8. BISCOM vs.

PAFLU – Supervisory Employees

G.R. No. L-18782 August 29, 1963

BINALBAGAN-ISABELA SUGAR CO., INC., (BISCOM), petitioner,

vs.
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), ET AL., respondents.

Salonga, Ordoñez, Sicat & Associates for petitioner.

Cipriano Cid & Associates for respondents.

BAUTISTA ANGELO, J.:

The Binalbagan-Isabela Sugar Co., Inc., BISCOM for short, is a corporation engaged in the
manufacture of centrifugal sugar at Binalbagan, Negros Occidental. Among its employees were
Enrique G. Entila and Victoriano Tenazas.

On March 6, 1952, Entila and Tenazas joined the Fraternal Labor Organization (FLO), which is a
labor union composed of employees and laborers of the BISCOM. On May 3, 1957, the BISCOM
entered into a two-year collective bargaining agreement containing a closed shop clause with said
union wherein it was stipulated that the agreement may be extended for a period of one year
unless either party notifies the other in writing, not less than 60 days prior to its expiry date of its
intention to terminate the same. The closed shop clause, among others, contains the following
provisions. "Any employee who resigns or for any reason ceases to be a member or a member
of good standing of the UNION, or who, not being a member fails to become member of the
UNION, within the aforementioned fifteen (15) day-period shall be considered as a sufficient
cause for dismissal by the COMPANY and for the forfeiture of all privileges extended by the
COMPANY by virtue of this Agreement."

On March 4, 1959, the BISCOM and the aforesaid Union entered into a new collective bargaining
agreement incorporating therein the same closed shop clause which was also made effective for
a period of two years from March 4, 1959, extendible for another period of one year unless either
party notifies the other in writing, not less than 60 days prior to the expiry date, of its intention to
terminate the same. This as well as the original collective bargaining agreement were signed by
Entila and Tenazas who agreed to abide by and respect its terms and conditions.

Notwithstanding their commitment to respect the collective bargaining agreement signed on

March 4, 1959, Entila and Tenazas, in violation of its closed shop provision, joined the Philippine
Association of Free Labor Unions (PAFLU), another labor organization composed of laborer, and
employees of the BISCOM, and campaigned among their co-employees and laborers persuading
them to join and affiliate with the latter union, for which reason they were investigated in
connection with union activities. Two hearings were held at which Entila and Tenazas were given
an opportunity to explain their behavior. And having been found guilty of misconduct they were
expelled from the Fraternity Labor Organization. On May 31, 1959, the Fraternal Labor
Organization notified the BISCOM of the action taken against Entila and Tenazas, and, acting in
line with the closed shop provision contained in the collective bargaining agreement, it decreed
the dismissal of said employees.

As a result of their dismissal, the two employees, together with the Philippine Association of Free
Labor Unions (PAFLU), with which they were later affiliated, filed a complaint for unfair labor
practice against the BISCOM and the Fraternal Labor Organization (FLO) with the Court of
Industrial Relations alleging that because said employees joined the PAFLU and campaigned
actively for membership therein among their co-employees especially those affiliated with the
FLO, they were dismissed from their employment by the BISCOM.

The BISCOM denied the unfair labor practice imputation. It alleged that Entila and Tenazas were
dismissed pursuant to the closed shop provision contained in the collective bargaining agreement
executed between the FLO and the BISCOM, and that on May 31, 1959, the BISCOM was notified
by the FLO of the expulsion from the union of said employees asking for their dismissal, and so it
had to accede to the demand in line with the closed shop provision. The FLO, in turn, also denied
the charge and alleged that the expulsion of Entila and Tenazas was effected in accordance with
its constitution and by-laws and because of their failure to respect the closed shop provision
contained in the collective bargaining agreement.

In a decision rendered on March 29, 1961, Presiding Judge Jose S. Bautista, who was assigned
to receive the evidence, found that the unfair labor practice charge was justified and so he decreed
that Entila and Tenazas be reinstated to their former positions with payment of back wages from
the time of their dismissal, the Judge stating that, since it was established that said employees
performed the duties of supervisors, it was improper for them to join the FLO or any other rank
and file union even if they may become members of a supervisors' union. And as this decision
was affirmed by the Court of Industrial Relations en banc, the BISCOM interposed the present
petition for review.1äwphï1.ñët

The issues posed by the parties when this case was submitted for decision after the presentation
of their evidence were boiled down by the court a quo as follows: (1) Do Entila and Tenazas come
within the scope of supervisory employees?; (2) Was their suspension and expulsion by the FLO
in accordance with due process?; (3) Is the closed shop provision contained in the collective
bargaining agreement concluded on March 3, 1947 valid?; and (4) Was the dismissal of Entila
and Tenazas legal?

