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FIRST DIVISION

[G.R. No. 108855. February 28, 1996]

METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE MA. NIEVES ROLDAN-CONFESOR, in her capacity as
Secretary of the Department of Labor and Employment and METRO DRUG CORPORATION EMPLOYEES
ASSOCIATION-FEDERATION OF FREE WORKERS, respondents.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF ADMINISTRATIVE AGENCIES; RULE; CASE AT BAR. - We reaffirm
the doctrine that considering their expertise in their respective fields, factual findings of administrative agencies
supported by substantial evidence are accorded great respect and binds this Court. The Secretary of Labor ruled,
thus: x x x Any act committed during the pendency of the dispute that tends to give rise to further contentious
issues or increase the tensions between the parties should be considered an act of exacerbation. One must look at
the act itself, not on speculative reactions. A misplaced recourse is not needed to prove that a dispute has been
exacerbated. For instance, the Union could not be expected to file another notice of strike. For this would depart
from its theory of the case that the layoff is subsumed under the instant dispute, for which a notice of strike had
already been filed. On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic
action from the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. Under a
regime of laws, legal remedies take the place of violent ones. x xx Protest against the subject layoffs need not be in
the form of violent action or any other drastic measure. In the instant case the Union registered their dissent by
swiftly filing a motion for a cease and desist order. Contrary to petitioners allegations, the Union strongly
condemned the layoffs and threatened mass action if the Secretary of Labor fails to timely intervene: x x x 3. This
unilateral action of management is a blatant violation of the injunction of this Office against committing acts which
would exacerbate the dispute. Unless such act is enjoined the Union will be compelled to resort to its legal right to
mass actions and concerted activities to protest and stop the said management action. This mass layoff is clearly
one which would result in a very serious dispute unless this Office swiftly intervenes. x x x Metrolab and the Union
were still in the process of resolving their CBA deadlock when petitioner implemented the subject layoffs. As a
result, motions and oppositions were filed diverting the parties attention, delaying resolution of the bargaining
deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict.

2. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EXERCISE OF MANAGEMENT PREROGATIVES;


NOT ABSOLUTE; SUBJECT TO EXCEPTIONS IMPOSED BY LAW. - This Court recognizes the exercise of management
prerogatives and often declines to interfere with the legitimate business decisions of the employer. However, this
privilege is not absolute but subject to limitations imposed by law. In PAL vs. NLRC, (225 SCRA 301 [1993]), we
issued this reminder: ... the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs.
Medina (177 SCRA 565 [1989]), it was held that managements prerogatives must be without abuse of discretion
...All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by
limi(ations found in law, a collective bargaining agreement, or the general principles of fair play and justice
(University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]).

3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN EXCEPTION. - The case at bench constitutes one of the exceptions. The
Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor
disputes involving industries indispensable to national interest. The disputed injunction is subsumed under this
special grant of authority. Art. 263 (g) of the Labor Code specifically provides that: x x x (g) When, in his opinion,
there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify
the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification
order. If one has already taken place at the time of assumption or certification, all striking or locked out employees
shall immediately return to work and the employer shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with
this provision as well as with such orders as he may issue to enforce the same. . . . That Metrolabs business is of
national interest is not disputed. Metrolab is one of the leading manufacturers and suppliers of medical and
pharmaceutical products to the country. Metrolabs management prerogatives, therefore, are not being unjustly
curtailed but duly balanced with and tempered by the limitations set by law, taking into account its special character
and the particular circumstances in the case at bench.

4. ID.; LABOR RELATIONS; INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN, FORM AND ASSIST ANY LABOR
ORGANIZATION; PROHIBITION EXTENDED TO CONFIDENTIAL EMPLOYEES. - 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 nature of work are
required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive
and highly confidential records.

5. ID.; ID.; EXCLUSION OF CONFIDENTIAL EMPLOYEES FROM THE RANK AND FILE BARGAINING UNIT; NOT
TANTAMOUNT TO DISCRIMINATION. - Confidential employees cannot be classified as rank and file. As previously
discussed, the nature of employment of confidential employees is quite distinct from the rank and file, thus,
warranting a separate category. Excluding confidential employees from the rank and file bargaining unit, therefore,
is not tantamount to discrimination.

APPEARANCES OF COUNSEL

Bautista Picazo Buyco Tan & Fider for petitioner.

The Solicitor General for public respondent.

Perfecto V. Fernandez, Jose P. Fernandez & Cristobal P. Fernandez for Metro Drug Corporation.

DECISION

KAPUNAN, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution
and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April 1992 and 25 January 1993,
respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-9 1; NCMB-NCR-NS-09-678-91) on grounds that these were
issued with grave abuse of discretion and in excess of jurisdiction.

Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter
referred to as the Union) is a labor organization representing the rank and file employees of petitioner Metrolab
Industries, Inc. (hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc.

On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union expired. The
negotiations for a new CBA, however, ended in a deadlock.

Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro Drug Inc. The
parties failed to settle their dispute despite the conciliation efforts of the National Conciliation and Mediation
Board.

To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued an
assumption order dated 20 September 1991, the dispositive portion of which reads, thus:

WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this Office
hereby assumes jurisdiction over the entire labor dispute at Metro Drug, Inc. - Metro Drug Distribution Division and
Metrolab Industries Inc.

Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug Corp. Employees
Association - FFW are likewise directed to cease and desist from committing any and all acts that might exacerbate
the situation.

Finally, the parties are directed to submit their position papers and evidence on the aforequoted deadlocked issues
to this office within twenty (20) days from receipt hereof.

SO ORDERED.[1] (Italics ours.)

On 27 December 1991, then Labor Secretary Torres issued an order resolving all the disputed items in the CBA and
ordered the parties involved to execute a new CBA.

Thereafter, the Union filed a motion for reconsideration.

