFECTED WITHIN THE TEN (10)
CALENDAR DAYS REGLEMENTARY
PERIOD; HENCE THE APPEAL SHOULD
NOT BE GIVEN DUE COURSE; Mioo_t
II. WHETHER OR NOT PUBLIC
RESPONDENT NLRC ACTED WITHOUT OR
IN EXCESS OF JURISDICTION WHEN IT
RESOLVED TO DELETE EN TOTO MORAL
DAMAGES, EXEMPLARY DAMAGES,
ATTORNEY’S FEES AND COSTS OF
LITIGATION. FACTUAL BASIS OF WHICH
WERE ASCERTAINED BY THE
HONORABLE LABOR ARBITER BELOW;
III. WHETHER OR NOT THE ORDER TO
APPLY AND DEDUCT RECEIVABLE
BACKWAGES FROM RECEIVED BENEFITS
MAY BE REASONABLE BUT UNREALISTIC
AND ARBITRARY."
Petitioners contend that although respondent NEECO I filed its
appeal on December 28, 1992, such appeal was not completed
for failure to file the necessary supersedeas bond, during the
period prescribed by law, or until January 4, 1993. Hence, no
appeal was perfected.
Indisputable is the legal doctrine that the appeal of a decision
involving a monetary award in labor cases may be perfected
"only upon the posting of a cash or surety bond."[6]
The Labor Code, as amended by Republic Act No. 6715, clearly
provides:
"Art. 223. Appeal - Decisions, awards or orders

of the Labor Arbiter are final and executory
unless appealed to the Commission by any or
both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. . .
x x x
In case of a judgment involving a monetary
award, an appeal by the employer may be
perfected only upon the posting of a cash or
surety bond issued by a reputable bonding
company duly accredited by the Commission in
the amount equivalent to the monetary award in
the judgment appealed from.
x x x
Also, the perfection of an appeal within the reglementary period
and in the manner prescribed by law is jurisdictional, and
noncompliance with such legal requirement is fatal and
effectively renders the judgment final and executory.[7] Eo¢oo
However, in a number of cases,[8] this Court relaxed the rule to
resolve controversies on the merits,[9] specifically, when there
are special meritorious circumstances and issues.[10] We relaxed
the requirement of posting a supersedeas bond for the perfection
of an appeal, when there was substantial compliance with the
rule, so that on balance, we made technical considerations to
give way to equity and justice.[11]
In the case before us, the decision of the labor arbiter was issued
on December 21, 1992. Private respondents filed their appeal on
December 28, 1992, barely seven days from receipt thereof. The
bonding company issued the bond dated January 4, 1993, the
last day for filing an appeal. However, it was forwarded to
respondent NLRC only on the following day, January 5, 1993.
Considering these circumstances and the holiday season, we
find it equitable to ease the rules and consider that there was

substantial compliance with the requirements of the law.
As to the amount of bond, we note that there had been changes
in the Rules promulgated by the NLRC. Previously the
computation of the cash or surety bond to be posted by an
employer who wishes to appeal contained in the original rules
was "exclusive of moral and exemplary damages and attorney’s
fees."[12] It was later deleted sometime in 1991 and 1992, then
restored on November 20, 1993.[13]
It may be noted that while respondent NLRC in its Resolution
No. 11-01-91 dated November 7, 1991 deleted the phrase
"exclusive of moral and exemplary damages as well as
attorney’s fees" in the determination of the amount of the bond,
it provided a safeguard against the imposition of excessive
bonds providing "(T)he Commission may, in meritorious cases
and upon Motion of the Appellant, reduce the amount of the
bond."[14] Ettcoo_
In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, we ruled:
"In the case at bar, the backwages and thirteenth
month pay awarded to petitioner amounted only
to P270,000.00, but the moral and exemplary
damages, plus 10% attorney’s fees, totalled
P2,497,000.00. In other words, the moral and
exemplary damages and attorney’s fees are
almost ten (10) times greater than the basic
monetary judgment. Private respondents posted a
supersedeas bond of P270,000.00, obviously, on
the honest belief that the amount was sufficient.
At the very least, therefore, there was substantial
compliance with the requirement of appeal bond.
For to rule otherwise would negate the interest of
justice and deviate from the mandate of the Labor
Code that the rules of procedure should be
liberally construed, . . .

x x x
Since private respondents filed a bond which
they honestly believed sufficient for purposes of
their appeal, respondent NLRC should have
called their attention that the bond was
inadequate, which it did not."[15]
The unreasonable and excessive amount of bond would be
oppressive and unjust and would have the effect of depriving a
party of his right to appeal. Besides, private respondents stress
that the petitioners were paid their retirement benefits[16] and
that the cooperative has sufficient assets from which the other
claims for damages and attorney’s fees may be obtained.
We come next to the issue of the propriety of the award of moral
and exemplary damages.
To warrant an award of moral damages, it must be shown that
the dismissal of the employee was attended to by bad faith, or
constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy.[17] The Labor
Arbiter ruled that there was unfair labor practice:
"As a backdrop, complainants alleged, and this is
supported by documentary evidence, that on 7
February 1987, the then NEECO I Board of
Directors adopted their own Policy No. 3-33
under Resolution No. 47, series of 1987 requiring
all employees to avail of the retirement benefits.
All regular employees, including the
complainants were ordered to file their
application for retirement/resignation and/or
separation from the service under NEECO I
Form 87. All NEECO I employees have no
choice but to manifest their willingness to
retire. Xo÷ìµo_

