Vous êtes sur la page 1sur 48
Smc employees vs confessor p2 Philtranco service enterprises vs BLR p21 SMC vs Laguesma p27 SMC Supervisors and Exempt Employees Union vs laguesma p31 St. James School of Quezon City vs Samahang Manggagawa sa St. James School of Quezon City p38 FIRST DIVISION [G.R. No. 111262. September 19, 1996] SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN MIGUEL CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC. (Formerly, B-Meg Plant), respondents. SYLLABUS 1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; COLLECTIVE BARGAINING AGREEMENT; TERM OF REPRESENTATION ASPECT FIXED TO FIVE YEARS; ALL OTHER ASPECTS, THREE YEARS. - Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the CBA has a term of five (5) years instead of three years, before the amendment of the law as far as the representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than three (3) years after its execution. The “representation aspect” refers to the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned. “All other provisions” simply refers to the rest of the CBA, economic as well as non- economic provisions, except representation. 2. STATUTORY CONSTRUCTION; COURT MUST ASCERTAIN LEGISLATIVE INTENT.— It is a cardinal principle of statutory construction that the Court must ascertain the legislative intent for the purpose of giving effect to any statute. The history of the times and state of the things existing when the act was framed or adopted must be followed and the conditions of the things at the time of the enactment of the law should be considered to determine the legislative intent. 3. ID.; ID.; ARTICLE 253-A OF THE LABOR CODE, CONSTRUED.— The framers of the law wanted to maintain industrial peace and stability by having both management and labor work harmoniously together without any disturbance. Thus, no outside union can enter the establishment within five (5) years and challenge the status of the incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and non-economic) can not be questioned by the employers or employees during the period of effectivity of the CBA. The CBA is a contract between the parties and the parties must respect the terms and conditions of the agreement. Notably, the framers of the law did not give a fixed term as to the effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it was left to the parties to fix the period. 4. LABOR AND SOCIAL LEGISLATION; LABOR CODE; COLLECTIVE BARGAINING AGREEMENT; TERM OF NON-REPRESENTATION PROVISION IS THREE YEARS.— The issue as to the term of non-representation provisions of the CBA need not belabored especially when we take note of the Memorandum of the Secretary of Labor dated February 24, 1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January 16, 1995 in the certification election case involving the SMC employees. In said memorandum, the Secretary of Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the term of the bargaining agent, to wit: As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term which would coincide (sic) with the aforesaid five (5) year term of the bargaining representative. In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a term of three (3) years or one which does not coincide with the said 5-year term, and said agreement is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal and therefore, binds the contracting parties. The same will however not adversely affect the right of another union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the CBA. Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that the effectivity of the renegotiated terms of the CBA shall be for three (3) years. 5. ID.; ID.; EMPLOYMENT; TRANSFORMATION OF COMPANIES, MANAGEMENT PREROGATIVE AND BUSINESS JUDGMENT.— Undeniably the transformation of the companies was a management prerogative and business judgment which the courts can not look into unless it is contrary to law, public policy or morals. Neither can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of piercing the corporate veil. 6. ID.; ID.; COLLECTIVE BARGAINING AGREEMENT; OPERATING DIVISIONS OF THE COMPANY WHICH BECAME SEPARATE AND DISTINCT NO LONGER BELONG TO A SINGLE BARGAINING UNIT.— Ever mindful of the employees’ interests, management has assured the concerned employees that they will be absorbed by the new corporations without loss of tenure and retaining their present pay and benefits according to the existing CBAs. They were advised that upon the expiration of the CBAs, new agreements will be negotiated between the management of the new corporations and the bargaining representatives of the employees concerned. Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities. Thus, they can not belong to a single bargaining unit as held in the case of Diatagon Labor Federation Local 110 of the ULGWP v. Ople. Petitioner-union’s attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit so as to have a bigger mass base of employees has, therefore, no more valid ground. 7. ID.; ID.; ID.; TEST IN DETERMINING APPROPRIATE BARGAINING UNIT.— We reiterate what we have explained in the case of University of the Philippines v. Ferrer-Calleja that: [T]here are various factors which must be satisfied and considered in determining the proper constituency of a bargaining unit. No one particular factor is itself decisive of the determination. The weight accorded to any particular factor varies in accordance with the particular question or questions that may arise in a given case. What are these factors? Rothenberg mentions a good number, but the most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2) affinity and unit of employees’ interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions; (3) prior collective bargaining history; and (4) employment status, such as temporary, seasonal and probationary employees. 8. ID.; ID.; ID.; ID.; CASE AT BAR.— In determining an appropriate bargaining unit, the test of grouping is mutuality or commonality of interests. The employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they performed. Considering the spin-offs, the companies would consequently have their respective and distinctive concerns in terms of the nature of work, wages, hours of work and other conditions of employment. Interests of employees in the different companies perforce differ. SMC is engaged in the business of beer manufacturing. Magnolia is involved in the manufacturing and processing of dairy products while SMFI is involved in the production of feeds and the processing of chicken. The nature of their products and scales of business may require different skills which must necessarily be commensurated by different compensation packages. The different companies may have different volumes of work and different working conditions. For such reason, the employees of the different companies see the need to group themselves together and organize themselves into distinctive and different groups. It would then be best to have separate bargaining units for the different companies where the employees can bargain separately according to their needs and according to their own working conditions. D E C I S I O N KAPUNAN, J.: This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February 15, 1993 involving a labor dispute at San Miguel Corporation. The facts are as follows: On June 28, 1990, petitioner-union San Miguel Corporation Employees Union - PTGWO entered into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation (SMC) to take effect upon the expiration of the previous CBA or on June 30, 1989. This CBA provided, among others, that: ARTICLE XIV DURATION OF AGREEMENT SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective successors-in-interest, shall become effective and shall remain in force and effect until June 30, 1992. SEC. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement insofar as the representation aspect is concerned, shall be for five (5) years from July 1, 1989 to June 30, 1994. Hence, the freedom period for purposes of such representation shall be sixty (60) days prior to June 30, 1994. SEC. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of this Agreement, except insofar as the representation aspect is concerned. If no agreement is reached in such negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent agreement is reached by the parties.[1] In keeping with their vision and long term strategy for business expansion, SMC management informed its employees in a letter dated August 13, 1991[2]that the company which was composed of four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and Agri- business would undergo a restructuring.[3] Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect. After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and Article 253- A of the Labor Code. Negotiations started sometime in July, 1992 with the two parties submitting their respective proposals and counterproposals. During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still include the employees of the spun-off corporations: Magnolia and SMFI; and that the renegotiated terms of the CBA shall be effective only for the remaining period of two years or until June 30, 1994. SMC, on the other hand, contended that the members/employees who had moved to Magnolia and SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the CBA should be effective for three years in accordance with Art. 253-A of the Labor Code. Unable to agree on these issues with respect to the bargaining unit and duration of the CBA, petitioner- union declared a deadlock on September 29, 1990. On October 2, 1992, a Notice of Strike was filed against SMC. In order to avert a strike, SMC requested the National Conciliation and Mediation Board (NCMB) to conduct preventive mediation. No settlement was arrived at despite several meetings held between the parties. On November 3, 1992, a strike vote was conducted which resulted in a “yes vote” in favor of a strike. On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital industry. As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November 10, 1992.