G.R. No.
142000            January 22, 2003
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF
CLUB INCORPORATED, petitioner,
vs.
TAGAYTAY HIGHLANDS EMPLOYEES UNION-
PGTWO, respondent.
Labor Law; Labor Unions; Certification Elections;
After a certificate of registration is issued to a union,
its legal personality cannot be subject to collateral
attack.—The petition fails. After a certificate of
registration is issued to a union, its legal personality
cannot be subject to collateral attack. It may be
questioned only in an independent petition for
cancellation in accordance with Section 5 of Rule V,
Book IV of the “Rules to Implement the Labor Code”
(Implementing Rules) which section reads: Sec. 5.
Effect of registration. The labor organization or
workers’ association shall be deemed registered and
vested with legal personality on the date of issuance
of its certificate of registration. Such legal personality
cannot thereafter be subject to collateral attack, but
may be questioned only in an independent petition for
cancellation in accordance with these Rules.
Same; Same; Same; The inclusion in a union of
disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to
misrepresentation, false statement or fraud.—The
inclusion in a union of disqualified employees is not
among the grounds for cancellation, unless such
inclusion is due to misrepresentation, false statement
or fraud under the circumstances enumerated in
Sections (a) and (c) of Article 239 of above-quoted
Article 239 of the Labor Code. THEU, having been
validly issued a certificate of registration, should be
considered to have already acquired juridical
personality which may not be assailed collaterally.
_______________
* THIRD DIVISION.
700
700
SUPREME COURT REPORTS ANNOTATED
Tagaytay Highlands International Golf Club
Incorporated vs. Tagaytay Highlands Employees
Union-PTGWO
Same; Same; Same; Where the employer alleges that
some signatures in the petition for certification
election were obtained through fraud, false statement
and misrepresentation, the proper procedure is for
said employer to file a petition for cancellation of the
certificate of registration, and not to intervene in a
petition for certification election.—As for petitioner’s
allegation that some of the signatures in the petition
for certification election were obtained through fraud,
false statement and misrepresentation, the proper
procedure is, as reflected above, for it to file a petition
for cancellation of the certificate of registration, and
not to intervene in a petition for certification election.
Same; Same; Same; The best forum for determining
whether there were indeed retractions from some of
the laborers is in the certification election itself
wherein the workers can freely express their choice in
a secret ballot.—Regarding the alleged withdrawal of
union members from participating in the certification
election, this Court’s following ruling is instructive: “
‘[T]he best forum for determining whether there were
indeed retractions from some of the laborers is in the
certification election itself wherein the workers can
freely express their choice in a secret ballot.’ Suffice it
to say that the will of the rank-and-file employees
should in every possible instance be determined by
secret ballot rather than by administrative or quasi-
judicial inquiry. Such representation and certification
election cases are not to be taken as contentious
litigations for suits but as mere investigations of a
non-adversary, fact-finding character as to which of
the competing unions represents the genuine choice
of the workers to be their sole and exclusive collective
bargaining representative with their employer.”
Same; Same; Same; Designation should be
reconciled with the actual job description of the
employees—the mere fact that an employee is
designated manager does not necessarily make him
one.—While petitioner submitted a list of its
employees with their corresponding job titles and
ranks, there is nothing mentioned about the
supervisors’ respective duties, powers and
prerogatives that would show that they can effectively
recommend managerial actions which require the use
of independent judgment. As this Court put it in Pepsi-
Cola Products Philippines, Inc. v. Secretary of Labor:
Designation should be reconciled with the actual job
description of subject employees x x x The mere fact
that an employee is designated manager does not
necessarily make him one. Otherwise, there would be
an absurd situation where one can be given the title
just to be deprived of the right to be a member of a
union. In the case of National Steel Corporation vs.
Laguesma (G.R. No. 103743, January 29, 1996), it
was stressed that: What is essential is the nature of
the employee’s function and not the nomenclature or
title given to the job which determines whether the
employee has rank-and-file or managerial status or
whether he is a supervisory employee. (Italics
supplied).
 Tagaytay Highlands International Golf Club
Incorporated vs. Tagaytay Highlands Employees
Union-PTGWO, 395 SCRA 699, G.R. No. 142000
January 22, 2003
CARPIO-MORALES, J.:
Before this Court on certiorari under Rule 45 is the
petition of the Tagaytay Highlands International Golf
Club Incorporated (THIGCI) assailing the February
15, 2002 decision of the Court of Appeals denying its
petition to annul the Department of Labor and
Employment (DOLE) Resolutions of November 12,
1998 and December 29, 1998.
On October 16, 1997, the Tagaytay Highlands
Employees Union (THEU)–Philippine Transport and
General Workers Organization (PTGWO), Local
Chapter No. 776, a legitimate labor organization said
to represent majority of the rank-and-file employees of
THIGCI, filed a petition for certification election before
the DOLE Mediation-Arbitration Unit, Regional Branch
No. IV.
THIGCI, in its Comment1 filed on November 27, 1997,
opposed THEU’s petition for certification election on
the ground that the list of union members submitted
by it was defective and fatally flawed as it included the
names and signatures of supervisors, resigned,
terminated and absent without leave (AWOL)
employees, as well as employees of The Country
Club, Inc., a corporation distinct and separate from
THIGCI; and that out of the 192 signatories to the
petition, only 71 were actual rank-and-file employees
of THIGCI.
THIGCI thus submitted a list of the names of its 71
actual rank-and-file employees which it annexed  to 2
its Comment to the petition for certification election.
And it therein incorporated the following
tabulation  showing the number of signatories to said
3 Series of 1997 with all the legal right and
petition whose membership in the union was being
questioned as disqualified and the reasons for
disqualification:
# of
Reasons for Disqualification respondent’s establishment is unorganized,
Signatures
13 Supervisors of THIGCI
6 Resigned employees of THIGCI
2 AWOL employees of THIGCI
53 Rank-and-file employees of The Country Club at Tagaytay
Highlands, Inc.
14
Supervisors of The Country Club at Tagaytay
6 Resigned employees of The Country Club
Inc.
3 Terminated employees of The Country Club proceedings
Highlands, Inc.
1 AWOL employees of The Country Club at Tagaytay Highlands,
Inc.
4 Signatures that cannot be deciphered jurisdiction of the DOLE Regional Director. In any
16 Names in list that were erased
2 Names with first names only
THIGCI also alleged that some of the signatures in
the list of union members were secured through
fraudulent and deceitful means, and submitted copies
of the handwritten denial and withdrawal of some of
its employees from participating in the
petition.4Replying to THIGCI’s Comment, THEU
asserted that it had complied with all the requirements
for valid affiliation and inclusion in the roster of
legitimate labor organizations pursuant to DOLE
Department Order No. 9, series of 1997,5 on account
of which it was duly granted a Certification of
Affiliation by DOLE on October 10, 1997;6 and that
Section 5, Rule V of said Department Order provides
that the legitimacy of its registration cannot be subject
to collateral attack, and for as long as there is no final
order of cancellation, it continues to enjoy the rights
accorded to a legitimate organization.
THEU thus concluded in its Reply7 that under the
circumstances, the Med-Arbiter should, pursuant to
Article 257 of the Labor Code and Section 11, Rule XI
of DOLE Department Order No. 09, automatically
order the conduct of a certification election.
By Order of January 28, 1998, 8 DOLE Med-Arbiter
Anastacio Bactin ordered the holding of a certification
election among the rank-and-file employees of
THIGCI in this wise, quoted verbatim:
We evaluated carefully this instant petition
and we are of the opinion that it is complete in
form and substance. In addition thereto, the
accompanying documents show that
indeed petitioner union is a legitimate
labor federation and its local/chapter was
duly reported to this Office as one of its
affiliate local/chapter. Its due reporting
through the submission of all the requirements
for registration of a local/chapter is a clear
showing that it was already included in the
roster of legitimate labor organizations in this
Office pursuant to Department Order No. 9
personality to institute this instant petition.
Pursuant therefore to the provisions of Article
257 of the Labor Code, as amended, and its
Implementing Rules as amended by
Department Order No. 9, since the
the holding of a certification election is
mandatory for it was clearly established that
petitioner is a legitimate labor organization.
Giving due course to this petition is therefore
proper and appropriate.9 (Emphasis supplied)
Passing on THIGCI’s allegation that some of the
union Highlands,
members are Inc.supervisory, resigned and AWOL
employees or employees of a separate and distinct
at Tagaytay
corporation, theHighlands,
Med-Arbiter held that the same
should be properly raised in the exclusion-inclusion
at Tagaytayat the pre-election conference. As for the
allegation that some of the signatures were secured
through fraudulent and deceitful means, he held that it
should be coursed through an independent petition for
cancellation of union registration which is within the
event, the Med-Arbiter held that THIGCI failed to
submit the job descriptions of the questioned
employees and other supporting documents to
bolster its claim that they are disqualified from
joining THEU.
THIGCI appealed to the Office of the DOLE Secretary "ISSUES/ASSIGNMENT OF ERRORS:
which, by Resolution of June 4, 1998, set aside the
said Med-Arbiter’s Order and accordingly dismissed THE COURT OF APPEALS GRIEVOUSLY
the petition for certification election on the ground that ERRED IN AFFIRMING THE RESOLUTION
there is a "clear absence of community or mutuality of DATED 12 NOVEMER 1998 HOLDING THAT
interests," it finding that THEU sought to represent SUPERVISORY EMPLOYEES AND NON-
two separate bargaining units (supervisory employees EMPLOYEES COULD SIMPLY BE
and rank-and-file employees) as well as employees of REMOVED FROM APPELLEES ROSTER OF
two separate and distinct corporate entities. RANK-AND-FILE MEMBERSHIP INSTEAD
OF RESOLVING THE LEGITIMACY OF
Upon Motion for Reconsideration by THEU, DOLE RESPONDENT UNION’S STATUS
Undersecretary Rosalinda Dimalipis-Baldoz, by
authority of the DOLE Secretary, issued DOLE THE COURT OF APPEALS GRIEVOUSLY
Resolution of November 12, 199810 setting aside the ERRED IN AFFIRMING THE RESOLUTION
June 4, 1998 Resolution dismissing the petition for DATED 12 NOVEMBER 1998 HOLDING
certification election. In the November 12, 1998 THAT THE DISQUALIFIED EMPLOYEES’
Resolution, Undersecretary Dimapilis-Baldoz held that STATUS COULD READILY BE RESOLVED
since THEU is a local chapter, the twenty percent DURING THE INCLUSION AND EXCLUSION
(20%) membership requirement is not necessary for it PROCEEDINGS
to acquire legitimate status, hence, "the alleged
retraction and withdrawal of support by 45 of the 70 THE COURT OF APPEALS GRIEVOUSLY
remaining rank-and-file members . . . cannot negate ERRED IN NOT HOLDING THAT THE
the legitimacy it has already acquired before the ALLEGATIONS OF PETITIONER HAD BEEN
petition;" that rather than disregard the legitimate DULY PROVEN BY FAILURE OF
status already conferred on THEU by the Bureau of RESPONDENT UNION TO DENY THE SAME
Labor Relations, the names of alleged disqualified AND BY THE SHEER WEIGHT OF
supervisory employees and employees of the Country EVIDENCE INTRODUCED BY PETITIONER
Club, Inc., a separate and distinct corporation, should AND CONTAINED IN THE RECORDS OF
simply be removed from the THEU’s roster of THE CASE"18
membership; and that regarding the participation of
alleged resigned and AWOL employees and those
The statutory authority for the exclusion of
whose signatures are illegible, the issue can be
supervisory employees in a rank-and-file union, and
resolved during the inclusion-exclusion proceedings
vice-versa, is Article 245 of the Labor Code, to wit:
at the pre-election stage.
Article 245. Ineligibility of managerial
The records of the case were thus ordered remanded
employees to join any labor organization; right
to the Office of the Med-Arbiter for the conduct of
of supervisory employees. — Managerial
certification election.
employees are not eligible to join, assist or
form any labor organization. Supervisory
THIGCI’s Motion for Reconsideration of the employees shall not be eligible for
November 12, 1998 Resolution having been denied membership in a labor organization of the
by the DOLE Undersecretary by Resolution of rank-and-file employees but may join, assist
December 29, 1998,11 it filed a petition for certiorari or form separate labor organizations of their
before this Court which, by Resolution of April 14, own.
1999,12 referred it to the Court of Appeals in line with
its pronouncement in National Federation of Labor
While above-quoted Article 245 expressly prohibits
(NFL) v. Hon. Bienvenido E. Laguesma, et al.,13 and in
supervisory employees from joining a rank-and-file
strict observance of the hierarchy of courts, as
union, it does not provide what would be the effect if a
emphasized in the case of St. Martin Funeral Home v.
rank-and-file union counts supervisory employees
National Labor Relations Commission.14
among its members, or vice-versa.
By Decision of February 15, 2000,15 the Court of
Citing Toyota19 which held that "a labor organization
Appeals denied THIGCI’s Petition for Certiorari and
composed of both rank-and-file and supervisory
affirmed the DOLE Resolution dated November 12,
employees is no labor organization at all," and the
1998. It held that while a petition for certification
subsequent case of Progressive Development Corp.
election is an exception to the innocent bystander
– Pizza Hut v. Ledesma20 which held that:
rule, hence, the employer may pray for the dismissal
of such petition on the basis of lack of mutuality of
interests of the members of the union as well as lack "The Labor Code requires that in organized
of employer-employee relationship following this and unorganized establishments, a petition for
Court’s ruling in Toyota Motor Philippines Corporation certification election must be filed by a
v. Toyota Motor Philippines Corporation Labor Union legitimate labor organization. The acquisition
et al.16 and Dunlop Slazenger [Phils.] v. Hon. of rights by any union or labor organization,
Secretary of Labor and Employment et al,17 petitioner particularly the right to file a petition for
failed to adduce substantial evidence to support certification election, first and foremost,
its allegations. depends on whether or not the labor
organization has attained the status of a
legitimate labor organization.
Hence, the present petition for certiorari, raising the
following
 In the case before us, the Med-Arbiter
summarily disregarded the petitioner’s prayer
that the former look into the legitimacy of the
respondent Union by a sweeping declaration
that the union was in the possession of a
charter certificate so that ‘for all intents and
purposes, Sumasaklaw sa Manggagawa sa
Pizza Hut (was) a legitimate
organization,’"21 (Underscoring and emphasis
supplied),
petitioner contends that, quoting Toyota, "[i]t becomes
necessary . . ., anterior to the granting of an order
allowing a certification election, to inquire into the
composition of any labor organization whenever the
status of the labor organization is challenged on the
basis of Article 245 of the Labor Code."22
Continuing, petitioner argues that without resolving
the status of THEU, the DOLE Undersecretary
"conveniently deferred the resolution on the serious
infirmity in the membership of [THEU] and ordered the
holding of the certification election" which is frowned
upon as the following ruling of this Court shows:
We also do not agree with the ruling of the
respondent Secretary of Labor that the
infirmity in the membership of the respondent
union can be remedied in "the pre-election
conference thru the exclusion-inclusion
proceedings wherein those employees who
are occupying rank-and-file positions will be
excluded from the list of eligible voters."
Public respondent gravely misappreciated the
basic antipathy between the interest of
supervisors and the interest of rank-and-file
employees. Due to the irreconcilability of their
interest we held in Toyota Motor Philippines v.
Toyota Motors Philippines Corporation Labor
Union, viz:
‘x x x
"Clearly, based on this provision
[Article 245], a labor organization
composed of both rank-and-file and
supervisory employees is no labor
organization at all. It cannot, for any
guise or purpose, be a legitimate labor
organization. Not being one, an
organization which carries a mixture of
rank-and-file and supervisory
employees cannot posses any of the
rights of a legitimate labor
organization, including the right to file
a petition for certification election for
the purpose of collective bargaining. It
becomes necessary, therefore,
anterior to the granting of an order
allowing a certification election, to
inquire into the composition of any
labor organization whenever the
status of the labor organization is
challenged on the basis of Article 245
of the Labor Code." (Emphasis by
petitioner) (Dunlop Slazenger (Phils.),
v. Secretary of Labor, 300 SCRA 120
[1998]; Underscoring and emphasis
supplied by petitioner.)
The petition fails. After a certificate of registration is
issued to a union, its legal personality cannot be
subject to collateral attack. It may be questioned only
in an independent petition for cancellation in
accordance with Section 5 of Rule V, Book IV of the
"Rules to Implement the Labor Code" (Implementing
Rules) which section reads:
Sec. 5. Effect of registration. The labor
organization or workers’ association shall be
deemed registered and vested with legal
personality on the date of issuance of its
certificate of registration. Such legal
personality cannot thereafter be subject to
collateral attack, but may be questioned
only in an independent petition for
cancellation in accordance with these Rules.
(Emphasis supplied)
The grounds for cancellation of union registration are
provided for under Article 239 of the Labor Code, as
follows:
Art. 239. Grounds for cancellation of union
registration. The following shall constitute
grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud
in connection with the adoption or ratification
of the constitution and by-laws or
amendments thereto, the minutes of
ratification, and the list of members who took
part in the ratification;
(b) Failure to submit the documents
mentioned in the preceding paragraph within
thirty (30) days from adoption or ratification of
the constitution and by-laws or amendments
thereto;
(c) Misrepresentation, false statements or
fraud in connection with the election of
officers, minutes of the election of officers, the
list of voters, or failure to subject these
documents together with the list of the newly
elected/appointed officers and their postal
addresses within thirty (30) days from
election;
(d) Failure to submit the annual financial
report to the Bureau within thirty (30) days
after the losing of every fiscal year and
misrepresentation, false entries or fraud in the
preparation of the financial report itself;
(e) Acting as a labor contractor or engaging in
the "cabo" system, or otherwise engaging in
any activity prohibited by law;
(f) Entering into collective bargaining
agreements which provide terms and
conditions of employment below minimum
standards established by law;
(g) Asking for or accepting attorney’s fees or
negotiation fees from employers;
(h) Other than for mandatory activities under
this Code, checking off special assessments
 or any other fees without duly signed
individual written authorizations of the
members;
(i) Failure to submit list of individual members
to the Bureau once a year or whenever
required by the Bureau; and
(j) Failure to comply with the requirements
under Articles 237 and 238, (Emphasis
supplied),
while the procedure for cancellation of
registration is provided for in Rule VIII, Book V
of the Implementing Rules.
The inclusion in a union of disqualified employees is
not among the grounds for cancellation, unless such
inclusion is due to misrepresentation, false statement
or fraud under the circumstances enumerated in
Sections (a) and (c) of Article 239 of above-quoted
Article 239 of the Labor Code.
THEU, having been validly issued a certificate of
registration, should be considered to have already
acquired juridical personality which may not be
assailed collaterally.
As for petitioner’s allegation that some of the
signatures in the petition for certification election were
obtained through fraud, false statement and
misrepresentation, the proper procedure is, as
reflected above, for it to file a petition for cancellation
of the certificate of registration, and not to intervene in
a petition for certification election.
they can effectively recommend managerial actions
which require the use of independent judgment.25
As this Court put it in Pepsi-Cola Products
Philippines, Inc. v. Secretary of Labor:26
Designation should be reconciled with the
actual job description of subject employees x
x x The mere fact that an employee is
designated manager does not necessarily
make him one. Otherwise, there would be an
absurd situation where one can be given the
title just to be deprived of the right to be a
member of a union. In the case of National
Steel Corporation vs. Laguesma (G. R. No.
103743, January 29, 1996), it was stressed
that:
What is essential is the nature of the
employee’s function and not the
nomenclature or title given to the job
which determines whether the
employee has rank-and-file or
managerial status or whether he is a
supervisory employee. (Emphasis
supplied).27
WHEREFORE, the petition is hereby DENIED. Let the
records of the case be remanded to the office of
origin, the Mediation-Arbitration Unit, Regional Branch
No. IV, for the immediate conduct of a certification
election subject to the usual pre-election conference.
SO ORDERED.

Regarding the alleged withdrawal of union members

from participating in the certification election, this
Court’s following ruling is instructive:

"‘[T]he best forum for determining whether

there were indeed retractions from some of
the laborers is in the certification election
itself wherein the workers can freely express
their choice in a secret ballot.’ Suffice it to say
that the will of the rank-and-file employees
should in every possible instance be
determined by secret ballot rather than by
administrative or quasi-judicial inquiry. Such
representation and certification election cases
are not to be taken as contentious litigations
for suits but as mere investigations of a non-
adversary, fact-finding character as to which
of the competing unions represents the
genuine choice of the workers to be their sole
and exclusive collective bargaining
representative with their employer."23

As for the lack of mutuality of interest argument of

petitioner, it, at all events, does not lie given, as found
by the court a quo, its failure to present substantial
evidence that the assailed employees are actually
occupying supervisory positions.

While petitioner submitted a list of its employees with

their corresponding job titles and ranks,24 there is
nothing mentioned about the supervisors’ respective
duties, powers and prerogatives that would show that

G.R. No. 110399 August 15, 1997
SAN MIGUEL CORPORATION SUPERVISORS AND
EXEMPT UNION AND ERNESTO L. PONCE,
President, petitioners,
vs.
HONORABLE BIENVENIDO E. LAGUESMA IN HIS
CAPACITY AS UNDERSECRETARY OF LABOR
AND EMPLOYMENT, HONORABLE DANILO L.
REYNANTE IN HIS CAPACITY AS MED-ARBITER
AND SAN MIGUEL CORPORATION, respondents.
Labor Law; Labor Unions; Criteria to Determine who
are Confidential Employees.—Confidential employees
are those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine,
and effectuate management policies in the field of
labor relations. The two criteria are cumulative, and
both must be met if an employee is to be considered
a confidential employee—that is, the confidential
relationship must exist between the employee and his
supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor relations.
Same; Same; Reason behind the confidential
employee rule.—The exclusion from bargaining units
of employees who, in the normal course of their
duties, become aware of management policies
relating to labor relations is a principal objective
sought to be accomplished by the “confidential
employee rule.” The broad rationale behind this rule is
that employees should not be placed in a position
involving a potential conflict of interests.
“Management should not be required to handle labor
relations matters through employees who are
represented by the union with which the company is
required to deal and who in the normal performance
of their duties may obtain advance information of the
company’s position with regard to contract
negotiations, the disposition of grievances, or other
labor relations matters.”
Same; Same; Same; In determining the confidentiality
of certain employees, a key question frequently
considered is the employee’s necessary access to
confidential labor relations information.—An important
element of the “confidential employee rule” is the
employee’s need to use labor relations information.
Thus, in determin-
______________________
* SECOND DIVISION.
371
VOL. 277, AUGUST 15, 1997
371
San Miguel Corp. Supervisors and Exempt
Employees
Union vs. Laguesma
ing the confidentiality of certain employees, a key
question frequently considered is the employee’s
necessary access to confidential labor relations
information.
Same; Same; Same; 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 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, “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.”
Same; Same; Same; Confidential employees who
may be excluded from bargaining unit must be strictly
defined so as not to needlessly deprive many
employees of their right to bargain collectively through
representatives of their choosing.—It must be borne
in mind that Section 3 of Article XIII of the 1987
Constitution mandates the State to guarantee to “all”
workers the right to self-organization. Hence,
confidential employees who may be excluded from
bargaining unit must be strictly defined so as not to
needlessly deprive many employees of their right to
bargain collectively through representatives of their
choosing.
Same; Same; Appropriate Bargaining Unit Defined.—
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.” San Miguel Corp. Supervisors and
Exempt Employees Union vs. Laguema, 277 SCRA
370, G.R. No. 110399 August 15, 1997
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  entitled "In
1
Re: Petition for Certification Election Among the
Supervisory and Exempt Employees of the San
Miguel Corporation Magnolia Poultry Plants of
Cabuyao, San Fernando and Otis, San Miguel
Corporation Supervisors and Exempt Union,
Petitioner." The Order excluded the employees under
supervisory levels 3 and 4 and the so-called exempt
employees from the proposed bargaining unit and
ruled out their participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the
Department of Labor and Employment (DOLE) a
Petition for Direct Certification or Certification Election
among the supervisors and exempt employees of the
SMC Magnolia Poultry Products Plants of Cabuyao,
San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L.
Reynante issued an Order ordering the conduct of
certification election among the supervisors and
exempt employees of the SMC Magnolia Poultry
Products Plants of Cabuyao, San Fernando and Otis
as one bargaining unit.
On January 18, 1991, respondent San Miguel
Corporation filed a Notice of Appeal with
Memorandum on Appeal, pointing out, among others,
the Med-Arbiter's error in grouping together all three
(3) separate plants, Otis, Cabuyao and San
Fernando, into one bargaining unit, and in including
supervisory levels 3 and above whose positions are
confidential in nature.
On July 23, 1991, the public respondent,
Undersecretary Laguesma, granted respondent
company's Appeal and ordered the remand of the
case to the Med-Arbiter of origin for determination of
the true classification of each of the employees
sought to be included in the appropriate bargaining
unit.
Upon petitioner-union's motion dated August 7, 1991,
Undersecretary Laguesma granted the
reconsideration prayed for on September 3, 1991 and
directed the conduct of separate certification elections
among the supervisors ranked as supervisory levels 1
to 4 (S1 to S4) and the exempt employees in each of
the three plants at Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San
Miguel Corporation filed a Motion for Reconsideration
with Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the
public respondent granting the Motion, citing the
doctrine enunciated in Philips Industrial Development,
Inc. v. NLRC   case. Said Order reads in part:
2
. . . Confidential employees, like
managerial employees, are not
allowed to form, join or assist a labor
union for purposes of collective
bargaining.
In this case, S3 and S4 Supervisors
and the so-called exempt employees
are admittedly confidential employees
and therefore, they are not allowed to
form, join or assist a labor union for
purposes of collective bargaining
following the above court's ruling.
Consequently, they are not allowed to
participate in the certification election.
WHEREFORE, the Motion is hereby
granted and the Decision of this Office
dated 03 September 1991 is hereby
modified to the extent that employees
under supervisory levels 3 and 4 (S3
and S4) and the so-called exempt
employees are not allowed to join the
proposed bargaining unit and are
therefore excluded from those who
could participate in the certification
election. 3
Hence this petition.
For resolution in this case are the following issues:
1. Whether
Supervisory
employees 3 and 4
and the exempt
employees of the
company are
considered confidential
employees, hence
ineligible from joining a
union.
2. If they are not
confidential
employees, do the
employees of the three
plants constitute an
appropriate single
bargaining unit.
On the first issue, this Court rules that said employees
do not fall within the term "confidential employees"
who may be prohibited from joining a union.
There is no question that the said employees,
supervisors and the exempt employees, are not
vested with the powers and prerogatives to lay down
and execute management policies and/or to hire,
transfer, suspend, layoff, recall, discharge or dismiss
employees. They are, therefore, not qualified to be
classified as managerial employees who, under
Article 245   of the Labor Code, are not eligible to join,
4
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.   The two criteria
5
are cumulative, and both must be met if an employee
is to be considered a confidential employee — that is,
the confidential relationship must exist between the
employee and his supervisor, and the supervisor must
handle the prescribed responsibilities relating to labor
relations. 6
The exclusion from bargaining units of employees
who, in the normal course of their duties, become
aware of management policies relating to labor
relations is a principal objective sought to be
accomplished by the ''confidential employee
rule." The broad rationale behind this rule is that
employees should not be placed in a position
involving a potential conflict of
interests.   "Management should not be required to
7 information which is regarded by the employer to be
handle labor relations matters through employees
who are represented by the union with which the
company is required to deal and who in the normal
performance of their duties may obtain advance
information of the company's position with regard to
contract negotiations, the disposition of grievances, or
other labor relations matters."  8
There have been precedents in this regards, thus
in Bulletin Publishing Company v. Hon. Augusto
Sanchez,   the Court held that "if these managerial
9
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"   and in the more recent case
10
of "Philips Industrial Development,
Inc. v. NLRC"   which held that confidential
11
employees, by the very nature of their functions,
assist and act in a confidential capacity to, or have
access to confidential matters of, persons who
exercise managerial functions in the field of labor
relations. Therefore, the rationale behind the
ineligibility of managerial employees to form, assist or
join a labor union was held equally applicable to
them. 12
An important element of the "confidential employee
rule" is the employee's need to use labor relations
information. Thus, in determining the confidentiality of
certain employees, a key question frequently
considered is the employee's necessary access to
confidential labor relations information.  13
It is the contention of respondent corporation that
Supervisor employees 3 and 4 and the exempt
employees come within the meaning of the term
"confidential employees" primarily because they
answered in the affirmative when asked "Do you
handle confidential data or documents?" in the
Position Questionnaires submitted by the Union.   In
14
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.   "If access to confidential
16
labor relations information is to be a factor in the
determination of an employee's confidential status,
such information must relate to the employer's labor
relations policies. Thus, an employee of a labor union,
or of a management association, must have access to
confidential labor relations information with respect to
his employer, the union, or the association, to be
regarded a confidential employee, and knowledge of
labor relations information pertaining to the
companies with which the union deals, or which the
association represents, will not cause an employee to
be excluded from the bargaining unit representing
employees of the union or association."   "Access to
17
confidential from the business standpoint, such as
financial information   or technical trade secrets, will
18
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,   "an employee may not be
21
excluded from appropriate bargaining unit merely
because he has access to confidential information
concerning employer's internal business operations
and which is not related to the field of labor relations."
It must be borne in mind that Section 3 of Article XIII
of the 1987 Constitution mandates the State to
guarantee to "all" workers the right to self-
organization. Hence, confidential employees who may
be excluded from bargaining unit must be strictly
defined so as not to needlessly deprive many
employees of their right to bargain collectively through
representatives of their choosing.  22
In the case at bar, supervisors 3 and above may not
be considered confidential employees merely
because they handle "confidential data" as such must
first be strictly classified as pertaining to labor
relations for them to fall under said restrictions. The
information they handle are properly classifiable as
technical and internal business operations data which,
to our mind, has no relevance to negotiations and
settlement of grievances wherein the interests of a
union and the management are invariably adversarial.
Since the employees are not classifiable under the
confidential type, this Court rules that they may
appropriately form a bargaining unit for purposes of
collective bargaining. Furthermore, even assuming
that they are confidential employees, jurisprudence
has established that there is no legal prohibition
against confidential employees who are not
performing managerial functions to form and join a
union.  23
In this connection, the issue of whether the
employees of San Miguel Corporation Magnolia
Poultry Products Plants of Cabuyao, San Fernando,
and Otis constitute a single bargaining unit needs to
be threshed out.
It is the contention of the petitioner union that the
creation of three (3) separate bargaining units, one
each for Cabuyao, Otis and San Fernando as ruled by
the respondent Undersecretary, is contrary to the
one-company, one-union policy. It adds that
Supervisors level 1 to 4 and exempt employees of the
three plants have a similarity or a community of
interests.
This Court finds the contention of the petitioner
meritorious.
An appropriate bargaining unit may be defined as "a
group of employees of a given employer, comprised
of all or less than all of the entire body of employees,
which the collective interest of all the employees,
consistent with equity to the employer, indicate to be
best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions
of the
law." 
24
A unit to be appropriate must effect a grouping of
employees who have substantial, mutual interests in
wages, hours, working conditions and other subjects
of collective bargaining. 25
It is readily seen that the employees in the instant
case have "community or mutuality of interests,"
which is the standard in determining the proper
constituency of a collective bargaining unit.   It is
26
undisputed that they all belong to the Magnolia
Poultry Division of San Miguel Corporation. This
means that, although they belong to three different
plants, they perform work of the same nature, receive
the same wages and compensation, and most
importantly, share a common stake in concerted
activities.
In light of these considerations, the Solicitor General
has opined that separate bargaining units in the three
different plants of the division will fragmentize the
employees of the said division, thus greatly
diminishing their bargaining leverage. Any concerted
activity held against the private respondent for a labor
grievance in one bargaining unit will, in all probability,
not create much impact on the operations of the
private respondent. The two other plants still in
operation can well step up their production and make
up for the slack caused by the bargaining unit
engaged in the concerted activity. This situation will
clearly frustrate the provisions of the Labor Code and
the mandate of the Constitution.  27
The fact that the three plants are located in three
different places, namely, in Cabuyao, Laguna, in Otis,
Pandacan, Metro Manila, and in San Fernando,
Pampanga is immaterial. Geographical location can
be completely disregarded if the communal or mutual
interests of the employees are not sacrificed as
demonstrated in UP v. Calleja-Ferrer where all non-
academic rank and file employee of the University of
the Philippines in Diliman, Quezon City, Padre Faura,
Manila, Los Baños, Laguna and the Visayas were
allowed to participate in a certification election. We
rule that the distance among the three plants is not
productive of insurmountable difficulties in the
administration of union affairs. Neither are there
regional differences that are likely to impede the
operations of a single bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993
is hereby SET ASIDE and the Order of the Med-
Arbiter on December 19, 1990 is REINSTATED under
which a certification election among the supervisors
(level 1 to 4) and exempt employees of the San
Miguel Corporation Magnolia Poultry Products Plants
of Cabuyao, San Fernando, and Otis as one
bargaining unit is ordered conducted.
SO ORDERED.