On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab laid off 94
of its rank and file employees.
On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the
mass layoff, alleging that such act violated the prohibition against committing acts that would exacerbate the
dispute as specifically directed in the assumption order.[2]

On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its management
prerogative. It maintained that the company would suffer a yearly gross revenue loss of approximately sixty-six (66)
million pesos due to the withdrawal of its principals in the Toll and Contract Manufacturing Department. Metrolab
further asserted that with the automation of the manufacture of its product Eskinol, the number of workers
required its production is significantly reduced.[3]

Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis due to availability
of work in the production lines.

On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of Metrolabs 94
rank and file workers illegal and ordered their reinstatement with full backwages. The dispositive portion reads as
follows:

WHEREFORE, the Unions motion for reconsideration is granted in part, and our order of 28 December 1991 is
affirmed subject to the modifications in allowances and in the close shop provision. The layoff of the 94 employees
at MII is hereby declared illegal for the failure of the latter to comply with our injunction against committing any act
which may exacerbate the dispute and with the 30-day notice requirement. Accordingly, MII is hereby ordered to
reinstate the 94 employees, except those who have already been recalled, to their former positions or substantially
equivalent, positions with full backwages from the date they were illegally laid off on 27 January 1992 until actually
reinstated without loss of seniority rights and other benefits. Issues relative to the CBA agreed upon by the parties
and not embodied in our earlier order are hereby ordered adopted for incorporation in the CBA. Further, the
dispositions and directives contained in all previous orders and resolutions relative to the instant dispute, insofar as
not inconsistent herein, are reiterated. Finally, the parties are enjoined to cease and desist from committing any act
which may tend to circumvent this resolution.

SO RESOLVED.[4]

On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not aggravate the
dispute since no untoward incident occurred as a result thereof. It, likewise, filed a motion for clarification regarding
the constitution of the bargaining unit covered by the CBA.

On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The execution, however, was
without prejudice to the outcome of the issues raised in the reconsideration and clarification motions submitted for
decision to the Secretary of Labor.[5]

Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its employees on
grounds of redundancy due to lack of work which the Union again promptly opposed on 5 October 1992.

On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order. Metrolab moved for a
reconsideration.[6]

On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution containing the following
orders:

xxx xxx xxx.

1. MIIs motion for partial reconsideration of our 14 April 1992 resolution specifically that portion thereof assailing
our ruling that the layoff of the 94 employees is illegal, is hereby denied. MII is hereby ordered to pay such
employees their full backwages computed from the time of actual layoff to the time of actual recall;

2. For the parties to incorporate in their respective collective bargaining agreements the clarifications herein
contained; and

3. MIIs motion for reconsideration with respect to the consequences of the second wave of layoff affecting 73
employees, to the extent of assailing our ruling that such layoff tended to exacerbate the dispute, is hereby denied.
But inasmuch as the legality of the layoff was not submitted for our resolution and no evidence had been adduced
upon which a categorical finding thereon can be based, the same is hereby referred to the NLRC for its appropriate
action.
Finally, all prohibitory injunctions issued as a result of our assumption of jurisdiction over this dispute are hereby
lifted.

SO RESOLVED.[7]

Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-shop provision of the
CBA, not from the bargaining unit.

On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the present petition for
certiorari with application for issuance of a Temporary Restraining Order.

On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary of Labor from enforcing and
implementing the assailed Resolution and Omnibus Resolution dated 14 April 1992 and 25 January 1993,
respectively.

In its petition, Metrolab assigns the following errors:

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF
DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY LAYOFF ILLEGAL AND ORDERING
THE REINSTATEMENT AND PAYMENT OF BACKWAGES TO THE AFFECTED EMPLOYEES.*

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN
INCLUDING EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF RANK AND FILE EMPLOYEES.[8]

Anent the first issue, we are asked to determine whether or not public respondent Labor Secretary committed grave
abuse of discretion and exceeded her jurisdiction in declaring the subject layoffs instituted by Metrolab illegal on
grounds that these unilateral actions aggravated the conflict between Metrolab and the Union who were, then,
locked in a stalemate in CBA negotiations.

Metrolab argues that the Labor Secretarys order enjoining the parties from committing any act that might
exacerbate the dispute is overly broad, sweeping and vague and should not be used to curtail the employers right to
manage his business and ensure its viability.

We cannot give credence to Metrolabs contention.

This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate
business decisions of the employer. However, this privilege is not absolute but subject to limitations imposed by
law.[9]

In PAL v. NLRC,[10] we issued this reminder:

xxx xxx xxx

. . .the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina ( 177 SCRA
565 [1989]), it was held that managements prerogatives must be without abuse of discretion....

xxx xxx xxx

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by
limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice
(University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]). . . . (Italics ours.)

xxx xxx xxx.

The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power under the
Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest.
The disputed injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor Code specifically
provides that:
xxx xxx xxx

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified
in the assumption or certification order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with such orders as he may issue to enforce the same. . . (Italics
ours.)

xxx xxx xxx.

That Metrolabs business is of national interest is not disputed. Metrolab is one of the leading manufacturers and
suppliers of medical and pharmaceutical products to the country.

Metro labs management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and
tempered by the limitations set by law, taking into account its special character and the particular circumstances in
the case at bench.

As aptly declared by public respondent Secretary of Labor in its assailed resolution:

xxx xxx xxx.

MII is right to the extent that as a rule, we may not interfere with the legitimate exercise of management
prerogatives such as layoffs. But it may nevertheless be appropriate to mention here that one of the substantive
evils which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further
detriment of the national interest. When a labor dispute has in fact occurred and a general injunction has been
issued restraining the commission of disruptive acts, management prerogatives must always be exercised
consistently with the statutory objective.[11]

xxx xxx xxx.

Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no untoward incident
occurred after the layoffs were implemented. There were no work disruptions or stoppages and no mass actions
were threatened or undertaken. Instead, petitioner asserts, the affected employees calmly accepted their fate as
this was a matter which they had been previously advised would be inevitable.[12]

After a judicious review of the record, we find no compelling reason to overturn the findings of the Secretary of
Labor.