[4] Several conciliation meetings were held but still no agreement/settlement was arrived at by both parties. After the parties submitted their respective position papers, the Secretary of Labor issued the assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of the CBA shall be effective for the period of three (3) years from June 30, 1992; and that such CBA shall cover only the employees of SMC and not of Magnolia and SMFI. Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of Labor. Subsequently, on March 30, 1995,[5] petitioner-union filed a Motion for Issuance of a Temporary Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections in the different companies, maintaining that the employees of Magnolia and SMFI fall within the bargaining unit of SMC. On March 29, 1995, the Court issued a resolution granting the temporary restraining order prayed for.[6] Meanwhile, an urgent motion for leave to intervene[7]in the case was filed by the Samahan ng Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW) through its authorized representiative, Elmer S. Armando, alleging that it is one of the contending parties adversely effected by the temporary restraining order. The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma,[8] G.R. No. 101766, March 5, 1993, where the Court recognized the separation of the employees of Magnolia from the SMC bargaining unit. It then prayed for the lifting of the temporary restraining order. Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized the employees’ right to conclude a new CBA. At the same time, he challenged the legal personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter was already officially dismissed from the company on October 4, 1994. Amidst all these pleadings, the following primordial issues arise: 1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three years or for only two years; and 2) Whether or not the bargaining unit of SMC includes also the employees of Magnolia and SMFI. Petitioner-union contends that the duration for the non-representation provisions of the CBA should be coterminous with the term of the bargaining agency which in effect shall be for the remaining two years of the current CBA, citing a previous decision of the Secretary of Labor on December 14, 1992 in the matter of the labor dispute at Philippine Refining Company.[9] However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the renegotiated terms of the CBA at SMC should run for a period of three (3) years. We agree with the Secretary of Labor. Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads: ART. 253-A. Terms of a Collective Bargaining Agreement. — Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. (underlining supplied.) Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the CBA has a term of five (5) years instead of three years, before the amendment of the law as far as the representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than three (3) years after its execution. The “representation aspect” refers to the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned. “All other provisions” simply refers to the rest of the CBA, economic as well as non-economic provisions, except representation.[10] As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous with the terms of the other provisions of the CBA. It is a cardinal principle of statutory construction that the Court must ascertain the legislative intent for the purpose of giving effect to any statute. The history of the times and state of the things existing when the act was framed or adopted must be followed and the conditions of the things at the time of the enactment of the law should be considered to determine the legislative intent.[11] We look into the discussions leading to the passage of the law: THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar as the economic provisions are concerned . . . THE CHAIRMAN (SEN. HERRERA): Maximum of three years? THE CHAIRMAN (SEN. VELOSO): Maximum of three years. THE CHAIRMAN (SEN. HERRERA): Present practice? THE CHAIRMAN (REP. VELOSO): In other words, after three years puwede nang magnegotiate in that CBA for the remaining two years. THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years but assuming three years which, I think, that’s the likelihood. . . . THE CHAIRMAN (REP. VELOSO): Yes. THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a change of agent, at least he has one year to administer and to adjust, to develop rapport with the management. Yan ang importante. You know, for us na nagne-negotiate, and hazard talaga sa negotiation, when we negotiate with somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer ng Labor; ang mga employer, ito bayaran ko lang ito okay na. ‘Yan ang nangyayari, but let us give that allowance for one year to let them know. Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you encourage union to fight each other. ‘Yan ang problema.’*12+ x x x x x x x x x HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to provide some doubts later on in the implementation. Sabi kasi rito, insofar as representation issue is concerned, seven years ang lifetime . . . HON. CHAIRMAN HERRERA: Five years. HON. ISIDRO: Five years, all the others three years. HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later than three years. HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA. HON. CHAIRMAN HERRERA: Yes. HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan — then, seven years . . . HON. CHAIRMAN HERRERA: Not later than three years. HON. ISIDRO: Assuming that they usually follow the period — three years nang three years, but under this law with respect to representation — five years, ano? Now, after three years, nagkaroon ng bagong terms, tapos na iyong term, renewed na iyong terms, ang karapatan noon sa representation issue mayroon pang two years left. HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus three. HON ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So, another CBA was formed and this CBA mayroon na naman siyang bagong five years with respect to representation issue. HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for three years. HON. ISIDRO: Yes. HON. CHAIRMAN HERRERA: On the third year you can start negotiating to change the terms and conditions. HON. ISIDRO: Yes. HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . . HON. ISIDRO: Oo. HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be questioned, so baka puwedeng magkaroon ng certification election. If the incumbent union loses, then the new union administers the contract for one year to give him time to know his counterpart — the employer, before he can negotiate for a new term. Iyan ang advantage. HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and conditions and then, so you have to renew that in three years — you renew for another three years, mayroon na naman another five years iyong ano . . . HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang. HON. CHAIRMAN HERRERA: Two years na lang sa representation. HON. ANIAG: So that if they changed the union, iyong last year. . . . HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then, voluntary arbitration na kayo and then mayroon ka nang probisyon “retroact on the date of the expiry date”. Pagnatalo and incumbent unyon, mag-aassume and new union, administer the contract. As far as the term ang condition, for one year, and that will give him time and the employer to know each other. HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it would not want to administer a CBA which has not been negotiated by the union itself. HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening now in the country is that the term ng contract natin, duon din mage-expire ang representation. Iyon and nangyari. That is where you have the gulo. Ganoon and nangyari. So, ang nangyari diyan, pag-mayroon certification election, expire ang contract, ano ang usual issue - company union. I can you (sic) give you more what the incumbent union is giving. So ang mangyayari diyan, pag-negotiate mo hardline na agad. HON. CHAIRMAN VELOSO: Mon, for four years? HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the representation aspect — why do we have to distinguish between three and five? What’s wrong with having a uniform expiration period? HON. CHAIRMAN HERRERA: Five years. HON. ISIDRO: Puro three years. HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan, Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, that’s the average, aabot pa minsan ng one year. Pagkatapos ng negotiation mo, signing kayo. There will be an allowed period of one year. Third year na, uumpisahan naman ang organizations, papasok na ang ibang unyon because the reality in Trade Union committee, they organize, we organize. So, actually, you have only industrial peace for one year, effective industrial peace. That is what we are trying to change. Otherwise, we will continue to discourage the investors and the union will never grow because every other year it has to use its money for the certification election. Ang grabe pang practice diyan, mag-a-advance ang federation for three years union dues para panggastos lang sa certification election. That is what we are trying to avoid. HON. JABAR: Although there are unions which really get advances. HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I think our responsibility here is to create a legal framework to promote industrial peace and to develop responsible and fair labor movement. HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . . x x x HON. CHAIRMAN VELOSO. (continuing) . . in other words, the longer the period of effectivity of the CBA, the better for industrial peace. HON. CHAIRMAN HERRERA: representation status. HON. CHAIRMAN VELOSO: Only on — HON. CHAIRMAN HERRERA: — the representations. HON. CHAIRMAN VELOSO: But on the economic issues. HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that. HON. CHAIRMAN VELOSO: At least on second year. HON. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga, mag-negotiate when the company is — (interrupted)[13] x x x From the aforesaid discussions, the legislators were more inclined to have the period of effectivity for three (3) years insofar as the economic as well as non-economic provisions are concerned, except representation. Obviously, the framers of the law wanted to maintain industrial peace and stability by having both management and labor work harmoniously together without any disturbance. Thus, no outside union can enter the establishment within five (5) years and challenge the status of the incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and non- economic) can not be questioned by the employers or employees during the period of effectivity of the CBA. The CBA is a contract between the parties and the parties must respect the terms and conditions of the agreement.[14] Notably, the framers of the law did not give a fixed term as to the effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it was left to the parties to fix the period. In the instant case, it is not difficult to determine the period of effectivity for the non-representation provisions of the CBA. Taking it from the history of their CBAs, SMC intended to have the terms of the CBA effective for three (3) years reckoned from the expiration of the old or previous CBA which was on June 30, 1989, as it provides: SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective successors-in-interest, shall become effective and shall remain in force and effect until June 30, 1992. The argument that the PRC case is applicable is indeed misplaced. We quote with favor the Order of the Secretary of Labor in the light of SMC’s peculiar situation as compared with PRC’s company situation. It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic), Labor Dispute at Philippine Refining Company), we ruled that the term of the renegotiated provisions of the CBA should coincide with the remaining term of the agency. In doing so, we placed premium on the fact that PRC has only two (2) unions and no other union had yet executed a renewed term of 3 years. Nonetheless, in ruling for a shortened term, we were guided by our considered perception that the said term would improve, rather than ruin, the general welfare of both the workers and the company. It is equally true that once the economic provisions of the CBA expire, the residual representative status of the union is effective for only 2 more years. However, if circumstances warrant that the contract duration which it is soliciting from the company for the benefit of the workers, shall be a little bit longer than its lifespan, then this Office cannot stand in the way of a more ideal situation. We must not lose sight of the fact that the primordial purpose of a collective contract is to promote industrial harmony and stability in the terms and conditions of employment. To our mind, this objective cannot be achieved without giving due consideration to the peculiarities and unique characteristics of the employer. In the case at bar, there is no dispute that the mother corporation (SMC) spun-off two of its divisions and thereby gave birth to two (2) other entities now known as Magnolia Corporation and San Miguel Foods, Inc. In order to effect a smooth transition, the companies concerned continued to recognize the existing unions as the bargaining agents of their respective bargaining units. In the meantime, the other unions in these companies eventually concluded their CBA negotiations on the remaining term and all of them agreed on a 3-year cycle. Notably, the following CBAs were forged incorporating a term of 3-years on the renegotiated provisions, to wit: 1. SMC - daily-paid employees union (IBM) 2. SMF - monthly-paid employees and daily-paid employees at the Cabuyao Plant. There is a direct link between the voluntary recognition by the company of the continuing representative status of the unions after the aforementioned spin-offs and the stand of the company for a 3-year renegotiated cycle when the economic provisions of the existing CBAs expired, i.e., to maintain stability and avoid confusion when the umbilical cord of the two divisions were severed from their parent. These two cannot be considered independently of each other for they were intended to reinforce one another. Precisely, the company conceded to face the same union notwithstanding the spin-offs in order to preserve industrial peace during the infancy of the two corporations. If the union would insist on a shorter renegotiated term, then all the advantages gained by both parties in this regard, would have gone to naught. With this in mind, this office feels that it will betray its mandate should we order the parties to execute a 2-year renegotiated term for then chaos and confusion, rather than tranquility, would be the order of the day. Worse, there is a strong likelihood that such a ruling might spawn discontent and possible mass actions against the company coming from the other unions who had already agreed to a 3-year renegotiated terms. If this happens, the purpose of this Office’s intervention into the parties’ controversy would have been defeated.*15+ The issue as to the term of the non-representation provisions of the CBA need not belabored especially when we take note of the Memorandum of the Secretary of Labor dated February 24, 1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January 16, 1995 in the certification election case involving the SMC employees.[16] In said memorandum, the Secretary of Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the term of the bargaining agent, to wit: As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term which would coincidde (sic) with the aforesaid five (5) year term of the bargaining representative. In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a term of three (3) years or one which does not coincide with the said 5-year term, and said agreement is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal and therefore, binds the contracting parties. The same will however not adversely affect the right of another union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the CBA. Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that the effectivity of the renegotiated terms of the CBA shall be for three (3) years. With respect to the second issue, there is, likewise, no merit in petitioner-union’s assertion that the employees of Magnolia and SMFI should still be considered part of the bargaining unit of SMC. Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991. Management saw the need for these transformations in keeping with its vision and long term strategy as it explained in its letter addressed to the employees dated August 13, 1991: x x x As early as 1986, we announced the decentralization program and spoke of the need for structures that can react fast to competition, a changing environment, shorter product life cycles and shifts in consumer preference. We further stated in the 1987 Annual Report to Stockholders that San Miguel’s businesses will be more autonomous and self sufficient so as to better acquire and master new technologies, cope with a labor force with different expertises and expectations, and master and satisfy the changing needs of our customers and end-consumers. As subsidiaries, Magnolia and FLD will gain better industry focus and flexibility, greater awareness of operating results, and speedier, more responsive decision making. x x x We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this company was organized about ten years ago, to see the benefits that arise from restructuring a division of San Miguel into a more competitive organization. As a stand-alone enterprise, CCBPI engineered a dramatic turnaround and has sustained its sales and market share leadership ever since. We are confident that history will repeat itself, and the transformation of Magnolia and FLD will be successful as that of CCBPI.[17] Undeniably, the transformation of the companies was a management prerogative and business judgment which the courts can not look into unless it is contrary to law, public policy or morals. Neither can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of piercing the corporate veil.