Anent the first issue, the parties submitted both testimonial as well as documentary evidence, and
after a detailed and minute analysis thereof, the court a quo found that, Entila and Tenazas
performed the duties of foremen or supervisors. In other words, contrary to the contention of the
BISCOM, the court a quo became convinced that the duties performed by them were essentially
those of foremen since they were given the right to recommend or suggest the disciplinary
measures that should be taken against the erring employees. Indeed, the court said: "Within the
purview of the legal definition of supervisor, both (complainants herein) had exercised the inherent
powers as such when they were allowed by the company to make suggestions or
recommendations for disciplinary matters on their men", and this conclusion is supported not only
by testimonial evidence but by numerous exhibits.

The company now disputes this filing, but being a question of fact which is supported by
substantial evidence, we are not now justified in inquiring into the matter.

Anent the second issue, the court a quo likewise found that Tenazas, being a member of the
Board of Directors of the FLO, did not undergo am impeachment proceeding as provided in its
by-laws relative to the action to be taken against an officer of the union, while Entila was not given
proper hearing even if he was called before a lawyer of the union for investigation. The court
found that during the alleged hearing not a single witness was presented as Entila was merely
questioned investigating the contents of certain affidavits. In fact, the son of Entila who was a law
student asked for postponement of the hearing so that he could prepare the defense of his father,
but the request was denied. This is also a question of fact which we cannot now look into being
supported by substantial evidence.

Concerning the collective bargaining agreement involved in the third issue, the company disputes
the view taken by the court a quo that said collective bargaining agreement was illegal because
it was entered into with a union which was not certified by the court as the one chosen by the
employees as their collective bargaining unit for, it is contended, such view ignores the fact that
under the law there are four different ways under which a collective bargaining agreement maybe
entered into by an employer and his employees, one of them being when "a majority of the
employees designate the labor organization it may choose to act as its representative for the
purpose of collective bargaining, which it can do without court intervention, and the organization
so designated may immediately conclude a collective bargaining with the employer."

This contention may be correct if a majority of the employees should request the employer to
designate certain labor union as their representative in order that it may conclude with it the
necessary collective bargaining agreement, but this can only take place when there is no dispute
as to what union counts in its membership with a majority of its employees for otherwise there
would be need to file in court a petition for certification election, the reason for this requirement
being that a labor union cannot on its own accord and responsibility determine by itself the
question of majority membership. Here this is precisely the question in dispute when the Visayan
Free Workers Union, one of the several unions existing in the BISCOM, filed a petition for
certification election in order that the court may determine the union that has a majority
representation, but notwithstanding this petition, which was joined by other legally existing unions,
the BISCOM concluded with the FLO the disputed collective bargaining agreement. Said the
court a quo on this matter.

. . . However, the records show that before the execution of the contract on May 3, 1957,
there was already a pending petition for certification election docketed as Case No. 3-MC-
Iloilo which was filed by the Free Visayan Union on December 8, 1956. Summons was
served to the Binalbagan-Isabela Sugar Co., Inc. (BISCOM) on December 14, 1956 where
a return of service was executed by a police officer of the Municipality of Binalbagan. A
motion for intervention under the same case was filed by the Allied Workers Association
on August 15, 1957 and another motion for intervention was filed by the Philippine
Association of Free Labor Unions (PAFLU) on January 27, 1959. Based on these dates,
it could be clearly said that there was already an issue of majority representation in the
proper collective bargaining unit before the execution of the agreement on May 3, 1957.
The filing of a petition for certification election raises a doubt as to the majority
representation. Only the Court should resolve this point. The company or any interested
union has no authority to resolve it as in this case, there were other unions apparently
existing in the company aside from the FLO before May 3, 1957. The three or four
contending unions were asserting their majority representation. The written affirmation
made by the members of the FLO or their willingness to side with the FLO for purposes of
executing a collective bargaining agreement does not cure nor resolves the question of
majority representations. Nevertheless, the company, despite the absence of any
compelling necessity for dealing only with the FLO, executed a collective bargaining
agreement on May 3, 1957. There was no cogent reason why it hurriedly executed such
contract. It may be surmised that the company just relied on the different signatures of
alleged members as the only factors that led to the execution of the contract on May 3,
1957. However, there was no positive proof that all the signatures obtained were genuine
 and freely given for such purpose. Precisely, the very reason why court's intervention is
mandatory on cases of certification involving many unions in a particular unit is to assure
freedom of choice through democratic proceedings. The Court frowns at unilateral
determination of majority representation in a unit for this leads to either company
domination or preference. In the case at bar, at least four (4) unions claim for majority,
hence it is incumbent for the Court to determine and the company to defer its execution of
a contract. The impact of company's preference with the FLO is revealing at the expense
of other unions then existing.