We reaffirm the doctrine that considering their expertise in their respective fields, factual findings of administrative
agencies supported by substantial evidence are accorded great respect and binds this Court.[13]

The Secretary of Labor ruled, thus:

xxx xxx xxx.

Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or
increase the tensions between the parties should be considered an act of exacerbation. One must look at the act
itself, not on speculative reactions. A misplaced recourse is not needed to prove that a dispute has been
exacerbated. For instance, the Union could not be expected to file another notice of strike. For this would depart
from its theory of the case that the layoff is subsumed under the instant dispute, for which a notice of strike had
already been filed. On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic
action from the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. Under a
regime of laws, legal remedies take the place of violent ones.[14]

xxx xxx xxx.

Protest against the subject layoffs need not be in the form of violent action or any other drastic measure. In the
instant case the Union registered their dissent by swiftly filing a motion for a cease and desist order. Contrary to
petitioners allegations, the Union strongly condemned the layoffs and threatened mass action if the Secretary of
Labor fails to timely intervene:

xxx xxx xxx.

3. This unilateral action of management is a blatant violation of the injunction of this Office against committing acts
which would exacerbate the dispute. Unless such act is enjoined the Union will be compelled to resort to its legal
right to mass actions and concerted activities to protest and stop the said management action. This mass layoff is
clearly one which would result in a very serious labor dispute unless this Office swiftly intervenes.[15]

xxx xxx xxx.

Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the
subject layoffs. As a result, motions and oppositions were filed diverting the parties attention, delaying resolution of
the bargaining deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict.

We, likewise, find untenable Metrolabs contention that the layoff of the 94 rank-and-file employees was temporary,
despite the recall of some of the laid off workers.

If Metrolab intended the layoff of the 94 workers to be temporary, it should have plainly stated so in the notices it
sent to the affected employees and the Department of Labor and Employment. Consider the tenor of the pertinent
portions of the layoff notice to the affected employees:

xxx xxx xxx.

Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng lay-off ng mga empleyado sa Rank & File
dahil nabawasan ang trabaho at puwesto para sa kanila. Marami sa atin ang kasama sa lay-off dahil wala nang
trabaho para sa kanila. Mahirap tanggapin ang mga bagay na ito subalit kailangan nating gawin dahil hindi kaya ng
kumpanya ang magbayad ng suweldo kung ang empleyado ay walang trabaho. Kung tayo ay patuloy na magbabayad
ng suweldo, mas hihina ang ating kumpanya at mas marami ang maaring maapektuhan.

Sa pagpapatupad ng lay-off susundin natin ang LAST IN-FIRST OUT policy. Ang mga empleyadong may
pinakamaikling serbisyo sa kumpanya ang unang maaapektuhan. Ito ay batay na rin sa nakasaad sa ating CBA na ang
mga huling pumasok sa kumpanya ang unang masasama sa lay-off kapag nagkaroon ng ganitong mga kalagayan.

Ang mga empleyado na kasama sa lay-off ay nakalista sa sulat na ito. Ang umpisa ng lay-off ay sa Lunes, Enero 27.
Hindi na muna sila papasok sa kumpanya. Makukuha nila ang suweldo nila sa Enero 30, 1992.

Hindi po natin matitiyak kung gaano katagal ang lay-off ngunit ang aming tingin ay matatagalan bago magkaroon ng
dagdag na trabaho. Dahil dito, sinimulan na namin ang isang Redundancy Program sa mga supervisors. Nabawasan
ang mga puwesto para sa kanila, kaya sila ay mawawalan ng trabaho at bibigyan na ng redundancy pay.[16] (Italics
ours.)

xxx xxx xxx.

We agree with the ruling of the Secretary of Labor, thus:

xxx xxx xxx.

. . .MII insists that the layoff in question is temporary not permanent. It then cites International Hardware, Inc. vs.
NLRC, 176 SCRA 256, in which the Supreme Court held that the 30-day notice required under Article 283 of the
Labor Code need not be complied with if the employer has no intention to permanently severe (sic) the
employment relationship.

We are not convinced by this argument. International Hardware involves a case where there had been a reduction
of workload. Precisely to avoid laying off the employees, the employer therein opted to give them work on a
rotating basis. Though on a limited scale, work was available. This was the Supreme Courts basis for holding that
there was no intention to permanently severe (sic) the employment relationship.

Here, there is no circumstance at all from which we can infer an intention from MII not to sever the employment
relationship permanently. If there was such an intention, MII could have made it very clear in the notices of layoff.
But as it were, the notices are couched in a language so uncertain that the only conclusion possible is the
permanent termination, not the continuation, of the employment relationship.
MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. While insisting that there is
really no best time to announce a bad news, (sic) it also claims that it broke the bad news only on 27 January 1992
because had it complied with the 30-day notice, it could have broken the bad news on 02 January 1992, the first
working day of the year. If there is really no best time to announce a bad news (sic), it wouldnt have mattered if the
same was announced at the first working day of the year. That way, MII could have at least complied with the
requirement of the law.[17]

The second issue raised by petitioner merits our consideration.

In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA provisions on closed-shop and the
scope of the bargaining unit in this wise:

xxx xxx xxx.

Appropriateness of the bargaining unit.

xxx xxx xxx.

Exclusions. In our 14 April 1992 resolution, we ruled on the issue of exclusion as follows:

These aside, we reconsider our denial of the modifications which the Union proposes to introduce on the close shop
provision. While we note that the provision as presently worded has served the relationship of the parties well
under previous CBAs, the shift in constitutional policy toward expanding the right of all workers to self-organization
should now be formally recognized by the parties, subject to the following exclusions only:

1. Managerial employees; and

2. The executive secretaries of the President, Executive Vice-President, Vice-President, Vice President for Sales,
Personnel Manager, and Director for Corporate Planning who may have access to vital labor relations information or
who may otherwise act in a confidential capacity to persons who determine or formulate management policies.

The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be modified consistently with the
foregoing.