However, the complainants pointed out that the
approval of the employees’ application for
retirement was not done in succession according
to the list, but according to the choice of the
respondents, and for which, complainants were
singled out from the list because they were union
officers, past officers and active members of the
complainant Association."[18]
x x x
"Clearly, therefore, complainants have
established the fact that they were illegally
dismissed by the respondents and their illegal
dismissal was even tainted with unfair labor
practice act. ..."[19]
Unfair labor practices violate the constitutional rights of workers
and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including
their right to bargain collectively and otherwise deal with each
other in an atmosphere of freedom and mutual respect; and
disrupt industrial peace and hinder the promotion of healthy and
stable labor-management relations.[20] As the conscience of the
government, it is the Court’s sworn duty to ensure that none
trifles with labor rights.[21]
For this reason, we find it proper in this case to impose moral
and exemplary damages on private respondent. However, the
damages awarded by the labor arbiter, to our mind, are
excessive. In determining the amount of damages recoverable,
the business, social and financial position of the offended parties
and the business and financial position of the offender are taken
into account.[22] It is our view that herein private respondents
had not fully acted in good faith. However, we are cognizant
that a cooperative promotes the welfare of its own members.
The economic benefits filter to the cooperative members. Either
equally or proportionally, they are distributed among members

in correlation with the resources of the association utilized.
Cooperatives help promote economic democracy and support
community development. Under these circumstances, we deem
it proper to reduce moral damages to only P10,000.00 payable
by private respondent NEECO I to each individual petitioner.
We also deem it sufficient for private respondent NEECO I to
pay each individual petitioner P5,000.00 to answer for
exemplary damages, based on the provisions of Articles 2229
and 2232 of the Civil Code.[23] E__÷oìµ
Having been illegally dismissed, individual petitioners are
entitled to reinstatement from the time they were illegally
dismissed, until they were reinstated on March 16, 1993. For
that period they are likewise entitled to backwages minus the
amount petitioners were forced to receive as "retirement"
pay.[24] It must be noted that the backwages computed by the
labor arbiter covered only until December 22, 1992 but did not
include backwages from January 1, 1993 to March 15, 1993,[25]
which should now be computed and included for payment. In
the event that the amount of "retirement" pay received by an
individual petitioner exceeds the amount of his backwages, then
the excess should be deemed as advances of salary which should
be refundable until fully repaid by him.
WHEREFORE, the petition is PARTIALLY GRANTED. The
assailed decision of the NLRC is AFFIRMED with
MODIFICATION. Private respondent Nueva Ecija 1 Electric
Cooperative is hereby ORDERED through its executive
officers:
1. to pay individual petitioners their full backwages from the
time they were illegally dismissed until the date of their
reinstatement on March 13, 1992, minus the amount they
received as "retirement" pay. In the event that the computed
backwages of a concerned petitioner is less than the amount of
so-called "retirement" pay already received, the difference
should be treated as advances refundable from his salary until
fully repaid;

2. to pay moral and exemplary damages in the amount of ten
thousand (P10,000.00) pesos and five thousand (P5,000.00)
pesos, respectively, to each of the petitioners who were illegally
terminated and/or compulsorily retired;
3. to pay ten (10%) of the total amount due to petitioners as
attorney’s fees; and
4. to pay the cost of suits.
Respondent NLRC is ORDERED to RECOMPUTE the total
monetary benefits awarded and due to the employees concerned
in accordance with the decision and to submit its compliance
thereon within thirty (30) days from notice of this decision, with
copies furnished to the parties.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ.,
concur. Xoìµo÷ttco
G.R. No. L-53590 July 31, 1984
ROSARIO BROTHERS INC. (MANILA COD DEPARTMENT
STORE), petitioner, 
 vs.
 HON. BLAS F. OPLE, THE NATIONAL
LABOR RELATIONS COMMISSION, and LEONARDO
LOVERIA, MARIETTA GALUT, LINDA TAPICERIA, JESUS S.
OLIVER, CLARITA SANGLE, RICARDO ROXAS, ANTONIO
MABUTOL, LUZ BAYNO, NESTOR SANCHEZ, TITO
CASTALEDA, EDDIE RODRIGUEZ, MANUEL MEJES,
FRANCISCA TAPICERIA, EDITHA BAYNO, ET AL.,
respondents.
Bueno & Primicias Law Office for petitioner.
The Solicitor General for respondents.

RELOVA, J .:
The issue raised in this case is whether an employer-employee

relationship exists between the petitioner and the private
respondents. It is the submission of petitioner that no such
relationship exists or has been created because the "series of
memoranda" issued by petitioner to the private respondents from
1973 to 1977 would reveal that it had no control and/or supervision
over the work of the private respondents.
Private respondents are tailors, pressers, stitchers and similar
workers hired by the petitioner in its tailoring department (Modes
Suburbia). Some had worked there since 1969 until their
separation on January 2, 1978. For their services, they were paid
weekly wages on piece-work basis, minus the withholding tax per
Bureau of Internal Revenue (BIR) rules. Further, they were
registered with the Social Security System (SSS) as employees of
petitioner and premiums were deducted from their wages; they
were also members of the Avenida-Cubao Manila COD
Department Store Labor Union which has a Collective Bargaining
Agreement with the company and; they were required to report for
work from Monday through Saturday and to stay in the tailoring
shop for no less than eight (8) hours a day, unless no job order
was given them after waiting for two to three hours, in which case,
they may leave and may come back in the afternoon. Their
attendance was recorded through a bundy clock just like the other
employees of petitioner. A master cutter distributes job orders
equally, supervises the work and sees to it that they were finished
as soon as possible. Quoting from the comment of the Solicitor
General, petitioner, in its memorandum, said —
Once the job orders and the corresponding materials were
distributed to them, private respondents were on their own. They
were free to do their jobs either in the petitioner's shop or
elsewhere at their option, without observing the regular working
time of the company provided that they finished their work on time
and in accordance with the specifications. As a matter of fact, they
were allowed to contract other persons to do the job for them; and
also to accept tailoring jobs from other establishments. (p. 202,
Rollo)
On September 7, 1977, the private respondents filed with the
Regional Office of the Department (now Ministry) of Labor a
complaint for violation of Presidential Decree 851 (13th month pay)
and Presidential Decree 525, as amended by Presidential Decree
1123 (Emergency Living Allowance) against herein petitioner.