Having reached the conclusion that the collective bargaining agreement in question was
concluded not in accordance with the law, we find no cogent reason for disturbing the decision of
the Court of Industrial Relations.

WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.

9. Engineering Equipment vs. NLRC – Managerial Employees

G.R. No. L-59221 December 26, 1984

ENGINEERING EQUIPMENT, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER JOSE T. COLLADO, AND
RICARDO PILI, respondents.

Sycip, Salazar, Feliciano and Hernandez Law Office for petitioner.

The Solicitor General for respondent NLRC.

Rolly R. Ralutin and Abraham B. Drapiza for private respondent.

GUTIERREZ, JR., J.:

This is a petition for certiorari to set aside the resolutions of respondent National Labor Relations
Commission (NLRC) which affirmed the decision of the respondent Labor Arbiter declaring the
private respondent's dismissal illegal and directing his reinstatement to his former position with
full backwages.

Respondent Ricardo Pili was an employee of petitioner Engineering Equipment, Inc. beginning
December 11, 1973 until July 18, 1976 when his services were terminated. At that time, he was
assigned as foreman in the Central Bank building construction project of the petitioner at Diliman,
Quezon City. As a result of the termination of his services, Pili filed a complaint for illegal dismissal
against the petitioner before the Manila Labor Regional Office.

No amicable settlement could be reached at the conciliation level. hence the case docketed as
NLRC Case No. RB-IV-11874-77 entitled Ricardo Pili v. Engineering Equipment Inc. was certified
for compulsory arbitration and assigned to the respondent Labor Arbiter.
During the arbitration proceedings, the parties tried to establish the following facts:

Complainant alleged that he was first employed by respondent on 11 December

1973; that his last salary was P650.00 a month; that he was assigned at the
respondent's construction project of Central Bank Building in Quezon City as a
field foreman; that on 16 July 1976, he received a letter from the respondent dated
18 July 1976 terminating his services; that he admits having been verbally
informed by the Project Field Engineer that some workers around 40 of them
protested against him, but said Field Engineer did not show him any written protest
despite his request but was asked only as to the truth of whether he brought inside
the job site a jungle bolo which complainant denied and that he was told that the
other charges or protest are small and minor and not to mind about them and that
he was just told not to report for work for one month until things cooled off; that on
8 July 1976, he was told to see the Company legal counsel who also informed him
of some complaints by some workers but again he was not shown the names nor
the complaint itself despite his request, specially to confront those allegedly
protesting against him; that said legal counsel merely asked him about the jungle
bolo which he allegedly brought inside the job site which he denied saying that the
same was impossible because of the strict security service at the jobsite; that he
was not given any opportunity to explain in writing his side on the alleged protest
of some workers; nor was he in, investigated formally on the same; that he was
never the subject of any disciplinary measure for any infraction of company rules
prior to his dismissal; that as a matter of fact he was the recipient of a merit
increase for his good performance three months prior to his dismissal.

For the Respondent —

On the other hand, the respondent alleged that respondent received on 24 June
1976 a letter protest (Exh. "4") containing 8 charges by some 40 workers against
the complainant; that upon receipt of said protest-letter, the Labor Relations
Supervisor immediately investigated the matter by asking the alleged signatories
thereof; that the said Labor Relations Officer also talked to the complainant and
assured him that he would given opportunity to explain his side in a formal
investigation; that the complainant, in an act of reprisal, allegedly threatened the
signatories to the protest-letter so that the complainant had to be. dismissed before
he could be formally investigated and given the opportunity to explain in writing his
side of the charges made by the workers; that the charges made by the workers
against the complainant constituted gross and habitual neglect of duties; that the
immediate cause of complainant's dismissal was his inefficiency and
incompetence.

After a review of the conflicting evidence for both parties, the respondent Labor Arbiter issued the
questioned decision which was in favor of the complainant. The dispositive portion reads:

WHEREFORE, in view of all the foregoing considerations, we find the respondent

Engineering Equipment, Inc., guilty of illegal dismissal as charged, Resultancy, the
complainant should be entitled to reinstatement without loss of seniority rights and
to his back wages computed from June 28, 1978 up to the tune of his actual
reinstatement.
As earlier stated, the Labor Arbiter's decision was affirmed by the NLRC and a motion for
reconsideration was denied. Hence, the instance petition.

In a resolution dated January 6, 1982, we issued a temporary restraining order enjoining the
respondents from enforcing the Labor Arbiter's decision and the NLRC resolution.

The records show that the petitioner company received a letter - protest on June 24, 1976 from
forty (40) of its construction workers complaining against respondent Ricardo Pili. The workers
had eight (8) charges against Pili but four were considered minor or were ignored by the petitioner,
so it investigated only four charges, to wit:

(a) Interfering with the conduct of work properly within the competence of other
foremen to supervise.

(b) Ordering specific jobs to be done in a 'hit-or-miss' fashion to such extent that
such jobs had to be later repaired and/ or completely re-done.

(c) Unauthorized establishment of a canteen inside the project premises, where he

spent more time than what he devoted to supervision and direction of the workers
under him.

(d) Unauthorized possession of a deadly weapon (jungle bolo) on the project

premises. (Exh. "4 ").

Respondent NLRC decided in favor of the private respondent on the following grounds:

It is very clear from respondent's own assertion that the grounds upon which it
anchors its quest for terminating the services of complainant herein, are that
contained in the petition/complaint allegedly signed by forty (40) of its rank-and-file
employees against complainant herein. Parenthetically, complainant's separation
from his employment must necessarily likewise rest upon the truth and veracity of
the charges leveled therein against complainant, and ancillarily, the observance of
the tenural due process in effecting his dismissal.

A close examination of the records of this case reveals that respondent miserably
failed to establish and support its claim that complainant's separation from the
service is for cause. It will be observed that while respondent insists that forty (40)
of its rank-and-file employees signed a petition/complaint against complainant
herein, for various offense, not one ever testified to establish, much more
corroborate, the due execution of such a petition/complaint, if it was really
executed.

The petitioner was ordered to reinstate the respondent with full backwages and without loss of
seniority rights because the NLRC considered the evidence submitted by the petitioner
inadequate to support just cause for dismissal.

We are constrained to grant the petition.

The petitioner terminated the services of respondent Pili not only for the reasons stated in the
complaint of the forty (40) workers but also because he instigated labor unrest when he took
reprisal action against its signatories. This is clearly stated in the petitioner's position paper filed
with the public respondents.

The records show that when respondent Pili learned of the letter-complaint and the on-the-spot
investigation being conducted by the labor relations manager of the firm, he threatened the
signatories and told them they would be the ones separated from employment. The workers
trooped to the petitioner's personnel department and threatened to file complaints against the firm
with the Ministry of Labor. The unrest was averted when the workers were assured that the
investigation of Pili would continue and that their having written a formal complaint would not be
taken against them.

The respondents are correct in stating that the best evidence to support the four charges would
have been the presentation of some of the 40 worker-complainants as witnesses before the
Ministry of Labor and Employment. However, the labor unrest caused by the respondent is
supported by substantial evidence. Messrs. Romeo Cabrera and Normandie B. Pizarro testified
on matters within their personal knowledge and about which they were the most qualified to testify.
There is furthermore the admission of respondent Pili that he took a leave of absence for one
month to let the heated atmosphere cool down. There was no need to go on leave if there was
no charged atmosphere in the workplace.

The petitioner may have been remiss in introducing as witnesses before the labor arbiter only the
labor relations manager and the supervisor who conducted the investigation. There is one
important point, however, which the public respondents ignored. Whether or not foreman Pili had
a jungle bolo strapped to his side while supervising construction workers in the Central Bank
project, whether or not he interfered with the conduct of work assigned to other foremen, and
whether or not he ordered jobs to be done in a hit-or-miss fashion that these had to be redone,
the fact remains that no less than forty (40) construction workers felt sufficiently aggrieved at his
improper behavior or conduct as to sign a formal letter of protest against him. And after he was
investigated these same workers were threatened by the respondent, thus aggravating an already
difficult situation. Under the circumstances, it would be expecting too much from the employer for
the public respondents or this Court to order the reinstatement of Mr. Pili.

The operation of the canteen by the respondent and his wife at the Central Bank project is
admitted. The respondent's defense is that he was given permission by his superior to operate it
and it had been in operation for some months before the petitioner investigated him about it. The
records show that the private respondent was disciplined on the basis of the charge about the
canteen not only because of its operation but also because he used some of his subordinates to
maintain it. There was conflict of interest, not only as regards the time that he spent on this private
business but also the use of services of workmen who should devote full-time to the company.

Respondent NLRC also blamed the petitioner for not giving the private respondent an opportunity
to meet his accusers face to face. The petitioner answered this alleged lack of due process by
stating that it conducted a formal investigation but the respondent "after one or two questions did
not appear anymore." He took a one month leave of absence of cool off the tense situation.
Moreover, the petitioner states that confrontation was unwise at the start because emotions were
running high and, moreover, the respondent himself pre-empted it when he took reprisal action
against the signatories.
We also note that the respondent NLRC did not categorically rule on whether or not Mr. Pili was
a managerial employee and, therefore, whether or not the requirement of prior clearance to
terminate was necessary.

The petitioner's explanation reads;

It should also be added that even private respondent himself has not denied that
he exercised supervision and control over around fifty (50) project workers.
Foremen like private respondent are outside the rank-and-file unit and are in fact
excluded therefrom by contractual stipulation and legal mandate. They do not
maintain time cards and are exempt from the hours-of-work provision of the Labor
Code, which private respondent conveniently understood to mean that he could
sleep during working hours. They also have the power of "direct hires" (T.S.N.,
Aug. 12, 1977, p. 43). They exercise discretionary powers "in distinguishing the
skills of workers" under the supervision for the purpose of determining wages (Ibid.,
p. 46).

In a company with around three thousand (3,000) workers such as petitioner, it is,
of course, logical to expect a departmentalization of functions for efficient
operations. Thus, the "formulation of policies in the hiring of personnel is within the
scope of the Personnel Department" (T.S.N., August 12, 1977, p. 42). The "job
evaluation program" is within the competence of the Wage and Salary
Administration Section (Ibid., p. 48). Petitioner even has an Employee Relations
Office which approves or disapproves applications to operate canteens within
project premises (T.S.N., October 28, 1977, p. 48). In brief, it is unnatural to expect
foremen in a giant construction firm to actually perform executive managerial
status. In point of law, there could not be any serious dispute that petitioner's
foremen cannot and are not in fact unionized because the are managerial
employees under the law.

It is the nature of an employee's functions and not the nomenclature or title given to his job which
determines whether he has rank-and-file or managerial status. Among the characteristics of
managerial rank are: (1) He is not subject to the rigid observance of regular office hours; (2) His
work requires the consistent exercise of discretion and judgment in its performance; (3) the output
produced or the result accomplished cannot be standardized in relation to a given period of time;
(4) He manages a customarily recognized department or subdivision of the establishment,
customarily and regularly directing the work of other employees therein; (5) He either has the
authority to hire or discharge other employees or his suggestions and recommendations as to
hiring and discharging, advancement and promotion or other change of status of other employees
are given particular weight; and (6) As a rule, he is not paid hourly wages nor subjected to
maximum hours of work. (See National Waterworks and Sewerage Authority v.
NWSA Consolidated Unions, 11 SCRA 766).

The petitioner has made out a satisfactory case as to why it did not seek prior clearance but
limited itself to making a belated report.

At any rate, the employer has a right to dismiss an employee whose continuance in the service is
inimical to the employer's interest, The law protects the rights of workers but it cannot authorize
the oppression or self-destruction of the employer. (Manila Trading and Supply Co. v. Philippine
labor Union, 71 Phil. 124; El Hogar Filipino Mutual Bldg. and loan Association, et al. v. Building
Employees Inc, et al., 107 Phil. 473; Philippine Airlines Inc. v. Philippine Air lines Employees
Association, 57 SCRA 489). The step taken by the employer in this case was a measure of self-
protection.

Under the facts of the case, we rule that the petitioner had valid grounds to terminate the services
of the private respondent. However, we also take into account some equities of the case. The
respondent had worked for almost three years with the petitioner. Top management should have
become aware of the problem earlier instead of awaiting an explosive situation where forty (40)
construction workers prepare a formal protest against their foreman and question his competence
and conduct. Considering the boundary line nature of the respondent's job — whether or not it is
managerial, it would have been more prudent for the firm, which has very competent counsel, to
have asked for a prior clearance. In the light of the foregoing, we hold that the private respondent
is entitled to full separation pay but not reinstatement with back wages.

WHEREFORE, the petition is hereby GRANTED. The decisions of the respondent National Labor
Relations Commission and the respondent Labor Arbiter are REVERSED and SET ASIDE. Our
restraining order dated January 6, 1982 is made PERMANENT. The petitioner is ordered to grant
full separation pay to the private respondent.

10. Toyota Motors Philippines vs. TMPCLU – Effect if some union members do not
belong to the bargaining unit

G.R. No. 121084 February 19, 1997

TOYOTA MOTOR PHILIPPINES CORPORATION , petitioner,

vs.
TOYOTA MOTOR PHILIPPINES CORPORATION LABOR UNION AND THE SECRETARY OF
LABOR AND EMPLOYMENT, respondents.

KAPUNAN, J.:

On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed
a petition for certification election with the Department of Labor, National Capital Region, for all
rank-and-file employees of the Toyota Motor Corporation.1

In response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the
issuance of an Order directing the holding of a certification election on two grounds: first, that the
respondent union, being "in the process of registration" had no legal personality to file the same
as it was not a legitimate labor organization as of the date of the filing of the petition; and second,
that the union was composed of both rank-and-file and supervisory employees in violation of
law.2 Attached to the position paper was a list of union members and their respective job
classifications, indicating that many of the signatories to the petition for certification election
occupied supervisory positions and were not in fact rank-and-file employees.3

The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification election
for lack of merit. In his March 8, 1993 Order, the Med-Arbiter found that the labor organization's
membership was composed of supervisory and rank-and-file employees in violation of Article 245
of the Labor Code,4 and that at the time of the filing of its petition, respondent union had not even
acquired legal personality yet.5

On appeal, the Office of the Secretary of Labor, in a Resolution6 dated November 9, 1993 signed
by Undersecretary Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of March 3, 1993,
and directed the holding of a certification election among the regular rank.-and-file employees of
Toyota Motor Corporation. In setting aside the questioned Order, the Office of the Secretary
contended that:

Contrary to the allegation of herein respondent-appellee, petitioner-appellant was

already a legitimate labor organization at the time of the filing of the petition on 26
November 1992. Records show that on 24 November 1992 or two (2) days before
the filing of the said petition, it was issued a certificate of registration.

We also agree with petitioner-appellant that the Med-Arbiter should have not
dismissed the petition for certification election based on the ground that the
proposed bargaining unit is a mixture of supervisory and rank-and-file employees,
hence, violative of Article 245 of the Labor Code as amended.

A perusal of the petition and the other documents submitted by petitioner-appellant

will readily show that what the former really seeks to represent are the regular
rank-and-file employees in the company numbering about 1,800 more or less, a
unit which is obviously appropriate for bargaining purposes. This being the case,
the mere allegation of respondent-appellee that there are about 42 supervisoy
employees in the proposed bargaining unit should have not caused the dismissal
of the instant petition. Said issue could very well be taken cared of during the pre-
election conference where inclusion/exclusion proceedings will be conducted to
determine the list of eligible voters.7

Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion for
Reconsideration of the Resolution of March 3, 1993, reiterating its claim that as of the date of
filing of petition for certification election, respondent TMPCLU had not yet acquired the status of
a legitimate labor organization as required by the Labor Code, and that the proposed bargaining
unit was inappropriate.

Acting on petitioner's motion for reconsideration, the public respondent, on July 13, 1994 set aside
its earlier resolution and remanded the case to the Med-Arbiter concluding that the issues raised
by petitioner both on appeal and in its motion for reconsideration were factual issues requiring
further hearing and production of evidence.8 The Order stated

We carefully re-examined the records vis-a-vis the arguments raised by the

movant, and we note that movant correctly pointed out that petitioner submitted a
copy of its certificate of registration for the first time on appeal and that in its
petition, petitioner alleges that it is an independent organization which is in the
process of registration." Movant strongly argues that the foregoing only confirms
what it has been pointing out all along, that at the time the petition was filed
petitioner is (sic) not yet the holder of a registration certificate; that what was
actually issued on 24 November 1992 or two (2) days before the filing of the petition
was an official receipt of payment for the application fee; and, that the date
appearing in the Registration certificate which is November 24, 1992 is not the
 date when petitioner was actually registered, but the date when the registration
certificate was prepared by the processor. Movant also ratiocinates that if indeed
petitioner has been in possession of the registration certificate at the time this
petition was filed on November 26, 1992, it would have attached the same to the
petition.

The foregoing issues are factual ones, the resolution of which is crucial to the
petition. For if indeed it is true that at the time of filing of the petition, the said
registration certificate has not been approved yet, then, petitioner lacks the legal
personality to file the petition and the dismissal order is proper. Sadly, we can not
resolve the said questions by merely perusing the records. Further hearing and
introduction of evidence are required. Thus, there is a need to remand the case to
the Med-Arbiter solely for the purpose.

WHEREFORE, the motion is hereby granted and our Resolution is hereby set
aside. Let the case be remanded to the Med-Arbiter for the purpose aforestated.

SO ORDERED.9

Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on
September 28, 1994, stating the following: 10

[T]he controvertible fact is that petitioner could not have been issued its Certificate
of Registration on November 24, 1992 when it applied for registration only on
November 23, 1992 as shown by the official receipt of payment of filing fee. As
Enrique Nalus, Chief LEG, this office, would attest in his letter dated September 8,
1994 addressed to Mr. Porfirio T. Reyes, Industrial Relations Officer of respondent
company, in response to a query posed by the latter, "It is unlikely that an
application for registration is approved on the date that it is filed or the day
thereafter as the processing course has to pass thought routing, screening, and
assignment, evaluation, review and initialing, and approval/disapproval procedure,
among others, so that a 30-day period is provided for under the Labor Code for
this purpose, let alone opposition thereto by interested parties which must be also
given due course.

Another evidence which petitioner presented. . . is the "Union Registration 1992

Logbook of IRD". . . and the entry date November 25, 1992 as allegedly the date
of the release of the registration certificate. . . On the other hand, respondent
company presented . . . a certified true copy of an entry on page 265 of the Union
Registration Logbook showing the pertinent facts about petitioner but which do not
show the petitioner's registration was issued on or before November 26, 1992. 11

Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that
respondent TMPCLU could not have "acquire[d] legal personality at the time of the filing of (its)
petition." 12

On April 20, 1996, the public respondent issued a new Resolution, "directing the conduct of a
certification election among the regular rank-and-file employees of the Toyota Motor Philippines
Corporation. 13 Petitioner's motion for reconsideration was denied by public respondent in his
Order dated July 14, 1995.14
Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court, where
petitioner contends that "the Secretary of Labor and Employment committed grave abuse of
discretion amounting to lack or excess of jurisdiction in reversing, contrary to law and facts the
findings of the Med-Arbiters to the effect that: 1) the inclusion of the prohibited mix of rank-and
file and supervisory employees in the roster of members and officers of the union cannot be cured
by a simple inclusion-exclusion proceeding; and that 2) the respondent union had no legal
standing at the time of the filing of its petition for certification election. 15

We grant the petition.

The purpose of every certification election is to determine the exclusive representative of

employees in an appropriate bargaining unit for the purpose of collective bargaining. A
certification election for the collective bargaining process is one of the fairest and most effective
ways of determining which labor organization can truly represent the working force. 16 In
determining the labor organization which represents the interests of the workforce, those interests
must be, as far as reasonably possible, homogeneous, so as to genuinely reach the concerns of
the individual members of a labor organization.

According to Rothenberg, 17 an appropriate bargaining unit is a group of employees of a given

employer, composed of all or less than the entire body of employees, which the collective interests
of all the employees, consistent with equity to the employer indicate to be best suited to serve
reciprocal rights and duties of the parties under the collective bargaining provisions of law.
In Belyca Corporation v. Ferrer Calleja, 18 we defined the bargaining unit as "the legal collectivity
for collective bargaining purposes whose members have substantially mutual bargaining interests
in terms and conditions of employment as will assure to all employees their collective bargaining
rights." This in mind, the Labor Code has made it a clear statutory policy to prevent supervisory
employees from joining labor organizations consisting of rank-and-file employees as the concerns
which involve members of either group are normally disparate and contradictory. Article 245
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.

Clearly, based on this provision, 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 possess 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.

It is the petitioner's contention that forty-two (42) of the respondent union's members, including
three of its officers, occupy supervisory positions 19 In its position paper dated February 22, 1993,
petitioner identified fourteen (14) union members occupying the position of Junior Group Chief
11 20 and twenty-seven (27) members in level five positions. Their respective job-descriptions are
quoted below:
 LEVEL 4 (JUNIOR GROUP CHIEF II) — He is responsible for all operators and
assigned stations, prepares production reports related to daily production output.
He oversees smooth flow of production, quality of production, availability of
manpower, parts and equipments. He also coordinates with other sections in the
Production Department.

LEVEL 5 — He is responsible for overseeing initial production of new models,

prepares and monitors construction schedules for new models, identifies
manpower requirements for production, facilities and equipment, and lay-out
processes. He also oversees other sections in the production process (e.g.
assembly, welding, painting)." (Annex "V" of Respondent TMP's Position Paper;
which is the Job Description for an Engineer holding Level 5 position in the
Production Engineering Section of the Production Planning and Control
Department).

While there may be a genuine divergence of opinion as to whether or not union members
occupying Level 4 positions are supervisory employees, it is fairly obvious, from a reading of the
Labor Code's definition of the term that those occupying Level 5 positions are unquestionably
supervisory employees. Supervisory employees, as defined above, are those who, in the interest
of the employer, effectively recommend managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but require the use of independent judgment. 21 Under the
job description for level five employees, such personnel — all engineers — having a number of
personnel under them, not only oversee production of new models but also determine manpower
requirements, thereby influencing important hiring decisions at the highest levels. This
determination is neither routine nor clerical but involves the independent assessment of factors
affecting production, which in turn affect decisions to hire or transfer workers. The use of
independent judgment in making the decision to hire, fire or transfer in the identification of
manpower requirements would be greatly impaired if the employee's loyalties are torn between
the interests of the union and the interests of management. A supervisory employee occupying a
level five position would therefore find it difficult to objectively identify the exact manpower
requirements dictated by production demands.

This is precisely what the Labor Code, in requiring separate unions among rank-and-file
employees on one hand, and supervisory employees on the other, seeks to avoid. The rationale
behind the Code's exclusion of supervisors from unions of rank-and-file employees is that such
employees, while in the performance of supervisory functions, become the alter ego of
management in the making and the implementing of key decisions at the sub-managerial level.
Certainly, it would be difficult to find unity or mutuality of interests in a bargaining unit consisting
of a mixture of rank-and-file and supervisory employees. And this is so because the fundamental
test of a bargaining unit's acceptability is whether or not such a unit will best advance to all
employees within the unit the proper exercise of their collective bargaining rights. 22 The Code
itself has recognized this, in preventing supervisory employees from joining unions of rank-and-
file employees.

In the case at bar, as respondent union's membership list contains the names of at least twenty-
seven (27) supervisory employees in Level Five positions. the union could not, prior to purging
itself of its supervisory employee members, attain the status of a legitimate labor organization.
Not being one, it cannot possess the requisite personality to file a petition for certification election.
The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to
whether or not respondent union was in possession of the status of a legitimate labor
organization at the time of filing, when, as petitioner vigorously claims, the former was still at the
stage of processing of its application for recognition as a legitimate labor organization. The union's
composition being in violation of the Labor Code's Prohibition of unions composed of supervisory
and rank-and-file employees, it could not possess the requisite personality to file for recognition
as a legitimate labor organization. In any case, the factual issue, albeit ignored by the public
respondent's assailed Resolution, was adequately threshed out in the Med-Arbiter's September
28, 1994 Order

The holding of a certification election is based on clear statutory policy which cannot be
circumvented. 23 Its rules, strictly construed by this Court, are designed to eliminate fraud and
manipulation. As we emphasized in Progressive Development Corporation v. Secretary,
Department of Labor and Employment, 24 the Court's conclusion should not be interpreted as
impairing any union's right to be certified as the employees' bargaining agent in the petitioner's
establishment. Workers of an appropriate bargaining unit must be allowed to freely express their
choice in an election where everything is open to sound judgment and the possibility for fraud and
misrepresentation is absent. 25

WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and Order
dated July 14, 1995 of respondent Secretary of Labor are hereby SET ASIDE. The Order dated
September 28, 1994 of the Med-Arbiter is REINSTATED.