*18+ Ever mindful of the employees’ interests, management has assured the concerned employees that they will be absorbed by the new corporations without loss of tenure and retaining their present pay and benefits according to the existing CBAs.[19] They were advised that upon the expiration of the CBAs, new agreements will be negotiated between the management of the new corporations and the bargaining representatives of the employees concerned. As a result of the spin- offs: 1. Each of the companies are run by, supervised and controlled by different management teams including separate human resource/personnel managers. 2. Each Company enforces its own administrative and operational rules and policies and are not dependent on each other in their operations. 3. Each entity maintains separate financial statements and are audited separately from each other.[20] Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities. Thus, they can not belong to a single bargaining unit as held in the case of Diatagon Labor Federation Local 110 of the ULGWP v. Ople.[21] We elucidate: The fact that their businesses are related and that the 236 employees of Georgia Pacific International Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a justification for disregarding their separate personalities. Hence, the 236 employees, who are now attached to Georgia Pacific International Corporation, should not be allowed to vote in the certification election at the Lianga Bay Logging Co., Inc. They should vote at a separate certification election to determine the collective bargaining representative of the employees of Georgia Pacific International Corporation. Petitioner-union’s attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit so as to have a bigger mass base of employees has, therefore, no more valid ground. Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or commonality of interests. The employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they performed.[22] Considering the spin-offs, the companies would consequently have their respective and distinctive concerns in terms of the nature of work, wages, hours of work and other conditions of employment. Interests of employees in the different companies perforce differ. SMC is engaged in the business of beer manufacturing. Magnolia is involved in the manufacturing and processing of dairy products[23] while SMFI is involved in the production of feeds and the processing of chicken.[24] The nature of their products and scales of business may require different skills which must necessarily be commensurated by different compensation packages. The different companies may have different volumes of work and different working conditions. For such reason, the employees of the different companies see the need to group themselves together and organize themselves into distinctive and different groups. It would then be best to have separate bargaining units for the different companies where the employees can bargain separately according to their needs and according to their own working conditions. We reiterate what we have explained in the case of University of the Philippines v. Ferrer-Calleja[25] that: [T]here are various factors which must be satisfied and considered in determining the proper constituency of a bargaining unit. No one particular factor is itself decisive of the determination. The weight accorded to any particular factor varies in accordance with the particular question or questions that may arise in a given case. What are these factors? Rothenberg mentions a good number, but the most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2) affinity and unit of employees’ interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions; (3) prior collective bargaining history; and (4) employment status, such as temporary, seasonal and probationary employees x x. x x x An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th Annual Report of the National Labor Relations Board wherein it is emphasized that the factors which said board may consider and weigh in fixing appropriate units are: the history, extent and type of organization of employees; the history of their collective bargaining; the history, extent and type of organization of employees in other plants of the same employer, or other employers in the same industry; the skill wages, work, and working conditions of the employees; the desires of the employees; the eligibility of the employees for membership in the union or unions involved; and the relationship between the unit or units proposed and the employer’s organization, management, and operation x x. x x In said report, it is likewise emphasized that the basic test in determining the appropriate bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162) x x. Finally, we take note of the fact that the separate interests of the employees of Magnolia and SMFI from those of SMC has been recognized in the case of Daniel Borbon v. Laguesma.[26] We quote: Even assuming in gratia argumenti that at the time of the election they were regular employees of San Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation in any manner because Magnolia has ceased to be a division of San Miguel Corporation and has been formed into a separate corporation with a personality of its own (p. 305, Rollo). This development, which was brought to our attention by private respondents, necessarily renders moot and academic any further discourse on the propriety of the elections which petitioners impugn via the present recourse (p. 319, Rollo). In view of all the foregoing, we do not find any grave abuse of discretion on the part of the Secretary of Labor in rendering the assailed Order. WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on March 29, 1995 is lifted. SO ORDERED. Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur. Padilla, J. (Chairman), took no part, in view of stock investments in SMC. G.R. No. 85343 June 28, 1989 PHILTRANCO SERVICE ENTERPRISES, petitioner, vs. BUREAU OF LABOR RELATIONS and KAPISANAN NG MGA KAWANI, ASSISTANT, MANGGAGAWA AT KONPIDENSIYAL SA PHILTRANCO, respondents. Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioner. Lily S. Dayaon for KASAMA KO . GUTIERREZ, JR., J .: In this petition for certiorari, the petitioner assails the order of the Bureau of Labor Relations (BLR) dated September 5, 1988. The dispositive portion of the order reads: WHEREFORE, premises considered, the Order of the Med-Arbiter dated 4 April 1988 is hereby set aside and vacated and a new one entered ordering the conduct of a certification election among regular rank-and-file professional, technical, administrative and confidential employees of respondent company, with the following choices: 1. Kapisanan ng mga Kawani, Assistant Manggagawa at Konpidensyal sa Philtranco (KASAMA KO) 2. No Union. Let, therefore the records of the case be remanded to the Office of origin for the immediate conduct of the election. SO ORDERED. (Rollo, p. 33) The antecedent facts are as follows: Petitioner Philtranco Service Enterprises, Inc. is a land transportation company engaged in the business of carrying passengers and freight. The company employees included field workers consisting of drivers, conductors, coach drivers, coach stewards and mechanics and office employees like clerks, cashiers, programmers, telephone operators, etc. On February 15, 1988, the Kapisanan ng mga Kawani, Assistant, Manggagawa at Konpidensyal sa Philtranco (KASAMA KO), a registered labor organization filed a petition for certification election with the Department of Labor and Employment, alleging among others that: xxx xxx xxx 3. Petitioner desires to represent all professional, technical, administrative, and confidential employees personnel of respondent at its establishments in Luzon, Visayas and Mindanao for purposes of collective bargaining; 4. The aforementioned employees were always expressly excluded from participating in the certification election conducted among the rank and file employees (drivers, conductors, coach drivers, coach stewards, and mechanics) of respondent and are excluded from the bargaining unit covered by the CBA between respondent and its rank and file employees. In addition, there exist substantial differences in the terms and conditions of employment between the above-mentioned employees, hence, the former are covered by another appropriate bargaining unit which is separate and distinct from that of the rank and file employees of respondent and; which has been recognized by the Bureau of Labor Relations and upheld by the Honorable Supreme Court. Attached hereto as Annex 'A' and Annex 'B' are copies of the decision of the BLR and the Supreme Court in support thereof; xxx xxx xxx 6. The petition is supported by the signatures of more than twenty percent (20%) of all covered employees as provided for by law and which shall be presented during the initial hearing; xxx xxx xxx 8. There has been no Consent Election or Certification Election held and conducted by this Honorable Office for the past three (3) years prior to the filing of this petition in the bargaining unit petitioner sought to represent, the last Certification Election having been held last November 27, 1984. Attached hereto as Annex "C" is a copy of the Order issued by this Honorable Office relative to the result of the last