G.R. No. 151021             May 4, 2006
CAINTA CATHOLIC SCHOOL and MSGR.
MARIANO T. BALBAGO, Petitioners,
vs.
CAINTA CATHOLIC SCHOOL EMPLOYEES UNION
(CCSEU), Respondent.
Appeals; Only questions of law are entertained by the
Supreme Court through a petition for review on
certiorari, except when the factual findings of the
NLRC and the Court of Appeals are contradictory.—
Only questions of law are entertained by this Court
through a petition for review on certiorari. There are,
however, well-recognized exceptions such as in this
case when the factual findings of the NLRC and the
Court of Appeals are contradictory. A re-evaluation of
the records of this case is necessary for its proper
resolution.
Labor Law; Retirement; Retirement is a different
specie of termination of employment from dismissal
for just or authorized causes under Articles 282 and
283 of the Labor Code; While in all three cases, the
employee to be terminated may be unwilling to part
from service, there are eminently higher standards to
be met by the employer validly exercising the
prerogative to dismiss for just or authorized causes.—
Pursuant to the existing CBA, the School has the
option to retire an employee upon reaching the age
limit of sixty (60) or after having rendered at least
twenty (20) years of service to the School, the last
three (3) years of which must be continuous.
Retirement is a different specie of termination of
employment from dismissal for just or authorized
causes under Articles 282 and 283 of the Labor Code.
While in all three cases, the employee to be
terminated may be unwilling to part from service,
there are eminently higher standards to be met by the
employer validly exercising the prerogative to dismiss
for just or authorized causes. In those two instances,
it is indispensable that the employer establish the
existence of just or authorized causes for dismissal as
spelled out in the Labor Code. Retirement, on the
other hand, is the result of a bilateral act of the
parties, a voluntary agreement between the employer
and the employee whereby the latter after reaching a
certain age agrees and/or consents to sever his
employment with the former.
_______________
* THIRD DIVISION.
469
VOL. 489, MAY 4, 2006
469
Cainta Catholic School vs. Cainta Catholic School
Employees Union (CCSEU)
Same; Same; Collective Bargaining Agreements; By
their acceptance of the Collective Bargaining
Agreement (CBA), the Union and its members are
obliged to abide by the commitments and limitations
they had agreed to cede to management; A Collective
Bargaining Agreement (CBA), as a labor contract, is
not merely contractual in nature but impressed with
public interest—if the retirement provisions in the
Collective Bargaining Agreement (CBA) run contrary
to law, public morals, or public policy, such provisions
may very well be voided.—By their acceptance of the
CBA, the Union and its members are obliged to abide
by the commitments and limitations they had agreed
to cede to management. The questioned retirement
provisions cannot be deemed as an imposition foisted
on the Union, which very well had the right to have
refused to agree to allowing management to retire
employees with at least 20 years of service. It should
not be taken to mean that retirement provisions
agreed upon in the CBA are absolutely beyond the
ambit of judicial review and nullification. A CBA, as a
labor contract, is not merely contractual in nature but
impressed with public interest. If the retirement
provisions in the CBA run contrary to law, public
morals, or public policy, such provisions may very well
be voided. Certainly, a CBA provision or employment
contract that would allow management to subvert
security of tenure and allow it to unilaterally “retire”
employees after one month of service cannot be
upheld. Neither will the Court sustain a retirement
clause that entitles the retiring employee to benefits
less than what is guaranteed under Article 287 of the
Labor Code, pursuant to the provision’s express
proviso thereto in the provision.
Same; Same; Same; Under Article 287 of the Labor
Code, a Collective Bargaining Agreement (CBA) may
validly accord management the prerogative to
optionally retire an employee under the terms and
conditions mutually agreed upon by management and
the bargaining union, even if such agreement allows
for retirement at an age lower than the optional
retirement age or the compulsory retirement age;
Under ordinary contemplation, a Collective Bargaining
Agreement (CBA) provision entitling an employee to
retire after 20 years of service and accordingly collect
retirement benefits is “reward for services rendered
since it enables an employee to reap the fruits of his
labor—particularly retirement benefits, whether lump-
sum or otherwise—at an earlier age, when said
employee, in presumably better physical and mental
condition, can enjoy them better and longer.”—Yet the
CBA in the case at bar contains no such infirmities
which must be

470
470
SUPREME COURT REPORTS ANNOTATED
Cainta Catholic School vs. Cainta Catholic School
Employees Union (CCSEU)
stricken down. There is no essential difference
between the CBA provision in this case and those we
affirmed in Pantranco and Progressive. Twenty years
is a more than ideal length of service an employee
can render to one employer. Under ordinary
contemplation, a CBA provision entitling an employee
to retire after 20 years of service and accordingly
collect retirement benefits is “reward for services
rendered since it enables an employee to reap the
fruits of his labor—particularly retirement benefits,
whether lump-sum or otherwise—at an earlier age,
when said employee, in presumably better physical
and mental condition, can enjoy them better and
longer.” We affirm the continued validity of Pantranco
and its kindred cases, and thus reiterate that under
Article 287 of the Labor Code, a CBA may validly
accord management the prerogative to optionally
retire an employee under the terms and conditions
mutually agreed upon by management and the
bargaining union, even if such agreement allows for
retirement at an age lower than the optional
retirement age or the compulsory retirement age. The
Court of Appeals gravely erred in refusing to consider
this case from the perspective of Pantranco, or from
the settled doctrine enunciated therein.
Same; Same; Same; Management Prerogatives;
There is perhaps a greater imperative to recognize
the management prerogative on retirement than the
prerogative to dismiss employees for just or
authorized causes; There is a greater subjectivity, not
to mention factual dispute, attached to the concepts of
just or authorized cause than retirement which
normally contemplates merely the attainment of a
certain age or a certain number of years in the
service.—The law and this Court frowns upon unfair
labor practices by management, including so-called
union-busting. Such illegal practices will not be
sustained by the Court, even if guised under
ostensibly legal premises. But with respect to an
active unionized employee who claims having lost
his/her job for union activities, there are different
considerations presented if the termination is justified
under just or authorized cause under the Labor Code;
and if separation from service is effected through the
exercise of a duly accorded management prerogative
to retire an employee. There is perhaps a greater
imperative to recognize the management prerogative
on retirement than the prerogative to dismiss
employees for just or authorized causes. For one,
there is a greater subjectivity, not to mention factual
dispute, attached to the concepts of just or authorized
cause
471
VOL. 489, MAY 4, 2006
471
Cainta Catholic School vs. Cainta Catholic School
Employees Union (CCSEU)
than retirement which normally contemplates merely
the attainment of a certain age or a certain number of
years in the service. It would be easier for
management desirous to eliminate pesky union
members to abuse the prerogative of termination for
such purpose since the determination of just or
authorized cause is rarely a simplistic question, but
involves facts highly prone to dispute and subjective
interpretation.
Same; Same; Same; Same; The exercise by
management of its retirement prerogative is less
susceptible to dubitability as to the question whether
an employee could be validly retired—the only factual
matter to consider then is whether the employee
concerned had attained the requisite age or number
of years in service.—The exercise by management of
its retirement prerogative is less susceptible to
dubitability as to the question whether an employee
could be validly retired. The only factual matter to
consider then is whether the employee concerned
had attained the requisite age or number of years in
service pursuant to the CBA or employment
agreement, or if none, pursuant to Article 287 of the
Labor Code. In fact, the question of the amount of
retirement benefits is more likely to be questioned
than the retirement itself. Evidently, it more clearly
emerges in the case of retirement that management
would anyway have the right to retire an employee, no
matter the degree of involvement of said employee in
union activities.
Same; Same; Same; Same; Our law’s protection of
the right to organize labor does not translate into
perpetual job security for union leaders by reason of
their leadership role alone; The exercise by the
employer of a valid and duly established prerogative
to retire an employee does not constitute unfair labor
practice.—There is another point that militates against
the Union. A ruling in its favor is tantamount to a
concession that a validly drawn management
prerogative to retire its employees can be judicially
interfered on a showing that the employee in question
is highly valuable to the union. Such a rule would be a
source of mischief, even if narrowly carved out by the
Court, for it would imply that an active union member
or officer may be, by reason of his/her importance to
the union, somehow exempted from the normal
standards of retirement applicable to the other,
perhaps less vital members of the union. Indeed, our
law’s protection of the right to organize labor does not
translate into perpetual job security for union leaders
by reason of their leadership role alone. Should we
entertain such a notion, the detriment is ultimately to
the
472
472
SUPREME COURT REPORTS ANNOTATED
Cainta Catholic School vs. Cainta Catholic School
Employees Union (CCSEU)
union itself, promoting as it would a stagnating
entrenched leadership. We can thus can comfortably
uphold the principle, as reiterated in Philippine
Airlines, that the exercise by the employer of a valid
and duly established prerogative to retire an
employee does not constitute unfair labor practice.
Same; Words and Phrases; Managerial Employees; A
managerial employee is one who is vested with
powers or prerogatives to lay down and execute
management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline
employees, or to effectively recommend such
managerial actions; A Dean of Student Affairs
exercises managerial functions.—Article 212(m) of
the Labor Code defines a managerial employee 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, or to effectively
recommend such managerial actions.” The functions
of the Dean of Student Affairs, as occupied by Llagas,
are enumerated in the Faculty Manual. The salient
portions are hereby enumerated: a. Manages the
High School Department with the Registrar and
Guidance Counselors (acting as a COLLEGIAL
BODY) in the absence of the Director or Principal. b.
Enforces the school rules and regulations governing
students to maintain discipline. x x x x g. Plans with
the Guidance Counselors student leadership training
programs to encourage dynamic and responsible
leadership among the students and submits the same
for the approval of the Principal/Director. x x x x i.
Studies proposals on extracurricular or co-curricular
activities and projects proposed by teachers and
students and recommends to the Principal/Director
the necessary approval. j. Implements and supervises
activities and projects approved by the
Principal/Director so that the activities and projects
follow faithfully the conditions set forth by the
Principal/Director in the approval. k. Assists in the
planning, supervising and evaluating of programs of
co-curricular activities in line with the philosophy and
objectives of the School for the total development of
the students. l. Recommends to the Principal policies
and rules to serve as guides to effective
implementation of the student activity program. x x x x
It is fairly obvious from a perusal of the list that the
Dean of Student Affairs exercises managerial
functions, thereby classifying Llagas as a managerial
employee.
Same; Same; Supervisory Employees; Supervisory
employees are those who, in the interest of the
employer, effectively recommend
473
VOL. 489, MAY 4, 2006
473
Cainta Catholic School vs. Cainta Catholic School
Employees Union (CCSEU)
such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature
but requires the use of independent judgment.—
Supervisory employees, as defined in Article 212(m)
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. In the same vein, a reading of the above
functions leads us to conclude that Javier was a
supervisory employee. Verily, Javier made
recommendations as to what actions to take in hiring,
termination, disciplinary actions, and management
policies, among others. Cainta Catholic School vs.
Cainta Catholic School Employees Union (CCSEU),
489 SCRA 468, G.R. No. 151021 May 4, 2006
 DECISION
TINGA, J.:
The main issue for resolution hinges on the validity of
a stipulation in a Collective Bargaining Agreement
(CBA) that allows management to retire an employee
in its employ for a predetermined lengthy period but
who has not yet reached the minimum compulsory
retirement age provided in the Labor Code.
Jurisprudence has answered the question in the
affirmative a number of times and our duty calls for
the application of the principle of stare decisis. As a
consequence, we grant the petition and reverse the
Court of Appeals.
Before us is a petition for review on certiorari under
Rule 45 of the Rules of Court, assailing the
Decision1 dated 20 August 2001 of the Court of
Appeals in CA-G.R. SP No. 50851, which reversed
the Resolutions dated 31 January 1997,2 and 30 April
19973 of the National Labor Relations Commission
(NLRC), Third Division in NLRC NCR CC No. L-
000028-93 (NLRC RAB-IV-7-6827-94-R), as well as
the Resolution4 dated 6 December 2001.
The antecedent facts follow:
On 6 March 1986, a Collective Bargaining Agreement
(CBA) was entered into between Cainta Catholic
School (School) and the Cainta Catholic School
Employees Union (Union) effective 1 January 1986 to
31 May 1989. This CBA provided, among others, that:
ARTICLE IX
DURATION OF AGREEMENT
This Collective Bargaining Agreement shall become
effective and binding upon the parties from January 1,
1986 up to May 31, 1989. At least sixty (60) days
before the expiration of this Agreement, the parties
hereto shall submit written proposals which shall be
made the basis of negotiations for the execution of a
new agreement.
If no new agreement is reached by the parties at the
expiration of this agreement, all the provisions of this
Agreement shall remain full force and in effect, up to
the time a new Agreement shall be executed.5
Msgr. Mariano Balbago (Balbago) was appointed
School Director in April 1987. From this time, the
Union became inactive.
It was only in 10 September 1993 that the Union held
an election of officers, with Mrs. Rosalina Llagas
(Llagas) being elected as President; Paz Javier
(Javier), Vice-President; Fe Villegas (Villegas),
Treasurer; and Maria Luisa Santos (Santos),
Secretary. Llagas was then the Dean of the Student
Affairs while Villegas and Santos were Year-Level
Chairmen. The other elected officers were Rizalina
Fernandez, Ester Amigo, secretaries; Nena Marvilla,
treasurer; Gilda Galange and Jimmy del Rosario,
auditors; Filomeno Dacanay and Adelina Andres,
P.R.O.s; and Danilo Amigo and Arturo Guevarra,
business managers.6
On 15 October 1993, the School retired Llagas and
Javier, who had rendered more than twenty (20)
years of continuous service, pursuant to Section 2,
Article X of the CBA, to wit:
An employee may be retired, either upon application
by the employee himself or by the decision of the
Director of the School, upon reaching the age of sixty
(60) or after having rendered at
least twenty (20) years of service to the School the
last three (3) years of which must be continuous.7
Three (3) days later, the Union filed a notice of strike
with the National Conciliation and Mediation Board
(NCMB) docketed as NCMB-RB-12-NS-10-124-93.
On 8 November 1993, the Union struck and picketed
the School’s entrances.
On 11 November 1993, then Secretary of Labor Ma.
Nieves R. Confesor issued an Order certifying the
labor dispute to the National Labor Relations
Commission (NLRC). The dispositive portion reads:
"WHEREFORE, PREMISES CONSIDERED, this
Office hereby certifies the labor dispute at the Cainta
Catholic School to the National Labor Relations
Commission for compulsory arbitration, pursuant to
Article 263(g) of the Labor Code as amended."
"Accordingly, all striking teachers and employees are
directed to return to work within 24 hours from receipt
of this Order and the School Administrator to accept
all returning employees under the same terms and
conditions prevailing prior to the strike."
"Furthermore, the effects of the termination of Ms.
Rosalinda Llagas and Paz A. Javier are hereby
suspended. In line with this Order, the School
Administration is ordered to reinstate them to their
former positions without loss of seniority rights and
privileges pending determination of the validity of their
dismissal."
"Both parties are further directed to cease and desist
from committing any acts that might aggravate the
situation."
"SO ORDERED."8
On 20 December 1993, the School filed a petition
directly with the NLRC to declare the strike illegal.
On 27 July 1994, the Union filed a complaint9 for
unfair labor practice before the NLRC docketed as
NLRC Case No. RAB-IV-7-6827-94-R, entitled,
"Cainta Catholic School Employees Union v. Cainta
Catholic School, et. al.," before Arbitration Branch IV.
Upon motion, then Labor Arbiter Oswald Lorenzo
ordered the consolidation of this unfair labor practice
case with the above-certified case.
On 31 January 1997, the NLRC rendered a
Resolution favoring the School.
Three (3) issues were passed upon by the NLRC,
namely: (1) whether the retirement of Llagas and
Javier is legal; (2) whether the School is guilty of
unfair labor practice; and (3) whether the strike is
legal.
The NLRC ruled that the retirement of Llagas and
Javier is legal as the School was merely exercising an
option given to it under the CBA.10 The NLRC
dismissed the unfair labor practice charge against the
School for insufficiency of evidence. Furthermore, it
was found that the strike declared by the Union from 8
to 12 November 1993 is illegal, thereby declaring all
union officers to have lost their employment status.11
The Union moved for reconsideration but it was
denied in a Resolution dated 30 April 1997.
Hence, on 9 July 1997, the Union filed a petition for
certiorari before this Court docketed as G.R. No.
129548. The Court issued a temporary restraining
order (TRO) against the enforcement of the subject
resolutions effective as of 23 July 1997. The School,
however, filed a motion for clarification considering
that it had already enforced the 31 January 1997
NLRC Resolution.
On 28 July 1997, ten (10) regular teachers, who were
declared to have lost their employment status under
the aforesaid NLRC Resolution reported back to work
but the School refused to accept them by reason of its
pending motion for clarification. This prompted the
Union to file a petition for contempt against Balbago
and his agents before this Court, docketed as G.R.
No. 130004, which was later on consolidated with
G.R. No. 129548.
Pursuant to the ruling of this Court in St. Martin
Funeral Homes v. NLRC,12 the case was referred to
the Court of Appeals and re-docketed as CA-G.R. SP
No. 50851.
On 20 August 2001, the Court of Appeals rendered a
decision giving due course and granting the petition to
annul and set aside the 31 January 1997 and 30 April
1997 Resolutions of the NLRC; while dismissing the
petition for contempt for lack of merit. The decretal
portion of the decision reads:
WHEREFORE, premises considered, the petition to
annul and set aside the 31 January 1997 and the 30
April 1997 resolutions of the National Labor Relations
Commission is GRANTED. Judgment is hereby
RENDERED directing private respondents: 1) to
REINSTATE the terminated union officers, except
Rosalinda Llagas, Paz Javier, Gilda Galange and
Ester Amigo, to their former positions without loss of
seniority rights and other privileges with full
backwages, inclusive of allowances and other
benefits or their monetary equivalent from 9 June
1997 up to the time of their actual reinstatement; 2) to
pay Rosalinda Llagas: a) separation pay equivalent to
one (1) month pay for every year of service, in lieu of
reinstatement, with full backwages, inclusive of
allowances and other benefits or their monetary
equivalent from 9 June 1997 up to the time of the
finality of this decision; b) moral and exemplary
damages in the amount of ten thousand pesos
(P10,000.00) and five thousand (P5,000.00),
respectively; 3) to pay Paz Javier, or her heirs: a)
unpaid salaries, inclusive of allowances and other
benefits, including death benefits, or their monetary
equivalent from the time her compensation was
withheld from her up to the time of her death; b)
separation pay equivalent to one (1) month’s salary
for every year of service; and c) moral and exemplary
damages in the amount of ten thousand pesos
(P10,000.00) and five thousand pesos (P5,000.00),
respectively.
Private respondents are also ordered to pay petitioner
union attorney’s fees equivalent to five percent (5%)
of the total judgment award.
The petition for contempt, however, is DISMISSED for
lack of merit.
No pronouncement as to costs.
SO ORDERED.13
In reversing the decision of the NLRC, the Court of
Appeals construed the retirement of Llagas and Javier
as an act amounting to unfair labor practice when
viewed against the backdrop of the relevant
circumstances obtaining in the case. The appellate
court pointed out, thus:
The two happened to be the most vocal, dynamic and
influential of all union officers and members and they
held considerable suasion over the other employees.
Rosalinda Llagas objected to the signing of the
prepared form distributed by the school, as a
consequence of which, no one accomplished the
form, and opposed the formation of the high school
faculty club as the teachers already had sufficient
representation through the union. Paz Javier, on the
other hand, demanded that she be given the floor
during the faculty club organizational meeting and
went on to win the presidency of the faculty club,
conclusively showing that she enjoyed the support of
the high school teachers. They were therefore a new
and different breed of union leaders – assertive,
militant and independent – the exact opposite of
former union president Victor Javier who seemed to
be passive, cooperative and pacific. The school saw
the two as threats which it could not control, and
faced with a very uncomfortable situation of having to
contend with an aggressive union which just
dominated the high school faculty club (except for
Joel Javeniar, all of the faculty club’s officers were
union members; Rollo, p. 418), the school decided to
"nip in the bud" the reactivated union by retiring its
most prominent leaders.
xxxx
It is not difficult to see the anti-union bias of the
school. One of the first acts of private respondent
Msgr. Balbago immediately after his assumption of
office as school director was to ask for a moratorium
on all union activities. With the union in inactive
status, the school felt secure and comfortable but
when the union reactivated, the school became
apprehensive and reacted by retiring the union’s two
topmost officers by invoking the provisions of the
CBA. When the union furnished the school, through
counsel, a copy of a proposed CBA on 3 November
1993, the school in a cavalier fashion ignored it on the
pretext that the union no longer enjoyed the majority
status among the employees x x x14
The appellate court concluded that the retirement of
the two (2) union officers was clearly to bust the
reactivated union.
Having established that the School committed unfair
labor practice, the Court of Appeals declared that the
"no-strike, no-lockout clause" in the CBA was not
violated when the union members staged a strike
from 8 to 12 November 1993.15 It further held that
minor disorders or isolated incidents of perceived
coercion attending the strike do not categorize it as
illegal:
We studied carefully the available records and found
that the existence of force during the strike was
certainly not pervasive and widespread, or
consistently and deliberately resorted to as a matter
of policy, so as to stamp the strike with illegality, or to
cause the loss of employment of the guilty party x x
x 16
The motion for reconsideration subsequently filed by
the School was denied in a Resolution dated 6
December 2001, save in case of some union officers
where the appellate court modified its ruling granting
them separation pay instead of reinstatement
because of their retirement or death.17
Thereafter, petitioners filed this petition for review on
certiorari raising three main issues, summarized as:
(1) whether the School’s decision to retire Llagas and
Javier constitutes unfair labor practice; (2) whether
the strike was legal; and (3) whether some union
officers ordered dismissed are entitled to
backwages.18
The School avers that the retirement of Llagas and
Javier was clearly in accordance with a specific right
granted under the CBA. The School justifies its
actions by invoking our rulings in Pantranco North
Express, Inc. v. NLRC19 and Bulletin Publishing
Corporation v. Sanchez20 that no unfair labor practice
is committed by management if the retirement was
made in accord with management prerogative or in
case of voluntary retirement, upon approval of
management.
The Union, relying on the findings made by the Court
of Appeals,21 argues that the retirement of the two
union officers is a mere subterfuge to bust the union.22
The NLRC, however, gave another justification to
sustain the validity of the two union officers’ forcible
retirement, viz:
The retirement of Rosalinda Llagas has become
inevitable because, being a managerial employee by
reason of her position as Dean of Student Affairs, she
accepted the Union presidency. She lost the trust and
confidence on her by the SCHOOL as she occupied a
managerial position as Dean of Student Affairs. . .
Being also the union president, she has allowed her
loyalties to be divided between the administration and
the union.
As to Paz Javier, her retirement was decided upon
after an evaluation shows that she was not performing
well as her students were complaining about her
brusque attitude and bad language, aside from being
habitually absent and late. 23
At the outset, only questions of law are entertained by
this Court through a petition for review on certiorari.
There are, however, well-recognized exceptions such
as in this case when the factual findings of the NLRC
and the Court of Appeals are contradictory.24 A re-
evaluation of the records of this case is necessary for
its proper resolution.
The key issue remains whether the forced retirement
of Llagas and Javier was a valid exercise of
management prerogative. Undoubtedly, the
retirement of the two (2) union officers triggered the
declaration of strike by the Union, and the ruling on
whether the strike was legal is highly dependent on
whether the retirement was valid.
We are impelled to reverse the Court of Appeals and
affirm the validity of the termination of employment of
Llagas and Javier, arising as it did from a
management prerogative granted by the mutually-
negotiated CBA between the School and the Union.
Pursuant to the existing CBA,25 the School has the
option to retire an employee upon reaching the age
limit of sixty (60) or after having rendered at least
twenty (20) years of service to the School, the last
three (3) years of which must be continuous.
Retirement is a different specie of termination of
employment from dismissal for just or authorized
causes under Articles 282 and 283 of the Labor Code.
While in all three cases, the employee to be
terminated may be unwilling to part from service,
there are eminently higher standards to be met by the
employer validly exercising the prerogative to dismiss
for just or authorized causes. In those two instances,
it is indispensable that the employer establish the
existence of just or authorized causes for dismissal as
spelled out in the Labor Code. Retirement, on the
other hand, is the result of a bilateral act of the
parties, a voluntary agreement between the employer
and the employee whereby the latter after reaching a
certain age agrees and/or consents to sever his
employment with the former.26
Article 287 of the Labor Code, as amended, governs
retirement of employees, stating:
ART. 287. Retirement. –
Any employee may be retired upon reaching the
retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled
to receive such retirement benefits as he may have
earned under existing laws and any collective
bargaining agreement and other agreements:
Provided, however, That an employee’s retirement
benefits under any collective bargaining agreement
and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory
retirement age, who has served at least five (5) years
in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-
half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as
one whole year.
The CBA in the case at bar established 60 as the
compulsory retirement age. However, it is not alleged
that either Javier or Llagas had reached the
compulsory retirement age of 60 years, but instead
that they had rendered at least 20 years of service in
the School, the last three (3) years continuous.
Clearly, the CBA provision allows the employee to be
retired by the School even before reaching the age of
60, provided that he/she had rendered 20 years of
service. Would such a stipulation be valid?
Jurisprudence affirms the position of the School.
Pantranco North Express, Inc. v. NLRC, cited by
petitioners, finds direct application in this case. The
CBA involved in Pantranco allowed the employee to
be compulsorily retired upon reaching the age of 60
"or upon completing [25] years of service to
[Pantranco]." On the basis of the CBA, private
respondent was compulsorily retired by Pantranco at
the age of 52, after 25 years of service. Interpreting
Article 287, the Court ruled that the Labor Code
permitted employers and employees to fix the
applicable retirement age at below 60 years of age.
Moreover, the Court also held that there was no illegal
dismissal since it was the CBA itself that incorporated
the agreement reached between the employer and
the bargaining agent with respect to the terms and
conditions of employment; hence, when the private
respondent ratified the CBA with his union, he
concurrently agreed to conform to and abide by its
provisions. Thus, the Court asserted, "[p]roviding in a
CBA for compulsory retirement of employees after
twenty-five (25) years of service is legal and
enforceable so long as the parties agree to be
governed by such CBA."27
A similar set of facts informed our decision in
Progressive Development Corporation v. NLRC.28 The
CBA therein stipulated that an employee "with [20]
years of service, regardless of age, may be retired at
his option or at the option of the company." The
stipulation was used by management to compulsorily
retire two employees with more than 20 years of
service, at the ages of 45 and 38. The Court affirmed
the validity of the stipulation on retirement as
consistent with Article 287 of the Labor Code.
Philippine Airlines, Inc. v. Airline Pilots Association of
the Phils.29 further bolsters the School’s position. At
contention therein was a provision of the PAL-ALPAP
Retirement Plan, the Plan having subsequently been
misquoted in the CBA mutually negotiated by the
parties. The Plan authorized PAL to exercise the
option of retirement over pilots who had chosen not to
retire after completing 20 years of service or logging
over 20,000 hours for PAL. After PAL exercised such
option over a pilot, ALPAP charged PAL with illegal
dismissal and union-busting. While the Secretary of
Labor upheld the unilateral retirement, it nonetheless
ruled that PAL should first consult with the pilot to be
retired before it could exercise such option. The Court
struck down that proviso, ruling that "the requirement
to consult the pilots prior to their retirement defeats
the exercise by management of its option to retire the
said employees, [giving] the pilot concerned an undue
prerogative to assail the decision of management."
By their acceptance of the CBA, the Union and its
members are obliged to abide by the commitments
and limitations they had agreed to cede to
management. The questioned retirement provisions
cannot be deemed as an imposition foisted on the
Union, which very well had the right to have refused
to agree to allowing management to retire retire
employees with at least 20 years of service.
It should not be taken to mean that retirement
provisions agreed upon in the CBA are absolutely
beyond the ambit of judicial review and nullification. A
CBA, as a labor contract, is not merely contractual in
nature but impressed with public interest. If the
retirement provisions in the CBA run contrary to law,
public morals, or public policy, such provisions may
very well be voided. Certainly, a CBA provision or
employment contract that would allow management to
subvert security of tenure and allow it to unilaterally
"retire" employees after one month of service cannot
be upheld. Neither will the Court sustain a retirement
clause that entitles the retiring employee to benefits
less than what is guaranteed under Article 287 of the
Labor Code, pursuant to the provision’s express
proviso thereto in the provision.
Yet the CBA in the case at bar contains no such
infirmities which must be stricken down. There is no
essential difference between the CBA provision in this
case and those we affirmed in Pantranco and
Progressive. Twenty years is a more than ideal length
of service an employee can render to one employer.
Under ordinary contemplation, a CBA provision
entitling an employee to retire after 20 years of
service and accordingly collect retirement benefits is
"reward for services rendered since it enables an
employee to reap the fruits of his labor — particularly
retirement benefits, whether lump-sum or otherwise
— at an earlier age, when said employee, in
presumably better physical and mental condition, can
enjoy them better and longer."30
We affirm the continued validity of Pantranco and its
kindred cases, and thus reiterate that under Article
287 of the Labor Code, a CBA may validly accord
management the prerogative to optionally retire an
employee under the terms and conditions mutually
agreed upon by management and the bargaining
union, even if such agreement allows for retirement at
an age lower than the optional retirement age or the
compulsory retirement age. The Court of Appeals
gravely erred in refusing to consider this case from
the perspective of Pantranco, or from the settled
doctrine enunciated therein.
What the Court of Appeals did instead was to
favorably consider the claim of the Union that the real
purpose behind the retirement of Llagas and Javier
was to "bust" the union, they being its president and
vice-president, respectively. To that end, the appellate
court favorably adopted the citation by the Union of
the American
case of NLRB v. Ace Comb, Co.,31 which in turn was
taken from a popular local labor law textbook. The
citation stated that "[f]or the purpose of determining
whether or not a discharge is discriminatory, it is
necessary that the underlying reason for the
discharge be established. The fact that a lawful cause
for discharge is available is not a defense where the
employee is actually discharged because of his union
activities."32
Reliance on NLRB v. Ace Comb, Co. was grossly
inapropos. The case did not involve an employee
sought to be retired, but one who cited for termination
from employment for cause, particularly for violating
Section 8(a)(3) of the National Labor Relations Act, or
for insubordination. Moreover, the United States Court
of Appeals Eighth Circuit, which decided the case,
ultimately concluded that "here the evidence abounds
that there was a justifiable cause for [the employee’s]
discharge,"33 his union activities notwithstanding.
Certainly, the Union and the Court of Appeals would
have been better off citing a case wherein the
decision actually concluded that the employee was
invalidly dismissed for union activities despite the
ostensible existence of a valid cause for termination.
Nonetheless, the premise warrants considering
whether management may be precluded from retiring
an employee whom it is entitled to retire upon a
determination that the true cause for compulsory
retirement is the employee’s union activities.
The law and this Court frowns upon unfair labor
practices by management, including so-called union-
busting. Such illegal practices will not be sustained by
the Court, even if guised under ostensibly legal
premises. But with respect to an active unionized
employee who claims having lost his/her job for union
activities, there are different considerations presented
if the termination is justified under just or authorized
cause under the Labor Code; and if separation from
service is effected through the exercise of a duly
accorded management prerogative to retire an
employee. There is perhaps a greater imperative to
recognize the management prerogative on retirement
than the prerogative to dismiss employees for just or
authorized causes. For one, there is a greater
subjectivity, not to mention factual dispute, attached
to the concepts of just or authorized cause than
retirement which normally contemplates merely the
attainment of a certain age or a certain number of
years in the service. It would be easier for
management desirous to eliminate pesky union
members to abuse the prerogative of termination for
such purpose since the determination of just or
authorized cause is rarely a simplistic question, but
involves facts highly prone to dispute and subjective
interpretation.
On the other hand, the exercise by management of its
retirement prerogative is less susceptible to
dubitability as to the question whether an employee
could be validly retired. The only factual matter to
consider then is whether the employee concerned
had attained the requisite age or number of years in
service pursuant to the CBA or employment
agreement, or if none, pursuant to Article 287 of the
Labor Code. In fact, the question of the amount of
retirement benefits is more likely to be questioned
than the retirement itself. Evidently, it more clearly
emerges in the case of retirement that management
would anyway have the right to retire an employee, no
matter the degree of involvement of said employee in
union activities.
There is another point that militates against the Union.
A ruling in its favor is tantamount to a concession that
a validly drawn management prerogative to retire its
employees can be judicially interfered on a showing
that the employee in question is highly valuable to the
union. Such a rule would be a source of mischief,
even if narrowly carved out by the Court, for it would
imply that an active union member or officer may be,
by reason of his/her importance to the union,
somehow exempted from the normal standards of
retirement applicable to the other, perhaps less vital
members of the union. Indeed, our law’s protection of
the right to organize labor does not translate into
perpetual job security for union leaders by reason of
their leadership role alone. Should we entertain such
a notion, the detriment is ultimately to the union itself,
promoting as it would a stagnating entrenched
leadership.
We can thus can comfortably uphold the principle, as
reiterated in Philippine Airlines,34 that the exercise by
the employer of a valid and duly established
prerogative to retire an employee does not constitute
unfair labor practice.
There are other arguments raised by petitioners. We
need to discuss them only in brief, as they are no
longer central to the resolution of this case.
The School insisted that Llagas and Javier were
actually managerial employees, and it was illegal for
the Union to have called a strike on behalf of two
employees who were not legally qualified to be
members of the Union in the first place.35 The Union,
on the other hand, maintains that they are rank-and-
file employees.
Article 212(m) of the Labor Code defines a
managerial employee 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, or to effectively recommend such
managerial actions." The functions of the Dean of
Student Affairs, as occupied by Llagas, are
enumerated in the Faculty Manual. The salient
portions are hereby enumerated:
a. Manages the High School Department with
the Registrar and Guidance Counselors
(acting as a COLLEGIAL BODY) in the
absence of the Director or Principal.
b. Enforces the school rules and regulations
governing students to maintain discipline.
xxxx
g. Plans with the Guidance Counselors
student leadership training programs to
encourage dynamic and responsible
leadership among the students and submits
the same for the approval of the
Principal/Director.
xxxx
 i. Studies proposals on extra-curricular or co- proximate trier of facts, that Llagas and Javier were
curricular activities and projects proposed by indeed managerial and supervisory employees,
teachers and students and recommends to respectively.1avvphil.net

the Principal/Director the necessary approval.