Article I (b) of the 1988-1990 CBA provides:

b)Close Shop. - All Qualified Employees must join the Association immediately upon regularization as a condition for
continued employment. This provision shall not apply to: (i) managerial employees who are excluded from the
scope of the bargaining unit; (ii) the auditors and executive secretaries of senior executive officers, such as, the
President, Executive Vice-President, Vice-President for Finance, Head of Legal, Vice-President for Sales, who are
excluded from membership in the Association; and (iii) those employees who are referred to in Attachment I hereof,
subject, however, to the application of the provision of Article II, par. (b) hereof. Consequently, the above-specified
employees are not required to join the Association as a condition for their continued employment.

On the other hand, Attachment I provides:

Exclusion from the Scope of the Close Shop Provision

The following positions in the Bargaining Unit are not covered by the Close Shop provision of the CBA (Article I, par.
b):

1. Executive Secretaries of Vice-Presidents, or equivalent positions.

2. Executive Secretary of the Personnel Manager, or equivalent positions.

3. Executive Secretary of the Director for Corporate Planning, or equivalent positions.

4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at Head Office, Accounting
Department at Head Office, and Budget Staff, who because of the nature of their duties and responsibilities need
not join the Association as a condition for their employment.

5. Newly-hired secretaries of Branch Managers and Regional Managers.


Both MDD and MII read the exclusion of managerial employees and executive secretaries in our 14 April 1992
resolution as exclusion from the bargaining unit. They point out that managerial employees are lumped under one
classification with executive secretaries, so that since the former are excluded from the bargaining unit, so must the
latter be likewise excluded.

This reading is obviously contrary to the intent of our 14 April 1992 resolution. By recognizing the expanded scope
of the right to self-organization, our intent was to delimit the types of employees excluded from the close shop
provision, not from the bargaining unit, to executive secretaries only. Otherwise, the conversion of the exclusionary
provision to one that refers to the bargaining unit from one that merely refers to the close shop provision would
effectively curtail all the organizational rights of executive secretaries.

The exclusion of managerial employees, in accordance with law, must therefore still carry the qualifying phrase from
the bargaining unit in Article I (b)(i) of the 1988-1990 CBA. In the same manner, the exclusion of executive
secretaries should be read together with the qualifying phrase are excluded from membership in the Association of
the same Article and with the heading of Attachment I. The latter refers to Exclusions from Scope of Close Shop
Provision and provides that [t]he following positions in Bargaining Unit are not covered by the close shop provision
of the CBA.

The issue of exclusion has different dimension in the case of MII. In an earlier motion for clarification, MII points out
that it has done away with the positions of Executive Vice-President, Vice-President for Sales, and Director for
Corporate Planning. Thus, the foregoing group of exclusions is no longer appropriate in its present organizational
structure. Nevertheless, there remain MII officer positions for which there may be executive secretaries. These
include the General Manager and members of the Management Committee, specifically i) the Quality Assurance
Manager; ii) the Product Development Manager; iii) the Finance Director; iv) the Management System Manager; v)
the Human Resources Manager; vi) the Marketing Director; vii) the Engineering Manager; viii) the Materials
Manager; and ix) the Production Manager.

xxx xxx xxx

The basis for the questioned exclusions, it should be noted, is no other than the previous CBA between MII and the
Union. If MII had undergone an organizational restructuring since then, this is a fact to which we have never been
made privy. In any event, had this been otherwise the result would have been the same. To repeat, we limited the
exclusions to recognize the expanded scope of the right to self-organization as embodied in the Constitution.[18]

Metrolab, however, maintains that executive secretaries of the General Manager and the 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
Manager, who are all members of the companys Management Committee should not only be exempted from the
closed-shop provision but should be excluded from membership in the bargaining unit of the rank and file
employees as well on grounds that their executive secretaries are confidential employees, having access to vital
labor information.[19]

We concur with Metrolab.

Although Article 245 of the Labor Code[20] 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 nature of work are required to assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive and highly confidential records.

The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file
employees and their disqualification to join any labor organization was succinctly discussed in Philips Industrial
Development v. NLRC:[21]

xxx xxx xxx.

On the main issue raised before Us, it is quite obvious that respondent NLRC committed grave abuse of discretion in
reversing the decision of the Executive Labor Arbiter and in decreeing that PIDIs Service Engineers, Sales Force,
division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of
Audit, EDP and Financial Systems are included within the rank and file bargaining unit.

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 join a labor union equally applies to them.

In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus:

x x x 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.

In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale applicable to confidential
employees:

This rationale holds true also for 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 a spy or spies of either party to a collective bargaining agreement. This is specially true in
the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the
establishment. To allow the confidential employees to join the existing Union of the rank-and-file would be in
violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their
functions/positions are expressly excluded.

xxx xxx xxx.

Similarly, in National Association of Trade Union - Republic Planters Bank Supervisors Chapter v. Torres[22] we
declared:

xxx xxx xxx.

. . . As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers and Controllers are
confidential employees, having control, custody and/ or access to confidential matters, e.g., the branchs cash
position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts
and other negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, this
claim is not even disputed by petitioner. A confidential employee is one entrusted with confidence on delicate
matters, or with the custody, handling, or care and protection of the employers property. While Art. 245 of the
Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization, under the
doctrine of necessary, implication, confidential employees are similarly disqualified. . . .

xxx xxx xxx.

. . .(I)n 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. . . .

xxx xxx xxx.

And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor,[23] we ruled that:

xxx xxx xxx.

Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically routinary and
clerical. However, they should be differentiated from rank-and-file employees because they are tasked with, among
others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving
of and receiving notices, and such other duties as required by the legal personnel of the corporation. Legal
secretaries therefore fall under the category of confidential employees. . . .
xxx xxx xxx.

We thus hold that public respondent acted with grave abuse of discretion in not excluding the four foremen and
legal secretary from the bargaining unit composed of rank-and-file employees.

xxx xxx xxx.

In the case at bench, the Union does not disagree with petitioner that the executive secretaries are confidential
employees. It however, makes the following contentions:

xxx xxx xxx.

There would be no danger of company domination of the Union since the confidential employees would not be
members of and would not participate in the decision making processes of the Union.

Neither would there be a danger of espionage since the confidential employees would not have any conflict of
interest, not being members of the Union. In any case, there is always the danger that any employee would leak
management secrets to the Union out of sympathy for his fellow rank and filer even if he were not a member of the
union nor the bargaining unit.

Confidential employees are rank and file employees and they, like all the other rank and file employees, should be
granted the benefits of the Collective Bargaining Agreement. There is no valid basis for discriminating against them.
The mandate of the Constitution and the Labor Code, primarily of protection to Labor, compels such conclusion.[24]

xxx xxx xxx.

The Unions assurances fail to convince. The dangers sought to be prevented, particularly the threat of conflict of
interest and espionage, are not eliminated by non-membership of Metrolabs executive secretaries or confidential
employees in the Union. Forming part of the bargaining unit, the executive secretaries stand to benefit from any
agreement executed between the Union and Metrolab. Such a scenario, thus, gives rise to a potential conflict
between personal interests and their duty as confidential employees to act for and in behalf of Metrolab. They do
not have to be union members to affect or influence either side.

Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature of
employment of confidential employees is quite distinct from the rank and file, thus, warranting a separate category.
Excluding confidential employees from the rank and file bargaining unit, therefore, is not tantamount to
discrimination.

WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public respondent
Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the extent that executive
secretaries of petitioner Metrolabs General Manager and the executive secretaries of the members of its
Management Committee are excluded from the bargaining unit of petitioners rank and file employees.

SO ORDERED.

Padilla, Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.

[1] Rollo, p.74.

[2] Id., at 202-204.

[3] Id., at 8-9.

[4]

[5] Id., at 303.

[6] Id., at 236-241.

[7] Id., at 70-71.


* Metrolab submits that the issue in the instant petition for certiorari is limited to the determination of whether or
not the Secretary of Labor gravely abused her discretion in ruling that the layoff of its 94 workers exacerbated their
labor dispute with the Union. Metrolab underscores that the basis for the said layoff has never been placed in issue.
(Rollo, pp. 327- 328.)

In the same manner, Metrolab prefatorily declared that it does not dispute the Secretary of Labors certification to
the NLRC of the legality (or illegality) of the second layoff of Metrolabs 73 rank and file workers on grounds of
redundancy (Rollo, pp. 11-12). In its Consolidated Reply, Metrolab states, thus:

5.0. Moreover, the redundancy program of October 1992 is not an issue in the present petition. The assailed
Omnibus Order, in no uncertain terms, ordered that this matter be brought before the National Labor Relations
Commission (NLRC) for adjudication (Please see Annex A-i of the Petition). Petitioner herein does not question the
said part of the Omnibus Resolution in the present petition. The time for the same is not yet ripe, as the NLRC still
has to pass judgment upon the facts surrounding the redundancy program. As of this writing, the said redundancy
program is presently being litigated before the Arbitration Branch of the NLRC in NLRC-NCR Case No. 00-05-03325-
93 entitled Metro Drug Corporation Employees Association - FFW v. Metrolab Industries, Inc., et al. before Labor
Arbiter Cornelio Linsangan. (Rollo, p. 330.)

[8] Id., at 13.

[9] Radio Communications of the Philippines, Inc. v. NLRC, 221 SCRA 782 (1993); Corral v. NLRC, 221 SCRA
693(1993); Rubberworld (Phils.), Inc. v. NLRC, 175 SCRA 450 (1989).

[10] 225 SCRA 301 (1993).

[11] Rollo, p. 46.

[12] Id., at 335.

[13] Association of Marine Officers & Seamen of Reyes & Lim Co. v. Laguesma, 239 SCRA 460 (1994); Maya Farms
Employees Organization v. NLRC, 239 SCRA 508 (1994); Rabago v. NLRC, 200 SCRA 158 (1991); Pan Pacific Industrial
Sales, Co., Inc. v. NLRC, 194 SCRA 633 (1991).

[14] Rollo, p. 57.

[15] Id., at 202-204; 228-234; Urgent Motion to Resolve Unions Motion dated 27 January 1992, Folder 4, Original
Record.

[16] Rollo, p. 198.

[17] Id., at 58-59.

[18] Rollo, pp. 59-63.

[19] Id., at 31-32.

[20] Art. 245. Labor Code. 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.

[21] 210 SCRA 339(1992).

[22] 239 SCRA 546(1994).

[23] 241 SCRA 294(1995).

[24] Rollo, pp. 192-193.

Syllabi/Synopsis

THIRD DIVISION
[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.

DECISION

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.

On October 12, 1990, PEPSI filed a Notice of Appeal and Memorandum of Appeal with the Secretary of Labor,
questioning the setting of the certification election on the said date and five (5) days after. It also presented an
urgent Ex-Parte Motion to Suspend the Certification Election, which motion was granted on October 18, 1990.

On November 12, 1990, the Secretary of Labor denied the appeal and Motion for Reconsideration. Even as the
Petition to Cancel, Revoke and Suspend Union Charter Certificate was pending before the BLR, PEPSI found its way
to this Court via the present petition for certiorari.

On February 6, 1991, the Court granted the prayer for temporary restraining order and/or preliminary injunction.

The pivot of inquiry here is: whether or not a supervisors union can affiliate with the same Federation of which two
(2) rank and file unions are likewise members, without violating Article 245 of the Labor Code (PD 442), as amended,
by Republic Act 6715, which provides:

Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees.-
Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not
be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own.

In its Comment dated March 19, 1991, the Federation argued that:

The pertinent portion of Article 245 of the Labor Code states that. Supervisory employees shall not be eligible for
membership in a labor organization of the rank and file employees but may join, assist or form separate labor
organization of their own.

This provision of law does not prohibit a local union composed of supervisory employees from being affiliated to a
federation which has local unions with rank-and-file members as affiliates.

xxx xxx xxx

xxx the Petition to Cancel, Revoke or Set Aside the Charter Certificate of the private respondent is anchored on the
alleged ground that certain managerial employees are included as members thereof. The grounds for the
cancellation of the registration certificate of a labor organization are provided in Section 7 of Rule II, Book V of the
Omnibus Rules Implementing the Labor Code, and the inclusion of managerial employees is not one of the grounds.
xxx (in this case, the private respondent herein) remains to be a legitimate labor organization.[1]

On April 8, 1991, the Secretary of Labor and Employment, through the Office of the Solicitor General, sent in a
Comment, alleging inter alia, that:

xxx under Article 259 of the New Labor Code, only orders of the Med-Arbiter can be appealed through the Secretary
of Labor and only on the ground that the rules and regulations for the conduct of the certification election have
been violated. The Order of the Representation Officer is interlocutory and not appealable. xxx

xxx until and unless there is a final order cancelling its certificate of registration or charter certificate, a labor
organization remains to be a legitimate labor organization entitled to exercise all the rights and duties accorded to it
by the Labor Code including the right to be certified as a bargaining representative. xxx

xxx 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

Article 245 of the New Labor Code does not preclude the supervisors union and the rank-and-file union from being
affiliated with the same federation.

xxx xxx xxx

A federation of local union is not the labor organization referred to in Article 245 but only becomes entitled to all
the rights enjoyed by the labor organization (at the company level) when it has complied with the registration
requirements found in Articles 234 and 237. Hence, what is prohibited by Article 245 is membership of supervisory
employees in a labor union (at the company level) of the rank and file. xxx

xxx In other words, the affiliation of the supervisory employees union with the same federation with which the rank
and file employees union is affiliated did not make the supervisory employees members of the rank and file
employees union and vice versa.[2] xxx

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

It is our humble contention that a final determination of the Petition to Set-Aside, Cancel, Revoke Charter Union
Affiliation should first be disposed of before granting the Petition for the Conduct of Certification Election. To allow
the conduct of the certification election to proceed would make any decision arrived at by the Bureau of Labor
Relations useless inasmuch as the same would necessarily be rendered moot and academic.[3]

On June 7, 1991, petitioner again filed a Supplemental Reply stressing:

It is likewise stressed that officials of both the PCLU and PEUP are top ranking officers of UOEF, the federation of
supervisors union, to wit:

POSITION IN RANK AND FILE POSITION IN FEDERATION

UNION
1. Rogelio de la Cruz PCLU -President General Vice President

2. Felix Gatela PEUP - President General Treasurer

3. Carlito Epino PCLU Board Member Educational Research

Director

xxx xxx xxx

The respondent supervisory union could do indirectly what it could not do directly as the simple expedient of
affiliating with UOEF would negate the manifest intent and letter of the law that supervisory employees can only
join, assist or form separate labor organizations of their own and cannot be eligible for membership in a labor
organization of the rank and file employees.[4]

On August 6, 1991, the Secretary of Labor and Employment filed a Rejoinder, claiming thus:

xxx an employer has no legal standing to question the validity of a certification election.

xxx For this reason, the Supreme Court has consistently held that, as a rule, a certification election is the sole and
exclusive concern of the employees and that the employer is definitely an intruder or a mere bystander
(Consolidated Farms vs. Noriel, L-47752, July 31, 1978, 84 SCRA 469; Filipino Metals Corporation vs. Ople, L- 43861,
September 4, 1981, 107 SCRA 211; Trade Unions of the Philippines and Allied Services (TUPAS) vs. Trajano No. L-
61153, January 17, 1983, 120 SCRA 64].

xxx xxx xxx

In Adamson & Adamson, Inc. vs. CIR No. L-35120, January 31, 1984, 127 SCRA 268, the Supreme Court (then 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,

There is nothing in the provisions of the Industrial Peace Act which provides that a duly registered local union
affiliating with a national union or federation loses its legal personality, or its independence.

xxx xxx xxx

However, there is absolutely nothing in the Labor Code that prohibits a federation from representing or exercising
influence over its affiliates. On the contrary, this is precisely the reason why federations are formed and are allowed
by law to exist.[5]

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

On December 9, 1991, the Court resolved to DISMISS the case for failure to sufficiently show that the questioned
judgment is tainted with grave abuse of discretion.

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.

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 and Employment, dated October 4, 1991 and December 12, 1991, respectively.

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

WHEREFORE, premises considered, an order is hereby issued:

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

2. Ordering the conduct of a Certification Election to be participated by and among the supervisory workers of the
respondent company, Pepsi-Cola Products Philippines, Inc. at its plant at Tin-ao, Cagayan de Oro City, including all
the satellite warehouse within the territorial coverage and control of the Cagayan de Oro Pepsi-Cola Plant. The
choices are as follows:

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

2. No union

The parties are directed to attend a pre-election conference on June 10, 1991, 2:30 p.m. at the Regional Office to
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
aforementioned payroll during the pre-election conference for verification purposes.[6] xxx

The supervisory employees of the Union are:

POSITION

1. Felipe Valdehueza Route Manager

2. Gerberto Vertudazo C & C Manager

3. Paul Mendoza Sales Service Department Manager

4. Gilberto Emano, Jr. Route Manager

5. Jaime Huliganga Chief Checker

6. Elias Edgama, Sr. Accounting Manager

7. Romanico Ramos Route Manager

8. Raul Yacapin Route Manager

9. Jovenal Albaque Route Manager

10. Fulvio Narciso Route Manager

11. Apolinario Opiniano Route Manager

12. Alfredo Panas Route Manager

13. Simplicio Nelie Route Manager

14. Arthur Rodriguez Route Manager

15. Marco Ilano Warehouse Operations Manager and

16. Deodoro Ramos Maintenance Manager

On June 6, 1991, PEPSI appealed the said Order to the Secretary of Labor and Employment on the ground of grave
abuse of discretion, docketed as Case No. OS-A-232-91.