certification election. (Rollo, pp. 4-5) On February 24, 1988, the National Mines and Allied Workers Union (NAMAWU-MIF) filed a motion for intervention alleging that it is the bargaining agent of the workers at Philtranco and as such it has a substantial interest in the outcome of the petition. On February 26, 1988, Arbiter Paterno Adap called the parties to a hearing. Philtranco and NAMAWU were ordered to submit their respective position papers and KASAMA KO was given the opportunity to submit a reply. On April 4, 1988, a resolution was rendered with the following dispositive portion: WHEREFORE, in the light of the foregoing premises, this petition is, as it is hereby ordered DISMISSED. If there are still individual members of the herein petitioner eligible to join a labor organization, it is hereby directed that all should be included/incorporated in the existing bargaining unit. Parties are further directed/enjoined to device a mechanism for the implementation of the matter herein treated. (Rollo, pp. 29-30) KASAMA KO appealed to the Bureau of Labor Relations (BLR) On September 5, 1988 the BLR reversed the resolution of the Med-Arbiter. A motion for reconsideration was denied in an order dated October 10, 1988. As prayed for by the petitioner, a temporary restraining order was issued by this Court on November 7, 1988 restraining the BLR from enforcing and/or carrying out the decision dated September 5, 1988 and the order dated October 10, 1988. 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: xxx xxx xxx (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. In implementation of the aforequoted provision of the law, Section 11 of Rule II, Book V of the Omnibus Rules implementing the Labor Code did away with existing supervisors' unions classifying the members either as managerial or 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 Bulletin Publishing Corp. v. Sanchez, (144 SCRA 628 [1986]). It, therefore, follows that the members of the KASAMA KO who are professional, technical, administrative and confidential personnel of PHILTRANCO performing managerial functions are not qualified to join, much less form a union. This rationalizes the exclusion of managers and confidential employees exercising managerial functions from the ambit of the collective bargaining unit. As correctly observed by Med-Arbiter Adap: ... managerial and confidential employees were expressly excluded within the operational ambit of the bargaining unit for the simple reason that under the law, managers are disqualified to be members of a labor organization. On the other hand, confidential workers were not included because either they were performing managerial functions and/or their duties and responsibilities were considered or may be categorized as part and parcel of management as the primary reason for their exclusion in the bargaining unit. The other categorized employees were likewise not included because parties have agreed on the fact that the aforementioned group of workers are not qualified to join a labor organization at the time the agreement was executed and that they were classified as outside the parameter of the bargaining unit. (Rollo, pp. 28-29) The respondents, on the other hand, aver that the members of the respondent union are rank and file employees qualified to form a union. In fact their status as rank and file employees was allegedly recognized by this Court in the case of Pantranco South Express, Inc. v. NAMAWU, (G.R. No. 67475, July 30, 1984). The reliance on the Pantranco South Express, Inc. case is misplaced. The petition filed by Pantranco South Express Inc. simply asked for a ruling that certain employees were performing managerial functions. We denied the petition for lack of merit in a minute resolution. There was absolutely no discussion on the recognition of another separate rank and file union in addition to the existing bargaining unit. There is no conflict. The employees of Philtranco have been appraised and their functions evaluated. Managers by any name may not join the rank and file union. On the other hand, those who are rank and file workers may join the existing bargaining unit instead of organizing another bargaining unit and compelling the employer to deal with it. We are constrained to disallow the formation of another union. There is no dispute that there exists a labor union in the company, herein intervenor, the NAMAWU-MIF which is the collective bargaining agent of the rank and file employees in PHILTRANCO. Article 2 of the Collective Bargaining Agreement between PHILTRANCO and NAMAWU-MIF under the sub-title Appropriate Bargaining Unit provides: Section 1 -The appropriate bargaining unit covered by this agreement consists of all regular rank- and file employees of the company. Managerial, confidential, casuals, temporary, probationary and contractual employees as well as trainees, apprentices, security personnel and foreman are excluded from the bargaining unit and therefore, not covered by this AGREEMENT. The job description outside the bargaining unit are enumerated in the list hereto attached as Annex '1' and made an integral part hereof (Emphasis supplied; Rollo, p. 27) We see no need for the formation of another union in PHILTRANCO. The qualified members of the KASAMA KO may join the NAMAWU-MIF if they want to be union members, and to be consistent with the one-union, one-company policy of the Department of Labor and Employment, and the laws it enforces. As held in the case of General Rubber and Footwear Corp. v. Bureau of Labor Relations (155 SCRA 283 [1987]): ... It has been the policy of the Bureau to encourage the formation of an employer unit 'unless circumstances otherwise require. The proliferation of unions in an employer unit is discouraged as a matter of policy unless there are compelling reasons which would deny a certain class of employees the right to self-organization for purposes of collective bargaining. This case does not fall squarely within the exception. (Emphasis supplied). There are no compelling reasons in this case such as a denial to the KASAMA KO group of the right to join the certified bargaining unit or substantial distinctions warranting the recognition of a separate group of rank and file workers. Precisely, NAMAWU-MIF intervened to make it clear it has no objections to qualified rank and file workers joining its union. It is natural in almost all fairly sized companies to have groups of workers discharging different functions. No company could possibly have all employees performing exactly the same work. Variety of tasks is to be expected. It would not be in the interest of sound labor-management relations if each group of employees assigned to a specialized function or section would decide to break away from their fellow-workers and form their own separate bargaining unit. We cannot allow one unit for typists and clerks, one unit for accountants, another unit for messengers and drivers, and so on in needless profusion. Where shall the line be drawn? The questioned decision of the public respondent can only lead to confusion, discord and labor strife. The respondents state that this case is an exception to the general rule considering that substantial differences exist between the office employees or professional, technical, administrative and confidential employees vis-a-vis the field workers or drivers, conductors and mechanics of the petitioner. Against this contention, we find that the "substantial differences" in the terms and conditions of employment between the private respondent's members and the rest of the company's rank and file employees are more imagined than real. We agree with the petitioner that the differences alleged are not substantial or significant enough to merit the formation of another union. PHILTRANCO is a large bus company engaged in the business of carrying passengers and freight, servicing Luzon, Visayas and Mindanao. Certainly there is a commonality of interest among filing clerks, dispatchers, drivers, typists, and field men. They are all interested in the progress of their company and in each worker sharing in the fruits of their endeavors equitably and generously. Their functions mesh with one another. One group needs the other in the same way that the company needs them all. The drivers, mechanics and conductors are necessary for the company but technical, administrative and office personnel are also needed and equally important for the smooth operation of the business. There may be differences as to the nature of their individual assignments but the distinctions are not enough to warrant the formation of separate unions. The private respondent has not even shown that a separate bargaining unit would be beneficial to the employees concerned. Office employees also belong to the rank and file. There is an existing employer wide unit in the company represented by NAMAWU- MIF. And as earlier stated, the fact that NAMAWU-MIF moved to intervene in the petition for certification election filed by KASAMA KO negates the allegations that "substantial differences" exist between the employees concerned. We find a commonality of interest among them. There are no compelling reasons for the formation of another union. We quote with favor Med-Arbiter Adap's rationale, to wit: ... It is against the policy of the Department of Labor to dismember the already wide existing bargaining unit because of its well