j. Implements and supervises activities and
projects approved by the Principal/Director so
that the activities and projects follow faithfully
the conditions set forth by the
Principal/Director in the approval.
k. Assists in the planning, supervising and
evaluating of programs of co-curricular
activities in line with the philosophy and
objectives of the School for the total
development of the students.
l. Recommends to the Principal policies and
rules to serve as guides to effective
implementation of the student activity
program.36
xxxx
It is fairly obvious from a perusal of the list that the
Dean of Student Affairs exercises managerial
functions, thereby classifying Llagas as a managerial
employee.
Javier was occupying the position of Subject Area
Coordinator. Her duties and responsibilities include:
1. Recommends to the principal’s
consideration the appointment of faculty
members in the department, their promotion,
discipline and even termination;
Having established that Llagas is a managerial
employee, she is proscribed from joining a labor
union,38 more so being elected as union officer. In the
case of Javier, a supervisory employee, she may join
a labor union composed only of supervisory
employees.39 Finding both union officers to be
employees not belonging to the rank-and-file, their
membership in the Union has become questionable,
rendering the Union inutile to represent their cause.
Since the strike has been declared as illegal based on
the foregoing discussion, we need not dwell on its
legality with respect to the means employed by the
Union.
Finally, there is neither legal nor factual justification in
awarding backwages to some union officers who have
lost their employment status, in light of our finding that
the strike is illegal. The ruling of the NLRC is thus
upheld on this point. We are also satisfied with the
disposition of the NLRC that mandates that Llagas
and Javier (or her heirs) receive their retirement
benefits.
WHEREFORE, the petition is GRANTED. The
Resolution dated 31 January 1997 of the National
Labor Relations Commission in NLRC NCR CC No.
L-000028-93 is REINSTATED.
SO ORDERED.

2. Recommends advisory responsibilities of

faculty members;

3. Recommends to the principal curricular

changes, purchase the books and periodicals,
supplies and equipment for the growth of the
school;

4. Recommends his/her colleagues and

serves as channel between teachers in the
department the principal and/or director.37

Supervisory employees, as defined in Article 212(m)

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.

In the same vein, a reading of the above functions

leads us to conclude that Javier was a supervisory
employee. Verily, Javier made recommendations as
to what actions to take in hiring, termination,
disciplinary actions, and management policies, among
others.

We can concede, as the Court of Appeals noted, that

such job descriptions or appellations are meaningless
should it be established that the actual duties
performed by the employees concerned are neither
managerial nor supervisory in nature. Yet on this
point, we defer to the factual finding of the NLRC, the

G.R. No. 173357               February 13, 2013
ROWENA DE LEON CRUZ, Petitioner,
vs.
BANK OF THE PHILIPPINE
ISLANDS, Respondents.
Labor Law; Termination of Employment; Gross
Negligence; Gross negligence connotes want or
absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without
exerting any effort to avoid them.―Gross negligence
connotes want or absence of or failure to exercise
slight care or diligence, or the entire absence of care.
It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them. On the other
hand, the basic premise for dismissal on the ground
of loss of confidence is that the employees concerned
hold a position of trust and confidence. It is the breach
of this trust that results in the employer’s loss of
confidence in the employee.
Same; Managerial Employees; Petitioner holds a
managerial status since she is tasked to act in the
interest of her employer as she
_______________
* THIRD DIVISION.
547
VOL. 690, FEBRUARY 13, 2013
547
Cruz vs. Bank of the Philippine Islands
exercises independent judgment when she approves
pre-termination of (U.S. Dollar Certificate of Deposit
(USD CDs) or the withdrawal of deposits.―Petitioner
holds a managerial status since she is tasked to act in
the interest of her employer as she exercises
independent judgment when she approves pre-
termination of USD CDs or the withdrawal of deposits.
In fact, petitioner admitted the exercise of
independent judgment when she explained that as
regards the pre-termination of the USD CDs of
Uymatiao and Caluag, the transactions were
approved on the basis of her independent judgment
that the signatures in all the documents presented to
her by the traders matched, as shown in her reply
dated April 23, 2002 to respondent’s memorandum
asking her to explain the unauthorized
preterminations/withdrawals of U.S. dollar deposits in
the BPI Ayala Avenue Branch.
Same; Same; Termination of Employment; Loss of
Trust and Confidence; As long as there is some basis
for such loss of confidence, such as when the
employer has reasonable ground to believe that the
employee concerned is responsible for the purported
misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence
demanded of his position, a managerial employee
may be dismissed.―Petitioner was remiss in the
performance of her duty to approve the pre-
termination of certificates of deposits by legitimate
depositors or their duly-authorized representatives,
resulting in prejudice to the bank, which reimbursed
the monetary loss suffered by the affected clients.
Hence, respondent was justified in dismissing
petitioner on the ground of breach of trust. As long as
there is some basis for such loss of confidence, such
as when the employer has reasonable ground to
believe that the employee concerned is responsible
for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust
and confidence demanded of his position, a
managerial employee may be dismissed. Cruz vs.
Bank of the Philippine Islands, 690 SCRA 546, G.R.
No. 173357 February 13, 2013
DECISION
PERALTA, J.:
This is a petition for review on certiorari 1 of the Court
of Appeals' Decision2 dated April 27. 2006 in CA-G.R.
SP No. 92202, and its Resolution dated .July 13,
2006, denying petitioner's motion for reconsideration.
The Court of Appeals affirmed the Decision of the
National Labor Relations Commission (NLRC), dated
January 31, 2005, which reversed and set aside the
Decision of the Labor Arbiter finding the dismissal of
petitioner Rowena de Leon Cruz to he illegal. The
NLRC dismissed petitioner’s Complaint for lack of
merit.
The facts are as follows:
Petitioner was hired by Far East Bank and Trust
Company (FEBTC) in 1989. Upon the merger of
FEBTC with respondent Bank of the Philippine
Islands (BPI) in April 2000, petitioner automatically
became an employee of respondent. Petitioner held
the position of Assistant Branch Manager of the BPI
Ayala Avenue Branch in Makati City, and she was in
charge of the Trading Section.
On July 12, 2002, after 13 years of continuous
service, respondent terminated petitioner on grounds
of gross negligence and breach of trust. Petitioner's
dismissal was brought about by the fraud perpetrated
against three depositors, namely, Geoffrey L.
Uymatiao, Maybel Caluag and Evelyn G. Avila, in
respondent's Ayala Avenue Branch.
The fraud committed against Uymatiao, Caluag and
Avila was narrated by the NLRC and the Court of
Appeals as follows:
On June 2, 1997, Geoffrey Uymatiao deposited
US$29,592.30 under a U.S. Dollar Certificate of
Deposit (USD CD) with respondent's Ayala Avenue
Branch. As shown on the USD CD, it was supposed
to mature a month after its issuance or on July 2,
1997. Since the USD CD was not presented by
Uymatiao for redemption on July 2, 1997, it was
automatically rolled over on a monthly basis by the
bank with a new USD CD being issued for each
rolled-over USD CD, and the rolled-over USD CD was
kept by the bank.
On June 21, 2000, Uymatiao's USD CD, with due
date on June 27, 2000, was pre-terminated and the
proceeds thereof, amounting to US$34,358.03, was
credited to an account opened in the name of
Uymatiao by means of an Instruction Sheet. However,
it was not Uymatiao who pre-terminated the last USD
CD, as the prior USD CD was still in his possession.
When Uymatiao discovered the fraud, he immediately
wrote respondent a letter complaining that he was not
the one who pre-terminated the account. Upon
investigation, it turned out that Uymatiao's signature
was forged and intercalated in the records of BPI
Ayala Avenue Branch. Moreover, it was petitioner
who approved the pre-termination of Uymatiao's USD
CD and the withdrawal of the proceeds thereof.
Uymatiao also had a U.S. Dollar Savings Account.
For a time, his savings account was dormant.
However, on June 23, 2003, the account was
reactivated, without Uymatiao's consent, through an
alleged Instruction Sheet bearing the forged signature
of Uymatiao and a spurious passbook. On the same
date that it was reactivated, the amount of
US$15,000.00 was withdrawn. On July 7, 2002, the
amount of US$3,500.00 was again withdrawn from
Uymatiao's account.
Uymatiao complained about the illegal withdrawal. An
investigation revealed that the Letter of Instruction,
which was used to reactivate the account, was a
forgery. Moreover, it was found that petitioner was the
one who approved the reactivation and withdrawal of
money from Uymatiao's account.
The second defrauded depositor, Maybel Caluag,
deposited US$5,848.30 under a USD CD, which was
supposed to mature on February 11, 2000. The
automatic roll-over of Caluag's USD CD would have
continued, but on July 24, 2000, the same was pre-
terminated and the proceeds thereof, amounting to
US$6,006.58, was credited to an account opened in
the name of Caluag by means of an Instruction Sheet.
The amount was subsequently withdrawn.
On July 28, 2000, Caluag discovered the fraud and
complained that she did not pre-terminate her USD
CD. She said that she was in Japan on July 24, 2000
and she did not authorize anyone to pre-terminate her
account. She presented the original certificate of
deposit issued to her to prove that she did not have
her account pre-terminated. Upon investigation, it was
found that petitioner was the one who approved the
pre-termination of Caluag's account.
The third defrauded depositor, Evelyn Avila, had a
balance of US$20,575.12 in her U.S. Dollar Savings
Account as of March 31, 2000. On July 27, 2000, it
was made to appear that Avila withdrew the balance
from her account. On February 28, 2001, Avila
discovered the illegal withdrawal and complained to
respondent about it. She said that she was in
Australia on July 27, 2000 when the withdrawal from
her account was made. An investigation later showed
that it was petitioner who approved the withdrawal
from Avila's account.
On April 19, 2002, BPI Vice-President Edwin S.
Ragos issued a memorandum3 directing petitioner to
explain within 24 hours the aforementioned
unauthorized pre-terminations/withdrawals of US
dollar deposits at the BPI Ayala Avenue Branch.
In petitioner's reply,4 she asserted that she followed
the bank procedure/policy on pre-termination of
accounts, opening of transitory accounts and
reactivation of dormant accounts. She explained that
upon verifying the authenticity of the signatures of the
depositors involved, she approved the withdrawals
from certain accounts of these clients. With regard to
the pre-termination of Uymatiao's USD CD, petitioner
claimed that the Trader presented to her what she
believed was an original and genuine client copy of
the certificate of deposit, the surrender of which
caused the issuance of a new USD CD.
Moreover, petitioner stated that at the time the alleged
fraudulent transactions took place, she was not yet an
Assistant Manager, but only a Cash II Officer of the
branch, still operating under the FEBTC set-up. As
such, she was in charge of overseeing and
supervising all the transactions in the Trading Section,
among other departments. Hence, her responsibilities
required her only to bring out signature card files from
the vault to the Trading Section and to ensure that
these files were returned to the vault at the close of
banking hours.
On May 22, 2002, an administrative hearing was held
to give petitioner an opportunity to explain her side of
the controversy.
On July 10, 2002, a notice of termination5 was issued
informing petitioner of her dismissal effective July 12,
2002 on grounds of gross negligence and breach of
trust for the following acts: (1) allowing the issuance
of USD CDs under the bank's safekeeping to an
impostor without valid consideration; (2) allowing USD
CD pre-terminations based on such irregularly
released certificates; and (3) allowing withdrawals by
third parties from clients' accounts, which resulted in
prejudice to the bank.
Petitioner filed an appeal before BPI President Xavier
Loinaz, but her appeal was denied.
The aforementioned incidents of fraud resulted in the
dismissal of three officers, including petitioner, one
trader; the suspension of two officers and one trader,
and the reprimand of one teller.6
Thereafter, petitioner filed a Complaint for illegal
dismissal against respondent and its officers with the
Arbitral Office of the NLRC.
In her Position Paper, petitioner alleged that her
employment record as an officer and staff had always
been beyond par and was not tainted with any fraud
or anomaly. When the incidents took place, she was
barely two months as Service Officer of the Ayala
Avenue Branch's Trading Section, and she was hardly
familiar with any bank client, not to mention the
enormous volume of transactions handled by the said
BPI branch. Being new in her position, she had yet to
adjust to the system in place. Nonetheless, she
followed the policies and procedural control prior to
affixing her initials as approving authority; hence,
petitioner asserted that her dismissal was grossly
disproportionate as a penalty.
In respondent's Position Paper, respondent asserted
that petitioner's dismissal is legal; hence, petitioner
has no cause of action against it. Respondent stated
that there is no question that the fraudulent incidents,
which affected its three depositors, namely, Uymatiao,
Caluag and Avila, happened in its Ayala Avenue
Branch, and that the fraudulent transactions were
approved by petitioner as borne out by her signature
on the documents allowing the pre-termination of
certificates of dollar deposits and allowing the
withdrawal of dollar deposits from the respective
savings account of the affected depositors.
Respondent stated that in giving the aforementioned
unauthorized pre-termination and withdrawal
transactions her seal of approval, petitioner neglected
to perform one, if not the most, basic banking
requirement integral to these transactions, which is to
see to it that the persons who effected the pre-
termination and cancellation of the USD CDs and who
made the withdrawals from the U.S. dollar savings
deposits and received the proceeds thereof were
really the depositors themselves, namely, Uymatiao,
Caluag and Avila. According to respondent, as it
happened, respondent never exerted any effort to
require such persons to produce satisfactory
identification, which was the reason the
aforementioned incidents of fraud were successfully
carried out. If it had been her own money that was
involved, petitioner would have asked for more than
what was expected of her in this case, which was
simply to ask for satisfactory identification from the
respective person effecting the pre-termination of the
certificate of deposit and making the withdrawal.
Hence, respondent submitted that petitioner's
dismissal on grounds of gross negligence and breach
of trust, resulting in the substantial monetary loss to
respondent in the sum of US$81,492.39, which it
reimbursed to the affected depositors, is legal and
valid.
In a Decision7 dated April 1, 2004, the Labor Arbiter
held that the dismissal of petitioner was illegal. The
dispositive portion of the decision reads:
WHEREFORE, decision is hereby rendered declaring
the dismissal of complainant Rowena Cruz illegal
such that respondent Bank of the Philippine Islands is
hereby ordered to reinstate her to her former or
substantially equivalent position without loss of
seniority rights and other privileges and to pay her
backwages and attorney's fees in the amount of SIX
HUNDRED THIRTY-NINE THOUSAND ONE
HUNDRED EIGHTY-SIX PESOS AND 16/100
(₱639,186.16).8
The Labor Arbiter held that petitioner cannot be
considered a managerial employee, and that her
dismissal on grounds of gross negligence and breach
of trust was unjustified.
On appeal, the NLRC reversed and set aside the
Decision of the Labor Arbiter, and it entered a new
decision dismissing petitioner's Complaint for lack of
merit.9
The NLRC stated that the evidence showed that the
pre-termination of the accounts of the depositors
involved and the withdrawal of money from such
accounts were with the approval of petitioner. A
stamp of approval given by a bank officer, especially
in sensitive transactions like pre-termination of
accounts and withdrawal of money, means that the
corresponding documents are in order and the validity
of such documents had been verified. Otherwise,
there would be no integrity in the approval of these
transactions, considering that approval is the last act
that would give effect to the transactions involved.
According to the NLRC, the banking industry is such a
sensitive one that the trust given by a bank's
depositors must be protected at all times even by the
lowest-ranking employee. As petitioner's signature
appeared in the documents showing her approval of
the pre-termination of the accounts of the depositors
involved and the withdrawal of money from their
accounts, the NLRC reversed the decision of the
Labor Arbiter and ruled that petitioner's dismissal was
for a valid cause.
Petitioner filed a petition for certiorari with the Court of
Appeals, alleging that the NLRC acted with grave
abuse of discretion amounting to lack or excess of
jurisdiction for the following: (1) Failing to consider
with great respect and finality the factual findings of
the Labor Arbiter that petitioner followed all the
policies and procedures in place and, hence, is not
remiss in her duties; (2) concluding that mere
approval of the transactions by petitioner in itself was
a valid cause for dismissal; (3) concluding that
petitioner could not be exculpated from liability by
claiming that it is not incumbent upon her to call the
depositors to personally appear before her and
confirm their signatures when such is not required of
petitioner; (4) not holding that the petitioner could not
have committed gross negligence at the time the
questioned transactions occurred, as she was not an
Assistant Manager and her duties were that of a Cash
II Officer; (5) not holding that there was insufficient
factual and legal basis to terminate petitioner's
employment; (6) ignoring the fundamental rule that all
doubts must be resolved in favor of labor; (7) not
affirming the award of backwages; and (8) not
affirming the award of attorney's fees.10
On April 27, 2006, the Court of Appeals rendered a
Decision,11 the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is
hereby DENIED and is accordingly DISMISSED. No
costs.12
The Court of Appeals disagreed with petitioner's
submission, in gist, that her termination was grossly
disproportionate to the omission she committed. It
stressed that petitioner was holding a highly
confidential position, as Assistant Branch Manager, in
the banking industry, which required extraordinary
diligence among its employees. If petitioner was still
unfamiliar with the terrain of her position, she should
not have accepted it.
The Court of Appeals stated that petitioner is a
managerial employee whose continuous employment
is dependent on the trust and confidence reposed on
her by respondent. After the incident wherein
respondent lost thousands of U.S. dollars, it could not
be expected that the trust and confidence petitioner
was previously enjoying could still be extended by
respondent. Hence, the Court of Appeals held that
petitioner's dismissal based on the ground of loss of
trust and confidence was a valid exercise of
management prerogative.
Petitioner's motion for reconsideration was denied by
the Court of Appeals in a Resolution13 dated July 13,
2006.
Petitioner filed this petition, and raised in her
Memorandum the following issues:
I of consequences without exerting any effort to avoid
WHETHER OR NOT THE FINDINGS OF
FACT OF LABOR ARBITER LEDA ARE TO
BE GIVEN MORE WEIGHT AND RESPECT
GIVEN THE DOCTRINE LAID DOWN THAT
THOSE FINDINGS OF FACT OF THE
LABOR ARBITER, IN THE ABSENCE OF
ANY FINDING OF ABUSE OF DISCRETION,
ARE NOT TO BE DISTURBED ON APPEAL.
II
WHETHER OR NOT THE EVIDENCE
SUBMITTED BY RESPONDENT BANK IS
SUBSTANTIAL IN CHARACTER TO
WARRANT THE DISMISSAL OF THE
PETITIONER, GIVEN THE ELEMENTARY
RULES IN LABOR THAT DOUBTS ARE TO
BE RESOLVED IN FAVOR OF LABOR AND
THE BURDEN OF PROOF THAT DISMISSAL
IS FOR JUST CAUSE RESTS UPON THE
EMPLOYER AND NOT ON THE WEAKNESS
OF THE EVIDENCE FOR THE EMPLOYEE.
III
WHETHER OR NOT THE PENALTY OF
DISMISSAL IS DISPROPORTIONATE TO
OR IS IT COMMENSURATE TO THE ACTS
ATTRIBUTED TO THE [PETITIONER] IN
THE PERFORMANCE OF HER DUTIES.14
Petitioner contends that the factual finding of the
Labor Arbiter is to be respected and given credence
on appeal in the absence of abuse of discretion.
As the decision of the Labor Arbiter has been
appealed to the NLRC, the NLRC has the power to
review the factual finding and resolution of the Labor
Arbiter. It is a settled rule that only errors of law are
generally reviewed by this Court in petitions for review
on certiorari of the decisions of the Court of
Appeals.15 However, an exception to this rule is when
the findings of the NLRC, as affirmed by the Court of
Appeals, contradict those of the Labor Arbiter.16 In this
case, the Labor Arbiter found that petitioner was
illegally dismissed, while the NLRC reversed the
finding of the Labor Arbiter, which reversal was
affirmed by the Court of Appeals. In view of the
discordance between the findings of the Labor Arbiter,
on one hand, and the NLRC and the Court of
Appeals, on the other, there is a need for the Court, in
the exercise of its equity jurisdiction, to review the
factual findings and the conclusions based on the said
findings.17
After a review of the records of the case, the Court
agrees with the findings of the Court of Appeals and
the NLRC that petitioner's dismissal was for a valid
cause.
Respondent dismissed petitioner from her
employment on grounds of gross negligence and
breach of trust reposed on her by respondent under
Article 282 (b) and (c) of the Labor Code. 1âwphi1
Gross negligence connotes want or absence of or
failure to exercise slight care or diligence, or the entire
absence of care.18 It evinces a thoughtless disregard
them.19 On the other hand, the basic premise for
dismissal on the ground of loss of confidence is that
the employees concerned hold a position of trust and
confidence.20 It is the breach of this trust that results in
the employer's loss of confidence in the employee.21
In this case, respondent avers that petitioner held the
position of Assistant Manager in its Ayala Avenue
Branch. However, petitioner contends that her
position was only Cash II Officer.
The test of "supervisory" or "managerial status"
depends on whether a person possesses authority to
act in the interest of his employer and whether such
authority is not merely routinary or clerical in nature,
but requires the use of independent judgment.22
In respondent's Position Paper23 before the NLRC and
its Memorandum,24 respondent stated that the
responsibility of petitioner, among others, were as
follows: (1) to maintain the integrity of the signature
card files of certificates of deposits and/or detect
spurious signature cards in the same files; (2) to
ensure that releases of original CDS are done only
against valid considerations and made only to the
legitimate depositors or their duly authorized
representatives; (3) to approve payments or
withdrawals of deposits by clients to ensure that such
withdrawals are valid transactions of the bank; and (4)
to supervise the performance of certain rank-and-file
employees of the branch.
Petitioner holds a managerial status since she is
tasked to act in the interest of her employer as she
exercises independent judgment when she approves
pre-termination of USD CDs or the withdrawal of
deposits. In fact, petitioner admitted the exercise of
independent judgment when she explained that as
regards the pre-termination of the USD CDs of
Uymatiao and Caluag, the transactions were
approved on the basis of her independent judgment
that the signatures in all the documents presented to
her by the traders matched, as shown in her
reply25 dated April 23, 2002 to respondent's
memorandum asking her to explain the unauthorized
preterminations/withdrawals of U.S. dollar deposits in
the BPI Ayala Avenue Branch.
Petitioner contends that respondent failed to submit
substantial evidence to warrant a conclusion that she
committed acts amounting to willful breach of trust
and gross negligence. Petitioner submits that
although she approved the fraudulent pre-termination
of the accounts involved as well as the withdrawal of
money from the accounts, before she affixed her
signature on the questioned transactions, she
followed office procedures by requiring the
presentation of the original certificate on file with the
branch bearing the client's signatures as proof that he
holds the original in his possession, withdrawal slips,
which when matched by her (petitioner) with the
signature card on file with the branch, were found to
be all the same. Hence, all required signatures
matched before she (petitioner) gave her approval.
According to petitioner, per respondent's policy, the
signature card on file is the most exacting
requirement in branch operations; hence, even when
an identification card is required from the bank's
client, the basis of approval would still be the
signature card on file with the branch. Moreover,
petitioner reasons that she was barely two months
with the BPI Ayala Avenue Branch when the
questioned transactions occurred. She asserts that
she had no participation in the insertion of spurious
signature cards which was done prior to her
designation as Cash II Officer of the Ayala Avenue
Branch.
Respondent counters that investigation disclosed that
in approving the respective pre-termination
transactions of Uymatiao and Caluag, no sincere
effort was made by petitioner to properly identify the
person or persons presenting the certificates of
deposit for pre-termination. In other words, petitioner
did not see to it that it was really Uymatiao or Caluag
who was pre-terminating his/her USD CD. Neither did
petitioner require that the original certificates of time
deposit, which were supposed to be in the possession
of Uymatiao and Caluag, be surrendered in exchange
for the rolled-over certificates which were pre-
terminated.
The Court notes that petitioner admitted that she did
not call the depositors to appear before her, although
she performed other procedures to determine whether
the subject transactions were with the depositors'
authorization.26 Petitioner did not determine if it was
really Uymatiao and Caluag who were pre-terminating
their respective USD CD, as she based the
identification of the said clients from their matching
signatures on the original certificate on file with the
branch, withdrawal slips and signature cards.
Moreover, as stated by respondent, petitioner did not
require that the original certificates of time deposit in
the possession of Uymatiao and Caluag be
surrendered to the bank when the rolled-over
certificates were pre-terminated. If petitioner took the
precaution to identify that it was really Uymatiao and
Caluag who were pre-terminating their respective
USD CD, and required that Uymatiao and Calaug
surrender their respective original certificates of time
deposit in their possession upon pre-termination of
the rolled-over certificates, the fraud could have been
averted.
In that regard, petitioner was remiss in the
performance of her duty to approve the pre-
termination of certificates of deposits by legitimate
depositors or their duly-authorized representatives,
resulting in prejudice to the bank, which reimbursed
the monetary loss suffered by the affected clients.
Hence, respondent was justified in dismissing
petitioner on the ground of breach of trust. As long as
there is some basis for such loss of confidence, such
as when the employer has reasonable ground to
believe that the employee concerned is responsible
for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust
and confidence demanded of his position, a
managerial employee may be dismissed.27
Bristol Myers Squibb (Phils). Inc. v.
Baban28 reiterated:
x x x [A]s a general rule. employers are allowed a
wider latitude of discretion in terminating the services
of employees who perform functions by which their
nature require the employer's full trust and
confidence. Mere existence of basis for believing that
the employee has breached the trust and confidence
of the employer is sufficient and does not require
proof beyond reasonable doubt. Thus. when an
employee has been guilty of breach of trust or his
employer has ample reason to distrust him. a labor
tribunal cannot deny the employer the authority to
dismiss him.29
In fine, the dismissal of petitioner on the ground of
breach of trust or loss of trust and confidence is
upheld.
WHEREFORE, the petition is DENIED. The Court of
Appeals’ Decision dated April 27, 2006 in CA-G.R. SP
No. 92202, and its Resolution dated July 13, 2006 are
hereby AFFIRMED.
No costs.
SO ORDERED.

G.R. No. 186070               April 11, 2011
CLIENTLOGIC PHILPPINES, INC. (now known as
SITEL), JOSEPH VELASQUEZ, IRENE ROA, and
RODNEY SPIRES, Petitioners,
vs.
BENEDICT CASTRO, Respondent.
Labor Law; Managerial Employees; “The test of
“supervisory” or “managerial status” depends on
whether a person possesses authority to act in the
interest of his employer and whether such authority is
not merely routinary or clerical in nature, but requires
the use of independent judgment.—We find no
reversible error in the above ruling. The test of
“supervisory” or “managerial status” depends on
whether a person possesses authority to act in the
interest of his employer and whether such authority is
not merely routinary or clerical in nature, but requires
the use of independent judgment. The position held
by respondent and its concomitant duties failed to
hurdle this test. Clientlogic Philippines, Inc. vs.
Castro, 647 SCRA 524, G.R. No. 186070 April 11,
2011
DECISION
NACHURA, J.:
This is a Petition for Review on Certiorari under Rule
45 of the Rules of Court, assailing the September 1,
2008 Decision1 and the January 7, 2009
Resolution2 of the Court of Appeals (CA), affirming
with modification the November 29, 2007
resolution3 of the National Labor Relations
Commission (NLRC), which held that respondent
Benedict Castro was not illegally dismissed. The CA,
however, awarded respondent’s money claims, viz.:
WHEREFORE, premises considered, the instant
Petition is PARTLY GRANTED. The Resolutions
dated 29 November 2007 and 23 January 2008 of the
National Labor Relations Commission (Third Division)
in NLRC CN. RAB-CAR-02-0091-07 LAC NO. 08-
002207-07 are AFFIRMED with MODIFICATION in
that the monetary awards of Executive Labor Arbiter
Vito C. Bose in his Decision dated 29 June 2007, as
computed in Annex "A" thereof, ONLY for holiday
premiums of Php 16,913.35; service incentive leave
pay Php8,456.65; overtime pay of Php 578,753.10;
and rest day pay of Php 26,384.80 which (petitioners)
shall jointly and solidarily pay to petitioner, are hereby
REINSTATED. No pronouncement as to costs.
SO ORDERED.4
The second assailed issuance of the CA denied
petitioners’ motion for reconsideration.
The facts:
Respondent was employed by petitioner ClientLogic
Philippines, Inc. (now known and shall hereafter be
referred to as SITEL) on February 14, 2005 as a call
center agent for its Bell South Account. After six (6)
months, he was promoted to the "Mentor" position,
and thereafter to the "Coach" position. A "Coach" is a
team supervisor who is in charge of dealing with
customer complaints which cannot be resolved by call
center agents. In June 2006, he was transferred to
the Dot Green Account.
During respondent’s stint at the Dot Green Account,
respondent noticed that some of the call center
agents under him would often make excuses to leave
their work stations. Their most common excuse was
that they would visit the company’s medical clinic. To
verify that they were not using the clinic as an alibi to
cut their work hours, respondent sent an e-mail to the
clinic’s personnel requesting for the details of the
agents’ alleged medical consultation. His request was
denied on the ground that medical records of
employees are highly confidential and can only be
disclosed in cases involving health issues, and not to
be used to build any disciplinary case against them.
On October 11, 2006, respondent received a notice
requiring him to explain why he should not be
penalized for: (1) violating Green Dot Company’s
Policy and Procedure for Direct Deposit Bank Info
Request when he accessed a customer’s online
account and then gave the latter’s routing and
reference numbers for direct deposit; and (2) gravely
abusing his discretion when he requested for the
medical records of his team members. Respondent
did not deny the infractions imputed against him. He,
however, justified his actuations by explaining that the
customer begged him to access the account because
she did not have a computer or an internet access
and that he merely requested for a patient tracker, not
medical records.
In November 2006, a poster showing SITEL’s
organizational chart was posted on the company’s
bulletin board, but respondent’s name and picture
were conspicuously missing, and the name and photo
of another employee appeared in the position which
respondent was supposedly occupying.
On January 22, 2007, SITEL posted a notice of
vacancy for respondent’s position, and on February
12, 2007, he received a Notice of Termination. These
events prompted him to file a complaint for illegal
dismissal; non-payment of overtime pay, rest day pay,
holiday pay, service incentive leave pay; full
backwages; damages; and attorney’s fees before the
Labor Arbiter (LA) against herein petitioners SITEL
and its officers, Joseph Velasquez (Velasquez), Irene
Roa (Roa), and Rodney Spires (Spires).5
In their position paper,6 petitioners averred that
respondent was dismissed on account of valid and
justifiable causes. He committed serious misconduct
which breached the trust and confidence reposed in
him by the company. He was duly furnished the twin
notices required by the Labor Code. Further, he is not
entitled to overtime pay, rest day pay, night shift
differential, holiday pay, and service incentive leave
pay because he was a supervisor, hence, a member
of the managerial staff.
In a decision dated June 29, 2007,7 the LA ruled in
favor of respondent by declaring him illegally
dismissed and ordering petitioners to pay his full
backwages and, in lieu of reinstatement, his
separation pay. The LA further awarded respondent’s
money claims upon finding that he was not occupying
a managerial position. The decretal portion of the
decision reads:
WHEREFORE, all premises duly considered, the
(petitioners) are hereby found guilty of illegally
dismissing (respondent). As such, (petitioners) shall
be jointly and solidarily liable to pay (respondent) his
full backwages from the date of his dismissal to the
finality of this decision, computed as of today at One
Hundred Thirty Eight Thousand Seven Hundred Fifty
Nine Pesos and 80/100 (₱138,759.80) plus, Seven
Hundred Sixty Three Thousand Two Hundred Forty
Eight Pesos and 67/100 (₱763,248.67) representing
his separation pay at one month pay for every year of
service, holiday pay and service incentive leave pay
for the three years prior to the filing of this case,
overtime pay for six (6) hours daily, rest day and ten
percent (10%) as attorney’s fees.
All other claims are hereby dismissed for lack of
evidence.
The computation of the foregoing monetary claims is
hereto attached and made an integral part hereof as
Annex "A."
SO ORDERED.8
Aggrieved, petitioners appealed to the NLRC, which,
in its November 29, 2007 resolution,9 reversed and
set aside the decision of the LA by dismissing the
complaint for lack of merit on the ground that
respondent’s employment was terminated for a just
cause. The NLRC failed to discuss the money claims.
On September 1, 2008, the CA affirmed the NLRC’s
finding that there was no illegal dismissal. Anent the
money claims, however, the CA concurred with the
LA’s ruling.10
Petitioners and respondent respectively moved for
partial reconsideration, but their motions were denied
in the CA Resolution dated January 7, 2009.11 From
the said denial, only petitioners sought recourse with
this Court through the petition at bar. Respondent’s
failure to partially appeal the CA’s Decision finding
him not illegally dismissed has now rendered the
same final and executory; hence, the instant petition
shall traverse only the issue on money claims.
Petitioners argue in the main12 that, as a team
supervisor, respondent was a member of the
managerial staff; hence, he is not entitled to overtime
pay, rest day pay, holiday pay, and service incentive
leave pay.
We deny the petition.
The petition hinges on the question of whether the
duties and responsibilities performed by respondent
qualify him as a member of petitioners’ managerial
staff. This is clearly a question of fact, the
determination of which entails an evaluation of the
evidence on record.
The alleged errors of the CA lengthily enumerated in
the petition13 are essentially factual in nature and,
therefore, outside the ambit of a petition for review on
certiorari under Rule 45 of the Rules of Civil
Procedure. The Court does not try facts since such
statutory duty is devolved upon the labor tribunals. It
is not for this Court to weigh and calibrate pieces of
evidence otherwise adequately passed upon by the
labor tribunals especially when affirmed by the
appellate court.14
Petitioners claim exception to the foregoing rule and
assert that the factual findings of the LA and the
NLRC were conflicting. This is not correct. The labor
tribunals’ decisions were at odds only with respect to
the issue of illegal dismissal. Anent the money claims
issue, it cannot be said that their rulings were
contradictory because the NLRC, disappointingly, did
not make any finding thereon and it erroneously
construed that the resolution of the money claims was
intertwined with the determination of the legality of
respondent’s dismissal. Nonetheless, the CA has
already rectified such lapse when it made a definitive
review of the LA’s factual findings on respondent’s
money claims. Agreeing with the LA, the CA held:
Article 82 of the Labor Code states that the provisions
of the Labor Code on working conditions and rest
periods shall not apply to managerial employees.
Generally, managerial employees are not entitled to
overtime pay for services rendered in excess of eight
hours a day.
Article 212 (m) of the Labor Code defines a
managerial employee 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, or to effectively recommend such
managerial actions.
In his Position Paper, (respondent) states that he
worked from 8:00 p.m. to 10:00 a.m. or 4 p.m. to
12:00 p.m. of the following day; he was also required
to work during his restdays and during holidays but he
was not paid; he was also not paid overtime pay;
night shift differentials, and service incentive leave.
He was employed as call center agent on 14 February
2005, then promoted as "Mentor" in August 2005, and
again promoted to "Coach" position in September
2005, which was the position he had when he was
terminated. A "coach" is a team supervisor who is in
charge of dealing with customer complaints which
could not be dealt with by call center agents, and if a
call center agent could not meet the needs of a
customer, he passes the customer’s call to the
"coach." Clearly, (respondent) is not a managerial
employee as defined by law. Thus, he is entitled to his
money claims.
As correctly found by Executive Labor Arbiter Bose:
Employees are considered occupying managerial
positions if they meet all of the following conditions,
namely:
 1) Their primary duty consists of management
of the establishment in which they are
employed or of a department or subdivision
thereof;
2) They customarily and regularly direct the
work of two or more employees therein;
3) They have the authority to hire or fire other
employees of lower rank; or their suggestions
and recommendations as to the hiring and
firing and as to the promotion or any other
change of status of other employees are given
particular weight.
They are considered as officers or members of a
managerial staff if they perform the following duties
and responsibilities:
1) The primary duty consists of the
performance of work directly related to
management of policies of their employer;
2) Customarily and regularly exercise
discretion and independent judgment;
3) (i) Regularly and directly assist a proprietor
or a managerial employee whose primary duty
consists of management of the establishment
in which he is employed or subdivision
thereof; or (ii) execute under general
supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or (iii) execute,
under general supervision, special
assignment and tasks xxx.
(Respondent’s) duties do not fall under any of the
categories enumerated above. His work is not directly
related to management policies. Even the
circumstances shown by the instant case reveal that
(respondent) does not regularly exercise discretion
and independent judgment. (Petitioners) submitted a
list of the responsibilities of "HR Manager/Supervisor"
and "Division Manager/Department
Manager/Supervisors" but these do not pertain to
(respondent) who does not have any of the said
positions. He was just a team Supervisor and not (an)
HR or Department Supervisor.15
We find no reversible error in the above ruling. The
test of "supervisory" or "managerial status" depends
on whether a person possesses authority to act in the
interest of his employer and whether such authority is
not merely routinary or clerical in nature, but requires
the use of independent judgment.16 The position held
by respondent and its concomitant duties failed to
hurdle this test.
As a coach or team supervisor, respondent’s main
duty was to deal with customer complaints which
could not be handled or solved by call center agents.
If the members of his team could not meet the needs
of a customer, they passed the customer’s call to
respondent.
This job description does not indicate that respondent
can exercise the powers and prerogatives equivalent
to managerial actions which require the customary
use of independent judgment. There is no showing
that he was actually conferred or was actually
exercising the following duties attributable to a
"member of the managerial staff," viz.:
1) The primary duty consists of the
performance of work directly related to
management of policies of their employer;
2) Customarily and regularly exercise
discretion and independent judgment;
3) (i) Regularly and directly assist a proprietor
or a managerial employee whose primary duty
consists of management of the establishment
in which he is employed or subdivision
thereof; or (ii) execute under general
supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or (iii) execute,
under general supervision, special
assignment and tasks; and
4) Who do not devote more than 20 percent of
their hours worked in a workweek to activities
which are not directly and closely related to
the performance of the work described in
paragraphs (1), (2), and (3) above.17
According to petitioners, respondent also performed
the following duties, as shown in the company’s
Statement of Policy on Discipline:
a. Know and understand in full the Policy on
Discipline including their underlying reasons.
b. Implement strictly and consistently the
Policy on Discipline.
c. Ensure that the said Policy on Discipline is
communicated to and understood by all
employees.
d. Monitor compliance by employees with the
said Policy.
e. Advise HR Manager on the state of
discipline in their respective departments;
problems, if any, and recommend solution(s)
and corrective action(s).
As correctly observed by the CA and the LA, these
duties clearly pertained to "Division
Managers/Department Managers/ Supervisors," which
respondent was not, as he was merely a team
supervisor. Petitioners themselves described
respondent as "the superior of a call center agent; he
heads and guides a specific number of agents, who
form a team."18
1âwphi1
From the foregoing, respondent is thus entitled to his
claims for holiday pay, service incentive leave pay,
overtime pay and rest day pay,
pursuant to Book Three of the Labor Code,
specifically Article 82,19 in relation to Articles
87,20 93,21 and 9522 thereof.
WHEREFORE, premises considered, the Petition is
hereby DENIED. The September 1, 2008 Decision
and the January 7, 2009 Resolution of the Court of
Appeals are AFFIRMED.
SO ORDERED.
G.R. No. 131653            March 26, 2001
ROBERTO GONZALES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
PEPSI COLA PRODUCTS, PHILIPPINES,
INC., respondents.
Labor Law; Evidence; Only when the factual findings
and conclusion of the Labor Arbiter and NLRC are
clearly in conflict with each other is the Supreme
Court behooved to give utmost attention to and
thoroughly scrutinize the records of the case, more
particularly the evidence presented, to arrive at a
correct decision.—The factual findings and
conclusions of the NLRC are generally accorded not
only great weight and respect but even clothed with
finality and deemed binding on this Court as long as
they are supported by substantial evidence. Only
when the factual findings and conclusion of the Labor
Arbiter and NLRC are clearly in conflict with each
other is this Court behooved to give utmost attention
to and thoroughly
________________
* SECOND DIVISION.
196
196
SUPREME COURT REPORTS ANNOTATED
Gonzales vs. National Labor Relations Commission
scrutinize the records of the case, more particularly
the evidence presented, to arrive at a correct
decision. Nowhere in the record does it show that
public respondent NLRC grossly abused its discretion
in arriving at its challenged Decision.
Same; Illegal Dismissals; Due Process; Not only must
the employee be afforded a reasonable opportunity to
be heard and to submit any evidence he may have in
support of his defense, but that the dismissal must be
for a valid or authorized cause as provided by law.—
Under the Labor Code, as amended, the
requirements for the lawful dismissal of an employee
by his employer are two-fold, namely: (1) the
procedural, and (2) the substantive. Not only must the
employee be afforded a reasonable opportunity to be
heard and to submit any evidence he may have in
support of his defense, but that the dismissal must be
for a valid or authorized cause as provided by law.
Same; Same; Same; Procedural due process
requires, for validity of the employee’s dismissal, that
an employer must furnish the employee sought to be
dismissed with two (2) written notices before
termination may be validly effected—a notice
apprising him of the particular acts or omission for
which his dismissal is sought, and a subsequent
notice informing him of the decision to dismiss him.—
Procedural due process requires, for validity of the
employee’s dismissal, that an employer must furnish
the employee sought to be dismissed with two (2)
written notices before termination may be validly
effected. They are: (a) a notice apprising the
employee of the particular acts or omission for which
his dismissal is sought; and (b) a subsequent notice
informing the employee of the decision to dismiss
him.
Same; Same; Loss of Trust and Confidence; Loss of
confidence, as a just cause for termination of
employment, is premised on the fact that the
employee concerned holds a position of responsibility,
trust and confidence, but in order to constitute a just
cause for dismissal, the act complained of must be
“work-related” such as would show the employee
concerned to be unfit to continue working for the
employer.—Under Article 282(c) of the Labor Code,
an employer can terminate the employment of the
employee concerned for “fraud or willful breach by an
employee of the trust reposed in him by his employer
or duly authorized representative.” The loss of trust
and confidence must be based on the willful breach of
the trust reposed in the employee by his employer.
Ordinary breach will not suffice. A breach of trust is
willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly
or inadvertently. Loss of confidence, as a
197
 events in question; mere uncorroborated assertions
and accusations by the employer will not suffice.

VOL. 355, MARCH 26, 2001

Same; Same; Same; Same; A managerial employee
betrayed his employer’s trust and confidence when he
instigated the issuance by his subordinate salesman
197 of an official receipt for his post-dated check whereby
he could have evaded payment to his employer of his
debt—Private respon-

Gonzales vs. National Labor Relations Commission

198

just cause for termination of employment, is premised

on the fact that the employee concerned holds a
position of responsibility, trust and confidence. He
must be invested with confidence on delicate matters
such as the custody, handling, care and protection of 198
the employer’s property and/or funds. But in order to
constitute a just cause for dismissal, the act
complained of must be “work-related” such as would
show the employee concerned to be unfit to continue SUPREME COURT REPORTS ANNOTATED
working for the employer.

Gonzales vs. National Labor Relations Commission

Same; Same; Same; Managerial Employees; The test
of managerial status has been defined as an authority
to act in the interest of the employer, which authority
is not merely routinary or clerical in nature but
dent PCPPI has sufficiently shown that petitioner has
requires independent judgment.—In the present case,
become unworthy of the trust and confidence
petitioner is not an ordinary rank-and-file employee.
demanded of his position. Petitioner betrayed his
He is a Route Manager, a managerial level position
employer’s trust and confidence when he instigated
as we settled in the case of United Pepsi—Cola
the issuance by his subordinate salesman of an
Supervising Union (UPSU) v. Laguesma. The test of
official receipt for his post-dated check on December
managerial status has been defined as an authority to
22, 1992 whereby he (petitioner) could have evaded
act in the interest of the employer, which authority is
payment to private respondent PCPPI of his debt
not merely routinary or clerical in nature but requires
amounting to P116,182.00. These acts committed by
independent judgment. As managerial employee,
petitioner adversely reflected on his integrity. As
petitioner is tasked to perform key and sensitive
Route Manager he disregarded the private
functions, and thus he is bound by more exacting
respondent company’s rules and regulation
work ethics.
prohibiting the issuance of official receipt for post-
dated check payment unless the same is done by the
Sales Office Manager.

Same; Same; Same; Same; As a general rule,

employers are allowed a wide latitude of discretion in
terminating the employment of managerial personnel
Same; Same; Same; Same; The fact that the
or those who, while not of similar rank, perform
employer ultimately suffered no monetary damage as
functions which by their nature require the employer’s
the employee subsequently settled his account is of
full trust and confidence.—As a general rule,
no moment, as this was not the reason for the
employers are allowed a wide latitude of discretion in
termination of his employment but the anomalous
terminating the employment of managerial personnel
scheme he engineered to cover up his past due
or those who, while not of similar rank, perform
account—The fact the private respondent PCPPI
functions which by their nature require the employer’s
ultimately suffered no monetary damage as petitioner
full trust and confidence. Proof beyond reasonable
subsequently settled his account is of no moment.
doubt is not required. It is sufficient that there is some
This was not the reason for the termination of his
basis for loss of confidence, such as when the
employment in the respondent company but the
employer has reasonable ground to believe that the
anomalous scheme he engineered to cover up his
employee concerned is responsible for the purported
past due account, which constitutes a clear betrayal
misconduct, and the nature of his participation therein
of trust and confidence. Gonzales vs. National Labor
renders him unworthy of the trust and confidence
Relations Commission, 355 SCRA 195, G.R. No.
demanded by his position. This must be distinguished
131653 March 26, 2001
from the case of ordinary rank-and-file employees,
whose termination on the basis of these same
grounds requires a higher proof of involvement in the DE LEON, JR., J.:
Before us is a petition for certiorari1 seeking
nullification of the Decision2 and Resolution3 of the
National Labor Relations Commission (NLRC), dated
June 26, 1997 and August 12, 1997, respectively,
reversing the Decision4 dated October 15, 1996 of the
Labor Arbiter who found and declared that petitioner
Roberto Gonzales was illegally dismissed by private
respondent Pepsi Cola Products, Philippines, Inc.,
(PCPPI, for brevity) and ordered his reinstatement
with payment of full backwages.
The pertinent facts are as follows:
Petitioner Roberto Gonzales was an employee of
private respondent PCPPI since July 25, 1989.5 In
1990 he was promoted to the position of Route
Manager with a post at PCPPI Northbay Sales Office
located in Northbay Boulevard, Manila. As Route
Manager, he was tasked with the supervision and
coordination of the activities of salesmen servicing the
area under his jurisdiction. His service with the
respondent company was abruptly interrupted on
October 6, 1993 when he was served a notice of
termination of his employment. At that time he was
earning a monthly salary of P9,970.00.
His dismissal stemmed from alleged irregularities
attributed to him as Route Manager and concurrently
as dealer of Pepsi Cola products. His dealership
contract with PCPPI started in 1990. Under the said
contract, petitioner was extended by PCPPI a credit
line of P300,000.006 payable in thirty (30) days. As
concessionaire or dealer, petitioner was entitled to a
"concession" which is the cash equivalent of the value
of empty bottles and its contents given to a dealer
who met the monthly quota requirements in the sale
of Pepsi Cola products. Petitioner operated under the
business name of RR Store.
On November 25, 1992, petitioner as proprietor of RR
Store purchased Pepsi Cola products on credit
amounting to P116,182.00. The credit transaction was
covered by Charge Invoice No. 365508. To cover this
transaction, petitioner Gonzales issued a post-dated
check in the amount of P116,182.00 payable on
December 25, 1992. Petitioner calculated that his
receivables from respondent PCPPI by way of
"concession" amounted to P109,766.00.
On December 22, 1992 or three (3) days before his
said post-dated check for P116,182.00 became due
and payable, petitioner issued in favor of respondent
PCPPI another post-dated check, to mature on
January 4, 1993, to cover the outstanding total debt of
P116,182.00.7 With the issuance of the new post-
dated check, petitioner ordered Mr. Gerry Alhambra,
PCPPI salesman servicing RR Store, to issue an
official receipt8 in the amount of P116,182.00 to cover
his account. However, issuance of official receipt for
post-dated checks is contrary to respondent PCPPI's
company policy which requires that its official receipt
shall be issued only for cash sales and/or currently
dated checks. Nonetheless, Gerry Alhambra acceded
to his superior, herein petitioner, and issued the
official receipt.
When salesman Alhambra attempted to settle his
account, the settlement clerk noticed that there was a
discrepancy between the cash amount declared by
Alhambra and the sum actually remitted. Based on
the official receipt, Alhambra declared a cash
collection of P116,182.00, but the amount he actually
remitted was only P3,128.66. Asked to explain the
said discrepancy, Alhambra admitted that petitioner
Gonzales pressured him to issue the official receipt.
Alhambra could not likewise present the post-dated
check issued by respondent Gonzales for the reason
that under the company rules and regulations, any
post-dated check must be covered by a post-dated
check receipt (PDCR), duly signed by Mr. Andy
Roxas, the Sales Office Manager.9
In another vain effort to undo the damage he had
done, petitioner on December 31, 1992 issued a third
post-dated check dated January 15, 1993, now
covered with the supposed post-dated check receipt
which, however, was signed by the petitioner himself
and not by the Sales Office Manager who has the
sole authority to issue the same.
In January 1993, petitioner's request for payment of
his "concession" was approved, but only up to the
extent of P91,000.00. Hence, petitioner paid PCPPI
the following:
Official Receipt
Particulars Date
No.
1. Check 70945 Jan. 14, 1993
2. Cash 70945 Jan. 14, 1993
3. Concession 70945 Jan. 14, 1993
4. Empties 85430 Jan. 06, 1993
5. Empties 85437 Jan. 10, 1993
            Total payment
Upon payment of his liability, having been settled the
same with an excess of P3,074.00, petitioner
demanded for the return of his post-dated check from
the Cashier's Department on January 15, 1993.
In view of the alleged irregularities in the above
transaction, petitioner was subjected to an
administrative investigation, conducted on April 16,
1993 and June 25, 1993, wherein petitioner was given
the opportunity to explain his side and to defend
himself.12
Petitioner claimed that from the time he became a
dealer in 1991, he consistently met his monthly sales
quota, and that notwithstanding, he was not able to
receive his "concession". As of December 1992,
petitioner's concession, as per his own computation,
already amounted to P109,766.00. Petitioner
allegedly proposed to Mr. Efren Marquez, District
Manager, that he be allowed to pay his liability of
P116,182.00 using his concession in the amount of
P109,766.00 plus cash money for the balance. Mr.
Marquez allegedly approved petitioner's request,
subject to the final approval of his unpaid
"concession" by a certain Mr. Dino of PCPPI, and that
he must issue a post-dated check as security or
collateral, in the event his "concession" is
disapproved. Petitioner then complied and
accordingly, he issued a post-dated check in the
amount of P116,182.00.
Private respondent PCPPI averred that petitioner's
allegation that he was entitled to concessions worth
P109,766.00 and that there was an agreement that
the same would supposedly be credited to his
outstanding account is baseless and self-serving.
PCPPI declares that trade concessions are given in
goods (softdrink full and empties), and not in the form
of cash or credit arrangement. Thus, the post-dated
check issued by petitioner was in payment of his
previous purchases which had become due and
demandable and not in any way related to his alleged
entitlement of any concession.13
In a letter dated September 30, 1993,14 petitioner was
notified of his termination from employment on the
ground of loss of confidence and of having violated
the company rules and regulations, to wit:
"Group III — Frauds and Acts of Dishonesty
4. Engaging in fictitious transactions, fake
invoicing, deals padding and other sale
malpractices
8. Breach of trust and confidence."
Aggrieved, petitioner instituted a case of illegal
dismissal, backwages, damages and attorney
fees15 before the Department of Labor and
Employment (DOLE), National Capital Region (NCR),
Regional Arbitration Branch in Quezon City, and the
case was assigned to Labor Arbiter Ramon Valentin
C. Reyes.
On October 15, 1996, the Labor Arbiter found and
declared that petitioner was denied due process when
no written notice of the charges against him was
received by petitioner prior to his receipt of the notice
of termination. Furthermore, there was no justifiable
reason for the termination of the employment of
petitioner, the Labor Arbiter concluding that the
imputation against petitioner was committed by the
latter not as an employee but as a concessionaire of
private respondent PCPPI, and that there is no
showing that private respondent PCPPI suffered
damage as a consequence thereof. The dispositive
portion of the decision of the Labor Arbiter reads:
WHEREFORE, premises all considered,
judgment is hereby rendered finding the
dismissal illegal and ordering respondent to:
1. Reinstate complainant to his former position
without loss of seniority rights and other
benefits;
2. Pay complainant backwages from date of
termination up to his actual reinstatement;
3. Dismissing the complaint against Florante
Manalo for lack of merit.
All other claims are dismissed for lack of
merit.
The Research and Information Unit, this
Commission, is hereby directed to effect the
necessary computation shall form part of this
decision.
SO ORDERED.
Private respondent PCPPI then appealed the decision
of the Labor Arbiter to the public respondent NLRC,
and it was assigned to the Second Division. The
NLRC, in its Decision, reversed the decision of the
Labor Arbiter and dismissed the complaint for illegal
dismissal for lack of merit. In its Order dated August
12, 1997, it denied petitioner's motion for
reconsideration. The petitioner now challenges the
correctness of the said Decision and Order of the
NLRC in the instant petition.
Petitioner contends that public respondent NLRC
gravely abused its discretion in reversing the factual
findings and conclusions of the Labor Arbiter.
The factual findings and conclusions of the NLRC are
generally accorded not only great weight and respect
but even clothed with finality and deemed binding on
this Court as long as they are supported by
substantial evidence. Only when the factual findings
and conclusion of the Labor Arbiter and NLRC are
clearly in conflict with each other is this Court
behooved to give utmost attention to and thoroughly
scrutinize the records of the case, more particularly
the evidence presented, to arrive at a correct
decision.16 Nowhere in the record does it show that
public respondent NLRC grossly abused its discretion
in arriving at its challenged Decision.
Under the Labor Code, as amended, the
requirements for the lawful dismissal of an employee
by his employer are two-fold, namely: (1) the
procedural, and (2) the substantive. Not only must the
employee be afforded a reasonable opportunity to be
heard and to submit any evidence he may have in
support of his defense,17 but that the dismissal must
be for a valid or authorized cause as provided by
law.18
Procedural due process requires, for validity of the
employee's dismissal, that an employer must furnish
the employee sought to be dismissed with two (2)
written notices before termination may be validly
effected. They are: (a) a notice apprising the
employee of the particular acts or omission for which
his dismissal is sought and; (b) a subsequent notice
informing the employee of the decision to dismiss
him.19
In the instant case, the evidence on record shows that
contrary to the finding of the Labor Arbiter, petitioner
was given ample opportunity to present his side and
to defend himself against the charges. In a letter
dated April 14, 1993, petitioner was directed by
private respondent PCPPI to report to the Security
Office on April 16, 1993 for administrative
investigation. The letter reads:
TO: RM ROBERTO C. GONZALES
FROM: A.B. ESPINO
DATE: April 14, 1993
SUBJ: NOTICE OF ADMINISTRATIVE
INVESTIGATION
cc. DRD/DRFD/FLM/TYZ/FYS/201 FILE/FILE

During the administrative investigation of Slm.
Gerry Alhambra on this date at the Security
Office, he alleged that sometime December
1992, you handed a piece of paper and
written therein a breakdown of different
packages for him to issue OR No. 85418
amounting to P116,182.00 and Charge Inv.
No. 365524 amounting to P109,766.00 to be
included in his loadsheet.
He further alleged that you issued on that day
a UCPB check No. AUB 278849 post-dated 4
January 1993 amounting to P116,182.00
while the amount in words is One Hundred
Sixteen Thousand One Hundred Eighty Two
Pesos for transmittal to the Cashier.
Likewise, said above check was shown to us
today when it supposedly should have been
entered in our Cashier's register last January
4, 1993 and he allegedly said you handed this
to him last night (April 13, 1993) to be
presented during the investigation.
In view thereof, you are hereby directed to
report to the Security Office at 9:00 a.m., 16
April 1993 for an administrative investigation
so that you may avail of due process and
present your side with reference to the above
allegation of Slm. Alhambra which is a
violation of our existing Company Rules and
Regulations to wit:
Group III-4: "Engaging in fictitious
transactions, false invoicing, deals padding
and other sales malpractices"
Group III-8: "Breach of Trust and Confidence"
Failure on you part to attend the scheduled
investigation on the said time, date and place
shall be construed as a waiver of your right to
be heard and your case will be decided based
on available evidence at hand.
A.B. ESPINO
While the letter does not show on its face that the
petitioner acknowledged receipt thereof, it is
undisputed that petitioner freely, voluntarily and
actively participated in the administrative investigation
on the charges filed against him, as evidenced by his
signature affixed on each page of the minutes of the
hearings conducted on April 16, 1993 and June 25,
1993. After the said investigation, petitioner received
on October 6, 1993 a notice of dismissal dated
September 20, 1993. Under these circumstances, we
find no basis for the Labor Arbiter's ruling that private
respondent PCPPI breached legal procedure prior to
the termination of the petitioner's employment.
Substantive due process, for validity of the petitioner's
dismissal, has likewise been met by private
respondent PCPPI. As aptly found by the NLRC,
petitioner was separated or terminated by private
respondent PCPPI from his employment due to loss
of trust and confidence, which is a just and valid
cause for dismissal under Article 282(c) of the Labor
Code. We find the evidence adduced in this case
contrary to petitioner's claim that the questionable
credit sale transaction he was charged with was in
connection with his being a dealer or concessionaire
of PCPPI and not as an employee thereof, and thus,
there was allegedly no just and valid cause to dismiss
him.
Records show that maneuvers and machinations on
the questionable credit sale transaction could not
have been consummated by the petitioner if he was
not equipped with the knowledge, as a route
manager, of how the respondent company processes
these kinds of transactions. It was highly
inconceivable for a mere dealer to have done what
petitioner did.
First, petitioner gave himself a credit extension
without proper authorization. Three (3) days before
the post-dated check which he issued as payment for
the purchases on credit on November 25, 1992 was
about to mature on December 25, 1992, petitioner
issued another post-dated check dated January 4,
1993. The second post-dated check was defective
inasmuch as the amount written thereon
(P116,182.00) did not match the sum written in words,
that is, "ONE HUNDRED SIXTEEN THOUSAND ONE
HUNDRED EIGHTY PESOS ONLY". This scheme
was a definite ploy to circumvent the policy against
unauthorized credit extension inasmuch as the
November 25, 1992 purchase on credit was due 30
days after the delivery or on December 25, 1992.
Second, petitioner, as route manager prevailed upon
salesman Alhambra, his subordinate, over whom he
exercises moral and professional ascendancy to carry
out his machination. Petitioner ordered and pressured
salesman Alhambra in issuing Official Receipt No.
85418, for the December 22, 1992 post-dated check
to cover his account. As route manager, petitioner
knew fully well that the same was not sanctioned by
company policy inasmuch as official receipts are
issued only for cash payment and/or currently dated
checks. Had that official receipt which he caused to
be prepared escaped the scrutiny of and were
accepted by the settlement clerk, petitioner would
have evaded payment of his debt or account payable
to private respondent PCPPI amounting to
P116,182.00.
Third, upon the discovery by the settlement clerk of
the fraudulent official receipt, petitioner issued on
December 31, 1992 another post-dated check dated
January 15, 1993 together with a post-dated check
receipt (PDCR) signed by petitioner himself although
he was not authorized to do so. A post-dated check
receipt can only be issued by the Sales Office
Manager of PCPPI whenever payment is made by
post-dated check. Petitioner's scheme was
discovered because, as route manager, he was not
authorized by respondent company to issue post-
dated check receipts.
These acts of petitioner are patently dishonest and
militate against the rules and regulations of his
employer, herein private respondent company.
Hence, the loss of trust and confidence in him by
private respondent PCPPI.
Under Article 282(c) of the Labor Code, an employer
can terminate the employment of the employee
concerned for "fraud or willful breach by an employee
of the trust reposed in him by his employer or duly
authorized representative." The loss of trust and
confidence must be based on the willful breach of the
trust reposed in the employee by his employer.
Ordinary breach will not suffice. A breach of trust is
willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly
or inadvertently.20 Loss of confidence, as a just cause
for termination of employment, is premised on the fact
that the employee concerned holds a position of
responsibility, trust and confidence. He must be
invested with confidence on delicate matters such as
the custody, handling, care and protection of the
employer's property and/or funds. But in order to
constitute a just cause for dismissal, the act
complained of must be "work-related" such as would
show the employee concerned to be unfit to continue
working for the employer.21
In the present case, petitioner is not an ordinary rank-
and-file employee. He is a Route Manager, a
managerial level position as we settled in the case of
United Pepsi-Cola Supervising Union (UPSU) v.
Laguesma.22 The test of managerial status has been
defined as an authority to act in the interest of the
employer, which authority is not merely routinary or
clerical in nature but requires in dependent
judgment.23 As managerial employee, petitioner is
tasked to perform key and sensitive functions, and
thus he is bound by more exacting work ethics.24
The fact the private respondent PCPPI ultimately
suffered no monetary damage as petitioner
subsequently settled his account is of no moment.
This was not the reason for the termination of his
employment in the respondent company but the
anomalous scheme he engineered to cover up his
past due account, which constitutes a clear betrayal
of trust and confidence.
Premises considered, we find that the petitioner is
indeed unfit to continue working for private
respondent PCPPI. We therefore hold that public
respondent NLRC committed no grave abuse of
discretion in reversing the decision of the Labor
Arbiter and in dismissing the complaint for illegal
dismissal.
WHEREFORE, the petition is hereby DISMISSED for
lack of merit, and the assailed Decision and
Resolution of public respondent National Labor
Relation Commission dated June 26, 1997 and
August 12, 1997, respectively, are AFFIRMED. No
pronouncement as to costs.
SO ORDERED.

As a general rule, employers are allowed a wide

latitude of discretion in terminating the employment of
managerial personnel or those who, while not of
similar rank, perform functions which by their nature
require the employer's full trust and confidence. Proof
beyond reasonable doubt is not required. It is
sufficient that there is some basis for loss of
confidence, such as when the employer has
reasonable ground to believe that the employee
concerned is responsible for the purported
misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence
demanded by his position.25 This must be
distinguished from the case of ordinary rank-and-file
employees, whose termination on the basis of these
same grounds requires a higher proof of involvement
in the events in question; mere uncorroborated
assertions and accusations by the employer will not
suffice.26

Private respondent PCPPI has sufficiently shown that

petitioner has become unworthy of the trust and
confidence demanded of his position. Petitioner
betrayed his employer's trust and confidence when he
instigated the issuance by his subordinate salesman
of an official receipt for his post-dated check on
December 22, 1992 whereby he (petitioner) could
have evaded payment to private respondent PCPPI of
his debt amounting to P116,182.00. These acts
committed by petitioner adversely reflected on his
integrity. As Route Manager he disregarded the
private respondent company's rules and regulation
prohibiting the issuance of official receipt for post-
dated check payment unless the same is done by the
Sales Office Manager.

G.R. No. 96189 July 14, 1992
UNIVERSITY OF THE PHILIPPINES, petitioner,
vs.
HON. PURA FERRER-CALLEJA, Director of the
Bureau of Labor Relations, Department of Labor
and Employment, and THE ALL U.P. WORKERS'
UNION, represented by its President, Rosario del
Rosario, respondent.
Labor Laws; Labor Organization; Professors,
associate professors and assistant professors cannot
be considered as exercising such managerial or
highly confidential functions as would justify their
being categorized as “high-level employees” of the
University of the Philippines.—As regards the first
issue, the Court is satisfied that it has been correctly
resolved by the respondent Director of Bureau
Relations. In light of Executive Order No. 180 and its
implementing rules, as well as the University’s charter
and relevant regulations, the professors, associate
professors and assistant professors (hereafter simply
referred to as professors) cannot be considered as
exercising such managerial or highly confidential
functions as would justify their being categorized as
“high-level employees” of the institution.
Same; Same; Same; It is the University Academic
Personnel Committee composed of deans, the
assistant for academic affairs and the chief of
personnel which formulates the policies, rules and
standards respecting selection, compensation and
promotion of members of the academic staff.—From
the foregoing, it is evident that it is the University
Academic Personnel Committee, composed of deans,
the assistant for academic affairs and the chief of
personnel, which formulates the policies, rules and
standards respecting selection, compensation and
promotion of members of the academic staff. The
departmental and college academic personnel
committees’ functions are purely recommendatory in
nature, subject to review and evaluation by the
University Academic Personnel Board.
Same; Same; Same; Membership in the University
Council can not elevate the professors to the status of
high-level employees.—Neither can membership in
the University Council elevate the professors to the
status of high-level employees.
_________________
*SECOND DIVISION.
452
452
SUPREME COURT REPORTS ANNOTATED
University of the Philippines vs. Ferrer-Calleja
Same; Same; Same; Same; Even assuming
arguendo that UP professors discharge policy-
determining functions through the University Council,
still such exercise would not qualify them as high-level
employees within the context of E.O. 180.—Even
assuming arguendo that UP professors discharge
policy-determining functions through the University
Council, still such exercise would not qualify them as
high-level employees within the context of E.O. 180.
As correctly observed by private respondent,
“Executive Order No. 180 is a law concerning public
sector unionism. It must therefore be construed within
that context. Within that context, the University of the
Philippines represents the government as an
employer. ‘Policy-determining’ refers to policy-
determination in university matters that affect those
same matters that may be the subject of negotiation
between public sector management and labor. The
reason why ‘policy-determining’ has been laid down
as a test in segregating rank-and-file from
management is to ensure that those who lay down
policies in areas that are still negotiable in public
sector collective bargaining do not themselves
become part of those employees who seek to change
these policies for their collective welfare.”
Same; Same; Bargaining Unit defined.—A “bargaining
unit” has been 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 the best suited to serve the
reciprocal rights and duties of the parties under the
collective bargaining provisions of the law.
Same; Same; Same; Our labor laws do not provide
the criteria for determining the proper collective
bargaining unit.—Our labor laws do not however
provide the criteria for determining the proper
collective bargaining unit.

Same; Same; Same; Same; The basic test of an
asserted bargaining unit’s acceptability is whether or
not it is fundamentally the combination which will best
assure to all employees the exercise of their collective
bargaining rights.—The Court further explained that
“(t)he test of the grouping is community or mutuality of
interests. And this is so because ‘the basic test of an
asserted bargaining unit’s acceptability is whether or
not it is fundamentally the combination which will best
assure to all employees the exercise of their collective
bargaining rights’ (Rothenberg on Labor Relations,
490).” Hence, in that case, the Court upheld the trial
court’s conclusion that two separate bargaining units
should be formed, one consisting of regular and
permanent employees and another consisting of
casual laborers or stevedores.
453
VOL. 211,JULY14,1992
453
University of the Philippines vs. Ferrer-Calleja
Same; Same; Same; Same; Same; The community or
mutuality of interests test has provided the standard in
determining the proper constituency of a collective
bargaining unit.—Since then, the “community or
mutuality of interests” test has provided the standard
in determining the proper constituency of a collective
bargaining unit. In Alhambra Cigar & Cigarette
Manufacturing Company, et al. vs. Alhambra
Employees’ Association (PAFLU), 107 Phil. 23, the
Court, noting that the employees in the administrative,
sales and dispensary departments of a cigar and
cigarette manufacturing firm perform work which have
nothing to do with production and maintenance, unlike
those in the raw lead (malalasi), cigar, cigarette,
packing (precintera) and engineering and garage
departments, authorized the formation of the former
set of employees into a separate collective bargaining
unit. The ruling in the Democratic Labor Association
case, supra, was reiterated in Philippine Land-Air-Sea
Labor Union vs. Court of Industrial Relations, 110
Phil. 176, where casual employees were barred from
joining the union of the permanent and regular
employees. University of the Philippines vs. Ferrer-
Calleja, 211 SCRA 451, G.R. No. 96189 July 14,
1992
 
NARVASA, C.J.:
In this special civil action of certiorari the University of
the Philippines seeks the nullification of the Order
dated October 30, 1990 of Director Pura Ferrer-
Calleja of the Bureau of Labor Relations holding that
"professors, associate professors and assistant
professors (of the University of the Philippines) are . .
rank-and-file employees . . ;" consequently, they
should, together with the so-called non-academic,
non-teaching, and all other employees of the
University, be represented by only one labor
organization.   The University is joined in this
1
undertaking by the Solicitor General who "has taken a
position not contrary to that of petitioner and, in fact,
has manifested . . that he is not opposing the petition .
. ." 
2
The case   was initiated in the Bureau of Labor
3
Relations by a petition filed on March 2, 1990 by a
registered labor union, the "Organization of Non-
Academic Personnel of UP" (ONAPUP).   Claiming to
4
have a membership of 3,236 members — comprising
more than 33% of the 9,617 persons constituting the
non-academic personnel of UP-Diliman, Los Baños,
Manila, and Visayas, it sought the holding of a
certification election among all said non-academic
employees of the University of the Philippines. At a
conference thereafter held on March 22, 1990 in the
Bureau, the University stated that it had no objection
to the election.
On April 18, 1990, another registered labor union, the
"All UP Workers' Union,"   filed a comment, as
5
intervenor in the certification election proceeding.
Alleging that its membership covers both academic
and non-academic personnel, and that it aims to unite
all UP rank-and-file employees in one union, it
declared its assent to the holding of the election
provided the appropriate organizational unit was first
clearly defined. It observed in this connection that the
Research, Extension and Professional Staff (REPS),
who are academic non-teaching personnel, should
not be deemed part of the organizational unit.
For its part, the University, through its General
Counsel,   made of record its view that there should
6
be two (2) unions: one for academic, the other for
non-academic or administrative, personnel
considering the dichotomy of interests, conditions and
rules governing these employee groups.
Director Calleja ruled on the matter on August 7,
1990.   She declared that "the appropriate
7
organizational unit . . should embrace all the regular
rank-and-file employees, teaching and non-teaching,
of the University of the Philippines, including all its
branches" and that there was no sufficient evidence
"to justify the grouping of the non-academic or
administrative personnel into an organization unit
apart and distinct from that of the academic or
teaching personnel." Director Calleja adverted to
Section 9 of Executive Order No. 180, viz.:
Sec. 9. The appropriate organizational
unit shall be the employer unit
consisting of rank-and-file employees,
unless circumstances otherwise
require.
and Section 1, Rule IV of the Rules
Implementing said EO 180 (as amended by
SEC. 2, Resolution of Public Sector Labor
 Management Council dated May 14,
1989, viz.:
xxx xxx xxx
For purposes of registration, an
appropriate organizational unit may
refer to:
xxx xxx xxx
d. State universities or colleges,
government-owned or controlled
corporations with original charters.
She went on to say that the general intent of
EO 180 was "not to fragmentize the employer
unit, as "can be gleaned from the definition of
the term "accredited employees'
organization," which refers to:
. . a registered organization of the
rank-and-file employees as defined in
these rules recognized to negotiate for
the employees in an organizational
unit headed by an officer with
sufficient authority to bind the agency,
such as . . . . . . state colleges and
universities.
The Director thus commanded that a certification
election be "conducted among rank-and-file
employees, teaching and non-teaching" in all four
autonomous campuses of the UP, and that
management appear and bring copies of the
corresponding payrolls for January, June, and July,
1990 at the "usual pre-election conference . . ."
At the pre-election conference held on March 22,
1990 at the Labor Organizational Division of the
DOLE, 8 the University sought further clarification of the coverage of the
term, "rank-and-file" personnel, asserting that not every employee could
properly be embraced within both teaching and non-teaching categories
since there are those whose positions are in truth managerial and policy-
determining, and hence, excluded by law.
At a subsequent hearing (on October 4, 1990), the
University filed a Manifestation seeking the exclusion
from the organizational unit of those employees
holding supervisory positions among non-academic
personnel, and those in teaching staff with the rank of
Assistant Professor or higher, submitting the following
as grounds therefor:
1) Certain "high-level employees" with policy-making,
managerial, or confidential functions, are ineligible to
join rank-and-file employee organizations under
Section 3, EO 180:
Sec. 3. 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;
2) In the University hierarchy, not all teaching and
non-teaching personnel belong the rank-and file: just
as there are those occupying managerial positions
within the non-teaching roster, there is also a
dichotomy between various levels of the teaching or
academic staff;
3) Among the non-teaching employees composed of
Administrative Staff and Research personnel, only
those holding positions below Grade 18 should be
regarded as rank-and-file, considering that those
holding higher grade positions, like Chiefs of
Sections, perform supervisory functions including that
of effectively recommending termination of
appointments or initiating appointments and
promotions; and
4) Not all teaching personnel may be deemed
included in the term, "rank-and-file;" only those
holding appointments at the instructor level may be so
considered, because those holding appointments
from Assistant Professor to Associate Professor to full
Professor take part, as members of the University
Council, a policy-making body, in the initiation of
policies and rules with respect to faculty tenure and
promotion. 9
The ONAPUP quite categorically made of record its
position; that it was not opposing the University's
proferred classification of rank-and file employees. On
the other hand, the "All UP Workers' Union" opposed
the University's view, in a Position Paper presented
by it under date of October 18, 1990.
Director Calleja subsequently promulgated an Order
dated October 30, 1990, resolving the "sole issue" of
"whether or not professors, associate professors and
assistant professors are included in the definition of
high-level employee(s)" in light of Rule I, Section (1)
of the Implementing Guidelines of Executive Order
No. 180, defining "high level employee" as follows:
1. 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.
The Director adjudged that said teachers are rank-
and-file employees "qualified to join unions and vote
in certification elections." According to her —
A careful perusal of the University
Code . . shows that the policy-making
powers of the Council are limited to
academic matters, namely, prescribing
 courses of study and rules of
discipline, fixing student admission
and graduation requirements,
recommending to the Board of
Regents the conferment of degrees,
and disciplinary power over students.
The policy-determining functions
contemplated in the definition of a
high-level employee pertain to
managerial, executive, or organization
policies, such as hiring, firing, and
disciplining of employees, salaries,
teaching/working hours, other
monetary and non-monetary benefits,
and other terms and conditions of
employment. They are the usual
issues in collective bargaining
negotiations so that whoever wields
these powers would be placed in a
situation of conflicting interests if he
were allowed to join the union of rank-
and-file employees.
The University seasonably moved for reconsideration,
seeking to make the following points, to wit:
1) UP professors do "wield the most potent
managerial powers: the power to rule on tenure, on
the creation of new programs and new jobs, and
conversely, the abolition of old programs and the
attendant re-assignment of employees.
2) To say that the Council is "limited to (acting on)
academic matters" is error, since academic decisions
"are the most important decisions made in a
University . . (being, as it were) the heart, the core of
the University as a workplace.
3) Considering that the law regards as a "high level"
employee, one who performs either policy-
determining, managerial, or confidential functions, the
Director erred in applying only the "managerial
functions" test, ignoring the "policy-determining
functions" test.
4) The Director's interpretation of the law would lead
to absurd results, e.g.: "an administrative officer of the
College of Law is a high level employee, while a full
Professor who has published several treatises and
who has distinguished himself in argument before the
Supreme Court is a mere rank-and-file employee. A
dormitory manager is classified as a high level
employee, while a full Professor or Political Science
with a Ph. D. and several Honorary doctorates is
classified as rank-and-file." 
10
The motion for reconsideration was denied by
Director Calleja, by Order dated November 20, 1990.
The University would now have this Court declare
void the Director's Order of October 30, 1990 as well
as that of November 20, 1990.   A temporary
11
restraining order was issued by the Court, by
Resolution dated December 5, 1990 conformably to
the University's application therefor.
Two issues arise from these undisputed facts. One is
whether or not professors, associate professors and
assistant professors are "high-level employees"
"whose functions are normally considered policy
determining, managerial or . . highly confidential in
nature." The other is whether or not, they, and other
employees performing academic functions,   should
12
comprise a collective bargaining unit distinct and
different from that consisting of the non-academic
employees of the University,   considering the
13
dichotomy of interests, conditions and rules existing
between them.
As regards the first issue, the Court is satisfied that it
has been correctly resolved by the respondent
Director of Bureau Relations. In light of Executive
Order No. 180 and its implementing rules, as well as
the University's charter and relevant regulations, the
professors, associate professors and assistant
professors (hereafter simply referred to as professors)
cannot be considered as exercising such managerial
or highly confidential functions as would justify their
being categorized as "high-level employees" of the
institution.
The Academic Personnel Committees, through which
the professors supposedly exercise managerial
functions, were constituted "in order to foster greater
involvement of the faculty and other academic
personnel in appointments, promotions, and other
personnel matters that directly affect
them."   Academic Personnel Committees at the
14
departmental and college levels were organized
"consistent with, and demonstrative of the very idea of
consulting the faculty and other academic personnel
on matters directly affecting them" and to allow
"flexibility in the determination of guidelines peculiar to
a particular department or college."  15
Personnel actions affecting the faculty and other
academic personnel should, however, "be considered
under uniform guidelines and consistent with the
Resolution of the Board (of Regents) adopted during
its 789th Meeting (11-26-69) creating the University
Academic Personnel Board."   Thus, the
16
Departmental Academic Personnel Committee is
given the function of "assist(ing) in the review of the
recommendations initiated by the Department
Chairman with regard to recruitment, selection,
performance evaluation, tenure and staff
development, in accordance with the general
guidelines formulated by the University Academic
Personnel Board and the implementing details laid
down by the College Academic Personnel
Committee;"   while the College Academic Personnel
17
Committee is entrusted with the following functions:  18
1. Assist the Dean in setting up the
details for the implementation of
policies, rules, standards or general
guidelines as formulated by the
University Academic Personnel Board;
2. Review the recommendation
submitted by the DAPCs with regard
to recruitment, selection, performance
evaluation, tenure, staff development,
and promotion of the faculty and other
academic personnel of the College;
3. Establish departmental priorities in
the allocation of available funds for
promotion;
 4. Act on cases of disagreement
between the Chairman and the
members of the DAPC particularly on
personnel matters covered by this
Order;
5. Act on complaints and/or protests
against personnel actions made by the
Department Chairman and/or the
DAPC.
The University Academic Personnel Board, on the
other hand, performs the following functions:  19
1. Assist the Chancellor in the review
of the recommendations of the
CAPC'S.
2. Act on cases of disagreement
between the Dean and the CAPC.
3. Formulate policies, rules, and
standards with respect to the
selection, compensation, and
promotion of members of the
academic staff.
4. Assist the Chancellor in the review
of recommendations on academic
promotions and on other matters
affecting faculty status and welfare.
From the foregoing, it is evident that it is the
University Academic Personnel Committee,
composed of deans, the assistant for academic affairs
and the chief of personnel, which formulates the
policies, rules and standards respecting selection,
compensation and promotion of members of the
academic staff. The departmental and college
academic personnel committees' functions are purely
recommendatory in nature, subject to review and
evaluation by the University Academic Personnel
Board. In Franklin Baker Company of the Philippines
vs. Trajano,   this Court reiterated the principle laid
20
down in National Merchandising Corp. vs. Court of
Industrial Relations,   that the power to recommend,
21
in order to qualify an employee as a supervisor or
managerial employee "must not only be effective but
the exercise of such authority should not be merely of
a routinary or clerical nature but should require the
use of independent judgment." Where such
recommendatory powers, as in the case at bar, are
subject to evaluation, review and final action by the
department heads and other higher executives of the
company, the same, although present, are not
effective and not an exercise of independent
judgment as required by law.
Significantly, the personnel actions that may be
recommended by the departmental and college
academic personnel committees must conform with
the general guidelines drawn up by the university
personnel academic committee. This being the case,
the members of the departmental and college
academic personnel committees are not unlike the
chiefs of divisions and sections of the National
Waterworks and Sewerage Authority whom this Court
considered as rank-and-file employees in National
Waterworks & Sewerage Authority vs. NWSA
Consolidated Unions,   because "given ready policies
22
to execute and standard practices to observe for their
execution, . . . they have little freedom of action, as
their main function is merely to carry out the
company's orders, plans and policies."
The power or prerogative pertaining to a high-level
employee "to effectively recommend such managerial
actions, to formulate or execute management policies
or decisions and/or to hire, transfer, suspend, lay-off,
recall, dismiss, assign or discipline employees"   is
23
exercised to a certain degree by the university
academic personnel board/committees and ultimately
by the Board of Regents in accordance with Section 6
of the University
Charter,   thus:
24
(e) To appoint, on the
recommendation of the President of
the University, professors, instructors,
lecturers and other employees of the
University; to fix their compensation,
hours of service, and such other
duties and conditions as it may deem
proper; to grant them in its discretion
leave of absence under such
regulations as it may promulgate, any
other provision of law to the contrary
notwithstanding, and to remove them
for cause after investigation and
hearing shall have been had.
Another factor that militates against petitioner's
espousal of managerial employment status for all its
professors through membership in the departmental
and college academic personnel committees is that
not all professors are members thereof. Membership
and the number of members in the committees are
provided as follows: 25
Sec. 2. Membership in Committees. —
Membership in committees may be
made either through appointment,
election, or by some other means as
may be determined by the faculty and
other academic personnel of a
particular department or college.
Sec. 3. Number of Members. — In
addition to the Chairman, in the case
of a department, and the Dean in the
case of a college, there shall be such
number of members representing the
faculty and academic personnel as will
afford a fairly representative,
deliberative and manageable group
that can handle evaluation of
personnel actions.
Neither can membership in the University Council
elevate the professors to the status of high-level
employees. Section 6 (f) and 9 of the UP Charter
respectively provide: 26
Sec. 6. The Board of Regents shall
have the following powers and duties .
..;
xxx xxx xxx
 (f) To approve the courses of study
and rules of discipline drawn up by the
University Council as hereinafter
provided; . . .
Sec. 9. There shall be a University
Council consisting of the President of
the University and of all instructors in
the university holding the rank of
professor, associate professor, or
assistant professor. The Council shall
have the power to prescribe the
courses of study and rules of
discipline, subject to the approval of
the Board of Regents. It shall fix the
requirements for admission to any
college of the university, as well as for
graduation and the receiving of a
degree. The Council alone shall have
the power to recommend students or
others to be recipients of degrees.
Through its president or committees, it
shall have disciplinary power over the
students within the limits prescribed
by the rules of discipline approved by
the Board of Regents. The powers
and duties of the President of the
University, in addition to those
specifically provided in this Act shall
be those usually pertaining to the
office of president of a university.
It is readily apparent that the policy-determining
functions of the University Council are subject to
review, evaluation and final approval by the Board of
Regents. The Council's power of discipline is likewise
circumscribed by the limits imposed by the Board of
Regents. What has been said about the
recommendatory powers of the departmental and
college academic personnel committees applies with
equal force to the alleged policy-determining functions
of the University Council.
Even assuming arguendo that UP professors
discharge policy-determining functions through the
University Council, still such exercise would not
qualify them as high-level employees within the
context of E.O. 180. As correctly observed by private
respondent, "Executive Order No. 180 is a law
concerning public sector unionism. It must therefore
be construed within that context. Within that context,
the University of the Philippines represents the
government as an employer. 'Policy-determining'
refers to policy-determination in university mattes that
affect those same matters that may be the subject of
negotiation between public sector management and
labor. The reason why 'policy-determining' has been
laid down as a test in segregating rank-and-file from
management is to ensure that those who lay down
policies in areas that are still negotiable in public
sector collective bargaining do not themselves
become part of those employees who seek to change
these policies for their collective welfare." 
27
The policy-determining functions of the University
Council refer to academic matters, i.e. those
governing the relationship between the University and
its students, and not the University as an employer
and the professors as employees. It is thus evident
that no conflict of interest results in the professors
being members of the University Council and being
classified as rank-and-file employees.
Be that as it may, does it follow, as public respondent
would propose, that all rank-and-file employees of the
university are to be organized into a single collective
bargaining unit?
A "bargaining unit" has been 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 the best
suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions of
the law. 
28
Our labor laws do not however provide the criteria for
determining the proper collective bargaining unit.
Section 12 of the old law, Republic Act No. 875
otherwise known as the Industrial Peace Act, simply
reads as follows: 29
Sec. 12. Exclusive Collective
Bargaining Representation for Labor
Organizations. — The labor
organization designated or selected
for the purpose of collective
bargaining by the majority of the
employees in an appropriate collective
bargaining unit shall be the exclusive
representative of all the employees in
such unit for the purpose of collective
bargaining in respect to rates of pay,
wages, hours of employment, or other
conditions of employment; Provided,
That any individual employee or group
of employees shall have the right at
any time to present grievances to their
employer.
Although said Section 12 of the Industrial Peace Act
was subsequently incorporated into the Labor Code
with minor changes, no guidelines were included in
said Code for determination of an appropriate
bargaining unit in a given case.   Thus, apart from the
30
single descriptive word "appropriate," no specific
guide for determining the proper collective bargaining
unit can be found in the statutes.
Even Executive Order No. 180 already adverted to is
not much help. All it says, in its Section 9, is that
"(t)he appropriate organizational unit shall be the
employer unit consisting of rank-and-file employees,
unless circumstances otherwise require." Case law
fortunately furnishes some guidelines.
When first confronted with the task of determining the
proper collective bargaining unit in a particular
controversy, the Court had perforce to rely on
American jurisprudence. In Democratic Labor
Association vs. Cebu Stevedoring Company,
Inc., decided on February 28, 1958,   the Court
31
observed that "the issue of how to determine the
proper collective bargaining unit and what unit would
be appropriate to be the collective bargaining
agency" . . . "is novel in this jurisdiction; however,
American precedents on the matter abound . . (to
which resort may be had) considering that our present
Magna Carta has been patterned after the American
law on the subject." Said the Court:
. . . Under these precedents, there are
various factors which must be satisfied
and considered in determining the
proper constituency of a bargaining
unit. No one particular factor is itself
decisive of the determination. The
weight accorded to any particular
factor varies in accordance with the
particular question or questions that
may arise in a given case. What are
these factors? Rothenberg mentions a
good number, but the most pertinent
to our case are: (1) will of the
employees (Globe Doctrine); (2)
affinity and unit of employees' interest,
such as substantial similarity of work
and duties, or similarity of
compensation and working conditions;
(3) prior collective bargaining history;
and (4) employment status, such as
temporary, seasonal probationary
employees. . . .
xxx xxx xxx
An enlightening appraisal of the
problem of defining an appropriate
bargaining unit is given in the 10th
Annual Report of the National Labor
Relations Board wherein it is
emphasized that the factors which
said board may consider and weigh in
fixing appropriate units are: the
history, extent and type of
organization of employees; the history
of their collective bargaining; the
history, extent and type of
organization of employees in other
plants of the same employer, or other
employers in the same industry; the
skill, wages, work, and working
conditions of the employees; the
desires of the employees; the eligibility
of the employees for membership in
the union or unions involved; and the
relationship between the unit or units
proposed and the employer's
organization, management, and
operation. . . .
. . In said report, it is likewise
emphasized that the basic test in
determining the appropriate
bargaining unit is that a unit, to be
appropriate, must affect a grouping of
employees who have substantial,
mutual interests in wages, hours,
working conditions and other subjects
of collective bargaining (citing Smith
on Labor Laws, 316-317; Francisco,
Labor Laws, 162). . . .
The Court further explained that "(t)he test of the
grouping is community or mutuality of interests. And
this is so because 'the basic test of an asserted
bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure
to all employees the exercise of their collective
bargaining rights' (Rothenberg on Labor Relations,
490)." Hence, in that case, the Court upheld the trial
court's conclusion that two separate bargaining units
should be formed, one consisting of regular and
permanent employees and another consisting of
casual laborers or stevedores.
Since then, the "community or mutuality of interests"
test has provided the standard in determining the
proper constituency of a collective bargaining unit.
In Alhambra Cigar & Cigarette Manufacturing
Company, et al. vs. Alhambra Employees'
Association (PAFLU), 107 Phil. 23, the Court, noting
that the employees in the administrative, sales and
dispensary departments of a cigar and cigarette
manufacturing firm perform work which have nothing
to do with production and maintenance, unlike those
in the raw lead (malalasi), cigar, cigarette, packing
(precintera) and engineering and garage
departments, authorized the formation of the former
set of employees into a separate collective bargaining
unit. The ruling in the Democratic Labor
Association case, supra, was reiterated in Philippine
Land-Air-Sea Labor Unit vs. Court of Industrial
Relations, 110 Phil. 176, where casual employees
were barred from joining the union of the permanent
and regular employees.
Applying the same "community or mutuality of
interests" test, but resulting in the formation of only
one collective bargaining units is the case of National
Association of Free Trade Unions vs. Mainit Lumber
Development Company Workers Union-United
Lumber and General Workers of the Phils., G.R. No.
79526, December 21, 1990, 192 SCRA 598. In said
case, the Court ordered the formation of a single
bargaining unit consisting of the Sawmill Division in
Butuan City and the Logging Division in Zapanta
Valley, Kitcharao, Agusan Norte of the Mainit Lumber
Development Company. The Court reasoned:
Certainly, there is a mutuality of
interest among the employees of the
Sawmill Division and the Logging
Division. Their functions mesh with
one another. One group needs the
other in the same way that the
company needs them both. There may
be difference as to the nature of their
individual assignments but the
distinctions are not enough to warrant
the formation of a separate bargaining
unit.
In the case at bar, the University employees may, as
already suggested, quite easily be categorized into
two general classes: one, the group composed of
employees whose functions are non-academic, i.e.,
janitors, messengers, typists, clerks, receptionists,
carpenters, electricians, grounds-keepers, chauffeurs,
mechanics, plumbers;   and two, the group made up
32
of those performing academic functions, i.e., full
professors, associate professors, assistant
professors, instructors — who may be judges or
government executives — and research, extension
and professorial staff.   Not much reflection is needed
33
to perceive that the community or mutuality of
interests which justifies the formation of a single
collective bargaining unit is wanting between the
academic and non-academic personnel of the
university. It would seem obvious that teachers would
find very little in common with the University clerks
and other non-academic employees as regards
responsibilities and functions, working conditions,
compensation rates, social life and interests, skills
and intellectual pursuits, cultural activities, etc. On the
contrary, the dichotomy of interests, the dissimilarity
in the nature of the work and duties as well as in the
compensation and working conditions of the
academic and non-academic personnel dictate the
separation of these two categories of employees for
purposes of collective bargaining. The formation of
two separate bargaining units, the first consisting of
the rank-and-file non-academic personnel, and the
second, of the rank-and-file academic employees, is
the set-up that will best assure to all the employees
the exercise of their collective bargaining rights.
These special circumstances, i.e., the dichotomy of
interests and concerns as well as the dissimilarity in
the nature and conditions of work, wages and
compensation between the academic and non-
academic personnel, bring the case at bar within the
exception contemplated in Section 9 of Executive
Order No. 180. It was grave abuse of discretion on
the part of the Labor Relations Director to have ruled
otherwise, ignoring plain and patent realities.

WHEREFORE, the assailed Order of October 30,

1990 is hereby AFFIRMED in so far as it declares the
professors, associate professors and assistant
professors of the University of the Philippines as rank-
and-file employees. The Order of August 7, 1990 is
MODIFIED in the sense that the non-academic rank-
and-file employees of the University of the Philippines
shall constitute a bargaining unit to the exclusion of
the academic employees of the institution — i.e., full
professors, associate professors, assistant
professors, instructors, and the research, extension
and professorial staff, who may, if so minded,
organize themselves into a separate collective
bargaining unit; and that, therefore, only said non-
academic rank-and-file personnel of the University of
the Philippines in Diliman, Manila, Los Baños and the
Visayas are to participate in the certification election.

SO ORDERED.

G.R. No. 75039 January 28, 1988
FRANKLIN BAKER COMPANY OF THE
PHILIPPINES, petitioner,
vs.
HONORABLE CRESENCIO B. TRAJANO,
DIRECTOR OF BUREAU OF LABOR RELATIONS,
FRANKLIN BAKER BROTHERHOOD
ASSOCIATION (TECHNICAL AND OFFICE
EMPLOYEES)-ASSOCIATION OF TRADE UNIONS
(ATU), respondents.
Labor; Employer-employee relationship; Managerial
employee, defined.—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, or to
effectively recommend such managerial actions.”
(Reynolds Phil. Corp. v. Eslava, 137 SCRA 259
[1985]), citing Section 212 (K), Labor Code.
Same; Same; Same; Test of supervisory” or
“managerial status” depends on whether a person
possesses authority to act in the interest of his
employer and whether such authority is not merely
routinary or clerical in nature but requires use of
independent judgment.—The test of “supervisory” or
“managerial status” depends on whether a person
possesses authority to act in the interest of his
employer in the matter specified in Article 212 (k) of
the Labor Code and Section 1 (m) of its Implementing
Rules and whether such authority is not merely
routinary or clerical in nature, but requires the use of
independent judgment. Thus, where such
recommendatory powers as in the case at bar, are
subject to evaluation, review and final action by the
department heads and other higher executives of the
company, the same, although present, are not
effective and not an exercise of independent
judgment as required by law (National Warehousing
Corp. v. CIR, 7 SCRA 602-603 [1963]).
Same; Same; Same; Employees in case at bar are
not managerial employees because they do not
participate in policy making but are given ready
policies to execute and standard practices to observe.
—Further-more, in line with the ruling of this Court,
subject employees are not managerial employees
because as borne by the records, they do not
participate in policy making but are given ready
policies to execute and standard practices to observe,
thus having little freedom of action (National
Waterworks and Sewerage Authority v. NWSA
Consolidated, L-18938, 11 SCRA 766 [1964]).
________________
* FIRST DIVISION.
417
VOL. 157, JANUARY 28, 1988
417
Franklin Baker Company of the Phils. vs. Trajano
Same; Same; Same; Rule that findings of fact of the
Ministry of Labor and the NLRC are entitled to great
respect, unless the findings of fact are not supported
by substantial evidence or when there is grave abuse
of discretion.—It is well settled that the findings of fact
of the Ministry of Labor and National Labor Relations
Commission are entitled to great respect, unless the
findings of fact and the conclusions made therefrom,
are not supported by substantial evidence, or when
there is grave abuse of discretion committed by said
public official (Kapisanan ng Manggagawa sa Camara
Shoes, et al. v. Camara Shoes, 2nd Heirs of Santos
Camara et al., 111 SCRA 477 [1982]; International
Hardwood and Veneer Co. of the Philippines v.
Leonardo, 117 SCRA 967 [1982]; Pan-Phil-Life, Inc.
vs. NLRC, 114 SCRA 866 [1982]; Pepsi-Cola Labor
Union-BF LU-TUPAS Local Chapter N-896 v. NLRC,
114 SCRA 930 [1982]; Egyptair v. NLRC, 148 SCRA
125 [1987]; RJL Martinez Fishing Corp. v. NLRC,
G.R. Nos. 63550-51, 127 SCRA 455 [1984]; and
Reyes v. Phil. Duplicators, G.R. No. 54996, 109
SCRA 489 [1981]).
Same; Same; Same; Same; Term “grave abuse of
discretion”, defined.—By “grave abuse of discretion”
is meant, such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. The
abuse of discretion must be grave as where the
power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility and must be
so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law
(G.R. No. 59880, George Arguelles [Hda. Emma
Arguelles v. Romeo Yang, etc.], September 11,
1987).
Same; Same; Same; Same; Certiorari; Remedy of
certiorari does not lie in the absence of any showing
of abuse or misuse of power properly vested in the
Ministry of Labor and Employment.—Moreover, this
Court has ruled that findings of administrative
agencies which have acquired expertise, like the
Labor Ministry, are accorded respect and finality
(Special Events and Central Shipping Office Workers
Union v. San Miguel Corp., 122 SCRA 557 [1983] and
that the remedy of certiorari does not lie in the
absence of any showing of abuse or misuse of power
properly vested in the Ministry of Labor and
Employment (Buiser v. Leogardo, Jr., 131 SCRA 151
[1984].)
Same; Same; Same; Unions; Managerial employees
can join the union of the rank and file but they cannot
form their own exclusive union as managerial
employees.—Even if We regard the employees
concerned as “managerial employees”, they can still
join the union of the rank and file employees. They
cannot however form their own exclusive union as
418
418
SUPREME COURT REPORTS ANNOTATED
Franklin Baker Company of the Phils. vs. Trajano
“managerial employees” (Bulletin Publishing
Corporation v. Sanchez, 144 SCRA 628). Franklin
Baker Company of the Phils, vs. Trajano, 157 SCRA
416, No. L-75039 January 28, 1988
PARAS, J.:
This is a petition for certiorari seeking the annulment of. (a) the Order of
Mediator-Arbiter Conchita J. Martinez of the Ministry of Labor and
Employment, Davao City, dated September 17, 1984 in LRD Case No. R-
22 MED-ROXI-UR-28-84 entitled "In Re: Petition for Certification Election
Among the Office and Technical Employees of Franklin Baker Company of
the Philippines, Davao Plant at Coronan, Sta. Cruz, Davao del Sur, Franklin
Baker Company of the Philippines, Davao Plant, Employer, Franklin Baker
Brotherhood Association (Technical and Office Employees)-Association of
Trade Unions (ATU)," insofar as it includes the managerial employees
(inspectors, foremen and supervisors) in the certification election; (b) the
Order of April 7, 1986 of Director Cresencio B. Trajano, also of the MOLE,
dismissing the appeal of aforesaid Order of September 17, 1985 for lack of
merit; and (c) the Order of June 6, 1986 of said Director denying
reconsideration of his Order of April 7, 1986 and affirming the same in
toto (Rollo, p. 90).
In brief, the undisputed facts of this case are as
follows:
On April 23, 1984, private respondent Franklin Baker
Brotherhood Association-(ATU) filed a petition for
certification election among the office and technical
employees of petitioner company with the Ministry of
Labor and Employment, Regional Office No. XI,
Davao City, docketed as LRD No. R-22, MED-ROXI-
UR-2884. Among other things, it alleges that Franklin
Baker Company of the Phils. Davao Plant, had in its
employ approximately ninety (90) regular technical
and office employees, which group is separate and
distinct from the regular rank and file employees and
is excluded from the coverage of existing Collective
Bargaining Agreement.
Petitioner company did not object to the holding of
such an election but manifested that out of the ninety
(90) employees sought to be represented by the
respondent union, seventy four (74) are managerial
employees while two (2) others are confidential
employees, hence, must be excluded from the
certification election and from the bargaining unit that
may result from such election (Rollo, p. 3).
Hearings were held and thereafter, the parties agreed
to file their respective memoranda. Likewise,
petitioner filed a reply to private respondent's
Memorandum (Rollo, p. 4).
Subsequently, on September 17, 1984, Med-Arbiter
Conchita J. Martinez issued an order, the dispositive
part of which reads:
Accordingly, the petition is hereby
granted and a certification election
among the office and technical
employees of Franklin Baker
Company of the Philippines, Davao
Plant is ordered within twenty (20)
days from receipt hereof. The choices
shall be the following:
1. Franklin Baker Brotherhood
Association-(ATU)
2. No Union
The representation officer assigned
shall call the parties for a pre-election
conference at least five (5) days
before the date of the election to
thresh out the mechanics of the
election, the finalization of the list of
voters, the posting of notices and
other relevant matters.
The company's latest payroll shall be
the basis for determining the office
 and technical workers qualified to
vote.
SO ORDERED. (Rollo, pp. 47-48).
From the aforequoted order petitioner Company
appealed to the Bureau of Labor Relations, docketed
as BLR Case No. A-22884, praying that the appealed
order be set aside and another be issued declaring
the seventy four (74) inspectors, foremen and
supervisors as managerial employees.
During the pendency of the appeal, sixty one (61) of
the employees involved, filed a Motion to Withdraw
the petition for certification election praying therein for
their exclusion from the Bargaining Unit and for a
categorical declaration that they are managerial
employees, as they are performing managerial
functions (Rollo, p. 4).
On April 7, 1986, public respondent Bureau of Labor
Relations Cresencio B. Trajano issued a Resolution
affirming the order dated September 17, 1984, the
dispositive part of which reads:
WHEREFORE, the appealed Order
dated September 17, 1985 is hereby
affirmed and the appeal dismissed for
lack of merit. Let the certification
election among the office and
technical employees of Franklin Baker
Company of the Philippines proceed
without delay.
The latest payrolls of the company
shall be used as basis of determining
the list of eligible voters. (Rollo, p. 77),
Petitioner company sought the reconsideration of the
aforequoted resolution but its motion was denied by
Director Cresencio B. Trajano in his order dated June
6, 1986, the dispositive part of which reads:
WHEREFORE, the appeal of
respondent company is, dismissed for
lack of merit and the Bureau's
Resolution dated April 1986
affirmed in toto.
Let, therefore, the pertinent papers of
this case be immediately forwarded to
the Office of origin for the conduct of
the certification election. (Rollo, p. 90).
Hence, this petition.
In the resolution of July 30, 1986, the Second Division
of this Court without giving due course to the petition
required the respondents to file their comment (Rollo,
p. 91). On August 28, 1986, public respondent filed its
comment (Rollo, pp. 99 to 102). Likewise private
respondent filed its comment on September 5, 1986
(Rollo, pp. 104 to 107).
In the resolution of September 8, 1986, petitioner was
required to file its reply to public respondent's
comment (Rollo, p. 119) which reply was filed on
September 18, 1986 (Rollo, pp. 122-127).
On October 20, 1986, this Court resolved to give due
course to the petition and required the parties to file
their respective Memoranda (Rollo, p. 133). In
compliance with said resolution, petitioner and private
respondent filed their Memoranda on December 8,
1986 and December 29, 1986, respectively (Rollo, pp.
183-187). On the other hand, public respondent filed
with this Court a manifestation (Rollo, p. 153) to the
effect that it is adopting as its memorandum its
comment dated August 18, 1986 (Rollo, p. 99) which
manifestation was noted by this Court in its resolution
dated November 26, 1986
(Rollo, p. 155).
The lone assignment of error raised by petitioner
states:
Public respondent acted with grave
abuse of discretion amounting to lack
of jurisdiction when he ruled that the
76 employees subject of this petition
are not managerial employees
(inspectors, foremen, supervisors and
the like) and therefore, may participate
in the certification election among the
office and technical employees. Such
ruling is contrary to jurisprudence and
to the factual evidence presented by
petitioner which was not rebutted by
private respondent union and is
therefore patently baseless.
From this assigned error two questions are raised by
petitioner, namely: (1) whether or not subject
employees are managerial employees under the
purview of the Labor Code and its Implementing
Rules; and (2) whether the Director of the Bureau of
Labor Relations acted with abuse of discretion in
affirming the order of Mediator-Arbiter Conchita J.
Martinez.
There is no question that there are in the DAVAO
Plant of petitioner company approximately 90 regular
technical and office employees which form a unit,
separate and distinct from the regular rank and file
employees and are excluded from the coverage of
existing Collective Bargaining Agreement; that said
group of employees organized themselves as Franklin
Baker Brotherhood Association (technical and office
employees) and affiliated with the local chapter of the
Association of trade Unions (ATU), a legitimate labor
organization with Registration Permit No. 8745 (Fed)
LC and with office located at the 3rd Floor of Antwell
Bldg., Sta. Ana, Davao City; that petitioner company
did not object to the holding of such certification, but
only sought the exclusion of inspectors, foremen and
supervisors, members of Franklin Baker Brotherhood
Association (technical and office employees)
numbering 76 from the certification election on the
ground that they are managerial employees.
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, or to effectively recommend such
managerial actions." (Reynolds Phil. Corp. v. Eslava,
137 SCRA [1985], citing Section 212 (K), Labor Code.
Also pertinent thereto is Section 1 (M) of the
Implementing Rules and Regulations, which is
practically a restatement of the above provision of
law.
To sustain its posture, that the inspectors, foreman
and supervisors numbering 76 are managerial
employees, petitioner painstakingly demonstrates that
subject employees indeed participate in the
formulation and execution of company policies and
regulations as to the conduct of work in the plant,
exercised the power to hire, suspend or dismiss
subordinate employees and effectively recommend
such action, by citing concrete cases, among which
are: (1) Mr. Ponciano Viola, a wet process inspector,
who while in the performance of his duty, found Mr.
Enrique Asuncion, a trimmer "forging", falsifying and
simulating a company time card (timesheet) resulting
in payroll padding, immediately recommended the
dismissal of said erring employee, resulting in the
latter's discharge. (Employer's Memo, Rollo, p.18); (2)
Mr. Manuel Alipio, an opening inspector,
recommended for suspension Nut Operator Ephraim
Dumayos who was caught in the act of surreptitiously
transferring to a co-worker's bin some whole nuts
which act constitutes a violation of company policy;
(3) Mr. Sofronio Abangan, a line inspector, censured
and thereafter recommended the suspension of Mr.
Romeo Fullante, for being remiss in the proper and
accurate counting of nuts; (4) Binleader Dionisio
Agtang was required to explain his inefficiency of Mr.
Saturnino Bangkas, Bin Loading Inspector; (5) for
disobeying the orders of Bin Loading Inspector
Mauricio Lumanog's order, Macario Mante, Eduardo
Adaptor, Rodolfo Irene and George Rellanos were all
recommended for suspension which culminated in an
investigation conducted by Lumanog's higher bosses
(Ibid., p. 20).
It has also been shown that subject employees have
the power to hire, as evidenced by the hiring of
Rolando Asis, Roy Layson, Arcadio Gaudicos and
Felix Arciaga, upon the recommendation of Opening
Inspector Serafin Suelo, Processing Inspector
Leonardo Velez and Laureano C. Lim, Opening
Inspector (Ibid., p. 21).
It will be noted, however, that in the performance of
their duties and functions and in the exercise of their
recommendatory powers, subject employees may
only recommend, as the ultimate power to hire, fire or
suspend as the case may be, rests upon the plant
personnel manager.
The test of "supervisory" or "managerial status"
depends on whether a person possesses authority to
act in the interest of his employer in the matter
specified in Article 212 (k) of the Labor Code and
Section 1 (m) of its Implementing Rules and whether
such authority is not merely routinary or clerical in
nature, but requires the use of independent judgment.
Thus, where such recommendatory powers as in the
case at bar, are subject to evaluation, review and final
action by the department heads and other higher
executives of the company, the same, although
present, are not effective and not an exercise of
independent judgment as required by law (National
Warehousing Corp. v. CIR, 7 SCRA 602-603 [1963]).
Furthermore, in line with the ruling of this Court,
subject employees are not managerial employees
because as borne by the records, they do not
participate in policy making but are given ready
policies to execute and standard practices to observe,
thus having little freedom of action (National
Waterworks and Sewerage Authority v. NWSA
Consolidated, L-18938, 11 SCRA 766 [1964]).
Petitioner's contention that the Director of the Bureau
of Labor Relations acted with abuse of discretion
amounting to lack of jurisdiction in holding that the 76
employees are not managerial employees and must
be included in the certification election has no basis in
fact and in law. Neither is its contention that the use of
the word's "and/or" categorically shows that
performance of the functions enumerated in the law
qualifies an employee as a managerial employee.
It is well settled that the findings of fact of the Ministry
of Labor and National Labor Relations Commission
are entitled to great respect, unless the findings of
fact and the conclusions made therefrom, are not
supported by substantial evidence, or when there is
grave abuse of discretion committed by said public
official (Kapisanan ng Manggagawa sa Camara
Shoes, 2nd Heirs of Santos Camara, et al., 111
SCRA 477 [1982]; International hardwood and Veneer
Co. of the Philippines v. Leonardo, 117 SCRA 967
[1982]; Pan-Phil-Life, Inc. v. NLRC, 114 SCRA 866
[1982]; Pepsi-Cola Labor Union-BF LUTUPAS Local
Chapter N-896 v. NLRC, 114 SCRA 930 [1982];
Egyptair v. NLRC, 148 SCRA 125 [1987]; RJL
Martinez Fishing Corp. v. NLRC, G.R. Nos. 63550-51,
127 SCRA 455 [1984]; and Reyes v. Phil. Duplicators,
G.R. No. 54996, 109 SCRA 489 [1981]).
By "grave abuse of discretion" is meant, such
capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of
discretion must be grave as where the power is
exercised in an arbitrary or despotic manner by
reason of passion or personal hostility and must be so
patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law
(G.R. No. 59880, George Arguelles [Hda. Emma
Arguelles v. Romeo Yang, etc.], September 11,
1987).
Moreover, this Court has ruled that findings of
administrative agencies which have acquired
expertise, like the Labor Ministry, are accorded
respect and finality (Special Events and Central
Shipping Office Workers Union v. San Miguel Corp.,
122 SCRA 557 [1983] and that the remedy of
certiorari does not lie in the absence of any showing
of abuse or misuse of power properly vested in the
Ministry of Labor and Employment (Buiser v.
Leogardo, Jr., 131 SCRA 151 [1984]).
After a careful review of the records, no plausible
reason could be found to disturb the findings of fact
and the conclusions of law of the Ministry of Labor.
Even if We regard the employees concerned as
"managerial employees," they can still join the union
of the rank and file employees. They cannot however
form their own exclusive union as "managerial
employees" (Bulletin Publishing Corporation v.
Sanchez, 144 SCRA 628).
PREMISES CONSIDERED, the petition is
DISMISSED, and the assailed resolution and orders
are AFFIRMED.
SO ORDERED.
Same; Same; Same; Where private respondents-
employees were not privy to the agreement between
petitioner and the previous bargaining representatives
as to their exclusion from the bargaining union of the
rank-and-file or from forming their own union, they
can never bind subsequent federations and unions;
Reason.—Petitioner,

______________

* FIRST DIVISION.

284

G.R. No. 74262 October 29, 1987

284
GENERAL RUBBER and FOOTWEAR
CORPORATION, petitioner,
vs.
BUREAU OF LABOR RELATIONS, NATIONAL SUPREME COURT REPORTS ANNOTATED
ASSOCIATION OF TRADE UNION OF MONTHLY
PAID EMPLOYEES-NATU, respondents.

Labor; Labor Unions; Right to self-organization; General Rubber and Footwear Corporation vs.
Members who are not managerial employees but Bureau of Labor Relations
considered rank-and-file employees have every right
to self-organization or be heard through a duly
certified collective bargaining union; Reason.—Thus,
it can be readily seen from the above findings of the
in justification of its action, maintained that the
Bureau of Labor Relations that the members of
exclusion of the members of the private respondent
private respondent are not managerial employees as
from the bargaining union of the rank-and-file or from
claimed by petitioners but merely considered as rank-
forming their own union was agreed upon by
and-file employees who have every right to self-
petitioner corporation with the previous bargaining
organization or to be heard through a duly certified
representatives namely: the General “Rubber
collective bargaining union. The Supervisory power of
Workers Union-PTGWO, the General Workers Union-
the members of private respondent union consists
NAFLU and the General Rubber Workers Union
merely in recommending as to what managerial
(independent). Such posture has no leg to stand on. It
actions to take in disciplinary cases. These members
has not been shown that private respondent was privy
of private respondent union do not fit the definition of
to this agreement. And even if it were so, it can never
managerial employees which We laid down in the
bind subsequent federations and unions particularly
case of Bulletin Publishing Corporation V. Sanchez
private respondent-union because it is a curtailment
(144 SCRA 628). These members of private
of the right to self-organization guaranteed by the
respondent union are therefore not prohibited from
laber laws.
forming their own collective bargaining unit since it
has not been shown by petitioner that “the
responsibilities (of these monthly-paid-employees)
inherently require the exercise of discretion and
independent judgment as supervisors” or that “they Same; Same; Same; Same; To avoid confusion and
possess the power and authority to lay down or fulfill the policy of the Labor Code and to be
exercise management policies.” Similarly, We held in consistent with the ruling in the Bulletin case, the
the same case that “Members of supervisory unions monthly-paid rank-and-file employees should be
who do not fall within the definition of managerial allowed to join the union of daily paid rank-and-file
employees shall become eligible to join or assist the employees or to form their own rank-and-file union.—
rank-and-file labor organization, and if none exists, to However, to prevent any difficulty and to avoid
form or assist in the forming of such rank-and-file confusion to all concerned and, more importantly, to
organizations.’’ fulfill the policy of the New Labor Code as well as to
be consistent with Our ruling in the Bulletin case,
supra, the monthly-paid rank-and-file employees
should be allowed to join the union of the daily-paid-
rank-and-file employees of petitioner so that they can
also avail of the CBA benefits or to form their own
rank and file union, without prejudice to the
certification election that has been ordered. General
Rubber and Footwear Corporation vs. Bureau of
Labor Relations, 155 SCRA 283, No. L-74262
October 29, 1987
PARAS, J.:
Petitioner is a corporation engaged in the business of
manufacturing rubber sandals and oilier rubber
products. In 1985, the Samahang Manggagawa sa
General Rubber Corporation — ANGLO was formed
by the daily paid — rank and file employees as their
union for collective bargaining, after the expiration on
October 15, 1985 of the collective bargaining
agreement previously executed by petitioner with
General Rubber Workers Union (Independent) on
October 15, 1982. Be it noted however that on July
17, 1985, the monthly — paid employees of the
petitioner-corporation, after forming their own
collective bargaining unit the National Association of
Trade Unions of Monthly Paid Employees-NATU, filed
a petition for direct certification with tile Bureau of
Labor Relations which petition was opposed by herein
petitioner. On September 2, 1985, the Med-Arbiter
issued an Order for the holding of a certification
election after finding that a certification election is in
order in this case and observing that it is the fairest
remedy to determine whether employees of petitioner
desire to have a union or not. On appeal, the Bureau
of Labor Relations denied both the appeal and motion
for reconsideration interposed by petitioner and
affirmed the ruling of the Med-Arbiter. Hence, the
present petition, imputing serious error's of law and
grave abuse of discretion on the part of the Bureau of
Labor Relations in issuing the assailed order which
sanctioned the creation of two (2) bargaining units
within petitioner-corporation with the following:
GROUNDS FOR REVIEW
I
The Bureau of Labor Relations
committed serious error of law and
grave abuse of discretion in ordering
the creation of a new bargaining unit
at petitioner, notwithstanding that
there is already an existing bargaining
unit, whose members are represented
for collective bargaining purposes by
Samahang Manggagawa sa General
Rubber Corporation- ANGLO.
II
The Bureau of Labor Relations
committed serious error of law in
holding that managerial employees or
those employees exercising
managerial functions can legally form
and join a labor organization and be
members of the new bargaining unit.
III
The Bureau of Labor Relations
committed grave abuse of discretion in
holding that supervisors, employees
perform- ing managerial, confidential
and technical functions and office
personnel, who are negotiated by
petitioner to be excluded from the
existing bargaining unit because they
are performing vital functions to
management, can form and join a
labor organization and be members of
the new bargaining unit.
Expounding on its position, petitioner argues that:
1. The order violates the thrust of the Labor Code
insofar as formation of a bargaining unit is concerned.
A policy is in favor of a larger unit and not the creation
of smaller units in one establishment which might lead
to formation, thus impractical.
2. Article 246 of the Labor Code explicitly provides
that managerial employees are ineligible to join or
form any labor organization. Since it has been shown
by the petitioners that 30% of the monthly-paid
employees are managers or employees exercising
managerial functions, it was grave error for the
Bureau of Labor Relations to allow these monthly paid
employees to form a union and/or a bargaining unit.
3. The Bureau of Labor Relations overlooked the fact
that these monthly-paid-employees are excluded from
the first existing bargaining unit of the daily-paid rank
and file employees because in the year 1963, when
the employees of petitioner initially started to exercise
their right to self-organization, herein petitioner
bargained for the exclusion of the monthly-paid
employees from the existing bargaining unit because
they are performing vital functions of management. In
view of this exclusion, petitioner took upon itself to
take care of them and directly gave them the benefits
or privileges without having to bargain for them or
without the aid of the bargaining arm or force of a
union.
Petitioner's contentions are devoid of merit.
Among other issues answered in the assailed order
are the following findings of fact:
Regarding the second issue, we deem
it necessary to examine the respective
functions of the employees. It appears
therefrom that they perform
supervisory functions. Verily they
make recommendation petitions as to
what Managerial actions to take in
disciplinary cases. However, that fact
alone does not make them managerial
employees already, It is more a
question of how effective are those
recommendations which aspect has
not been clearly established in this
case. As defined in the Labor Code, a
"managerial employee is one who is
vested with powers or prerogatives to
lay down and execute management
policies and/or to hire, transfer,
suspend, lay-off, recall, discharge,
assign or discipline employees, or to
effectively recommend such
managerial actions." Thus, employees
who do not fall within this definition are
considered rank-and-file employees.
Lastly, we find that the third issue has
been raised for the first time on
appeal. It has been the policy of the
Bureau to encourage the formation of
an employer unit "unless
circumstances otherwise require. The
proliferation of unions in an employer
unit is discouraged as a matter of
policy unless there are compelling
reasons which would deny a certain
class of employees the right to self-
organization for purposes of collective
bargaining, This case does not fall
squarely within the exception. It is
undisputed that the monthlies who are
rank-and-file have been historically
excluded from the bargaining unit
composed of daily-paid rank-and-filers
that is, since 1963 when the existing
rank- and- file union was recognized.
In fact, the collective bargaining
agreement (CBA) which expired last
15 October 1985 provides as follows:
ARTICLE I
SCOPE
Section 1. Appropriate
bargaining unit. — This
Agreement covers all
regular employees and
workers employed by
the company at its
factory in Malabon,
Metro Manila. The
words "employee,"
"laborer" and "workers"
when used in this
Agreement shall be
deemed to refer to
those employees
within the bargaining
unit. Employees who
occupy managerial,
confidential or
technical positions,
supervisors, contract
employees, monthly-
paid employees,
security as wen as
office personnel are
excluded from the
appropriate bargaining
unit (emphasis
supplied).
In view of the above, the monthly-paid
rank-and-file employees ran form a
union of their own, separate and
distinct from the existing rank-and-file
union composed of daily-paid workers.
(Rollo, pp. 1920)
Thus, it can be readily seen from the above findings
of the Bureau of labor Relations that the members of
private respondent are not managerial employees as
claimed by petitioners but merely considered as rank-
and-file employees who have every right to self-
organization or to be heard through a duly certified
collective bargaining union. The Supervisory power of
the members of private respondent union consists
merely in recommending as to what managerial
actions to take in disciplinary cases. These members
of private respondent union do not fit the definition of
managerial employees which We laid down in the
case of Bulletin Publishing Corporation v. Sanchez
(144 SCRA 628). These members of private
respondent union are therefore not prohibited from
forming their own collective bargaining unit since it
has not been shown by petitioner that "the
responsibilities (of these monthly-paid-employees)
inherently require the exercise of discretion and
independent judgment as supervisors" or that "they
possess the power and authority to lay down or
exercise management policies." Similarly, he held in
the same case that "Members of supervisory unions
who do not fall within the definition of managerial
employees shall become eligible to loin or assist the
rank-and-file labor organization, and if none exists, to
form or assist in the forming of such rank-and-file
organizations.
Perhaps it is unusual for the petitioner to have to deal
with two (2) collective bargaining unions but there is
no one to blame except petitioner itself for creating
the situation it is in. From the beginning of the
existence in 1963 of a bargaining limit for the
employees up to the present, petitioner had sought to
indiscriminately suppress the members of the private
respondent"s right to self-organization provided for by
law. Petitioner, in justification of its action, maintained
that the exclusion of the members of the private
respondent from the bargaining union of the rank-and-
file or from forming their own union was agreed upon
by petitioner corporation with the previous bargaining
representatives namely: the General "Rubber
Workers Union PTGWO the General Workers Union
— NAFLU and the General Rubber Workers Union
(independent). Such posture has no leg to stand on. It
has not been shown that private respondent was privy
to this agreement. And even if it were so, it can never
bind subsequent federations and unions particularly
private respondent-union because it is a curtailment
of the right to self-organization guaranteed by the
labor laws. However, to prevent any difficulty. and to
avoid confusion to all concerned and, more
importantly, to fulfill the policy of the New Labor Code
as well as to be consistent with Our ruling in
the Bulletin case, supra, the monthly-paid rank-and-
file employees should be allowed to join the union of
the daily-paid-rank-and-file employees of petitioner so
that they can also avail of the CBA benefits or to form
their own rank-and-file union, without prejudice to the
certification election that has been ordered.
WHEREFORE, premises considered, the petition is
hereby DISMISSED for lack of merit.
SO ORDERED.

G.R. No. L-48814 June 27, 1985
REYNOLDS PHILIPPINE
CORPORATION, petitioner,
vs.
GENARO A, ESLAVA, Technical Assistant of the
Office of the President; ACTING SECRETARY OF
LABOR AMADO G. INCIONG and PEDRO S. DE
JESUS, respondents.
Labor Law; Illegal dismissal, not a case of;
Managerial Employee; Occupancy by managerial
employee of inconsistent positions, not proper.—We
hold that the Regional Director committed a grave
abuse of discretion amounting to lack of jurisdiction in
not holding that the misconduct of De Jesus was a
just cause for terminating his services. De Jesus
occupied inconsistent positions. He was supposed to
be on the side of management. He also wanted to be
________________
* SECOND DIVISION.
260
260
SUPREME COURT REPORTS ANNOTATED
Reynolds Philippine Corporation vs. Eslava
on the side of labor. “No man can serve two masters;
for either he will hate the one and love the other, or
else he will stand by the one and despise the other.”
Same; Same; Same; Personnel officer and
government and public relations manager, considered
a managerial employee; Concept of a managerial
employee.—As personnel officer and as government
and public relations manager, De Jesus was
obviously a managerial employee not a rank-and-file
employee. 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, or to effectively
recommend such managerial actions.” (Sec. 212[K],
Labor Code).
Same; Same; Same; Termination of employment of
managerial employee for just cause as lack of
confidence, proper; Lack of confidence of
management in managerial employee because of his
misfeasance and malfeasance.—Managerial
employees may be terminated for just cause such as
lack of confidence (Policy Instructions No. 8 of
Secretary of Labor, effective April 23, 1976). The
management of Reynolds had reason to lose
confidence in De Jesus because of his misfeasance
and malfeasance as found by the Executive
Committee. His misconduct amounts to breach of
trust (See sec. 283, Labor Code).
Same; Same; Where an employee has been guilty of
breach of trust or that his employer has ample reason
to distrust him, a labor tribunal cannot deny to the
employer the authority to dismiss the employee.—The
rule is that if “there is sufficient evidence to show that
the employee has been guilty of a breach of trust, or
that his employer has ample reason to distrust him,”
the labor tribunal “cannot justly deny to the employer
the authority to dismiss such employee” (National
Labor Union, Inc. vs. Standard Vacuum Oil Company
and CIR, 73 Phil. 279, 282; Sea-Land Service, Inc. vs.
NLRC and Reyes, G. R. No. 68212, May 24, 1985).
Reynolds Philippine Corporation vs. Eslava, 137
SCRA 259, No. L-48814 June 27, 1985
Araneta, Mendoza, Papa & Ibarra for petitioner.
F. Reyes, Cabigao & Associates for respondent P. S.
de Jesus.
AQUINO, J.:
Reynolds Philippine Corporation in this certiorari case
assails the order dated November 11, 1977 of
Francisco L. Estrella, the Director of Region IV
(National Capital Region) of the Department of Labor,
ordering the reinstatement with full backwages of
Pedro S. de Jesus as its concurrent personnel
manager and government and public relations
manager.
As summarized by the Solicitor General in his
comment, it appears that in January and February,
1977, three anonymous letters were received by W.
W. Dunkum, Jr., Reynolds' executive vice-president
and general manager, and the members of its board
of directors.
The first letter called Dunkum a "big fool", criticized
his alleged unfairness in giving salary increases and
declared "that it is now known in business circles that
you are anti-Filipino" and that "your employees are
fervently praying for your replacement". The second
letter was of the same tenor as the first.
The third letter informed Reynolds' president,
chairman and board of directors that the company
was headed for destruction because of the
"mismanagement, inefficiency, lack of planning and
foresight, petty favoritism, dictatorial policies, one-
man rule, contemptuous attitude to labor, anti-Filipino
utterances and activities of Mr. Dunkum, etc."
Dunkum called a meeting of the department heads of
the company. They were convinced that De Jesus
was the author of the anonymous letters.
On February 23, 1977, Epifanio Garcia, president of
the union, addressed a letter to the directors,
requesting that the officers of the union be given a
chance to appear before the Filipino members of the
board for the purpose of acquainting them about the
situation of the company and the employees in the
organization.
In the morning of March 7, 1977 De Jesus gave the
union president a "guide" or statement in Tagalog of
what the latter would say to the board of directors. On
that day the union president appeared before the
Executive Committee but he did not mention the
grievances specified by De Jesus in his "guide". De
Jesus, who attended that meeting, was asked if he
had any complaint against Dunkum. He answered
that he had none.
The Executive Committee of Reynolds, composed of
J. Antonio Araneta, Demetrio Tuason, William A.
Farrell, Bruce B. Gralow, William W. Dunkum, Jr.,
James Litton and Vicente Nicandro, investigated the
alleged malfeasance and misfeasance committed by
De Jesus.
After conducting the investigation, the Executive
Committee adopted a resolution dated March 21,
1977 directing Dunkum to suspend De Jesus because
he had committed acts of malfeasance and
misfeasance which were inimical to the interest of the
company and, therefore, he did not deserve the trust
and confidence required for that position (Annex N,
Petition).
A week later, De Jesus was suspended. He was
given five days from notice to air his side before the
corporate secretary. He was given a specification of
his acts of misconduct (Annexes O, P and P-1,
Petition). He submitted his answer, Annex Q of the
petition.
On April 5, 1977 the Executive Committee adopted a
resolution directing Dunkum to dismiss De Jesus. The
resolution reads (Annex R of Petition):
RESOLVED, that MR. PETE DE
JESUS be, as he hereby is, dismissed
and Mr. William W. Dunkum, Jr., in the
exercise of his powers as general
Manager is directed to dismiss him
immediately considering that:
The Executive Committee evaluated
the documentary evidence in support
of the statement of the acts of
malfeasance and misfeasance
committed by Mr. Pedro de Jesus
which were furnished to him on March
29, 1977, consisting of, but not limited
to, the "Salaysay" of Mr. Epifanio
Garcia, Union President, dated March
23, 1977, the affidavit of Mrs. Aurora
L. Ruiz, his Secretary, dated March
18, 1977 and the two statements of
Mr. Cesar Abueg, an employee in his
department, dated March 10 and 12,
1977.
Thereafter, the verified answer of Mr.
De Jesus, dated April 1, 1977, was
considered by the EXCOM, together
with all its annexes, in the light of the
memo of Mr. De Jesus dated March
25, 1977 and addressed to Mr.
Dunkum, in which Mr. de Jesus
admitted having "polished" the draft of
a letter which, according to the above
mentioned affidavit of Mrs. Ruiz, he
had himself typed inside his room and
which he gave to her to be typed in
clearly draft.
The EXCOM noted that except the
anonymous letters and the letter of the
Union President to the Board of
Directors dated February 23, 1977
whose authorship he denied, Mr. De
Jesus virtually admitted in his answer
that he prepared the guide in Tagalog
of what the Union President would say
before the Board of Directors; the
letter of February 28, 1977 of the
Union to Mr. J Louis Reynolds,
Richmond, Virginia, specifying acts of
mismanagement allegedly committed
by Mr. Dunkum and asking his recall
and the immediate appointment of his
replacement; and the telex of the
Union President, dated February 28,
1977 to FOILWAX RICHMONDVA
requesting that Mr. Dunkum be
recalled and stating that a petition to
this effect has been mailed on even
 date, without disclosing his
participation to Management.
Appraising the evidence as a whole,
the EXCOM found and concluded
what the acts of Mr. de Jesus prove
his lack of candor to Management of
which he was a part; that he actually
and expressly denied, falsely it turned
out, his participation in the drafting of
the letter of the Union President dated
February 23, 1977 to the Board of
Directors; that if his intention as
Personnel Manager was indeed to
benefit the Company, he should have
been frank enough to disclose his
authorship and/or participation in the
writing of the letters of the Union and
should have openly helped to
demonstrate that what he was
suggesting would be to the interest of
the Company; that the means he
employed to discredit Mr. Dunkum and
other members of the Management
Staff was improper: that by making
use of the Union, through its
President, to conceal his authorship
and/or his participation in the drafting
of the letters, he was in effect
instigating the Union to feel
dissatisfied with management of
which, as already stated above, he
was a part, and in that way he actually
formented distrust and discontent in
the Company; and that it would be
inimical to the interest of the
Company, to retain him.
De Jesus was dismissed on April 13, 1977. The next
day he filed a complaint for illegal dismissal, illegal
suspension and moral damages. After the filing of
position papers, the Regional Director, as already
noted, ordered the reinstatement of De Jesus with full
backwages.
De Jesus contended that he was not guilty of
misconduct. He said:
Complainant's desire to be of
reasonable assistance to the
employees has been a natural impulse
to him. He wanted to show them that
at long last the walls of recrimination
have been demolished and a new era
of good relationship has commenced.
He wanted to give substance to the
fact that under the New Society labor
and Management are no longer
belligerents but friends—that they are
partners in achieving a common goal,
which is the good of the Company. By
being nice to the employees, by
listening to their problems and by
giving them little favors complainant
has hoped that by doing so he could
generate a wholesome climate of
understanding conducive to maximum
efficiency.
He has hoped that from the reservoir
of goodwill he has sought to build, he
could draw heavily from in the future.
He could use that goodwill to the
advantage of the Company as, for
instance, when it becomes necessary
for Management to quell any
unreasonable impositions or
unwarranted demands.
The Regional Director assumed that De Jesus did not
obliterate the sharp dividing line between his loyalty to
management and his rapport with labor.
We hold that the Regional Director committed a grave
abuse of discretion amounting to lack of jurisdiction in
not holding that the misconduct of De Jesus was a
just cause for terminating his services. De Jesus
occupied inconsistent positions. He was supposed to
be on the side of management. He also wanted to be
on the side of labor. "No man can serve two masters;
for either he will hate the one and love the other, or
else he will stand by the one and despise the other."
As personnel officer and as government and public
relations manager, De Jesus was obviously a
managerial employee not a rank-and-file employee. 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, or to effectively recommend such
managerial actions." (Sec. 212[K], Labor Code).
Managerial employees may be terminated for just
cause such as lack of confidence (Policy Instructions
No. 8 of Secretary of Labor, effective April 23, 1976).
The management of Reynolds had reason to lose
confidence in De Jesus because of his misfeasance
and malfeasance as found by the Executive
Committee. His misconduct amounts to breach of
trust (See sec. 283, Labor Code). *
The rule is that if "there is sufficient evidence to show that the employee
has been guilty of a breach of trust, or that his employer has ample reason
to distrust him," the labor tribunal "cannot justly deny to the employer the
authority to dismiss such employee" (National Labor Union, Inc. vs.
Standard Vacuum Oil Company and CIR, 73 Phil. 279, 282; Sea-Land
Service, Inc. vs. NLRC and Reyes, G. R. No. 68212, May 24, 1985).
WHEREFORE, the order of the Regional Director is
reversed and set aside and the complaint of Pedro S.
de Jesus is dismissed. No costs.
SO ORDERED.

G.R. No. 96663           August 10, 1999
PEPSI-COLA PRODUCTS, PHILIPPINES,
INC., petitioner,
vs.
HONORABLE SECRETARY OF LABOR, MED-
ARBITER NAPOLEON V. FERNANDO & PEPSI-
COLA SUPERVISORY EMPLOYEES
ORGANIZATION-UOEF, respondents,
-----------------------------
G.R. No. 103300           August 10, 1999
PEPSI COLA PRODUCTS PHILIPPINES, petitioner,
vs.
OFFICE OF THE SECRETARY DEPARTMENT OF
LABOR AND HON. CELENIO N. DAING, in his
capacity as Med-Arbiter Labor Regional Office No.
X, Cagayan de Oro City, CAGAYAN DE ORO
PEPSI COLA SUPERVISORS UNION
(UOEF), respondents.
Labor Law; Remedial Law; Action; Moot and
Academic; It is unnecessary to indulge in academic
discussion of a moot question.– The issue in G.R. No.
96663, whether or not the supervisors union can be
affiliated with a Federation with two (2) rank and file
unions directly under the supervision of the former,
has thus become moot and academic in view of the
Union’s withdrawal from the federation. In a long line
of cases (Narciso Nakpil, et al. vs. Hon. Crisanto
Aragon, et al., G.R. No. L-24087, January 22, 1980,
95 SCRA 85; Toribio v. Bidin, et al., G.R. No. L-
37960, February 28, 1980, 96 SCRA 361; Gumaua v.
Espino, G.R. No. L-36188-37586, February 29, 1980,
96 SCRA 402), the Court dismissed the petition for
being moot and academic. In the case of F.C. Fisher
v. Yangco Steamship Co., March 31, 1915, the Court
held: “It is unnecessary, however to indulge in
academic discussion of a moot question. x x x x x x
The action would have been dismissed at any time on
a showing of the facts as they were . The question left
for the court was a moot one. Its Resolution would
have been useless. Its judgment would have been
impossible of execution x x x.–
________________
* THIRD DIVISION.
105
VOL. 312, AUGUST 10, 1999
105
Pepsi-Cola Products Philippines, Inc. vs. Secretary of
Labor
Same; Same; Same; Same; Even if a case were moot
and academic, a statement of the governing principle
is appropriate in the resolution of dismissal for the
guidance not only of the parties but of others similarly
situated.–In the case of University of San Agustin,
Inc., et al. vs. Court of Appeals, et al., the court
resolved the case, ruling that “even if a case were
moot and academic, a statement of the governing
principle is appropriate in the resolution of dismissal
for the guidance not only of the parties but of others
similarly situated. x x x–
Same; Labor Unions; Certification Election; An order
to hold a certification election is proper despite the
pendency of the petition for cancellation of the
registration certificate of the respondent union.–
Anent the issue of whether or not the Petition to
cancel/revoke registration is a prejudicial question to
the petition for certification election, the following
ruling in the case of Association of the Court of
Appeals Employees (ACAE) vs. Hon. Pura Ferrer-
Calleja, in her capacity as Director, Bureau of Labor
Relations, et al., 203 SCRA 597, 598, [1991], is in
point, to wit: x x x It is a well-settled rule that “a
certification proceedings is not a litigation in the sense
that the term is ordinarily understood, but an
investigation of a nonadversarial and fact finding
character.– (Associated Labor Unions [ALU] v. Ferrer-
Calleja, 179 SCRA 127 [1989]; Philippine Telegraph
and Telephone Corporation v. NLRC, 183 SCRA 451
[1990]). Thus, the technical rules of evidence do not
apply if the decision to grant it proceeds from an
examination of the sufficiency of the petition as well
as a careful look into the arguments contained in the
position papers and other documents. At any rate, the
Court applies the established rule correctly followed
by the public respondent that an order to hold a
certification election is proper despite the pendency of
the petition for cancellation of the registration
certificate of the respondent union. The rationale for
this is that at the time the respondent union filed its
petition, it still had the legal personality to perform
such act absent an order directing the cancellation.
Same; Same; Court considers the position of
confidential employees as included in the
disqualification found in Article 245 as if the
disqualification of confidential employees were written
in the provision.–In applying the doctrine of necessary
implication, we took into consideration the rationale
behind the disqualification of managerial employees
expressed in Bulletin Publishing Corporation v.
Sanchez, thus “x x x if these managerial employees
would belong
106
106
SUPREME COURT REPORTS ANNOTATED
Pepsi-Cola Products Philippines, Inc. vs. Secretary of
Labor
to or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident
conflict of interests. The Union can also become
company–dominated with the presence of managerial
employees in Union membership.– Stated differently,
in the collective bargaining process, managerial
employees are supposed to be on the side of the
employer, to act as its representatives, and to see to it
that its interest are well protected. The employer is
not assured of such protection if these employees
themselves are union members. Collective bargaining
in such a situation can become one-sided. It is the
same reason that impelled this Court to consider the
position of confidential employees as included in the
disqualification found in Art. 245 as if the
disqualification of confidential employees were written
in the provision. If confidential employees could
unionize in order to bargain for advantages for
themselves, then they could be governed by their own
motives rather than the interest of the employers.
Pepsi-Cola Products Philippines, Inc. vs. Secretary of
Labor, 312 SCRA 104, G.R. No. 96663, G.R. No.
103300 August 10, 1999
PURISIMA, J.:
These are petitions for certiorari relating to three (3)
cases filed with the Med-Arbiter, to wit: MED ARB
ROX Case No. R100-9101-RU-002 for Certification
Election filed by Pepsi Cola Supervisors Union-UOEF
(Union), MED ARB Case No. R1000-9102-RU-008,
Re: Petition to Set Aside, Cancel and/or Revoke the
Charter Affiliation of the Union, and MED-ARB ROX
Case No. R1000-9104-RU-012, for Cancellation of
Registration Certificate No. 11492-LC in favor of the
Union.
G. R. No. 96663
The facts that matter can be culled as follows:
Sometime in June 1990, the Pepsi-Cola Employees
Organization-UOEF (Union) filed a petition for
certification election with the Med-Arbiter seeking to
be the exclusive bargaining agent of supervisors of
Pepsi-Cola Philippines, Inc. (PEPSI).
On July 12, 1990, the Med-Arbiter granted the
Petition, with the explicit statement that it was an
affiliate of Union de Obreros Estivadores de Filipinas
(federation) together with two (2) rank and file unions.
Pepsi-Cola Labor Unity (PCLU) and Pepsi-Cola
Employees Union of the Philippines (PEUP).
On July 23, 1990, PEPSI filed with the Bureau of
Labor Relations a petition to Set Aside, Cancel and/or
Revoke Charter Affiliation of the Union,
entitled PCPPI v. PCEU-UOEF and docketed as
Case No. 725-90, on the grounds that (a) the
members of the Union were managers and (b) a
supervisors' union can not affiliate with a federation
whose members include the rank and file union of the
same company.
On August 29, 1990, PEPSI presented a motion to re-
open the case since it was not furnished with a copy
of the Petition for Certification Election.
On September 4, 1990, PEPSI submitted its position
paper to the BLR in Case No. 725-90.
On September 21, 1990, PEPSI received summons to
appear at the pre-trial conference set on September
25, 1990 but which the hearing officer rescheduled on
October 21, 1990. 1âwphi1.nêt
On October 12, 1990, PEPSI filed a Notice of Appeal
and Memorandum of Appeal with the Secretary of
Labor, questioning the setting of the certification
election on the said date and five (5) days after. It
also presented an urgent Ex-Parte Motion to Suspend
the Certification Election, which motion was granted
on October 18, 1990.
On November 12, 1990, the Secretary of Labor
denied the appeal and Motion for Reconsideration.
Even as the Petition to Cancel, Revoke and Suspend
Union Charter Certificate was pending before the
BLR, PEPSI found its way to this Court via the
present petition for certiorari.
On February 6, 1991, the Court granted the prayer for
temporary restraining order and/or preliminary
injunction.
The pivot of inquiry here is: whether or not a
supervisors' union can affiliate with the same
Federation of which two (2) rank and file unions are
likewise members, without violating Article 245 of the
Labor Code (PD 442), as amended, by Republic Act
6715, which provides:
Art. 245. Ineligibility of managerial employees
to join any labor organization; right of
supervisory employees. — Managerial
employees are not eligible to join, assist or
form any labor organization. Supervisory
employees shall not be eligible for
membership in a labor organization of the
rank-and-file employees but may join, assist
or form separate labor organizations of their
own.
In its Comment dated March 19, 1991, the Federation
argued that:
The pertinent portion of Article 245 of the
Labor Code states that. "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 organization of their own.
This provision of law does not prohibit a local
union composed of supervisory employees
from being affiliated to a federation which has
local unions with rank-and-file members as
affiliates.
xxx     xxx     xxx
. . . the Petition to Cancel, Revoke or Set
Aside the Charter Certificate of the private
respondent is anchored on the alleged ground
that certain managerial employees are
included as members thereof. The grounds for
the cancellation of the registration certificate
of a labor organization are provided in Section
7 of Rule II, Book V of the Omnibus Rules
Implementing the Labor Code, and the
inclusion of managerial employees is not one
of the grounds. . . . (in this case, the private
respondent herein) remains to be a legitimate
labor organization.1
On April 8, 1991, the Secretary of Labor and
Employment, through the Office of the Solicitor
General, sent in a Comment, alleging inter alia, that:
. . . under Article 259 of the New Labor Code,
only orders of the Med-Arbiter can be
appealed through the Secretary of Labor and
only on the ground that the rules and
regulations for the conduct of the certification
election have been violated. The Order of the
Representation Officer is "interlocutory" and
not appealable. . . .
. . . until and unless there is a final order
cancelling its certificate of registration or
charter certificate, a labor organization
remains to be a legitimate labor organization
entitled to exercised all the rights and duties
accorded to it by the Labor Code including the
right to be certified as a bargaining
representative. . . .
. . . Public respondent cannot be deemed to
have committed grave abuse of discretion with
respect to an issue that was never presented
before it for resolution. . . .
Art. 245 of the New Labor Code does
not preclude the supervisor's union
and the rank-and-file union from being
affiliated with the same federation.
xxx     xxx     xxx
A federation of local union is not the labor
organization referred to in Article 245 but only
becomes entitled to all the rights enjoyed by
the labor organization (at the company level)
when it has complied with the registration
requirements found in Articles 234 and 237.
Hence, what is prohibited by Article 245 is
membership of supervisory employees in a
labor union (at the company level) of the rank
and file. . . .
. . . In other words, the affiliation of the
supervisory employee's union with the same
federation with which the rank and file
employees union is affiliated did not make the
supervisory employees members of the rank
and file employee's union and vice versa.2 . . .
PEPSI, in its Reply dated May 7, 1991, asserted:
It is our humble contention that a final
determination of the Petition to Set-Aside,
Cancel, Revoke Charter Union Affiliation
should first be disposed of before granting the
Petition for the Conduct of Certification
Election. To allow the conduct of the
certification election to proceed would make
any decision arrived at by the Bureau of Labor
Relations useless inasmuch as the same
would necessarily be rendered moot and
academic.3
On June 7, 1991, petitioner again filed a
Supplemental Reply stressing:
It is likewise stressed that officials of both the
PCLU and PEUP are top ranking officers of
UOEF, the federation of supervisors' union, to
wit:
POSITION IN
POSITION IN RANK AND
FEDERATION
FILE
UNION
1. Rogelio PCLU- General Vice
de la Cruz President President
2. Felix PEUP-
General Treasurer
Gatela President
3. Carlito PCLU Board Educational Research
Epino Member Director
xxx     xxx     xxx
 The respondent supervisory union could do
indirectly what it could not do directly as the
simple expedient of affiliating with UOEF
would negate the manifest intent and letter of
the law that supervisory employees can only
"join, assist or form separate labor
organizations of their own" and cannot "be
eligible for membership in a labor organization
of the rank and file employees."4
On August 6, 1991, the Secretary of Labor and
Employment filed a Rejoinder, claiming thus:
. . . an employer has no legal standing to
question the validity of a certification election.
What are assailed in this case is Med-Arbiter Order
dated May 23, 1991 and the Decision and Order of
the Secretary of Labor and Employment, dated
October 4, 1991 and December 12, 1991,
respectively.
The decretal portion of the Med-Arbiter Order under
attack, reads:
WHEREFORE, premises considered, an order
is hereby issued:
1. Dismissing MED ARB ROX CASE NO.
R1000-919104-RU-012 and R1000-9102-RU-
008 for lack of merit; and

. . . For this reason, the Supreme Court has
consistently held that, as a rule, a certification
election is the sole and exclusive concern of
the employees and that the employer is
definitely an intruder or a mere bystander
(Consolidated Farms vs. Noriel, L-47752, July
31, 1978, 84 SCRA 469; Filipino Metals
Corporation vs. Ople, L-43861, September 4,
1981, 107 SCRA 211; Trade Unions of the
Philippines and Allied Services (TUPAS) vs.
Trajano No. L-61153, January 17, 1983, 120
SCRA 64].
2. Ordering the conduct of a Certification
Election to be participated by and among the
supervisory workers of the respondent
company, Pepsi-Cola Products Philippines,
Inc. at its plant at Tin-ao, Cagayan de Oro
City, including all the satellite warehouse
within the territorial coverage and control of
the Cagayan de Oro Pepsi-Cola Plant. The
choices are as follows:
1. Cagayan de Oro Pepsi-Cola
Supervisors Union (U.O.E.P.)

xxx     xxx     xxx 2. No union.

In Adamson & Adamson, Inc. vs. CIR No. L- The parties are directed to attend a pre-

35120, January 31, 1984, 127 SCRA 268, the election conference on June 10, 1991, 2:30
Supreme Court (then dealing with the p.m. at the Regional Office to determine the
interpretation of Section 3 of the Industrial qualification of the voters and to thresh out the
Peace Act, from which Section 245 of the mechanics of the election.
Labor Code was derived) grappled with the Respondent/employer is directed to submit
issue in the case at bar. It held that, five (5) copies of the names of the rank and
file workers taken from the payroll on October
There is nothing in the provisions of 1-31, 1991; alphabetically arranged (sic)
the Industrial Peace Act which indicating their names and positions and
provides that a duly registered local dates of employment and to bring the
union affiliating with a national union aforementioned payroll during the pre-election
or federation loses its legal conference for verification purposes.6 . . .
personality, or its independence.
The supervisory employees of the Union are:
xxx     xxx     xxx
POSITION
However, there is absolutely nothing in the
Labor Code that prohibits a federation from 1. Felipe
representing or exercising influence over its Route Manager
Valdehueza
affiliates. On the contrary, this is precisely the
reason why federations are formed and are 2. Gerberto
C & C Manager
allowed by law to exist.5 Vertudazo
Sales Service
On November 8, 1991, the Union also filed a 3. Paul
Department
Rejoinder. Mendoza
Manager

On December 9, 1991, the Court resolved to 4. Gilberto

Route Manager
DISMISS the case for "failure to sufficiently show that Emano, Jr.
the questioned judgment is tainted with grave abuse 5. Jaime
of discretion." Chief Checker
Huliganga

In a Resolution dated March 2, 1992, the Second 6. Elias Accounting

Division of the Court resolved to grant the motion for Edgama, Sr. Manager
reconsideration interposed on January 28, 1992. 7. Romanico
Route Manager
Ramos
G. R. No. 103300
8. Raul Route Manager
 Yacapin
9. Jovenal
Route Manager
Albaque
10. Fulvio
Route Manager
Narciso
11. Apolinario
Route Manager
Opiniano
12. Alfredo
Route Manager
Panas
13. Simplicio
Route Manager
Nelie
14. Arthur
Route Manager
Rodriguez
Warehouse
15. Marco
Operations
Ilano
Manager and
16. Deodoro Maintenance
Ramos Manager
On June 6, 1991, PEPSI appealed the said Order to
the Secretary of Labor and Employment on the
ground of grave abuse of discretion, docketed as
Case No. OS-A-232-91.
On October 4, 1991, the Secretary modified the
appealed decision, ruling thus:
WHEREFORE, the Order of the Med-Arbiter
dated 23 May 1991 is hereby modified to the
effect that MED ARB ROX Case No. R1000-
9104-RU-012 and R1000-9102-RU-008 are
hereby referred to the Office of the Regional
Director which has jurisdiction over these
cases. The call for certification election among
the supervisory workers of the Pepsi-Cola
Products Philippines, Inc. at its plant at Tin-ao,
Cagayan de Oro City is hereby sustained.7
On October 19, 1991, PEPSI presented a motion for
reconsideration of the aforesaid Order but the same
was denied on December 12, 1991.
Meanwhile, the BLR issued Registration Certificate
No. 11492-LC in favor of the Union. Dissatisfied
therewith, PEPSI brought the instant petition
for certiorari, contending that:
PUBLIC RESPONDENT COMMITTED
GRAVE ABUSE OF DISCRETION IN
RULING THAT PRIVATE RESPONDENT'S
OFFICERS AND MEMBERS ARE NOT
MANAGERIAL EMPLOYEES;
PRIVATE RESPONDENT IS PROHIBITED
FROM AFFILIATING ITSELF WITH A
FEDERATION ALREADY AFFILIATED WITH
THE RANK AND FILE UNION;
PUBLIC RESPONDENT COMMITTED
GRAVE OF (SIC) ABUSE OF DISCRETION
IN RULING THAT THE INSTITUTION OF A
PETITION FOR CANCELLATION OF UNION
REGISTRATION DOES NOT CONSTITUTE
A PREJUDICIAL QUESTION TO A PETITION
CERTIFICATION ELECTION.8
The petitions must fail for want of merit.
At the outset, it must be stressed that on September
1, 1992, there was a Resolution of the Union
withdrawing from the Federation, to wit:
BE IT RESOLVED, as it is hereby
RESOLVED, that this UNION WITHDRAW, as
it hereby WITHDRAWS its affiliation from the
Union de Obreros Estivadores de Filipinas,
and at the same time, give our thanks to the
said federation for its help and guidance
rendered to this Union in the past.9
The issue in G.R. No. 96663, whether or not the
supervisors union can be affiliated with a Federation
with two (2) rank and file unions directly under the
supervision of the former, has thus become moot and
academic in view of the Union's withdrawal from the
federation.
In a long line of cases (Narciso Nakpil, et. al., vs. Hon.
Crisanto Aragon, et. al., G.R. No. L-24087, January
22, 1980, 95 SCRA 85; Toribio v. Bidin, et. al., G.R.
No. L-37960, February 28, 1980, 96 SCRA 361;
Gumaua v. Espino, G.R. No. L-36188 — 37586
February 29, 1980, 96 SCRA 402), the Court
dismissed the petition for being moot and academic.
In the case of F. C. Fisher v. Yangco Steamship Co.,
March 31, 1915, the Court held:
It is unnecessary, however to indulge in
academic discussion of a moot question. . . .
. . . The action would have been dismissed at
any time on a showing of the facts as they
were. The question left for the court was a
moot one. Its Resolution would have been
useless. Its judgment would have been
impossible of execution . . . .
However, in the case of University of San
Agustin, Inc., et al. vs. Court of Appeals, et al., the
court resolved the case, ruling that "even if a case
were moot and academic, a statement of the
governing principle is appropriate in the resolution of
dismissal for the guidance not only of the parties but
of others similarly situated. . . .10
In Atlas Lithographic Services, Inc. v. Laguesma, 205
SCRA 121 [1992] decided by the Third Division with
J. Gutierrez, Jr., as ponente and JJ. Feliciano, Bidin,
Romero and now Chief Justice Davide, Jr., as
members it was ratiocinated:
xxx     xxx     xxx
Thus, if the intent of the law is to avoid a
situation where supervisors would merge with
the rank-and-file or where the supervisors'
labor organization would represent conflicting
interests, then a local supervisors' union
should not be allowed to affiliate with the
national federation of union of rank-and-file
employees where that federation actively
participates in union activity in the company.
 xxx     xxx     xxx
The prohibition against a supervisors' union
joining a local union of rank and file is replete
with jurisprudence. The Court emphasizes
that the limitation is not confined to a case of
supervisors' wanting to join a rank-and-file
union. The prohibition extends to a
supervisors' local union applying for
membership in a national federation the
members of which include local unions of rank
and file employees. The intent of the law is
clear especially where, as in this case at bar,
the supervisors will be co-mingling with those
employees whom they directly supervise in
their own bargaining unit.
Anent the issue of whether or not the Petition to
cancel/revoke registration is a prejudicial question to
the petition for certification election, the following
ruling in the case of Association of the Court of
Appeals Employees (ACAE) vs. Hon. Pura Ferrer-
Calleja, in her capacity as Director, Bureau of Labor
Relations et. Al., 203 ACRA 597, 598, [1991], is in
point, to wit:
. . . It is a well-settled rule that "a certification
proceedings is not a litigation in the sense that
the term is ordinarily understood, but an
investigation of a non-adversarial and fact
finding character." (Associated Labor Unions
(ALU) v. Ferrer-Calleja, 179 SCRA 127
[1989]; Philippine Telegraph and Telephone
Corporation v. NLRC, 183 SCRA 451 [1990].
Thus, the technical rules of evidence do not
apply if the decision to grant it proceeds from
an examination of the sufficiency of the
petition as well as a careful look into the
arguments contained in the position papers
and other documents.
At any rate, the Court applies the established
rule correctly followed by the public
respondent that an order to hold a certification
election is proper despite the pendency of the
petition for cancellation of the registration
certificate of the respondent union. The
rationale for this is that at the time the
respondent union filed its petition, it still had
the legal personality to perform such act
absent an order directing the cancellation.
xxx     xxx     xxx
As regards the issue of whether or not confidential
employees can join the labor union of the rank and
file, what was held in the case of National Association
of Trade Unions (NATU) — Republic Planters Bank
Supervisors Chapter vs. Hon. R. D. Torres, et. al.,
G.R. No. 93468, December 29, 1994, applies to this
case. Citing Bulletin Publishing Corporation
vs. Sanchez, 144 SCRA 628, 635, Golden Farms
vs. NLRC, 175 SCRA 471, and Pier 8 Arrastre and
Stevedoring Services, Inc. vs. Hon. Nieves Roldan-
Confessor et al., G.R. No. 110854, February 14,
1995, the Court ruled:
. . . A confidential employee is one entrusted
with confidence on delicate matters, or with
the custody, handling, or care and protection
of the employer's property. While Art. 245 of
the Labor Code singles out managerial
employee as ineligible to join, assist or form
any labor organization, under the doctrine of
necessary implication, confidential employees
are similarly disqualified. This doctrine states
that what is implied in a statute is as much a
part thereof as that which is expressed, as
elucidated in several case; the latest of which
is Chua v. Civil Service Commission where
we said:
No statute can be enacted that can
provide all the details involved in its
application. There is always an
omission that may not meet a
particular situation. What is thought, at
the time of the enactment, to be an all
embracing legislation maybe
inadequate to provide for the unfolding
events of the future. So-called gaps in
the law develop as the law is
enforced. One of the rules of statutory
construction used to fill in the gap is
the doctrine of necessary
implication . . ., Every statute is
understood, by implication, to contain
all such provisions as may be
necessary to effectuate its object and
purpose, or to make effective rights,
powers, privileges or jurisdiction which
it grants, including all such collateral
and subsidiary consequences as may
be fairly and logically inferred from its
terms. Ex necessitate legis . . .
In applying the doctrine of necessary
implication, we took into consideration the
rationale behind the disqualification of
managerial employees expressed in Bulletin
Publishing Corporation v. Sanchez, thus ". . .
if these managerial employees would belong
to or be affiliated with a Union, the latter might
not be assured of their loyalty to the Union in
view of evident conflict of interests. The Union
can also become company — dominated with
the presence of managerial employees in
Union membership." Stated differently, in the
collective bargaining process, managerial
employees are supposed to be on the side of
the employer, to act as its representatives,
and to see to it that its interest are well
protected. The employer is not assured of
such protection if these employees
themselves are union members. Collective
bargaining in such a situation can become
one-sided. It is the same reason that impelled
this Court to consider the position of
confidential employees as included in the
disqualification found in Art. 245 as if the
disqualification of confidential employees
were written in the provision. If confidential
employees could unionize in order to bargain
for advantages for themselves, then they
could be governed by their own motives rather
than the interest of the employers. Moreover,
unionization of confidential employees for the
purpose of collective bargaining would mean
the extension of the law to persons or
individuals who are supposed to act "in the
interest of" the employers. It is not farfetched
 that in the course of collective bargaining,
they might jeopardize that interest which they
are duty bound to protect. Along the same line
of reasoning we held in Golden
Farms, Inc. vs. Ferrer-Calleja reiterated in
Philips Industrial Development, Inc., NLRC,
that "confidential employees such as
accounting personnel, radio and telegraph
operators who, having access to confidential
information, may become the source of undue
advantage. Said employee(s) may act as spy
or spies of either party to a collective
bargaining agreement.

The Court finds merit in the submission of the OSG

that Route Managers, Chief Checkers and
Warehouse Operations Managers are supervisors
while Credit & Collection Managers and Accounting
Managers are highly confidential employees.
Designation should be reconciled with the actual job
description of subject employees. A careful scrutiny of
their job description indicates that they don't lay down
company policies. Theirs is not a final determination
of the company policies since they have to report to
their respective superior. The mere fact that an
employee is designated manager does not
necessarily make him one. Otherwise, there would be
an absurd situation where one can be given the title
just to be deprived of the right to be a member of a
union. In the case of National Steel Corporation
v. Laguesma, G.R. No. 103743, January 29, 1996, it
was stressed that:

What is essential is the nature of the

employee's function and not the nomenclature
or title given to the job which determines
whether the employee has rank and file or
managerial status, or whether he is a
supervisory employee.

WHEREFORE, the petitions under consideration are

DISMISSED but subject Decision, dated October 4,
1991, of the Secretary of Labor and Employment is
MODIFIED in that Credit and Collection Managers
and Accounting Managers are highly confidential
employees not eligible for membership in a
supervisors' union. No pronouncement as to costs. 1âwphi1.nêt

SO ORDERED.

G.R. No.151370           December 4, 2002
ASIA PACIFIC CHARTERING (PHILS.)
INC., petitioner,
vs.
MARIA LINDA R. FAROLAN, respondent.
Labor Law; Dismissals; Requisites.—A statement of
the requisites for a valid dismissal of an employee is
thus in order, to wit: (a) the employee must be
afforded due process, i.e., he must be given
opportunity to be heard and to defend himself; and (b)
dismissal must be for a valid cause as provided in
Article 282 of the Labor Code or any of the authorized
causes under Articles 283 and 284 of the same Code.
Same; Same; Same; Second Requisite; In termination
cases, the employer bears the onus of proving that
the dismissal is for just cause.—As regards the
second requisite, the rule is settled that in termination
cases, the employer bears the onus of proving that
the dismissal is for just cause failing which the
dismissal is not justified and the employee is entitled
to reinstatement.
Same; Same; Managerial Employees; Distinguished
from Rank-and-File Employees; Recent decisions of
this Court distinguish the treatment of managerial
employees from that of rank and file personnel insofar
as the application of the doctrine of loss of trust and
confidence is concerned.—Recent decisions of this
Court distinguish the treatment of managerial em-
_______________
* THIRD DIVISION.
455
VOL. 393, DECEMBER 4, 2002
455
Asia Pacific Chartering (Phils.), Inc. vs. Farolan
ployees from that of rank and file personnel insofar as
the application of the doctrine of loss of trust and
confidence is concerned. “Thus with respect to rank
and file personnel, loss of trust and confidence as
ground for valid dismissal requires proof of
involvement in the alleged events in question and that
mere uncorroborated assertions and accusations by
the employer will not be sufficient. But as regards a
managerial employee, mere existence of a basis for
believing that such employee has breached the trust
of his employer would suffice for his dismissal.”
(Italics supplied)
Same; Same; Same; Conditions to be Considered as
Managerial Employee.—As enunciated in Samson v.
NLRC, 330 SCRA 460, “Before one may be properly
considered a managerial employee, all the following
conditions must be met: (1) Their primary duty
consists of the management of the establishment in
which they are employed or of a department or
subdivision thereof; (2) They customarily and
regularly direct the work of two or more employees
therein; (3) They have the authority to hire or fire
other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and
as to the promotion or any other change of status of
other employees are given particular weight. (Section
2(b), Rule I, Book III of the Omnibus Rules
Implementing the Labor Code, emphasis supplied).
Same; Same; Same; Loss of Trust and Confidence;
Definition.—Loss of trust and confidence to be a valid
ground for an employee’s dismissal must be based on
a willful breach and founded on clearly established
facts. A breach is willful if it is done intentionally,
knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.
Same; Same; Damages; Award of moral and
exemplary damages for an illegally dismissed
employee is proper where the employee had been
harassed and arbitrarily terminated by the employer. It is gathered that Leslie Murray, the then Sales
—To warrant award of moral damages, it must be Manager of petitioner, talked to respondent into
shown that the dismissal of the employee was accepting the position after verbally briefing her on
attended to by bad faith, or constituted an act the nature of the position.
opposite to labor, or was done in a manner contrary to
morals, good customs or public policy. Award of moral Soon after respondent assumed her post, she
and exemplary damages for an illegally dismissed participated in a number of
employee is proper where the employee had been meetings/seminars4 including a Customer Service
harassed and arbitrarily terminated by the employer. Seminar in Bangkok, Thailand, a Regional Sales
Asia Pacific Chartering (Phils.), Inc. vs. Farolan, 393 Meeting on the technical aspects of airline
SCRA 454, G.R. No. 151370 December 4, 2002 commercial operations in February 1993, and a
course on the highly technical airline computer
DECISION reservations system called "Amadeus", all geared
towards improving her marketing and sales skills.
CARPIO MORALES, J.:
In September of 1993, respondent, upon instruction of
Before this Court is a Petition for Review under Rule Bondoc, submitted a report5 "RE: OUR COMMENTS
45 of the 1997 Rules of Civil Procedure assailing the AND ACTIONS BEING TAKEN CONCERNING SAS’
Court of Appeals 1) June 28, 2001 Decision1 which POOR P & L PERFORMANCE FOR JANUARY -
set aside the decision of the National Labor Relations JULY 1993" the pertinent portions of which read:
Commission (NLRC) reversing that of the Labor
Arbiter, and 2) January 9, 20022 Resolution denying a "1 January to July 1993 Sales x x x
reconsideration of its decision.
199 199 CHANG
Petitioner Asia Pacific Chartering (Phils) Inc. was, 3 2 E
until 1996, the general sales agent (GSA) of the
Scandinavian Airline System (SAS), an off-line Seaman 233 423 (190)
international airline company with license to do
Expats/Touris
business in the Philippines. As GSA, petitioner sold 503 716 (213)
ts
passenger and cargo spaces for airlines operated by
SAS. PTAs 346 196 150

Respondent Maria Linda R. Farolan was on Refugees/IO

53 864 811)
December 16, 1992 hired as Sales Manager of M
petitioner for its passenger and cargo GSA operations
for SAS, following her conformity to a December 10, xxx
1992 letter-offer of employment3 from petitioner
through its Vice President/Comptroller Catalino Explanations.
Bondoc. The pertinent portion of the letter-offer reads:
1. International Organization for
"Dear Ms. Farolan: Migration (IOM)-both Vietnam and
Scandinavian Governments
Confirming our previous discussions, ASIA-PACIFIC have terminated projects for
CHARTERING PHIL., INC. is pleased to offer you the refugees; hence the tremendous
position of Sales Manager of its Passenger and Cargo decrease (94%) x x x.
Operations for SCANDINAVIAN AIRLINES SYSTEM
in the Philippines, commencing on December 16, 2. Seaman’s Fares-Rates not
1992 on the following terms: competitive enough.

Monthly 3. Expats/Tourists-In a market

where on-line carriers were dropping
Basic Pay P 22, 000.00 rates drastically, we were losing
Housing Allowance 4,000.00 passengers to said carriers.

Transportation Allowance Cash Equivalent 1 The present Market:

(200 liters of gas)
Meal Allowance 750.00 1. As SAS is off-line, we have no
control over space and to an
extent our rates are higher because of
Please affix your signature below if you find the proration with delivering carriers.
foregoing acceptable and return to us a signed
duplicate. Meanwhile, we certainly look forward to
2. On-lines do not prorate with other
your joining us and rest assured of our fullest support.
carriers therefore can dive fares x x x.
xxx
I have convinced Mr. Jespersen to bring down
the fares to be more competitive. The reason
(Sgd) Maria Linda R. Farolan he did not do so earlier was because low-yield
fares are low in priority for confirming seats.
Conforme:" (Emphasis supplied). But now that SAS is considering increasing
 their frequencies ex-Hongkong before year-
end, this will be advantageous to boosting our
sales.
A. Measures to take remainder of 1993 and for
1994:
1. We have negotiated a lower fare for
seamen (effective September) which is
competitive. We are already getting positive
response from agents. Since this(sic) low-
yield sales, Hongkong did not adjust fare
accordingly first half of 1993 because of
space constraints.
2. As SAS still prefers high-yield sales, we
have offered incentives to Ameco as Asian
Development Bank (ADB) (effective 1st June
for one year) with Mr. Jespersen’s approval x
x x.
In addition, ADB itself is willing to
consider proposals we submit to them
in the case of cost-savings. In
exchange, they can endorse to SAS a
relevant share of their Europe travel x
x x.
3. We have also negotiated a lower net fare
for Economy Class. This rate is also
competitive and is in force.
4. Incentive Program for Agents-Using the
points system similar to PAL’s promo (PALs
Smiles), to stimulate sales. We are at present
fine-tuning mechanics for Hongkong’s
approval which we intend to launch before
Christmas. This promo is self-sustaining (no
significant expenses to be incurred)
5. We are currently pushing sales for Baltic
area/Russia as we have the best rates. We
have identified the agents who have
passengers to these destinations and we are
focusing on them x x x." (Emphasis and
underscoring supplied).
As reflected in respondent’s report, there was a drop
in SAS’ sales revenues which to her was attributable
to market forces beyond her control.
Noting the marked decline in SAS’ sales revenues,
petitioner directed its high ranking officer Roberto
Zozobrado in January 1994 to conduct an
investigation on the matter and identify the problem/s
and implement possible solutions.
Zozobrado thus informally took over some of
respondent’s marketing and sales responsibilities,
albeit respondent retained her title as Sales Manager
and continued to receive her salary as such.
By petitioner’s claim, Zozobrado found out that
respondent did not adopt any sales strategy nor
conduct any sales meeting or develop other sources
of revenue for SAS, she having simply let her sales
staff perform their functions all by themselves; in
1994, Soren Jespersen, General Manager of SAS in
Hongkong, Southern China, Taipei and the
Philippines, came to the Philippines to assess the
statistics on SAS’ sales revenues and SAS was
convinced that respondent was not fit for the job of
Sales Manager; and in view of the changes
introduced by Zozobrado, SAS-GSA sales operations
drew positive results.
On May 21, 1994, respondent received a
message6 from Jespersen reading:
"Dear Linda and Bob [Zozobrado],
First of all congratulation to your sale result in
April. You reached and exceeded the target by 50%
In C/class (Fantastic!!!) and 1% In M/class. This is the
second month in a row (and the last 2 first in more
than a year) and hopefully the beginning of a new and
positive trend.
xxx
As you can see May looks very good.
With the agreed focus on selling the M/class and all
the activities initiated, I’m sure that the rest of the
period will pick very soon.
x x x" (Underscoring supplied; Quoted verbatim).
On July 18, 1994,7 respondent received another
message from Jespersen reading:
"Dear Linda,
The sales report for June 1994 did unfortunately not
reach target in C/class but in M/class you managed
very well. Totally 9% below target.
The pre bookings eff. 14 July looks very good and
encouraging and with 2 weeks to go July should not
be a problem. (enclosed)
Please send my regards to all the girls and tell them
to keep up the good work.
Just for reason of clarification. Enclosed to your action
list is a production report for Jan-May 1994. The
figures I send to you is only your long-haul sales and
do not include European sectors. The correct figure
for the period will be 436,000 USD in target for long-
haul (actual 362 TUSD) and 642 TUSD total with 514
TUSD achieved.
Please be so kind and inform Bob accordingly.
xxx
On even date, however, petitioner sent respondent a
letter of termination8 on the ground of "loss of
confidence." The letter reads:
"This confirms our (‘Bob’ Zozobrado and myself) July
4, 1994 verbal advice to you regarding Management’s
decision to terminate your Services as our GSA
Manager for SCANDINAVIAN AIRLINES SYSTEM’s
Offline Operations in the Philippines, thirty (30) days
upon receipt of this Notice, due to our loss of
confidence in your Managerial and Marketing
capabilities. As explained to you by Mr. Zozobrado
and myself, records will show that under your
Management (or lack of it), our SAS-GSA
performance is, as follows:
A. 1993 vs. 1992
Gross Revenue - 29 % shortfall
Operating Expenses - 2% over
Net Cash Flow - 79% shortfall
B. JAN-APR ’94 vs. JAN-APR ‘92
Revenues - 34% shortfall
Operating Expenses - 6% over
Net Cash Flow - 94% shortfall
Several times in the past, we have made you aware in
the need to improve your sales performance and gain
the respect of your staff which have openly expressed
their concern on their lack of direction under your
management. Even our principal (SAS) had negative
comments about the way you handle urgent
requirements of the Regional Office. SAS was also
alarmed by the aforementioned dismal overall
Performance of APC/SAS. All these prompted us to
decide to replace you as our SAS GSA Manager to
save the situation and our representation of the SAS-
GSA in the Philippines.
x x x" (Quoted verbatim; Emphasis supplies).
Thus spawned the filing by respondent of a complaint
for illegal dismissal against petitioner, Bondoc,
Zozobrado and one Donald Marshall (the record
indicates that he had ceased to be connected with
petitioner when the case was pending before the
Labor Arbiter), with prayer for damages and attorney’s
fees. In her complaint petitioner alleged that Bondoc
and Zozobrado had asked her to tender her
resignation as she was not the person whom SAS
was looking for to handle the position of Sales
Manager9 but that she refused, hence, she was
terminated by the letter of July 18, 1994 letter.10
The Labor Arbiter, after a detailed analysis of the
evidence for both parties, found for respondent upon
the following issues:
1. Whether or not complainant was validly
terminated for cause;
2. Whether or not due process was observed
when complainant was terminated; and
3. Whether or not any of the parties are
entitled to damages,
and disposed in his decision11 as follows:
"WHEREFORE, finding the dismissal of the
complainant Ms Linda Farolan to be without just
cause, effected with malice, ill will and bad faith,
respondent Asian Pacific Chartering Philippine, Inc. is
hereby ordered to pay her separation pay of Forty
Four Thousand Pesos (P44,000.00), and all the
benefit that would have been due her under the
premises. Asian Pacific Chartering is likewise ordered
to pay complainant moral damages in the amount of
One Million Five Hundred Thousand Pesos
(P1,500,000.00) and exemplary damages in the
amount of Seven Hundred Fifty Thousand Pesos
(P750,000.00), nominal damages of Five Thousand
Pesos (P5,000.00) and the equivalent of 25% of the
total award as attorney’s fees."
On appeal, the NLRC, by Decision of March 22,
1999,12 reversed the Labor Arbiter’s decision, it
recognizing the right of petitioner as employer to
terminate or dismiss employees based on loss of trust
and confidence, the right being a management
prerogative.
Respondent’s Motion for Reconsideration of the
NLRC Decision having been denied, she brought her
case to the Court of Appeals via Certiorari.13
By Decision of June 28, 2001,14 the Court of Appeals,
as stated early on, reversed the NLRC decision and
disposed as follows:
"WHEREFORE, premises considered, the challenged
decision dated March 22, 1999 and the Resolution
dated July 16, 1999 of public respondent National
Labor Relations Commission (Second Division) are
hereby set aside for having been issued with grave
abuse of discretion amounting to lack or in excess of
jurisdiction. The decision dated September 17, 1998
of Labor Arbiter Romulus S. Protacio is hereby upheld
with modifications that the award of attorney’s fees
shall only be equivalent to ten percent (10%) of the
total monetary award. In addition, the award for
nominal damages is deleted for lack of basis."
(Underscoring supplied).
Petitioner filed a motion for reconsideration15 of the
Court of Appeals decision but it was denied, hence,
the present Petition for Review on
Certiorari16 anchored on the following grounds:
"I
THE CA DEFIED THE WELL-ESTABLISHED RULE
THAT APC, AS EMPLOYER, HAS THE
MANAGEMENT PREROGATIVE TO REPLACE A
SALES MANAGER WHOM IT HAS REASONABLE
GROUNDS TO BELIEVE CANNOT EFFECTIVELY
DISCHARGE THE DUTIES DEMANDED BY SUCH
POSITION.
II
THE CA DECISION WAS PREMISED ON LACK OF
EVIDENCE TO DISPROVE RESPONDENT’S
THEORY THAT THE POOR SALES
PERFORMANCE OF SAS WAS DUE TO MARKET
FORCES BEYOND HER CONTROL. YET, THE
EVIDENCE ON RECORD SHOWED THE
CONTRARY. NO LESS THAN SAS CONFIRMED
THAT RESPONDENT WAS NOT FIT FOR THE
POSITION OF MANAGER AND, THAT NO SPECIAL
CIRCUMSTANCES SUFFICIENT TO TRIGGER THE
SHARP DECLINE IN SALES SUPERVENED IN THE
PHILIPPINE MARKET.
III
IN AWARDING MORAL AND EXEMPLARY
DAMAGES, THE CA ACTED WITH GRAVE ABUSE
OF DISCRETION. EVEN ASSUMING, THAT
RESPONDENT’S TERMINATION WAS ‘WITHOUT
JUST CAUSE’, APC IS NOT LIABLE TO PAY
DAMAGES [MILLARES vs. NLRC, 328 SCRA 79
(2001)] COROLLARILY, APC IS PRESUMED TO
HAVE ACTED IN GOOD FAITH [GONZALES vs.
NLRC, G.R. NO. 131653-26 March 2001]. THE CA,
HOWEVER, REVERSED THE PRESUMPTION. IT
PRESUMED-WITHOUT ANY EVIDENCE
WHATSOEVER-THAT APC ACTED IN BAD FAITH
IN TERMINATING RESPONDENT ‘WITHOUT DUE
REGARD TO THE HARSH CONSEQUENCES’ OF
THE TERMINATION
The issue in the main is whether or not respondent’s
dismissal was legal.
A statement of the requisites for a valid dismissal of
an employee is thus in order, to wit: (a) the employee
must be afforded due process, i.e., he must be given
opportunity to be heard and to defend himself; and (b)
dismissal must be for a valid cause as provided in
Article 282 of the Labor Code or any of the authorized
causes under Article 283 and 284 of the same Code.17
As regards the first requisite, the following
substantiated findings of the Labor Arbiter, which
were adopted by the Court of Appeals, reflect
respondent’s deprivation of due process:
"x x x
[W]e find that the manner by which complainant was
dismissed violated the basic precepts of fairness and
due process. First, without any semblance of, or
written authority whatsoever (TSN dated January 30,
1996, pp. 46 - 48), respondent Zozobrado took over
the functions of complainant. Complainant claims that
she has been told it was upon the will of respondent
Marshall that she be replaced. Although respondent
Zozobrado may have been merely giving pointers and
suggestions to the staff of complainant, the
appearance of authority was unpleasantly
conspicuous. Later, respondent Bondoc summoned
complainant and told her to tender her resignation or
face termination. Complainant, not having been given
a justifiable ground, refused to resign. Thereafter, she
was finally terminated, without being afforded the
opportunity to be heard and to present evidence in
her defense. She was never given a written notice
stating the particular acts or omission constituting the
grounds for her dismissal as required by law. x x x"18
As regards the second requisite, the rule is settled
that in termination cases, the employer bears the
onus of proving that the dismissal is for just cause
failing which the dismissal is not justified and the
employee is entitled to reinstatement.19
Petitioner claims that respondent failed to live up to
management’s expectation in light of her failure to
adopt sales and marketing strategies to increase
sales revenues of SAS, which failure is reflective of
her incompetence and inefficiency, thus resulting to
loss of revenues in 1993 and 1994.
Petitioner adds that had it not been through
Zozobrado’s efforts, SAS sales revenues could not
have recovered.
Petitioner further claims that Jespersen was the one
who initiated the termination of respondent because
of her "dismal performance" in handling its operations.
And petitioner reiterates the principle that the right to
dismiss a managerial employee is a measure of self-
preservation, it citing the cases of Grand Motor Parts
Corp. v. Minister of Labor et al.,20 and Buiser et al. v.
Legardo.21
Before passing on petitioner’s position, this Court
deems it imperative to discuss the nature of
respondent’s job as sales manager of petitioner. It is
not disputed that her job description, and the terms
and conditions of her employment, with the exception
of her salary and allowances, were never reduced to
writing.
Recent decisions of this Court distinguish the
treatment of managerial employees from that of rank
and file personnel insofar as the application of the
doctrine of loss of trust and confidence is concerned.22
"Thus with respect to rank and file personnel, loss of
trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in
question and that mere uncorroborated assertions
and accusations by the employer will not be sufficient.
But as regards a managerial employee, mere
existence of a basis for believing that such employee
has breached the trust of his employer would suffice
for his dismissal." (Underscoring supplied)
As enunciated in Samson v. NLRC, 330 SCRA 460,
"Before one may be properly considered a managerial
employee, all the following conditions must be met:
(1) Their primary duty consists of the
management of the establishment in which
they are employed or of a department or
subdivision thereof;
(2) They customarily and regularly direct the
work of two or more employees therein;
(3) They have the authority to hire or fire other
employees of lower rank; or their suggestions
and recommendations as to the hiring and
firing and as to the promotion or any other
change of status of other employees are given
particular weight. (Section 2(b), Rule I, Book
III of the Omnibus Rules Implementing the
Labor Code, emphasis supplied).
By respondent’s claim, her function, as verbally
explained to her by Murray, dealt mainly with
servicing of existing clientele.23 Bondoc, however,
described respondent’s functions and duties as
critical.24
The following ruling of this Court in Paper Industries In another vein, petitioner attributes loss of confidence
Corp. of the Philippines v. Laguesma25 is instructive: to respondent’s alleged "gross inefficiency and
incompetence," it citing, as earlier stated, the cases of
"Managerial employees are ranked as Top Managers, Grand Motor Parts Corp. (supra) and Buiser et al.
Middle Managers and First Line Managers. The mere (supra).
fact that an employee is designated "manager" does
not ipso facto make him one-designation should be The Grand Motors case, however, involved
reconciled with the actual job description of the a probationary employee-manager who failed to,
employee for it is the job description that determines among other things, submit required monthly reports
the nature of employment." 24 (Underscoring supplied). and violated company policy, clearly mirroring his
insubordination and disrespect to express instructions
The absence of a written job description or prescribed of management.
work standards, however, leaves this Court in the
dark. While this Court, in the Buiser case (supra), held that
"[f]ailure to observe prescribed standards of work, or
Even assuming, however, that respondent was a to fulfill reasonable work assignments due to
managerial employee, the stated ground (in the letter inefficiency" may be just cause for dismissal,
of termination) for her dismissal, "loss of confidence," petitioner has neither shown what standards of work
should have a basis and determination thereof cannot or reasonable work assignments were prescribed
be left entirely to the employer. which respondent failed to observe nor that if she did
fail to observe any such, it was due to inefficiency.
Loss of trust and confidence to be a valid ground for
an employee’s dismissal must be based on a willful Finally and at all events, given respondent’s previous
breach and founded on clearly established facts.26 A work experience as herein below indicated, to wit:
breach is willful if it is
done intentionally, knowingly and purposely, "Period Company Position
without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or 1960- Express Clerk-Reservations
inadvertently.27 1967 Tours, Inc. & Ticketing
1968- House of Sales Manager
Respondent’s detailed REPORT dated September 8, 1970 Travel, Inc.
1993, quoted above, relative to SAS profit and loss for
1993, which was closely examined and analyzed by 1971- Super Manager,
the Labor Arbiter, contains an explanation of what 1973 Travel Administration
brought about the decline in sales revenues. And it
contains too a number of recommended measures on 1973- American Manager, World
improvement of sales for the remainder of 1993 and 1978 Express, Health
for 1994. Inc. Organization
Account
As did the Labor Arbiter and the Court of Appeals, this 1978- F.A.R. President &
Court finds respondent’s explanation in her Report 1983 Travel General Manager
behind the decline in sales revenues as due to market Masters,
forces beyond respondent’s control plausible. In any Inc.
event, there is no showing that the decline is reflective
of any willfull breach of duties by respondent. 1983- Cebu Plaza Director,
1984 Convention
The two letters sent by SAS to respondent in 1994 in 1985- American Manager-World
fact negate willful breach of her duties by respondent. 1989 Express, Health
The first (received on May 21, 1994) congratulated Inc. Organization In-
her and Zozobrado for exceeding "sale (sic) result in Plant Office Senior
April" 1994. Petitioner’s argument that respondent Manager-Asian
could not invoke these letters in her favor as they Development Bank
were intended for Zozobrado fails. The letters were In-Plant Office
addressed to respondent and Zozobrado. The second
letter (received on July 18, 1994) which was 1992- Asia Pacific Sales Manager,
addressed to respondent, while noting that the sales 1994 Chartering Passenger &
for June 1994 did not reach the target in "C/class", Phil. Inc. Cargo GSA
noted that in "M/class" she "managed very well". And Operations,
it went on to state that "[t]he pre-bookings eff. 14 July Scandinavian
looks (sic) very good and encouraging and with 2 Airlines System."
weeks to go July should not be a problem." In fact it
requested respondent to "send . . . regards to all the (Exhibit "A", p. 72, Court of Appeals Rollo),
girls and tell them to keep up the good work."
this Court is not prepared to find for petitioner. It bears
While petitioner attributes the improvement of sales in noting that there is no showing that respondent
1994 to Zozobrado, the fact remains that respondent represented herself as possessed of the highest
was still the Sales Manager up to July 1994, in charge degree of skill and care known in the trade. And it is
of those "sales meetings" during which pertinent not disputed that respondent was approached by
market strategies were developed and utilized to petitioner’s then Sales Manager Murray,
increase sales.
and offered the position of Sales Manager. She thus
could not just be unceremoniously discharged for
"loss of confidence" arising from alleged
incompetency28.
"While an employee may be dismissed because of
inefficiency, neglect or carelessness, the law implies a
situation or undertaking by an employee in entering
into a contract of employment that he is competent to
perform the work undertaken and is possessed of the
requisite skill and knowledge to enable him to do so,
and that he will do the work of the employer in a
careful manner. If he is not qualified to do the work
which he undertakes, if he is incompetent, unskillful or
inefficient, or if he executes his work in a negligent
manner or is otherwise guilty of neglect of duty, he
may lawfully be discharged before the expiration of
his term of employment."29
In fine, this Court finds that respondent had been
illegally dismissed and is accordingly entitled to
reinstatement to her former position without loss of
seniority rights and payment of backwages.30 But as
the matter of reinstatement is no longer feasible as
the GSA contract between SAS and petitioner had
been terminated in May of 1996, respondent is, as
correctly held by the Court of Appeals, entitled to
separation pay in an amount equivalent to one (1)
month salary for every year of service, a fraction of six
(6) months to be considered a year.
Having been hired on December 16, 1992 and
terminated on July 18, 1994, respondent is
considered to have worked for two (2) years for
purposes of computing her separation pay.
Respondent is also entitled to the award of
backwages computed from July 18, 1994 up to May of
1996.
As regards the award to respondent of moral and
exemplary damages, petitioner assails it in this wise:
"The award of damages in so far as the same was
based solely on respondent’s affidavit containing
general and uncorroborated statement that she
suffered damages as a result of her termination is null
and void [it being] insufficient to overcome the
presumption o good faith."
The following pertinent portions of petitioner’s Affidavit
which Affidavit was submitted as part of her testimony
are self-explanatory, however.
"x x x
8. On July 4, 1994, Messrs. Bondoc and Zozobrado
summoned me and without any clear explanation,
ordered me to submit a letter of resignation; they
informed me that I was not the person whom SAS
was looking for to handle the position of Sales
Manager; even as I was deeply hurt, shocked, and
humiliated, I declined to resign from my position as I
strongly believed that the instruction for me to resign
was unjust and violative of my rights; during the
conference, I was never given the chance to know
precisely why I was being asked to resign or to
explain my position; furthermore, I was informed then
that Mr. Donald Marshall was the one who decided
and insisted on my termination.
9. On July 18, 1994, again without regard to the basic
requirements of due process, I was given a notice of
termination signed by Mr. Bondoc; the supposed
ground for my termination was APC’s alleged ‘loss of
confidence in my managerial and marketing
capabilities due to the company’s alleged dismal
performance during my term of office as GSA Sales
Manager’; once more, I was never called to answer
this charge; a copy of the notice of termination is
hereto attached as Annex ‘E’;
10. The news of my termination circulated at once in
the travel industry and as a result, I was and still am
frequently asked by my friends and acquaintances in
the industry about my termination from APC to my
endless humiliation and embarrassment; this up to
now causes me endless emotional pain that I even
avoid my friends and acquaintances for fear that they
might look at me differently after my termination from
APC; my reputation as a professional has been totally
shattered by the unjust act of APC;
11. Because of the extreme social humiliation, and
serious anxiety over my now besmirched reputation in
the travel industry, I decided to seek legal advise; on
July 21, 1994, my counsel wrote APC demanding for
my immediate reinstatement without loss of seniority
rights and for damages; a copy of the letter-demand is
hereto attached as Annex ‘F’;
x x x".
They need no amplification and/or corroboration.
Indeed, petitioner was deprived of due process and
denied "basic precepts of fairness" when she was
terminated. Her resultant sufferings thus entitle her to
an award of moral damages.
To warrant award of moral damages, it must be
shown that the dismissal of the employee was
attended to by bad faith, or constituted an act
opposite to labor, or was done in a manner contrary to
morals, good customs or public policy.31
Award of moral and exemplary damages for an
illegally dismissed employee is proper where the
employee had been harassed and arbitrarily
terminated by the employer.32
In determining the amount of moral damages
recoverable, however, the business, social and
financial position of the offended party and the
business or financial position of the offender are taken
into account.33 Given petitioner’s business position or
standing before and at the time of termination and
petitioner’s business and financial position, this Court
reduces the amount of moral damages awarded
to P500,000.00 which it finds reasonable. The amount
of exemplary damages awarded is accordingly
reduced too to P250,000.00.
WHEREFORE, the decision of the Court of Appeals is
hereby AFFIRMED with the MODIFICATION that the
amount of moral damages and exemplary damages
awarded to respondent, Ma. Linda R. Farolan, is
hereby reduced to Five Hundred Thousand
(P500,000.00) Pesos and Two Hundred Fifty
Thousand (P250,000.00) Pesos, respectively.
Costs against petitioner.

SO ORDERED.