After petitioner had filed its answer, the case was certified for
compulsory arbitration to the Labor Arbiter who, after due hearing,
rendered a decision on December 29, 1977 dismissing "private
respondents" claims for unpaid emergency living allowance and
13th month pay, for lack of merit, upon finding that the
complainants (herein private respondents) are not employees of
the respondent (herein petitioner) within the meaning of Article
267(b) of the Labor Code. As a consequence, the private
respondents were dismissed on January 2, 1978 and this
prompted them to file a complaint for illegal dismissal with the
Ministry of Labor. Meanwhile, the National Labor Relations
Commission (NLRC) affirmed the decision of the Labor Arbiter and
dismissed private respondents' appeal for lack of merit. However,
upon appeal to the Minister of Labor, the latter reversed the
resolution of the NLRC in a decision, dated March 27, 1979,
holding that —
The decision appealed from must be reversed. It is clearly
erronious. Ccmplainants and respondent are correct (sic) in
considering their relationship as one between employees and
employer. The labor arbiter should not have made a different
finding.
Complainants were employed as tailors, pressers, stitchers and
coatmakers in the tailoring department of the respondent. They are
hired through a master cutter and the department head and upon
the approval of the personnel department and the management.
They report to the shop from Monday to Saturday and record their
attendance with a bundy clock. They are required to stay in the
shop premises "for no less than 8 hours a day" unless no job is
given them "after waiting for two or three hours" in which case,
they are "allowed to leave."
The employees (tailors, pressers and stitchers) are paid by piece
per week according to the rates established by the company. They
are registered as employees with the Social Security System for
which premiums are deducted from their wages. Taxes are also
witheld from their wages pursuant to BIR rules. Moreover, they
enjoy the benefits due to employees under their collective
agreement with the company.
The tailors are given deadlines on their assigned jobs. They are
required to work on job orders as soon as these are given to them.

The master cutter is ordered "to watch out for tailors who
postponed their assigned job up to the last few days of the
deadline" and to report violators "for proper action." Tailors are
also required to follow the company code of discipline and the
rules and regulations of the tailoring department. Outright
dismissal is meted on anyone who brings out company patterns.
Under these facts, the existence of the employment relations can
not be disputed. The respondent itself, in its very first position
papers, accepts this fact. The labor arbiter certainly erred in
making a different finding.
However, respondent contends that the employees are excluded
from the coverage of PD 525, 851 and 1123 because of the nature
of their employment, there being 'no fixed number with regards to
entry and exit and no fixed number of days of work, with respect to
said employees. We have, however, examined carefully the
decrees and find absolutely no indication therein that the
employees are indeed excluded. Nor are the rules implementing
the decrees supportive of the respondent's contention. On the
contrary, the rules argue for the contrary view.
Section 2 of the rules implementing PD 525 provides: "The Decree
shall apply to all employees of covered employers, regardless of
their position, designation or employment status, and irrespective
of the method by which their wages are paid, including temporary,
casual, probationary, and seasonal employees and workers." And
Section 3, of the rules implementing PD 851 provides that "all
employees of covered employers shall be entitled to benefits
provided under the Decree ... regardless of their position,
designation or employment status, and irrespective of the method
by which their wages are paid." Section 2 of the same rules
explicitly provides that the rules apply to "workers paid on piece-
rate basis" or "those who are paid a standard amount for every
piece or unit of work produced that is more or less regularly
replicated, without regard to the time spent in producing the
same."
WHEREFORE, respondent is hereby ordered to pay the
emergency allowances under PD 525 and 1123 and the 13th
month pay under PD 851 from the date of the effectivity of said
decrees but not earlier than September 7, 1974 to the following
complainants: Leonardo Loveria, Editha Bayno, Fe Bonita, Ricardo

Roxas, Marietta Galut, Mercedes Oliver, Antonio Mabutol, Clarita
Sangle and Jesus Oliver; and the emergency allowances and 13th
month pay under said decrees from the date of the effectivity of
said decrees but not earlier than the date of the date of the start of
their employment, as indicated in the parenthesis after their
names, to the following complainants: Linda Tapiceria (July 14,
1975), Luz Bayno, (September 22, 1975), Tito Castañeda (October
20, 1976), Francisco Tapiceria (February 14, 1977), Manuel Mejes
(February 20, 1977), Eddie Rodriguez (July 4, 1977) and Nestor
Sanchez (July 22, 1977). The Socio-Economic Analyst of the
National Labor Relations Commission is hereby directed to
compute the amount of the awards stated in this order and to
submit a report thereon within 20 calendar days from receipt of this
order. (pp. 37-40, Rollo)
Thereafter, private respondents filed a motion for issuance of a writ
of execution of the aforesaid decision of the Minister of Labor
which was granted and, partially implemented.
On February 28, 1980, the Labor Arbiter, issued an order directing
the Chief of the Research and Information Department of the
Commission to designate a Socio-Economic Analyst to compute
the balance of private respondents' claims for the 13th month pay
and emergency living allowance in accordance with respondent
Minister's decision of March 27, 1979. Pursuant thereto, a report,
dated March 4, 1980, was submitted computing the balance of
private respondents' claims for emergency living allowance and
13th month pay up to February 29,1980 in the total amount of
P71,131.14. A writ of execution was issued for the satisfaction of
said amount.
Hence, the filing of this petition for certiorari, praying, among
others, to annul and set aside the decision of public respondent
Minister of Labor and to dismiss the claims of private respondents.
We cannot sustain the petition. It was filed on April 1, 1980 which
was too late because the Labor Minister's decision of March 27,
1979, subject of this judicial review, had already become final.
And, not only that. The questioned decision has already been
partially implemented by the sheriff as shown by his return, dated
July 17, 1979 (p. 96, Rollo). What is left for execution is the
balance of private respondents' claim.
Further, the petition is devoid of merit. As held in Mafinco Trading