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

WHEREFORE, the Order of the Med-Arbiter dated 23 May 1991 is hereby modified to the effect that MED ARB ROX
Case No. R1000-9104-RU-012 and R1000-9102-RU-008 are hereby referred to the Office of the Regional Director
which has jurisdiction over these cases. The call for certification election among the supervisory workers of the
Pepsi-Cola Products Philippines, Inc. at its plant at Tin-ao, Cagayan de Oro City is hereby sustained.[7]

On October 19, 1991, PEPSI presented a motion for reconsideration of the aforesaid Order but the same was denied
on December 12, 1991.
Meanwhile, the BLR issued Registration Certificate No. 11492-LC in favor of the Union. Dissatisfied therewith, PEPSI
brought the instant petition for certiorari, contending that:

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT PRIVATE RESPONDENTS
OFFICERS AND MEMBERS ARE NOT MANAGERIAL EMPLOYEES;

PRIVATE RESPONDENT IS PROHIBITED FROM AFFILIATING ITSELF WITH A FEDERATION ALREADY AFFILIATED WITH
THE RANK AND FILE UNION;

PUBLIC RESPONDENT COMMITTED GRAVE OF (SIC) ABUSE OF DISCRETION IN RULING THAT THE INSTITUTION OF A
PETITION FOR CANCELLATION OF UNION REGISTRATION DOES NOT CONSTITUTE A PREJUDICIAL QUESTION TO A
PETITION CERTIFICATION ELECTION.[8]

The petitions must fail for want of merit.

At the outset, it must be stressed that on September 1, 1992, there was a Resolution of the Union withdrawing from
the Federation, to wit:

BE IT RESOLVED, as it is hereby RESOLVED, that this UNION WITHDRAW, as it hereby WITHDRAWS its affiliation from
the Union de Obreros Estivadores de Filipinas, and at the same time, give our thanks to the said federation for its
help and guidance rendered to this Union in the past.[9]

The issue in G.R. No. 96663, whether or not the supervisors union can be affiliated with a Federation with two (2)
rank and file unions directly under the supervision of the former, has thus become moot and academic in view of
the Unions withdrawal from the federation.

In a long line of cases (Narciso Nakpil, et. al., vs. Hon. Crisanto Aragon, et. al.,, G. R. No. L - 24087, January 22, 1980,
95 SCRA 85; Toribio v. Bidin, et. al., G.R. No. L-37960, February 28, 1980, 96 SCRA 361; Gumaua v. Espino, G.R. No. L-
36188 - 37586 February 29, 1980, 96 SCRA 402), the Court dismissed the petition for being moot and academic. In
the case of F. C. Fisher v. Yangco Steamship Co., March 31, 1915, the Court held:

It is unnecessary, however to indulge in academic discussion of a moot question. xxx

xxx 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 xxx.

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. xxx[10]

In Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12, [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:

xxx 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:

xxx A confidential employee is one entrusted with confidence on delicate matters, or with the custody, handling, or
care and protection of the employers 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 xxx, 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 xxx

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 xxx 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 dont 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 employees 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.

SO ORDERED.

Melo, (Chairman), Vitug, and Gonzaga-Reyes, JJ., concur.

Panganiban, J., in the result.

[1] Pepsi - Cola Supervisory Employees Organization - UOEF, Comment, pp. 4-6, Rollo, pp. 71-73.

[2] Rollo, pp. 86-89, 92.

[3] Rollo, p. 104.

[4] Rollo, p.110.

[5] Rejoinder, pp. 2,3,10,14; Rollo, pp. 125,126, 133,137.

[6] OSG Comment, pp. 3 -4, Rollo, pp. 145 - 146.

[7] OSG Comment, p. 5, Rollo, p. 147.

[8] Petition, pp. 8, 13, 14; Rollo, pp. 9, 14, 15.

[9] Annex I, Rollo, p. 213.

[10] 230 SCRA 761, 770, citing EasteRepublic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-35120 January 31, 1984

ADAMSON & ADAMSON, INC., petitioner,


vs.
THE COURT OF INDUSTRIAL RELATIONS and ADAMSON & ADAMSON SUPERVISORY UNION (FFW), respondents.

Sycip, Salazar, Luna & Feliciano for petitioner.

Jaime D. Lauron for respondents.

GUTIERREZ, JR., J.:

Adamson and Adamson, Inc., filed this petition to set aside orders of the respondent Court of Industrial Relations
(CIR) holding that the Adamson and Adamson, Inc. supervisory Union (FFW) can legally represent supervisors of the
petitioner corporation notwithstanding the affiliation of the lank and file union of the same company with the same
labor federation, the Federation of Free Workers.
The Adamson and Adamson, Inc. Supervisory Union (FFW) informed the petitioner about its having organized on the
same date that the Adamson and Adamson, Inc. Salesmen Association (FFW) advised the petitioner that the rank
and file salesmen had formed their own union.

The CIR dismissed the petition in CIR Case No. 3267-MC entitled "In the Matter of Representation of the Supervisory
Employees of Adamson and Adamson, Inc., Petitioner " thus prompting the filing of this petition for review on
certiorari.

Subsequently and during the pendency of the present petition, the rank and file employees formed their own union,
naming it Adamson and Adamson Independent Workers (FFW).

The petitioner made a lone assignment of error, to wit:

THE RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN SUSTAINING THE ELIGIBILITY OF THE RESPONDENT
UNION TO REPRESENT THE PETITIONER'S SUPERVISORY EMPLOYEES NOT-WITHSTANDING THE AFFILIATION OF THE
SAID UNION WITH THE SAME NATIONAL FEDERATION WITH WHICH THE UNIONS OF NON-SUPERVISORS IN THE
PETITIONER COMPANY ARE ALSO AFFILIATED.

The petitioner argues that the affiliation of the respondent union of supervisors, the salesmen's association, and the
Adamson and Adamson independent Workers Union of rank and file personnel with the same national federation
(FFW) violates Section 3 of the Industrial Peace Act, as amended, because — (1) it results in the indirect affiliation Of
supervisors and rank-and-file employees with one labor organization; (2) since respondent union and the unions of
non-supervisors in the same company are governed by the same constitution and by-laws of the national
federation, in practical effect, there is but one union; and (3) it would result in the respondent union's losing its
independence because it becomes the alter ego of the federation.

The petitioner also submits that should affiliation be allowed, this would violate the requirement of separateness of
bar units under Section 12 of the Act because only one union will in fact represent both supervisors and rank-and-
file employees of the petitioner.

The respondents on the other hand argue that the supervisory employees of an employer may validly join an
organization of the rank-and-file employees so long as the said rank and file employees are not under their
supervision. They submit that Adamson and Adamson Supervisory Union (FFW) is not composed of sales supervisors
and, therefore, the salesmen of the company are not under the supervision of the supervisory employees forming
the union. Respondents also argue that even if the salesmen of the petitioner company are under the supervision of
the members of the supervisory union, the prohibition would not apply because the salesmen and the supervisory
employees of the company have their separate and distinct labor organizations, and, as a matter of fact, their
respective unions sent separate proposal for collective bargaining agreements. They contend that their respective
labor organizations, not the FFW, will represent their members in the negotiations as well as in the signing of their
respective contracts. Respondents further argue that the Federation of Free Workers has, as its affiliates,
supervisory as well as rank-and-file employees, and should both the supervisory and the rank-and-file employees of
a certain employer who have separate certificates of registration affiliate with the same federation, the prohibition
does not apply as the federation is not the organization of the supervisory employees contemplated in the law.

The issue presented involves the correct interpretation of Section 3 of Republic Act No. 875, the Industrial Peace
Act, as amended, which states:

Employees shall have the right to self-organization and to form join or assist labor organizations of their own
choosing for the purpose 6f collective bargaining through representatives of their own and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid or protection. Individuals employed as
supervisors shall not be eligible for membership in a labor organization of employees under their supervision but
may form separate organizations of their own.

The right of employees to self-organization and to form, join or assist labor organizations of their own choosing for
the purpose of collective bargaining and to engage in concerted activities for mutual aid or protection is a
fundamental right of labor that derives its existence from the Constitution. It is recognized and implemented
through the abovecited Section 3 of the Industrial Peace Act as amended.

In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or rules
and regulations implementing the constitutional mandates, we have always adopted the liberal approach which
favors the exercise of labor rights.
In deciding this case, we start with the recognized rule that the right of supervisory employees to organize under the
Industrial Peace Act carries certain restrictions but the right itself may not be denied or unduly abridged. The
supervisory employees of an employer cannot join any labor organization of employees under their supervision but
may validly form a separate organization of their own. As stated in Caltex Filipino Managers and Supervisors
Association v. Court of Industrial Relations (47 SCRA 112), it would be to attach unorthodoxy to, not to say an
emasculation of, the concept of law if managers as such were precluded from organization. Thus, if Republic Act
875, in its Section 3, recognizes the right of supervisors to form a separate organization of their own, albeit they
cannot be members of a labor organization of employees under their supervision, that authority of supervisors to
form a separate labor union carries with it the right to bargain collectively with the employer. (Government Service
Insurance System v. Government Service Insurance System Supervisors' Union, 68 SCRA 418).

The specific issue before us is whether or not a supervisor's union may affiliate with a federation with which unions
of rank and-file employees of the same employer are also affiliated. We find without merit the contentions of
petitioner that if affilation will be allowed, only one union will in fact represent both supervisors and rank-and-file
employees of the petitioner; that there would be an indirect affiliation of supervisors and rank-and-file employees
with one labor organization; that there would be emerging of two bargaining units ; and that the respondent union
will loose its independence because it becomes an alter ego of the federation.

In Elisco-Elirol Labor Union (NAFLU) v. Noriel (80 SCRA 681) and Liberty Cotton Mills Workers Union v. Liberty Cotton
Mills, Inc. (66 SCRA 512), we held :

xxx xxx xxx

... the court expressly cited and affirmed the basic principle that '(T)he locals are separate and distinct units
primarily designed to secure and maintain the equality of bargaining power between the employer and their
employee-member in the economic struggle for the fruits of the joint productive effort of labor and capital; and the
association of the locals into the national union (as PAFLU) was in the furtherance of the same end. These
association are concensual entities capable of entering into such legal relations with their members. The essential
purpose was the affiliation of the local unions into a common enterprise to increase by collective action the
common bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of
association; free to serve their own and the common-interest of all, subject to the restraints imposed by the
Constitution and By-laws of the Association; and free also to renounce the affiliation for mutual welfare upon the
terms laid down in the agreement which brought it into existence.

We agree with the Court of Industrial Relations when it ruled that:

xxx xxx xxx

The confusion seems to have stemmed from the prefix of FFW after the name of the local unions in the registration
of both. Nonetheless, the inclusion of FWW in the registration is merely to stress that they are its affiliates at the
time of registrations. It does not mean that said local unions cannot stand on their own Neither can it be construed
that their personalities are so merged with the mother federation that for one difference or another they cannot
pursue their own ways, independently of the federation. This is borne by the fact that FFW, like other federation is a
legitimate labor organization separate and distinct from its locals and affiliates and to construe the registration
certificates of the aforecited unions, along the line of the Company's argument. would tie up any affiliates to the
shoe string of the federation. ...

The Adamson and Adamson Supervisory Union and the Adamson and Adamson, Inc., Salesmen Association (FFW),
have their own respective constitutions and by-laws. They are separately and independently registered of each
other. Both sent their separate proposals for collective bar agreements with their employer. There could be no
employer influence on rank-and-file organizational activities nor their could be any rank and file influence on the
supervisory function of the supervisors because of the representation sought to be proscribed.

WHEREFORE, the instant petition is DISMISSED for lack of merit. The questioned order and the resolution en banc of
the respondent Court of Industrial Relations are AFFIRMED.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana and Relova,rn Broadcasting Corporation (DYRE) vs. Dans, etc, et al.,
137 SCRA 628