established goal towards a single employer wide unit which is more to the broader and greater benefit of the employees working force. The philosophy is to avoid fragmentation of the bargaining unit so as to strengthen the employees bargaining power with the management. To do otherwise, would be contrary, inimical and repugnant to the objectives of a strong and dynamic unionism. Let there be a unified whole rather than a divisive one, let them speak as one in a clear resonant voice unmarred by dissension towards progressive unionism. (Rollo, p. 29) WHEREFORE, the decision of the Bureau of Labor Relations, dated September 5, 1988 and the Order dated October 10, 1988 are hereby SET ASIDE. The resolution of the Med-Arbiter dated April 4, 1988 is REINSTATED. The restraining order issued by the Court on November 7, 1988 is made permanent. SO ORDERED. Fernan, C.J.,(Chairman), Feliciano, Bidin and Cortes, JJ.,., concur. G.R. No. 100485 September 21, 1994 SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH LUZON MAGNOLIA SALES LABOR UNION-INDEPENDENT, respondents. Siguion Reyna, Montecillo & Ongsiako for petitioner. E.N.A. Cruz & Associates for private respondent. PUNO, J .: Petitioner San Miguel Corporation (SMC) prays that the Resolution dated March 19, 1991 and the Order dated April 12, 1991 of public respondent Undersecretary Bienvenido E. Laguesma declaring respondent union as the sole and exclusive bargaining agent of all the Magnolia sales personnel in northern Luzon be set aside for having been issued in excess of jurisdiction and/or with grave abuse of discretion. On June 4, 1990, the North Luzon Magnolia Sales Labor Union (respondent union for brevity) filed with theDepartment of Labor a petition for certification election among all the regular sales personnel of Magnolia Dairy Products in the North Luzon Sales Area. 1 Petitioner opposed the petition and questioned the appropriateness of the bargaining unit sought to be represented by respondent union. It claimed that its bargaining history in its sales offices, plants and warehouses is to have a separate bargaining unit for each sales office. The petition was heard on November 9, 1990 with petitioner being represented by Atty. Alvin C. Batalla of the Siguion Reyna law office. Atty. Batalla withdrew petitioner's opposition to a certification election and agreed to consider all the sales offices in northern Luzon as one bargaining unit. At the pre-election conference, the parties agreed inter alia, on the date, time and place of the consent election. Respondent union won the election held on November 24, 1990. In an Order dated December 3, 1990, 2 Mediator-Arbiter Benalfre J. Galang certified respondent union as the sole and exclusive bargaining agent for all the regular sales personnel in all the sales offices of Magnolia Dairy Products in the North Luzon Sales Area. Petitioner appealed to the Secretary of Labor. It claimed that Atty. Batalla was only authorized to agree to the holding of certification elections subject to the following conditions: (1) there would only be one general election; (2) in this general election, the individual sales offices shall still comprise separate bargaining units. 3 In a Resolution dated March 19, 1991, 4 public respondent, by authority of the Secretary of Labor, denied SMC's appeal and affirmed the Order of the Med- Arbiter. Hence this petition for certiorari. Petitioner claims that: THE HONORABLE UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION WHEN HE IGNORED AND TOTALLY DISREGARDED PETITIONER'S VALID AND JUSTIFIABLE GROUNDS WHY THE ERROR MADE IN GOOD FAITH BY PETITIONER'S COUNSEL BE CORRECTED, AND INSTEAD RULED: A THAT PRIVATE RESPONDENT IS "THE SOLE AND EXCLUSIVE BARGAINING AGENT FOR ALL THE REGULAR SALES OFFICES OF MAGNOLIA DAIRY PRODUCTS, NORTH LUZON SALES AREA", COMPLETELY IGNORING THE ESTABLISHED BARGAINING HISTORY OF PETITIONER SMC. B THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE "AGREEMENT" ENTERED INTO AT THE HEARING ON 9 NOVEMBER 1990, IN CONTRAVENTION OF THE ESTABLISHED FACTS OF THE CASE AND THE APPLICABLE LAW ON THE MATTER. We find no merit in the petition. The issues for resolution are: (1) whether or not respondent union represents an appropriate bargaining unit, and (2) whether or not petitioner is bound by its lawyer's act of agreeing to consider the sales personnel in the north Luzon sales area as one bargaining unit. Petitioner claims that in issuing the impugned Orders, public respondent disregarded its collective bargaining history which is to have a separate bargaining unit for each sales office. It insists that its prior collective bargaining history is the most persuasive criterion in determining the appropriateness of the collective bargaining unit. There is no merit in the contention. A bargaining unit is a "group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 5 The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe Doctrine); 6 (2) affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 7 Contrary to petitioner's assertion, this Court has categorically ruled that the existence of a prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. 8 Indeed, the test of grouping is mutuality or commonality of interests. The employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they perform. In the case at bench, respondent union sought to represent the sales personnel in the various Magnolia sales offices in northern Luzon. There is similarity of employment status for only the regular sales personnel in the north Luzon area are covered. They have the same duties and responsibilities and substantially similar compensation and working conditions. The commonality of interest among he sales personnel in the north Luzon sales area cannot be gainsaid. In fact, in the certification election held on November 24, 1990, the employees concerned accepted respondent union as their exclusive bargaining agent. Clearly, they have expressed their desire to be one. Petitioner cannot insist that each of the sales office of Magnolia should constitute only one bargaining unit. What greatly militates against this position is the meager number of sales personnel in each of the Magnolia sales office in northern Luzon. Even the bargaining unit sought to be represented by respondent union in the entire north Luzon sales area consists only of approximately fifty-five (55) employees. 9 Surely, it would not be for the best interest of these employees if they would further be fractionalized. The adage "there is strength in number" is the very rationale underlying the formation of a labor union. Anent the second issue, petitioner claims that Atty. Batalla was merely a substitute lawyer for Atty. Christine Ona, who got stranded in Legaspi City. Atty. Batalla was allegedly unfamiliar with the collective bargaining history of its establishment. Petitioner claims it should not be bound by the mistake committed by its substitute lawyer. We are not persuaded. As discussed earlier, the collective bargaining history of a company is not decisive of what should comprise the collective bargaining unit. Insofar as the alleged "mistake" of the substitute lawyer is concerned, we find that this mistake was the direct result of the negligence of petitioner's lawyers. It will be noted that Atty. Ona was under the supervision of two (2) other lawyers, Attys. Jacinto de la Rosa, Jr. and George C. Nograles. There is nothing in the records to show that these two (2) counsels were likewise unavailable at that time. Instead of deferring the hearing, petitioner's counsels chose to proceed therewith. Indeed, prudence dictates that, in such case, the lawyers allegedly actively involved in SMC's labor case should have adequately and sufficiently briefed the substitute lawyer with respect to the matters involved in the case and the specific limits of his authority. Unfortunately, this was not done in this case. The negligence of its lawyers binds petitioner. As held by this Court in the case of Villa Rhecar Bus v. De la Cruz: 10 . . . As a general rule, a client is bound by the mistakes of his counsel. Only when the application of the general rule would result in serious injustice should an exception thereto be called for. In the case at bench, petitioner insists that each of the sales offices in northern Luzon should be considered as a separate bargaining unit for negotiations would be more expeditious. Petitioner obviously chooses to follow the path of least resistance. It is not, however, the convenience of the employer that constitutes the determinative factor in forming an appropriate bargaining unit. Equally, if not more important, is the interest of the employees. In choosing and crafting an appropriate bargaining unit, extreme care should be taken to prevent an employer from having any undue advantage over the employees' bargaining representative. Our workers are weak enough and it is not our social policy to further debilitate their bargaining representative. In sum, we find that no arbitrariness or grave abuse of discretion can be attributed to public respondents certification of respondent union as the sole and exclusive bargaining agent of all the regular Magnolia sales personnel of the north Luzon sales area. WHEREFORE, premises considered, the challenged Resolution and Order of public respondent are hereby AFFIRMED in toto, there being no showing of grave abuse of discretion or lack of jurisdiction. SO