Corporation vs. Ople, 70 SCRA 139, the existence of employer-
employee relationship is determined by the following elements,
namely: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to
control employees' conduct although the latter is the most
important element. On the other hand, an independent contractor
is one who exercises independent employment and contracts to do
a piece of work according to his own methods and without being
subjected to control of his employer except as to the result of his
work.
1. In the case at bar, as found by the public respondent, the
selection and hiring of private respondents were done by the
petitioner, through the master cutter of its tailoring department who
was a regular employee. The procedure was modified when the
employment of personnel in the tailoring department was made by
the management itself after the applicants' qualifications had been
passed upon by a committee of four. Later, further approval by the
Personnel Department was required.
2. Private respondents received their weekly wages from petitioner
on piece-work basis which is within the scope and meaning of the
term "wage" as defined under Article 97(f) of the New Labor Code
(PD 442), thus —
(f) "Wage" paid to any employee shag mean the remuneration or
earnings, however, designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be
done or for services rendered or to be rendered, and includes the
fair and reasonable value, as determined by the Secretary of
Labor, of board, lodging or other facilities customarily furnished by
the employer to the employee. ...
3. Petitioner had the power to dismiss private respondents, as
shown by the various memoranda issued for strict compliance by
private respondents, violations of which, in extreme cases, are
grounds for outright dismissal. In fact, they were dismissed on
January 2, 1978, although, the dismissal was declared illegal by
the Labor Arbiter. The case is pending appeal with the National
Labor Relations Commission.

4. Private respondents' conduct in the performance of their work
was controlled by petitioner, such as: (1) they were required to
work from Monday through Saturday; (2) they worked on job
orders without waiting for the deadline; (3) they were to observe
cleanliness in their place of work and were not allowed to bring out
tailoring shop patterns; and (4) they were subject to quality control
by petitioner.
5. Private respondents were allowed to register with the Social
Security System (SSS) as employees of petitioner and premiums
were deducted from their wages just like its other employees. And,
withholding taxes were also deducted from their wages for
transmittal to the Bureau of Internal Revenue (BIR).
6. Well-established is the principle that "findings of administrative
agencies which have acquired expertise because their jurisdiction
is confined to specific matters are generally accorded not only
respect but even finality. Judicial review by this Court on labor
cases do not go so far as to evaluate the sufficiency of the
evidence upon which the Deputy Minister and the Regional
Director based their determinations but are limited to issues of
jurisdiction or grave abuse of discretion (Special Events & Central
Shipping Office Workers Union vs. San Miguel Corporation, 122
SCRA 557)." In the case at bar, the questioned decision and order
of execution of public respondents are not tainted with unfairness
or arbitrariness that would amount to abuse of discretion or lack of
jurisdiction and, therefore, this Court finds no necessity to disturb,
much less, reverse the same.
WHEREFORE, premises considered, the petition is dismissed for
lack of merit.
SO ORDERED.
Melencio-Herrera, Plana, Gutierrez, Jr. and De la Fuente, JJ.,
concur.
Teehankee (Chairman), J., took no part.
G.R. Nos. 43633-34 September 14, 1990
PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN,
and FELINO BULANDUS, petitioners, 
 vs.
 THE COURT OF
APPEALS and THE PEOPLE OF THE PHILIPPINES,

respondents.
Januario T. Seno for petitioners.

NARVASA, J .:
Under the Industrial Peace Act,
1
government-owned or controlled
corporations had the duty to bargain collectively and were
otherwise subject to the obligations and duties of employers in the
private sector.
2
The Act also prohibited supervisors to become, or
continue to be, members of labor organizations composed of rank-
and-file employees,
3
and prescribed criminal sanctions for breach
of the prohibition.
4

It was under the regime of said Industrial Peace Act that the
Government Service Insurance System (GSIS, for short) became
bound by a collective bargaining agreement executed between it
and the labor organization representing the majority of its
employees, the GSIS Employees Association. The agreement
contained a "maintenance-of-membership" clause,
5
i.e., that all
employees who, at the time of the execution of said agreement,
were members of the union or became members thereafter, were
obliged to maintain their union membership in good standing for
the duration of the agreement as a condition for their continued
employment in the GSIS.
There appears to be no dispute that at that time, the petitioners
occupied supervisory positions in the GSIS. Pablo Arizala and
Sergio Maribao were, respectively, the Chief of the Accounting
Division, and the Chief of the Billing Section of said Division, in the
Central Visayas Regional Office of the GSIS. Leonardo Joven and
Felino Bulandus were, respectively, the Assistant Chief of the
Accounting Division (sometimes Acting Chief in the absence of the
Chief) and the Assistant Chief of the Field Service and Non-Life
Insurance Division (and Acting Division Chief in the absence of the
Chief), of the same Central Visayas Regional Office of the GSIS.
Demands were made on all four of them to resign from the GSIS
Employees Association, in view of their supervisory positions.
They refused to do so. Consequently, two (2) criminal cases for
violation of the Industrial Peace Act were lodged against them in
the City Court of Cebu: one involving Arizala and Maribao
6
and
the other, Joven and Bulandus.
7


