II.
Right to Self-Organization  B. Constitutional Basis
A. Basis, History
ARTICLE III BILL OF RIGHTS
Section 8. The right of the people, including those employed in the public and private sectors, to form
unions, associations, or societies for purposes not contrary to law shall not be abridged.
ARTICLE XIII SOCIAL JUSTICE AND HUMAN RIGHTS
LABOR
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the preferential use
of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in
the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.
1935 Constitution
ARTICLE III BILL OF RIGHTS
1. The right to form associations or societies for purposes not contrary to law shall not be abridged.
1973 Constitution
ARTICLE IV BILL OF RIGHTS
SEC. 7. The right to form associations or societies for purposes not contrary to law shall not be abridged.
 
ARTICLE III BILL OF RIGHTS
Section 8. The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall not be abridged.
ARTICLE XIII SOCIAL JUSTICE AND HUMAN RIGHTS
LABOR
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just
share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and
growth.
C. Statutory Basis 
ART. 253. [243] Coverage and Employees' Right to Self-Organization– All persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for
profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for
purposes of collective bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and those
without any definite employers may form labor organizations for their mutual aid and protection
ART. 254. [244] Right of Employees in the Public Service.– Employees of government corporations established
under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All
other employees in the civil service shall have the right to form associations for purposes not contrary to law.
ART. 255. [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 the collective bargaining unit of the rank-and-file employees but may join,
assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union
and the supervisors' union operating within the same establishment may join the same federation or national union.
D. Extent and Scope of Right; Art. 257
ART. 257. [246] Non-Abridgment of Right to Self-Organization.– It shall be unlawful for any person to
restrain, coerce, discriminate against or unduly interfere with employees and workers in their exercise of the right to self-
organization. Such right shall include the right to form, join, or assist labor organizations for the purpose of collective
bargaining through representatives of their own choosing and to engage in lawful concerted activities for the same purpose
for their mutual aid and protection, subject to the provisions of Article 264 of this Code.

E. Coverage of Right to Self-Organization  of labor and derives its existence from the Constitution. In interpreting the protection to labor and social justice
1. All Employees; Art. 253
ART. 253. [243] Coverage and Employees' Right to Self-Organization– All persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for
profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for
purposes of collective bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and those
without any definite employers may form labor organizations for their mutual aid and protection
G.R. No. 118562 July 5, 1996
ALLIANCE OF NATIONALIST AND GENUINE LABOR ORGANIZATION (ANGLO-KMU), petitioner, vs.
SAMAHAN NG MGA MANGGAGAWANG NAGKAKAISA SA MANILA BAY SPINNING MILLS AT J.P.
COATS (SAMANA BAY), GILBERT SUNGAYANN, FERNANDO MELARPIS, ET AL), respondents.
FRANCISCO, J.:p
Petitioner Alliance of Nationalist and Genuine Labor Organization (ANGLO for brevity) is a duly registered labor
organization while respondent union Samahan Ng Mga Manggagawang Nagkakaisa sa Manila Bay Spinning Mills and J.P.
Coats (SAMANA BAY for brevity) is its affiliate. In representation of SAMANA BAY, ANGLO entered and concluded a
Collective Bargaining Agreement (CBA) with Manila Bay Spinning Mills and J.P. Coats Manila Bay, Inc. (hereinafter
referred to as the corporations) on November 1, 1991. On December 4, 1993, the Executive Committee of SAMANA BAY
decided to disaffiliate from ANGLO in view of the latter's dereliction of its duty to promote and advance the welfare of
SAMANA BAY and the alleged cases of corruption involving the federation officers. Said disaffiliation was unanimously
confirmed by the members of SAMANA BAY.
On April 4, 1994, a petition to stop remittance of federation dues to ANGLO was filed by SAMANA BAY with the Bureau
of Labor Relations on the ground that the corporations, despite having been furnished copies of the union resolution relating
to said disaffiliation, refused to honor the same. ANGLO counter-acted by unseating all officers and board members of
SAMANA BAY and appointing, in their stead, a new set of officers who were duly recognized by the corporations.
In its position paper, ANGLO contended that the disaffiliation was void considering that a collective bargaining agreement is
still existing and the freedom period has not yet set in. The Med-Arbiter resolved that the disaffiliation was void but upheld
the illegality of the ouster of the officers of SAMANA BAY. Both parties filed their respective appeals with the Department
of Labor and Employment. In a resolution dated September 23, 1994, herein public respondent modified the order and ruled
in favor of respondent union, disposing as follows:
WHEREFORE, the appeal of respondent ANGLO is hereby denied for lack of merit while the appeal of
petitioners is hereby granted. Accordingly, the order of the Med-Arbiter is modified by:
1) declaring the disaffiliation of petitioner union from respondent ANGLO as valid;
2) directing respondent Manila Bay Spinning Mills, Inc. and J.P. Coats to stop remitting to ANGLO
federation dues and instead to remit the whole amount of union dues to the treasurer of petitioner union;
and
3) enjoining ANGLO-KMU from interfering in the affairs of petitioner union.
SO ORDERED.1
ANGLO filed a motion for reconsideration but the same was denied for lack of merit. Hence, this petition for certiorari under
Rule 65.
The petition calls upon us to resolve two issues, to wit:
1) whether the disaffiliation was valid; and
2) whether petitioner can validly oust individual private respondents from their positions.
We rule for the respondents.
For clarity, we shall first consider the issue respecting the validity of the disaffiliation.
Petitioner ANGLO wants to impress on us that the disaffiliation was invalid for two reasons, namely: that the
procedural requirements for a valid disaffiliation were not followed; and that it was made in violation of P.D 1391.
Anent the first ground, we reiterate the rule that all employees enjoy the right to self-organization and to form and
join labor organizations of their own choosing for the purpose of collective bargaining. This is a fundamental right
provisions of the Constitution and the labor laws, rules or regulations, we have always adopted the liberal approach
which favors the exercise of labor rights. 2
This Court is not ready to bend this principle to yield to a mere procedural defect, to wit: failure to observe certain
procedural requirements for a valid disaffiliation. Non-compliance with the procedure on disaffiliation, being
premised on purely technical grounds cannot rise above the fundamental right of self-organization. 3
We quote, with approval, the findings of herein public respondent, that:
. . . the resolution of the general membership ratifying the disaffiliation action initiated by the Board, substantially
satisfies the procedural requirements for disaffiliation. No doubt was raised on the support of the majority of the
union members on the decision to
disaffiliate. 
This, to our mind, is clearly supported by the evidence. ANGLO's alleged acts inimical to the interests of
respondent union have not been sufficiently rebutted. It is clear under the facts that respondent union's members have
unanimously decided to disaffiliate from the mother federation and ANGLO has nothing to offer in dispute other than the law
prohibiting the disaffiliation outside the freedom period.
In the same wise, We find no ground for ruling against the validity of the disaffiliation in the light of recent
jurisprudential rules.
Although P.D. 1391 provides:
Item No. 6. No petition for certification election, for intervention and disaffiliation shall be entertained
or given due course except within the 60-day freedom period immediately preceeding the expiration of a
collective bargaining agreement,
said law is definitely not without exceptions. Settled is the rule that a local union has the right to disaffiliate from
its mother union when circumstances warrant. 5 Generally, a labor union may disaffiliate from the mother union to
form a local or independent union only during the 60-day freedom period immediately preceding the expiration of
the CBA. However, even before the onset of the freedom period, disaffiliation may be carried out when there is a
shift of allegiance on the part of the majority of the members of the union. 6
Coming now to the second issue, ANGLO contends that individual private respondents were validly ousted as they
have ceased to be officers of the incumbent union (ANGLO-KMU) at the time of disaffiliation. In order to fill the
vacuum, it was deemed proper to appoint the individual replacements so as not to put in disarray the organizational
structure and to prevent chaos and confusion among the general membership and within the company.
The contention is bereft of merit. A local labor union is a separate and distinct unit primarily designed to secure
and maintain an equality of bargaining power between the employer and their employee-members. A local union
does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its members. 7 The mere act of affiliation does not divest the local
union of its own personality, neither does it give the mother federation the license to act independently of the local
union. It only gives rise to a contract of agency 8 where the former acts in representation of the latter.
By SAMANA BAY's disaffiliation from ANGLO, the vinculum that previously bound the two entities was
completely severed. ANGLO was divested of any and all power to act in representation of SAMANA BAY. Thus,
any act performed by ANGLO affecting the interests and affairs of SAMANA BAY, including the ouster of herein
individual private respondent, is rendered without force and effect. WHEREFORE, premises considered, the
petition is hereby DISMISSED.
 G.R. No. L-52824 March 16, 88 In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following : (a) the selection and engagement of the employee; (b) the payment of
REYNALDO BAUTISTA, petitioner, wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to
the means and methods by which the work is to be accomplished. It is the so-called 'control test' that is
vs.
HON. AMADO C. INCIONG, in his capacity as Deputy Minister of Labor and ASSOCIATED LABOR UNIONS the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21
SCRA 492; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)
(ALU), respondents.

GUTIERREZ, JR., J.:
This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein petitioner principally on
the ground that no employer-employee relationship existed between the petitioner and respondent Associated Labor Unions
(ALU).
The facts as found by the National Capital Region Director of the then ministry of Labor (MOL) Region IV are as follows:
Complainant (petitioner) was employed by ALU as 'Organizer' in 1972 with a starting salary of P250.00
a month. As such he paid his monthly SSS contributions, with the respondent as his employer. On
March 15, 1979, He was left in the office of ALU while his other co-organizers were in Cainta, Rizal
attending a certification election at Chrysler Philippines, as he was not the organizer assigned in said
company. On March 16, 1979, he went on sick leave for ten (10) days. His SSS sickness benefit
application form signed by ALU's physician was given to ALU for submission to the SSS. On March
16, 1979, complainant reported back for work upon expiration of his leave but was informed by ALU's
Area Vice-President for Luzon of his termination effective March 15, 1979. Hence, this complaint filed
on March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate
complainant's services effective March 16, 1979 on the ground of abandonment of work. (p. 48, Rollo)
Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate the
petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and to refund his
Mutual Aid Fund Deposit in the amount of P 370.00
In the case at bar, the Regional director correctly found that the petitioner was an employee of the respondent union as
reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System
(SSS) and the respondent union's share of remittances in the petitioner's favor. Even more significant, is the respondent
union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista was selected and
hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And
definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal
basis got deputy Minister Inciong's decision.
We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show that
antipathy and antagonism between the petitioner and the respondent union militate against the former's reinstatement. ALU
would not want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize commercial
and industrial establishments. Severance pay, therefore, is more proper in order. As we have ruled in the case of Asiaworld
Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23, 1987) quoting the cast of Balaquezon EWTU v.
Zamora, (97 SCRA 5,8):
It should be underscored that the backwages are being awarded on the basis of equity or in the nature of
severance pay. This means that a monetary award is to be paid to the employees as an alternative to
reinstatement which can no longer be effected in view of the long passage of time or because of the
realities of the situation. (Emphasis supplied)
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is ANNULLED and
SET ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and ordered executed but instead of
returning the petitioner to his former position, the private respondent is ordered to pay him an amount equal to his backwages
for only three years and the separation pay to which he may be entitled as of the end of the three year period under the
applicable law or collective bargaining agreement.

Respondent ALU appealed to the Ministry of Labor. On October 23,1979, the respondent Deputy Minister set aside the order SO ORDERED.
of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister found that the
petitioner was merely accomodated by the respondent union after he was dismissed by his former employer sometime in 1972
and that his membership coverage with the SSS which shows that respondent ALU is the one paying the employer's share in
the premiums is not conclusive proof that respondent is the petitioner's employer because such payments were performed by
the respondent as a favor for all those who were performing full time union activities with it to entitle them to SSS benefits.
The Deputy Minister further ruled that the non-existence of an employer-employee relationship between the parties is
bolstered by the fact that respondent ALU is not an entity for profit but a duly registered labor union whose sole purpose is
the representation of its bona fide organization units where it is certified as such.

In this petition, the petitioner contends that the respondent Deputy minister committed grave abuse of discretion in holding
that there was no employer-employee relationship between him and the respondent union so much so that he is not entitled to
the benefits that he is praying for.

We agree with the petitioner.

There is nothing in the records which support the Deputy minister's conclusion that the petitioner is not an employee of
respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be considered an employer
of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor
organization. In case of es v. Brotherhood Labor Unity Movement in the Phillipines Zamora, , (147 SCRA 49, 54), we
outlined the factors in ascertaining an employer-employee realtionship:
 G.R. No. 82914 June 20, 1988 On November 17, 1987, the Med-Arbiter ordered the holding of a certification election within 20 days (Annex C).

KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027), petitioner,
vs.
THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND CANNING DIVISION
UNIVERSAL ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW EMPLOYEES AND
WORKERS UNITED LABOR ORGANIZATION, respondents.
TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it was able to negotiate a new 3-year CBA with
ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990.
On January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D).

Alar, Comia, Manalo and Associates for petitioner.
Danilo Bolos for respondent Robina Corporation.
RESOLUTION
GRIÑO-AQUINO, J.:
The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027) hereinafter referred to as
"TUPAS," seeks a review of the resolution dated January 27, 1988 (Annex D) of public respondent Pura Ferrer-Calleja,
Director of the Bureau of Labor Relations, dismissing its appeal from the Order dated November 17, 1987 (Annex C) of the
Med-Arbiter Rasidali C. Abdullah ordering a certification election to be conducted among the regular daily paid rank and file
employees/workers of Universal Robina Corporation-Meat and Canning Division to determine which of the contending
unions:
a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or "TUPAS" for brevity);
b) Meat and Canning Division New Employees and Workers United Labor Organization (or "NEW
ULO" for brevity);
TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On April 30, 1988, it filed this
petition alleging that the public respondent acted in excess of her jurisdiction and with grave abuse of discretion in affirming
the Med-Arbiter's order for a certification election.
After deliberating on the petition and the documents annexed thereto, We find no merit in the Petition. The public respondent
did not err in dismissing the petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision in Victoriano vs.
Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a
labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union.
The public respondent correctly observed that the "recognition of the tenets of the sect ... should not infringe on the basic
right of self-organization granted by the constitution to workers, regardless of religious affiliation."
The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA,
does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a timely
petition for certification election on October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it
signed a new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a "certification
election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can
freely choose their bargaining representative thru secret ballot." Since it has not been shown that this order is tainted with
unfairness, this Court will not thwart the holding of a certification election (Associated Trade Unions [ATU] vs. Noriel, 88
SCRA 96).
WHEREFORE, the petition for certiorari is denied, with costs against the petitioner.

c) No union. SO ORDERED.

shall be the bargaining unit of the daily wage rank and file employees in the Meat and Canning Division of the company.

From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of the workers in the Meat and
Canning Division of the Universal Robina Corporation, with a 3-year collective bargaining agreement (CBA) which was to
expire on November 15, 1987.

Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS filed an amended notice of strike on
September 28, 1987 as a means of pressuring the company to extend, renew, or negotiate a new CBA with it.

On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI KRISTO sect, registered as
a labor union.

On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an injunction against the strike, resulting in an
agreement to return to work and for the parties to negotiate a new CBA.

The next day, October 13, 1987, NEW ULO, claiming that it has "the majority of the daily wage rank and file employees
numbering 191," filed a petition for a certification election at the Bureau of Labor Relations (Annex A).

TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW ULO were mostly
members of the Iglesia ni Kristo sect which three (3) years previous refused to affiliate with any labor union. It also accused
the company of using the NEW ULO to defeat TUPAS' bargaining rights (Annex B).
 a. Employees of Non-Profit Organizations
G.R. No. 76273               July 31, 1987
FEU-DR. NICANOR REYES MEDICAL FOUNDATION, INC., petitioner,
vs.
HON. CRESENCIANO TRAJANO and RICARDO C. CASTRO, FAR EASTERN UNIVERSITY DR. NICANOR
REYES MEDICAL FOUNDATION, INC. ALLIANCE OF FILIPINO WORKERS (AFW), respondents.
PARAS, J.:
This is a petition for certiorari seeking to annul and set aside the decision of the respondent Director which affirmed the
Order of the Med-Arbiter in the petition for certification election (NCR-LRD-N-2-050-86) filed by private respondent, thus
ordering the holding of a certification election among the rank and file employees of the herein petitioner.
The facts of the case are as follows:
The petitioner, Far Eastern University-Dr. Nicanor Reyes Memorial Foundation, Inc., has a work force of about 350 rank and
file employees, majority of whom are members of private respondent Alliance of Filipino Workers.
On February 13, 1986, private respondent filed a Petition for Consent and/or Certification Election with The Ministry of
Labor and Employment. The petitioner opposed the petition on the ground that a similar petition involving the same issues
and the same parties is pending resolution before the Supreme Court, docketed as G.R. No. L-49771.
In its position paper, private respondent admitted: that as early as May 10, 1976, private respondent filed a similar petition for
certification election with the Ministry of Labor and Employment but the petition was denied by the MED Arbiter and the
Secretary of Labor on appeal, on the ground that the petitioner was a non-stock, non-profit medical institution, therefore, its
employees may not form, join, or organize a union pursuant to Article 244 of the Labor Code; that private respondent filed a
petition for certiorari with the Supreme Court (docketed as G.R. No. L-49771) assailing the constitutionality of Article 244 of
the Labor Code; that pending resolution of the aforesaid petition, or on May 1, 1980, Batas Pambansa Bilang 70 was enacted
amending Article 244 of the Labor Code, thus granting even employees of non-stock, non-profit institutions the right to form,
join and organize labor unions of their choice; and that in the exercise of such right, private respondent filed another petition
for certification election with the Ministry of Labor and Employment (NCR-LRD-N-2-050-86).
On April 17, 1986, the Med Arbiter issued an Order granting the petition, declaring that a certification election be conducted
to determine the exclusive bargaining representative of all the rank and file employees of the petitioner (p. 4, Rollo).
Respondent Director affirmed said Order on appeal. In dismissing the appeal, however, respondent Director said that:
... respondent's (petitioner herein, reliance on the petition with the Supreme Court involving as it does the
provisions of Article 244 of the Labor Code vis-a-vis the character of the hospital, which has been alleged as a
non-profit medical foundation, has been rendered moot and academic by virtue of the amendatory BP #70, which
allows employees of non-profit medical institutions to unionize.
Whatever doubt there may be on the right of the workers in a medical institution has been laid to rest by BP#70.
WHEREFORE, premises considered, the present appeal is hereby dismissed for lack of merit and the Order of the
Med-Arbiter dated 17 April 1986 affirmed. ... (p. 19, Rollo)
Hence, this petition, raising the issue of whether or not respondent Director gravely abused his discretion in granting the
petition for certification election, despite the pendency of a similar petition before the Supreme Court (G.R. No. 49771)
which involves the same parties for the same cause.
The Petition is devoid of merit.
At the time private respondent filed its petition for certification election on February 13, 1986, Article 244 of the Labor Code
was already amended by Batas Pambansa Bilang 70, to wit:
Art. 244. Coverage and employees' right to self-organization. — All persons employed in commercial, industrial
and charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-
organizations of their own choosing for purposes of collective bargaining. Ambulant intermittent and itinerant
workers, self-employed people, rural workers and those without any definite employers may form labor
organizations for the purpose of enhancing and defending their interests and for their mutual aid and protection.
(underscoring supplied).
Under the aforequoted provision, there is no doubt that rank and file employees of non-profit medical institutions (as herein
petitioner) are now permitted to form, organize or join labor unions of their choice for purposes of collective bargaining.
Since private respondent had complied with the requisites provided by law for calling a certification election (p. 15, Rollo), it
was incumbent upon respondent Director to conduct such certification election to ascertain the bargaining representative of
petitioner's employees (Samahang Manggagawa Ng Pacific Mills, Inc. vs. Noriel, 134 SCRA 152).
As held in Quimpo v. Dela Victoria, 46 SCRA 139, in order that the pendency of another action between the same parties for
the same cause may be availed of as a ground to dismiss a case, there must be, between the action under consideration and the
other action: (1) Identity of parties, or at least such as representing the same interest in both actions; (2) Identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3) the Identity on the two preceding particulars
should be such that any judgment which may be rendered on the other action wig, regardless of which party is successful,
amount to res judicata in the action under consideration.1avvphi1
In the instant case, any judgment which may be rendered in the petition for certiorari pending before the Supreme Court (G.
R. No. L-49771) wig not constitute res judicata in the petition for certification election under consideration, for while in the
former, private respondent questioned the constitutionality of Article 244 of the Labor Code before its amendment, in the
latter, private respondent invokes the same article as already amended.
Petitioner, however, has pointed out that respondent Director should not have arrogated upon himself the power to declare the
aforesaid petition for certiorari (G.R. No. L-49771) moot and academic, as the same is sub-judice and only the Supreme
Court can decide the matter. The Director cannot be faulted for he had to make a decision.
WHEREFORE, this petition is DISMISSED, and the decision appealed from is hereby AFFIRMED.
SO ORDERED.
 G.R. No. 82914 June 20, 1988
KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027), petitioner,
vs.
THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND CANNING DIVISION
UNIVERSAL ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW EMPLOYEES AND
WORKERS UNITED LABOR ORGANIZATION, respondents.
Alar, Comia, Manalo and Associates for petitioner.
Danilo Bolos for respondent Robina Corporation.
RESOLUTION
GRIÑO-AQUINO, J.:
The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027) hereinafter referred to as
"TUPAS," seeks a review of the resolution dated January 27, 1988 (Annex D) of public respondent Pura Ferrer-Calleja,
Director of the Bureau of Labor Relations, dismissing its appeal from the Order dated November 17, 1987 (Annex C) of the
Med-Arbiter Rasidali C. Abdullah ordering a certification election to be conducted among the regular daily paid rank and file
employees/workers of Universal Robina Corporation-Meat and Canning Division to determine which of the contending
unions:
a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or "TUPAS" for brevity);
b) Meat and Canning Division New Employees and Workers United Labor Organization (or "NEW
ULO" for brevity);
TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW ULO were mostly
members of the Iglesia ni Kristo sect which three (3) years previous refused to affiliate with any labor union. It also accused
the company of using the NEW ULO to defeat TUPAS' bargaining rights (Annex B).
On November 17, 1987, the Med-Arbiter ordered the holding of a certification election within 20 days (Annex C).
TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it was able to negotiate a new 3-year CBA with
ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990.
On January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D).
TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On April 30, 1988, it filed this
petition alleging that the public respondent acted in excess of her jurisdiction and with grave abuse of discretion in affirming
the Med-Arbiter's order for a certification election.
After deliberating on the petition and the documents annexed thereto, We find no merit in the Petition. The public respondent
did not err in dismissing the petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision in Victoriano vs.
Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a
labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union.
The public respondent correctly observed that the "recognition of the tenets of the sect ... should not infringe on the basic
right of self-organization granted by the constitution to workers, regardless of religious affiliation."
The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA,
does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a timely
petition for certification election on October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it
signed a new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a "certification
election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can
freely choose their bargaining representative thru secret ballot." Since it has not been shown that this order is tainted with
unfairness, this Court will not thwart the holding of a certification election (Associated Trade Unions [ATU] vs. Noriel, 88
SCRA 96).

c) No union. WHEREFORE, the petition for certiorari is denied, with costs against the petitioner

shall be the bargaining unit of the daily wage rank and file employees in the Meat and Canning Division of the company.

From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of the workers in the Meat and
Canning Division of the Universal Robina Corporation, with a 3-year collective bargaining agreement (CBA) which was to
expire on November 15, 1987.

Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS filed an amended notice of strike on
September 28, 1987 as a means of pressuring the company to extend, renew, or negotiate a new CBA with it.

On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI KRISTO sect, registered as
a labor union.

On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an injunction against the strike, resulting in an
agreement to return to work and for the parties to negotiate a new CBA.

The next day, October 13, 1987, NEW ULO, claiming that it has "the majority of the daily wage rank and file employees
numbering 191," filed a petition for a certification election at the Bureau of Labor Relations (Annex A).

b. Employees of Government Corporations,
ART. 254. [244] Right of Employees in the Public Service.– Employees of government corporations established
under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All
other employees in the civil service shall have the right to form associations for purposes not contrary to law.
G.R. No. 210773, January 23, 2019
GSIS FAMILY BANK EMPLOYEES UNION, REPRESENTED BY ITS PRESIDENT MS. JUDITH JOCELYN
MARTINEZ, Petitioner, v. SEC. CESAR L. VILLANUEVA (IN HIS CAPACITY AS THE CHAIRMAN OF THE
GOVERNANCE COMMISSION FOR GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS UNDER
THE OFFICE OF THE PRESIDENT), MR. EMMANUEL L. BENITEZ (IN HIS CAPACITY AS PRESIDENT OF
THE GSIS FAMILY BANK), AND ATTY. GERALDINE MARIE BERBERABE-MARTINEZ (IN HER CAPACITY
AS CHAIRPERSON OF THE BOARD OF DIRECTORS OF THE GSIS FAMILY BANK), Respondents.
DECISION
LEONEN, J.:
Officers and employees of government-owned or controlled corporations without original charters are covered by the Labor
Code, not the Civil Service Law. However, non-chartered government-owned or controlled corporations are limited by law in
negotiating economic terms with their employees. This is because the law has provided the Compensation and Position
Classification System, which applies to all government-owned or controlled corporations, chartered or non-chartered.
This Court resolves a Petition  for Certiorari, Prohibition, and Mandamus filed by the GSIS Family Bank Employees Union
1
(GSIS Union), praying that GSIS Family Bank be declared outside the coverage of Republic Act No. 10149 and, therefore, be
directed to negotiate a new collective bargaining agreement with its employees.
On July 22, 1969, Royal Savings Bank was organized and incorporated as a thrift bank. It began operating on February 8,
1971, with former Cavite Representative Renato Dragon as its President and Board Chairman.2
On June 28, 1984, Royal Savings Bank filed an application with the Central Bank of the Philippines (Central Bank) for the
appointment of a conservator.3
On July 6, 1984, the Central Bank denied Royal Savings Bank's application for conservatorship, prohibited it from doing
business, and placed it under receivership.4
Royal Savings Bank filed several complaints against the Central Bank for grave abuse of discretion. To amicably settle the
cases, then Central Bank Governor Jose B. Fernandez, Jr. offered to reopen and rehabilitate Royal Savings Bank if it would
drop all its complaints against the Central Bank and transfer all its shares of stock to Commercial Bank of Manila, a wholly-
owned subsidiary of the Government Service Insurance System.5
On September 7, 1984, Royal Savings Bank and Commercial Bank of Manila entered into a Memorandum of Agreement to
rehabilitate and infuse capital into Royal Savings Bank. Royal Savings Bank was renamed Comsavings Bank.6
Sometime in December 1987, the Government Service Insurance System transferred its holdings from Commercial Bank of
Manila to Boston Bank. Comsavings Bank was not included in the transfer. Due to Boston Bank's acquisition of Commercial
Bank of Manila, the Government Service Insurance System took over the control and management of Comsavings Bank.7
On July 19, 1993, Comsavings Bank and the Government Service Insurance System executed a Memorandum of Agreement
where the latter committed to infuse an additional capital of P2.5 billion into Comsavings Bank. After the infusion of funds,
the Government Service Insurance System effectively owned 99.55% of Comsavings Bank's outstanding shares of stock.8
Sometime in July 2001, Comsavings Bank changed its name to GSIS Family Bank.9
On May 25, 2004,10 acting on a request for opinion from GSIS Family Bank, the General Counsel of Bangko Sentral ng
Pilipinas opined that GSIS Family Bank could not be categorized as a government bank:
[GSIS Family Bank], when it was still [Royal Savings Bank], was organized as a private stock savings and loan association
organized under the general corporation law. Thus, at its inception, the bank was set up for private needs. When GSIS
invested in the bank, it was the result of a business decision on its part to be an equity owner in a thrift bank. The case of
[GSIS Family Bank] is unlike that of government banks, such as Development Bank of the Philippines, the Land Bank of the
Philippines or Al-Amanah Islamic Development Bank[,] the charters of which were enacted by the lawmaking authority for
the purpose of addressing public needs....
It is true that P.D. No. 2029 simply defines a GOCC as "a stock or non-stock corporation, whether performing governmental
or proprietary functions, which is charted by special law or if organized under the general corporation law is owned by the
government directly or indirectly through a parent corporation or subsidiary corporation to the extent of at least a majority of
its outstanding capital . . . stock or of its outstanding voting capital stock". We believe however that this definition, which
merely requires ownership by the government for an entity to qualify as a GOCC, has been qualified by the subsequent
promulgation of E.O. No. 292 . . . which requires, in addition, that the institution was organized to serve public needs.
In view of the foregoing, we find insufficient basis to categorize [GSIS Family Bank] as a government bank.11
On September 8, 2010, then President Benigno S. Aquino III (President Aquino) issued Executive Order No. 7, 12 which
placed an indefinite moratorium on increases in salaries and benefits of employees in government-owned or controlled
corporations and government financial institutions.13
On June 6, 2011, President Aquino signed into law Republic Act No. 10149, or the GOCC Governance Act of 2011.14 The
law created the Governance Commission for Government-Owned or Controlled Corporations (Governance Commission),
defined as "a central advisory, monitoring, and oversight body with authority to formulate, implement[,] and coordinate
policies"15 in its governed sector.
On May 2, 2012, Emmanuel L. Benitez (Benitez), GSIS Family Bank's president, sought opinion from the Bangko Sentral ng
Pilipinas as to whether GSIS Family Bank may be considered as a government-owned or controlled corporation or
government bank under Republic Act No. 10149.16
On May 14, 2012, Bangko Sentral ng Pilipinas advised GSIS Family Bank to seek the opinion of the Governance
Commission, the implementing agency of Republic Act No. 10149.17
On January 15, 2013, GSIS Family Bank met with representatives of the Governance Commission, which clarified that GSIS
Family Bank was classified as a government financial institution under Republic Act No. 10149.18
On February 11, 2013, Benitez wrote19 the Governance Commission to seek further clarification on several issues, namely:
(1) GSIS Family Bank's impending collective bargaining negotiations with its employees; (2) its authority to enter into a
collective bargaining agreement with the GSIS Union; and (3) its employees' right to strike.20 Benitez asked:
Should a CBA be the proper mode of determining the terms and conditions of employment of the rank-and-file employees,
the question as to which matters may be negotiated remains[?]
Did R.A. 10149 effectively amend the provisions of the Labor Code on [collective bargaining agreements] insofar as
compensation is concerned? Under said law, management and labor may no longer voluntarily determine the compensation
the employees would be entitled to as the law provides for the development of a "Compensation and Position Classification
System which shall apply to all officers and employees of the GOCCs whether under the Salary Standardization Law or
exempt therefrom and shall consist of classes of positions grouped into such categories as the GCG may determine, subject to
approval of the President."21
On March 8, 2013,22 the Governance Commission replied that as a government financial institution, GSIS Family Bank was
unauthorized to enter into a collective bargaining agreement with its employees "based on the principle that the compensation
and position classification system is provided for by law and not subject to private bargaining."23
The Governance Commission further clarified that the right to strike of GSIS Family Bank's employees was not guaranteed
by the Constitution, as they were government officers and employees.24
On December 20, 2013, counsel for the GSIS Union sent GSIS Family Bank a demand letter25 for the payment of Christmas
bonus to its members, as stipulated in their Collective Bargaining Agreement. GSIS Union accused GSIS Family Bank of
evading its contractual obligation to its employees by invoking the Governance Commission's opinion that it was no longer
authorized to grant incentives and other benefits to its employees, unless authorized by the President of the Philippines.26
GSIS Union alleged that Republic Act No. 10149 does not apply to GSIS Family Bank, as it was a private bank created and
established under the Corporation Code.27 It asserted that even if the Government Service Insurance System owned a majority
of GSIS Family Bank's outstanding capital stock, the change in ownership of shares did not automatically place the bank
under the operation of Republic Act No. 10149.28
For GSIS Family Bank's refusal to negotiate a new collective bargaining agreement, the GSIS Union filed a Complaint before
the National Conciliation and Mediation Board, and later, a Notice of Strike.29
Some bank employees also filed their own Complaints before the National Labor Relations Commission and the Department
of Labor and Employment. They aimed to compel GSIS Family Bank to abide by the provisions of their existing Collective
Bargaining Agreement.30
On January 30, 2014, petitioner GSIS Union filed before this Court a Petition for Certiorari,31 asserting that GSIS Family
Bank is a private bank; thus, it is not covered by the provisions of Republic Act No. 10149.32
Petitioner contends that GSIS Family Bank does not perform functions for public needs since it was created "by private
individuals in their own private capacities pursuant to the provisions of the Corporation Code, to advance their own private,
personal[,] and economic or financial and business needs or interests."33
Petitioner argues that despite the Government Service Insurance System owning the majority of GSIS Family Bank's shares
of stock, the bank did not automatically fall within the ambit of Republic Act No. 10149. 34 Further, the law's enactment did
not automatically convert it into a government-owned or controlled corporation or a government financial institution.35
Petitioner cites Phil. National Oil Company-Energy Dev't. Corp. v. Hon. Leogardo,36 which stated that the employees of the
Philippine National Oil Company-Energy Development Corporation, a government-owned or controlled corporation
incorporated under the Corporation Code, remained subject to the provisions of the Labor Code.37
Finally, petitioner stresses that as a private corporation established under the Corporation Code, GSIS Family Bank and its
employees are covered by the applicable provisions of the Labor Code, not the Civil Service Law. Thus, the Collective
Bargaining Agreement between petitioner and GSIS Family Bank cannot be impaired by Republic Act No. 10149.38
On April 28, 2014, respondents Benitez and Atty. Geraldine Marie Berberabe-Martinez (Atty. Berberabe-Martinez) filed their
Comment.39 They admit that after the Government Service Insurance System purchased majority of GSIS Family Bank's
shares, the bank continued to operate as a private bank, governed by the Corporation Code and the Labor Code. However,
they point out that with the enactment of Republic Act No. 10149, GSIS Family Bank's authority to enter into negotiations
with its employees was revoked, as confirmed by the Governance Commission.40
Respondents Benitez and Atty. Berberabe-Martinez also point out that the Petition for Certiorari, Prohibition, and Mandamus
was fatally defective since respondents do not exercise judicial or quasi-judicial functions. Further, they maintain that the
Collective Bargaining Agreement provided remedies for the enforcement of rights, of which petitioner supposedly did not
avail. Thus, there was a plain, speedy, and adequate remedy available to it, without need to directly resort to this Court with a
Rule 65 petition.41
Nonetheless, respondents Benitez and Atty. Berberabe-Martinez insist that as a government-acquired bank, GSIS Family
Bank is a government owned or controlled corporation under Republic Act No. 10149.42 They stress that they merely
followed the Governance Commission's directive forbidding them from negotiating the economic terms of a collective
bargaining agreement with petitioner.43 They likewise contend that GSIS Family Bank, a government financial institution
covered by the Compensation and Position Classification System, is not at liberty to negotiate economic terms with its
employees and cannot set its own salary or compensation scheme.44
On May 28, 2014, respondent Secretary Cesar L. Villanueva (Villanueva) filed his Comment, 45 where he brings up
petitioner's failure to implead several indispensable parties. He states that despite the Governance Commission being a
collegial body with five (5) members, only he was impleaded in the Petition as the Governance Commission's chair. He also
stresses that GSIS Family Bank is governed by a Board of Directors, yet petitioner only impleaded its President and Board
Chairman.46
Respondent Villanueva likewise states that petitioner availed of the wrong remedy 47 and violated the rule on judicial
hierarchy by directly filing its Petition before this Court.48
As for the substantial issues, respondent Villanueva points out that GSIS Family Bank, as a government-owned or controlled
corporation, specifically a government financial institution, falls within the ambit of Republic Act No. 10149 and is subject to
the Governance Commission's regulatory jurisdiction.49
Respondent Villanueva rejects petitioner's argument that Republic Act No. 10149 only applies to corporations with original
charters. He emphasizes that the law does not distinguish between chartered and non-chartered corporations:50
All GOCCs, whether chartered or non-chartered, are government corporations brought about by the fact that they are owned
and/or controlled by the government. While non-chartered GOCCs are akin to "private corporations" in the sense that their
juridical entity and intra-corporate relationships are primarily governed by the Corporation Code and fall within the
administrative jurisdiction of the [Securities and Exchange Commission], they remain to be "government corporations" in the
sense that they fall within the coverage of GOCCs under the Administrative Code of 1987, and now also under R.A. No.
10149.51 (Emphasis in the original, citation omitted)
Respondent Villanueva explains that Republic Act No. 10149 aimed to standardize or rationalize the compensation
framework of government-owned or controlled corporations and government financial institutions to remedy the "severe pay
imbalance between personnel of these special entities and the rest of the bureaucracy following the [Salary Standardization
Law]."52 Under Republic Act No. 10149, the Governance Commission submitted a Compensation and Position Classification
System to President Aquino for his approval. Thus, pending President Aquino's approval, a moratorium was established on
any increase in salaries and benefits, and any salary increase shall be subject to the President's approval.53
Finally, respondent Villanueva declares that this Court, in Galicto v. H.E. President Aquino III, et al.,54 recognized the
President's power to provide a compensation system for government-owned or controlled corporations.55
On January 12, 2015, petitioner filed its Reply.56 It avers that respondents Villanueva, Benitez, and Atty. Berberabe-Martinez
were impleaded as the officers of Governance Commission and GSIS Family Bank who issued and affirmed the assailed
directives. Hence, they cannot excuse themselves by "conveniently saying that the rest of the Board of Directors and/or the
institutions they represent have not been impleaded in the petition."57
Petitioner also insists that the Governance Commission and GSIS Family Bank are not indispensable parties.58 Further,
petitioner stresses that the issue at hand was the correct interpretation of Republic Act No. 10149; thus, the non-inclusion of
the Governance Commission and GSIS Family Bank as party respondents was not fatal to its cause. Nonetheless, petitioner
concedes that if this Court declares them to be indispensable parties, it will willingly implead them with the proper motion.59
Petitioner likewise argues that its Petition for Certiorari, Prohibition, and Mandamus was the correct remedy, as it seeks
judicial declaration of the applicability of Republic Act No. 10149 to GSIS Family Bank, and for this Court to compel
respondents Benitez and Atty. Berberabe-Martinez to negotiate a new collective bargaining agreement.60
Petitioner then reiterates that GSIS Family Bank remains a private bank, outside the coverage of Republic Act No. 10149.61
On May 13, 2016, the Bangko Sentral ng Pilipinas Monetary Board, through MB Resolution 826.A, 62 prohibited GSIS
Family Bank from doing business and designated the Philippine Deposit and Insurance Corporation as its receiver.
The three (3) issues for this Court's resolution are:
First, whether or not the Petition for Certiorari is the correct remedy;
Second, whether or not the closure of GSIS Family Bank has rendered the Petition moot; and
Third, whether or not GSIS Family Bank, a non-chartered government-owned or controlled corporation, can enter into a
collective bargaining agreement with its employees.
I pleadings and documents relevant and pertinent thereto, and a sworn certification of non forum shopping as provided in the
Judicial power is the court's authority to "settle justiciable controversies or disputes involving rights that are enforceable and
demandable before the courts of justice or the redress of wrongs for violations of such rights."63
This Court's judicial power is anchored on Article VIII, Section 1 of the 1987 Constitution, which provides:
SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government.
Judicial power includes the power to enforce rights conferred by law and determine grave abuse of discretion by any
government branch or instrumentality. Jurisprudence has consistently referred to these two (2) as the court's traditional and
expanded powers of judicial review.64
Traditional judicial power is the court's authority to review and settle actual controversies or conflicting rights between
dueling parties and enforce legally demandable rights. An actual case or controversy exists "when the case presents
conflicting or opposite legal rights that may be resolved by the court in a judicial proceeding."65
On the other hand, the framers of the 1987 Constitution deliberately expanded this Court's power of judicial review to prevent
courts from seeking refuge behind the political question doctrine and turning a blind eye to abuses committed by the other
branches of government.66
This Court's expanded power of judicial review requires a prima facie showing of grave abuse of discretion by any
government branch or instrumentality. This broad grant of power contrasts with the remedy of certiorari under Rule 65,
which is limited to the review of judicial and quasi-judicial acts. 67 Nonetheless, this Court, by its own power to relax its rules,
allowed Rule 65 to be used for petitions invoking the courts' expanded jurisdiction.68
Here, petitioner asserts that the Governance Commission committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it prevented respondents Benitez and Atty. Berberabe-Martinez, as the bank's President and Chairperson of
the Board of Directors, respectively, from negotiating the economic provisions of the Collective Bargaining Agreement
between petitioner and the bank.69
Petitioner claims that in filing its Petition for Certiorari under Rule 65, it has "no plain, speedy[,] and adequate remedy in the
ordinary course of law which will promptly and immediately relieve them from the injurious effects of the unconstitutional
and patently unwarranted and illegal acts of the Respondents."70
Petitioner is mistaken.
Rule 65, Section 1 of the Rules of Civil Procedure reads:
SECTION 1. Petition for Certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment
be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as
law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all
third paragraph of Section 3, Rule 46.
Thus, a writ of certiorari may only be issued when the following are alleged in the petition and proven:
(1) the writ is directed against a tribunal, a board[,] or any officer exercising judicial or quasi[-]judicial functions; (2) such
tribunal, board[,] or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction; and (3) there is no appeal or any plain, speedy[,] and adequate remedy in the ordinary course of
law.71 (Citation omitted)
The Governance Commission was created under Republic Act No. 10149. It is attached to the Office of the President and is
the "central advisory, monitoring, and oversight body with authority to formulate, implement[,] and coordinate
policies"72 relative to government-owned and controlled corporations. It has no judicial or quasi-judicial authority, as
evidenced by its powers and functions73 under the law. Under its charter, the Governance Commission is empowered to:
 oversee the selection and nomination of directors/trustees and maintain the quality of Board Governance;
 institutionalize transparency, accountability, financial viability and responsiveness in corporate performance by
monitoring and evaluating GOCCs' performance;
 rationalize the Sector through streamlining, reorganization, merger, as well as recommending to the President of
the Philippines the privatization or abolition of a GOCC; and
 establish compensation standards to ensure reasonable and competitive remuneration schemes that attract and
retain the right talent.74
The Governance Commission possesses neither judicial nor quasi judicial powers; thus, it cannot review or settle actual
controversies or conflicting rights between dueling parties and enforce legally demandable rights. It is not a tribunal or board
exercising judicial or quasi-judicial functions that may properly be the subject of a petition for certiorari.
Petitioner refers to the Governance Commission's February 5, 201375 and March 8, 201376 letters to substantiate its claim that
the Governance Commission forbade respondents Benitez and Atty. Berberabe-Martinez from negotiating the economic
terms of their Collective Bargaining Agreement. However, a careful review of the letters convinces this Court that they were
merely advisory opinions, rendered in response to the queries of respondents Atty. Berberabe-Martinez and Benitez.
The February 5, 2013 letter read:
Gentlemen:
We write to formally inform you that pursuant to the terms of Republic Act (R.A.) No. 10149, the Governing Boards and
Managements of all covered GOCCs, GFIs and GCE/GICPs are without legal authority to enter into negotiations for the
economic terms of Collective Bargaining Agreements (CBAs); more so, approving CBAs, whether conditionally or
unconditionally, that cover matters involving compensation, allowances, benefits and incentives.
"Collective Bargaining" covers matters that can be voluntarily agreed upon by the employer and employees. Presidential
Decree (P.D.) No. 1597 and Joint Resolution (J.R.) No. 4 mandate that SSL exempt GOCCs, including Non-Chartered
GOCCs, shall observe the policies, parameters and guidelines governing position classification, salary rates, categories and
rates of allowances, benefits and incentives, prescribed by the President, and that any increase in the existing salary rates, as
well as the grant of new allowances, benefits, and incentives in the rates thereof shall be subject to the approval of the
President.
Executive Order No. 7 (s.2010) likewise provides for a moratorium on increases in the rates of salaries, and the grant of new
allowances, incentives and other benefits, except for salary adjustments pursuant to Executive Order No. 811 (s. 2009) and
Executive Order No. 900 (s. 2010), until specifically authorized by the President.
Pursuant to these, compensation matters cannot be voluntarily agreed upon by the Board with the union under a CBA, since
such matters have to be subjected to policies, guidelines and parameters prescribed and approved by the President.
As you are aware of, Section 8 of R.A. No. 10149 mandates the Commission to develop a Compensation and Position
Classification System (CPCS) that strikes a balance between reasonableness and competitiveness, and shall apply to ALL
GOCCs, whether SSL-covered or SSL-exempt. The task of undertaking the development of a CPCS for all GOCCs has
already commenced and is well underway being already on Phase III of its development. Pending however the formal
promulgation and approval of the CPCS, the authority to approve or deny requests for any adjustment pertaining to
compensation, additional incentives or benefits, remain with His Excellency.
In view of the foregoing, and pursuant to the fiduciary duties of the members of the Board of Directors and Officers, as well
as the principles under R.A. No. 10149, the Commission takes this opportunity to inform Governing Boards and Management
within the GOCC Sector of their lack of authority to enter into any negotiations for the economic terms of CBAs with their
respective unions.77 (Emphasis in the original, citation omitted)
A careful reading of the March 8, 2013 letter likewise demonstrates its advisory nature with no directive for respondents to
refrain from negotiating with petitioner.
Further, petitioner failed to prove that it had no other "plain, speedy[,] and adequate remedy in the ordinary course of
law"78 aside from its present Petition. The Governance Commission is an attached agency of the Office of the President;
hence, petitioner could have elevated the advisories to the Office of the President to question the Governance Commission's
legal opinion.
Finally, it has not escaped this Court's attention that petitioner only impleaded respondent Villanueva in his capacity as
chairperson of the Governance Commission, and not the four (4) other members of the Governance Commission.
The Governance Commission is composed of five (5) members. The chairperson, with a rank of Cabinet Secretary, and two
(2) other members, with the rank of Undersecretary, are appointed by the President. The Department of Budget and
Management and the Department of Finance Secretaries sit as ex-officio members.79
As a collegial body, all members of the Governance Commission should have been impleaded as indispensable parties in the
Petition, since no final determination of the action can be reached without them. 80 As it is, petitioner's failure to implead all
members of the Governance Commission should lead to the outright dismissal of this Petition as their non-inclusion is
debilitating since this Court cannot exercise its juridical power when an indispensable party is not impleaded.81
II
Nonetheless, even if all the requirements for the issuance of a writ of certiorari were alleged and proven, and even if all the
indispensable parties were impleaded, the closure of GSIS Family Bank has rendered the Petition moot. As seen in the
Petition's prayer,82 this Court is asked to direct GSIS Family Bank's representatives to perform positive acts:
WHEREFORE, premises considered, Petitioner humbly prays that the Honorable Court rule in favor of the Petitioner and that
a judgment be rendered:
1. Declaring GSIS Family Bank as a private bank and therefore outside the coverage of RA 10149;
2. Ordering the [Governance Commission] to DESIST from further usurping into matters between the
GSIS [Family Bank] and its employees;
3. Directing GSIS [Family Bank] management to immediate[ly] commence negotiations with the petitioner
for a Collective Bargaining Agreement (CBA) covering the period retroactive January 01, 2012 to
December 31, 2015;
4. Ordering respondent GSIS Family Bank to fully comply with the terms and conditions of the existing
[Collective Bargaining Agreement] until a new [collective bargaining agreement] has been negotiated
and signed, by providing the benefits, allowances and incentives and other rightful claims, including the
2013 Christmas bonus, of the members of the Petitioner union[.]83 (Emphasis supplied)
A case is deemed moot when it ceases to present a justiciable controversy due to a supervening event. The lack of an actual or
justiciable controversy means that the court has nothing to resolve, and will, in effect, only render an advisory opinion.84
Courts generally dismiss cases on the ground of mootness 85 unless any of the following instances are present: (1) grave
constitutional violations; (2) exceptional character of the case; (3) paramount public interest; (4) the case presents an
opportunity to guide the bench, the bar, and the public; or (5) the case is capable of repetition yet evading review.86
Despite GSIS Family Bank's closure, which has effectively rendered the case moot, this Court believes that there is a need to
discuss the substantive issues of the case, as it presents an opportunity to guide the bench and bar on how to resolve similar
issues arising from similarly situated parties.
III
On February 4, 1986, to clarify which of the government entities could be classified as a government-owned or controlled
corporation,87 then President Ferdinand E. Marcos issued Presidential Decree No. 2029, which defined a government-owned
or controlled corporation as follows:
SECTION 2. Definition. — A government-owned or controlled corporation is a stock or a non-stock corporation, whether
performing governmental or proprietary functions, which is directly chartered by a special law or if organized under the
general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or
subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting capital
stock;
Provided, that a corporation organized under the general corporation law under private ownership at least a majority of the
shares of stock of which were conveyed to a government financial institution, whether by a foreclosure or otherwise, or a
subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific
physical assets acquired by a government financial institution in satisfaction of debts incurred therewith, and which in any
case by enunciated policy of the government is required to be disposed of to private ownership within a specified period of
time, shall not be considered a government-owned or controlled corporation before such disposition and even if the
ownership or control thereof is subsequently transferred to another government-owned or controlled corporation;
Provided, further, that a corporation created by special law which is explicitly intended under that law for ultimate transfer to
private ownership under certain specified conditions shall be considered a government-owned or controlled corporation, until
it is transferred to private ownership; and
Provided, finally, that a corporation that is authorized to be established by special law, but which is still required under that
law to register with the Securities and Exchange Commission in order to acquire a juridical personality, shall not on the basis
of the special law alone be considered a government-owned or controlled corporation.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order No. 292 or the Administrative Code of 1987,
which replaced the 1917 colonial period Administrative Code in effect then, and laid out in a "unified document the major
structural, functional[,] and procedural principles and rules of governance[.]"88 Section 2(13) of Executive Order No. 292
defined a government-owned or controlled corporation:
SECTION 2. General Terms Defined. — Unless the specific words of the text, or the context as a whole, or a particular
statute, shall require a different meaning:
(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation,
vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the
Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or
controlled corporations may be further categorized by the Department of the Budget, the Civil Service Commission,
and the Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and
responsibilities with respect to such corporations.
This definition was echoed in Section 3(o) of Republic Act No. 10149:
SECTION 3. Definition of Terms. —
....
(o) Government-Owned or -Controlled Corporation (GOCC) refers to any agency organized as a stock or nonstock
corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the
Government of the Republic of the Philippines directly or through its instrumentalities either wholly or, where applicable as
in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock: Provided, however, That
for purposes of this Act, the term "GOCC" shall include GICP/GCE and GFI as defined herein.
Thus, a government-owned or controlled corporation is: (1) established by original charter or through the general corporation
law; (2) vested with functions relating to public need whether governmental or proprietary in nature; and (3) directly owned
by the government or by its instrumentality, or where the government owns a majority of the outstanding capital stock.
Possessing all three (3) attributes is necessary to be classified as a government-owned or controlled corporation.89
There is no doubt that GSIS Family Bank is a government-owned or controlled corporation since 99.55% of its outstanding
capital stock is owned and controlled by the Government Service Insurance System.
Petitioner cites this Court's ruling in Phil. National Oil Company-Energy Dev't. Corp.90 to substantiate its claim that
government-owned and controlled corporations without original charters, or those incorporated under the Corporation Code,
are subject to the provisions of the Labor Code, and are thus free to negotiate economic terms with their employers.91
Petitioner is again mistaken.
Phil. National Oil Company-Energy Dev 't. Corp. involved a decision of the Deputy Minister of Labor upholding his
jurisdiction revoking a clearance to dismiss, earlier issued by the Ministry of Labor's Regional Office. The petitioner, despite
its earlier application for such issuance, contested the Ministry of Labor's jurisdiction on the ground that it was a government-
owned and controlled corporation.
In disposing of the petition, this Court noted that for purposes of coverage under the Civil Service Rules, it was only
government-owned and controlled corporations with original charters that were covered:
Under the laws then in force, employees of government-owned and/or controlled corporations were governed by the Civil
Service Law and not by the Labor Code. Thus,
Article 277 of the Labor Code (PD 442) then provided:
"The terms and conditions of employment of all government employees, including employees of government-owned and
controlled corporations shall be governed by the Civil Service Law, rules and regulations .. "
In turn, the 1973 Constitution provided:
"The Civil Service embraces every branch, agency, subdivision and instrumentality of the government, including
government-owned or controlled corporations."
In National Housing Corporation vs. Juco (L-64313, January 17, 1985, 134 SCRA 172), we laid down the doctrine that
employees of government-owned and/or controlled corporations, whether created by special law or formed as subsidiaries
under the general Corporation Law, are governed by the Civil Service Law and not by the Labor Code.
However, the above doctrine has been supplanted by the present Constitution, which provides:
"The Civil Service embraces all branches, subdivisions, instrumentalities and agencies of the Government, including
government-owned or controlled corporations with original charters." (Article IX-B, Section 2 [1])
Thus, under the present state of the law, the test in determining whether a government-owned or controlled corporation is
subject to the Civil Service Law is the manner of its creation such that government corporations created by special charter are
subject to its provisions while those incorporated under the general Corporation Law are not within its coverage.92
However, what was in issue in Phil. National Oil Company-Energy Dev't. Corp.93 was jurisdiction in relation to dismissal of
employees. It had nothing to do with the obligation of the government-owned or controlled corporation to collectively
bargain in good faith.
Similarly, Galicto94 was a petition filed by an employee of the Philippine Health Insurance Corporation (Philhealth)
challenging the validity of an Executive Order issued by the President. The Executive Order imposed a moratorium on
increases in compensation and benefits to be given to employees, including government-owned and controlled
corporations.95 Unlike the present case, Galicto did not deal with the obligation, if any, of the management of government-
owned or controlled corporations to bargain collectively with its employees in good faith.
Nonetheless, Galicto involved Philhealth, a corporation with an original charter, Republic Act No. 7875. More importantly,
the case was dismissed due to the improper remedy,96 lack of standing,97 and procedural errors98 of the petitioner. This Court
also noted that while the case was pending, Republic Act No. 10149 was promulgated, providing statutory basis for the
President to approve the Compensation and Position Classification System for government-owned and controlled
corporations.99
Galicto did not rule on the legality of any provision of Republic Act No. 10149 as it was not raised as an issue.
Further, Galicto dismissed the petition against then President Aquino for being moot.100
IV
The right of workers to self-organization, collective bargaining, and negotiations is guaranteed by the Constitution under
Article XIII, Section 3:
SECTION 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.
The right to self-organization is not limited to private employees and encompasses all workers in both the public and private
sectors, as shown by the clear declaration in Article IX(B), Section 2(5) that "the right to self organization shall not be denied
to government employees." Article III, Section 8 of the Bill of Rights likewise states, "[t]he right of the people, including
those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law
shall not be abridged."
While the right to self-organization is absolute, the right of government employees to collective bargaining and negotiation is
subject to limitations.
Collective bargaining is a series of negotiations between an employer and a representative of the employees to regulate the
various aspects of the employer-employee relationship such as working hours, working conditions, benefits, economic
provisions, and others.
Relations between private employers and their employees are subject to the minimum requirements of wage laws, labor, and
welfare legislation. Beyond these requirements, private employers and their employees are at liberty to establish the terms
and conditions of their employment relationship. In contrast with the private sector, the terms and conditions of employment
of government workers are fixed by the legislature; thus, the negotiable matters in the public sector are limited to terms and
conditions of employment that are not fixed by law101
Social Security System Employees Association v. Court of Appeals102 explains that instead of a collective bargaining
agreement or negotiation, government employees must course their petitions for a change in the terms and conditions of their
employment through the Congress for the issuance of new laws, rules, or regulations to that effect:
Government employees may, therefore, through their unions or associations, either petition the Congress for the betterment of
the terms and conditions of employment which are within the ambit of legislation or negotiate with the appropriate
government agencies for the improvement of those which are not fixed by law.103
In PCSO v. Chairperson Pulido-Tan, et al.,104 the Commission on Audit disallowed the monthly cost of living allowance
being received by Philippine Charity Sweepstakes Office's officials and employees.
This Court held that the Philippine Charity Sweepstakes Office's charter does not allow its Board complete liberty to set the
salaries and benefits of its officials and employees. This Court emphasized that as a government-owned and controlled
corporation, the Philippine Charity Sweepstakes Office is covered by the compensation and position standards issued by the
Department of Budget and Management and applicable laws.105
PCSO underscored that the power of a government-owned or controlled corporation to fix salaries or allowances of its
employees is subject to and must conform to the compensation and classification standards laid down by applicable law:
Upon the effectivity of R.A. No. 6758, GOCCs like the PCSO are included in the Compensation and Position Classification
System because Section 16 of the law repeals all laws, decrees, executive orders, corporate charters, and other issuances or
parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classification, salaries,
pay rates or allowances of specified positions, or groups of officials and employees or of agencies, which are inconsistent
with the System, including the proviso under Section 2 and Section 16 of P.D. No. 985.106 (Citation omitted)
Republic Act No. 10149 defines a non-chartered government-owned or controlled corporation as a government-owned or
controlled corporation that was organized and is operating under the Corporation Code. 107 It does not differentiate between
chartered and non-chartered government-owned or controlled corporations; hence, its provisions apply equally to both:
SECTION 4. Coverage. — This Act shall be applicable to all GOCCs, GICPs/GCEs, and government financial institutions,
including their subsidiaries, but excluding the Bangko Sentral ng Pilipinas, state universities and colleges, cooperatives, local
water districts, economic zone authorities and research institutions: Provided, That in economic zone authorities and research
institutions, the President shall appoint one-third (1/3) of the board members from the list submitted by the GCG. (Emphasis
supplied)
Section 9 of Republic Act No. 10149 also categorically states, "Any law to the contrary notwithstanding, no [government-
owned or controlled corporation] shall be exempt from the coverage of the Compensation and Position Classification System
developed by the [Governance Commission] under this Act."
Furthermore, Republic Act No. 10149 directed the Governance Commission to develop a Compensation and Position
Classification System, to be submitted for the President's approval, which shall apply to all officers and employees of
government-owned or controlled corporations, whether chartered or non-chartered.108
On March 22, 2016, President Aquino issued Executive Order No. 203, 109 which approved the compensation and
classification standards and the Index of Occupational Services Framework developed and submitted by the Governance
Commission.
When it comes to collective bargaining agreements and collective negotiation agreements in government-owned or controlled
corporations, Executive Order No. 203 unequivocally stated that while it recognized the right of workers to organize, bargain,
and negotiate with their employers, "the Governing Boards of all covered [government-owned or controlled corporations],
whether Chartered or Non-chartered, may not negotiate with their officers and employees the economic terms of their
[collective bargaining agreements]."110
Thus, considering the existing law at the time, GSIS Family Bank could not be faulted for refusing to enter into a new
collective bargaining agreement with petitioner as it lacked the authority to negotiate economic terms with its
employees.111 Unless directly challenged in the appropriate case and with a proper actual controversy, the constitutionality
and validity of Republic Act No. 10149, as it applies to fully government-owned and controlled non-chartered corporations,
prevail.
WHEREFORE, premises considered, the Petition is DENIED.
SO ORDERED.
c. Supervisors; Arts. 255, 219 (m)
ART. 255. [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 the collective bargaining unit of the rank-and-file employees but may join,
assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union
and the supervisors' union operating within the same establishment may join the same federation or national union.
ART. 219. [212] Definitions. –
(m) "Managerial employee" is one who is vested with the powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory
employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of
such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank and-file employees for purposes of this Book.
G.R. No. L-26736 August 18, 1972
FILOIL REFINERY CORPORATION, petitioner, vs. FILOIL SUPERVISORY & CONFIDENTIAL EMPLOYEES
ASSOCIATION AND COURT OF INDUSTRIAL RELATIONS, respondents.
TEEHANKEE, J.:p
The present appeal questions the right of supervisors and confidential employees to organize the respondent labor association
and to bargain collectively with their employer, petitioner corporation herein, as upheld by respondent court of industrial
relations in its appealed orders and resolution.
Respondent association is a labor organization duly registered with the Department of Labor. It is composed exclusively of
the supervisory and confidential employees of petitioner corporation. There exists another entirely distinct labor association
composed of the corporation's rank-and-file employees, the Filoil Employees & Workers Association (FEWA) with which
petitioner executed a collective bargaining agreement. This collective bargaining agreement expressly excluded from its
coverage petitioner's supervisory and confidential employees, who in turn organized their own labor association, respondent
herein.
Respondent association filed on February 18, 1965 with the industrial court its petition for certification as the sole and
exclusive collective bargaining agent of all of petitioner's supervisory and confidential employees working at its refinery in
Rosario, Cavite.
Petitioner corporation filed a motion to dismiss the petition on the grounds of lack of cause of action and of respondent
court's lack of jurisdiction over the subject-matter, under its claim that supervisors are not employees within the meaning of
Republic Act 875, the Industrial Peace Act, and that since they are part of management, they do not have the right to bargain
collectively although they may organize an organization of their own.
Respondent court in its order of May 26, 1965 denied the dismissal motion. It ruled that under the express provisions of
section 3 of the Industrial Peace Act, "(I)ndividuals employed as supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form separate organizations their own."1
It rejected petitioner's claim against respondent association's right to bargain collectively, holding that such was expressly
granted under section 24 of the Industrial Peace Act, and asserting that "if Congress deemed it wise for supervisors not to
have the right to strike, then it should have been so expressly stated as in the case of government employees. Section 11 of
the Industrial Peace Act gives government employees the right to belong to any labor organization provided no obligation to
strike or join a strike is imposed by such labor organization. The denial to government employees of the right to strike is
significant in the controversy before this Court because it manifests to all that Congress in enacting Republic Act No. 875
was aware of the implications that when supervisors were given the right to organize themselves into a labor organization,
they have correlative right to declare a strike. In the case of supervisors, they were enfranchised by Congress to organize
themselves into a labor organization and were denied the right to strike. This means that the right to strike was not denied
them since no special reason obtains among the supervisors as it does obtain among government employees."2
The industrial court likewise dismissed petitioner's objection against the composition of respondent association in that it
included as members technical men and confidential employees in this wise: "(A)t this point, it may be stressed that
supervisors as a general rule should form an association of their own and should exclude all other types of personnel unless a
special consideration exists, like example, that they are so few in number and that there are other technical men or
confidential men equally few in number. In the latter case, the supervisors, technical men and confidential employees may be
constituted into one unit."3
Petitioner's motion for reconsideration of said order of May 26, 1965 was denied by respondent court en banc per its
resolution dated September 7, 1965 which affirmed the said order. No appeal having been taken from the resolution, the
petition was accordingly set for hearing and the parties submitted their stipulation of facts, stipulating  inter alia that
respondent association "has forty-seven (47) members among the supervisory, technical men and confidential employees of
the company" and that "all the forty seven (47) members of the (respondent association) are being checked-off by the
company for union dues pursuant to the individual check-off authorization submitted to the company."
The parties could not agree, however, on the composition of the appropriate bargaining unit with petitioner corporation
proposing that the 47 members of respondent association should be broken up into five (5) separate collective bargaining
units, viz, the supervisors should form a distinct unit separate from the rest of the personnel who in turn would be divided into
separate and independent units or confidential employees, professional personnel, "fringe" employees consisting of five
firemen, and twelve (12) office and clerical employees.
Evidence was received by respondent court and it was satisfied that executive personnel handling personnel matters for the
employer were duly excluded from respondent association. Thus, per respondent court's order of July 23, 1966, it is noted
that "not one of the employees listed under Groups I and II including (their supervisor) Leonardo R. Santos under Group III,
is a member of (respondent association)", since "(I)t appears that the personnel listed under Groups I and Group II ... are in
the category of executives who have supervision over the supervisors who are members of (respondent association) and that
Marcelo Bernardo handles personnel matters of the employer ... All of them should, therefore, be excluded from the
appropriate bargaining unit.4
Respondent court in its said order of July 23, 1966 consequently cast aside petitioner's sedulous objections against the
inclusion of the confidential employees in the supervisors respondent association, thus: "(F)rom the memorandum and
manifestation of the company, a persistent assault against the inclusion of the confidential emloyees with supervisors under
one bargaining unit would seem to be evident. Although this inclusion has already been raised in the motion to dismiss filed
by the company and has already been resolved by the Court en banc, with no appeal to the Supreme Court having been taken
by the company, we shall try once more to show why such inclusion. It is admitted by the company that confidential
employees are outside the coverage of the existing collective bargaining agreement between the respondent company and the
rank and file union (FEWA) by specific agreement. Since the confidential employees are very few and are, by practice and
tradition, identified with management, the NLRB, because of such "identity of interest" (Wilson & Co., 68 NLRB 84), has
allowed their inclusion in the bargaining unit of supervisors who are likewise identified with management. This Court, a
counterpart of the NLRB, for same reason, should also allow the inclusion of the confedential employees in the bargaining
unit of supervisor except of course Marcelo Bernardo who, pursuant to Order of May 26, 1965, as affirmed by the Court  en
banc, should be excluded because he handles personnel matters for the employer."5
Respondent court pointed out that "in fact, out of forty-three (43), excluding the twelve (12) executive personnel under
Groups I and II, the company proposes five (5) bargaining units or eight (8) employees per unit. This Court will be creating
fragmentary units which would not serve the interest of industrial peace, much less in an industry indispensable to the
national interest like the one at bar, as is now obtaining in the Philippine National Railways, also an industry indispensable
to the national interest (Union de Maquinistas, Fogoneros y Motormen vs. Philippine National Railways, Case No. 67-IPA),
with thirteen (13) unions, if it breaks up the petitioner union into five (5) bargaining units. The Court is likewise aware of
the ineffectiveness of a small union with a scanty members as bargaining unit. The breaking up of bargaining agents into tiny
units will greatly impair their organizational value. It has always been the policy of the United States National Labor
Relations Board that, in deciding upon whether to include or exclude a group of employees from a bargaining unit, the Board
has always allowed itself to be guided by the determination as to whether its action "will insure to the employees of the
Company the full benefit of their right to self-organization and to collective bargaining and otherwise effectuate the policies
of the Act" (20 NLRB 705). We see no reason why this Tribunal whose basic functions are the same as that of the NLRB,
should do less or otherwise depart from this sound policy."6
Since respondent association "clearly represents the majority of the employees in the appropriate bargaining unit," respondent
court therefore certified it as the sole and exclusive bargaining agent for all the employees in the unit.
Respondent court per its resolution en banc dated September 15, 1966 dismissed petitioner's motion for reconsideration,
holding that "as to the question of the right of supervisors and confidential employees to compel their employer to bargain
collectively, this has already been passed upon by the Trial Court in its Order dated May 26, 1965 which Order was affirmed
by the Court en banc  in a resolution dated September 7, 1965. The Company did not appeal this resolution to the Supreme
Court. Hence, this matter, as far as we are concerned, has already been resolved. We find it, therefore, unnecessary to pass
upon the same again," and that it found no sufficient justification to alter or modify the trial court's order upholding the
appropriateness of the bargaining unit. On this latter point, Judge Salvador, while concurring with the supervisors' right of
self-organization and collective bargaining, cast a dissenting vote on the ground that the Industrial Peace Act did not
contemplate nor provide for supervisors and confidential employees to be under one bargaining unit and as to "executive
personnel" who have supervision over the supervisors being excluded from any representation, urged that "another
supervisors' unit must be created for these executive personnel." The second point is not in contention at bar since the
"executive personnel" concerned have not appealed their exclusion.
In this appeal, petitioner pursues anew its contention that supervisors form part of management and are not considered as
employees entitled to bargain collectively, arguing that "as supervisors form part and parcel of management, it is absurd for
management to bargain collectively with itself." Petitioner further argues that under the American concept, supervisors are
not considered employees and that since our Congress copied verbatim the Taft-Hartley Act's definition of supervisor, 7 its act
of "incorporating the definition in the Taft-Hartley Act" must be deemed an expression of its intention "to follow the
intendment of said Act."
Petitioner's contentions are untenable, prescinding from the fact of its failure to appeal in due course respondent court's en
banc resolution of September 7, 1965 upholding the right of the supervisors and confidential employees to organize
respondent association and to compel petitioner to negotiate and bargain collectively with it. Petitioner's argument that since
supervisors form part of management, to allow them to bargain collectively would be tantamount to management bargaining
with itself may be a well-turned phrase but ignores the dual status of a supervisor as a representative of management and as
an employee.
If indeed the supervisor is absolutely undistinguishable from management, then he would be beyond removal or dismissal, for
as respondent association counters, "how can management remove or dismiss itself?"
As stated for the Court by the now Chief Justice in AG & P Co. of Manila, Inc. vs. C.I.R.,8 section 3 of the Industrial Peace
Act "explicitly provides that "employees" — and this term includes supervisors — "shall have the right to self-organization,
and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through
representations of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other
mutual aid or protection" and that "individuals employed as supervisors ... may form separate organizations of their own".
Indeed, it is well settled that "in relation to his employer," a foreman or supervisor "is an employee within the meaning of the
Act" ... For this reason, supervisors are entitled to engage in union activities and any discrimination against them by reason
thereof constitutes an unfair labor practice."
Petitioner's arguments go in reality to the wisdom and policy of the Industrial Peace Act which expressly grants supervisors
the right to organize and bargain collectively, which are beyond the Court's power of review. Thus, the argument that "it is
axiomatic in the law of self-interest that an employer must give a "better deal" to those who act in his interest and in whom he
has trust and confidence. These are the supervisors and confidential employees"9 and that "In the United States there was a
move to have a part of the supervisory group to be aligned with labor. But the enactment of the Taft-Hartley Act put an end to
this move." 10
So with petitioner's thesis that "(T)o then give supervisors the right to compel employers to bargain would in effect align
labor and management together against stockholders and bondholders (capital) and inexorably tilt the balance of power in
favor of these hitherto confliction forces. This is contrary to the nature and philosophy of free enterprise." 11 This further
serves to point up the validity and rationale of the Industrial Peace Act's provision, since the supervisors and confidential
employees, even though they may exercise the prerogatives of management as regards the rank and file employees are indeed
employees in relation to their employer, the company which is owned by the "stockholders and bondholders (capital)" in
petitioner's own words, and should therefore be entitled under the law to bargain collectively with the top management with
respect to their terms and conditions of employment.
Petitioner's argument that the express provisions of section 3 of our Industrial Peace Act must give way to the intendment of
the Taft-Hartley Act which exempts employers from the legal obligation to recognize and negotiate with supervisors is
tenuous and groundless. The language of our own statute is plain and unambiguous and admits of no other interpretation.
The other principal ground of petitioner's appeal questioning the confidential employees' inclusion in the supevisors
bargaining unit is equally untenable. Respondent court correctly held that since the confidential employee are very few in
number and are by practice and tradition identified with the supervisors in their role as representives of management vis-a-vis
the rank and file employee such identity of interest has allowed their inclusion in the bargaining unit of supervisors-managers
for purposes of collective bargaining in turn as employees in relation to the company as their employer.
No arbitrariness or grave abuse of discretion can be attributed against respondent court's allowing the inclusion of the
confidential employees in the supervisors' association for as admitted by petitioner itself, supra, the supervisors and
confidential emplyees enjoy its trust and confidence. Thisidentity of interest logically calls for their inclusion in the same
bargaining unit and at the same time fulfills the law's objective of insuring to them the full benefit of their right to self-
organization and to collective bargaining, which could hardly be accomplished if the respondent association's membership
were to be broken up into five separate ineffective tiny units, as urged by petitioner.
Respondent court's action not being vulnerable to challenge as being arbitrary or capricious is therefore sustained, in line with
the Court's consistent rulings that the industrial court "enjoys a wide discretion in determining the procedure necessary to
insure the fair and free choice of bargaining representations by employees," and that its action "in deciding upon an
appropriate unit for collective bargaining purposes is discretionary ... and (that) its judgment in this respect is entitled to
almost complete finality, unless its action is arbitrary or capricious" 12 and that absent any grave abuse of discretion as to
justify the Court's intervention, "this Court has repeatedly upheld the exercise of the Court of Industrial Relations in matters
concerning the representation of employee groups." 13
ACCORDINGLY, the orders and resolution appealed from are hereby affirmed and the petition at bar is dismissed. No
pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.
Castro, J., concurs in the result.
[G.R. No. 121084. February 19, 1997.]
TOYOTA MOTOR PHILIPPINES CORPORATION, Petitioner, v. TOYOTA MOTOR PHILIPPINES
CORPORATION LABOR UNION AND THE SECRETARY OF LABOR AND EMPLOYMENT, Respondents.
DECISION
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.
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.
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.
On appeal, the Office of the Secretary of Labor, in a Resolution 6 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 supervisory 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.
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.
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.
Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on September 28, 1994, stating
the following:
[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 LEO, this office, would attest in his letter dated September 8, 1994 addressed to Mr. Porfirio T. Reyes,
Industrial Relations Officer of Respondent company, n 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.
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."
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.
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.
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. 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, 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 II 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. 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.2 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. 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.25cralaw:red
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.
SO ORDERED.
 In its Reply filed on December 5, 1995, the respondent union alleged that its members are supervisors and not rank-and-file
employees. It averred that all its members are paid monthly by the petitioner company. It alleged that the bargaining unit it
seeks to represent is made up of the monthly paid supervisory employees and other personnel who cannot be classified as
belonging to the rank-and-file. It further contended that it has no obligation to attach its books of accounts since it is a
legitimate labor organization. It urged that the certification election proceeding cannot be used to question the legal
personality of a labor organization. On March 4, 1996, however, respondent union submitted its new books of accounts
consisting of the Cash Receipts Journal, Cash Disbursements Journal and two (2) ledgers.

On July 15, 1996, Mediator Arbiter Ma. Carmen A. Espinosa granted the petition for certification election. Respondent
Secretary of Labor and Employment affirmed the Arbiter’s decision ruling as follows:

"x       x       x

‘The order of the Med-Arbiter directing the conduct of a certification elections is well and proper.

"A perusal of the records shows that the bargaining unit that the petitioner seeks to represent has been properly defined and
this is composed of all the supervisory employees of the respondent company. We wish to emphasize that the right of
supervisory employees to form their own labor organization separate from that of the rank-and-file union has been recognized
by law. This is quite clear from the provisions of Article 245 of the Labor Code, as amended, which states:chanrobles.com :
virtual law library

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.’
[G.R. No. 131248. December 11, 1998.]

DUNLOP SLAZENGER (PHILS.), INC., Petitioner, v. HON. SECRETARY OF LABOR AND EMPLOYMENT and "As to the contention of the respondent that the petitioning union is composed of both supervisory and rank and file
DUNLOP SLAZENGER STAFF ASSOCIATION-APSOTEU, Respondents. employees, suffice it to stress that the same is not a sufficient reason that would warrant the dismissal of the present petition.
The same can be taken care (sic) of during 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.

DECISION "Anent the issue on the legitimacy of the petitioner, we agree with the findings of the Med-Arbiter that the petitioner has
acquired the requisite legal personality to file the present petition for certification elections. This is shown by the fact that the
petitioner has sufficiently complied with the mandatory reportorial requirements provided for under Section 3, Rule II, Book
V of the Rules and Regulations Implementing the Labor Code, as amended and as enunciated by the Supreme Court in the
PUNO, J.: cases of Progressive Development Corporation v. Secretary of Labor, Et Al., 205 SCRA 802 and Protection Technology Inc.
v. Secretary of Labor, G.R. 11711, March 1, 1995."

In this petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, petitioner seeks the annulment of the Respondent Secretary of Labor denied petitioner’s motion for reconsideration; hence, this petition.
Resolution and Order, dated July 19, 1997 and October 16, 1997, 1 of the public respondent Secretary of Labor and
Employment calling for a certification election in its company. It is petitioner’s submission that:

It appears that on September 15, 1995, the respondent union filed a Petition for Certification Election among the supervisory, "I
office and technical employees of the petitioner company before the Department of Labor and Employment, Regional Office
No. III, San Fernando, Pampanga. It alleged that it is a legitimate labor organization, a duly chartered local of the Associated
Professional, Supervisory, Office & Technical Employees Union (APSOTEU); that petitioner is a domestic corporation "Respondent Secretary acted arbitrarily and with grave abuse of discretion amounting to lack or excess of jurisdiction in
engaged in the manufacture of tennis balls and other allied products; that petitioner is an unorganized establishment and there holding that the respondent union is composed of all the supervisory employees of the [petitioner] company.
is no certified bargaining agreement that will bar the filing of its petition for certification election; and that no certification
election has been conducted within one (1) year prior to the filing of its petition for certification election
"II
On October 9, 1995, the petitioner company filed its Answer with Motion to Dismiss based on three (3) grounds, namely: (1)
that the respondent union is comprised of supervisory and rank-and-file employees and cannot act as bargaining agent for the "Respondent Secretary acted arbitrarily and with grave abuse of discretion amounting to lack or excess of jurisdiction in
proposed unit; (2) that a single certification election cannot be conducted jointly among supervisory and rank-and-file finding that even if the respondent union is composed of both supervisory and rank-and-file employees such can be taken
employees; and (3) that the respondent union lacks legal standing since it failed to submit its books of accounts. cared of during the pre-election conference thru the exclusion-inclusion proceedings.
 "III
"Respondent Secretary acted contrary to law and with grave abuse of discretion amounting to lack or excess of jurisdiction in
upholding the findings of the Med-Arbiter that the respondent union has complied with all the requirements for it to attain the
legal personality to file the petition for certification election."
The petition is meritorious.
We agree with the public respondent that supervisors can be an appropriate bargaining unit. This is in accord with our
repeated ruling that" [a]n 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.
Otherwise stated, it is a 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.
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."
"Clearly, based on this provision [Article 245, Labor Code], 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
Needless to stress, the respondent union has no legal right to file a certification election to represent a bargaining unit
composed of supervisors for so long as it counts rank-and-file employees among its members.
IN VIEW WHEREOF, the Resolution and Order dated July 19, 1997 and October 16, 1997, in OS-A-10-171-96 of the public
respondent are annulled and set aside. No costs.
SO ORDERED.

The critical issue, however, is whether or not the respondent union can file a petition for certification election to represent the
supervisory employees of the petitioner company. The resolution of this issue depends on whether the respondent union is
composed solely of supervisory employees or of both supervisory and rank-and-file employees. Article 245 of the Labor
Code clearly provides that "supervisory employees shall not be eligible for membership in a labor organization of the rank-
and-file employees . . ."

To determine who are supervisory and rank-and-file employees reference has to be made to Article 212 (m) of the Labor
Code, as amended, as well as Section 1 (t), Rule I, Book V of the Omnibus Rules Implementing the Labor Code, as amended,
viz:

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

Determining the status of supervisory and rank-and-file employees is not a hard row to hoe in labor law. The test of
supervisory status as we have repeatedly ruled is whether an employee possesses authority to act in the interest of his
employer, which authority should not be merely routinary or clerical in nature but requires the use of independent judgment.
Corrollarily, what determines the nature of employment is not the employee’s title, but his job description.

In the instant case, the list of monthly paid employees submitted by the petitioner company contains the names of about
twenty seven (27) supervisory employees, six (6) managerial employees, one (1) confidential employee and twenty six (26)
office and technical employees holding various positions. The list reveals that the positions occupied by the twenty six (26)
office and technical employees are in fact rank-and-file positions, i.e., A/C mechanic, draftsmen, storemen, motorpool
mechanic, secretaries, accounts clerk, company nurses, industrial mechanic, boiler men, laboratory technicians, payroll clerk,
welder, purchasing clerk, company drivers and electricians. It is fairly obvious that these positions cannot be considered as
supervisory positions for they do not carry the authority to act in the interest of the employer or to recommend managerial
actions. It is not decisive that these employees are monthly paid employees. Their mode of compensation is usually a matter
of convenience and does not necessarily determine the nature and character of their job.

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 misappreciates the basic antipathy between the interest of supervisors and the interest of rank-and-file employees.
Due to the irreconcilability of their interests we held in Toyota Motor Philippines v. Toyota Motors Philippines Corporation
Labor Union, "x       x       x

G.R. No. L-98050 March 17, 1994
PHILIPPINE PHOSPHATE FERTILIZER CORPORATION, petitioner,
vs.
HON. RUBEN D. TORRES, Secretary of Labor and Employment, HON. RODOLFO S. MILADO, Department of
Labor and Employment Mediator-Arbiter for Region VIII, Tacloban, City, and PHILPHOS MOVEMENT FOR
PROGRESS, INC. (PMPI), respondents.
Quiroz, Dumas & Henares Law Offices for petitioner.
Seno, Mendoza & Associates for private respondent Philphos Movement for Progress, Inc.
BELLOSILLO, J.:
PHILIPPINE PHOSPHATE FERTILIZER CORPORATION (PHILPHOS) assails the decision of the Secretary of Labor of 7
August 1990 affirming the order of the Mediator-Arbiter of 28 March 1990 which directed the immediate conduct of a
certification election among the supervisory, professional or technical, and confidential employees of petitioner corporation.
On 7 July 1989, Philphos Movement for Progress, Inc. (PMPI for brevity), filed with the Department of Labor and
Employment a petition for certification election among the supervisory employees of petitioner, alleging that as a supervisory
union duly registered with the Department of Labor and Employment it was seeking to represent the supervisory employees
of Philippine Phosphate Fertilizer Corporation.
The petition for certification election filed by PMPI was not opposed by PHILPHOS. In fact, on 11 August 1989, PHILPHOS
submitted a position paper with the Mediator-Arbiter stating that its management welcomed the creation of a supervisory
employees' union provided the necessary requisites of law were properly observed, but exempting from the union
its superintendents who were managerial and not supervisory employees as they managed a division, subdivision or section,
and were vested with powers or prerogatives to lay down and execute management policies. PHILPHOS also asserted that
its professional or technical employees  were not within the definition of supervisory employees under the Labor Code as
they were immediately under the direction and supervision of its superintendents and supervisors. Moreover, the professional
and technical employees did not have a staff of workers under them. Consequently, petitioner prayed for the exclusion of
its superintendents and  professional/technical employees  from the PMPI supervisory union.
On 13 October 1989, Mediator-Arbiter Rodolfo S. Milado issued an order directing the holding of a certification election
among the supervisory employees  of petitioner, excluding therefrom the superintendents and the professional and technical
employees. He also directed the parties to attend the pre-election conference on 19 April 1990 for the determination of the
mechanics of the election process and the qualifications and eligibility of those allowed to vote.
On 15 November 1989, PMPI filed an amended petition with the Mediator-Arbiter wherein it sought to represent not only
the supervisory employees of petitioner but also its professional/technical and confidential employees. The amended petition
was filed in view of the amendment of the PMPI Construction which included in its membership
the professional/technical  and confidential employees.
On 14 December 1989, the parties therein agreed to submit their respective position papers and to consider the amended
petition submitted for decision on the basis thereof and related documents.
On 28 March 1990, Mediator-Arbiter Milado issued an order granting the petition and directing the holding of a certification
election among the "supervisory, professional (engineers, analysts, mechanics, accountants, nurses, midwives,
etc.), technical, and confidential employees" 1 to comprise the proposed bargaining unit.
On 16 April 1990, PHILPHOS appealed the order of 28 March 1990 to the Secretary of Labor and Employment who on 7
August 1990 rendered a decision through Undersecretary Bienvenido Laguesma dismissing the appeal. PHILPHOS moved
for reconsideration but the same was denied; hence, the instant petition alleging grave abuse of discretion on the part of
public respondents in rendering the assailed rulings.
On 8 July 1991, this Court issued a temporary restraining order enjoining respondents from holding the certification election
among petitioner's supervisory, professional/technical, and confidential employees  scheduled on 12 July 1991.
There are two (2) issues raised by petitioner: (1) whether it was denied due process in the proceedings before respondent
Mediator-Arbiter; and, (2) whether its professional/technical and confidential employees  may validly join respondent PMPI
union which is composed of supervisors.
PHILPHOS claims that it was denied due process when respondent Mediator-Arbiter granted the amended petition of
respondent PMPI without according PHILPHOS a new opportunity to be heard.
We do not see it the way PHILPHOS does here. The essence of due process is simply an opportunity to be heard or, as
applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the
action or ruling complained of.2 Where, as in the instant case, petitioner PHILPHOS agreed to file its position paper with the
Mediator-Arbiter and to consider the case submitted for decision on the basis of the position papers filed by the parties, there
was sufficient compliance with the requirement of due process, as petitioner was afforded reasonable opportunity to present
its side.3 Moreover, petitioner could have, if it so desired, insisted on a hearing to confront and examine the witnesses of the
other party. But it did
not; 4 instead, it opted to submit its position paper with the Mediator-Arbiter. Besides, petitioner had all the opportunity to
ventilate its arguments in its appeal to the Secretary of Labor.
As regards the second issue, we are with petitioner that being a supervisory union, respondent PMPI cannot represent
the  professional/technical  and confidential employees  of petitioner whose positions we find to be more of the rank and file
than supervisory.
With the enactment in March 1989 of R.A. 6715, employees were thereunder reclassified into three (3) groups, namely: (a)
managerial employees, (b) supervisory employees, and (c) rank and file employees. The category of supervisory employees is
once again recognized in the present law.
Respondent PMPI is supposed to be a union of 125 supervisors. If the professional/technical employees are included as
members, and records show that they are 271 in all or much more than the supervisors, then PMPI will turn out to be a rank
and file union with the supervisors as members.
This is precisely the situation which the law prohibits. It would create an obvious conflict of views among the members, or at
least between two (2) groups of members espousing opposing interests. 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, especially where, as in the case at bar, the supervisors will be commingling with those employees whom
they directly supervise in their own bargaining unit. Members of the supervisory union might refuse to carry out disciplinary
measures against their co-member rank and file employees. 10

Article 212, par. (m), of the Labor Code, as amended, provides, that "(s)upervisory employees are those who, in the interest
of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of independent judgment." The definition of managerial employees is limited to those
having authority to hire and fire, while those who only recommend effectively the hiring or firing or transfer of personnel; are
considered closer to rank and file employees. The exclusion therefore of mid-level executives from the category of managers
has brought about a third classification, the supervisory employees. The peculiar role of supervisors is such that while they
are not managers, when they recommend action implementing management policy or ask for the discipline or dismissal of
subordinates, they identify with the interests of the employer and may act contrary to the interests of the rank and file.5
In its position paper submitted to the Mediator-Arbiter, petitioner described the positions and functions of
its professional/technical employees, (engineers, analysts, mechanics, accountants, nurses, and midwives). The guidelines,
which were not refuted by respondent PMPI, state:
. . . . Professional and Technical positions are those whose primary duty consists of the performance of
work directly related to management programs; who customarily, regularly and routinarily exercise
judgment in the application of concepts, methods, systems and procedures in their respective fields of
specialization; who regularly and directly assist a managerial and/or supervisory employee, execute
under general supervision, work along specialized or technical lines requiring special training,
experience or knowledge, or execute under general supervision special assignments and task . . . . They
are immediately under the direction and supervision of supervisors or superintendents. They have no
men under them but are regularly called upon by their supervisors or superintendents on some technical
matters.6
Supervisors have the right to form their own union or labor organization. What the law prohibits is a union whose
membership comprises of supervisors  merging with the rank and file employees  because this is where conflict of interests
may arise in the areas of discipline, collective bargaining and strikes. 11 The professional/technical employees of petitioner
therefore may join the existing rank and file  union, or form a union separate and distinct from the existing union organized
by the rank and file employees of the same company.
As to the confidential employees of the petitioner, the latter has not shown any proof or compelling reason to exclude them
from joining respondent PMPI and from participating in the certification election, unless these confidential employees are the
same professional/technical employees whom we find to be occupying rank and file positions.
WHEREFORE, the petition is GRANTED. The decision of respondent Secretary of Labor of 7 August 1990, as well as the
order of the respondent Mediator-Arbiter of 28 March 1990, is SET ASIDE. The professional/technical employees of
petitioner Philippine Phosphate Fertilizer Corporation (PHILPHOS) are declared disqualified from affiliating with respondent
Philphos Movement for Progress, Inc. (PMPI).
The Department of Labor is directed to order immediately the conduct of certification election among the supervisory
employees of petitioner, particularly excluding therefrom its professional and technical employees.
SO ORDERED.

Moreover, Herculano, A. Duhaylungsod, Personnel Officer of petitioner, attested that there was no community of interests
between the supervisors  of petitioner and the professional/technical employees; that as of 25 July 1990, personnel records
showed that there were 125 supervisors and 271  professional/technical employees; that of the 271 professional/technical
employees, 150 were directly under and being supervised by supervisors, while the rest were staff members of
superintendents.7

The certification of Personnel Officer Duhaylungsod that its  professional/technical employees  occupy positions that are non-
supervisory is evidence that said employees belong to the rank and file.8 Quite obviously, these professional/technical
employees  cannot effectively recommend managerial actions with the use of independent judgment because they are under
the supervision of superintendents and supervisors. Because it is unrefuted that these professional/technical employees  are
performing non-supervisory functions, hence considered admitted, they should be classified, at least for purposes of this case,
as rank and file employees. Consequently, these  professional/technical employees  cannot be allowed to join a union
composed of supervisors. Conversely, supervisory employees  cannot join a labor organization of employees under their
supervision but may validly form a separate organization of their own. 9 This is provided in Art. 245 of the Labor Code, as
amended by R.A. No. 6715, to wit:

. . . 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.
 On November 25, 1987, a petition for certification election was filed by the respondent union with the Department of Labor
and Employment.

On January 30, 1988, a motion to dismiss the petition for certification election was filed by Triumph International on the
grounds that the respondent union cannot lawfully represent managerial employees and that the petition cannot prosper by
virtue of the contract-bar rule. On the same grounds, the petitioner, as intervenor, filed its opposition to the petition on
February 18, 1988.

On April l3, 1988, the Labor Arbiter issued an order granting the petition for certification election and directing the holding
of a certification election to determine the sole and exclusive bargaining representative of all monthly-paid administrative,
technical, confidential and supervisory employees of Triumph International.

On appeal, the public respondent on August 24, 1988 affirmed the Labor Arbiter’s order with certain modifications as
follows:

"WHEREFORE, premises considered, the order appealed from is hereby affirmed subject to the modification in that the
subject employees sought to be represented by the petitioner union are given the option whether to join the existing
bargaining unit composed of daily paid rank-and-file employees. If they opt to join, the pertinent provision of the existing
CBA should be amended so as to include them in its coverage." (Rollo, p. 19)

On September 5, 1988, Triumph International filed a motion for reconsideration which was denied by the public respondent
in a resolution dated October 28, 1988.

The sole issue presented by the petitioner in the instant case is whether or not the public respondent gravely abused its
discretion in ordering the immediate holding of a certification election among the workers sought to be represented by the
respondent union.

The petitioner argues that the members of respondent union are managerial employees who are expressly excluded from
joining, assisting or forming any labor organization under Art. 245 of the Labor Code.
[G.R. No. 85915. January 17, 1990.]
In the determination of whether or not the members of respondent union are managerial employees, we accord due respect
PAGKAKAISA NG MGA MANGGAGAWA SA TRIUMPH INTERNATIONAL-UNITED LUMBER AND and, therefore, sustain the findings of fact made by the public respondent pursuant to the time-honored rule that findings of
GENERAL WORKERS OF THE PHILIPPINES (PMTI-ULGWF), Petitioner, v. PURA FERRER-CALLEJA, fact of quasi-judicial agencies like the Bureau of Labor Relations which are supported by substantial evidence are binding on
DIRECTOR OF THE BUREAU OF LABOR RELATIONS AND THE CONFEDERATION OF FILIPINO us and entitled to great respect considering their expertise in their respective fields. (see Phil. Airlines Employees Asso.
WORKERS (CFW), PROGRESSIVE EMPLOYEES UNION (PEU-TIPI), Respondents. (PALEA) v. Ferrer-Calleja, 162 SCRA 426 [1988]; Producers Bank of the Philippines v. National Labor Relations
Commission, G.R. No. 76001, September 5, 1988; Salvador Lacorte v. Hon. Amado G. Inciong, Et Al., G.R. No. 52034,
September 27, 1988; Johnson and Johnson Labor Union-FFW, Et. Al. v. Director of Labor Relations, G.R. No. 76427,
February 21, 1989; Teofila Arica, Et. Al. v. National Labor Relations Commission, Et Al., G.R. No. 78210, February 28,
1989; A.M. Oreta & Co. Inc. v. National Labor Relations Commission, G.R. No. 74004, August 10, 1989). According to the
Med-Arbiter, while the functions, and we may add, the titles of the personnel sought to be organized appear on paper to
involve an apparent exercise of managerial authority, the fact remains that none of them discharge said functions. The
petitioner has failed to show reversible error insofar as this finding is concerned.
DECISION
In ruling that the members of respondent union are rank-and-file and not managerial employees, the public respondent made
the following findings:
GUTIERREZ, JR., J.:
". . . (1) They do not have the power to lay down and execute management policies as they are given ready policies merely to
execute and standard practices to observe; 2) they do not have the power to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees but only to recommend for such actions as the power rests upon the personnel manager; and 3)
Once again we uphold the existing law which encourages one-union, one-company policy in this petition for certiorari with they do not have the power to effectively recommend any managerial actions as their recommendations have to pass through
prayer for preliminary injunction. The petitioner assails the resolutions of the public respondent dated August 24, 1988 and the department manager for review, the personnel manager for attestation and the general manager/president for final actions.
October 28, 1988 both ordering the holding of a certification election among certain monthly-paid employees of Triumph . . ." (At pp. 17-18, Rollo)
International Philippines, Inc. (Triumph International for brevity).
The petitioner further argues that while it has recognized those signatories and employees occupying the positions of
The petitioner is the recognized collective bargaining agent of the rank-and-file employees of Triumph International with Assistant Manager, Section Chief, Head Supervisor and Supervisor as managerial employees under the existing collective
which the latter has a valid and existing collective bargaining agreement effective up to September 24, 1989. bargaining agreement, in the event that they are declared as rank-and-file employees in the present case they are not
precluded from joining and they should join the petitioner. Section 3 of the same Act further provides that the supervisors as defined above shall not be eligible for membership in a
labor organization of employees under their supervision but may form separate organizations of their own.
We find the aforesaid contention of the petitioner meritorious in the absence of a showing that there are compelling reasons
such as the denial of the right to join the petitioner which is the certified bargaining unit to the members of respondent union With the enactment of the Labor Code (Presidential Decree No. 442 as amended), the term "supervisor" was replaced by
or that there are substantial distinctions warranting the recognition of a separate group of rank-and-file employees even as "managerial employee." Book V, Art. 212, subparagraph (k) of said Code
there is an existing bargaining agent for rank-and-file employees.
"(k) ‘Managerial Employee’ is one who is vested with powers or prerogatives to lay down and execute management policies
In the case of Philtranco Service Enterprises v. Bureau of Labor Relations, et. al., G.R. No. 85343 promulgated on June 28,
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such
1989, we stated that:
managerial actions. All employees not falling within this definition are considered rank and file employees for purposes of
this Book."cralaw virtua1aw library
"The Labor Code recognizes two (2) principal groups of employees, namely, the managerial and the rank-and-file groups.
Thus, Art. 212 (k) of the Code provides:chanrob1es virtual 1aw library
Art. 245 of the aforementioned Code prohibits managerial employees from joining, assisting or forming any labor
organization. Hence, employees who had then formed supervisory unions were classified either as managerial or rank-and-
x           x          x file depending on their functions in their respective work assignments. (Bulletin Publishing Corp. v. Sanchez, supra.)

The recent amendments to the Labor Code contain separate definitions for managerial and supervisory employees. Section 4
"(k) ‘Managerial employee’ is one who is vested with powers or prerogatives to lay down and execute management policies of Republic Act No. 6715 states that:
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such
managerial action. All employees not falling within this definition are considered rank-and-file employees for purposes of
"Section 4, Article 212 of the Labor Code of the Philippines, as amended, is further amended to read as follows:chanrob1es
this Book.
virtual 1aw library
"In implementation of the aforequoted provision of the law, Section II of Rule II, Book V of the Omnibus Rules
implementing the Labor Code did away with existing supervisory unions classifying the members either as managerial or x           x          x
rank and file employees depending on the work they perform. If they discharge managerial functions, supervisors are
prohibited from forming or joining any labor organization. If they do not perform managerial work, they may join the rank
and file union and if none exists, they may form one such rank and file organization. This rule was emphasized in the case of "(m) ‘Managerial Employee’ is one who is vested with powers or prerogatives to lay down and execute management policies
Bulletin Publishing Corp. v. Sanchez, (144 SCRA 628 [1986])." and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such management actions if the exercise of such authority is not
We have explicitly explained in the case of Franklin Baker Company of the Philippines v. Trajano, 157 SCRA 416 [1988] merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of
that the above definitions are considered rank-and-file employees for purposes of this Book."

"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])."
The public respondent, in its factual findings, found that the supervisory employees sought to be represented by the
respondent union are not involved in policy-making and their recommendatory powers are not even instantly effective since
the same are still subject to review by at least three managerial heads (department manager, personnel manager and general
manager) before final action can be taken. Hence, it is evidently settled that the said employees do not possess a managerial
status. The fact that their work designations are either managers or supervisors is of no moment considering that it is the
nature of their functions and not the said nomenclatures or titles of their jobs which determines their statuses (see Engineering
Equipment, Inc. v. National Labor Relations Commission, 133 SCRA 752 [1984] citing National Waterworks and Sewerage
Authority v. NWSA Consolidated Unions, 11 SCRA 766 [1964]).
Under the old Industrial Peace Act (Republic Act No. 875), the term "supervisors" had the following definition, to wit:
"Sec. 2. Definitions — As used in this Act —
Section 18 of the same Act retains the provision on the ineligibility of managerial employees to join any labor organization.
However, the right of supervisory employees to form their own union is revived under the said section which states, in part,
to wit:
". . . 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."
Thus, the right of supervisory employees to organize under the Industrial Peace Act is once more recognized under the
present amendments to the Labor Code. (see Adamson & Adamson, Inc., v. The Court of Industrial Relations, 127 SCRA 268
[1984]). In the absence of any grave abuse of discretion on the part of the public respondent as to the status of the members of
the respondent union, we adopt its findings that the employees sought to be represented by the respondent union are rank-
and-file employees.
There is no evidence in the records which sufficiently distinguishes and clearly separates the group of employees sought to be
represented by the private respondents into managerial and supervisory on one hand or supervisory and rank-and-file on the
other. The ‘respondents’ pleadings do not show the distinctions in functions and responsibilities which differentiate the
managers from the supervisors and sets apart the rank-and-file from either the managerial or supervisory groups. As a matter
of fact, the formation of a supervisor’s union was never before the Labor Arbiter and the Bureau of Labor Relations and
neither is the issue before us. We, therefore, abide by the public respondent’s factual findings in the absence of a showing of
grave abuse of discretion.

x           x          x
(k) ‘Supervisor’ means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall,
discharge, assign, recommend, or discipline, other employees, or responsibly to direct them, and to adjust their grievances, or
effectively to recommend such acts if, in connection with the foregoing, the exercise of such authority is not of a merely
routinary or clerical nature but requires the use of independent judgment."
In the case at bar, there is no dispute that the petitioner is the exclusive bargaining representative of the rank-and-file
employees of Triumph International. A careful examination of the records of this case reveals no evidence that rules out the
commonality of interests among the rank-and-file members of the petitioner and the herein declared rank-and-file employees
who are members of the respondent union. Instead of forming another bargaining unit, the law requires them to be members
of the existing one. The ends of unionism are better served if all the rank-and-file employees with substantially the same
interests and who invoke their right to self-organization are part of a single unit so that they can deal with their employer with
just one and yet potent voice. The employees’ bargaining power with management is strengthened thereby. Hence, the
circumstances of this case impel us to disallow the holding of a certification election among the workers sought to be
represented by the respondent union for want of proof that the right of said workers to self-organization is being suppressed.
Once again we enunciate that the proliferation of unions in an employer unit is discouraged as a matter of policy unless
compelling reasons exist which deny a certain and distinct class of employees the right to self-organization for purposes of
collective bargaining. (see General Rubber & Footwear Corporation v. Bureau of Labor Relations, 155 SCRA 283 [1987]).
Anent the correlative issue of whether or not the contract-bar rule applies to the present case, Rule V, Section 3, Book V of
the Implementing Rules and Regulations of the Labor Code is written in plain and simple terms. It provides in effect that if a
collective bargaining agreement validly exists, a petition for certification election can only be entertained within sixty (60)
days prior to the expiry date of said agreement. Respondent union’s petition for certification election was filed on November
25, 1987. At the time of the filing of the said petition, a valid and existing CBA was present between petitioner and Triumph
International. The CBA was effective up to September 24, 1989. There is no doubt that the respondent union’s CBA
constituted a bar to the holding of the certification election as petitioned by the respondent union with public Respondent.
(see Associated Trade Unions [ATU] v. Trajano, 162 SCRA 318 [1988], Federation of Democratic Trade Union v.
Pambansang Kilusan ng Paggawa, 156 SCRA 482 [1987]); Tanduay Distillery Labor Union v. National Labor Relations
Commission, 149 SCRA 470 [1987]). The members of the respondent union should wait for the proper time.
The CBA in this case expired on September 24, 1989. If a new CBA with the same provisions as the old one has been
executed, its terms should be amended so as to conform to the tenor of this decision.
WHEREFORE, in view of the foregoing, the assailed resolutions of the public respondent dated August 24, 1988 and
October 28, 1988 are hereby SET ASIDE. The restraining order dated January 11, 1989 issued by the Court is made
permanent.
SO ORDERED.
2. Excluded Employees
a. Managerial Employees; Arts. 255
ART. 255. [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 the collective bargaining unit of the rank-and-file employees but may join,
assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union
and the supervisors' union operating within the same establishment may join the same federation or national union.
G.R. No. 122226 March 25, 1998
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), Petitioner, vs. HON. BIENVENIDO E. LAGUESMA and
PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.
 
MENDOZA, J.:
Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification
election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the
med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial
employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which
provides:
Ineligibility of managerial employees to join any labor organization;  right of supervisory employees. - Managerial employees
are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own.
Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in the order dated
September 22, 1995, of the Secretary of Labor and Employment. Its petition was dismissed by the Third Division for lack of
showing that respondent committed grave abuse of discretion. But petitioner filed a motion for reconsideration, pressing for
resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees to be
ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution which provides:
The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies
for purposes not contrary to law shall not be abridged.
For this reason, the petition was referred to the Court en banc.
The Issues in this Case
Two questions are presented by the petition: (1) whether the route managers at Pepsi-Cola Products Philippines, Inc. are
managerial employees and (2) whether Art. 245, insofar as it prohibits managerial employees from forming, joining or
assisting labor unions, violates Art. III, 8 of the Constitution.
In resolving these issues it would be useful to begin by defining who are "managerial employees" and considering the types
of "managerial employees."
Types of Managerial Employees
The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational resources." 1 As
a class, managers constitute three levels of a pyramid:
Top management
Middle Management
First-Line Management (also called Supervisor)
Operatives or Operating Employees
FIRST-LINE MANAGERS - The lowest level in an organization at which individuals are responsible for the work of others
is called  first-line or first-level management. First-line managers direct operating employees only; they do not supervise other
managers. Examples of first-line managers are the "foreman" or production supervisor in a manufacturing plant, the
technical supervisor in a research department, and the clerical supervisor in a large office.  First-level managers are often
called supervisors.
MIDDLE MANAGERS - The term middle management can refer to more than one level in an organization. Middle
managers direct the activities of other managers and sometimes also those of operating employees. Middle managers'
principal responsibilities are to direct the activities that implement their organizations' policies and to balance the demands of
their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an example of a middle
manager.
TOP MANAGERS - Composed of a comparatively small group of executives, top management is responsible for the overall
management of the organization. It establishes operating policies and guides the organization's interactions with its
environment. Typical titles of top managers are "chief executive officer," "president," and "senior vice-president." Actual
titles vary from one organization to another and are not always a reliable guide to membership in the highest management
classification. 2
As can be seen from this description, a distinction exists between those who have the authority to devise, implement and
control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that such
policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What
distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such rank-
and-file employees.
"Managerial employees" may therefore be said to fall into two distinct categories: the "managers"  per se, who compose the
former group described above, and the "supervisors" who form the latter group. Whether they belong to the first or the second
category, managers, vis-a-vis employers, are, likewise, employees. 3
The first question is whether route managers are managerial employees or supervisors.
Previous Administrative Determinations of
the Question Whether Route Managers
are Managerial Employees
It appears that this question was the subject of two previous determinations by the Secretary of Labor and Employment, in
accordance with which this case was decided by the med-arbiter.
In Case No. OS-MA-10-318-91, entitled Worker's Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines, Inc.,
decided on November 13, 1991, the Secretary of Labor found:
We examined carefully the pertinent job descriptions of the subject employees and other documentary evidence on
record vis-a-vis paragraph (m), Article 212 of the Labor Code, as amended, and we find that only those employees occupying
the position of route manager and accounting manager are managerial employees. The rest i.e. quality control manager,
yard/transport manager and warehouse operations manager are supervisory employees.
To qualify as managerial employee, there must be a clear showing of the exercise of managerial attributes under paragraph
(m), Article 212 of the Labor Code as amended. Designations or titles of positions are not controlling. In the instant case,
nothing on record will support the claim that the quality control manager, yard/transport manager and warehouse operations
manager are vested with said attributes. The warehouse operations manager, for example, merely assists the plant finance
manager in planning, organizing, directing and controlling all activities relative to development and implementation of an
effective management control information system at the sale offices. The exercise of authority of the quality control manager,
on the other hand, needs the concurrence of the manufacturing manager.
As to the route managers and accounting manager, we are convinced that they are managerial employees. Their job
descriptions clearly reveal so.
On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92. entitled In Re: Petition for Direct Certification
and/or Certification Election-Route Managers/Supervisory Employees of Pepsi-Cola Products Phils.  Inc., as follows:
The issue brought before us is not of first impression. At one time, we had the occasion to rule upon the status of route
manager in the same company  vis a vis the issue as to whether or not it is supervisory employee or a managerial employee. In
the case of Workers Alliance Trade Unions (WATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-10-318-91 ), 15
November 1991, we ruled that a route manager is a managerial employee within the context of the definition of the law, and
hence, ineligible to join, form or assist a union. We have once more passed upon the logic of our Decision aforecited in the
light of the issues raised in the instant appeal, as well as the available documentary evidence on hand, and have come to the
view that there is no cogent reason to depart from our earlier holding. Route Managers are, by the very nature of their
functions and the authority they wield over their subordinates, managerial employees. The prescription found in Art. 245 of
the Labor Code, as amended therefore, clearly applies to them. 4
Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission, 5 however, petitioner argues that these
previous administrative determinations do not have the effect of res judicata in this case, because "labor relations
proceedings" are "non-litigious and summary in nature without regard to legal technicalities." 6 Nasipit Lumber Co. involved
a clearance to dismiss an employee issued by the Department of Labor. The question was whether in a subsequent proceeding
for illegal dismissal, the clearance was res judicata. In holding it was not, this Court made it clear that it was referring to
labor relations proceedings of a non-adversary character, thus:
The requirement of a clearance to terminate employment was a creation of the Department of labor to carry out the Labor
Code provisions on security of tenure and termination of employment. The proceeding subsequent to the filing of an
application for clearance to terminate employment was outlined in Book V, Rule XIV of the Rules and Regulations
Implementing the Labor Code. The fact that said rule allowed a procedure for the approval of the clearance with or without
the opposition of the employee concerned (Secs. 7 & 8), demonstrates the non-litigious and summary nature of the
proceeding. The clearance requirement was therefore necessary only as an expeditious shield against arbitrary dismissal
without the knowledge and supervision of the Department of Labor. Hence, a duly approved clearance implied that the
dismissal was legal or for cause (Sec. 2). 7
But the doctrine of res judicata certainly applies to adversary administrative proceedings. As early as 1956, in Brillantes
v. Castro, 8 we sustained the dismissal of an action by a trial court on the basis of a prior administrative determination of the
same case by the Wage Administration Service, applying the principle of res judicata. Recently, in Abad v.  NLRC 9 we
applied the related doctrine of stare decisis in holding that the prior determination that certain jobs at the Atlantic Gulf and
Pacific Co., were project employments was binding in another case involving another group of employees of the same
company. Indeed, in Nasipit Lumber Co., this Court clarified toward the end of its opinion that "the doctrine of res
judicata applies . . . to judicial or quasi judicial proceedings and not to the exercise of administrative powers." 10 Now
proceedings for certification election, such as those involved in Case No. OS-M-A-10-318-91 and Case No. OS-A-3-71-92,
are quasi judicial in nature and, therefore, decisions rendered in such proceedings can attain finality. 11
Thus, we have in this case an expert's view that the employees concerned are managerial employees within the purview of
Art. 212 which provides:
(m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of
the above definitions are considered rank-and-file employees for purposes of this Book.
At the very least, the principle of finality of administrative determination compels respect for the finding of the Secretary of
Labor that route managers are managerial employees as defined by law in the absence of anything to show that such
determination is without substantial evidence to support it. Nonetheless, the Court, concerned that employees who are
otherwise supervisors may wittingly or unwittingly be classified as managerial personnel and thus denied the right of self-
organization, has decided to review the record of this case.
DOLE's Finding that Route Managers are
Managerial Employees Supported by
Substantial Evidence in the Record
The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by substantial evidence. The of their respective sales teams. Such management necessarily involves the planning, direction, operation and evaluation of
nature of the job of route managers is given in a four-page pamphlet, prepared by the company, called "Route Manager their individual teams and areas which the work of supervisors does not entail.
Position Description," the pertinent parts of which read:
The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve, but goes
A. BASIC PURPOSE far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those above them.
They are not mere functionaries with simple oversight functions but business administrators in their own right. An idea of the
role of route managers as managers  per se can be gotten from a memo sent by the director of metro sales operations of
A Manager achieves objectives through others.
respondent company to one of the route managers. It reads: 13

As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful
03 April 1995
MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF YOUR PEOPLE.

These then are your functions as Pepsi-Cola Route Manager. Within these functions - managing your job and managing your To : CESAR T . REOLADA
people - you are accountable to your District Manager for the execution and completion of various tasks and activities which
will make it possible for you to achieve your sales objectives. From : REGGIE M.  SANTOS

B. PRINCIPAL ACCOUNTABILITIES Subj : SALARY INCREASE

1.0 MANAGING YOUR JOB Effective 01 April 1995, your basic monthly salary of P11,710 will be increased to P12,881 or an increase of 10%. This
The Route Manager is accountable for the following: represents the added managerial responsibilities you will assume due to the recent restructuring and streamlining of Metro
1.1 SALES DEVELOPMENT Sales Operations brought about by the continuous losses for the last nine (9) months.
1.1.1 Achieve the sales plan.
1.1.2 Achieve all distribution and new account objectives.
Let me remind you that for our operations to be profitable, we have to sustain the intensity and momentum that your group
1.1.3 Develop new business opportunities thru personal contacts with dealers. and yourself have shown last March. You just have to deliver the desired volume targets, better negotiated concessions,
1.1.4 Inspect and ensure that all merchandizing [sic] objectives are achieved in all outlets.
rationalized sustaining deals, eliminate or reduced overdues, improved collections, more cash accounts, controlled operating
1.1.5 maintain and improve productivity of all cooling equipment and kiosks. expenses, etc. Also, based on the agreed set targets, your monthly performance will be closely monitored.
1.1.6 Execute and control all authorized promotions.
1.1.7 Develop and maintain dealer goodwill.
1.1.8 Ensure all accounts comply with company suggested retail pricing. You have proven in the past that your capable of achieving your targets thru better planning, managing your group as a
1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to maximize utilization of fighting team, and thru aggressive selling.  I am looking forward to your success and I expect that you just have to exert your
resources. doubly best in turning around our operations from a losing to a profitable one!
1.2 Administration
1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles before check-in. Happy Selling!!
1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an accurate and timely
basis.
1.2.3 Ensure proper implementation of the various company policies and procedures incl. but not limited to shakedown; route (Sgd.) R.M. SANTOS
shortage; progressive discipline; sorting; spoilages; credit/collection; accident; attendance.
1.2.4 Ensure collection of receivables and delinquent accounts. The plasticized card given to route managers, quoted in the separate opinion of Justice Vitug, although entitled "RM's Job
2.0 MANAGING YOUR PEOPLE Description," is only a summary of performance standards. It does not show whether route managers are managers  per se or
The Route Manager is accountable for the following: supervisors. Obviously, these performance standards have to be related to the specific tasks given to route managers in the
2.1 Route Sales Team Development four-page "Route Manager Position Description," and, when this is done, the managerial nature of their jobs is fully revealed.
2.1.2 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least 3 days a week, to be Indeed, if any, the card indicates the great latitude and discretion given to route managers - from servicing and enhancing
supported by required route ride documents/reports & back check/spot check at least 2 days a week to be supported by company goodwill to supervising and auditing accounts, from trade (new business) development to the discipline, training
required documents/reports. and monitoring of performance of their respective sales teams, and so forth, - if they are to fulfill the company's expectations
2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of effective sales and in the "key result areas."
merchandizing [sic] techniques of the salesmen and helpers. Conduct group training at least 1 hour each week on a designated
day and of specific topic.
2.2 Code of Conduct Article 212(m) says that "supervisory employees are those who, in the interest of the employer, effectively recommend such
2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the universal standards of managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of
unquestioned business independent judgment." Thus, their only power is to recommend. Certainly, the route managers in this case more than merely
ethics. 12 recommend effective management action. They perform operational, human resource, financial and marketing functions for
the company, all of which involve the laying down of operating policies for themselves and their teams. For example, with
respect to marketing, route managers, in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are
Earlier in this opinion, reference was made to the distinction between managers per se (top managers and middle managers) charged, among other things, with expanding the dealership base of their respective sales areas, maintaining the goodwill of
and supervisors (first-line managers). That distinction is evident in the work of the route managers which sets them apart current dealers, and distributing the company's various promotional items as they see fit. It is difficult to see how supervisors
from supervisors in general. Unlike supervisors who basically merely direct operating employees in line with set tasks can be given such responsibility when this involves not just the routine supervision of operating employees but the protection
assigned to them, route managers are responsible for the success of the company's main line of business through management and expansion of the company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire people (the evidence shows that they only
"recommended" or "endorsed" the taking of disciplinary action against certain employees), this is because this
is a function of the Human Resources or Personnel Department of the company.  14 And neither should it be presumed that just
because they are given set benchmarks to observe, they are ipso facto supervisors. Adequate control methods (as embodied in
such concepts as "Management by Objectives [MBO]" and "performance appraisals") which require a delineation of the
functions and responsibilities of managers by means of ready reference cards as here, have long been recognized in
management as effective tools for keeping businesses competitive.
This brings us to the second question, whether the first sentence of Art. 245 of the Labor Code, prohibiting managerial
employees from forming, assisting or joining any labor organization, is constitutional in light of Art. III, 8 of the Constitution
which provides:
The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies
for purposes not contrary to law shall not be abridged.
As already stated, whether they belong to the first category (managers  per se) or the second category (supervisors), managers
are employees. Nonetheless, in the United States, as Justice Puno's separate opinion notes, supervisors have no right to form
unions. They are excluded from the definition of the term "employee" in 2(3) of the Labor-Management Relations Act of
1947. 15 In the Philippines, the question whether managerial employees have a right of self-organization has arisen with
respect to first-level managers or supervisors, as shown by a review of the course of labor legislation in this country.
Right of Self-Organization of Managerial
Employees under Pre-Labor Code Laws
Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the Industrial Peace Act
(R.A. No. 875).
However, in Caltex Filipino Managers and Supervisors Association v. Court of Industrial Relations, 19 the right of all
managerial employees to self-organization was upheld as a general proposition, thus:
It would be going too far to dismiss summarily the point raised by respondent Company - that of the alleged identity of
interest between the managerial staff and the employing firm. That should ordinarily be the case, especially so where the
dispute is between management and the rank and file. It does not necessarily follow though that what binds the managerial
staff to the corporation forecloses the possibility of conflict between them. There could be a real difference between what the
welfare of such group requires and the concessions the firm is willing to grant. Their needs might not be attended to then in
the absence of any organization of their own. Nor is this to indulge in empty theorizing. The record of respondent Company,
even the very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the impression is difficult
to erase that an alien firm failed to manifest sympathy for the claims of its Filipino executives. To predicate under such
circumstances that agreement inevitably marks their relationship, ignoring that discord would not be unusual, is to fly in the
face of reality.
. . . The basic question is whether the managerial personnel can organize. What respondent Company failed to take into
account is that the right to self-organization is not merely a statutory creation. It is fortified by our Constitution. All are free
to exercise such right unless their purpose is contrary to law. Certainly it would be to attach unorthodoxy to, not to say an
emasculation of, the concept of law if managers as such were precluded from organizing. Having done so and having been
duly registered, as did occur in this case, their union is entitled to all the rights under Republic Act No. 875. Considering what
is denominated as unfair labor practice under Section 4 of such Act and the facts set forth in our decision, there can be only
one answer to the objection raised that no unfair labor practice could be committed by respondent Company insofar as
managerial personnel is concerned. It is, as is quite obvious, in the negative. 20
Actually, the case involved front-line managers or supervisors only, as the plantilla of employees, quoted in the main
opinion, 21 clearly indicates:
CAFIMSA members holding the following Supervisory Payroll Position Title are Recognized by the Company

In accordance with the general definition above, this law defined "supervisor" as follows:
Payroll Position Title
Assistant to Mgr. - National Acct. Sales
Sec. 2. . . . Jr. Sales Engineer
Retail Development Asst.
(k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall, Staff Asst. - 0 Marketing
discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievances, or Sales Supervisor
effectively to recommend such acts, if, in connection with the foregoing, the exercise of such authority is not of a merely Supervisory Assistant
routinary or clerical nature but requires the use of independent judgment. 16 Jr. Supervisory Assistant
Credit Assistant
Lab. Supvr. - Pandacan
The right of supervisors to form their own organizations was affirmed: Jr. Sales Engineer B
Operations Assistant B
Sec. 3. Employees' Right to Self-Organization. - Employees shall have the right to self-organization and to form, join or assist Field Engineer
labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own Sr. Opers. Supvr. - MIA A/S
choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid and protection. Purchasing Assistant
Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their Jr. Construction Engineer
supervision but may form separate organizations of their own. 17 Sr. Sales Supervisor
Deport Supervisor A
Terminal Accountant B
For its part, the Supreme Court upheld in several of its decisions the right of supervisors to organize for purposes of labor Merchandiser
relations. 18 Dist. Sales Prom. Supvr.
Instr. - Merchandising
Although it had a definition of the term "supervisor," the Industrial Peace Act did not define the term "manager." But, using Asst. Dist. Accountant B
the commonly-understood concept of "manager," as above stated, it is apparent that the law used the term "supervisors" to Sr. Opers. Supervisor
refer to the sub-group of "managerial employees" known as front-line managers. The other sub-group of "managerial Jr. Sales Engineer A
employees," known as managers  per se, was not covered. Asst. Bulk Ter. Supt.
Sr. Opers. Supvr.
Credit Supervisor A
Asst. Stores Supvr. A
Ref. Supervisory Draftsman
Refinery Shift Supvr. B
Asst. Supvr. A - Operations (Refinery)
Refinery Shift Supvr. B
Asst. Lab. Supvr. A (Refinery)
St. Process Engineer B (Refinery)
Asst. Supvr. A - Maintenance (Refinery)
Asst. Supvr. B - Maintenance (Refinery)
Supervisory Accountant (Refinery)
Communications Supervisor (Refinery)
Finally, also deemed included are all other employees excluded from the rank and file unions but not classified as
managerial or otherwise excludable by law or applicable judicial precedents.
Right of Self-Organization of Managerial
Employees under the Labor Code
Thus, the dictum in the Caltex case which allowed at least for the theoretical unionization of top and middle managers by
assimilating them with the supervisory group under the broad phrase "managerial personnel," provided the lynchpin for later
laws denying the right of self-organization not only to top and middle management employees but to front line managers or
supervisors as well. Following the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the
distinction between the first and second sub-groups of managerial employees. Instead of treating the terms "supervisor" and
"manager" separately, the law lumped them together and called them "managerial employees," as follows:
Art. 212. Definitions . . . .
(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this definition are considered rank and file employees for purposes of
this Book. 22
The definition shows that it is actually a combination of the commonly understood definitions of both groups of managerial
employees, grammatically joined by the phrase "and/or."
This general definition was perhaps legally necessary at that time for two reasons. First, the 1974 Code denied supervisors
their right to self-organize as theretofore guaranteed to them by the Industrial Peace Act. Second, it stood the dictum in the
Caltex case on its head by prohibiting all types of managers from forming unions. The explicit general prohibition was
contained in the then Art. 246 of the Labor Code.
The practical effect of this synthesis of legal concepts was made apparent in the Omnibus Rules Implementing the Labor
Code which the Department of Labor promulgated on January 19, 1975. Book V, Rule II, 11 of the Rules provided:
Supervisory unions and unions of security guards to cease operation. - All existing supervisory unions and unions of security
guards shall, upon the effectivity of the Code, cease to operate as such and their registration certificates shall be deemed
automatically canceled. However, existing collective agreements with such unions, the life of which extends beyond the date
of effectivity of the Code, shall be respected until their expiry date insofar as the economic benefits granted therein are
concerned.
Members of supervisory unions who do not fall within the definition of managerial employees shall become eligible to join or
assist the rank and file labor organization, and if none exists, to form or assist in the forming of such rank and file
organization. The determination of who are managerial employees and who are not shall be the subject of negotiation
between representatives of the supervisory union and the employer. If no agreement is reached between the parties, either or
both of them may bring the issue to the nearest Regional Office for determination.
The Department of Labor continued to use the term "supervisory unions" despite the demise of the legal definition of
"supervisor" apparently because these were the unions of front line managers which were then allowed as a result of the
statutory grant of the right of self-organization under the Industrial Peace Act. Had the Department of Labor seen fit to
similarly ban unions of top and middle managers which may have been formed following the dictum in Caltex, it obviously
would have done so. Yet it did not, apparently because no such unions of top and middle managers really then existed.
Real Intent of the 1986 Constitutional Commission
This was the law as it stood at the time the Constitutional Commission considered the draft of Art. III, 8. Commissioner
Lerum sought to amend the draft of what was later to become Art. III, 8 of the present Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert between the words "people" and "to" the
following: WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS. In other words, the section will
now read as follows: "The right of the people WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations, unions, or societies for purposes not contrary to law shall not be abridged." 23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to form associations is granted to all persons whether or not they are
employed in the government. Under that provision, we allow unions in the government, in government-owned and controlled
corporations and in other industries in the private sector, such as the Philippine Government Employees' Association, unions
in the GSIS, the SSS, the DBP and other government-owned and controlled corporations. Also, we have unions of
supervisory employees and of security guards. But what is tragic about this is that after the 1973 Constitution was approved
and in spite of an express recognition of the right to organize in P.D. No. 442, known as the Labor Code, the right of
government workers, supervisory employees and security guards to form unions was abolished.
And we have been fighting against this abolition. In every tripartite conference attended by the government, management and
workers, we have always been insisting on the return of these rights. However, both the government and employers opposed
our proposal, so nothing came out of this until this week when we approved a provision which states:
Notwithstanding any provision of this article, the right to self-organization shall not be denied to government employees.
We are afraid that without any corresponding provision covering the private sector, the security guards, the supervisory
employees or majority employees [sic] will still be excluded, and that is the purpose of this amendment.
I will be very glad to accept any kind of wording as long as it will amount to absolute recognition of private sector
employees, without exception, to organize.
THE PRESIDENT. What does the Committee say?
FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by Commissioner Rodrigo is well-taken. Perhaps,
we can lengthen this a little bit more to read: "The right of the people WHETHER UNEMPLOYED OR EMPLOYED BY
STATE OR PRIVATE ESTABLISHMENTS.
I want to avoid also the possibility of having this interpreted as applicable only to the employed.
MR. DE LOS REYES. Will the proponent accept an amendment to the amendment, Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the right of the employees in the private sector is recognized. 24
Lerum thus anchored his proposal on the fact that (1) government employees, supervisory employees, and security guards,
who had the right to organize under the Industrial Peace Act, had been denied this right by the Labor Code, and (2) there was
a need to reinstate the right of these employees. In consonance with his objective to reinstate the right of government,
security, and supervisory employees to organize, Lerum then made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation with several Members of this Commission, my amendment will
now read as follows: "The right of the people INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE
SECTORS to form associations, unions, or societies for purposes not contrary to law shall not be abridged. In proposing that
amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished,
which read:
Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises
of the employers shall not be eligible for membership in a labor organization.
Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved. 25
The question is what Commissioner Lerum meant in seeking to "automatically abolish" the then Art. 246 of the Labor Code.
Did he simply want "any kind of wording as long as it will amount to absolute recognition of private sector employees,
without exception, to organize"? 26 Or, did he instead intend to have his words taken in the context of the cause which moved
him to propose the amendment in the first place, namely, the denial of the right of supervisory employees to organize,
because he said, "We are afraid that without any corresponding provision covering the private sector, security guards,
supervisory employees or majority [of] employees will still be excluded, and that is the purpose of this amendment"? 27
It would seem that Commissioner Lerum simply meant to restore the right of supervisory employees to organize. For even
though he spoke of the need to "abolish" Art. 246 of the Labor Code which, as already stated, prohibited "managerial
employees" in general from forming unions, the fact was that in explaining his proposal, he repeatedly referred to
"supervisory employees" whose right under the Industrial Peace Act to organize had been taken away by Art. 246. It is
noteworthy that Commissioner Lerum never referred to the then definition of "managerial employees" in Art. 212(m) of the
Labor Code which put together, under the broad phrase "managerial employees," top and middle managers and supervisors.
Instead, his repeated use of the term "supervisory employees," when such term then was no longer in the statute books,
suggests a frame of mind that remained grounded in the language of the Industrial Peace Act.
Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all managerial employees to organize, despite the
fact that the Industrial Peace Act did not expressly provide for the right of top and middle managers to organize. If Lerum
was aware of the Caltex dictum, then his insistence on the use of the term "supervisory employees" could only mean that he
was excluding other managerial employees from his proposal. If, on the other hand, he was not aware of the Caltex statement
sustaining the right to organize to top and middle managers, then the more should his repeated use of the term "supervisory
employees" be taken at face value, as it had been defined in the then Industrial Peace Act.
At all events, that the rest of the Commissioners understood his proposal to refer solely to supervisors and not to other
managerial employees is clear from the following account of Commissioner Joaquin G. Bernas, who writes:
In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R. Lerum explained that the modification
included three categories of workers: (1) government employees, (2) supervisory employees, and (3) security guards. Lerum
made of record the explicit intent to repeal provisions of P.D. 442, the Labor Code. The provisions referred to were:
Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises
of the employers shall not be eligible for membership in a labor organization.
Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. 28
Implications of the Lerum Proposal
In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by including labor unions in the guarantee of
organizational right should be taken in the context of statements that his aim was the removal of the statutory ban against
security guards and supervisory employees joining labor organizations. The approval by the Constitutional Commission of
his proposal can only mean, therefore, that the Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. By implication, no similar absolute
constitutional right to organize for labor purposes should be deemed to have been granted to top-level and middle managers.
As to them the right of self-organization may be regulated and even abridged conformably to Art. III, 8.
Constitutionality of Art.  245
Finally, the question is whether the present ban against managerial employees, as embodied in Art. 245 (which superseded
Art. 246) of the Labor Code, is valid. This provision reads:
Art. 245. Ineligibility of managerial employees to join any labor organization;  right of supervisory employees. - Managerial
employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations
of their own. 29
This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise known as the Herrera-
Veloso Law. Unlike the Industrial Peace Act or the provisions of the Labor Code which it superseded, R.A. No. 6715
provides separate definitions of the terms "managerial" and "supervisory employees," as follows:
Art. 212. Definitions. . . .
(m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of
the above definitions are considered rank-and-file employees for purposes of this Book.
Although the definition of "supervisory employees" seems to have been unduly restricted to the last phrase of the definition
in the Industrial Peace Act, the legal significance given to the phrase "effectively recommends" remains the same. In fact, the
distinction between top and middle managers, who set management policy, and front-line supervisors, who are merely
responsible for ensuring that such policies are carried out by the rank and file, is articulated in the present definition.  30 When
read in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the intent of the
Constitutional Commission in framing Art. III, 8 of the fundamental law.
Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial employees forming a union.
The right guaranteed in Art. III, 8 is subject to the condition that its exercise should be for purposes "not contrary to law." In
the case of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor
organizations. As Justice Davide, Jr., himself a constitutional commissioner, said in his  ponencia  in Philips Industrial
Development, Inc.  v.  NLRC: 31
In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are
confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs
between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions,
they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial
functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist
or joint a labor union equally applies to them.
In Bulletin Publishing Co., Inc. v. Hon.  Augusto Sanchez, this Court elaborated on this rationale, thus:
. . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be
affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests.
The Union can also become company-dominated with the presence of managerial employees in Union membership. 32
To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to organize. But the same
reason for denying them the right to organize justifies even more the ban on managerial employees from forming unions.
After all, those who qualify as top or middle managers are executives who receive from their employers information that not
only is confidential but also is not generally available to the public, or to their competitors, or to other employees. It is hardly
necessary to point out that to say that the first sentence of Art. 245 is unconstitutional would be to contradict the decision in
that case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
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.
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 It is likewise stressed that officials of both the PCLU and PEUP are top ranking officers of UOEF, the federation
membership in a labor organization of the rank and file employees but may join, assist or form separate labor of supervisors' union, to wit:
organization of their own.

POSITION IN RANK AND FILE POSITION IN FEDERATION UNION

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. 1. Rogelio de la Cruz PCLU-President General Vice President
2. Felix Gatela PEUP-President General Treasurer
xxx     xxx     xxx
3. Carlito Epino PCLU Board Member Educational Research Director
. . . 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 xxx     xxx     xxx
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
The respondent supervisory union could do indirectly what it could not do directly as the simple expedient of
grounds. . . . (in this case, the private respondent herein) remains to be a legitimate labor organization.1
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
On April 8, 1991, the Secretary of Labor and Employment, through the Office of the Solicitor General, sent in a Comment, organization of the rank and file employees."4
alleging inter alia, that:
On August 6, 1991, the Secretary of Labor and Employment filed a Rejoinder, claiming thus:
. . . 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
. . . an employer has no legal standing to question the validity of a certification election.
have been violated. The Order of the Representation Officer is "interlocutory" and not appealable. . . .

. . . For this reason, the Supreme Court has consistently held that, as a rule, a certification election is the sole and
. . . until and unless there is a final order cancelling its certificate of registration or charter certificate, a labor
exclusive concern of the employees and that the employer is definitely an intruder or a mere bystander
organization remains to be a legitimate labor organization entitled to exercised all the rights and duties accorded to
(Consolidated Farms vs. Noriel, L-47752, July 31, 1978, 84 SCRA 469; Filipino Metals Corporation vs. Ople, L-
it by the Labor Code including the right to be certified as a bargaining representative. . . .
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].
. . . 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. . . .
xxx     xxx     xxx

Art. 245 of the New Labor Code does not preclude the supervisor's union and the rank-and-file union
In Adamson & Adamson,  Inc. vs. CIR No. L-35120, January 31, 1984, 127 SCRA 268, the Supreme Court (then
from being affiliated with the same federation.
dealing with the interpretation of Section 3 of the Industrial Peace Act, from which Section 245 of the Labor Code
was derived) grappled with the issue in the case at bar. It held that,
xxx     xxx     xxx
There is nothing in the provisions of the Industrial Peace Act which provides that a duly registered local
A federation of local union is not the labor organization referred to in Article 245 but only becomes entitled to all union affiliating with a national union or federation loses its legal personality, or its independence.
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
xxx     xxx     xxx
supervisory employees in a labor union (at the company level) of the rank and file. . . .

However, there is absolutely nothing in the Labor Code that prohibits a federation from representing or exercising
. . . In other words, the affiliation of the supervisory employee's union with the same federation with which the
influence over its affiliates. On the contrary, this is precisely the reason why federations are formed and are
rank and file employees union is affiliated did not make the supervisory employees members of the rank and file
allowed by law to exist.5
employee's union and vice versa.2 . . .

On November 8, 1991, the Union also filed a Rejoinder.

PEPSI, in its Reply dated May 7, 1991, asserted:

On December 9, 1991, the Court resolved to DISMISS the case for "failure to sufficiently show that the questioned judgment
It is our humble contention that a final determination of the Petition to Set-Aside, Cancel, Revoke Charter Union
is tainted with grave abuse of discretion."
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 In a Resolution dated March 2, 1992, the Second Division of the Court resolved to grant the motion for reconsideration
interposed on January 28, 1992.
On June 7, 1991, petitioner again filed a Supplemental Reply stressing:
G. R. No. 103300
What are assailed in this case is Med-Arbiter Order dated May 23, 1991 and the Decision and Order of the Secretary of Labor 16. Deodoro Ramos Maintenance Manager
and Employment, dated October 4, 1991 and December 12, 1991, respectively.

The decretal portion of the Med-Arbiter Order under attack, reads: 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.

WHEREFORE, premises considered, an order is hereby issued:

On October 4, 1991, the Secretary modified the appealed decision, ruling thus:

1. Dismissing MED ARB ROX CASE NO. R1000-919104-RU-012 and R1000-9102-RU-008 for lack of merit;
and
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:
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.

1. Cagayan de Oro Pepsi-Cola Supervisors Union (U.O.E.P.)

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:
2. No union.
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT PRIVATE
The parties are directed to attend a pre-election conference on June 10, 1991, 2:30 p.m. at the Regional Office to RESPONDENT'S OFFICERS AND MEMBERS ARE NOT MANAGERIAL EMPLOYEES;
determine the qualification of the voters and to thresh out the mechanics of the election. Respondent/employer is
directed to submit five (5) copies of the names of the rank and file workers taken from the payroll on October 1-31,
1991; alphabetically arranged (sic) indicating their names and positions and dates of employment and to bring the PRIVATE RESPONDENT IS PROHIBITED FROM AFFILIATING ITSELF WITH A FEDERATION
aforementioned payroll during the pre-election conference for verification purposes.6 . . . ALREADY AFFILIATED WITH THE RANK AND FILE UNION;

The supervisory employees of the Union are:
1. Felipe Valdehueza
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
POSITION
Route Manager The petitions must fail for want of merit.

2. Gerberto Vertudazo C & C Manager

At the outset, it must be stressed that on September 1, 1992, there was a Resolution of the Union withdrawing from the
3. Paul Mendoza Sales Service Department Manager Federation, to wit:
4. Gilberto Emano, Jr. Route Manager
BE IT RESOLVED, as it is hereby RESOLVED, that this UNION WITHDRAW, as it hereby WITHDRAWS its
5. Jaime Huliganga Chief Checker 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
6. Elias Edgama, Sr. Accounting Manager
7. Romanico Ramos Route Manager The issue in G.R. No. 96663, whether or not the supervisors union can be affiliated with a Federation with two (2) rank and
8. Raul Yacapin Route Manager 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.
9. Jovenal Albaque Route Manager
10. Fulvio Narciso Route Manager 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-
11. Apolinario Opiniano Route Manager 36188 — 37586 February 29, 1980, 96 SCRA 402), the Court dismissed the petition for being moot and academic. In the
12. Alfredo Panas Route Manager case of F. C. Fisher v. Yangco Steamship Co., March 31, 1915, the Court held:

13. Simplicio Nelie Route Manager

It is unnecessary, however to indulge in academic discussion of a moot question. . . .
14. Arthur Rodriguez Route Manager
15. Marco Ilano Warehouse Operations Manager and . . . 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.

b. Non-Employees; Art. 253  Philippines v. National Labor Relations Commission, 175 SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72
ART. 253. [243] Coverage and Employees' Right to Self-Organization– All persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for
profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for
purposes of collective bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and those
without any definite employers may form labor organizations for their mutual aid and protection
[G.R. No. 91307. January 24, 1991.]
SINGER SEWING MACHINE COMPANY, Petitioner, v. HON. FRANKLIN M. DRILON, MED-ARBITER FELIX
B. CHAGUILE, JR., and SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB), Respondents.
DECISION
GUTIERREZ, JR., J.:
This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B. Chaguile, Jr., the resolution of then
Labor Secretary Franklin M. Drilon affirming said order on appeal and the order denying the motion for reconsideration in
the case entitled "In Re: Petition for Direct Certification as the Sole and Exclusive Collective Bargaining Agent of Collectors
of Singer Sewing Machine Company-Singer Machine Collectors Union-Baguio (SIMACUB)" docketed as OS-MA-A-7-119-
89 (IRD Case No. 02-89 MED).
On February 15, 1989, the respondent union filed a petition for direct certification as the sole and exclusive bargaining agent
of all collectors of the Singer Sewing Machine Company, Baguio City branch (hereinafter referred to as "the Company").
The Company opposed the petition mainly on the ground that the union members are actually not employees but are
independent contractors as evidenced by the collection agency agreement which they signed.
The respondent Med-Arbiter, finding that there exists an employer-employee relationship between the union members and
the Company, granted the petition for certification election. On appeal, Secretary of Labor Franklin M. Drilon affirmed it.
The motion for reconsideration of the Secretary’s resolution was denied. Hence, this petition in which the Company alleges
that public respondents acted in excess of jurisdiction and or committed grave abuse of discretion in that:chanrob1es virtual
1aw library
a) the Department of Labor and Employment (DOLE) has no jurisdiction over the case since the existence of employer-
employee relationship is at issue;
b) the right of petitioner to due process was denied when the evidence of the union members’ being commission agents was
disregarded by the Labor Secretary;
c) the public respondents patently erred in finding that there exists an employer-employee relationship;
d) the public respondents whimsically disregarded the well-settled rule that commission agents are not employees but are
independent contractors.
The respondents, on the other hand, insist that the provisions of the Collection Agency Agreement belie the Company’s
position that the union members are independent contractors. To prove that union members are employees, it is asserted that
they "perform the most desirable and necessary activities for the continuous and effective operations of the business of the
petitioner Company" (citing Article 280 of the Labor Code). They add that the termination of the agreement by the petitioner
pending the resolution of the case before the DOLE "only shows the weakness of petitioner’s stand" and was "for the purpose
of frustrating the constitutionally mandated rights of the members of private respondent union to self-organization and
collective organization." They also contend that under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing
the Labor Code, which defines job-contracting, they cannot legally qualify as independent contractors who must be free from
control of the alleged employer, who carry independent businesses and who have substantial capital or investment in the form
of equipment, tools, and the like necessary in the conduct of the business.c
The present case mainly calls for the application of the control test, which if not satisfied, would lead us to conclude that no
employer-employee relationship exists. Hence, if the union members are not employees, no right to organize for purposes of
bargaining, nor to be certified as such bargaining agent can ever be recognized. The following elements are generally
considered in the determination of the employer-employee relationship;" (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct — although the
latter is the most important element" (Mafinco Trading Corporation v. Ople, 70 SCRA 139 [1976]; Development Bank of the
[1984]; Broadway Motors Inc. v. NLRC, 156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v.
Zamora, 147 SCRA 49 [1986]).
The Collection Agency Agreement defines the relationship between the Company and each of the union members who signed
a contract. The petitioner relies on the following stipulations in the agreements: (a) a collector is designated as a "collecting
agent" who is to be considered at all times as an independent contractor and not employee of the Company; (b) collection of
all payments on installment accounts are to be made monthly or oftener; (c) an agent is paid his compensation for service in
the form of a commission of 6% of all collections made and turned over plus a bonus on said collections; (d) an agent is
required to post a cash bond of three thousand pesos (P3,000.00) to assure the faithful performance and observance of the
terms and conditions under the agreement; (e) he is subject to all the terms and conditions in the agreement; (f) the agreement
is effective for one year from the date of its execution and renewable on a yearly basis; and (g) his services shall be
terminated in case of failure to satisfy the minimum monthly collection performance required, failure to post a cash bond, or
cancellation of the agreement at the instance of either party unless the agent has a pending obligation or indebtedness in favor
of the Company.
Meanwhile, the respondents rely on other features to strengthen their position that the collectors are employees. They quote
paragraph 2 which states that an agent shall utilize only receipt forms authorized and issued by the Company. They also note
paragraph 3 which states that an agent has to submit and deliver at least once a week or as often as required a report of all
collections made using report forms furnished by the Company. Paragraph 4 on the monthly collection quota required by the
Company is deemed by respondents as a control measure over the means by which an agent is to perform his services.
The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular
relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The
collectors could fall under either category depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as an independent contractor not only because he is
explicitly described as such but also because the provisions permit him to perform collection services for the company
without being subject to the control of the latter except only as to the result of his work. After a careful analysis of the
contents of the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and report forms issued by the Company and that reports
shall be submitted at least once a week is not necessarily an indication of control over the means by which the job of
collection is to be performed. The agreement itself specifically explains that receipt forms shall be used for the purpose of
avoiding a comingling of personal funds of the agent with the money collected on behalf of the Company. Likewise, the use
of standard report forms as well as the regular time within which to submit a report of collection are intended to facilitate
order in office procedures. Even if the report requirements are to be called control measures, any control is only with respect
to the end result of the collection since the requirements regulate the things to be done after the performance of the collection
job or the rendition of the service.
The monthly collection quota is a normal requirement found in similar contractual agreements and is so stipulated to
encourage a collecting agent to report at least the minimum amount of proceeds. In fact, paragraph 5, section b gives a bonus,
aside from the regular commission every time the quota is reached. As a requirement for the fulfillment of the contract, it is
subject to agreement by both parties. Hence, if the other contracting party does not accede to it, he can choose not to sign it.
From the records, it is clear that the Company and each collecting agent intended that the former take control only over the
amount of collection, which is a result of the job performed.
The respondents’ contention that the union members are employees of the Company is based on selected provisions of the
Agreement but ignores the following circumstances which respondents never refuted either in the trial proceedings before the
labor officials nor in its pleadings filed before this Court.
"1. The collection agents are not required to observe office hours or report to Singer’s office everyday except, naturally and
necessarily, for the purpose of remitting their collections.
"2. The collection agents do not have to devote their time exclusively for SINGER. There is no prohibition on the part of the
collection agents from working elsewhere. Nor are these agents required to account for their time and submit a record of their
activity.
"3. The manner and method of effecting collections are left solely to the discretion of the collection agents without any
interference on the part of Singer.
"4. The collection agents shoulder their transportation expenses incurred in the collections of the accounts assigned to them.
"5. The collection agents are paid strictly on commission basis. The amounts paid to them are based solely on the amounts of
collection each of them make. They do not receive any commission if they do not effect any collection even if they put a lot
of effort in collecting. They are paid commission on the basis of actual collections.
"6. The commissions earned by the collection agents are directly deducted by them from the amount of collections they are
able to effect. The net amount is what is then remitted to Singer." (Rollo, pp. 7-8)
If indeed the union members are controlled as to the manner by which they are supposed to perform their collections, they
should have explicitly said so in detail by specifically denying each of the facts asserted by the petitioner. As there seems to
be no objections on the part of the respondents, the Court finds that they miserably failed to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the existence of an employer-employee
relationship between the Company and the collection agents cannot be sustained.chanrobles law library
The plain language of the agreement reveals that the designation as collection agent does not create an employment
relationship and that the applicant is to be considered at all times as an independent contractor. This is consistent with the first
rule of interpretation that the literal meaning of the stipulations in the contract controls (Article 1370, Civil Code; La Suerte
Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, 123 SCRA 679 [1983]). No such words as "to hire and
employ" are present. Moreover, the agreement did not fix an amount for wages nor the required working hours.
Compensation is earned only on the basis of the tangible results produced, i.e., total collections made (Sarra v. Agarrado, 166
SCRA 625 [1988]). In Investment Planning Corp. of the Philippines v. Social Security System, 21 SCRA 924 [1967] which
involved commission agents, this Court had the occasion to rule, thus:jgc:chanrobles.com.ph
"We are convinced from the facts that the work of petitioner’s agents or registered representatives more nearly approximates
that of an independent contractor than that of an employee. The latter is paid for the labor he performs, that is, for the acts of
which such labor consists; the former is paid for the result thereof . . .
x           x          x
"Even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans he would not
necessarily be entitled to compensation therefor. His right to compensation depends upon and is measured by the tangible
results he produces."cralaw virtua1aw library
Moreover, the collection agent does his work "more or less at his own pleasure" without a regular daily time frame imposed
on him (Investment Planning Corporation of the Philippines v. Social Security System, supra; See also Social Security
System v. Court of Appeals, 30 SCRA 210 [1969]).
The grounds specified in the contract for termination of the relationship do not support the view that control exists "for the
causes of termination thus specified have no relation to the means and methods of work that are ordinarily required of or
imposed upon employees." (Investment Planning Corp. of the Phil. v. Social Security System, supra)
The last and most important element of the control test is not satisfied by the terms and conditions of the contracts. There is
nothing in the agreement which implies control by the Company not only over the end to be achieved but also over the means
and methods in achieving the end (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).
The Court finds the contention of the respondents that the union members are employees under Article 280 of the Labor Code
to have no basis. The definition that regular employees are those who perform activities which are desirable and necessary for
the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services
for and in behalf of another for a consideration (no matter how necessary for the latter’s business) even without being hired as
an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. The Court
agrees with the petitioner’s argument that Article 280 is not the yardstick for determining the existence of an employment
relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees,
for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure.
Article 280 does not apply where the existence of an employment relationship is in dispute.
Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does not apply to this case.
Respondents assert that the said provision on job contracting requires that for one to be considered an independent contractor,
he must have "substantial capital or investment in the form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business." There is no showing that a collection agent needs tools and
machineries. Moreover, the provision must be viewed in relation to Article 106 of the Labor Code which
provides:jgc:chanrobles.com.ph
"Art. 106. Contractor or subcontractor. — Whenever an employer enters into a contract with another person for the
performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in
accordance with the provisions of this Code.chanrobles lawlibrary : rednad
"In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.
x           x          x
"There is ‘labor-only’ contracting where the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed
by such persons are performing activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him." (p. 20)
It can readily be seen that Section 8, Rule 8, Book III and Article 106 are relevant in determining whether the employer is
solidarily liable to the employees of an alleged contractor and/or sub-contractor for unpaid wages in case it is proven that
there is a job-contracting situation.
The assumption of jurisdiction by the DOLE over the case is justified as the case was brought on appeal by the petitioner
itself which prayed for the reversal of the Order of the Med-Arbiter on the ground that the union members are not its
employees. Hence, the petitioner submitted itself as well as the issue of existence of an employment relationship to the
jurisdiction of the DOLE which was faced with a dispute on an application for certification election.
The Court finds that since private respondents are not employees of the Company, they are not entitled to the constitutional
right to join or form a labor organization for purposes of collective bargaining. Accordingly, there is no constitutional and
legal basis for their "union" to be granted their petition for direct certification. This Court made this pronouncement in La
Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, supra:chanroblesvirtualawlibrary
". . . The question of whether employer-employee relationship exists is a primordial consideration before extending labor
benefits under the workmen’s compensation, social security, medicare, termination pay and labor relations law. It is
important in the determination of who shall be included in a proposed bargaining unit because, it is the sine qua non, the
fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this juridical
relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of
the union members to present a petition for certification election as well as to vote therein . . ." (At p. 689)
WHEREFORE, the Order dated June 14, 1989 of Med-Arbiter Designate Felix B. Chaguile, Jr., the Resolution and Order of
Secretary Franklin M. Drilon dated November 2, 1989 and December 14, 1989, respectively are hereby REVERSED and
SET ASIDE. The petition for certification election is ordered dismissed and the temporary restraining order issued by the
Court on December 21, 1989 is made permanent.
SO ORDERED.
c. Confidential Employees  
G.R. No. 162025               August 3, 2010
TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA BREWERY, Petitioner, vs. ASIA BREWERY,
INC., Respondent.
DECISION
VILLARAMA, JR., J.:
For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
assailing the Decision1 dated November 22, 2002 and Resolution 2 dated January 28, 2004 rendered by the Court of Appeals
(CA) in CA-G.R. SP No. 55578, granting the petition of respondent company and reversing the Voluntary Arbitrator’s
Decision3 dated October 14, 1999.
The facts are:
Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer, shandy, bottled water and
glass products. ABI entered into a Collective Bargaining Agreement (CBA), 4 effective for five (5) years from August 1, 1997
to July 31, 2002, with Bisig at Lakas ng mga Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the exclusive
bargaining representative of ABI’s rank-and-file employees. On October 3, 2000, ABI and BLMA-INDEPENDENT signed a
renegotiated CBA effective from August 1, 2000 to 31 July 2003.5
Article I of the CBA defined the scope of the bargaining unit, as follows:
Section 1. Recognition. The COMPANY recognizes the UNION as the sole and exclusive bargaining representative of all the
regular rank-and-file daily paid employees within the scope of the appropriate bargaining unit with respect to rates of pay,
hours of work and other terms and conditions of employment. The UNION shall not represent or accept for membership
employees outside the scope of the bargaining unit herein defined.
Section 2. Bargaining Unit. The bargaining unit shall be comprised of all regular rank-and-file daily-paid employees of the
COMPANY. However, the following jobs/positions as herein defined shall be excluded from the bargaining unit, to wit:
1. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
12. Purchasing and Quality Control Staff6 [emphasis supplied.]
Subsequently, a dispute arose when ABI’s management stopped deducting union dues from eighty-one (81) employees,
believing that their membership in BLMA-INDEPENDENT violated the CBA. Eighteen (18) of these affected employees are
QA Sampling Inspectors/Inspectresses and Machine Gauge Technician who formed part of the Quality Control Staff. Twenty
(20) checkers are assigned at the Materials Department of the Administration Division, Full Goods Department of the
Brewery Division and Packaging Division. The rest are secretaries/clerks directly under their respective division managers.7
BLMA-INDEPENDENT claimed that ABI’s actions restrained the employees’ right to self-organization and brought the
matter to the grievance machinery. As the parties failed to amicably settle the controversy, BLMA-INDEPENDENT lodged a
complaint before the National Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit the case
for arbitration to resolve the issue of "[w]hether or not there is restraint to employees in the exercise of their right to self-
organization."8
In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-INDEPENDENT after finding that the records
submitted by ABI showed that the positions of the subject employees qualify under the rank-and-file category because their
functions are merely routinary and clerical. He noted that the positions occupied by the checkers and secretaries/clerks in the
different divisions are not managerial or supervisory, as evident from the duties and responsibilities assigned to them. With
respect to QA Sampling Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI failed to establish with
sufficient clarity their basic functions as to consider them Quality Control Staff who were excluded from the coverage of the
CBA. Accordingly, the subject employees were declared eligible for inclusion within the bargaining unit represented by
BLMA-INDEPENDENT.9
On appeal, the CA reversed the Voluntary Arbitrator, ruling that:
WHEREFORE, foregoing premises considered, the questioned decision of the Honorable Voluntary Arbitrator Bienvenido
De Vera is hereby REVERSED and SET ASIDE, and A NEW ONE ENTERED DECLARING THAT:
a) the 81 employees are excluded from and are not eligible for inclusion in the bargaining unit as defined in
Section 2, Article I of the CBA;
b) the 81 employees cannot validly become members of respondent and/or if already members, that their
membership is violative of the CBA and that they should disaffiliate from respondent; and
employees in the Union membership.15 Having access to confidential information, confidential employees may also become
the source of undue advantage. Said employees may act as a spy or spies of either party to a collective bargaining
agreement.16
In Philips Industrial Development, Inc. v. NLRC,17 this Court held that petitioner’s "division secretaries, all Staff of General
Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems" are
confidential employees not included within the rank-and-file bargaining unit.18 Earlier, in Pier 8 Arrastre & Stevedoring
Services, Inc. v. Roldan-Confesor,19 we declared that legal secretaries who are tasked with, among others, the typing of legal
documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving notices, and such
other duties as required by the legal personnel of the corporation, fall under the category of confidential employees and hence
excluded from the bargaining unit composed of rank-and-file employees.20

c) petitioner has not committed any act that restrained or tended to restrain its employees in the exercise of their Also considered having access to "vital labor information" are the executive secretaries of the General Manager and the
right to self-organization. executive secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director, Management
System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production
NO COSTS. Manager.21

SO ORDERED In the present case, the CBA expressly excluded "Confidential and Executive Secretaries" from the rank-and-file bargaining
unit, for which reason ABI seeks their disaffiliation from petitioner. Petitioner, however, maintains that except for Daisy
Laloon, Evelyn Mabilangan and Lennie Saguan who had been promoted to monthly paid positions, the following
BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a certification election was held on August 10, secretaries/clerks are deemed included among the rank-and-file employees of ABI:22
2002 wherein petitioner Tunay na Pagkakaisa ng Manggagawa sa Asia (TPMA) won. As the incumbent bargaining
representative of ABI’s rank-and-file employees claiming interest in the outcome of the case, petitioner filed with the CA an
omnibus motion for reconsideration of the decision and intervention, with attached petition signed by the union NAME DEPARTMENT IMMEDIATE SUPERIOR
officers.11 Both motions were denied by the CA.12 C1 ADMIN DIVISION    
1. Angeles, Cristina C. Transportation Mr. Melito K. Tan
The petition is anchored on the following grounds: 2. Barraquio, Carina P. Transportation Mr. Melito K. Tan
3. Cabalo, Marivic B. Transportation Mr. Melito K. Tan
(1) 4. Fameronag, Leodigario C. Transportation Mr. Melito K. Tan
     
1. Abalos, Andrea A. Materials Mr. Andres G. Co
THE COURT OF APPEALS ERRED IN RULING THAT THE 81 EMPLOYEES ARE EXCLUDED FROM AND ARE
NOT ELIGIBLE FOR INCLUSION IN THE BARGAINING UNIT AS DEFINED IN SECTION 2, ARTICLE 1 OF THE 2. Algire, Juvy L. Materials Mr. Andres G. Co
CBA[;] 3. Anoñuevo, Shirley P. Materials Mr. Andres G. Co
4. Aviso, Rosita S. Materials Mr. Andres G. Co
(2) 5. Barachina, Pauline C. Materials Mr. Andres G. Co
6. Briones, Catalina P. Materials Mr. Andres G. Co
THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES CANNOT VALIDLY BECOME 7. Caralipio, Juanita P. Materials Mr. Andres G. Co
UNION MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF THE CBA AND THAT THEY SHOULD 8. Elmido, Ma. Rebecca S. Materials Mr. Andres G. Co
DISAFFILIATE FROM RESPONDENT; 9. Giron, Laura P. Materials Mr. Andres G. Co
10. Mane, Edna A. Materials Mr. Andres G. Co
(3)      
xxxx    
THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER (NOW PRIVATE      
RESPONDENT) HAS NOT COMMITTED ANY ACT THAT RESTRAINED OR TENDED TO RESTRAIN ITS C2 BREWERY DIVISION    
EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION.13      
1. Laloon, Daisy S. Brewhouse Mr. William Tan
Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial      
employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or 1. Arabit, Myrna F. Bottling Production Mr. Julius Palmares
nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to 2. Burgos, Adelaida D. Bottling Production Mr. Julius Palmares
sensitive and highly confidential records.14 Confidential employees are thus excluded from the rank-and-file bargaining unit. 3. Menil, Emmanuel S. Bottling Production Mr. Julius Palmares
The rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for
4. Nevalga, Marcelo G. Bottling Production Mr. Julius Palmares
managerial employees because if allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view
of evident conflict of interests and the Union can also become company-denominated with the presence of managerial      
 1. Mapola, Ma. Esraliza T. Bottling Maintenance Mr. Ernesto Ang We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-file employees and not confidential
2. Velez, Carmelito A. Bottling Maintenance Mr. Ernesto Ang employees.
     
1. Bordamonte, Rhumela D. Bottled Water Mr. Faustino Tetonche With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine Technician, there seems no dispute that they
2. Deauna, Edna R. Bottled Water Mr. Faustino Tetonche form part of the Quality Control Staff who, under the express terms of the CBA, fall under a distinct category. But we
3. Punongbayan, Marylou F. Bottled Water Mr. Faustino Tetonche disagree with respondent’s contention that the twenty (20) checkers are similarly confidential employees being "quality
control staff" entrusted with the handling and custody of company properties and sensitive information.
4. Saguan, Lennie Y. Bottled Water Mr. Faustino Tetonche
     
1. Alcoran, Simeon A. Full Goods Mr. Tsoi Wah Tung Again, the job descriptions of these checkers assigned in the storeroom section of the Materials Department, finishing section
of the Packaging Department, and the decorating and glass sections of the Production Department plainly showed that they
2. Cervantes, Ma. Sherley Y. Full Goods Mr. Tsoi Wah Tung perform routine and mechanical tasks preparatory to the delivery of the finished products. 24 While it may be argued that
3. Diongco, Ma. Teresa M. Full Goods Mr. Tsoi Wah Tung quality control extends to post-production phase -- proper packaging of the finished products -- no evidence was presented by
4. Mabilangan, Evelyn M. Full Goods Mr. Tsoi Wah Tung the respondent to prove that these daily-paid checkers actually form part of the company’s Quality Control Staff who as such
5. Rivera, Aurora M. Full Goods Mr. Tsoi Wah Tung "were exposed to sensitive, vital and confidential information about [company’s] products" or "have knowledge of mixtures
6. Salandanan, Nancy G. Full Goods Mr. Tsoi Wah Tung of the products, their defects, and even their formulas" which are considered ‘trade secrets’. Such allegations of respondent
      must be supported by evidence.25
1. Magbag, Ma. Corazon C. Tank Farm/ Mr. Manuel Yu Liat
Consequently, we hold that the twenty (20) checkers may not be considered confidential employees under the category of
Quality Control Staff who were expressly excluded from the CBA of the rank-and-file bargaining unit.
Cella Services
     
1. Capiroso, Francisca A. Quality Assurance Ms. Regina Mirasol Confidential employees are defined as 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 (2) 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
1. Alconaba, Elvira C. Engineering Mr. Clemente Wong between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor
2. Bustillo, Bernardita E. Electrical Mr. Jorge Villarosa relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of
3. Catindig, Ruel A. Civil Works Mr. Roger Giron management policies relating to labor relations is a principal objective sought to be accomplished by the "confidential
4. Sison, Claudia B. Utilities Mr. Venancio Alconaba employee rule."26 There is no showing in this case that the secretaries/clerks and checkers assisted or acted in a confidential
      capacity to managerial employees and obtained confidential information relating to labor relations policies. And even
assuming that they had exposure to internal business operations of the company, respondent claimed, this is not per se ground
xxxx    
for their exclusion in the bargaining unit of the daily-paid rank-and-file employees.27
     
C3 PACKAGING DIVISION    
Not being confidential employees, the secretaries/clerks and checkers are not disqualified from membership in the Union of
     
respondent’s rank-and-file employees. Petitioner argues that respondent’s act of unilaterally stopping the deduction of union
1. Alvarez, Ma. Luningning L. GP Administration Ms. Susan Bella dues from these employees constitutes unfair labor practice as it "restrained" the workers’ exercise of their right to self-
2. Cañiza, Alma A. GP Technical Mr. Chen Tsai Tyan organization, as provided in Article 248 (a) of the Labor Code.
3. Cantalejo, Aida S. GP Engineering Mr. Noel Fernandez
4. Castillo, Ma. Riza R. GP Production Mr. Tsai Chen Chih Unfair labor practice refers to "acts that violate the workers’ right to organize." The prohibited acts are related to the workers’
5. Lamadrid, Susana C. GP Production Mr. Robert Bautista right to self organization and to the observance of a CBA. For a charge of unfair labor practice to prosper, it must be shown
6. Mendoza, Jennifer L. GP Technical Mr. Mel Oña that ABI was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x
x"28 from ABI’s act in discontinuing the union dues deduction from those employees it believed were excluded by the CBA.
As can be gleaned from the above listing, it is rather curious that there would be several secretaries/clerks for just one (1)
Considering that the herein dispute arose from a simple disagreement in the interpretation of the CBA provision on excluded
department/division performing tasks which are mostly routine and clerical. Respondent insisted they fall under the
employees from the bargaining unit, respondent cannot be said to have committed unfair labor practice that restrained its
"Confidential and Executive Secretaries" expressly excluded by the CBA from the rank-and-file bargaining unit. However,
employees in the exercise of their right to self-organization, nor have thereby demonstrated an anti-union stance.
perusal of the job descriptions of these secretaries/clerks reveals that their assigned duties and responsibilities involve routine
activities of recording and monitoring, and other paper works for their respective departments while secretarial tasks such as
receiving telephone calls and filing of office correspondence appear to have been commonly imposed as additional WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2002 and Resolution dated January 28, 2004
duties.23 Respondent failed to indicate who among these numerous secretaries/clerks have access to confidential data relating of the Court of Appeals in CA-G.R. SP No. 55578 are hereby REVERSED and SET ASIDE. The checkers and
to management policies that could give rise to potential conflict of interest with their Union membership. Clearly, the secretaries/clerks of respondent company are hereby declared rank-and-file employees who are eligible to join the Union of
rationale under our previous rulings for the exclusion of executive secretaries or division secretaries would have little or no the rank-and-file employees.
significance considering the lack of or very limited access to confidential information of these secretaries/clerks. It is not
even farfetched that the job category may exist only on paper since they are all daily-paid workers. Quite understandably, No costs.
petitioner had earlier expressed the view that the positions were just being "reclassified" as these employees actually
discharged routine functions.
SO ORDERED.

G.R. No. 116194           February 2, 2000
SUGBUANON RURAL BANK, INC., petitioner, vs. HON. UNDERSECRETARY BIENVENIDO E. LAGUESMA,
DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER ACHILLES MANIT, DEPARTMENT OF
LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 7, CEBU CITY, AND SUGBUANON RURAL BANK,
INC. — ASSOCIATION OF PROFESSIONAL, SUPERVISORY, OFFICE, AND TECHNICAL EMPLOYEES
UNION-TRADE UNIONS CONGRESS OF THE PHILIPPINES, respondents.
QUISUMBING, J.:
In this special civil action for certiorari  and prohibition, petitioner seeks the annulment of the April 27, 1994 Resolution of
the Department of Labor and Employment, affirming the order of the Med-Arbiter, dated December 9, 1993, which denied
petitioner's motion to dismiss respondent union's petition for certification election.
Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking institution with principal office in
Cebu City and a branch in Mandaue City. Private respondent SRBI Association of Professional, Supervisory, Office, and
Technical Employees Union (APSOTEU) is a legitimate labor organization affiliated with the Trade Unions Congress of the
Philippines (TUCP).1âwphi1.nêt
On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration No. R0700-9310-UR-0064
to APSOTEU-TUCP, hereafter referred to as the union.
On October 26, 1993, the union filed a petition for certification election of the supervisory employees of SRBI. It alleged,
among others, that: (1) APSOTEU-TUCP was a labor organization duly-registered with the Labor Department; (2) SRBI
employed 5 or more supervisory employees; (3) a majority of these employees supported the petition: (4) there was no
existing collective bargaining agreement (CBA) between any union and SRBI; and (5) no certification election had been held
in SRBI during the past 12 months prior to the petition.
On October 28, 1993, the Med-Arbiter gave due course to the petition. The pre-certification election conference between
SRBI and APSOTEU-TUCP was set for November 15, 1993.
On November 12, 1993, SRBI filed a motion to dismiss the union's petition. It sought to prevent the holding of a certification
election on two grounds. First, that the members of APSOTEU-TUCP were in fact managerial or confidential employees.
Thus, following the doctrine in Philips Industrial Development Corporation v. National Labor Relations Commission,1 they
were disqualified from forming, joining, or assisting any labor organization. Petitioner attached the job descriptions of the
employees concerned to its motion. Second, the Association of Labor Unions-Trade Unions Congress of the Philippines or
ALU-TUCP was representing the union. Since ALU-TUCP also sought to represent the rank-and-file employees of SRBI,
there was a violation of the principle of separation of unions enunciated in Atlas Lithographic Services, Inc. v. Laguesma.2
The union filed its opposition to the motion to dismiss on December 1, 1993. It argued that its members were not managerial
employees but merely supervisory employees. The members attached their affidavits describing the nature of their respective
duties. The union pointed out that Article 245 of the Labor Code expressly allowed supervisory employees to form, join, or
assist their own unions.
On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. He scheduled the inclusion-exclusion
proceedings in preparation for the certification election on December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment. The appeal was denied for lack of
merit. The certification election was ordered.
On June 16, 1994, the Med-Arbiter scheduled the holding of the certification election for June 29, 1994. His order identified
the following SRBI personnel as the voting supervisory employees in the election: the Cashier of the Main Office, the
Cashier of the Mandaue Branch, the Accountant of the Mandaue Branch, and the Acting Chief of the Loans Department.
On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to suspend proceedings. The Med-Arbiter denied the
same on June 21, 1994. SRBI then filed a motion for reconsideration. Two days later, the Med-Arbiter cancelled the
certification election scheduled for June 29, 1994 in order to address the motion for reconsideration.
The Med-Arbiter later denied petitioner's motion for reconsideration, SRBI appealed the order of denial to the DOLE
Secretary on December 16, 1993..
On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional Office seeking the cancellation of the
respondent union's registration. It averred that the APSOTEU-TUCP members were actually managerial employees who were
prohibited by law from joining or organizing unions.
On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal for lack of merit. He ruled that APSOTEU-
TUCP was a legitimate labor organization. As such, it was fully entitled to all the rights and privileges granted by law to a
legitimate labor organization, including the right to file a petition for certification election. He also held that until and unless a
final order is issued cancelling APSOTEU-TUCP's registration certificate, it had the legal right to represent its members for
collective bargaining purposes. Furthermore, the question of whether the APSOTEU-TUCP members should be considered
as managerial or confidential employees should not be addressed in the proceedings involving a petition for certification
election but best threshed out in other appropriate proceedings.
On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's decision which was denied on July 7, 1994. The
Med-Arbiter scheduled the holding of certification elections on August 12, 1994.
Hence the instant petition grounded on the following assignments of error:
I to evaluation, review, and final decision by the bank's management. The job description forms submitted by petitioner clearly
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND
PALPABLY ERRED:
A: IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE MED-ARBITER TO CONDUCT A
CERTIFICATION ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN WHEN THE PETITIONING
UNION DOES NOT POSSESS THE QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT; AND
B. IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER'S APPEAL AND TO DISMISS THE
RESPONDENT UNION'S PETITION FOR CERTIFICATION ELECTION.
II
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND
PALPABLY ERRED IN DENYING THE PETITIONER'S APPEAL DESPITE THE FACT THAT:
A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE MANAGERIAL EMPLOYEES WHO ARE LEGALLY
DISQUALIFIED FROM JOINING ANY LABOR ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT UNION ARE OCCUPYING HIGHLY
CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, THE LEGAL DISQUALIFICATION OF MANAGERIAL
EMPLOYEES EQUALLY APPLY TO THEM.
III
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT RESOLUTIONS ARE CONTRARY TO LAW
AND ARE DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S RECORDED ADMISSIONS AND
REPRESENTATIONS.
Considering petitioner's assigned errors, we find two core issues for immediate resolution:
(1) Whether or not the members of the respondent union are managerial employees and/or highly-placed
confidential employees, hence prohibited by law from joining labor organizations and engaging in union activities?
(2) Whether or not the Med-Arbiter may validly order the holding of a certification election upon the filing of a
petition for certification election by a registered union, despite the petitioner's appeal pending before the DOLE
Secretary against the issuance of the union's registration?
The other issues based on the assigned errors could be resolved easily after the core issues are settled.
Respecting the  first issue, Article 212 (m) of the Labor Code defines the terms "managerial employee" and "supervisory
employees" as follows:
Art. 212. Definitions —
(m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute
management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees. Supervisory employees  are those who, in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use
of independent judgment. All employees not falling within any of the above definitions are considered rank-and-
file employees for purposes of this Book (Emphasis supplied).
Petitioner submitted detailed job descriptions to support its contention that the union members are managerial employees
and/or confidential employees proscribed from engaging in labor activities.3 Petitioner vehemently argues that the functions
and responsibilities of the employees involved constitute the "very core of the bank's business, lending of money to clients
and borrowers, evaluating their capacity to pay, approving the loan and its amount, scheduling the terms of repayment, and
endorsing delinquent accounts to counsel for collection."4 Hence, they must be deemed managerial employees. Petitioner
cites Tabacalera Insurance Co. v. National Labor Relations Commission,5 and Panday v. National Labor Relations
Commission,6 to sustain its submission. In Tabacalera, we sustained the classification of a credit and collection supervisor by
management as a managerial/supervisory personnel. But in that case, the credit and collection supervisor "had the power to
recommend the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or
increase."7 For this reason he was deemed to be a managerial employee. In the present case, however, petitioner failed to
show that the employees in question were vested with similar powers. At best they only had recommendatory powers subject
show that the union members in question may not transfer, suspend, lay-off, recall, discharge, assign, or discipline
employees. Moreover, the forms also do not show that the Cashiers, Accountants, and Acting Chiefs of the Loans Department
formulate and execute management policies which are normally expected of management officers.
Petitioner's reliance on Panday is equally misplaced. There, we held that a branch accountant is a managerial employee
because the said employee had managerial powers, similar to the supervisor in Tabaculera. Their powers included
recommending the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or
increase.8
Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the petitioner did not possess
managerial powers and duties. We are, therefore, constrained to conclude that they are not managerial employees.
Now may the said bank personnel be deemed confidential employees? Confidential employees are those who (1) assist or act
in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies
[specifically in the field of labor relations]. 9 The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee — that is, the confidential relationship must exist between the employee and his superior
officer; and that officer must handle the prescribed responsibilities relating to labor relations.10
Art. 245 of the Labor Code11 does not directly prohibit confidential employees from engaging in union activities. However,
under the doctrine of necessary implication, the disqualification of managerial employees equally applies to confidential
employees.12 The confidential-employee rule justifies exclusion of confidential employees because in the normal course of
their duties they become aware of management policies relating to labor relations.13 It must be stressed, however, that when
the employee does not have access to confidential labor relations information, there is no legal prohibition against
confidential employees from forming, assisting, or joining a union.14
Petitioner contends that it has only 5 officers running its day-to-day affairs. They assist in confidential capacities and have
complete access to the bank's confidential data. They form the core of the bank's management team. Petitioner explains that:
. . . Specifically: (1) the Head of the Loans Department initially approves the loan applications before they are
passed on to the Board for confirmation. As such, no loan application is even considered by the Board and
approved by petitioner without his stamp of approval based upon his interview of the applicant and determination
of his (applicant's) credit standing and financial capacity. The same holds true with respect to renewals or
restructuring of loan accounts. He himself determines what account should be collected, whether extrajudicially or
judicially, and settles the problems or complaints of borrowers regarding their accounts;
 (2) the Cashier is one of the approving officers and authorized signatories of petitioner. He approves the opening of
accounts, withdrawals and encashment, and acceptance of check deposits. He deals with other banks and, in the
absence of the regular Manager, manages the entire office or branch and approves disbursements of funds for
expenses; and
(3) the Accountant, who heads the Accounting Department, is also one of the authorized signatories of petitioner
and, in the absence of the Manager or Cashier, acts as substitute approving officer and assumes the management of
the entire office. She handles the financial reports and reviews the debit/credit tickets submitted by the other
departments.15
Petitioner's explanation, however, does not state who among the employees has access to information specifically relating to
its labor to relations policies. Even Cashier Patricia Maluya, who serves as the secretary of the bank's Board of Directors may
not be so classified. True, the board of directors is responsible for corporate policies, the exercise of corporate powers, and
the general management of the business and affairs of the corporation. As secretary of the bank's governing body. Patricia
Maluya serves the bank's management, but could not be deemed to have access to confidential information specifically
relating to SRBI's labor relations policies, absent a clear showing on this matter. Thus, while petitioner's explanation confirms
the regular duties of the concerned employees, it shows nothing about any duties specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate labor organization under Article 242(b) of the Labor Code is the right
to be certified as the exclusive representative of all employees in an appropriate bargaining unit for purposes of collective
bargaining. Having complied with the requirements of Art. 234, it is our view that respondent union is a legitimate labor
union. Article 257 of the Labor Code mandates that a certification election shall automatically  be conducted by the Med-
Arbiter upon the filing of a petition by a legitimate labor organization. 16 Nothing is said therein that prohibits such automatic
conduct of the certification election if the management appeals on the issue of the validity of the union's registration. On this
score, petitioner's appeal was correctly dismissed.
Petitioner argues that giving due course to respondent union's petition for certification election would violate the separation
of unions doctrine.17 Note that the petition was filed by APSOTEU-TUCP, a legitimate labor organization. It was not filed by
ALU. Nor was it filed by TUCP, which is a national labor federation of with which respondent union is affiliated. Petitioner
says that respondent union is a mere alter ego of ALU. The records show nothing to this effect. What the records instead
reveal is that respondent union was initially assisted by ALU during its preliminary stages of organization. A local union
maintains its separate personality despite affiliation with a larger national federation. 18 Petitioner alleges that ALU seeks to
represent both respondent union and the rank-and-file union. Again, we find nothing in the records to support this bare
assertion.
The law frowns on a union where the membership is composed of both supervisors and rank-and-file employees, for fear that
conflicts of interest may arise in the areas of discipline, collective bargaining, and strikes.19 However, in the present case,
none of the members of the respondent union came from the rank-and-file employees of the bank.
Taking into account the circumstances in this case, it is our view that respondent Undersecretary committed no reversible
error nor grave abuse of discretion when he found the order of the Med-Arbiter scheduling a certification election in order.
The list of employees eligible to vote in said certification election was also found in order, for none was specifically
disqualified from union membership.1âwphi1.nêt
WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to costs.
SO ORDERED.
d. Member-employee of a cooperative
[G.R. No. 79025. December 29, 1989.]
BENGUET ELECTRIC COOPERATIVE, INC., Petitioner, v. HON. PURA FERRER-CALLEJA, Director of the
Bureau of Labor Relations, and BENECO EMPLOYEES LABOR UNION, Respondents.
E.L. Gayo & Associates for Petitioner.
DECISION
CORTES, J.:
On June 21, 1985 Beneco Worker’s Labor Union-Association of Democratic Labor Organizations (hereinafter referred to as
BWLU-ADLO) filed a petition for direct certification as the sole and exclusive bargaining representative of all the rank and
file employees of Benguet Electric Cooperative, Inc. (hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet
alleging, inter alia, that BENECO has in its employ two hundred and fourteen (214) rank and file employees; that one
hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of the petition; that no certification
election has been conducted for the last 12 months; that there is no existing collective bargaining representative of the rank
and file employees sought to be represented by BWLU-ADLO; and, that there is no collective bargaining agreement in the
cooperative.
An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to as BELU) contending
that it was certified as the sole and exclusive bargaining representative of the subject workers pursuant to an order issued by
the med-arbiter on October 20, 1980; that pending resolution by the National Labor Relations Commission are two cases it
filed against BENECO involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars
any representation question.
BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit electric cooperative
engaged in providing electric services to its members and patron-consumers in the City of Baguio and Benguet Province; and,
that the employees sought to be represented by BWLU-ADLO are not eligible to form, join or assist labor organizations of
their own choosing because they are members and joint owners of the cooperative.
On September 2, 1985 the med-arbiter issued an order giving due course to the petition for certification election. However,
the med-arbiter limited the election among the rank and file employees of petitioner who are non members thereof and
without any involvement in the actual ownership of the cooperative. Based on the evidence during the hearing the med-
arbiter found that there are thirty-seven (37) employees who are not members and without any involvement in the actual
ownership of the cooperative. The dispositive portion of the med-arbiter’s order is as follows:
WHEREFORE, premises considered, a certification election should be as it is hereby ordered to be conducted at the premises
of Benguet, Electric Cooperative, Inc., at Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among
all the rank and file employees (non-members/consumers and without any involvement in the actual ownership of the
cooperative) with the following choices:
1. BENECO WORKERS LABOR UNION-ADLO
2. BENECO EMPLOYEES LABOR UNION
3. NO UNION
The payroll for the month of June 1980 shall be the basis in determining the qualified voters who may participate in the
certification election to be conducted.
SO ORDERED. [Rollo, pp. 22-23.]
BELU and BENECO appealed from this order but the same was dismissed for lack of merit on March 25, 1986. Whereupon
BENECO filed with this Court a petition for certiorari with prayer for preliminary injunction and or restraining order,
docketed as G.R. No. 74209, which the Supreme Court dismissed for lack of merit in a minute resolution dated April 28,
1986.
The ordered certification election was held on October 1, 1986. Prior to the conduct thereof BENECO’s counsel verbally
manifested that "the cooperative is protesting that employees who are members-consumers are being allowed to vote
when . . . they are not eligible to be members of any labor union for purposes of collective bargaining; much less, to vote in
this certification election." [Rollo, p. 28]. Petitioner submitted a certification showing that only four (4) employees are not
members of BENECO and insisted that only these employees are eligible to vote in the certification election. Canvass of the
votes showed that BELU garnered forty-nine (49) of the eighty-three (83) "valid" votes cast.
Thereafter BENECO formalized its verbal manifestation by filing a Protest. Finding, among others, that the issue as to
whether or not member-consumers who are employees of BENECO could form, assist or join a labor union has been
answered in the affirmative by the Supreme Court in G.R. No. 74209, the med-arbiter dismissed the protest on February 17,
1987. On June 23, 1987, Bureau of Labor Relations (BLR) director Pura Ferrer-Calleja affirmed the med-arbiter’s order and
certified BELU as the sole and exclusive bargaining agent of all the rank and file employees of BENECO
Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of jurisdiction BENECO
filed the instant petition for certiorari. In his Comment the Solicitor General agreed with BENECO’s stance and prayed that
the petition be given due course. In view of this, respondent director herself was required by the Court to file a Comment. On
April 19, 1989 the Court gave due course to the petition and required the parties to submit their respective memoranda.
The main issue in this case is whether or not respondent director committed grave abuse of discretion in certifying respondent
BELU as the sole and exclusive bargaining representative of the rank and file employees of BENECO.
Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification election, "at least a majority of all
eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all workers in the unit." Petitioner BENECO asserts that the certification
election held on October 1, 1986 was null and void since members-employees of petitioner cooperative who are not eligible
to form and join a labor union for purposes of collective bargaining were allowed to vote therein.
Respondent director and private respondent BELU on the other hand submit that members of a cooperative who are also rank
and file employees are eligible to form, assist or join a labor union [Comment of Respondent Director, p. 4; Rollo, p. 125;
Comment of BELU, pp. 9-10; Rollo pp. 99-100].
The Court finds the present petition meritorious.
The issue of whether or not employees of a cooperative are qualified to form or join a labor organization for purposes of
collective bargaining has already been resolved and clarified in the case of Cooperative Rural Bank of Davao City, Inc. v.
Ferrer-Calleja, Et. Al. [G.R. No. 77951, September 26, 1988] and reiterated in the cases of Batangas-I Electric Cooperative
Labor Union v. Young, Et. Al. [G.R. Nos. 62386, 70880 and 74560, November 9, 1988] and San Jose City Electric Service
Cooperative, Inc. v. Ministry of Labor and Employment, Et. Al. [G.R. No. 77231, May 31, 1989] wherein the Court had
stated that the right to collective bargaining is not available to an employee of a cooperative who at the same time is a
member and co-owner thereof. With respect, however, to employees who are neither members nor co-owners of the
cooperative they are entitled to exercise the rights to self-organization, collective bargaining and negotiation as mandated by
the 1987 Constitution and applicable statutes.
Respondent director argues that to deny the members of petitioner cooperative the right to form, assist or join a labor union of
their own choice for purposes of collective bargaining would amount to a patent violation of their right to self-organization.
She points out that:
"albeit a person assumes a dual capacity as rank and file employee and as member of a certain cooperative does not militate,
as in the instant case, against his/her exercise of the right to self-organization and to collective bargaining guaranteed by the
Constitution and Labor Code because, while so doing, he/she is acting in his/her capacity as rank and file employee thereof. It
may be added that while the employees concerned became members of petitioner cooperative, their status employment as
rank and filers who are hired for fixed compensation had not changed. They still do not actually participate in the
management of the cooperative as said function is entrusted to the Board of Directors and to the elected or appointed officers
thereof. They are not vested with the powers and prerogatives to lay down and execute managerial policies; to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees; and/or to effectively recommend such managerial
functions [Comment of Respondent Director, p. 4; Rollo, p. 125.]
Private respondent BELU concurs with the above contention of respondent director and, additionally, claims that since
membership in petitioner cooperative is only nominal, the rank and file employees who are members thereof should not be
deprived of their right to self-organization.
The above contentions are untenable. Contrary to respondents’ claim, the fact that the members-employees of petitioner do
not participate in the actual management of the cooperative does not make them eligible to form, assist or join a labor
organization for the purpose of collective bargaining with petitioner. The Court’s ruling in the Davao City case that members
of cooperative cannot join a labor union for purposes of collective bargaining was based on the fact that as members of the
cooperative they are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly an owner
cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, Et Al., supra].
It is the fact of ownership of the cooperative, and not involvement in the management thereof, which disqualifies a member
from joining any labor organization within the cooperative. Thus, irrespective of the degree of their participation in the actual
management of the cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of
collective bargaining.
Respondent union further claims that if nominal ownership in a cooperative is "enough to take away the constitutional
protections afforded to labor, then there would be no hindrance for employers to grant, on a scheme of generous profit
sharing, stock bonuses to their employees and thereafter claim that since their employees are not stockholders [of the
corporation], albeit in a minimal and involuntary manner, they are now also co-owners and thus disqualified to form unions."
To allow this, BELU argues, would be "to allow the floodgates of destruction to be opened upon the rights of labor which the
Constitution endeavors to protect and which welfare it promises to promote." [Comment of BELU, p. 10; Rollo, p. 100].
The above contention of respondent union is based on the erroneous presumption that membership in a cooperative is the
same as ownership of stocks in ordinary corporations. While cooperatives may exercise some of the rights and privileges
given to ordinary corporations provided under existing laws, such cooperatives enjoy other privileges not granted to the latter
[See Sections 4, 5, 6, and 8, Pres. Decree No. 175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly,
members of cooperatives have rights and obligations different from those of stockholders of ordinary corporations. It was
precisely because of the special nature of cooperatives, that the Court held in the Davao City case that members-employees
thereof cannot form or join a labor union for purposes of collective bargaining. The Court held that
A cooperative . . . is by its nature different from an ordinary business concern being run either by persons, partnerships, or
corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees. As
above stated, irrespective of the number of shares owned by each member they are entitled to cast one vote each in deciding
upon the affairs of the cooperative. Their share capital earn limited interest. They enjoy special privileges as — exemption
from income tax and sales taxes, preferential light to supply their products to State agencies and even exemption from the
minimum wage laws.
An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective
bargaining for certainly an owner cannot bargain with himself or his co-owners.
It is important to note that, in her order dated September 2, 1985, med-arbiter Elnora V. Balleras made a specific finding that
there are only thirty-seven (37) employees of petitioner who are not members of the cooperative and who are, therefore, the
only employees of petitioner cooperative eligible to form or join a labor union for purposes of collective bargaining [Annex
"A" of the Petition, p. 12; Rollo, p. 22]. However, the minutes of the certification election [Annex "C" of the Petition: Rollo,
p. 28] show that a total of eighty-three (83) employees were allowed to vote and of these, forty-nine (49) voted for respondent
union. Thus, even if We agree with respondent union’s contention that the thirty seven (37) employees who were originally
non-members of the cooperative can still vote in the certification election since they were only "forced and compelled to join
the cooperative on pain of disciplinary action," the certification election held on October 1, 1986 is still null and void since
even those who were already members of the cooperative at the time of the issuance of the med-arbiter’s order, and therefore
cannot claim that they were forced to join the union, were allowed to vote in the election.
Article 256 of the Labor Code provides, among others, that:
To have a valid, election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union
receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit . . .
[Emphasis supplied.]
In this case it cannot be determined whether or not respondent union was duly elected by the eligible voters of the bargaining
unit since even employees who are ineligible to join a labor union within the cooperative because of their membership therein
were allowed to vote in the certification election.
Considering the foregoing, the Court finds that respondent director committed grave abuse of discretion in certifying G.R. No. 172101               November 23, 2007
respondent union as the sole and exclusive bargaining representative of the rank and file employees of petitioner cooperative.
REPUBLIC OF THE PHILIPPINES, represented by the SOCIAL SECURITY COMMISSION and SOCIAL
WHEREFORE, the petition is hereby GRANTED and the assailed resolution of respondent director is ANNULLED. The
SECURITY SYSTEM, Petitioners, vs. ASIAPRO COOPERATIVE, Respondent.
certification election conducted on October 1, 1986, is SET ASIDE. The Regional Office No. 1 of San Fernando, La Union is
hereby directed to immediately conduct new certification election proceedings among the rank and file employees of the
petitioner who are not members of the cooperative DECISION

SO ORDERED. CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking
to annul and set aside the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No. 87236, dated 5 January 2006
and 20 March 2006, respectively, which annulled and set aside the Orders of the Social Security Commission (SSC) in SSC
Case No. 6-15507-03, dated 17 February 20043 and 16 September 2004,4 respectively, thereby dismissing the petition-
complaint dated 12 June 2003 filed by herein petitioner Social Security System (SSS) against herein respondent.

Herein petitioner Republic of the Philippines is represented by the SSC, a quasi-judicial body authorized by law to resolve
disputes arising under Republic Act No. 1161, as amended by Republic Act No. 8282.5 Petitioner SSS is a government
corporation created by virtue of Republic Act No. 1161, as amended. On the other hand, herein respondent Asiapro
Cooperative (Asiapro) is a multi-purpose cooperative created pursuant to Republic Act No. 6938 6 and duly registered with
the Cooperative Development Authority (CDA) on 23 November 1999 with Registration Certificate No. 0-623-2460.7

The antecedents of this case are as follows:

Respondent Asiapro, as a cooperative, is composed of owners-members. Under its by-laws, owners-members are of two
categories, to wit: (1) regular member, who is entitled to all the rights and privileges of membership; and (2) associate
member, who has no right to vote and be voted upon and shall be entitled only to such rights and privileges provided in its
by-laws.8 Its primary objectives are to provide savings and credit facilities and to develop other livelihood services for its
owners-members. In the discharge of the aforesaid primary objectives, respondent cooperative entered into several Service
Contracts9 with Stanfilco - a division of DOLE Philippines, Inc. and a company based in Bukidnon. The owners-members do
not receive compensation or wages from the respondent cooperative. Instead, they receive a share in the service
surplus10 which the respondent cooperative earns from different areas of trade it engages in, such as the income derived from
the said Service Contracts with Stanfilco. The owners-members get their income from the service surplus generated by the
quality and amount of services they rendered, which is determined by the Board of Directors of the respondent cooperative.

In order to enjoy the benefits under the Social Security Law of 1997, the owners-members of the respondent cooperative,
who were assigned to Stanfilco requested the services of the latter to register them with petitioner SSS as self-employed and
to remit their contributions as such. Also, to comply with Section 19-A of Republic Act No. 1161, as amended by Republic
Act No. 8282, the SSS contributions of the said owners-members were equal to the share of both the employer and the
employee.

On 26 September 2002, however, petitioner SSS through its Vice-President for Mindanao Division, Atty. Eddie A. Jara, sent
a letter11 to the respondent cooperative, addressed to its Chief Executive Officer (CEO) and General Manager Leo G. Parma,
informing the latter that based on the Service Contracts it executed with Stanfilco, respondent cooperative is actually a
manpower contractor supplying employees to Stanfilco and for that reason, it is an employer of its owners-members working
with Stanfilco. Thus, respondent cooperative should register itself with petitioner SSS as an employer and make the
corresponding report and remittance of premium contributions in accordance with the Social Security Law of 1997. On 9
October 2002,12 respondent cooperative, through its counsel, sent a reply to petitioner SSS’s letter asserting that it is not an
employer because its owners-members are the cooperative itself; hence, it cannot be its own employer. Again, on 21 October
2002,13 petitioner SSS sent a letter to respondent cooperative ordering the latter to register as an employer and report its
owners-members as employees for compulsory coverage with the petitioner SSS. Respondent cooperative continuously
ignored the demand of petitioner SSS.
Accordingly, petitioner SSS, on 12 June 2003, filed a Petition 14 before petitioner SSC against the respondent cooperative and
Stanfilco praying that the respondent cooperative or, in the alternative, Stanfilco be directed to register as an employer and to
report respondent cooperative’s owners-members as covered employees under the compulsory coverage of SSS and to remit
the necessary contributions in accordance with the Social Security Law of 1997. The same was docketed as SSC Case No. 6-
15507-03. Respondent cooperative filed its Answer with Motion to Dismiss alleging that no employer-employee relationship
exists between it and its owners-members, thus, petitioner SSC has no jurisdiction over the respondent cooperative. Stanfilco,
on the other hand, filed an Answer with Cross-claim against the respondent cooperative.
On 17 February 2004, petitioner SSC issued an Order denying the Motion to Dismiss filed by the respondent cooperative.
The respondent cooperative moved for the reconsideration of the said Order, but it was likewise denied in another Order
issued by the SSC dated 16 September 2004.
Intending to appeal the above Orders, respondent cooperative filed a Motion for Extension of Time to File a Petition for
Review before the Court of Appeals. Subsequently, respondent cooperative filed a Manifestation stating that it was no longer
filing a Petition for Review. In its place, respondent cooperative filed a Petition for Certiorari before the Court of Appeals,
docketed as CA-G.R. SP No. 87236, with the following assignment of errors:
I. The Orders dated 17 February 2004 and 16 September 2004 of [herein petitioner] SSC were issued with grave abuse of
discretion amounting to a (sic) lack or excess of jurisdiction in that:
A. [Petitioner] SSC arbitrarily proceeded with the case as if it has jurisdiction over the petition a quo, considering
that it failed to first resolve the issue of the existence of an employer-employee relationship between [respondent]
cooperative and its owners-members.
B. While indeed, the [petitioner] SSC has jurisdiction over all disputes arising under the SSS Law with respect to
coverage, benefits, contributions, and related matters, it is respectfully submitted that [petitioner] SSC may only
assume jurisdiction in cases where there is no dispute as to the existence of an employer-employee relationship.
C. Contrary to the holding of the [petitioner] SSC, the legal issue of employer-employee relationship raised in
[respondent’s] Motion to Dismiss can be preliminarily resolved through summary hearings prior to the hearing on
the merits. However, any inquiry beyond a preliminary determination, as what [petitioner SSC] wants to
accomplish, would be to encroach on the jurisdiction of the National Labor Relations Commission [NLRC], which
is the more competent body clothed with power to resolve issues relating to the existence of an employment
relationship.
II. At any rate, the [petitioner] SSC has no jurisdiction to take cognizance of the petition a quo.
A. [Respondent] is not an employer within the contemplation of the Labor Law but is a multi-purpose cooperative
created pursuant to Republic Act No. 6938 and composed of owners-members, not employees.
B. The rights and obligations of the owners-members of [respondent] cooperative are derived from their
Membership Agreements, the Cooperatives By-Laws, and Republic Act No. 6938, and not from any contract of
employment or from the Labor Laws. Moreover, said owners-members enjoy rights that are not consistent with
being mere employees of a company, such as the right to participate and vote in decision-making for the
cooperative.
C. As found by the Bureau of Internal Revenue [BIR], the owners-members of [respondent] cooperative are not
paid any compensation income.15 (Emphasis supplied.)
On 5 January 2006, the Court of Appeals rendered a Decision granting the petition filed by the respondent cooperative. The
decretal portion of the Decision reads:
WHEREFORE, the petition is GRANTED. The assailed Orders dated [17 February 2004] and [16 September 2004], are
ANNULLED and SET ASIDE and a new one is entered DISMISSING the petition-complaint dated [12 June 2003] of [herein
petitioner] Social Security System.16
Aggrieved by the aforesaid Decision, petitioner SSS moved for a reconsideration, but it was denied by the appellate court in
its Resolution dated 20 March 2006.
Hence, this Petition.
In its Memorandum, petitioners raise the issue of whether or not the Court of Appeals erred in not finding that the SSC has
jurisdiction over the subject matter and it has a valid basis in denying respondent’s Motion to Dismiss. The said issue is
supported by the following arguments:
I. The [petitioner SSC] has jurisdiction over the petition-complaint filed before it by the [petitioner SSS] under
R.A. No. 8282.
II. Respondent [cooperative] is estopped from questioning the jurisdiction of petitioner SSC after invoking its
jurisdiction by filing an [A]nswer with [M]otion to [D]ismiss before it.
III. The [petitioner SSC] did not act with grave abuse of discretion in denying respondent [cooperative’s] [M]otion
to [D]ismiss.
IV. The existence of an employer-employee relationship is a question of fact where presentation of evidence is
necessary.
V. There is an employer-employee relationship between [respondent cooperative] and its [owners-members].
Petitioners claim that SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS as it involved an issue
of whether or not a worker is entitled to compulsory coverage under the SSS Law. Petitioners avow that Section 5 of
Republic Act No. 1161, as amended by Republic Act No. 8282, expressly confers upon petitioner SSC the power to settle
disputes on compulsory coverage, benefits, contributions and penalties thereon or any other matter related thereto. Likewise,
Section 9 of the same law clearly provides that SSS coverage is compulsory upon all employees. Thus, when petitioner SSS
filed a petition-complaint against the respondent cooperative and Stanfilco before the petitioner SSC for the compulsory
coverage of respondent cooperative’s owners-members as well as for collection of unpaid SSS contributions, it was very
obvious that the subject matter of the aforesaid petition-complaint was within the expertise and jurisdiction of the SSC.
Petitioners similarly assert that granting arguendo that there is a prior need to determine the existence of an employer-
employee relationship between the respondent cooperative and its owners-members, said issue does not preclude petitioner
SSC from taking cognizance of the aforesaid petition-complaint. Considering that the principal relief sought in the said
petition-complaint has to be resolved by reference to the Social Security Law and not to the Labor Code or other labor
relations statutes, therefore, jurisdiction over the same solely belongs to petitioner SSC.
Petitioners further claim that the denial of the respondent cooperative’s Motion to Dismiss grounded on the alleged lack of
employer-employee relationship does not constitute grave abuse of discretion on the part of petitioner SSC because the latter
has the authority and power to deny the same. Moreover, the existence of an employer-employee relationship is a question of
fact where presentation of evidence is necessary. Petitioners also maintain that the respondent cooperative is already estopped
from assailing the jurisdiction of the petitioner SSC because it has already filed its Answer before it, thus, respondent
cooperative has already submitted itself to the jurisdiction of the petitioner SSC.
Finally, petitioners contend that there is an employer-employee relationship between the respondent cooperative and its
owners-members. The respondent cooperative is the employer of its owners-members considering that it undertook to provide
services to Stanfilco, the performance of which is under the full and sole control of the respondent cooperative.
On the other hand, respondent cooperative alleges that its owners-members own the cooperative, thus, no employer-employee
relationship can arise between them. The persons of the employer and the employee are merged in the owners-members
themselves. Likewise, respondent cooperative’s owners-members even requested the respondent cooperative to register them
with the petitioner SSS as self-employed individuals. Hence, petitioner SSC has no jurisdiction over the petition-complaint
filed before it by petitioner SSS.
Respondent cooperative further avers that the Court of Appeals correctly ruled that petitioner SSC acted with grave abuse of
discretion when it assumed jurisdiction over the petition-complaint without determining first if there was an employer-
employee relationship between the respondent cooperative and its owners-members. Respondent cooperative claims that the
question of whether an employer-employee relationship exists between it and its owners-members is a legal and not a factual
issue as the facts are undisputed and need only to be interpreted by the applicable law and jurisprudence.
Lastly, respondent cooperative asserts that it cannot be considered estopped from assailing the jurisdiction of petitioner SSC
simply because it filed an Answer with Motion to Dismiss, especially where the issue of jurisdiction is raised at the very first
instance and where the only relief being sought is the dismissal of the petition-complaint for lack of jurisdiction.
From the foregoing arguments of the parties, the issues may be summarized into:
I. Whether the petitioner SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS against
the respondent cooperative.
II. Whether the respondent cooperative is estopped from assailing the jurisdiction of petitioner SSC since it had
already filed an Answer with Motion to Dismiss before the said body.
Petitioner SSC’s jurisdiction is clearly stated in Section 5 of Republic Act No. 8282 as well as in Section 1, Rule III of the
1997 SSS Revised Rules of Procedure.
Section 5 of Republic Act No. 8282 provides:
SEC. 5. Settlement of Disputes. – (a) Any dispute arising under this Act with respect to coverage, benefits, contributions and
penalties thereon or any other matter related thereto, shall be cognizable by the Commission, x x x. (Emphasis supplied.)
Similarly, Section 1, Rule III of the 1997 SSS Revised Rules of Procedure states:
Section 1. Jurisdiction. – Any dispute arising under the Social Security Act with respect to coverage, entitlement of benefits,
collection and settlement of contributions and penalties thereon, or any other matter related thereto, shall be cognizable by the
Commission after the SSS through its President, Manager or Officer-in-charge of the Department/Branch/Representative
Office concerned had first taken action thereon in writing. (Emphasis supplied.)
It is clear then from the aforesaid provisions that any issue regarding the compulsory coverage of the SSS is well within the
exclusive domain of the petitioner SSC. It is important to note, though, that the mandatory coverage under the SSS Law is
premised on the existence of an employer-employee relationship17 except in cases of compulsory coverage of the self-
employed.
It is axiomatic that the allegations in the complaint, not the defenses set up in the Answer or in the Motion to Dismiss,
determine which court has jurisdiction over an action; otherwise, the question of jurisdiction would depend almost entirely
upon the defendant.18 Moreover, it is well-settled that once jurisdiction is acquired by the court, it remains with it until the full
termination of the case.19 The said principle may be applied even to quasi-judicial bodies.
In this case, the petition-complaint filed by the petitioner SSS before the petitioner SSC against the respondent cooperative
and Stanfilco alleges that the owners-members of the respondent cooperative are subject to the compulsory coverage of the
SSS because they are employees of the respondent cooperative. Consequently, the respondent cooperative being the employer
of its owners-members must register as employer and report its owners-members as covered members of the SSS and remit
the necessary premium contributions in accordance with the Social Security Law of 1997. Accordingly, based on the
aforesaid allegations in the petition-complaint filed before the petitioner SSC, the case clearly falls within its jurisdiction.
Although the Answer with Motion to Dismiss filed by the respondent cooperative challenged the jurisdiction of the petitioner
SSC on the alleged lack of employer-employee relationship between itself and its owners-members, the same is not enough to
deprive the petitioner SSC of its jurisdiction over the petition-complaint filed before it. Thus, the petitioner SSC cannot be
faulted for initially assuming jurisdiction over the petition-complaint of the petitioner SSS.
Nonetheless, since the existence of an employer-employee relationship between the respondent cooperative and its owners-
members was put in issue and considering that the compulsory coverage of the SSS Law is predicated on the existence of
such relationship, it behooves the petitioner SSC to determine if there is really an employer-employee relationship that exists
between the respondent cooperative and its owners-members.
The question on the existence of an employer-employee relationship is not within the exclusive jurisdiction of the National
Labor Relations Commission (NLRC). Article 217 of the Labor Code enumerating the jurisdiction of the Labor Arbiters and
the NLRC provides that:
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. - (a) x x x.
xxxx
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising
from employer-employee relations, including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (₱5,000.00) regardless of whether accompanied with a claim for reinstatement.20
Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily include issues on the
coverage thereof, because claims are undeniably rooted in the coverage by the system. Hence, the question on the existence
of an employer-employee relationship for the purpose of determining the coverage of the Social Security System is explicitly
excluded from the jurisdiction of the NLRC and falls within the jurisdiction of the SSC which is primarily charged with the
duty of settling disputes arising under the Social Security Law of 1997.
On the basis thereof, considering that the petition-complaint of the petitioner SSS involved the issue of compulsory coverage
of the owners-members of the respondent cooperative, this Court agrees with the petitioner SSC when it declared in its Order
dated 17 February 2004 that as an incident to the issue of compulsory coverage, it may inquire into the presence or absence of
an employer-employee relationship without need of waiting for a prior pronouncement or submitting the issue to the NLRC
for prior determination. Since both the petitioner SSC and the NLRC are independent bodies and their jurisdiction are well-
defined by the separate statutes creating them, petitioner SSC has the authority to inquire into the relationship existing
between the worker and the person or entity to whom he renders service to determine if the employment, indeed, is one that is
excepted by the Social Security Law of 1997 from compulsory coverage.21
Even before the petitioner SSC could make a determination of the existence of an employer-employee relationship, however,
the respondent cooperative already elevated the Order of the petitioner SSC, denying its Motion to Dismiss, to the Court of
Appeals by filing a Petition for Certiorari. As a consequence thereof, the petitioner SSC became a party to the said Petition
for Certiorari pursuant to Section 5(b)22 of Republic Act No. 8282. The appellate court ruled in favor of the respondent
cooperative by declaring that the petitioner SSC has no jurisdiction over the petition-complaint filed before it because there
was no employer-employee relationship between the respondent cooperative and its owners-members. Resultantly, the
petitioners SSS and SSC, representing the Republic of the Philippines, filed a Petition for Review before this Court.
Although as a rule, in the exercise of the Supreme Court’s power of review, the Court is not a trier of facts and the findings of
fact of the Court of Appeals are conclusive and binding on the Court,23 said rule is not without exceptions. There are several
recognized exceptions24 in which factual issues may be resolved by this Court. One of these exceptions finds application in
this present case which is, when the findings of fact are conflicting. There are, indeed, conflicting findings espoused by the
petitioner SSC and the appellate court relative to the existence of employer-employee relationship between the respondent
cooperative and its owners-members, which necessitates a departure from the oft-repeated rule that factual issues may not be
the subject of appeals to this Court.
In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection
and engagement of the workers; (2) the payment of wages by whatever means; (3) the power of dismissal; and (4) the power
to control the worker’s conduct, with the latter assuming primacy in the overall consideration. 25 The most important element
is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means
and methods to accomplish.26 The power of control refers to the existence of the power and not necessarily to the actual
exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is
enough that the employer has the right to wield that power.27 All the aforesaid elements are present in this case.
First. It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive discretion
in the selection and engagement of the owners-members as well as its team leaders who will be assigned at
Stanfilco.28 Second. Wages are defined as "remuneration or earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained, on a time, task, piece or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or
to be done, or for service rendered or to be rendered."29 In this case, the weekly stipends or the so-called shares in the service
surplus given by the respondent cooperative to its owners-members were in reality wages, as the same were equivalent to an
amount not lower than that prescribed by existing labor laws, rules and regulations, including the wage order applicable to the
area and industry; or the same shall not be lower than the prevailing rates of wages. 30 It cannot be doubted then that those
stipends or shares in the service surplus are indeed wages, because these are given to the owners-members as compensation in
rendering services to respondent cooperative’s client, Stanfilco. Third. It is also stated in the above-mentioned Service
Contracts that it is the respondent cooperative which has the power to investigate, discipline and remove the owners-members
and its team leaders who were rendering services at Stanfilco. 31 Fourth. As earlier opined, of the four elements of the
employer-employee relationship, the "control test" is the most important. In the case at bar, it is the respondent cooperative
which has the sole control over the manner and means of performing the services under the Service Contracts with Stanfilco
as well as the means and methods of work.32 Also, the respondent cooperative is solely and entirely responsible for its
owners-members, team leaders and other representatives at Stanfilco.33 All these clearly prove that, indeed, there is an
employer-employee relationship between the respondent cooperative and its owners-members.
It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide that there
shall be no employer-employee relationship between the respondent cooperative and its owners-members.34 This Court,
however, cannot give the said provision force and effect.
As previously pointed out by this Court, an employee-employer relationship actually exists between the respondent
cooperative and its owners-members. The four elements in the four-fold test for the existence of an employment relationship
have been complied with. The respondent cooperative must not be allowed to deny its employment relationship with its
owners-members by invoking the questionable Service Contracts provision, when in actuality, it does exist. The existence of
an employer-employee relationship cannot be negated by expressly repudiating it in a contract, when the terms and
surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by
what the parties say it should be.35
It is settled that the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their
agreement would have the force of law between them. However, the agreed terms and conditions must not be contrary to law,
morals, customs, public policy or public order. 36 The Service Contract provision in question must be struck down for being
contrary to law and public policy since it is apparently being used by the respondent cooperative merely to circumvent the
compulsory coverage of its employees, who are also its owners-members, by the Social Security Law.
This Court is not unmindful of the pronouncement it made in Cooperative Rural Bank of Davao City, Inc. v. Ferrer-
Calleja37 wherein it held that:
A cooperative, therefore, is by its nature different from an ordinary business concern, being run either by persons,
partnerships, or corporations. Its owners and/or members are the ones who run and operate the business while the others are
its employees x x x.
An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective
bargaining for certainly an owner cannot bargain with himself or his co-owners. In the opinion of August 14, 1981 of the
Solicitor General he correctly opined that employees of cooperatives who are themselves members of the cooperative have no
right to form or join labor organizations for purposes of collective bargaining for being themselves co-owners of the
cooperative.1awp++i1
However, in so far as it involves cooperatives with employees who are not members or co-owners thereof, certainly such
employees are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as
are enshrined in the Constitution and existing laws of the country.
The situation in the aforesaid case is very much different from the present case. The declaration made by the Court in the
aforesaid case was made in the context of whether an employee who is also an owner-member of a cooperative can exercise
the right to bargain collectively with the employer who is the cooperative wherein he is an owner-member. Obviously, an
owner-member cannot bargain collectively with the cooperative of which he is also the owner because an owner cannot
bargain with himself. In the instant case, there is no issue regarding an owner-member’s right to bargain collectively with the
cooperative. The question involved here is whether an employer-employee relationship can exist between the cooperative and
an owner-member. In fact, a closer look at Cooperative Rural Bank of Davao City, Inc. will show that it actually recognized
that an owner-member of a cooperative can be its own employee.
It bears stressing, too, that a cooperative acquires juridical personality upon its registration with the Cooperative
Development Authority.38 It has its Board of Directors, which directs and supervises its business; meaning, its Board of
Directors is the one in charge in the conduct and management of its affairs. 39 With that, a cooperative can be likened to a
corporation with a personality separate and distinct from its owners-members. Consequently, an owner-member of a
cooperative can be an employee of the latter and an employer-employee relationship can exist between them.
In the present case, it is not disputed that the respondent cooperative had registered itself with the Cooperative Development
Authority, as evidenced by its Certificate of Registration No. 0-623-2460.40 In its by-laws,41 its Board of Directors directs,
controls, and supervises the business and manages the property of the respondent cooperative. Clearly then, the management
of the affairs of the respondent cooperative is vested in its Board of Directors and not in its owners-members as a whole.
Therefore, it is completely logical that the respondent cooperative, as a juridical person represented by its Board of Directors,
can enter into an employment with its owners-members.
In sum, having declared that there is an employer-employee relationship between the respondent cooperative and its owners-
member, we conclude that the petitioner SSC has jurisdiction over the petition-complaint filed before it by the petitioner SSS.
This being our conclusion, it is no longer necessary to discuss the issue of whether the respondent cooperative was estopped
from assailing the jurisdiction of the petitioner SSC when it filed its Answer with Motion to Dismiss.
WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision and the Resolution of the Court
of Appeals in CA-G.R. SP No. 87236, dated 5 January 2006 and 20 March 2006, respectively, are hereby REVERSED and
SET ASIDE. The Orders of the petitioner SSC dated 17 February 2004 and 16 September 2004 are hereby REINSTATED.
The petitioner SSC is hereby DIRECTED to continue hearing the petition-complaint filed before it by the petitioner SSS as
regards the compulsory coverage of the respondent cooperative and its owners-members. No costs.
SO ORDERED.
e. Employees of government-owned and controlled corporations with original  charters 

G.R. No. 82819 February 8, 1989

LUZ LUMANTA, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FOOD TERMINAL, INC., respondents.

FELICIANO,  J.:

The present Petition for certiorari seeks to annul and set aside the Decision of the National Labor Relations Commission
rendered on 18 March 1988 in NLRC-NCR Case No. 00- 0301035-87, entitled "Luz Lumanta, et al., versus Food Terminal
Incorporated." The Decision affirmed an order of the Labor Arbiter dated 31 August 1987 dismissing petitioners' complaint
for lack of Jurisdiction.

On 20 March 1987, petitioner Luz Lumanta, joined by fifty-four (54) other retrenched employees, filed a complaint for
unpaid 'd retrenchment or separation pay against private respondent Food Terminal, Inc. ("FTI") with the Department of
Labor and Employment. The complaint was later amended to include charges of underpayment of wages and non-payment of
emergency cost of living allowances (ECOLA).

Private respondent FTI moved to dismiss the complaint on the ground of lack of jurisdiction. It argued that being a
government-owned and controlled corporation, its employees are governed by the Civil Service Law not by the Labor Code,
and that claims arising from employment fall within the jurisdiction of the Civil Service Commission and not the Department
of Labor and Employment.

The petitioners opposed the Motion to Dismiss contending that although FTI is a corporation owned and controlled by the
government, it has still the marks of a private corporation: it directly hires its employees without seeking approval from the
Civil Service Commission and its personnel are covered by the Social Security System and not the Government Service
Insurance System. Petitioners also argued that being a government-owned and controlled corporation without original charter,
private respondent FTl clearly falls outside the scope of the civil service as marked out in Section 2 (1), Article IX of the
1987 Constitution.

On 31 August 1987, Labor Arbiter Isabel P. Oritiguerra issued an Order, 1 the dispositive part of which read:

On account of the above findings the instant case is governed by the Civil Service Law. The case at bar
lies outside the jurisdictional competence of this Office.

WHEREFORE, premises considered this case is hereby directed to be DISMISSED for lack of
jurisdiction of this Office to hear and decide the case.

SO ORDERED.

On 18 March 1988, the public respondent National Labor Relations Commission affirmed on appeal the order of the Labor
Arbiter and dismissed the petitioners' appeal for lack of merit.

Hence this Petition for Certiorari.

The only question raised in the present Petition is whether or not a labor law claim against a government-owned and
controlled corporation, such as private respondent FTI, falls within the jurisdiction of the Department of Labor and
Employment.
In refusing to take cognizance of petitioners' complaint against private respondent, the Labor Arbiter and the National Labor
Relations Commission relied chiefly on this Court's ruling in National Housing Authority v. Juco,  2 which held that "there
should no longer be any question at this time that employees of government-owned or controlled corporations are governed
by the civil service law and civil service rules and regulations.
Juco was decided under the 1973 Constitution, Article II-B, Section 1 (1) of which provided:
The civil service embraces every branch, agency, subdivision, and instrumentality of the Government,
including every government-owned or controlled corporation.
The 1987 Constitution which took effect on 2 February 1987, has on this point a notably different provision which reads:
The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original charter. (Article IX-
B, Section 2 [1]).
The Court, in National Service Corporation (NASECO) v. National Labor Relations Commission, G.R. No. 69870,
promulgated on 29 November 1988, 3 quoting extensively from the deliberations 4 of the 1986 Constitutional Commission in
respect of the intent and meaning of the new phrase "with original charter," in effect held that government-owned and
controlled corporations with original charter refer to corporations chartered by special law as distinguished from corporations
organized under our general incorporation statute-the Corporation Code. In NASECO, the company involved had been
organized under the general incorporation statute and was a subsidiary of the National Investment Development Corporation
(NIDC) which in turn was a subsidiary of the Philippine National Bank, a bank chartered by a special statute. Thus,
government-owned or controlled corporations like NASECO are effectively excluded from the scope of the Civil Service.
It is the 1987 Constitution, and not the case law embodied in Juco, 5 which applies in the case at bar, under the principle that
jurisdiction is determined as of the time of the filing of the complaint. 6 At the time the complaint against private respondent
FTI was filed (i.e., 20 March 1987), and at the time the decisions of the respondent Labor Arbiter and National Labor
Relations Commission were rendered (i.e., 31 August 1987 and 18 March 1988, respectively), the 1987 Constitution had
already come into effect. latter of Instruction No. 1013, dated 19 April 1980, included Food Terminal, Inc. in the category of
"government-owned or controlled corporations." 7 Since then, FTI served as the marketing arm of the National Grains
Authority (now known as the National Food Authority). The pleadings show that FTI was previously a privately owned
enterprise, created and organized under the general incorporation law, with the corporate name "Greater Manila Food
Terminal Market, Inc." 8 The record does not indicate the precise amount of the capital stock of FM that is owned by the
government; the petitioners' claim, and this has not been disputed, that FTl is not hundred percent (100%) government-owned
and that it has some private shareholders.
We conclude that because respondent FTI is government-owned and controlled corporation without original charter, it is the
Department of Labor and Employment, and not the Civil Service Commission, which has jurisdiction over the dispute arising
from employment of the petitioners with private respondent FTI, and that consequently, the terms and conditions of such
employment are governed by the Labor Code and not by the Civil Service Rules and Regulations.
Public respondent National Labor Relations Commission acted without or in excess of its jurisdiction in dismissing
petitioners complaint.
ACCORDINGLY, the Petition for certiorari is hereby GRANTED and the Decision of public respondent Labor Arbiter dated
31 August 1987 and the Decision of public respondent Commission dated 18 March 1988, both in NLRC-NCR Case No. 00-
03-01035-87 are hereby SET ASIDE. The case is hereby REMANDED to the Labor Arbiter for further appropriate
proceedings.
f. Employees of International Organizations
g. High-level government employees, Members of the AFP, Police Officers,
Firemen and Jail Guards
BY THE PRESIDENT OF THE PHILIPPINES
EXECUTIVE ORDER NO. 180
PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF GOVERNMENT
EMPLOYEES, CREATING A PUBLIC SECTOR LABOR-MANAGEMENT COUNCIL, AND FOR OTHER
PURPOSES
In accordance with the provisions of the 1987 Constitution, I, CORAZON C. AQUINO, President of the Philippines, do
hereby order:
I. Coverage
SECTION 1. This Executive Order applies to all employees of all branches, subdivisions, instrumentalities, and agencies of
the Government, including government-owned or controlled corporations with original charters. For this purpose, employees
covered by this Executive Order shall be referred to as “government employees.”
SECTION 2. All government employees can form, join or assist employees’ organizations of their own choosing for the
furtherance and protection of their interests. They can also form, in conjunction with appropriate government authorities,
labor-management committees, works councils and other forms of workers’ participation schemes to achieve the same
objectives.
SECTION 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.
SECTION 4. The Executive Order shall not apply to the members of the Armed Forces of the Philippines, including police
officers, policemen, firemen and jail guards.
II. Protection of the Right to Organize
SECTION 5. Government employees shall not be discriminated against in respect of their employment by reason of their
membership in employees’ organizations or participation in the normal activities of their organization. Their employment
shall not be subject to the condition that they shall not join or shall relinquish their membership in the employees’
organizations.
SECTION 6. Government authorities shall not interfere in the establishment, functioning or administration of government
employees’ organizations through acts designed to place such organizations under the control of government authority.
III. Registration of Employees’ Organization
SECTION 7. Government employees’ organizations shall register with the Civil Service Commission and the Department of
Labor and Employment. The application shall be filed with the Bureau of Labor Relations of the Department which shall
process the same in accordance with the provisions of the Labor Code of the Philippines, as amended. Applications may also
be filed with the Regional Offices of the Department of Labor and Employment which shall immediately transmit the said
applications to the Bureau of Labor Relations within three (3) days from receipt thereof.
SECTION 8. Upon approval of the application, a registration certificate shall be issued to the organization recognizing it as a
legitimate employees’ organization with the right to represent its members and undertake activities to further and defend its
interest. The corresponding certificates of registration shall be jointly approved by the Chairman of the Civil Service
Commission and Secretary of Labor and Employment.
IV. Sole and Exclusive Employees’ Representatives
SECTION 9. The appropriate organizational unit shall be the employers unit consisting of rank-and-file employees unless
circumstances otherwise require.

SECTION 10. The duly registered employees’ organization having the support of the majority of the employees in the
appropriate organizational unit shall be designated as the sole and exclusive representative of the employees.

SECTION 11. A duly registered employees’ organization shall be accorded voluntary recognition upon a showing that no
other employees’ organization is registered or is seeking registration, based on records of the Bureau of Labor Relations, and
that the said organization has the majority support of the rank-and-file employees in the organizational unit.

SECTION 12. Where there are two or more duly registered employees’ organizations in the appropriate organizational unit,
the Bureau of Labor Relations shall, upon petition, order the conduct of a certification election and shall certify as the
exclusive representative of the rank-and-file employees in said organization unit.

V. Terms and Conditions of Employment in

Government Services

SECTION 13. Terms and conditions of employment or improvements thereof, except those that are fixed by law, may be the
subject of negotiations between duly recognized employees’ organizations and appropriate government authorities.

Peaceful Concerted Activities and Strikes

SECTION 14. The Civil Service law and rules governing concerted activities and strikes in the government service shall be
observed, subject to any legislation that may be enacted by Congress.

Public Sector Labor-Management Council

SECTION 15. A Public Sector Labor-Management Council, hereinafter referred to as the Council, is hereby constituted to be
composed of the following:

1) Chairman, Civil Service Commission Chairman

2) Secretary, Department of Labor and Employment Vice-Chairman
3) Secretary, Department of Finance Member
4) Secretary, Department of Justice Member
5) Secretary, Department of Budget and Management Member

The Council shall implement and administer the provisions of this Executive Order. For this purpose, the Council shall
promulgate the necessary rules and regulations to implement this Executive Order.

VIII. Settlement of Disputes

SECTION 16. The Civil Service and labor laws and procedures, whenever applicable, shall be followed in the resolution of
complaints, grievances and cases involving government employees. In case any dispute remains unresolved after exhausting
all the available remedies under existing laws and procedures, the parties may jointly refer the dispute to the Council, for
appropriate action.

IX. Effectivity
SECTION 17. This Executive Order shall take effect immediately.
Done in the City of Manila, this 1st day of June, in the year of Our Lord, nineteen hundred and eighty-seven.