ORDERED. Narvasa, C.J., Regalado and Mendoza, JJ., concur. Padilla, J., took no part. [G.R. No. 110399. August 15, 1997] SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President, petitioners, vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED- ARBITER AND SAN MIGUEL CORPORATION, respondents. D E C I S I O N ROMERO, J .: This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order of public respondent, Undersecretary of theDepartment of Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91 [1] entitled “In Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner.” The Order excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit and ruled out their participation in the certification election. The antecedent facts are undisputed: On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for District Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis. On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit. On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the Med- Arbiter’s error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature. On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent company’s Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit. Upon petitioner-union’s motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis. On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings. On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC [2] case. Said Order reads in part: “x x x Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining. In this case, S3 and S4 and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above court’s ruling. Consequently, they are not allowed to participate in the certification election. WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could participate in the certification election.” [3] Hence this petition. For resolution in this case are the following issues: 1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union. 2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit. On the first issue, this Court rules that said employees do not fall within the term “confidential employees” who may be prohibited from joining a union. There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be classified as managerial employees who, under Article 245 [4] of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. The only question that need be addressed is whether these employees are properly classified as confidential employees or not. Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. [5] The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee – that is, the confidential relationship must exist between the employees and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. [6] The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the “confidential employee rule.” The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests. [7] “Management should not be required to handle labor relations matters through employees who are represented by the union with the company is required to deal and who in the normal performance of their duties may obtain advance information of the company’s position with regard to contract negotiations, the disposition of grievances, or other labor relations matters.” [8] There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez, [9] the Court held that “if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become company-dominated with the presence of managerial employees in Union membership.” The same rationale was applied to confidential employees in “Golden Farms, Inc. v. Ferrer- Calleja” [10] and in the more recent case of “Philips Industrial Development, Inc. v. NLRC” [11] which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union was held equally applicable to them. [12] An important element of the “confidential employee rule” is the employee’s need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key questions frequently considered is the employees’ necessary access to confidential labor relations information. [13] It is the contention of respondent corporation that Supervisory employees 3 and 4 and the exempt employees come within the meaning of the term “confidential employees” primarily because they answered in the affirmative when asked “Do you handle confidential data or documents?” in the Position Questionnaires submitted by the Union. [14] In the same questionnaire, however, it was also stated that the confidential information handled by questioned employees relate to product formulation, product standards and product specification which by no means relate to “labor relations.” [15] Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such duties, said access does not render the employee a confidential employee. [16] “If access to confidential labor relations information is to be a factor in the determination of an employee’s confidential status, such information must relate to the employer’s labor relations policies. Thus, an employee of a labor union, or of a management association, must have access to confidential labor information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not clause an employee to be excluded from the bargaining unit representing employees of the union or association.” [17] “Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information [18] or technical trade secrets, will not render an employee a confidential employee.” [19] Herein listed are the functions of supervisors 3 and higher: 1. To undertake decisions to discontinue/temporarily stop shift operations when situations require. 2. To effectively oversee the quality control function at the processing lines in the storage of chicken and other products. 3. To administer efficient system of evaluation of products in the outlets. 4. To be directly responsible for the recall, holding and rejection of direct manufacturing materials. 5. To recommend and initiate actions in the maintenance of sanitation and hygiene throughout the plant. [20] It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions. From the foregoing functions, it can be gleaned that the confidential information said employees have access to concern the employer’s internal business operations. As held in Westinghouse Electric Corporation v. National Labor Relations Board, [21] “an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential information concerning employer’s internal business operations and which is not related to the field of labor relations.” It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to “all” workers the right to self- organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees of their right bargain collectively through representatives of their choosing. [22] In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle “confidential data” as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union. [23] In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out. It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one- union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests. This Court finds the contention of the petitioner meritorious. An appropriate bargaining unit may be defined as “a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.” [24] A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. [25] It is readily seen that the employees in the instant case have “community or mutuality of interest,” which is the standard in determining the proper constituency of a collective bargaining unit. [26] It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the Mandate of the Constitution. [27] The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of the University of the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los Baños, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative. WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted. SO ORDERED. Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur. ST. JAMES SCHOOL OF QUEZON CITY, G.R. No. 151326 Petitioner, Present: Davide, Jr., C.J., Chairman, Quisumbing, - versus - Ynares-Santiago, Carpio, and Azcuna, JJ. SAMAHANG MANGGAGAWA SA Promulgated: ST. JAMES SCHOOL OF QUEZON CITY, Respondent. November 23, 2005 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION CARPI O, J .: The Case Before the Court is a petition for review [1] assailing the 5 September 2001 Decision and 3 January 2002 Resolution of the Court of Appeals [2] in CA-G.R. SP No. 60197. The Court of Appeals sustained the Decision of the Department of Labor and Employment (“DOLE”) directing the opening of the challenged ballots cast during the certification election. The Antecedent Facts The Samahang Manggagawa sa St. James School of Quezon City (“Samahang Manggagawa”) filed a petition for certification election to determine the collective bargaining representative of the motor pool, construction and transportation employees of St. James School of Quezon City (“St. James”). On 26 June 1999, the certification election was held at the DOLE office in Intramuros, Manila. There were 149 eligible voters and 84 voters cast their votes. St. James filed a certification election protest challenging the 84 votes. St. James alleged that it had 179 rank and file employees, none of whom voted in the certification election. St. James argued that those who voted were not its regular employees but construction workers of an independent contractor, Architect Conrado Bacoy (“Architect Bacoy”). In an Order dated 6 January 2000, [3] Med-Arbiter Tomas