Both criminal actions resulted in the conviction of the accused in
separate decisions.
8
They were each sentenced "to pay a fine of P
500.00 or to suffer subsidiary imprisonment in case of insolvency."
They appealed to the Court of Appeals.
9
Arizala's and Maribao's
appeal was docketed as CA-G.R. No. 14724-CR; that of Joven
and Bulandus, as CA-G.R. No. 14856-CR.
The appeals were consolidated on motion of the appellants, and
eventuated in a judgment promulgated on January 29, 1976
affirming the convictions of all four appellants. The appellants
moved for reconsideration. They argued that when the so called
"1973 Constitution" took effect on January 17, 1973 pursuant to
Proclamation No. 1104, the case of Arizala and Maribao was still
pending in the Court of Appeals and that of Joven and Bulandus,
pending decision in the City Court of Cebu; that since the
provisions of that constitution and of the Labor Code subsequently
promulgated (eff., November 1, 1974), repealing the Industrial
Peace Act-placed employees of all categories in government-
owned or controlled corporations without distinction within the Civil
Service, and provided that the terms and conditions of their
employment were to be "governed by the Civil Service Law, rules
and regulations" and hence, no longer subject of collective
bargaining, the appellants ceased to fall within the coverage of the
Industrial Peace Act and should thus no longer continue to be
prosecuted and exposed to punishment for a violation thereof.
They pointed out further that the criminal sanction in the Industrial
Peace Act no longer appeared in the Labor Code. The Appellate
Court denied their plea for reconsideration.
Hence, the present petition for review on certiorari.
The crucial issue obviously is whether or not the petitioners'
criminal liability for a violation of the Industrial Peace Act may be
deemed to have been obliterated in virtue of subsequent
legislation and the provisions of the 1973 and 1987 Constitutions.
The petitioners' contention that their liability had been erased is
made to rest upon the following premises:
1. Section 1, Article XII-B of the 1973 Constitution does indeed
provide that the "Civil Service embraces every branch, agency,
subdivision and instrumentality of the government, including
government-owned or controlled corporations, .. administered by
an independent Civil Service Commission.

2. Article 292 of the Labor Code repealed such parts and
provisions of the Industrial Peace Act as were "not adopted as
part" of said Code "either directly or by reference." The Code did
not adopt the provision of the Industrial Peace Act conferring on
employees of government-owned or controlled corporations the
right of self-organization and collective bargaining; in fact it made
known that the "terms and conditions of employment of all
government employees, including employees of government-
owned and controlled corporations," would thenceforth no longer
be fixed by collective bargaining but "be governed by the Civil
Service Law, rules and regulations."
10

3. The specific penalty for violation of the prohibition on
supervisors being members in a labor organization of employees
under their supervision has disappeared.
4. The Code also modified the concept of unfair labor practice,
decreeing that thenceforth, "it shall be considered merely as an
administrative offense rather than a criminal offense (and that)
(u)nfair labor practice complaints shall x x be processed like any
ordinary labor disputes."
11

On the other hand, in justification of the Appellate Tribunal's
affirmance of the petitioners' convictions of violations of the
Industrial Peace Act, the People-
1) advert to the fact that said Labor Code also states that "all
actions or claims accruing prior to ... (its) effectivity ... shall be
determined in accordance with the laws in force at the time of their
accrual;" and
2) argue that the legislature cannot generally intervene and vacate
the judgment of the courts, either directly or indirectly, by the
repeal of the statute under which said judgment has been
rendered.
The legal principles governing the rights of self-organization and
collective bargaining of rank-and-file employees in the
government- particularly as regards supervisory, and high level or
managerial employees have undergone alterations through the
years.
Republic Act No. 875

As already intimated, under RA 875 (the Industry Peace Act),
12

persons "employed in proprietary functions of the Government,
including but not limited to governmental corporations," had the
right of self-organization and collective bargaining, including the
right to engage in concerted activities to attain their objectives, e.g.
strikes.
But those "employed in governmental functions" were forbidden to
"strike for the purpose of securing changes or modification in their
terms and conditions of employment" or join labor organizations
which imposed on their members the duty to strike. The reason
obviously was that the terms and conditions of their employment
were "governed by law" and hence could not be fixed, altered or
otherwise modified by collective bargaining.
Supervisory employees were forbidden to join labor organizations
composed of employees under them, but could form their own
unions. Considered "supervisors' were those '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
grievance or effectively to recommend such acts if, in connection
with the foregoing, the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent
judgment."
13

Republic Act No. 2260
Similar provisions were found in R.A. No. 2260, the Civil Service
Act of 1959. This Act declared that the "Philippine Civil Service ...
(embraced) all branches, subdivisions and instrumentalities of the
government including government-owned and controlled
corporations."
14

It prohibited such civil service employees who were "employed in
governmental functions" to belong to any labor organization which
imposed on their members "the obligation to strike or to join
strikes." And one of the first issuances of the President after the
proclamation of martial law in September, 1972, was General
Order No. 5 which inter alia banned strikes in vital industries," as
well as 'all rallies, demonstrations and other forms of group
actions."
15

Not so prohibited, however, were those "employed in proprietary

functions of the Government including, but not limited to,
governmental corporations."
16
The Act also penalized any person
who "violates, refuses or neglects to comply with any ... provisions
(of the Act) or rules (thereunder promulgated) ... by a fine not
exceeding one thousand pesos or by imprisonment not exceeding
six months or both such fine and imprisonment in the discretion of
the court."
17

The 1973 Constitution
The 1973 Constitution laid down the broad principle that "(t)he
State shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane
conditions of work,"
18
and directed that the "National Assembly
shall provide for the standardization of compensation of
government officials and employees, including those in
government-owned or controlled corporations, taking into account
the nature of the responsibilities pertaining to, and the
qualifications required for, the positions concerned."
19

PD 442, The Labor Code
The Labor Code of the Philippines, Presidential Decree No. 442,
enacted within a year from effectivity of the 1973 Constitution,
20

incorporated the proposition that the "terms and conditions of
employment of all government employees, including employees of
government-owned and controlled corporations ... (are) governed
by the Civil Service Law, rules and regulations."
21
It incorporated,
too, the constitutional mandate that the salaries of said employees
"shall be standardized by the National Assembly."
The Labor Code,
22
however "exempted" government employees
from the right to self-organization for purposes of collective
bargaining. While the Code contained provisions acknowledging
the right of "all persons employed in commercial, industrial and
agricultural enterprises, including religious, medical or educational
institutions operating for profit" to "self-organization and to form,
join or assist labor organizations for purposes of collective
bargaining," they "exempted from the foregoing provisions:
a) security guards;
b) government employees, including employees of government
government-owned and/ or controlled corporations;

c) managerial employees; and
d) employees of religious, charitable, medical and educational
institutions not operating for profit, provided the latter do not have
existing collective agreements or recognized unions at the time of
the effectivity of the code or have voluntarily waived their
exemption."
23

The reason for denying to government employees the right to "self-
organization and to form, join or assist labor organizations for
purposes of collective bargaining" is presumably the same as that
under the Industrial Peace Act, i.e., that the terms and conditions
of government employment are fixed by law and not by collective
bargaining.
Some inconsistency appears to have arisen between the Labor
Code and the Civil Service Act of 1959. Under the Civil Service
Act, persons "employed in proprietary functions of the government
including, but not limited to, governmental corporations'-not being
within "the policy of the Government that the employees therein
shall not strike for the purpose of securing changes in their terms
and conditions of employment"-could legitimately bargain with their
respective employers through their labor organizations, and
corollarily engage in strikes and other concerted activities in an
attempt to bring about changes in the conditions of their work.
They could not however do so under the Labor Code and its
Implementing Rules and Regulations; these provided that
"government employees, including employees of government-
owned and/or controlled corporations," without distinction as to
function, were "exempted" (excluded is the better term) from "the
right to self-organization and to form, join or assist labor
organizations for purposes of collective bargaining," and by
implication, excluded as well from the right to engage in concerted
activities, such as strikes, as coercive measures against their
employers.
Members of supervisory unions who were not managerial
employees, were declared by the Labor Code to be "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 "
24

Managerial employees, on the other hand, were pronounced as
'not eligible to join, assist or form any labor organization."
25
A
"managerial employee" was defined as one vested with power or

prerogatives to lay down and execute management policies and/or
to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees, or to effectively recommend such
managerial actions."
26

Presidential Decree No. 807
Clarification of the matter seems to have been very shortly
attempted by the Civil Service Decree of the Philippines,
Presidential Decree No. 807 (eff., Oct. 6,1975) which superseded
the Civil Service Law of 1959 (RA 2260)
27
and repealed or
modified "all laws, rules and regulations or parts thereof
inconsistent with the provisions" thereof. The Decree categorically
described the scope and coverage of the "Civil Service" as
embracing 44 every branch, agency, subdivision, and
instrumentality of the government, including every government
owned or controlled corporation whether performing governmental
or propriety function.
28
The effect was seemingly to prohibit
government employees (including those "employed in proprietary
functions of the Government") to "strike for the purpose of securing
changes of their terms and conditions of employment,"
29

something which, as aforestated, they were allowed to do under
the Civil Service Act of 1959.
30

Be this as it may it seems clear that PD 807 (the Civil Service
Decree) did not modify the declared ineligibility of "managerial
employees" from joining, assisting or forming any labor
organization.
Executive Order No. 111
Executive Order No. 111, issued by President Corazon C. Aquino
on December 24, 1986 in the exercise of legislative powers under
the Freedom Constitution, modified the general disqualification
above mentioned of 'government employees, including employees
of government-owned and/or controlled corporations" from "the
right to self-organization and to form, join or assist labor
organizations for purposes of collective bargaining.' It granted to
employees "of government corporations established under the
Corporation Code x x the right to organize and to bargain
collectively with their respective employers."
31
To all 'other
employees in the civil service, ... (it granted merely) the right to
form associations for purposes not contrary to law,"
32
not for
"purposes of collective bargaining."

The 1987 Constitution
The provisions of the present Constitution on the matter appear to
be somewhat more extensive. They declare that the "right to self
organization shall not be denied to government employees;"
33
that
the State "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;" and that said workers "shall be entitled to security of tenure,
humane conditions of work, and a living wage, ... (and) also
participate in policy and decision-making processes affecting their
rights and benefits as may be provided by law.
34

CSC Memorandum Circular No. 6
Memorandum Circular No. 6 of the Civil Service Commission,
issued on April 21, 1987 enjoined strikes by government officials
and employees, to wit:
35

... Prior to the enactment by Congress of applicable laws
concerning strike by government employees, and considering that
there are existing laws which prohibit government officials and
employees from resorting to strike, the Commission enjoins, under
pain of administrative sanctions, all government officers and
employees from staging strikes, demonstrations, mass leaves,
walk-outs and other forms of mass action which will result in
temporary stoppage or disruption of public services. To allow
otherwise is to undermine or prejudice the government system.
Executive Order No. 180
The scope of the constitutional right to self-organization of
"government employees" above mentioned, was defined and
delineated in Executive Order No. 180 (eff. June 1, 1987).
According to this Executive Order, the right of self-organization
does indeed pertain to all "employees of all branches,
subdivisions, instrumentalities and agencies of the Government,
including government-owned or controlled corporations with
original charters;"
36
such employees "shall not be discriminated
against in respect of their employment by reason of their
membership in employees' organizations or participation in the
normal activities of their organization x x (and their) employment
shall not be subject to the condition that they shall not join or shall
relinquish their membership in the employees' organizations.
37


However, the concept of the government employees' right of self-
organization differs significantly from that of employees in the
private sector. The latter's right of self-organization, i.e., "to form,
join or assist labor organizations for purposes of collective
bargaining," admittedly includes the right to deal and negotiate
with their respective employers in order to fix the terms and
conditions of employment and also, to engage in concerted
activities for the attainment of their objectives, such as strikes,
picketing, boycotts. But the right of government employees to
"form, join or assist employees organizations of their own
choosing" under Executive Order No. 180 is not regarded as
existing or available for "purposes of collective bargaining," but
simply "for the furtherance and protection of their interests."
38

In other words, the right of Government employees to deal and
negotiate with their respective employers is not quite as extensive
as that of private employees. Excluded from negotiation by
government employees are the "terms and conditions of
employment ... that are fixed by law," it being only those terms and
conditions not otherwise fixed by law that "may be subject of
negotiation between the duly recognized employees' organizations
and appropriate government authorities,"
39
And while EO No. 180
concedes to government employees, like their counterparts in the
private sector, the right to engage in concerted activities, including
the right to strike, the executive order is quick to add that those
activities must be exercised in accordance with law, i.e. are subject
both to "Civil Service Law and rules" and "any legislation that may
be enacted by Congress,"
40
that "the resolution of complaints,
grievances and cases involving government employees" is not
ordinarily left to collective bargaining or other related concerted
activities, but to "Civil Service Law and labor laws and procedures
whenever applicable;" and that in case "any dispute remains
unresolved after exhausting all available remedies under existing
laws and procedures, the parties may jointly refer the dispute to
the (Public Sector Labor-Management) Council for appropriate
action."
41
What is more, the Rules and Regulations implementing
Executive Order No. 180 explicitly provide that since the "terms
and conditions of employment in the government, including any
political subdivision or instrumentality thereof and government-
owned and controlled corporations with original charters are
governed by law, the employees therein shall not strike for the
purpose of securing changes thereof.
42


On the matter of limitations on membership in labor unions of
government employees, Executive Order No. 180 declares that
"high level employees whose functions are normally considered as
policy making or managerial, or whose duties are of a highly
confidential nature shall not be eligible to join the organization of
rank-and-file government employees.
43
A "high level employee" is
one "whose functions are normally considered policy determining,
managerial or one whose duties are highly confidential in nature. A
managerial function refers to the exercise of powers such as: 1. To
effectively recommend such managerial actions; 2. To formulate or
execute management policies and decisions; or 3. To hire,
transfer, suspend, lay off, recall, dismiss, assign or discipline
employees.
44

Republic Act No. 6715
The rule regarding membership in labor organizations of
managerial and supervisory employees just adverted to, was
clarified and refined by Republic Act No. 6715, effective on March
21, 1989, further amending the Labor Code.
Under RA 6715 labor unions are regarded as organized either (a)
"for purposes of negotiation," or (b) "for furtherance and
protection"of the members' rights. Membership in unions organized
"for purposes of negotiation" is open only to rank-and-file
employees. "Supervisory employees" are ineligible "for
membership in a labor organization of the rank-and-file employees
but may join, assist or form separate labor organizations of their
own," i.e., one organized "for furtherance and protection" of their
rights and interests. However, according to the Rules
implementing RA 6715, "supervisory employees who are included
in an existing rank-and- file bargaining unit, upon the effectivity of
Republic Act No. 6715 shall remain in that unit ..." Supervisory
employees are "those who, in the interest of the employer,
effectively recommend such managerial actions
45
if the exercise of
such authority is not merely routinary or clerical in nature but
requires the use of independent judgment.
46

Membership in employees' organizations formed for purposes of
negotiation are open to rank-and-file employees only, as above
mentioned, and not to high level employees.
47
Indeed,
"managerial employees" or "high level employees" are, to repeat,
"not eligible to join, assist or form any labor organization" at all.
48
A

managerial employee is defined as "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."
49

This is how the law now stands, particularly with respect to
supervisory employees vis a vis labor organizations of employees
under them.
Now, the GSIS performs proprietary functions. It is a non-stock
corporation, managed by a Board of Trustees exercising the "usual
corporate powers."
50
In other words, it exercises all the powers of
a corporation under the Corporation Law in so far as they are not
otherwise inconsistent with other applicable law.
51
It is engaged
essentially in insurance, a business that "is not inherently or
exclusively a governmental function, ... (but) is on the contrary, in
essence and practice, of a private nature and interest."
52

1. The petitioners contend that the right of self-organization and
collectivebargaining had been withdrawn by the Labor Code from
government employees including those in government-owned and
controlled corporations- chiefly for the reason that the terms and
conditions of government employment, all embraced in civil
service, may not be modified by collective bargaining because set
by law. It is therefore immaterial, they say, whether supervisors are
members of rank-and-file unions or not; after all, the possibility of
the employer's control of the members of the union thru
supervisors thus rendering collective bargaining illusory, which is
the main reason for the prohibition, is no longer of any
consequence.
This was true, for a time. As already discussed, both under the
Labor Code and PD 807, government employees, including those
in government-owned or controlled corporations, were indeed
precluded from bargaining as regards terms and conditions of
employment because these were set by law and hence could not
possibly be altered by negotiation.
But EO 111 restored the right to organize and to negotiate and
bargain of employees of "government corporations established
under the Corporation Code." And EO 180, and apparently RA
6715, too, granted to all government employees the right of
collective bargaining or negotiation except as regards those terms
of their employment which were fixed by law; and as to said terms

fixed by law, they were prohibited to strike to obtain changes
thereof.
2. The petitioners appear to be correct in their view of the
disappearance from the law of the prohibition on supervisors being
members of labor organizations composed of employees under
their supervision. The Labor Code (PD 442) allowed supervisors (if
not managerial) to join rank-and-file unions. And under the
Implementing Rules of RA 6715, supervisors who were members
of existing labor organizations on the effectivity of said RA 6715
were explicitly authorized to "remain therein."
3. The correctness of the petitioners' theory that unfair labor
practices ceased to be crimes and were deemed merely
administrative offenses in virtue of the Labor Code, cannot be
gainsaid. Article 250 of the Labor Code did provide as follows:
ART. 250. Concept of unfair labor practice.-The concept of unfair
labor practice is hereby modified. Henceforth, it shall be
considered merely as an administrative offense rather than a
criminal offense. Unfair labor practice complaints shall, therefore,
be processed like any ordinary labor disputes.
But unfair labor practices were declared to be crimes again by later
amendments of the Labor Code effected by Batas Pambansa Blg.
70, approved on May 1, 1980. As thus amended, the Code now
pertinently reads as follows:
ART. 248. Concept of unfair labor practice and procedure for
prosecution thereof. — Unfair labor practices violate the right of
workers and employees to self organization, are inimical to the
legitimate interests of both labor and management including their
right to bargain collectively and otherwise deal with each other in
an atmosphere of freedom and mutual respect, and hinder the
promotion of healthy and stable labor management relations.
Consequently, unfair labor practices are not only violations of the
civil rights of both labor and management but are also offenses
against the State which shall be subject to prosecution and
punishment as herein provided.
xxx xxx xxx
Recovery of civil liability in the administrative proceedings shall bar
recovery under the Civil Code.

No criminal prosecution under this title may be instituted without a
final judgment, finding that an unfair labor practice was committed
having been first obtained in the preceding paragraph. ...
The decisive consideration is that at present, supervisors who
were already members of a rank-and-file labor organization at the
time of the effectivity of R.A. No. 6715, are authorized to "remain
therein." It seems plain, in other words, that the maintenance by
supervisors of membership in a rank-and-file labor organization
even after the enactment of a statute imposing a prohibition on
such membership, is not only not a crime, but is explicitly allowed,
under present law.
Now, in a case decided as early as 1935, People v. Tamayo,
53

where the appellants had appealed from a judgment convicting
them of a violation of a municipal -ordinance, and while their
appeal was pending, the ordinance was repealed such that the act
complained of ceased to be a criminal act but became legal, this
Court dismissed the criminal proceedings, pronouncing the effects
of the repeal to be as follows:
In the leading case of the United States vs. Cuna (12 Phil. 241),
and Wing vs. United States (218 U.S. 272), the doctrine was
clearly established that in the Philippines repeal of a criminal act
by its reenactment, even without a saving clause would not destroy
criminal liability. But not a single sentence in either derision
indicates that there was any desire to hold that a person could be
prosecuted convicted, and punished for acts no longer criminal.
There is no question that at common law and in America a much
more favorable attitude towards the accused exists relative to
statutes that have been repealed than has been adopted here. Our
rule is more in conformity with the Spanish doctrine, but even in
Spain, where the offense ceased to be criminal, petition cannot be
had (1 Pacheco, Commentaries, 296).
The repeal here was absolute and not a reenactment and repeal
by implication. Nor was there any saving clause. The legislative
intent as shown by the action of the municipal is that such conduct,
formerly denounced, is no longer deemed criminal, and it would be
illogical for this court to attempt to sentence appellant for the
offense that no longer exists.
We are therefore of the opinion that the proceedings against

appellant must be dismissed.
To the same effect and in even more unmistakable language is
People v. Almuete
54
where the defendants-appellees were
charged under section 39 of Republic Act No. 1199, as amended
(the Agricultural Land Tenancy Law of 1954) which penalized pre-
threshing by either agricultural tenant or his landlord. They sought
and secured a dismissal on the ground, among others, that there
was no law punishing the act charged-a reference to the fact that
Republic Act No. 1199 had already been superseded by the
Agricultural Land Reform Code of 1963 which instituted the
leasehold system and abolished share tenancy subject to certain
conditions. On appeal by the Government, this Court upheld the
dismissal, saying:
The legislative intent not to punish anymore the tenant's act of pre-
reaping and pre-threshing without notice to the landlord is inferable
from the fact that, as already noted, the Code of Agrarian Reforms
did not reenact section 39 of the Agricultural Tenancy Law and that
it abolished share tenancy which is the basis for penalizing
clandestine pre-reaping and pre-threshing.
xxx xxx xxx
As held in the Adillo case,
55
the act of pre-reaping and pre-threshing
without notice to the landlord, which is an offense under the Agricultural
Tenancy Law, had ceased to be an offense under the subsequent law,
the Code of Agrarian Reforms. To prosecute it as an offense when the
Code of Agrarian Reforms is already in force would be repugnant or
abhorrent to the policy and spirit of that Code and would subvert the
manifest legislative intent not to punish anymore pre-reaping and pre-
threshing without notice to the landholder.
xxx xxx xxx
The repeal of a penal law deprives the courts of jurisdiction to
punish persons charged with a violation of the old penal law prior
to its repeal (People vs. Tamayo, 61 Phil. 225; People vs. Sindiong
and Pastor, 77 Phil. 1000; People vs. Binuya, 61 Phil. 208; U.S.
vs. Reyes, 10 Phil. 423; U.S. vs. Academia, 10 Phil. 431. See
dissent in Lagrimas vs. Director of Prisons, 57 Phil. 247, 252, 254).
The foregoing precedents dictate absolution of the appellants of
the offenses imputed to them.

WHEREFORE, the judgments of conviction in CA-G.R. No. 14724-
CR and CA-G.R. No. 14856-CR, subject of the appeal, as well as
those in Crim. Case No. 5275-R and Crim. Case No. 4130-R
rendered by the Trial Court, are REVERSED and the accused-
appellants ACQUITTED of the charges against them, with costs de
officio.
SO ORDERED.
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

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