F. Falconitin (“Med-Arbiter Falconitin”) ruled that at the time of the certification election, the 84 voters were no longer working at St. James. Med-Arbiter Falconitin supported his ruling using the roster of rank and file employees submitted by St. James, which did not include the names of the 84 voters. Med-Arbiter Falconitin also ruled that since the construction projects have ceased, some of the workers were no longer entitled to vote in the certification election. Finally, Med-Arbiter Falconitin ruled that even if the 84 workers were to be included in the 179 rank and file employees of St. James, the total number of voters would be 263. Thus, the 84 votes cast would not be sufficient to constitute a majority of all eligible voters to have a valid certification election. The dispositive portion of the Order reads: WHEREFORE, premises considered, the certification election protest is hereby given due course. Accordingly, judgment is hereby rendered, declaring the certification election for the rank and file employees of respondent/protestant St. James School of Quezon City conducted on June 26, 1999, a failure; and null and void ab initio. SO ORDERED. [4] Samahang Manggagawa appealed to the Secretary of Labor. In its Decision [5] dated 5 May 2000, the DOLE [6] reversed the ruling of Med-Arbiter Falconitin. The DOLE ruled that Samahang Manggagawa seeks to represent the non-academic personnel or the rank and file employees from the motor pool, construction and transportation departments, and not all the rank and file employees of St. James. According to the DOLE, Med-Arbiter Falconitin erred in including all the rank and file employees of St. James, whether teaching or non- teaching personnel, in the computation of the total number of employees. The DOLE ruled that the list submitted by St. James contained only the administrative, teaching and office personnel of the school. The dispositive portion of the Decision reads: WHEREFORE, the appeal is hereby GRANTED and the order dated 06 January 2000 of the Med-Arbiter is REVERSED and SET ASIDE. In lieu thereof, an order is hereby issued directing the Election Officer, Lilibeth Cagara, DOLE-National Capital Region to open and canvass the 84 challenged ballots within ten (10) days from receipt hereof, subject to usual notice and representation by the parties and thereafter to issue the corresponding certification of the results. SO DECIDED. [7] St. James filed a motion for reconsideration. The DOLE [8] denied the motion in its 19 June 2000 Resolution. [9] St. James filed a special civil action before the Court of Appeals. In a Decision [10] dated 5 September 2001, the Court of Appeals dismissed the petition and ruled that the DOLE did not commit grave abuse of discretion in reversing the ruling of Med-Arbiter Falconitin. In its 3 January 2002 Resolution, [11] the Court of Appeals denied St. James’ motion for reconsideration. Hence, the petition before this Court. The Issues St. James questions the validity of the formation of the labor union and the validity of the certification election. [12] The Ruling of the Court The petition has no merit. The Validity of the Formation of the Labor Union St. James argues that majority of the members of Samahang Manggagawa are not its employees but employees of Architect Bacoy, an independent contractor. St. James may no longer question the validity of the formation of the labor union. The records [13] show that prior to the holding of the certification election, St. James filed a petition for cancellation of Samahang Manggagawa’s union registration. Among the grounds cited in the petition was the lack of employer- employee relationship between St. James and Samahang Manggagawa’s members. The Med-Arbiter recommended the cancellation of the union registration. DOLE Regional Director IV Romeo Young (“Director Young”) adopted the Med- Arbiter’s recommendation and cancelled Samahang Manggagawa’s union registration. Samahang Manggagawa filed an appeal before the Bureau of Labor Relations (“BLR”). In its Decision [14] dated 22 January 1998, the BLR [15] reversed Director Young’s Decision. In its Resolution [16] of 12 February 1998, the BLR denied St. James’ motion for reconsideration. St. James filed a special civil action before the Court of Appeals. The case was docketed as CA-G.R. SP No. 50918. In its 9 February 2001 Decision, [17] the Court of Appeals dismissed St. James’ petition and affirmed the BLR’s Decision. The Court of Appeals ruled that the construction workers are actually St. James’ regular employees in its motor pool, construction and transportation departments. The Court of Appeals also ruled that Architect Bacoy is a labor-only contractor and thus an agent of St. James, which is the real employer. St. James filed a petition for certiorari before this Court. The case was docketed as G.R. No. 149648. In a Resolution dated 10 October 2001, this Court denied the petition for St. James’ error in the choice or mode of appeal. [18] The Court’s 10 October 2001 Resolution closed any issue on the validity of the formation of the labor union. The Validity of the Certification Election Section 13, Rule XII, Book V of the Omnibus Rules Implementing the Labor Code (“Omnibus Rules”) provides: Section 13. Proclamation and certification of results by election officer; when proper. – Upon completion of the canvass there being a valid election, the election officer shall proclaim and certify as winner the union which obtained a majority of the valid votes cast under any of the following conditions: a) No protest had been filed or, even if one was filed, the same was not perfected within the five-day period for perfection of the protest; b) No challenge of eligibility issue was raised or even if one was raised, the resolution of the same will not materially change the result. For this purpose, the election officer shall immediately issue the corresponding certification, copy furnished all parties, which shall form part of the records of the case. The winning union shall have the rights, privileges and obligations of a duly certified collective bargaining representative from the time the certification is issued. The proclamation and certification so issued shall not be appealable. According to St. James, the certification election was conducted without quorum. St. James alleges that it has 179 rank and file employees in its Quezon City Campus. When the certification election was held, none of these qualified rank and file employees cast their votes because they were all on duty in the school premises. The 84 voters who cast their votes are employees of Architect Bacoy. St. James also alleges that it has 570 rank and file employees in all its campuses. Even if the 84 voters are its employees, the votes do not constitute a majority vote of its rank and file employees because the quorum should be based on its 570 rank and file employees. We cannot sustain the argument. St. James has five campuses – the Philamlife and Scout Alcaraz, Quezon City campuses which are pre-schools; the Parañaque City and Calamba, Laguna campuses which offer elementary, secondary and college education; and the Tandang Sora, Quezon City campus which offers elementary and secondary education. [19] The members of Samahang Manggagawa are employees in the Tandang Sora campus. Under its constitution and by-laws, Samahang Manggagawa seeks to represent the motor pool, construction and transportation employees of the Tandang Sora campus. [20] Thus, the computation of the quorum should be based on the rank and file motor pool, construction and transportation employees of the Tandang Sora campus and not on all the employees in St. James’ five campuses. Section 2, Rule XII, Book V of the Omnibus Rules provides: Section 2. Qualification of voters; inclusion-exclusion proceedings. – All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the certification or consent election shall be qualified to vote. A dismissed employee whose dismissal is being contested in a pending case shall be allowed to vote in the election. In case of disagreement over the voters’ list or over the eligibility of voters, all contested voters shall be allowed to vote. However, their votes shall be segregated and sealed in individual envelopes in accordance with Section 9 of these Rules. The motor pool, construction and transportation employees of the Tandang Sora campus had 149 qualified voters at the time of the certification election. Hence, the 149 qualified voters should be used to determine the existence of a quorum. Since a majority or 84 out of the 149 qualified voters cast their votes, a quorum existed in the certification election. St. James further alleges that the names of the 84 voters are not on the list of its rank and file employees. On this score, we sustain the factual finding of the DOLE that the list submitted by St. James consists of its administrative, teaching and office personnel. These administrative, teaching and office personnel are not members of Samahang Manggagawa. They do not belong to the bargaining unit that Samahang Manggagawa seeks to represent. Hence, the list submitted by St. James may not be used as basis to determine the members of Samahang Manggagawa. WHEREFORE, we DENY the petition. We AFFIRM the 5 September 2001 Decision and the 3 January 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60197. SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: