G.R. No.

85333 February 26, 1990

CARMELITO
L.
PALACOL,
ET
AL., petitioners,
vs.
PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, MANILA CCBPI
SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES), INC., respondents.
Wellington B. Lachica for petitioners.
Adolpho M. Guerzon for respondent Union.

GANCAYCO, J.:
Can a special assessment be validly deducted by a labor union from the lump-sum
pay of its members, granted under a collective bargaining agreement (CBA),
notwithstanding a subsequent disauthorization of the same by a majority of the
union members? This is the main issue for resolution in the instant petition for
certiorari.
As gleaned from the records of the case, the pertinent facts are as follows:
On October 12, 1987, the respondent Manila CCBPI Sales Force Union (hereinafter
referred to as the Union), as the collective bargaining agent of all regular salesmen,
regular helpers, and relief helpers of the Manila Plant and Metro Manila Sales Office
of the respondent Coca-Cola Bottlers (Philippines), Inc. (hereinafter referred to as the
Company) concluded a new collective bargaining agreement with the latter. 1 Among
the compensation benefits granted to the employees was a general salary increase
to be given in lump sum including recomputation of actual commissions earned
based on the new rates of increase.
On the same day, the president of the Union submitted to the Company the
ratification by the union members of the new CBA and authorization for the
Company to deduct union dues equivalent to P10.00 every payday or P20.00 every
month and, in addition, 10% by way of special assessment, from the CBA lump-sum
pay granted to the union members. The last one among the aforementioned is the
subject of the instant petition.
As embodied in the Board Resolution of the Union dated September 29, 1987, the
purpose of the special assessment sought to be levied is "to put up a cooperative
and credit union; purchase vehicles and other items needed for the benefit of the
officers and the general membership; and for the payment for services rendered by
union officers, consultants and others." 2 There was also an additional proviso stating
that the "matter of allocation ... shall be at the discretion of our incumbent Union
President."

This "Authorization and CBA Ratification" was obtained by the Union through a
secret referendum held in separate local membership meetings on various
dates. 3 The total membership of the Union was about 800. Of this number, 672
members originally authorized the 10% special assessment, while 173 opposed the
same. 4
Subsequently however, one hundred seventy (170) members of the Union submitted
documents to the Company stating that although they have ratified the new CBA,
they are withdrawing or disauthorizing the deduction of any amount from their CBA
lump sum. Later, 185 other union members submitted similar documents expressing
the same intent. These members, numbering 355 in all (170 + 185), added to the
original oppositors of 173, turned the tide in favor of disauthorization for the special
assessment, with a total of 528 objectors and a remainder of 272 supporters. 5
On account of the above-mentioned disauthorization, the Company, being in a
quandary as to whom to remit the payment of the questioned amount, filed an
action for interpleader with the Bureau of Labor Relations in order to resolve the
conflicting claims of the parties concerned. Petitioners, who are regular rank-and-file
employees of the Company and bona fide members of the Union, filed a
motion/complaint for intervention therein in two groups of 161 and 94, respectively.
They claimed to be among those union members who either did not sign any
individual written authorization, or having signed one, subsequently withdrew or
retracted their signatures therefrom.
Petitioners assailed the 10% special assessment as a violation of Article 241(o) in
relation to Article 222(b) of the Labor Code. Article 222(b) provides as follows:
ART. 222. Appearances and Fees.
xxx xxx xxx
(b) No attorney's fees, negotiation fees or similar
charges of any kind arising from any collective
bargaining negotiations or conclusion of the
collective agreement shall be imposed on any
individual member of the contracting union;
Provided, however, that attorney's fees may be
charged against union funds in an amount to be
agreed upon by the parties. Any contract,
agreement or arrangement of any sort to the
contrary shall be null and void.
On the other hand, Article 241(o) mandates that:
ART. 241. Rights and conditions of membership in a labor
organization.

xxx xxx xxx

(o) Other than for mandatory activities under the
Code, no special assessments, attorney's fees,
negotiation fees or any other extraordinary fees
may be checked off from any amount due to an
employee
without
an
individual
written
authorization duly signed by the employee. The
authorization should specifically state the
amount, purpose and beneficiary of the
deduction;
As authority for their contention, petitioners cited Galvadores v. Trajano, 6 wherein it
was ruled that no check-offs from any amount due employees may be effected
without individual written authorizations duly signed by the employees specifically
stating the amount, purpose, and beneficiary of the deduction.
In its answer, the Union countered that the deductions not only have the popular
indorsement and approval of the general membership, but likewise complied with
the legal requirements of Article 241 (n) and (o) of the Labor Code in that the board
resolution of the Union imposing the questioned special assessment had been duly
approved in a general membership meeting and that the collection of a special fund
for labor education and research is mandated.
Article 241(n) of the Labor Code states that
ART. 241. Rights and conditions of membership in a labor
organization.
xxx xxx xxx
(n) No special assessment or other extraordinary fees may be
levied upon the members of a labor organization unless authorized
by a written resolution of a majority of all the members at a
general membership meeting duly called for the purpose. The
secretary of the organization shall record the minutes of the
meeting including the list of all members present, the votes cast,
the purpose of the special assessment or fees and the recipient of
such assessments or fees. The record shall be attested to by the
president;
Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated February
15, 1988 whereby he directed the Company to remit the amount it had kept in trust
directly to the rank-and-file personnel without delay.
On appeal to the Bureau of Labor Relations, however, the order of the Med-Arbiter
was reversed and set aside by the respondent-Director in a resolution dated August

19, 1988 upholding the claim of the Union that the special assessment is authorized
under Article 241 (n) of the Labor Code, and that the Union has complied with the
requirements therein.
Hence, the instant petition.
Petitioners allege that the respondent-Director committed a grave abuse of
discretion amounting to lack or excess of jurisdiction when she held Article 241 (n)
of the Labor Code to be the applicable provision instead of Article 222(b) in relation
to Article 241(o) of the same law.
According to petitioners, a cursory examination and comparison of the two
provisions of Article 241 reveals that paragraph (n) cannot prevail over paragraph
(o). The reason advanced is that a special assessment is not a matter of major policy
affecting the entire union membership but is one which concerns the individual
rights of union members.
Petitioners further assert that assuming arguendo that Article 241(n) should prevail
over paragraph (o), the Union has nevertheless failed to comply with the procedure
to legitimize the questioned special assessment by: (1) presenting mere minutes of
local membership meetings instead of a written resolution; (2) failing to call a
general membership meeting; (3) having the minutes of three (3) local membership
meetings recorded by a union director, and not by the union secretary as required;
(4) failing to have the list of members present included in the minutes of the
meetings; and (5) failing to present a record of the votes cast. 7 Petitioners
concluded their argument by citing Galvadores.
After a careful review of the records of this case, We are convinced that the
deduction of the 10% special assessment by the Union was not made in accordance
with the requirements provided by law.
Petitioners are correct in citing the ruling of this Court in Galvadores which is
applicable to the instant case. The principle "that employees are protected by law
from unwarranted practices that diminish their compensation without their known
edge and consent" 8 is in accord with the constitutional principle of the State
affording full protection to labor. 9
The respondent-Union brushed aside the defects pointed out by petitioners in the
manner of compliance with the legal requirements as "insignificant technicalities."
On the contrary, the failure of the Union to comply strictly with the requirements set
out by the law invalidates the questioned special assessment. Substantial
compliance is not enough in view of the fact that the special assessment will
diminish the compensation of the union members. Their express consent is required,
and this consent must be obtained in accordance with the steps outlined by law,
which must be followed to the letter. No shortcuts are allowed.

The applicable provisions are clear. The Union itself admits that both paragraphs (n)
and (o) of Article 241 apply. Paragraph (n) refers to "levy" while paragraph (o) refers
to "check-off" of a special assessment. Both provisions must be complied with.
Under paragraph (n), the Union must submit to the Company a written resolution of
a majority of all the members at a general membership meeting duly called for the
purpose. In addition, the secretary of the organization must record the minutes of
the meeting which, in turn, must include, among others, the list of all the members
present as well as the votes cast.
As earlier outlined by petitioners, the Union obviously failed to comply with the
requirements of paragraph (n). It held local membership meetings on separate
occasions, on different dates and at various venues, contrary to the express
requirement that there must be a general membership meeting. The contention of
the Union that "the local membership meetings are precisely the very general
meetings required by law" 10 is untenable because the law would not have specified
a general membership meeting had the legislative intent been to allow local
meetings in lieu of the latter.
It submitted only minutes of the local membership meetings when what is required
is a written resolution adopted at the general meeting. Worse still, the minutes of
three of those local meetings held were recorded by a union director and not by the
union secretary. The minutes submitted to the Company contained no list of the
members present and no record of the votes cast. Since it is quite evident that the
Union did not comply with the law at every turn, the only conclusion that may be
made therefrom is that there was no valid levy of the special assessment pursuant
to paragraph (n) of Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an individual written authorization duly
signed by every employee in order that a special assessment may be validly
checked-off. Even assuming that the special assessment was validly levied pursuant
to paragraph (n), and granting that individual written authorizations were obtained
by the Union, nevertheless there can be no valid check-off considering that the
majority of the union members had already withdrawn their individual
authorizations. A withdrawal of individual authorizations is equivalent to no
authorization at all. Hence, the ruling in Galvadores that "no check-offs from any
amounts due employees may be effected without an individual written authorization
signed by the employees ... " is applicable.
The Union points out, however, that said disauthorizations are not valid for being
collective in form, as they are "mere bunches of randomly procured signatures,
under loose sheets of paper." 11 The contention deserves no merit for the simple
reason that the documents containing the disauthorizations have the signatures of
the union members. The Court finds these retractions to be valid. There is nothing in
the law which requires that the disauthorization must be in individual form.
Moreover, it is well-settled that "all doubts in the implementation and interpretation
of the provisions of the Labor Code ... shall be resolved in favor of labor." 12 And as
previously stated, labor in this case refers to the union members, as employees of

the Company. Their mere desire to establish a separate bargaining unit, albeit
unproven, cannot be construed against them in relation to the legality of the
questioned special assessment. On the contrary, the same may even be taken to
reflect their dissatisfaction with their bargaining representative, the respondentUnion, as shown by the circumstances of the instant petition, and with good reason.
The Med-Arbiter correctly ruled in his Order that:
The mandate of the majority rank and file have (sic) to be
respected considering they are the ones directly affected and the
realities of the high standards of survival nowadays. To ignore the
mandate of the rank and file would enure to destabilizing industrial
peace and harmony within the rank and file and the employer's
fold, which we cannot countenance.
Moreover, it will be recalled that precisely union dues are collected
from the union members to be spent for the purposes alluded to
by respondent. There is no reason shown that the regular union
dues being now implemented is not sufficient for the alleged
expenses. Furthermore, the rank and file have spoken in
withdrawing their consent to the special assessment, believing
that their regular union dues are adequate for the purposes stated
by the respondent. Thus, the rank and file having spoken and, as
we have earlier mentioned, their sentiments should be respected.
Of the stated purposes of the special assessment, as embodied in the board
resolution of the Union, only the collection of a special fund for labor and education
research is mandated, as correctly pointed out by the Union. The two other
purposes, namely, the purchase of vehicles and other items for the benefit of the
union officers and the general membership, and the payment of services rendered
by union officers, consultants and others, should be supported by the regular union
dues, there being no showing that the latter are not sufficient to cover the same.
The last stated purpose is contended by petitioners to fall under the coverage of
Article 222 (b) of the Labor Code. The contention is impressed with merit. Article 222
(b) prohibits attorney's fees, negotiations fees and similar charges arising out of the
conclusion of a collective bargaining agreement from being imposed on any
individual union member. The collection of the special assessment partly for the
payment for services rendered by union officers, consultants and others may not be
in the category of "attorney's fees or negotiations fees." But there is no question
that it is an exaction which falls within the category of a "similar charge," and,
therefore, within the coverage of the prohibition in the aforementioned article. There
is an additional proviso giving the Union President unlimited discretion to allocate
the proceeds of the special assessment. Such a proviso may open the door to abuse
by the officers of the Union considering that the total amount of the special
assessment is quite considerable P1,027,694.33 collected from those union
members who originally authorized the deduction, and P1,267,863.39 from those
who
did
not authorize the same, or subsequently retracted their

authorizations. 13 The former amount had already been remitted to the Union, while
the latter is being held in trust by the Company.
The Court, therefore, stakes down the questioned special assessment for being a
violation of Article 241, paragraphs (n) and (o), and Article 222 (b) of the Labor
Code.
WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of
the Bureau of Labor Relations dated August 19, 1988 is hereby REVERSED and SET
ASIDE, while the order of the Med-Arbiter dated February 17, 1988 is reinstated, and
the respondent Coca-Cola Bottlers (Philippines), Inc. is hereby ordered to
immediately remit the amount of P1,267,863.39 to the respective union members
from whom the said amount was withheld. No pronouncement as to costs. This
decision is immediately executory.
SO ORDERED.
Narvasa, Grio-Aquino and Medialdea, JJ., concur.
Cruz, J., took no part.

The undisputed facts that spawned the instant case follow:

Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious
sect known as the "Iglesia ni Cristo", had been in the employ of the Elizalde Rope
Factory, Inc. (hereinafter referred to as Company) since 1958. As such employee, he
was a member of the Elizalde Rope Workers' Union (hereinafter referred to as Union)
which had with the Company a collective bargaining agreement containing a closed
shop provision which reads as follows:
Membership in the Union shall be required as a condition of
employment for all permanent employees workers covered by this
Agreement.
The collective bargaining agreement expired on March 3, 1964 but was renewed the
following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by
Republic Act No. 3350, the employer was not precluded "from making an agreement
with a labor organization to require as a condition of employment membership
therein, if such labor organization is the representative of the employees." On June
18, 1961, however, Republic Act No. 3350 was enacted, introducing an amendment
to paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ...
"but such agreement shall not cover members of any religious sects which prohibit
affiliation of their members in any such labor organization".

G.R. No. L-25246 September 12, 1974

BENJAMIN
VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS' UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.

ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of the Court of First
Instance of Manila in its Civil Case No. 58894.

Being a member of a religious sect that prohibits the affiliation of its members with
any labor organization, Appellee presented his resignation to appellant Union in
1962, and when no action was taken thereon, he reiterated his resignation on
September 3, 1974. Thereupon, the Union wrote a formal letter to the Company
asking the latter to separate Appellee from the service in view of the fact that he
was resigning from the Union as a member. The management of the Company in
turn notified Appellee and his counsel that unless the Appellee could achieve a
satisfactory arrangement with the Union, the Company would be constrained to
dismiss him from the service. This prompted Appellee to file an action for injunction,
docketed as Civil Case No. 58894 in the Court of First Instance of Manila to enjoin
the Company and the Union from dismissing Appellee. 1 In its answer, the Union
invoked the "union security clause" of the collective bargaining agreement; assailed
the constitutionality of Republic Act No. 3350; and contended that the Court had no
jurisdiction over the case, pursuant to Republic Act No. 875, Sections 24 and 9 (d)
and (e). 2 Upon the facts agreed upon by the parties during the pre-trial conference,
the Court a quo rendered its decision on August 26, 1965, the dispositive portion of
which reads:
IN VIEW OF THE FOREGOING, judgment is rendered enjoining the
defendant Elizalde Rope Factory, Inc. from dismissing the plaintiff
from his present employment and sentencing the defendant
Elizalde Rope Workers' Union to pay the plaintiff P500 for
attorney's fees and the costs of this action.3

From this decision, the Union appealed directly to this Court on purely questions of
law, assigning the following errors:
I. That the lower court erred when it did not rule that Republic Act
No. 3350 is unconstitutional.
II. That the lower court erred when it sentenced appellant herein to
pay plaintiff the sum of P500 as attorney's fees and the cost
thereof.
In support of the alleged unconstitutionality of Republic Act No. 3350, the Union
contented, firstly, that the Act infringes on the fundamental right to form lawful
associations; that "the very phraseology of said Republic Act 3350, that membership
in a labor organization is banned to all those belonging to such religious sect
prohibiting affiliation with any labor organization" 4 , "prohibits all the members of a
given religious sect from joining any labor union if such sect prohibits affiliations of
their members thereto" 5 ; and, consequently, deprives said members of their
constitutional right to form or join lawful associations or organizations guaranteed by
the Bill of Rights, and thus becomes obnoxious to Article III, Section 1 (6) of the 1935
Constitution. 6
Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for
impairing the obligation of contracts in that, while the Union is obliged to comply
with its collective bargaining agreement containing a "closed shop provision," the
Act relieves the employer from its reciprocal obligation of cooperating in the
maintenance of union membership as a condition of employment; and that said Act,
furthermore, impairs the Union's rights as it deprives the union of dues from
members who, under the Act, are relieved from the obligation to continue as such
members. 7
Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors
those religious sects which ban their members from joining labor unions, in violation
of Article Ill, Section 1 (7) of the 1935 Constitution; and while said Act unduly
protects certain religious sects, it leaves no rights or protection to labor
organizations. 8
Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional
provision that "no religious test shall be required for the exercise of a civil right," in
that the laborer's exercise of his civil right to join associations for purposes not
contrary to law has to be determined under the Act by his affiliation with a religious
sect; that conversely, if a worker has to sever his religious connection with a sect
that prohibits membership in a labor organization in order to be able to join a labor
organization, said Act would violate religious freedom. 9
Fifthly, the Union contended that Republic Act No. 3350, violates the "equal
protection of laws" clause of the Constitution, it being a discriminately legislation,
inasmuch as by exempting from the operation of closed shop agreement the
members of the "Iglesia ni Cristo", it has granted said members undue advantages

over their fellow workers, for while the Act exempts them from union obligation and
liability, it nevertheless entitles them at the same time to the enjoyment of all
concessions, benefits and other emoluments that the union might secure from the
employer. 10
Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional
provision regarding the promotion of social justice. 11
Appellant Union, furthermore, asserted that a "closed shop provision" in a collective
bargaining agreement cannot be considered violative of religious freedom, as to call
for the amendment introduced by Republic Act No. 3350; 12 and that unless Republic
Act No. 3350 is declared unconstitutional, trade unionism in this country would be
wiped out as employers would prefer to hire or employ members of the Iglesia ni
Cristo in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended that Republic Act No. 3350
does not violate the right to form lawful associations, for the right to join
associations includes the right not to join or to resign from a labor organization, if
one's conscience does not allow his membership therein, and the Act has given
substance to such right by prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of contracts for said law
formed part of, and was incorporated into, the terms of the closed shop
agreement; 15that the Act does not violate the establishment of religion clause or
separation of Church and State, for Congress, in enacting said law, merely
accommodated the religious needs of those workers whose religion prohibits its
members from joining labor unions, and balanced the collective rights of organized
labor with the constitutional right of an individual to freely exercise his chosen
religion; that the constitutional right to the free exercise of one's religion has
primacy and preference over union security measures which are merely
contractual 16 ; that said Act does not violate the constitutional provision of equal
protection, for the classification of workers under the Act depending on their
religious tenets is based on substantial distinction, is germane to the purpose of the
law, and applies to all the members of a given class; 17 that said Act, finally, does not
violate the social justice policy of the Constitution, for said Act was enacted precisely
to equalize employment opportunities for all citizens in the midst of the diversities of
their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is necessary to
premise that there are some thoroughly established principles which must be
followed in all cases where questions of constitutionality as obtains in the instant
case are involved. All presumptions are indulged in favor of constitutionality; one
who attacks a statute, alleging unconstitutionality must prove its invalidity beyond a
reasonable doubt, that a law may work hardship does not render it unconstitutional;
that if any reasonable basis may be conceived which supports the statute, it will be
upheld, and the challenger must negate all possible bases; that the courts are not
concerned with the wisdom, justice, policy, or expediency of a statute; and that a
liberal interpretation of the constitution in favor of the constitutionality of legislation
should be adopted. 19

1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans the
members of such religious sects that forbid affiliation of their members with labor
unions from joining labor unions appears nowhere in the wording of Republic Act No.
3350; neither can the same be deduced by necessary implication therefrom. It is not
surprising, therefore, that appellant, having thus misread the Act, committed the
error of contending that said Act is obnoxious to the constitutional provision on
freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of association.
Section 1 (6) of Article III of the Constitution of 1935, as well as Section 7 of Article
IV of the Constitution of 1973, provide that the right to form associations or societies
for purposes not contrary to law shall not be abridged. Section 3 of Republic Act No.
875 provides that employees shall have the right to self-organization and to form,
join of assist labor organizations of their own choosing for the purpose of collective
bargaining and to engage in concerted activities for the purpose of collective
bargaining and other mutual aid or protection. What the Constitution and the
Industrial Peace Act recognize and guarantee is the "right" to form or join
associations. Notwithstanding the different theories propounded by the different
schools of jurisprudence regarding the nature and contents of a "right", it can be
safely said that whatever theory one subscribes to, a right comprehends at least two
broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint,
whereby an employee may act for himself without being prevented by law; and
second, power, whereby an employee may, as he pleases, join or refrain from Joining
an association. It is, therefore, the employee who should decide for himself whether
he should join or not an association; and should he choose to join, he himself makes
up his mind as to which association he would join; and even after he has joined, he
still retains the liberty and the power to leave and cancel his membership with said
organization at any time. 20 It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union. 21 Inasmuch as what both the
Constitution and the Industrial Peace Act have recognized, and guaranteed to the
employee, is the "right" to join associations of his choice, it would be absurd to say
that the law also imposes, in the same breath, upon the employee the duty to join
associations. The law does not enjoin an employee to sign up with any association.
The right to refrain from joining labor organizations recognized by Section 3 of the
Industrial Peace Act is, however, limited. The legal protection granted to such right
to refrain from joining is withdrawn by operation of law, where a labor union and an
employer have agreed on a closed shop, by virtue of which the employer may
employ only member of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract in order to
keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it would be an unfair
labor practice for an employer "to discriminate in regard to hire or tenure of
employment or any term or condition of employment to encourage or discourage
membership in any labor organization" the employer is, however, not precluded
"from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative of
the employees". By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs,

wishes to be employed or to keep his employment, he must become a member of

the collective bargaining union. Hence, the right of said employee not to join the
labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop arrangement, Republic Act No.
3350 introduced an exception, when it added to Section 4 (a) (4) of the Industrial
Peace Act the following proviso: "but such agreement shall not cover members of
any religious sects which prohibit affiliation of their members in any such labor
organization". Republic Act No. 3350 merely excludes ipso jure from the application
and coverage of the closed shop agreement the employees belonging to any
religious sects which prohibit affiliation of their members with any labor
organization. What the exception provides, therefore, is that members of said
religious sects cannot be compelled or coerced to join labor unions even when said
unions have closed shop agreements with the employers; that in spite of any closed
shop agreement, members of said religious sects cannot be refused employment or
dismissed from their jobs on the sole ground that they are not members of the
collective bargaining union. It is clear, therefore, that the assailed Act, far from
infringing the constitutional provision on freedom of association, upholds and
reinforces it. It does not prohibit the members of said religious sects from affiliating
with labor unions. It still leaves to said members the liberty and the power to
affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious
beliefs, the members of said religious sects prefer to sign up with the labor union,
they can do so. If in deference and fealty to their religious faith, they refuse to sign
up, they can do so; the law does not coerce them to join; neither does the law
prohibit them from joining; and neither may the employer or labor union compel
them to join. Republic Act No. 3350, therefore, does not violate the constitutional
provision on freedom of association.
2. Appellant Union also contends that the Act is unconstitutional for impairing the
obligation of its contract, specifically, the "union security clause" embodied in its
Collective Bargaining Agreement with the Company, by virtue of which "membership
in the union was required as a condition for employment for all permanent
employees workers". This agreement was already in existence at the time Republic
Act No. 3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to
have been incorporated into the agreement. But by reason of this amendment,
Appellee, as well as others similarly situated, could no longer be dismissed from his
job even if he should cease to be a member, or disaffiliate from the Union, and the
Company could continue employing him notwithstanding his disaffiliation from the
Union. The Act, therefore, introduced a change into the express terms of the union
security clause; the Company was partly absolved by law from the contractual
obligation it had with the Union of employing only Union members in permanent
positions, It cannot be denied, therefore, that there was indeed an impairment of
said union security clause.
According to Black, any statute which introduces a change into the express terms of
the contract, or its legal construction, or its validity, or its discharge, or the remedy
for its enforcement, impairs the contract. The extent of the change is not material. It
is not a question of degree or manner or cause, but of encroaching in any respect on
its obligation or dispensing with any part of its force. There is an impairment of the

contract if either party is absolved by law from its performance. 22 Impairment has
also been predicated on laws which, without destroying contracts, derogate from
substantial contractual rights. 23
It should not be overlooked, however, that the prohibition to impair the obligation of
contracts is not absolute and unqualified. The prohibition is general, affording a
broad outline and requiring construction to fill in the details. The prohibition is not to
be read with literal exactness like a mathematical formula, for it prohibits
unreasonable impairment only. 24 In spite of the constitutional prohibition, the State
continues to possess authority to safeguard the vital interests of its people.
Legislation appropriate to safeguarding said interests may modify or abrogate
contracts already in effect. 25 For not only are existing laws read into contracts in
order to fix the obligations as between the parties, but the reservation of essential
attributes of sovereign power is also read into contracts as a postulate of the legal
order. All contracts made with reference to any matter that is subject to regulation
under the police power must be understood as made in reference to the possible
exercise of that power. 26 Otherwise, important and valuable reforms may be
precluded by the simple device of entering into contracts for the purpose of doing
that which otherwise may be prohibited. The policy of protecting contracts against
impairment presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains adequate authority
to secure the peace and good order of society. The contract clause of the
Constitution must, therefore, be not only in harmony with, but also in subordination
to, in appropriate instances, the reserved power of the state to safeguard the vital
interests of the people. It follows that not all legislations, which have the effect of
impairing a contract, are obnoxious to the constitutional prohibition as to
impairment, and a statute passed in the legitimate exercise of police power,
although it incidentally destroys existing contract rights, must be upheld by the
courts. This has special application to contracts regulating relations between capital
and labor which are not merely contractual, and said labor contracts, for being
impressed with public interest, must yield to the common good. 27
In several occasions this Court declared that the prohibition against impairing the
obligations of contracts has no application to statutes relating to public subjects
within the domain of the general legislative powers of the state involving public
welfare. 28 Thus, this Court also held that the Blue Sunday Law was not an
infringement of the obligation of a contract that required the employer to furnish
work on Sundays to his employees, the law having been enacted to secure the wellbeing and happiness of the laboring class, and being, furthermore, a legitimate
exercise of the police power.29
In order to determine whether legislation unconstitutionally impairs contract
obligations, no unchanging yardstick, applicable at all times and under all
circumstances, by which the validity of each statute may be measured or
determined, has been fashioned, but every case must be determined upon its own
circumstances. Legislation impairing the obligation of contracts can be sustained
when it is enacted for the promotion of the general good of the people, and when
the means adopted to secure that end are reasonable. Both the end sought and the

means adopted must be legitimate, i.e., within the scope of the reserved power of
the state construed in harmony with the constitutional limitation of that power. 30
What then was the purpose sought to be achieved by Republic Act No. 3350? Its
purpose was to insure freedom of belief and religion, and to promote the general
welfare by preventing discrimination against those members of religious sects which
prohibit their members from joining labor unions, confirming thereby their natural,
statutory and constitutional right to work, the fruits of which work are usually the
only means whereby they can maintain their own life and the life of their
dependents. It cannot be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said religious sects
against two aggregates of group strength from which the individual needs
protection. The individual employee, at various times in his working life, is
confronted by two aggregates of power collective labor, directed by a union, and
collective capital, directed by management. The union, an institution developed to
organize labor into a collective force and thus protect the individual employee from
the power of collective capital, is, paradoxically, both the champion of employee
rights, and a new source of their frustration. Moreover, when the Union interacts
with management, it produces yet a third aggregate of group strength from which
the individual also needs protection the collective bargaining relationship. 31
The aforementioned purpose of the amendatory law is clearly seen in the
Explanatory Note to House Bill No. 5859, which later became Republic Act No. 3350,
as follows:
It would be unthinkable indeed to refuse employing a person who,
on account of his religious beliefs and convictions, cannot accept
membership in a labor organization although he possesses all the
qualifications for the job. This is tantamount to punishing such
person for believing in a doctrine he has a right under the law to
believe in. The law would not allow discrimination to flourish to the
detriment of those whose religion discards membership in any
labor organization. Likewise, the law would not commend the
deprivation of their right to work and pursue a modest means of
livelihood, without in any manner violating their religious faith
and/or belief. 32
It cannot be denied, furthermore, that the means adopted by the Act to achieve that
purpose exempting the members of said religious sects from coverage of union
security agreements is reasonable.
It may not be amiss to point out here that the free exercise of religious profession or
belief is superior to contract rights. In case of conflict, the latter must, therefore,
yield to the former. The Supreme Court of the United States has also declared on
several occasions that the rights in the First Amendment, which include freedom of
religion, enjoy a preferred position in the constitutional system. 33 Religious freedom,
although not unlimited, is a fundamental personal right and liberty, 34 and has a

preferred position in the hierarchy of values. Contractual rights, therefore, must

yield to freedom of religion. It is only where unavoidably necessary to prevent an
immediate and grave danger to the security and welfare of the community that
infringement of religious freedom may be justified, and only to the smallest extent
necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is unconstitutional,
appellant Union averred that said Act discriminates in favor of members of said
religious sects in violation of Section 1 (7) of Article Ill of the 1935 Constitution, and
which is now Section 8 of Article IV of the 1973 Constitution, which provides:
No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof, and the free exercise and
enjoyment of religious profession and worship, without
discrimination and preference, shall forever be allowed. No
religious test shall be required for the exercise of civil or political
rights.
The constitutional provision into only prohibits legislation for the support of any
religious tenets or the modes of worship of any sect, thus forestalling compulsion by
law of the acceptance of any creed or the practice of any form of worship, 35 but also
assures the free exercise of one's chosen form of religion within limits of utmost
amplitude. It has been said that the religion clauses of the Constitution are all
designed to protect the broadest possible liberty of conscience, to allow each man to
believe as his conscience directs, to profess his beliefs, and to live as he believes he
ought to live, consistent with the liberty of others and with the common good. 36 Any
legislation whose effect or purpose is to impede the observance of one or all
religions, or to discriminate invidiously between the religions, is invalid, even though
the burden may be characterized as being only indirect. 37 But if the stage regulates
conduct by enacting, within its power, a general law which has for its purpose and
effect to advance the state's secular goals, the statute is valid despite its indirect
burden on religious observance, unless the state can accomplish its purpose without
imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that the government should
not be precluded from pursuing valid objectives secular in character even if the
incidental result would be favorable to a religion or sect. It has likewise been held
that the statute, in order to withstand the strictures of constitutional prohibition,
must have a secular legislative purpose and a primary effect that neither advances
nor inhibits religion. 40 Assessed by these criteria, Republic Act No. 3350 cannot be
said to violate the constitutional inhibition of the "no-establishment" (of religion)
clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual
or religious or holy and eternal. It was intended to serve the secular purpose of
advancing the constitutional right to the free exercise of religion, by averting that
certain persons be refused work, or be dismissed from work, or be dispossessed of
their right to work and of being impeded to pursue a modest means of livelihood, by

reason of union security agreements. To help its citizens to find gainful employment
whereby they can make a living to support themselves and their families is a valid
objective of the state. In fact, the state is enjoined, in the 1935 Constitution, to
afford protection to labor, and regulate the relations between labor and capital and
industry. 41 More so now in the 1973 Constitution where it is mandated that "the
State shall afford protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race or creed and
regulate the relation between workers and employers. 42
The primary effects of the exemption from closed shop agreements in favor of
members of religious sects that prohibit their members from affiliating with a labor
organization, is the protection of said employees against the aggregate force of the
collective bargaining agreement, and relieving certain citizens of a burden on their
religious beliefs; and by eliminating to a certain extent economic insecurity due to
unemployment, which is a serious menace to the health, morals, and welfare of the
people of the State, the Act also promotes the well-being of society. It is our view
that the exemption from the effects of closed shop agreement does not directly
advance, or diminish, the interests of any particular religion. Although the exemption
may benefit those who are members of religious sects that prohibit their members
from joining labor unions, the benefit upon the religious sects is merely incidental
and indirect. The "establishment clause" (of religion) does not ban regulation on
conduct whose reason or effect merely happens to coincide or harmonize with the
tenets of some or all religions. 43 The free exercise clause of the Constitution has
been interpreted to require that religious exercise be preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted consistently with
the spirit of the constitutional provision. It acted merely to relieve the exercise of
religion, by certain persons, of a burden that is imposed by union security
agreements. It was Congress itself that imposed that burden when it enacted the
Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems
advisable, could take away the same burden. It is certain that not every conscience
can be accommodated by all the laws of the land; but when general laws conflict
with scrupples of conscience, exemptions ought to be granted unless some
"compelling state interest" intervenes. 45 In the instant case, We see no such
compelling state interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350 protects members of certain
religious sects, it leaves no right to, and is silent as to the protection of, labor
organizations. The purpose of Republic Act No. 3350 was not to grant rights to labor
unions. The rights of labor unions are amply provided for in Republic Act No. 875 and
the new Labor Code. As to the lamented silence of the Act regarding the rights and
protection of labor unions, suffice it to say, first, that the validity of a statute is
determined by its provisions, not by its silence 46 ; and, second, the fact that the law
may work hardship does not render it unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel persons to join
and remain members of a union to keep their jobs in violation of their religious
scrupples, would hurt, rather than help, labor unions, Congress has seen it fit to
exempt religious objectors lest their resistance spread to other workers, for religious

objections have contagious potentialities more than political and philosophic

objections.
Furthermore, let it be noted that coerced unity and loyalty even to the country, and
a fortiori to a labor union assuming that such unity and loyalty can be attained
through coercion is not a goal that is constitutionally obtainable at the expense of
religious liberty. 48 A desirable end cannot be promoted by prohibited means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates the
constitutional prohibition against requiring a religious test for the exercise of a civil
right or a political right, is not well taken. The Act does not require as a qualification,
or condition, for joining any lawful association membership in any particular religion
or in any religious sect; neither does the Act require affiliation with a religious sect
that prohibits its members from joining a labor union as a condition or qualification
for withdrawing from a labor union. Joining or withdrawing from a labor union
requires a positive act. Republic Act No. 3350 only exempts members with such
religious affiliation from the coverage of closed shop agreements. So, under this Act,
a religious objector is not required to do a positive act to exercise the right to join
or to resign from the union. He is exempted ipso jure without need of any positive
act on his part. A conscientious religious objector need not perform a positive act or
exercise the right of resigning from the labor union he is exempted from the
coverage of any closed shop agreement that a labor union may have entered into.
How then can there be a religious test required for the exercise of a right when no
right need be exercised?
We have said that it was within the police power of the State to enact Republic Act
No. 3350, and that its purpose was legal and in consonance with the Constitution. It
is never an illegal evasion of a constitutional provision or prohibition to accomplish a
desired result, which is lawful in itself, by discovering or following a legal way to do
it.49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory
legislation, inasmuch as it grants to the members of certain religious sects undue
advantages over other workers, thus violating Section 1 of Article III of the 1935
Constitution which forbids the denial to any person of the equal protection of the
laws. 50
The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the state. It is not, therefore, a
requirement, in order to avoid the constitutional prohibition against inequality, that
every man, woman and child should be affected alike by a statute. Equality of
operation of statutes does not mean indiscriminate operation on persons merely as
such, but on persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does not require that
things which are different in fact be treated in law as though they were the same.
The equal protection clause does not forbid discrimination as to things that are
different. 51 It does not prohibit legislation which is limited either in the object to
which it is directed or by the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the
grouping of things in speculation or practice because they agree with one another in
certain particulars. A law is not invalid because of simple inequality. 52 The very idea
of classification is that of inequality, so that it goes without saying that the mere fact
of inequality in no manner determines the matter of constitutionality. 53 All that is
required of a valid classification is that it be reasonable, which means that the
classification should be based on substantial distinctions which make for real
differences; that it must be germane to the purpose of the law; that it must not be
limited to existing conditions only; and that it must apply equally to each member of
the class. 54 This Court has held that the standard is satisfied if the classification or
distinction is based on a reasonable foundation or rational basis and is not palpably
arbitrary. 55
In the exercise of its power to make classifications for the purpose of enacting laws
over matters within its jurisdiction, the state is recognized as enjoying a wide range
of discretion. 56 It is not necessary that the classification be based on scientific or
marked differences of things or in their relation. 57 Neither is it necessary that the
classification be made with mathematical nicety. 58 Hence legislative classification
may in many cases properly rest on narrow distinctions, 59 for the equal protection
guaranty does not preclude the legislature from recognizing degrees of evil or harm,
and legislation is addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned requirements.
The Act classifies employees and workers, as to the effect and coverage of union
shop security agreements, into those who by reason of their religious beliefs and
convictions cannot sign up with a labor union, and those whose religion does not
prohibit membership in labor unions. Tile classification rests on real or substantial,
not merely imaginary or whimsical, distinctions. There is such real distinction in the
beliefs, feelings and sentiments of employees. Employees do not believe in the
same religious faith and different religions differ in their dogmas and cannons.
Religious beliefs, manifestations and practices, though they are found in all places,
and in all times, take so many varied forms as to be almost beyond imagination.
There are many views that comprise the broad spectrum of religious beliefs among
the people. There are diverse manners in which beliefs, equally paramount in the
lives of their possessors, may be articulated. Today the country is far more
heterogenous in religion than before, differences in religion do exist, and these
differences are important and should not be ignored.
Even from the phychological point of view, the classification is based on real and
important differences. Religious beliefs are not mere beliefs, mere ideas existing
only in the mind, for they carry with them practical consequences and are the
motives of certain rules. of human conduct and the justification of certain
acts. 60 Religious sentiment makes a man view things and events in their relation to
his God. It gives to human life its distinctive character, its tone, its happiness or
unhappiness its enjoyment or irksomeness. Usually, a strong and passionate desire
is involved in a religious belief. To certain persons, no single factor of their
experience is more important to them than their religion, or their not having any
religion. Because of differences in religious belief and sentiments, a very poor

person may consider himself better than the rich, and the man who even lacks the
necessities of life may be more cheerful than the one who has all possible luxuries.
Due to their religious beliefs people, like the martyrs, became resigned to the
inevitable and accepted cheerfully even the most painful and excruciating pains.
Because of differences in religious beliefs, the world has witnessed turmoil, civil
strife, persecution, hatred, bloodshed and war, generated to a large extent by
members of sects who were intolerant of other religious beliefs. The classification,
introduced by Republic Act No. 3350, therefore, rests on substantial distinctions.
The classification introduced by said Act is also germane to its purpose. The purpose
of the law is precisely to avoid those who cannot, because of their religious belief,
join labor unions, from being deprived of their right to work and from being
dismissed from their work because of union shop security agreements.
Republic Act No. 3350, furthermore, is not limited in its application to conditions
existing at the time of its enactment. The law does not provide that it is to be
effective for a certain period of time only. It is intended to apply for all times as long
as the conditions to which the law is applicable exist. As long as there are closed
shop agreements between an employer and a labor union, and there are employees
who are prohibited by their religion from affiliating with labor unions, their
exemption from the coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects; this is evident
from its provision. The fact that the law grants a privilege to members of said
religious sects cannot by itself render the Act unconstitutional, for as We have
adverted to, the Act only restores to them their freedom of association which closed
shop agreements have taken away, and puts them in the same plane as the other
workers who are not prohibited by their religion from joining labor unions. The
circumstance, that the other employees, because they are differently situated, are
not granted the same privilege, does not render the law unconstitutional, for every
classification allowed by the Constitution by its nature involves inequality.
The mere fact that the legislative classification may result in actual inequality is not
violative of the right to equal protection, for every classification of persons or things
for regulation by law produces inequality in some degree, but the law is not thereby
rendered invalid. A classification otherwise reasonable does not offend the
constitution simply because in practice it results in some inequality. 61 Anent this
matter, it has been said that whenever it is apparent from the scope of the law that
its object is for the benefit of the public and the means by which the benefit is to be
obtained are of public character, the law will be upheld even though incidental
advantage may occur to individuals beyond those enjoyed by the general public. 62
6. Appellant's further contention that Republic Act No. 3350 violates the
constitutional provision on social justice is also baseless. Social justice is intended to
promote the welfare of all the people. 63 Republic Act No. 3350 promotes that
welfare insofar as it looks after the welfare of those who, because of their religious
belief, cannot join labor unions; the Act prevents their being deprived of work and of
the means of livelihood. In determining whether any particular measure is for public

advantage, it is not necessary that the entire state be directly benefited it is

sufficient that a portion of the state be benefited thereby.
Social justice also means the adoption by the Government of measures calculated to
insure economic stability of all component elements of society, through the
maintenance of a proper economic and social equilibrium in the inter-relations of the
members of the community. 64 Republic Act No. 3350 insures economic stability to
the members of a religious sect, like the Iglesia ni Cristo, who are also component
elements of society, for it insures security in their employment, notwithstanding
their failure to join a labor union having a closed shop agreement with the employer.
The Act also advances the proper economic and social equilibrium between labor
unions and employees who cannot join labor unions, for it exempts the latter from
the compelling necessity of joining labor unions that have closed shop agreements
and equalizes, in so far as opportunity to work is concerned, those whose religion
prohibits membership in labor unions with those whose religion does not prohibit
said membership. Social justice does not imply social equality, because social
inequality will always exist as long as social relations depend on personal or
subjective proclivities. Social justice does not require legal equality because legal
equality, being a relative term, is necessarily premised on differentiations based on
personal or natural conditions. 65 Social justice guarantees equality of opportunity 66 ,
and this is precisely what Republic Act No. 3350 proposes to accomplish it gives
laborers, irrespective of their religious scrupples, equal opportunity for work.
7. As its last ground, appellant contends that the amendment introduced by Republic
Act No. 3350 is not called for in other words, the Act is not proper, necessary or
desirable. Anent this matter, it has been held that a statute which is not necessary is
not, for that reason, unconstitutional; that in determining the constitutional validity
of legislation, the courts are unconcerned with issues as to the necessity for the
enactment of the legislation in question. 67 Courts do inquire into the wisdom of
laws. 68 Moreover, legislatures, being chosen by the people, are presumed to
understand and correctly appreciate the needs of the people, and it may change the
laws accordingly. 69 The fear is entertained by appellant that unless the Act is
declared unconstitutional, employers will prefer employing members of religious
sects that prohibit their members from joining labor unions, and thus be a fatal blow
to unionism. We do not agree. The threat to unionism will depend on the number of
employees who are members of the religious sects that control the demands of the
labor market. But there is really no occasion now to go further and anticipate
problems We cannot judge with the material now before Us. At any rate, the validity
of a statute is to be determined from its general purpose and its efficacy to
accomplish the end desired, not from its effects on a particular case. 70 The essential
basis for the exercise of power, and not a mere incidental result arising from its
exertion, is the criterion by which the validity of a statute is to be measured. 71
II. We now pass on the second assignment of error, in support of which the Union
argued that the decision of the trial court ordering the Union to pay P500 for
attorney's fees directly contravenes Section 24 of Republic Act No. 875, for the
instant action involves an industrial dispute wherein the Union was a party, and said
Union merely acted in the exercise of its rights under the union shop provision of its
existing collective bargaining contract with the Company; that said order also

contravenes Article 2208 of the Civil Code; that, furthermore, Appellee was never
actually dismissed by the defendant Company and did not therefore suffer any
damage at all . 72

WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26,
1965, of the Court of First Instance of Manila, in its Civil Case No. 58894, appealed
from is affirmed, with costs against appellant Union. It is so ordered.

In refuting appellant Union's arguments, Appellee claimed that in the instant case
there was really no industrial dispute involved in the attempt to compel Appellee to
maintain its membership in the union under pain of dismissal, and that the Union, by
its act, inflicted intentional harm on Appellee; that since Appellee was compelled to
institute an action to protect his right to work, appellant could legally be ordered to
pay attorney's fees under Articles 1704 and 2208 of the Civil Code. 73

Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, Antonio, Esguerra, Muoz

Palma and Aquino, JJ., concur.

The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by
appellant provides that:
No suit, action or other proceedings shall be maintainable in any
court against a labor organization or any officer or member thereof
for any act done by or on behalf of such organization in
furtherance of an industrial dispute to which it is a party, on the
ground only that such act induces some other person to break a
contract of employment or that it is in restraint of trade or
interferes with the trade, business or employment of some other
person or with the right of some other person to dispose of his
capital or labor. (Emphasis supplied)
That there was a labor dispute in the instant case cannot be disputed for appellant
sought the discharge of respondent by virtue of the closed shop agreement and
under Section 2 (j) of Republic Act No. 875 a question involving tenure of
employment is included in the term "labor dispute". 74 The discharge or the act of
seeking it is the labor dispute itself. It being the labor dispute itself, that very same
act of the Union in asking the employer to dismiss Appellee cannot be "an act
done ... in furtherance of an industrial dispute". The mere fact that appellant is a
labor union does not necessarily mean that all its acts are in furtherance of an
industrial dispute. 75 Appellant Union, therefore, cannot invoke in its favor Section 24
of Republic Act No. 875. This case is not intertwined with any unfair labor practice
case existing at the time when Appellee filed his complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield.
The article provides that attorney's fees and expenses of litigation may be awarded
"when the defendant's act or omission has compelled the plaintiff ... to incur
expenses to protect his interest"; and "in any other case where the court deems it
just and equitable that attorney's fees and expenses of litigation should be
recovered". In the instant case, it cannot be gainsaid that appellant Union's act in
demanding Appellee's dismissal caused Appellee to incur expenses to prevent his
being dismissed from his job. Costs according to Section 1, Rule 142, of the Rules of
Court, shall be allowed as a matter of course to the prevailing party.

G.R. No. 95770 March 1, 1993

ROEL EBRALINAG, EMILY EBRALINAG, represented by their parents MR. & MRS.
LEONARDO EBRALINAG, JUSTINIANA TANTOG, represented by her father AMOS
TANTOG; JEMILOYAO & JOEL OYAO, represented by their parents MR. & MRS. ELIEZER
OYAO; JANETH DIAMOS & JEREMIAS DIAMOS, represented by parents MR. & MRS.
GODOFREDO DIAMOS; SARA OSTIA & JONATHAN OSTIA, represented by their parents
MR. & MRS. FAUTO OSTIA; IRVIN SEQUINO & RENAN SEQUINO, represented by their
parents MR. & MRS. LYDIO SEQUINO; NAPTHALE TANACAO, represented by his
parents MR. & MRS. MANUEL TANACAO; PRECILA PINO, represented by her parents
MR. & MRS. FELIPE PINO; MARICRIS ALFAR, RUWINA ALFAR, represented by their
parents MR. & MRS. HERMINIGILDO ALFAR; FREDESMINDA ALFAR & GUMERSINDO
ALFAR, represented by their parents ABDON ALFAR; ALBERTO ALFAR & ARISTIO
ALFAR, represented by their parents MR. & MRS. GENEROSO ALFAR; MARTINO
VILLAR, represented by his parents MR. & MRS. GENARO VILLAR; PERGEBRIEL
GUINITA & CHAREN GUINITA, represented by their parents MR. & MRS. CESAR
GUINITA; ALVIN DOOP, represented by his parents MR. & MRS. LEONIDES DOOP;
RHILYN LAUDE, represented by her parents MR. & MRS. RENE LAUDE; LEOREMINDA
MONARES, represented by her parents, MR. & MRS. FLORENCIO MONARES; MERCY
MONTECILLO, represented by her parents MR. & MRS. MANUEL MONTECILLO;
ROBERTO TANGAHA, represented by his parent ILUMINADA TANGAHA; EVELYN,
MARIA & FLORA TANGAHA, represented by their parents MR. & MRS. ALBERTO
TANGAHA; MAXIMO EBRALINAG, represented by his parents, MR. & MRS. PAQUITO
EBRALINAG; JUTA CUMON, GIDEON CUMON & JONATHAN CUMON, represented by
their father RAFAEL CUMON; EVIE LUMAKANG & JUNAR LUMAKANG, represented by
their parents MR. & MRS. LUMAKANG; EMILIO SARSOZO, PAZ AMOR SARSOZO &
IGNA MARIE SARSOZO, represented by their parents MR. & MRS. VIRGILIO SARSOZO;
MICHAEL JOSEPH & HENRY JOSEPH, represented by parent ANNIE JOSEPH; EMERSON
TABLASON & MASTERLOU TABLASON, represented by their parent EMERLITO

TABLASON, petitioners,
vs.
THE DIVISION SUPERINTENDENT OF SCHOOLS OF CEBU, respondent.

Pinamungajan, Carcar, and Taburan Cebu province. All minors, they are assisted by
their parents who belong to the religious group known as Jehovah's Witnesses which
claims some 100,000 "baptized publishers" in the Philippines.

G.R. No. 95887 March 1, 1993

In G.R. No. 95887, "May Amolo, et al. vs. Division Superintendent of Schools of Cebu
and Antonio A. Sangutan," the petitioners are 25 high school and grade school
students enrolled in public schools in Asturias, Cebu, whose parents are Jehovah's
Witnesses. Both petitions were prepared by the same counsel, Attorney Felino M.
Ganal.

MAY AMOLO, represented by her parents MR. & MRS. ISAIAS AMOLO; REDFORD
ALSADO, JOEBERT ALSADO & RUDYARD ALSADO, represented by their parents MR. &
MRS. ABELARDO ALSADO; NELIA ALSADO, REU ALSADO & LILIBETH ALSADO,
represented by their parents MR. & MRS. ROLANDO ALSADO; SUZETTE NAPOLES,
represented by her parents ISMAILITO NAPOLES & OPHELIA NAPOLES; JESICA
CARMELOTES, represented by her parents MR. & MRS. SERGIO CARMELOTES; BABY
JEAN MACAPAS, represented by her parents MR. & MRS. TORIBIO MACAPAS;
GERALDINE ALSADO, represented by her parents MR. & MRS. JOEL ALSADO; RAQUEL
DEMOTOR & LEAH DEMOTOR, represented by their parents MR. & MRS. LEONARDO
DEMOTOR; JURELL VILLA & MELONEY VILLA, represented by their parents MR. &
MRS. JOVENIANO VILLA; JONELL HOPE MAHINAY, MARY GRACE MAHINAY and
MAGDALENE MAHINAY, represented by their parents MR. & MRS. FELIX MAHINAY;
JONALYN ANTIOLA and JERWIN ANTIOLA, represented by their parents FELIFE
ANTIOLA and ANECITA ANTIOLA; MARIA CONCEPCION CABUYAO, represented by her
parents WENIFREDO CABUYAO and ESTRELLITA CABUYAO, NOEMI TURNO
represented by her parents MANUEL TURNO and VEVENCIA TURNO; SOLOMON
PALATULON, SALMERO PALATULON and ROSALINDA PALATULON, represented by
their parents MARTILLANO PALATULON and CARMILA PALATULON, petitioners,
vs.
THE DIVISION SUPERINTENDENT OF SCHOOLS OF CEBU and ANTONIO A. SANGUTAN,
respondents.
Felino M. Ganal for petitioners.
The Solicitor General for respondents.

GRIO-AQUINO, J.:
These two special civil actions for certiorari, Mandamus and Prohibition were
consolidated because they raise essentially the same issue: whether school children
who are members or a religious sect known as Jehovah's Witnesses may be expelled
from school (both public and private), for refusing, on account of their religious
beliefs, to take part in the flag ceremony which includes playing (by a band) or
singing the Philippine national anthem, saluting the Philippine flag and reciting the
patriotic pledge.
In G.R. No. 95770 "Roel Ebralinag, et al. vs. Division Superintendent of Schools of
Cebu and Manuel F. Biongcog, Cebu District Supervisor," the petitioners are 43 high
school and elementary school students in the towns of Daan Bantayan,

All the petitioners in these two cases were expelled from their classes by the public
school authorities in Cebu for refusing to salute the flag, sing the national anthem
and recite the patriotic pledge as required by Republic Act No. 1265 of July 11, 1955,
and by Department Order No. 8 dated July 21, 1955 of the Department of Education,
Culture and Sports (DECS) making the flag ceremony compulsory in all educational
institutions. Republic Act No. 1265 provides:
Sec. 1. All educational institutions shall henceforth observe daily
flag ceremony, which shall be simple and dignified and shall
include the playing or singing of the Philippine National anthem.
Sec. 2. The Secretary of Education is hereby authorized and
directed to issue or cause to be issued rules and regulations for
the proper conduct of the flag ceremony herein provided.
Sec. 3. Failure or refusal to observe the flag ceremony provided by
this Act and in accordance with rules and regulations issued by the
Secretary of Education, after proper notice and hearing, shall
subject the educational institution concerned and its head to
public censure as an administrative punishment which shall be
published at least once in a newspaper of general circulation.
In case of failure to observe for the second time the flag-ceremony
provided by this Act, the Secretary of Education, after proper
notice and hearing, shall cause the cancellation of the recognition
or permit of the private educational institution responsible for
such failure.
The implementing rules and regulations in Department Order No. 8 provide:
RULES AND REGULATIONS FOR CONDUCTING
CEREMONY IN ALL EDUCATIONAL INSTITUTIONS.

THE

FLAG

1. The Filipino Flag shall be displayed by all educational

institutions, public and private, every school day throughout the
year. It shall be raised at sunrise and lowered at sunset. The flagstaff must be straight, slightly and gently tapering at the end, and

of such height as would give the Flag a commanding position in

front of the building or within the compound.

I
love
the
Philippines.
It
is
the
land
of
my
birth;
It
is
the
home
of
my
people.
It protects me and helps me to be, strong, happy
and
useful.
In return, I will heed the counsel of my parents;
I will obey the rules of my school;
I will perform the duties of a patriotic, lawabiding
citizen;
I will serve my country unselfishly and faithfully;
I will be a true, Filipino in thought, in word, in
deed.

2. Every public and private educational institution shall hold a flagraising ceremony every morning except when it is raining, in which
event the ceremony may be conducted indoors in the best way
possible. A retreat shall be held in the afternoon of the same day.
The flag-raising ceremony in the morning shall be conducted in the
following manner:
a. Pupils and teachers or students and faculty
members who are in school and its premises
shall assemble in formation facing the flag. At
command, books shall be put away or held in the
left hand and everybody shall come to attention.
Those with hats shall uncover. No one shall enter
or leave the school grounds during the
ceremony.
b. The assembly shall sing the Philippine
National Anthem accompanied by the school
band or without the accompaniment if it has
none; or the anthem may be played by the
school band alone. At the first note of the
Anthem, the flag shall be raised briskly. While
the flag is being raised, all persons present shall
stand at attention and execute a salute. Boys
and men with hats shall salute by placing the hat
over the heart. Those without hat may stand
with their arms and hands down and straight at
the sides. Those in military or Boy Scout uniform
shall give the salute prescribed by their
regulations. The salute shall be started as the
Flag rises, and completed upon last note of the
anthem.
c. Immediately following the singing of the
Anthem, the assembly shall recite in unison the
following patriotic pledge (English or vernacular
version), which may bring the ceremony to a
close. This is required of all public schools and of
private schools which are intended for Filipino
students or whose population is predominantly
Filipino.
English Version

xxx xxx xxx

Jehovah's Witnesses admittedly teach their children not to salute the flag, sing the
national anthem, and recite the patriotic pledge for they believe that those are "acts
of worship" or "religious devotion" (p. 10,Rollo) which they "cannot conscientiously
give . . . to anyone or anything except God" (p. 8, Rollo). They feel bound by the
Bible's
command
to
"guard
ourselves
from
idols 1 John 5:21" (p. 9, Rollo). They consider the flag as an image or idol
representing the State (p. 10, Rollo). They think the action of the local authorities in
compelling the flag salute and pledge transcends constitutional limitations on the
State's power and invades the sphere of the intellect and spirit which the
Constitution protect against official control (p. 10, Rollo).
This is not the first time that the question, of whether the children of Jehovah's
Witnesses may be expelled from school for disobedience of R.A. No. 1265 and
Department Order No. 8, series of 1955, has been raised before this Court.
The same issue was raised in 1959 in Gerona, et al. vs. Secretary of Education, et
al., 106 Phil. 2 (1959) and Balbuna, et al. vs. Secretary of Education, 110 Phil. 150
(1960). This Court in the Gerona case upheld the expulsion of the students, thus:
The flag is not an image but a symbol of the Republic of the
Philippines, an emblem of national sovereignty, of national unity
and cohesion and of freedom and liberty which it and the
Constitution guarantee and protect. Under a system of complete
separation of church and state in the government, the flag is
utterly devoid of any religious significance. Saluting the flag does
not involve any religious ceremony. The flag salute is no more a
religious ceremony than the taking of an oath of office by a public
official or by a candidate for admission to the bar.
In requiring school pupils to participate in the flag salute, the State
thru the Secretary of Education is not imposing a religion or
religious belief or a religious test on said students. It is merely
enforcing
a

non-discriminatory school regulation applicable to all alike whether

Christian, Moslem, Protestant or Jehovah's Witness. The State is
merely carrying out the duty imposed upon it by the Constitution
which charges it with supervision over and regulation of all
educational institutions, to establish and maintain a complete and
adequate system of public education, and see to it that all schools
aim to develop, among other things, civic conscience and teach
the duties of citizenship.
The children of Jehovah's Witnesses cannot be exempted from
participation in the flag ceremony. They have no valid right to such
exemption. Moreover, exemption to the requirement will disrupt
school discipline and demoralize the rest of the school population
which by far constitutes the great majority.
The freedom of religious belief guaranteed by the Constitution
does not and cannot mean exemption from or non-compliance
with reasonable and non-discriminatory laws, rules and regulations
promulgated by competent authority. (pp. 2-3).
Gerona was reiterated in Balbuna, as follows:
The Secretary of Education was duly authorized by the Legislature
thru Republic Act 1265 to promulgate said Department Order, and
its provisions requiring the observance of the flag salute, not being
a religious ceremony but an act and profession of love and
allegiance and pledge of loyalty to the fatherland which the flag
stands for, does not violate the constitutional provision on freedom
of religion. (Balbuna, et al. vs. Secretary of Education, et al., 110
Phil. 150).
Republic Act No. 1265 and the ruling in Gerona have been incorporated in Section
28, Title VI, Chapter 9 of the Administrative Code of 1987 (Executive Order No. 292)
which took effect on September 21, 1988 (one year after its publication in the
Official Gazette, Vol. 63, No. 38 of September 21, 1987). Paragraph 5 of Section 28
gives legislative cachet to the ruling in Gerona, thus:
5. Any teacher or student or pupil who refuses to join or
participate in the flag ceremony may be dismissed after due
investigation.
However, the petitioners herein have not raised in issue the constitutionality of the
above provision of the new Administrative Code of 1987. They have targeted only
Republic Act No. 1265 and the implementing orders of the DECS.
In 1989, the DECS Regional Office in Cebu received complaints about teachers and
pupils belonging to the Jehovah's Witnesses, and enrolled in various public and

private schools, who refused to sing the Philippine national anthem, salute the
Philippine flag and recite the patriotic pledge. Division Superintendent of Schools,
Susana B. Cabahug of the Cebu Division of DECS, and Dr. Atty. Marcelo M. Bacalso,
Assistant Division Superintendent, recalling this Court's decision in Gerona, issued
Division Memorandum No. 108, dated November 17, 1989 (pp. 147-148, Rollo of
G.R. No. 95770) directing District Supervisors, High School Principals and Heads of
Private Educational institutions as follows:
1. Reports reaching this Office disclose that there are a number of
teachers, pupils, students, and school employees in public schools
who refuse to salute the Philippine flag or participate in the daily
flag ceremony because of some religious belief.
2. Such refusal not only undermines Republic Act No. 1265 and the
DECS Department Order No. 8, Series of 1955 (Implementing Rules
and Regulations) but also strikes at the heart of the DECS
sustained effort to inculcate patriotism and nationalism.
3. Let it be stressed that any belief that considers the flag as an
image is not in any manner whatever a justification for not
saluting the Philippine flag or not participating in flag ceremony.
Thus, the Supreme Court of the Philippine says:
The flag is not an image but a symbol of the
Republic of the Philippines, an emblem of
national sovereignty, of national unity and
cohesion and freedom and liberty which it and
the Constitution guarantee and protect. (Gerona,
et al. vs. Sec. of Education, et al., 106 Phil. 11.)
4. As regards the claim for freedom of belief, which an objectionist
may advance, the Supreme Court asserts:
But between the freedom of belief and the
exercise of said belief, there is quite a stretch of
road to travel. If the exercise of said religious
belief clashes with the established institutions of
society and with the law, then the former must
yield and give way to the latter. (Gerona, et al.
vs. Sec. of Education, et al., 106 Phil. 11.)
5. Accordingly, teachers and school employees who choose not to
participate in the daily flag ceremony or to obey the flag salute
regulation spelled out in Department Order No. 8, Series of 1955,
shall be considered removed from the service after due process.

6. In strong language about pupils and students who do the same

the Supreme Court has this to say:

Education, et al., Respondents and Appellees' dated August 12,

1959 against their favor. (p. 149, Rollo of G.R. No. 95770.)

If they choose not to obey the flag salute

regulation, they merely lost the benefits of
public education being maintained at the
expense of their fellow Citizens, nothing more.
According to a popular expression, they could
take it or leave it! Having elected not to comply
with the regulation about the flag salute they
forfeited their right to attend public schools.
(Gerona, et al. vs. Sec. of Education, et al., 106
Phil. 15.)

In the Daan Bantayan District, the District Supervisor, Manuel F. Biongcog, ordered
the "dropping from the rolls" of students who "opted to follow their religious belief
which is against the Flag Salute Law" on the theory that "they forfeited their right to
attend public schools." (p. 47, Rollo of G.R. No. 95770.)

7. School administrators shall therefore submit to this Office a

report on those who choose not to participate in flag ceremony or
salute the Philippine flag. (pp. 147-148, Rollo of G.R. No. 95770;
Emphasis supplied).
Cebu school officials resorted to a number of ways to persuade the children of
Jehovah's Witnesses to obey the memorandum. In the Buenavista Elementary
School, the children were asked to sign an Agreement (Kasabutan) in the Cebuano
dialect promising to sing the national anthem, place their right hand on their breast
until the end of the song and recite the pledge of allegiance to the flag (Annex D, p.
46, Rollo of G.R. No. 95770 and p. 48, Rollo of G.R. No. 95887), but they refused to
sign the "Kasabutan" (p. 20, Rollo of G.R. No. 95770).

1st
DAANBANTAYAN
DISTRICT
Daanbantayan, Cebu, July 24, 1990.

Indorsement
II

Respectfully returned to Mrs. Alicia A. Diaz, School In Charge [sic],

Agujo Elementary School with the information that this office is
sad to order the dropping of Jeremias Diamos and Jeaneth Diamos,
Grades III and IV pupils respectively from the roll since they opted
to follow their religious belief which is against the Flag Salute
Law (R.A. 1265) and DECS Order No. 8, series of 1955, having
elected not to comply with the regulation about the flag salute
they forfeited their right to attend public schools (Gerona, et al. vs.
Sec. of Education, et al., 106 Philippines 15). However, should they
change their mind to respect and follow the Flag Salute Law they
may be re-accepted.
(Sgd.)
MANUEL
F.
BIONGCOG
District
Supervisor

In Tubigmanok Elementary School, the Teacher-In-Charge, Antonio A. Sangutan, met

with the Jehovah's Witnesses' parents, as disclosed in his letter of October 17, 1990,
excerpts from which reveal the following:
(p. 47, Rollo of G.R. No. 95770.)
After two (2) fruitless confrontation meetings with the Jehovah's
Witnesses' parents on October 2, 1990 and yesterday due to their
firm stand not to salute the flag of the Republic of the Philippines
during Flag Ceremony and other occasions, as mandated by law
specifically Republic Act No. 1265, this Office hereby orders the
dropping from the list in the School Register (BPS Form I) of all
teachers, all Jehovah Witness pupils from Grade I up to Grade VI
effective today.

The expulsion as of October 23, 1990 of the 43 petitioning students of the

Daanbantayan National High School, Agujo Elementary School, Calape Barangay
National High School, Pinamungajan Provincial High School, Tabuelan Central School,
Canasojan Elementary School, Liboron Elementary School, Tagaytay Primary School,
San Juan Primary School and Northern Central Elementary School of San Fernando,
Cebu, upon order of then Acting Division Superintendent Marcelo Bacalso, prompted
some Jehovah's Witnesses in Cebu to appeal to the Secretary of Education Isidro
Cario but the latter did not answer their letter. (p. 21, Rollo.)

xxx xxx xxx

This order is in compliance with Division Memorandum No. 108 s.
1989 dated November 17, 1989 by virtue of Department Order No.
8 s. 1955 dated July 21, 1955 in accordance with Republic Act No.
1265 and Supreme Court Decision of a case "Genaro Gerona, et
al., Petitioners and Appellants vs. The Honorable Secretary of

The petition in G.R. No. 95887 was filed by 25 students who were similarly expelled
because Dr. Pablo Antopina, who succeeded Susana Cabahug as Division
Superintendent of Schools, would not recall the expulsion orders of his predecessor.
Instead, he verbally caused the expulsion of some more children of Jehovah's
Witnesses.

On October 31, 1990, the students and their parents filed these special civil actions
for Mandamus,Certiorari and Prohibition alleging that the public respondents acted
without or in excess of their jurisdiction and with grave abuse of discretion (1) in
ordering their expulsion without prior notice and hearing, hence, in violation of their
right to due process, their right to free public education, and their right to freedom
of speech, religion and worship (p. 23, Rollo). The petitioners pray that:
c. Judgment be rendered:
i. declaring null and void the expulsion or
dropping from the rolls of herein petitioners from
their respective schools;
ii. prohibiting and enjoining respondent from
further barring the petitioners from their classes
or otherwise implementing the expulsion
ordered on petitioners; and
iii. compelling the respondent and all persons
acting for him to admit and order the readmission of petitioners to their respective
schools. (p. 41, Rollo.)
and that pending the determination of the merits of these cases, a temporary
restraining order be issued enjoining the respondents from enforcing the expulsion
of the petitioners and to re-admit them to their respective classes.
On November 27, 1990, the Court issued a temporary restraining order and a writ of
preliminary mandatory injunction commanding the respondents to immediately readmit the petitioners to their respective classes until further orders from this Court
(p. 57, Rollo).
The Court also ordered the Secretary of Education and Cebu District Supervisor
Manuel F. Biongcog to be impleaded as respondents in these cases.
On May 13, 1991, the Solicitor General filed a consolidated comment to the petitions
(p. 98, Rollo) defending the expulsion orders issued by the public respondents on the
grounds that:
1. Bizarre religious practices of the Jehovah's Witnesses produce
rebellious and anti-social school children and consequently disloyal
and mutant Filipino citizens.
2. There are no new and valid grounds to sustain the charges of
the Jehovah's Witnesses that the DECS' rules and regulations on
the flag salute ceremonies are violative of their freedom of religion
and worship.

3. The flag salute is devoid of any religious significance; instead, it

inculcates respect and love of country, for which the flag stands.
4. The State's compelling interests being pursued by the DECS'
lawful regulations in question do not warrant exemption of the
school children of the Jehovah's Witnesses from the flag salute
ceremonies on the basis of their own self-perceived religious
convictions.
5. The issue is not freedom of speech but enforcement of law and
jurisprudence.
6. State's power to regulate repressive and unlawful religious
practices justified, besides having scriptural basis.
7. The penalty of expulsion is legal and valid, more so with the
enactment of Executive Order No. 292 (The Administrative Code of
1987).
Our task here is extremely difficult, for the 30-year old decision of this court
in Gerona upholding the flag salute law and approving the expulsion of students who
refuse to obey it, is not lightly to be trifled with.
It is somewhat ironic however, that after the Gerona ruling had received legislative
cachet by its in corporation in the Administrative Code of 1987, the present Court
believes that the time has come to re-examine it. The idea that one may be
compelled to salute the flag, sing the national anthem, and recite the patriotic
pledge, during a flag ceremony on pain of being dismissed from one's job or of being
expelled from school, is alien to the conscience of the present generation of Filipinos
who cut their teeth on the Bill of Rights which guarantees their rights to free
speech ** and the free exercise of religious profession and worship (Sec. 5, Article III,
1987 Constitution; Article IV, Section 8, 1973 Constitution; Article III, Section 1[7],
1935 Constitution).
Religious freedom is a fundamental right which is entitled to the highest priority and
the amplest protection among human rights, for it involves the relationship of man
to his Creator (Chief Justice Enrique M. Fernando's separate opinion in German vs.
Barangan, 135 SCRA 514, 530-531).
The right to religious profession and worship has a two-fold
aspect, vis., freedom to believe and freedom to act on one's belief.
The first is absolute as long as the belief is confined within the
realm of thought. The second is subject to regulation where the
belief is translated into external acts that affect the public welfare
(J. Cruz, Constitutional Law, 1991 Ed., pp. 176-177).

Petitioners stress, however, that while they do not take part in the compulsory flag
ceremony, they do not engage in "external acts" or behavior that would offend their
countrymen who believe in expressing their love of country through the observance
of the flag ceremony. They quietly stand at attention during the flag ceremony to
show their respect for the right of those who choose to participate in the solemn
proceedings (Annex F, Rollo of G.R. No. 95887, p. 50 and Rollo of G.R. No. 95770, p.
48). Since they do not engage in disruptive behavior, there is no warrant for their
expulsion.
The sole justification for a prior restraint or limitation on the
exercise of religious freedom (according to the late Chief Justice
Claudio Teehankee in his dissenting opinion in German vs.
Barangan, 135 SCRA 514, 517) is the existence of a grave and
present danger of a character both grave and imminent, of a
serious evil to public safety, public morals, public health or any
other legitimate public interest, that the State has a right (and
duty) to prevent." Absent such a threat to public safety, the
expulsion of the petitioners from the schools is not justified.
The situation that the Court directly predicted in Gerona that:
The flag ceremony will become a thing of the past or perhaps
conducted with very few participants, and the time will come when
we would have citizens untaught and uninculcated in and not
imbued with reverence for the flag and love of country, admiration
for national heroes, and patriotism a pathetic, even tragic
situation, and all because a small portion of the school population
imposed its will, demanded and was granted an exemption.
(Gerona, p. 24.)
has not come to pass. We are not persuaded that by exempting the Jehovah's
Witnesses from saluting the flag, singing the national anthem and reciting the
patriotic pledge, this religious group which admittedly comprises a "small portion of
the school population" will shake up our part of the globe and suddenly produce a
nation "untaught and uninculcated in and unimbued with reverence for the flag,
patriotism, love of country and admiration for national heroes" (Gerona vs. Sec. of
Education, 106 Phil. 2, 24). After all, what the petitioners seek only is exemption
from the flag ceremony, not exclusion from the public schools where they may study
the Constitution, the democratic way of life and form of government, and learn not
only the arts, sciences, Philippine history and culture but also receive training for a
vocation of profession and be taught the virtues of "patriotism, respect for human
rights, appreciation for national heroes, the rights and duties of citizenship, and
moral and spiritual values (Sec. 3[2], Art. XIV, 1987 Constitution) as part of the
curricula. Expelling or banning the petitioners from Philippine schools will bring
about the very situation that this Court had feared in Gerona. Forcing a small
religious group, through the iron hand of the law, to participate in a ceremony that
violates their religious beliefs, will hardly be conducive to love of country or respect
for dully constituted authorities.

As Mr. Justice Jackson remarked in West Virginia vs. Barnette, 319 U.S. 624 (1943):
. . . To believe that patriotism will not flourish if patriotic
ceremonies are voluntary and spontaneous instead of a
compulsory routine is to make an unflattering estimate of the
appeal of our institutions to free minds. . . . When they [diversity]
are so harmless to others or to the State as those we deal with
here, the price is not too great. But freedom to differ is not limited
to things that do not matter much. That would be a mere shadow
of freedom. The test of its substance is the right to differ as to
things that touch the heart of the existing order.
Furthermore, let it be noted that coerced unity and loyalty even to
the country, . . . assuming that such unity and loyalty can be
attained through coercion is not a goal that is constitutionally
obtainable at the expense of religious liberty. A desirable end
cannot be promoted by prohibited means. (Meyer vs. Nebraska,
262 U.S. 390, 67 L. ed. 1042, 1046.)
Moreover, the expulsion of members of Jehovah's Witnesses from the schools where
they are enrolled will violate their right as Philippine citizens, under the 1987
Constitution, to receive free education, for it is the duty of the State to "protect and
promote the right of all citizens to quality education . . . and to make such education
accessible to all (Sec. 1, Art. XIV).
In Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, 72-75, we upheld the
exemption of members of the Iglesia ni Cristo, from the coverage of a closed shop
agreement between their employer and a union because it would violate the
teaching of their church not to join any labor group:
. . . It is certain that not every conscience can be accommodated
by all the laws of the land; but when general laws conflict with
scruples of conscience, exemptions ought to be granted unless
some "compelling state interests" intervenes. (Sherbert vs. Berner,
374 U.S. 398, 10 L. Ed. 2d 965, 970, 83 S. Ct. 1790.)
We hold that a similar exemption may be accorded to the Jehovah's Witnesses with
regard to the observance of the flag ceremony out of respect for their religious
beliefs, however "bizarre" those beliefs may seem to others. Nevertheless, their
right not to participate in the flag ceremony does not give them a right to disrupt
such patriotic exercises. Paraphrasing the warning cited by this Court in Non vs.
DamesII, 185 SCRA 523, 535, while the highest regard must be afforded their right
to the free exercise of their religion, "this should not be taken to mean that school
authorities are powerless to discipline them" if they should commit breaches of the
peace by actions that offend the sensibilities, both religious and patriotic, of other
persons. If they quietly stand at attention during the flag ceremony while their
classmates and teachers salute the flag, sing the national anthem and recite the
patriotic pledge, we do not see how such conduct may possibly disturb the peace, or

pose "a grave and present danger of a serious evil to public safety, public morals,
public health or any other legitimate public interest that the State has a right (and
duty) to prevent (German vs. Barangan, 135 SCRA 514, 517).
Before we close this decision, it is appropriate to recall the Japanese occupation of
our country in 1942-1944 when every Filipino, regardless of religious persuasion, in
fear of the invader, saluted the Japanese flag and bowed before every Japanese
soldier. Perhaps, if petitioners had lived through that dark period of our history, they
would not quibble now about saluting the Philippine flag. For when liberation came in
1944 and our own flag was proudly hoisted aloft again, it was a beautiful sight to
behold that made our hearts pound with pride and joy over the newly-regained
freedom and sovereignty of our nation.
Although the Court upholds in this decision the petitioners' right under our
Constitution to refuse to salute the Philippine flag on account of their religious
beliefs, we hope, nevertheless, that another foreign invasion of our country will not
be necessary in order for our countrymen to appreciate and cherish the Philippine
flag.
WHEREFORE, the petition for certiorari and prohibition is GRANTED. The expulsion
orders issued by the public respondents against the petitioners are hereby
ANNULLED AND SET ASIDE. The temporary restraining order which was issued by
this Court is hereby made permanent.
SO ORDERED.

G.R. Nos. 43633-34 September 14, 1990

PABLO
ARIZALA,
SERGIO
MARIBAO,
LEONARDO
JOVEN,
and
FELINO
BULANDUS, petitioners,
vs.
THE COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents.

Januario T. Seno for petitioners.

NARVASA, J.:
Under the Industrial Peace Act, 1 government-owned or controlled corporations had
the duty to bargain collectively and were otherwise subject to the obligations and
duties of employers in the private sector. 2 The Act also prohibited supervisors to
become, or continue to be, members of labor organizations composed of rank-andfile employees, 3 and prescribed criminal sanctions for breach of the prohibition. 4

since the provisions of that constitution and of the Labor Code subsequently
promulgated (eff., November 1, 1974), repealing the Industrial Peace Act-placed
employees of all categories in government-owned or controlled corporations without
distinction within the Civil Service, and provided that the terms and conditions of
their employment were to be "governed by the Civil Service Law, rules and
regulations" and hence, no longer subject of collective bargaining, the appellants
ceased to fall within the coverage of the Industrial Peace Act and should thus no
longer continue to be prosecuted and exposed to punishment for a violation thereof.
They pointed out further that the criminal sanction in the Industrial Peace Act no
longer appeared in the Labor Code. The Appellate Court denied their plea for
reconsideration.
Hence, the present petition for review on certiorari.

It was under the regime of said Industrial Peace Act that the Government Service
Insurance System (GSIS, for short) became bound by a collective bargaining
agreement executed between it and the labor organization representing the majority
of its employees, the GSIS Employees Association. The agreement contained a
"maintenance-of-membership" clause, 5 i.e., that all employees who, at the time of
the execution of said agreement, were members of the union or became members
thereafter, were obliged to maintain their union membership in good standing for
the duration of the agreement as a condition for their continued employment in the
GSIS.
There appears to be no dispute that at that time, the petitioners occupied
supervisory positions in the GSIS. Pablo Arizala and Sergio Maribao were,
respectively, the Chief of the Accounting Division, and the Chief of the Billing Section
of said Division, in the Central Visayas Regional Office of the GSIS. Leonardo Joven
and Felino Bulandus were, respectively, the Assistant Chief of the Accounting
Division (sometimes Acting Chief in the absence of the Chief) and the Assistant Chief
of the Field Service and Non-Life Insurance Division (and Acting Division Chief in the
absence of the Chief), of the same Central Visayas Regional Office of the GSIS.
Demands were made on all four of them to resign from the GSIS Employees
Association, in view of their supervisory positions. They refused to do so.
Consequently, two (2) criminal cases for violation of the Industrial Peace Act were
lodged against them in the City Court of Cebu: one involving Arizala and
Maribao 6 and the other, Joven and Bulandus. 7
Both criminal actions resulted in the conviction of the accused in separate
decisions. 8 They were each sentenced "to pay a fine of P 500.00 or to suffer
subsidiary imprisonment in case of insolvency." They appealed to the Court of
Appeals. 9 Arizala's and Maribao's appeal was docketed as CA-G.R. No. 14724-CR;
that of Joven and Bulandus, as CA-G.R. No. 14856-CR.
The appeals were consolidated on motion of the appellants, and eventuated in a
judgment promulgated on January 29, 1976 affirming the convictions of all four
appellants. The appellants moved for reconsideration. They argued that when the so
called "1973 Constitution" took effect on January 17, 1973 pursuant to Proclamation
No. 1104, the case of Arizala and Maribao was still pending in the Court of Appeals
and that of Joven and Bulandus, pending decision in the City Court of Cebu; that

The crucial issue obviously is whether or not the petitioners' criminal liability for a
violation of the Industrial Peace Act may be deemed to have been obliterated in
virtue of subsequent legislation and the provisions of the 1973 and 1987
Constitutions.
The petitioners' contention that their liability had been erased is made to rest upon
the following premises:
1. Section 1, Article XII-B of the 1973 Constitution does indeed provide that the "Civil
Service embraces every branch, agency, subdivision and instrumentality of the
government, including government-owned or controlled corporations, ..
administered by an independent Civil Service Commission.
2. Article 292 of the Labor Code repealed such parts and provisions of the Industrial
Peace Act as were "not adopted as part" of said Code "either directly or by
reference." The Code did not adopt the provision of the Industrial Peace Act
conferring on employees of government-owned or controlled corporations the right
of self-organization and collective bargaining; in fact it made known that the "terms
and conditions of employment of all government employees, including employees of
government-owned and controlled corporations," would thenceforth no longer be
fixed by collective bargaining but "be governed by the Civil Service Law, rules and
regulations." 10
3. The specific penalty for violation of the prohibition on supervisors being members
in a labor organization of employees under their supervision has disappeared.
4. The Code also modified the concept of unfair labor practice, decreeing that
thenceforth, "it shall be considered merely as an administrative offense rather than
a criminal offense (and that) (u)nfair labor practice complaints shall x x be
processed like any ordinary labor disputes." 11
On the other hand, in justification of the Appellate Tribunal's affirmance of the
petitioners' convictions of violations of the Industrial Peace Act, the People-

1) advert to the fact that said Labor Code also states that "all actions or claims
accruing prior to ... (its) effectivity ... shall be determined in accordance with the
laws in force at the time of their accrual;" and

after the proclamation of martial law in September, 1972, was General Order No. 5
which inter alia banned strikes in vital industries," as well as 'all rallies,
demonstrations and other forms of group actions." 15

2) argue that the legislature cannot generally intervene and vacate the judgment of
the courts, either directly or indirectly, by the repeal of the statute under which said
judgment has been rendered.

Not so prohibited, however, were those "employed in proprietary functions of the

Government including, but not limited to, governmental corporations." 16 The Act
also penalized any person who "violates, refuses or neglects to comply with any ...
provisions (of the Act) or rules (thereunder promulgated) ... by a fine not exceeding
one thousand pesos or by imprisonment not exceeding six months or both such fine
and imprisonment in the discretion of the court." 17

The legal principles governing the rights of self-organization and collective

bargaining of rank-and-file employees in the government- particularly as regards
supervisory, and high level or managerial employees have undergone alterations
through the years.
Republic Act No. 875
As already intimated, under RA 875 (the Industry Peace Act), 12 persons
"employed in proprietary functions of the Government, including but not limited to
governmental corporations," had the right of self-organization and collective
bargaining, including the right to engage in concerted activities to attain their
objectives, e.g. strikes.
But those "employed in governmental functions" were forbidden to "strike for the
purpose of securing changes or modification in their terms and conditions of
employment" or join labor organizations which imposed on their members the duty
to strike. The reason obviously was that the terms and conditions of their
employment were "governed by law" and hence could not be fixed, altered or
otherwise modified by collective bargaining.
Supervisory employees were forbidden to join labor organizations composed of
employees under them, but could form their own unions. Considered "supervisors'
were those 'having authority in the interest of an employer to hire, transfer,
suspend, lay-off, recall, discharge, assign, recommend, or discipline other
employees, or responsibly to direct them, and to adjust their grievance or effectively
to recommend such acts if, in connection with the foregoing, the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment." 13
Republic Act No. 2260

The 1973 Constitution

The 1973 Constitution laid down the broad principle that "(t)he State shall assure
the rights of workers to self-organization, collective bargaining, security of tenure,
and just and humane conditions of work," 18 and directed that the "National
Assembly shall provide for the standardization of compensation of government
officials and employees,including those in government-owned or controlled
corporations, taking into account the nature of the responsibilities pertaining to, and
the qualifications required for, the positions concerned." 19
PD 442, The Labor Code
The Labor Code of the Philippines, Presidential Decree No. 442, enacted within a
year from effectivity of the 1973 Constitution, 20 incorporated the proposition that
the "terms and conditions of employment of all government employees, including
employees of government-owned and controlled corporations ... (are) governed by
the Civil Service Law, rules and regulations." 21 It incorporated, too, the
constitutional mandate that the salaries of said employees "shall be standardized by
the National Assembly."
The Labor Code, 22 however "exempted" government employees from the right to
self-organization for purposes of collective bargaining. While the Code contained
provisions acknowledging the right of "all persons employed in commercial,
industrial and agricultural enterprises, including religious, medical or educational
institutions operating for profit" to "self-organization and to form, join or assist labor
organizations for purposes of collective bargaining," they "exempted from the
foregoing provisions:

Similar provisions were found in R.A. No. 2260, the Civil Service Act of 1959. This Act
declared that the "Philippine Civil Service ... (embraced) all branches, subdivisions
and
instrumentalities
of
the
government including
government-owned
and controlled corporations." 14

a) security guards;

It prohibited such civil service employees who were "employed in governmental

functions" to belong to any labor organization which imposed on their members "the
obligation to strike or to join strikes." And one of the first issuances of the President

c) managerial employees; and

b) government employees, including employees of government government-owned

and/ or controlled corporations;

d) employees of religious, charitable, medical and educational institutions not

operating for profit, provided the latter do not have existing collective agreements
or recognized unions at the time of the effectivity of the code or have voluntarily
waived their exemption." 23
The reason for denying to government employees the right to "self-organization and
to form, join or assist labor organizations for purposes of collective bargaining" is
presumably the same as that under the Industrial Peace Act, i.e., that the terms and
conditions of government employment are fixed by law and not by collective
bargaining.
Some inconsistency appears to have arisen between the Labor Code and the Civil
Service Act of 1959. Under the Civil Service Act, persons "employed in proprietary
functions of the government including, but not limited to, governmental
corporations'-not being within "the policy of the Government that the employees
therein shall not strike for the purpose of securing changes in their terms and
conditions of employment"-could legitimately bargain with their respective
employers through their labor organizations, and corollarily engage in strikes and
other concerted activities in an attempt to bring about changes in the conditions of
their work. They could not however do so under the Labor Code and its
Implementing Rules and Regulations; these provided that "government employees,
including employees of government-owned and/or controlled corporations," without
distinction as to function, were "exempted" (excluded is the better term) from "the
right to self-organization and to form, join or assist labor organizations for purposes
of collective bargaining," and by implication, excluded as well from the right to
engage in concerted activities, such as strikes, as coercive measures against their
employers.
Members of supervisory unions who were not managerial employees, were declared
by the Labor Code to be "eligible to join or assist the rank and file labor organization,
and if none exists, to form or assist in the forming of such rank and file organization
" 24 Managerial employees, on the other hand, were pronounced as 'not eligible to
join, assist or form any labor organization." 25 A "managerial employee" was defined
as one vested with power 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." 26

proprietary functions of the Government") to "strike for the purpose of securing

changes of their terms and conditions of employment," 29 something which, as
aforestated, they were allowed to do under the Civil Service Act of 1959. 30
Be this as it may it seems clear that PD 807 (the Civil Service Decree) did not modify
the declared ineligibility of "managerial employees" from joining, assisting or
forming any labor organization.
Executive Order No. 111
Executive Order No. 111, issued by President Corazon C. Aquino on December 24,
1986 in the exercise of legislative powers under the Freedom Constitution, modified
the general disqualification above mentioned of 'government employees, including
employees of government-owned and/or controlled corporations" from "the right to
self-organization and to form, join or assist labor organizations for purposes of
collective bargaining.' It granted to employees "of government corporations
established under the Corporation Code x x the right to organize and to bargain
collectively with their respective employers." 31 To all 'other employees in the civil
service, ... (it granted merely) the right to form associations for purposes not
contrary to law," 32 not for "purposes of collective bargaining."
The 1987 Constitution
The provisions of the present Constitution on the matter appear to be somewhat
more extensive. They declare that the "right to self organization shall not be denied
to government employees;" 33 that the State "shall guarantee the rights
of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities,including the right to strike in accordance with law;"
and that said workers "shall be entitled to security of tenure, humane conditions of
work, and a living wage, ... (and) also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law. 34
CSC Memorandum Circular No. 6
Memorandum Circular No. 6 of the Civil Service Commission, issued on April 21,
1987 enjoined strikes by government officials and employees, to wit: 35

Presidential Decree No. 807

Clarification of the matter seems to have been very shortly attempted by the Civil
Service Decree of the Philippines, Presidential Decree No. 807 (eff., Oct. 6,1975)
which superseded the Civil Service Law of 1959 (RA 2260) 27 and repealed or
modified "all laws, rules and regulations or parts thereof inconsistent with the
provisions" thereof. The Decree categorically described the scope and coverage of
the "Civil Service" as embracing 44 every branch, agency, subdivision, and
instrumentality of the government, including every government owned or controlled
corporation whether performing governmental or propriety function. 28 The effect
was seemingly to prohibit government employees (including those "employed in

... Prior to the enactment by Congress of applicable laws

concerning strike by government employees, and considering that
there are existing laws which prohibit government officials and
employees from resorting to strike, the Commission enjoins, under
pain of administrative sanctions, all government officers and
employees from staging strikes, demonstrations, mass leaves,
walk-outs and other forms of mass action which will result in
temporary stoppage or disruption of public services. To allow
otherwise is to undermine or prejudice the government system.

Executive Order No. 180

The scope of the constitutional right to self-organization of "government employees"
above mentioned, was defined and delineated in Executive Order No. 180 (eff. June
1, 1987). According to this Executive Order, the right of self-organization does
indeed pertain to all "employees of all branches, subdivisions, instrumentalities and
agencies of the Government, including government-owned or controlled
corporations with original charters;" 36such employees "shall not be discriminated
against in respect of their employment by reason of their membership in employees'
organizations or participation in the normal activities of their organization x x (and
their) employment shall not be subject to the condition that they shall not join or
shall relinquish their membership in the employees' organizations. 37
However, the concept of the government employees' right of self-organization differs
significantly from that of employees in the private sector. The latter's right of selforganization, i.e., "to form, join or assist labor organizations for purposes of
collective bargaining," admittedly includes the right to deal and negotiate with their
respective employers in order to fix the terms and conditions of employment and
also, to engage in concerted activities for the attainment of their objectives, such as
strikes, picketing, boycotts. But the right of government employees to "form, join or
assist employees organizations of their own choosing" under Executive Order No.
180 is not regarded as existing or available for "purposes of collective bargaining,"
but simply "for the furtherance and protection of their interests." 38
In other words, the right of Government employees to deal and negotiate with their
respective employers is not quite as extensive as that of private employees.
Excluded from negotiation by government employees are the "terms and conditions
of employment ... that are fixed by law," it being only those terms and conditions
not otherwise fixed by law that "may be subject of negotiation between the duly
recognized
employees'
organizations
and
appropriate
government
authorities," 39 And while EO No. 180 concedes to government employees, like their
counterparts in the private sector, the right to engage in concerted
activities, including the right to strike, the executive order is quick to add that those
activities must be exercised in accordance with law, i.e. are subject both to "Civil
Service Law and rules" and "any legislation that may be enacted by
Congress," 40 that "the resolution of complaints, grievances and cases involving
government employees" is not ordinarily left to collective bargaining or other related
concerted activities, but to "Civil Service Law and labor laws and procedures
whenever applicable;" and that in case "any dispute remains unresolved after
exhausting all available remedies under existing laws and procedures, the parties
may jointly refer the dispute to the (Public Sector Labor-Management) Council for
appropriate action." 41 What is more, the Rules and Regulations implementing
Executive Order No. 180 explicitly provide that since the "terms and conditions of
employment in the government, including any political subdivision or instrumentality
thereof and government-owned and controlled corporations with original charters
are governed by law, the employees therein shall not strike for the purpose of
securing changes thereof. 42

On the matter of limitations on membership in labor unions of government

employees, Executive Order No. 180 declares that "high level employees whose
functions are normally considered as policy making or managerial, or whose duties
are of a highly confidential nature shall not be eligible to join the organization of
rank-and-file government employees. 43 A "high level employee" is one "whose
functions are normally considered policy determining, managerial or one whose
duties are highly confidential in nature. A managerial function refers to the exercise
of powers such as: 1. To effectively recommend such managerial actions; 2. To
formulate or execute management policies and decisions; or 3. To hire, transfer,
suspend, lay off, recall, dismiss, assign or discipline employees. 44
Republic Act No. 6715
The rule regarding membership in labor organizations of managerial and supervisory
employees just adverted to, was clarified and refined by Republic Act No. 6715,
effective on March 21, 1989, further amending the Labor Code.
Under RA 6715 labor unions are regarded as organized either (a) "for purposes of
negotiation," or (b) "for furtherance and protection"of the members' rights.
Membership in unions organized "for purposes of negotiation" is open only to rankand-file employees. "Supervisory employees" are ineligible "for membership in a
labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own," i.e., one organized "for furtherance and
protection" of their rights and interests. However, according to the Rules
implementing RA 6715, "supervisory employees who are included in an existing
rank-and- file bargaining unit, upon the effectivity of Republic Act No. 6715 shall
remain in that unit ..." Supervisory employees are "those who, in the interest of the
employer, effectively recommend such managerial actions 45 if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. 46
Membership in employees' organizations formed for purposes of negotiation are
open to rank-and-file employees only, as above mentioned, and not to high
level employees. 47 Indeed, "managerial employees" or "high level employees" are,
to repeat, "not eligible to join, assist or form any labor organization" at
all. 48 A managerial employee is defined as "one who is vested with powers or
prerogatives to lay down and execute, management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees." 49
This is how the law now stands, particularly with respect to supervisory
employees vis a vis labor organizations of employees under them.
Now, the GSIS performs proprietary functions. It is a non-stock corporation,
managed by a Board of Trustees exercising the "usual corporate powers." 50 In other
words, it exercises all the powers of a corporation under the Corporation Law in so
far as they are not otherwise inconsistent with other applicable law. 51 It is engaged
essentially in insurance, a business that "is not inherently or exclusively a

governmental function, ... (but) is on the contrary, in essence and practice, of a

private nature and interest." 52
1. The petitioners contend that the right of self-organization and collectivebargaining
had been withdrawn by the Labor Code from government employees including those
in government-owned and controlled corporations- chiefly for the reason that the
terms and conditions of government employment, all embraced in civil service, may
not be modified by collective bargaining because set by law. It is therefore
immaterial, they say, whether supervisors are members of rank-and-file unions or
not; after all, the possibility of the employer's control of the members of the union
thru supervisors thus rendering collective bargaining illusory, which is the main
reason for the prohibition, is no longer of any consequence.

ART. 248. Concept of unfair labor practice and procedure for

prosecution thereof. Unfair labor practices violate the right of
workers and employees to self organization, are inimical to the
legitimate interests of both labor and management including their
right to bargain collectively and otherwise deal with each other in
an atmosphere of freedom and mutual respect, and hinder the
promotion of healthy and stable labor management relations.
Consequently, unfair labor practices are not only violations of the
civil rights of both labor and management but are also offenses
against the State which shall be subject to prosecution and
punishment as herein provided.
xxx xxx xxx

This was true, for a time. As already discussed, both under the Labor Code and PD
807, government employees, including those in government-owned or controlled
corporations, were indeed precluded from bargaining as regards terms and
conditions of employment because these were set by law and hence could not
possibly be altered by negotiation.
But EO 111 restored the right to organize and to negotiate and bargain of employees
of "government corporations established under the Corporation Code." And EO 180,
and apparently RA 6715, too, granted to all government employees the right of
collective bargaining or negotiation except as regards those terms of their
employment which were fixed by law; and as to said terms fixed by law, they were
prohibited to strike to obtain changes thereof.
2. The petitioners appear to be correct in their view of the disappearance from the
law of the prohibition on supervisors being members of labor organizations
composed of employees under their supervision. The Labor Code (PD 442) allowed
supervisors (if not managerial) to join rank-and-file unions. And under the
Implementing Rules of RA 6715, supervisors who were members of existing labor
organizations on the effectivity of said RA 6715 were explicitly authorized to "remain
therein."
3. The correctness of the petitioners' theory that unfair labor practices ceased to be
crimes and were deemed merely administrative offenses in virtue of the Labor Code,
cannot be gainsaid. Article 250 of the Labor Code did provide as follows:
ART. 250. Concept of unfair labor practice.-The concept of unfair
labor practice is hereby modified. Henceforth, it shall be
considered merely as an administrative offense rather than a
criminal offense. Unfair labor practice complaints shall, therefore,
be processed like any ordinary labor disputes.
But unfair labor practices were declared to be crimes again by later amendments of
the Labor Code effected by Batas Pambansa Blg. 70, approved on May 1, 1980. As
thus amended, the Code now pertinently reads as follows:

Recovery of civil liability in the administrative proceedings shall

bar recovery under the Civil Code.
No criminal prosecution under this title may be instituted without a
final judgment, finding that an unfair labor practice was committed
having been first obtained in the preceding paragraph. ...
The decisive consideration is that at present, supervisors who were already
members of a rank-and-file labor organization at the time of the effectivity of R.A.
No. 6715, are authorized to "remain therein." It seems plain, in other words, that the
maintenance by supervisors of membership in a rank-and-file labor organization
even after the enactment of a statute imposing a prohibition on such membership, is
not only not a crime, but is explicitly allowed, under present law.
Now, in a case decided as early as 1935, People v. Tamayo, 53 where the appellants
had appealed from a judgment convicting them of a violation of a municipal
-ordinance, and while their appeal was pending, the ordinance was repealed such
that the act complained of ceased to be a criminal act but became legal, this Court
dismissed the criminal proceedings, pronouncing the effects of the repeal to be as
follows:
In the leading case of the United States vs. Cuna (12 Phil. 241),
and Wing vs. United States (218 U.S. 272), the doctrine was
clearly established that in the Philippines repeal of a criminal act
by its reenactment, even without a saving clause would not
destroy criminal liability. But not a single sentence in either
derision indicates that there was any desire to hold that a person
could be prosecuted convicted, and punished for acts no longer
criminal.
There is no question that at common law and in America a much
more favorable attitude towards the accused exists relative to
statutes that have been repealed than has been adopted here. Our
rule is more in conformity with the Spanish doctrine, but even in

Spain, where the offense ceased to be criminal, petition cannot be

had (1 Pacheco, Commentaries, 296).
The repeal here was absolute and not a reenactment and repeal
by implication. Nor was there any saving clause. The legislative
intent as shown by the action of the municipal is that such
conduct, formerly denounced, is no longer deemed criminal, and it
would be illogical for this court to attempt to sentence appellant
for the offense that no longer exists.
We are therefore of the opinion that the proceedings against
appellant must be dismissed.

and Pastor, 77 Phil. 1000; People vs. Binuya, 61 Phil. 208; U.S. vs.
Reyes, 10 Phil. 423; U.S. vs. Academia, 10 Phil. 431. See dissent in
Lagrimas vs. Director of Prisons, 57 Phil. 247, 252, 254).
The foregoing precedents dictate absolution of the appellants of the offenses
imputed to them.
WHEREFORE, the judgments of conviction in CA-G.R. No. 14724-CR and CA-G.R. No.
14856-CR, subject of the appeal, as well as those in Crim. Case No. 5275-R and
Crim. Case No. 4130-R rendered by the Trial Court, are REVERSED and the accusedappellants ACQUITTED of the charges against them, with costs de officio.
SO ORDERED.

To the same effect and in even more unmistakable language is People v.

Almuete 54 where the defendants-appellees were charged under section 39 of
Republic Act No. 1199, as amended (the Agricultural Land Tenancy Law of 1954)
which penalized pre-threshing by either agricultural tenant or his landlord. They
sought and secured a dismissal on the ground, among others, that there was no law
punishing the act charged-a reference to the fact that Republic Act No. 1199 had
already been superseded by the Agricultural Land Reform Code of 1963 which
instituted the leasehold system and abolished share tenancy subject to certain
conditions. On appeal by the Government, this Court upheld the dismissal, saying:
The legislative intent not to punish anymore the tenant's act of
pre-reaping and pre-threshing without notice to the landlord is
inferable from the fact that, as already noted, the Code of Agrarian
Reforms did not reenact section 39 of the Agricultural Tenancy Law
and that it abolished share tenancy which is the basis for
penalizing clandestine pre-reaping and pre-threshing.
xxx xxx xxx
As held in the Adillo case, 55 the act of pre-reaping and prethreshing without notice to the landlord, which is an offense under
the Agricultural Tenancy Law, had ceased to be an offense under
the subsequent law, the Code of Agrarian Reforms. To prosecute it
as an offense when the Code of Agrarian Reforms is already in
force would be repugnant or abhorrent to the policy and spirit of
that Code and would subvert the manifest legislative intent not to
punish anymore pre-reaping and pre-threshing without notice to
the landholder.
xxx xxx xxx
The repeal of a penal law deprives the courts of jurisdiction to
punish persons charged with a violation of the old penal law prior
to its repeal (People vs. Tamayo, 61 Phil. 225; People vs. Sindiong

Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

G.R. No. L-49677 May 4, 1989

TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES, petitioner,
vs.
NATIONAL HOUSING CORPORATION and ATTY. VIRGILIO SY, as Officer-in-Charge of
the Bureau of Labor Relations, respondents.
Bonifacio V. Tupaz for petitioner.
The Government Corporate Counsel for respondent NHC.
Raul E. Espinosa for intervenor PACIWU.

REGALADO, J.:
The employees of the public sector comprise the largest bloc of workers in our
national work force. Governmental bureaucracy is continually being reorganized to
cope with the growing complexity of the problems and needs of political and
administrative governance. As the increase in the number of government employees
grows space, the need to enhance their welfare correspondingly becomes more
imperative. While it may be assumed that the Government is exerting efforts to
advance the interests of its employees, it is quite understandable that the
employees themselves should actively seek arrangements where by they can
participate more meaningfully in management and employment relationships. There
is, thus, a proliferation of unions or employees' organizations, each seeking
concomitant representational recognition.
The antecedent facts which led to the filing of this special civil action for certiorari
are clear and undisputed. The juridical status and relevant circumstances of
respondent corporation have been established in a case of illegal dismissal filed
against it, as previously decided by the Court and hereinafter discussed. However,
submitted this time for Our resolution is a controversy on the propriety of and
requirements for certification elections in government-owned or controlled
corporations like the respondent.
Respondent National Housing Corporation (hereinafter referred to as NHC) is a
corporation organized in 1959 in accordance with Executive Order No. 399,
otherwise known as the Uniform Charter of Government Corporations, dated January
1, 1951. Its shares of stock are and have been one hundred percent (100%) owned
by the Government from its incorporation under Act 459, the former corporation law.
The government entities that own its shares of stock are the Government Service

Insurance System, the Social Security System, the Development Bank of the
Philippines, the National Investment and Development Corporation and the People's
Homesite and Housing Corporation. 1 Petitioner Trade Unions of the Philippines and
Allied Services (TUPAS, for brevity) is a legitimate labor organization with a chapter
in NHC.
On July 13, 1977, TUPAS filed a petition for the conduct of a certification election
with Regional Office No. IV of the Department of Labor in order to determine the
exclusive bargaining representative of the workers in NHC. It was claimed that its
members comprised the majority of the employees of the corporation. 2 The petition
was dismissed by med-arbiter Eusebio M. Jimenez in an order, dated November 7,
1977, holding that NHC "being a government-owned and/or controlled corporation
its employees/workers are prohibited to form, join or assist any labor organization for
purposes of collective bargaining pursuant to Section 1, Rule II, Book V of the Rules
and Regulations Implementing the Labor Code." 3
From this order of dismissal, TUPAS appealed to the Bureau of Labor
Relations 4 where, acting thereon in BLR Case No. A-984-77 (RO4-MED-1090-77),
Director Carmelo C. Noriel reversed the order of dismissal and ordered the holding of
a certification election. 5 This order was, however, set aside by Officer-in-Charge
Virgilio S.J. Sy in his resolution of November 21, 1978 6 upon a motion for
reconsideration of respondent NHC.
In the instant petition for certiorari, TUPAS seeks the reversal of the said resolution
and prays that a certification election be held among the rank and file employees of
NHC.
In retrospect, it will be recalled that in a former case of illegal dismissal involving the
same respondent corporation, 7 We had ruled that the employees of NHC and of
other government owned or controlled corporations were governed by civil service
laws, rules and regulations pursuant to the 1973 Constitution which provided that
"the civil service embraces every branch, agency, subdivision and instrumentality of
the government, including government-owned or controlled corporations." 8
It was therein stressed that to allow subsidiary corporations to be excluded from the
civil service laws would be to permit the circumvention or emasculation of the
above-quoted constitutional provision. As perceptively analyzed therein, "(i)t would
be possible for a regular ministry of government to create a host of subsidiary
corporations under the Corporation Code funded by a willing legislature. A
government-owned corporation could create several subsidiary corporations. These
subsidiary corporation rations would enjoy the best of two worlds. Their officials and
employees would be privileged individuals, free from the strict accountability
required by the Civil Service Decree and the regulations of the Commission on Audit.
Their incomes would not be subject to the competitive restraints of the open market
nor to the terms and conditions of civil service employment."
The rule, however, was modified in the 1987 Constitution, the corresponding
provision whereof declares that "(t)he civil service embraces all branches,

subdivisions, instrumentalities and agencies of the government,

government-owned or controlled corporations with original charters." 9

including

Consequently, the civil service now covers only government owned or controlled
corporations with original or legislative charters, that is those created by an act of
Congress or by special law, and not those incorporated under and pursuant to a
general legislation. As We recently held
..., the situations sought to be avoided by the 1973 Constitution
and expressed by this Court in theNational Housing
Corporation case ... appear relegated to relative insignificance by
the 1987 Constitutional provision that the Civil Service embraces
government-owned
controlled
corporationswith
original
charters and therefore, by clear implication, the Civil Service does
not include government-owned or controlled corporations which
are organized as subsidiaries of government-owned or controlled
corporations under the general corporation law. 10
While the aforecited cases sought different reliefs, that is, reinstatement consequent
to illegal dismissal, the samelis mota determinative of the present special civil action
was involved therein.
The workers or employees of NHC undoubtedly have the right to form unions or
employees' organizations. The right to unionize or to form organizations is now
explicitly recognized and granted to employees in both the governmental and the
private sectors. The Bill of Rights provides that "(t)he right of the people, including
those employed in the public and private sectors, to form unions, associations or
societies for purposes not contrary to law shall not be abridged" 11
This guarantee is reiterated in the second paragraph of Section 3, Article XIII, on
Social Justice and Human Rights, which mandates that the State "shall guarantee
the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law
...."
Specifically with respect to government employees, the right to unionize is
recognized in Paragraph (5), Section 2, Article IX B 12 which provides that "(t)he right
to self-organization shall not be denied to government employees." The rationale of
and justification for this innovation which found expression in the aforesaid provision
was explained by its proponents as follows:
... The government is in a sense the repository of the national
sovereignty and, in that respect, it must be held in reverence if not
in awe. It symbolizes the unity of the nation, but it does perform a
mundane task as well. It is an employer in every sense of the word
except that terms and conditions of work are set forth through a
Civil Service Commission. The government is the biggest employer
in the Philippines. There is an employer-employee relationship and

we all know that the accumulated grievances of several decades

are now beginning to explode in our faces among government
workers who feel that the rights afforded by the Labor Code, for
example, to workers in the private sector have been effectively
denied to workers in government in what looks like a grotesque,
(sic) a caricature of the equal protection of the laws. For
example, ... there were many occasions under the old government
when wages and cost of living allowances were granted to workers
in the private sector but denied to workers in the government for
some reason or another, and the government did not even state
the reasons why. The government employees were being
discriminated against. As a general rule, the majority of the
world's countries now entertain public service unions. What they
really add up to is that the employees of the government form
their own association. Generally, they do not bargain for wages
because these are fixed in the budget but they do acquire a forum
where, among other things, professional and self-development is
(sic) promoted and encouraged. They also act as watchdogs of
their own bosses so that when graft and corruption is committed,
generally, it is the unions who are no longer afraid by virtue of the
armor of self-organization that become the public's own allies for
detecting graft and corruption and for exposing it.... 13
There is, therefore, no impediment to the holding of a certification election among
the workers of NHC for it is clear that they are covered by the Labor Code, the NHC
being a government-owned and/or controlled corporation without an original charter.
Statutory implementation of the last cited section of the Constitution is found in
Article 244 of the Labor Code, as amended by Executive Order No. 111, thus:
... Right of employees in the public service Employees of the
government corporations established under the Corporation Code
shall have the right to organize and to bargain collectively with
their respective employers. All other employees in the civil service
shall have the right to form associations for purposes not contrary
to law.
The records do not show that supervening factual events have mooted the present
action. It is meet, however, to also call attention to the fact that, insofar as
certification elections are concerned, subsequent statutory developments have
rendered academic even the distinction between the two types of governmentowned or controlled corporations and the laws governing employment relations
therein, as hereinbefore discussed. For, whether the employees of NHC are covered
by the Labor Code or by the civil service laws, a certification election may be
conducted.
For employees in corporations and entities covered by the Labor Code, the
determination of the exclusive bargaining representative is particularly governed by
Articles 255 to 259 of said Code. Article 256 provides for the procedure when there
is a representation issue in organized establishments, while Article 257 covers

unorganized establishments. These Labor Code provisions are fleshed out by Rules V
to VII, Book V of the Omnibus Implementing Rules.
With respect to other civil servants, that is, employees of all branches, subdivisions,
instrumentalities and agencies of the government including government-owned or
controlled corporations with original charters and who are, therefore, covered by the
civil service laws, the guidelines for the exercise of their right to organize is provided
for under Executive Order No. 180. Chapter IV thereof, consisting of Sections 9 to 12,
regulates the determination of the "sole and exclusive employees representative";
Under Section 12, "where there are two or more duly registered employees'
organizations in the appropriate organization unit, the Bureau of Labor Relations
shall, upon petition order the conduct of certification election and shall certify the
winner as the exclusive representative of the rank-and-file employees in said
organizational unit."
Parenthetically, note should be taken of the specific qualification in the Constitution
that the State "shall guarantee the rights of all workers to self-organization,
collective bargaining, and peaceful concerted activities, including the right to strike
in accordance with law" and that they shall also participate in policy and decisionmaking processes affecting their rights and benefits as may be provided by
law." 14 (Emphasis supplied.)
ON THE FOREGOING CONSIDERATIONS, the assailed resolution of the Bureau of
Labor Relations, dated November 21, 1978, is ANNULLED and SET ASIDE and the
conduct of a certification election among the affected employees of respondent
National Housing Corporation in accordance with the rules therefor is hereby
GRANTED.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla,
Bidin, Sarmiento, Cortes Grio Aquino and Medialdea, JJ., concur.
Gancayco, J., on leave.
[G.R. No. 122226. March 25, 1998]
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO
E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.
DECISION
MENDOZA, J.:
Petitioner is a union of supervisory employees. It appears that on March 20,
1995 the union filed a petition for certification election on behalf of the route
managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied

by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on

the ground that the route managers are managerial employees and, therefore,
ineligible for union membership under the first sentence of Art. 245 of the Labor
Code, which provides:
Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own.

Middle Management
_________________
First Line
Management
(also called Supervisor)

Petitioner brought this suit challenging the validity of the order dated August
31, 1995, as reiterated in the order dated September 22, 1995, of the Secretary of
Labor and Employment. Its petition was dismissed by the Third Division for lack of
showing that respondent committed grave abuse of discretion. But petitioner filed a
motion for reconsideration, pressing for resolution its contention that the first
sentence of Art. 245 of the Labor Code, so far as it declares managerial employees
to be ineligible to form, assist or join unions, contravenes Art. III 8 of the
Constitution which provides:

____________________

The right of the people, including those employed in the public and private sectors,
to form unions, associations, or societies for the purposes not contrary to law shall
not be abridged.

FIRST-LINE MANAGERS The lowest level in an organization at which individuals are

responsible for the work of others is called first-line or first-level management. Firstline managers direct operating employees only; they do not supervise other
managers. Example of first-line managers are the foreman or production
supervisor in a manufacturing plant, the technical supervisor in a research
department, and the clerical supervisor in a large office. First-level managers are
often called supervisors.

For this reason, the petition was referred to the Court en banc.
The Issues in this Case

Two question are presented by the petition: (1) whether the route managers at
Pepsi-Cola Products Philippines, Inc. are managerial employees and (2) whether Art.
245, insofar as it prohibits managerial employees from forming, joining or assisting
labor unions, violates Art. III, 8 of the Constitution.
In resolving these issues it would be useful to begin by defining who are
managerial employees and considering the types of managerial employees.
Types of Managerial Employees

The term manager generally refers to anyone who is responsible for

subordinates and other organization resources. [1] As a class, managers constitute
three levels of a pyramid:
Top Management
_________________

____________________
Operatives
Or Operating Employees

MIDDLE MANAGERS The term middle management can refer to more than one
level in an organization. Middle managers direct the activities of other managers
and sometimes also those of operating employees. Middle managers principal
responsibilities are to direct the activities that implement their organizations
policies and to balance the demands of their superiors with the capacities of their
subordinates. A plant manager in an electronics firm is an example of a middle
manager.
TOP MANAGERS Composed of a comparatively small group of executives, top
management is responsible for the overall management of the organization. It
establishes operating policies and guides the organizations interactions with its
environment. Typical titles of top managers are chief executive officer,
president, and senior vice-president. Actual titles vary from one organization to
another and are not always a reliable guide to membership in the highest
management classification.[2]
As can be seen from this description, a distinction exist between those who
have the authority to devise, implement and control strategic and operational
policies (top and middle managers) and those whose task is simply to ensure that
such polices are carried out by the rank-and-file employees of an organization (first-

level managers/supervisors). What distinguishes them from the rank-and file

employees is that they act in the interest of the employer in supervising such rankand-file employees.
Managerial employees may therefore be said to fall into two distinct
categories: the managers per se, who compose the former group described above,
and the supervisors who form the latter group. Whether they belong to the first or
second category, managers, vis--vis employers, are, likewise, employees. [3]
The first question is whether route managers are managers are managerial
employees or supervisors.

The issue brought before us is not of first impression. At one time, we had the
occasion to rule upon the status of route manager in the same company vis a vis the
issue as to whether or not it is supervisory employee or a managerial employee. In
the case of Workers Alliance Trade Unions (NATU) vs. Pepsi Cola Products, Phils.,
Inc. (OS-MA-A-10-318-91), 15 November 1991, we ruled that a route manager is a
managerial employee within the context of the definition of the law, and hence,
ineligible to join, form or assist a union. We have once more passed upon the logic of
our Decision aforecited in the light of the issues raised in the instant appeal, as well
as the available documentary evidence on hand, and have come to the view that
there is no cogent reason to depart from our earlier holding. Route Managers are,
by the very nature of their functions and the authority they wield over their
subordinates, managerial employees. The prescription found in Art. 245 of the
Labor Code, as amended therefore, clearly applies to them.[4]4

Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees

It appears that this question was the subject of two previous determinations by
the Secretary of Labor and Employment, in accordance with which this case was
decided by the med-arbiter.
In Case No. OS-MA-10318-91, entitled Workerss Alliance Trade Union (WATU) v.
Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the Secretary
of Labor found:
We examined carefully the pertinent job description of the subject employees and
other documentary evidence on record vis--vis paragraph (m), Article 212 of the
Labor Code, as amended, and we find that only those employees occupying the
position of route manager and accounting manager are managerial employees. The
rest i.e. quality control manager, yard/transport manager and warehouse operations
manager are supervisory employees.
To qualify as managerial employee, there must be a clear showing of the exercise of
managerial attributes under paragraph (m), Article 212 of the Labor Code as
amended. Designations or titles of positions are not controlling. In the instant case,
nothing on record will support the claim that the quality control manager,
yard/transport manager and warehouse operations manager are vested with said
attributes. The warehouse operations manager, for example, merely assists the
plant finance manager in planning, organizing, directing and controlling all activities
relative to development and implementation of an effective management control
information system at the sale offices. The exercise of authority of the quality
control manager, on the other hand, needs the concurrence of the manufacturing
manager
As to the route managers and accounting manager, we are convinced that they are
managerial employees. Their job descriptions clearly reveal so.
On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92, entitled
In Re: Petition for Direct Certification and/or Certification Election-Route
Managers/Supervisory Employees of Pepsi-Cola Products Phils. Inc., as follows:

Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission,
5 however, petitioner argues that these previous administrative determinations do
not have the effect of res judicata in this case, because "labor relations
proceedings" are "non-litigious and summary in nature without regard to legal
technicalities."[6] Nasipit Lumber Co. involved a clearance to dismiss an employee
issued by the Department of Labor. The question was whether in a subsequent
proceeding for illegal dismissal, the clearance was res judicata. In holding it was
not, this Court made it clear that it was referring to labor relations proceedings of a
non-adversary character, thus:
[5]

The requirement of a clearance to terminate employment was a creation of the

Department of labor to carry out the Labor Code provisions on security of tenure and
termination of employment. The proceeding subsequent to the filing of an
application for clearance to terminate employment was outlined in Book V, Rule XIV
of the Rules and Regulations Implementing the Labor Code. The fact that said rule
allowed a procedure for the approval of the clearance with or without the opposition
of the employee concerned (Secs. 7 & 8), demonstrates the non-litigious and
summary nature of the proceeding. The clearance requirement was therefore
necessary only as an expeditious shield against arbitrary dismissal without the
knowledge and supervision of the Department of Labor. Hence, a duly approved
clearance implied that the dismissal was legal or for cause (Sec. 2). [7]v. National
Labor Relations Commission, 177 SCRA 93, 100 (1989).7
But the doctrine of res judicata certainly applies to adversary administrative
proceedings. As early as 1956, in Brillantes v. Castro, [8]8 we sustained the dismissal
of an action by a trial court on the basis of a prior administrative determination of
the same case by the Wage Administration Service, applying the principle of res
judicata. Recently, in Abad v. NLRC[9]9 we applied the related doctrine of stare
decisis in holding that the prior determination that certain jobs at the Atlantic Gulf
and Pacific Co. were project employments was binding in another case involving
another group of employees of the same company. Indeed, in Nasipit Lumber Co.,
this Court clarified toward the end of its opinion that "the doctrine of res
judicata applies . . . to judicial or quasi judicial proceedings and not to the exercise
of administrative powers."[10]v. National Labor Relations Commission, supra note
7.10 Now proceedings for certification election, such as those involved in Case No.

OS-M-A-10-318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and,
therefore, decisions rendered in such proceedings can attain finality. [11]v. B.F.
Goodrich (Marikina Factory) Confidential and Salaries Employees Union-NATU, 49
SCRA 532 (1973).11
Thus, we have in this case an expert's view that the employees concerned are
managerial employees within the purview of Art. 212 which provides:

1.0 MANAGING YOUR JOB

The Route Manager is accountable for the following:
1.1 SALES DEVELOPMENT
1.1.1

Achieve the sales plan.

1.1.2

Achieve all distribution and new account objectives.

1.1.3

Develop new business opportunities thru personal contacts

with dealers.

1.1.4

Inspect and ensure that all merchandizing [sic] objectives

are achieved in all outlets.

At the very least, the principle of finality of administrative determination compels

respect for the finding of the Secretary of Labor that route managers are managerial
employees as defined by law in the absence of anything to show that such
determination is without substantial evidence to support it. Nonetheless, the Court,
concerned that employees who are otherwise supervisors may wittingly or
unwittingly be classified as managerial personnel and thus denied the right of selforganization, has decided to review the record of this case.

1.1.5

maintain and improve productivity of all cooling equipment

and kiosks.

1.1.6

Execute and control all authorized promotions.

1.1.7

Develop and maintain dealer goodwill.

DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record

1.1.8

Ensure all accounts comply with company suggested retail

pricing.

1.1.9

Study from time to time individual route coverage and

productivity for possible adjustments to maximize
utilization of resources.

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

The Court now finds that the job evaluation made by the Secretary of Labor is
indeed supported by substantial evidence. The nature of the job of route managers
is given in a four-page pamphlet, prepared by the company, called "Route Manager
Position Description," the pertinent parts of which read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan; and you
achieve this objective through the skillful MANAGEMENT OF YOUR JOB
AND THE MANAGEMENT OF YOUR PEOPLE.
These then are your functions as Pepsi-Cola Route Manager. Within these
functions - managing your job and managing your people - you are
accountable to your District Manager for the execution and completion of
various tasks and activities which will make it possible for you to achieve
your sales objectives.
B. PRINCIPAL ACCOUNTABILITIES

1.2 Administration
1.2.1

Ensure the proper loading of route trucks before check-out

and the proper sorting of bottles before check-in.

1.2.2

Ensure the upkeep of all route sales reports and all other
related reports and forms required on an accurate and
timely basis.

1.2.3

Ensure proper implementation of the various company

policies and procedures incl. but not limited to
shakedown; route shortage; progressive discipline;
sorting; spoilages; credit/collection; accident; attendance.

1.2.4

Ensure collection of receivables and delinquent accounts.

2.0 MANAGING YOUR PEOPLE

From

: REGGIE M. SANTOS

The Route Manager is accountable for the following:

Subj

: SALARY INCREASE

2.1 Route Sales Team Development

2.1.1

2.1.2

Conduct route rides to train, evaluate and develop all

assigned route salesmen and helpers at least 3 days a
week, to be supported by required route ride
documents/reports & back check/spot check at least 2
days
a
week
to
be
supported
by
required
documents/reports.
Conduct sales meetings and morning huddles. Training
should focus on the enhancement of effective sales and
merchandizing [sic] techniques of the salesmen and
helpers. Conduct group training at least 1 hour each
week on a designated day and of specific topic.

2.2 Code of Conduct

2.2.1

Maintain the company's reputation through strict adherence

to PCPPI's code of conduct and the universal standards of
unquestioned business ethics.[12]12

Earlier in this opinion, reference was made to the distinction between

managers per se (top managers and middle managers) and supervisors (first-line
managers). That distinction is evident in the work of the route managers which sets
them apart from supervisors in general. Unlike supervisors who basically merely
direct operating employees in line with set tasks assigned to them, route managers
are responsible for the success of the company's main line of business through
management of their respective sales teams. Such management necessarily
involves the planning, direction, operation and evaluation of their individual teams
and areas which the work of supervisors does not entail.
The route managers cannot thus possibly be classified as mere supervisors
because their work does not only involve, but goes far beyond, the simple direction
or supervision of operating employees to accomplish objectives set by those above
them. They are not mere functionaries with simple oversight functions but business
administrators in their own right. An idea of the role of route managers as
managers per se can be gotten from a memo sent by the director of metro sales
operations of respondent company to one of the route managers. It reads:[13]
03 April 1995
To

: CESAR T. REOLADA

Effective 01 April 1995, your basic monthly salary of P11,710 will be increased
to P12,881 or an increase of 10%. This represents the added managerial
responsibilities you will assume due to the recent restructuring and
streamlining of Metro Sales Operations brought about by the continuous losses
for the last nine (9) months.
Let me remind you that for our operations to be profitable, we have to sustain
the intensity and momentum that your group and yourself have shown last
March. You just have todeliver the desired volume targets, better negotiated
concessions, rationalized sustaining deals, eliminate or reduced overdues,
improved
collections,
more
cash
accounts,
controlled
operating
expenses, etc. Also, based on the agreed set targets, your monthly
performance will be closely monitored.
You have proven in the past that your capable of achieving your targets thru
better planning, managing your group as a fighting team, and thru aggressive
selling. I am looking forward to your success and I expect that you just have
to exert your doubly best in turning around our operations from a losing to a
profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers, quoted in the separate opinion
of Justice Vitug, although entitled "RM's Job Description," is only a summary of
performance standards. It does not show whether route managers are managers per
se or supervisors. Obviously, these performance standards have to be related to the
specific tasks given to route managers in the four-page "Route Manager Position
Description," and, when this is done, the managerial nature of their jobs is fully
revealed. Indeed, if any, the card indicates the great latitude and discretion given to
route managers - from servicing and enhancing company goodwill to supervising
and auditing accounts, from trade (new business) development to the discipline,
training and monitoring of performance of their respective sales teams, and so forth,
- if they are to fulfill the company's expectations in the "key result areas."
Article 212(m) says that "supervisory employees are those who, in the interest
of the employer, effectively recommend such managerial actions if the exercise of
such authority is not merely routinary or clerical in nature but requires the use of
independent judgment." Thus, their only power is to recommend. Certainly, the
route managers in this case more than merely recommend effective management
action. They perform operational, human resource, financial and marketing
functions for the company, all of which involve the laying down of operating policies

for themselves and their teams. For example, with respect to marketing, route
managers, in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job
Description, are charged, among other things, with expanding the dealership base of
their respective sales areas, maintaining the goodwill of current dealers, and
distributing the company's various promotional items as they see fit. It is difficult to
see how supervisors can be given such responsibility when this involves not just the
routine supervision of operating employees but the protection and expansion of the
company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire people
(the evidence shows that they only "recommended" or "endorsed" the taking of
disciplinary action against certain employees), this is because this is a function of
the Human Resources or Personnel Department of the company. [14]14 And neither
should it be presumed that just because they are given set benchmarks to observe,
they are ipso facto supervisors. Adequate control methods (as embodied in such
concepts as "Management by Objectives [MBO]" and "performance appraisals")
which require a delineation of the functions and responsibilities of managers by
means of ready reference cards as here, have long been recognized in management
as effective tools for keeping businesses competitive.
This brings us to the second question, whether the first sentence of Art. 245 of
the Labor Code, prohibiting managerial employees from forming, assisting or joining
any labor organization, is constitutional in light of Art. III, 8 of the Constitution
which provides:

discourages those best qualified to get ahead, it is wrong for industry, and
particularly for the future strength and productivity of our country.15 In the
Philippines, the question whether managerial employees have a right of selforganization has arisen with respect to first-level managers or supervisors, as shown
by a review of the course of labor legislation in this country.
Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws

Before the promulgation of the Labor Code in 1974, the field of labor relations
was governed by the Industrial Peace Act (R.A. No. 875).
In accordance with the general definition above, this law defined "supervisor"
as follows:
SECTION 2. . . .
(k) "Supervisor" means any person having authority in the interest of an employer,
to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline
other employees, or responsibly to direct them, and to adjust their grievances, or
effectively to recommend such acts, if, in connection with the foregoing, the exercise
of such authority is not of a merely routinary or clerical nature but requires the use
of independent judgment.[16]16
The right of supervisors to form their own organizations was affirmed:

The right of the people, including those employed in the public and private sectors,
to form unions, associations, or societies for purposes not contrary to law shall not
be abridged.
As already stated, whether they belong to the first category (managers per se)
or the second category (supervisors), managers are employees. Nonetheless, in
the United States, as Justice Puno's separate opinion notes, supervisors have no
right to form unions. They are excluded from the definition of the term "employee"
in 2(3) of the Labor-Management Relations Act of 1947. [15]v. Bell Aerospace Co., 416
U.S. 281, n 11, 40 L.Ed.2d 134, 147, n. 11 (1974), thus:
Supervisors are management people. They have distinguished themselves in
their work. They have demonstrated their ability to take care of themselves without
depending upon the pressure of collective action. No one forced them to become
supervisors. They abandoned the "collective security" of the rank and file
voluntarily, because they believed the opportunities thus opened to them to be
more valuable to them than such "security". It seems wrong, and it is wrong, to
subject people of this kind, who have demonstrated their initiative, their ambition
and their ability to get ahead, to the leveling processes of seniority, uniformity and
standardization that the Supreme Court recognizes as being fundamental principles
of unionism. (J.I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 88 L.Ed.
762, 64 S. Ct. 576 (1994). It is wrong for the foremen, for it discourages the things
in them that made them foremen in the first place. For the same reason, that it

SEC. 3. Employees' Right to Self-Organization. -- Employees shall have the right to

self-organization and to form, join or assist labor organizations of their own choosing
for the purpose of collective bargaining through representatives of their own
choosing and to engage in concerted activities for the purpose of collective
bargaining and other mutual aid and 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.[17]
For its part, the Supreme Court upheld in several of its decisions the right of
supervisors to organize for purposes of labor relations. [18]v. Filoil Supervisory and
Confidential Employees Association, 6 SCRA 522 (1972); Kapisanan ng mga
Manggagawa sa Manila Railroad Co. v. CIR, 106 Phil 607 (1959).18
Although it had a definition of the term "supervisor," the Industrial Peace Act
did not define the term "manager." But, using the commonly-understood concept of
"manager," as above stated, it is apparent that the law used the term "supervisors"
to refer to the sub-group of "managerial employees" known as front-line managers.
The other sub-group of "managerial employees," known as managers per se, was
not covered.

However, in Caltex Filipino Managers and Supervisors Association v. Court of

Industrial Relations,[19]J.)19 the right of all managerial employees to selforganization was upheld as a general proposition, thus:

Staff Asst. - 0 Marketing

It would be going too far to dismiss summarily the point raised by respondent
Company - that of the alleged identity of interest between the managerial staff and
the employing firm. That should ordinarily be the case, especially so where the
dispute is between management and the rank and file. It does not necessarily follow
though that what binds the managerial staff to the corporation forecloses the
possibility of conflict between them. There could be a real difference between what
the welfare of such group requires and the concessions the firm is willing to
grant. Their needs might not be attended to then in the absence of any organization
of their own. Nor is this to indulge in empty theorizing. The record of respondent
Company, even the very case cited by it, is proof enough of their uneasy and
troubled relationship. Certainly the impression is difficult to erase that an alien firm
failed to manifest sympathy for the claims of its Filipino executives. To predicate
under such circumstances that agreement inevitably marks their relationship,
ignoring that discord would not be unusual, is to fly in the face of reality.

Supervisory Assistant

Sales Supervisor

Jr. Supervisory Assistant

Credit Assistant
Lab. Supvr. - Pandacan
Jr. Sales Engineer B
Operations Assistant B
Field Engineer

. . . The basic question is whether the managerial personnel can organize. What
respondent Company failed to take into account is that the right to self-organization
is not merely a statutory creation. It is fortified by our Constitution. All are free to
exercise such right unless their purpose is contrary to law. Certainly it would be to
attach unorthodoxy to, not to say an emasculation of, the concept of law if
managers as such were precluded from organizing. Having done so and having
been duly registered, as did occur in this case, their union is entitled to all the rights
under Republic Act No. 875. Considering what is denominated as unfair labor
practice under Section 4 of such Act and the facts set forth in our decision, there can
be only one answer to the objection raised that no unfair labor practice could be
committed by respondent Company insofar as managerial personnel is
concerned. It is, as is quite obvious, in the negative. [20]20
Actually, the case involved front-line managers or supervisors only, as the
plantilla of employees, quoted in the main opinion, [21]J.) (emphasis added).21 clearly
indicates:
CAFIMSA members holding the following Supervisory Payroll Position Title are
Recognized by the Company

Sr. Opers. Supvr. - MIA A/S

Purchasing Assistant
Jr. Construction Engineer
St. Sales Supervisor
Deport Supervisor A
Terminal Accountant B
Merchandiser
Dist. Sales Prom. Supvr.
Instr. - Merchandising

Payroll Position Title

Asst. Dist. Accountant B
Assistant to Mgr. - National Acct. Sales
Sr. Opers. Supervisor
Jr. Sales Engineer
Jr. Sales Engineer A
Retail Development Asst.
Asst. Bulk Ter. Supt.

Sr. Opers. Supvr.

Credit Supervisor A
Asst. Stores Supvr. A
Ref. Supervisory Draftsman

(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay off,
recall, discharge, assign or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this definition are considered
rank and file employees for purposes of this Book. [22]22
The definition shows that it is actually a combination of the commonly understood
definitions of both groups of managerial employees, grammatically joined by the
phrase "and/or."

Refinery Shift Supvr. B

Asst. Supvr. A - Operations (Refinery)
Refinery Shift Supvr. B
Asst. Lab. Supvr. A (Refinery)
St. Process Engineer B (Refinery)
Asst. Supvr. A - Maintenance (Refinery)
Asst. Supvr. B - Maintenance (Refinery)
Supervisory Accountant (Refinery)
Communications Supervisor (Refinery)
Finally, also deemed included are all other employees excluded from the rank
and file unions but not classified as managerial or otherwise excludable by law
or applicable judicial precedents.
Right of Self-Organization of Managerial Employees under the Labor Code

Thus, the dictum in the Caltex case which allowed at least for the theoretical
unionization of top and middle managers by assimilating them with the supervisory
group under the broad phrase "managerial personnel," provided the lynchpin for
later laws denying the right of self-organization not only to top and middle
management employees but to front line managers or supervisors as well. Following
the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped
the distinction between the first and second sub-groups of managerial
employees. Instead of treating the terms "supervisor" and "manager" separately,
the law lumped them together and called them "managerial employees," as follows:

This general definition was perhaps legally necessary at that time for two
reasons. First, the 1974 Code denied supervisors their right to self-organize as
theretofore guaranteed to them by the Industrial Peace Act. Second, it stood the
dictum in the Caltex case on its head by prohibiting all types of managers from
forming unions. The explicit general prohibition was contained in the then Art. 246 of
the Labor Code.
The practical effect of this synthesis of legal concepts was made apparent in
the Omnibus Rules Implementing the Labor Code which the Department of Labor
promulgated on January 19, 1975. Book V, Rule II, 11 of the Rules provided:
Supervisory unions and unions of security guards to cease operation. - All existing
supervisory unions and unions of security guards shall, upon the effectivity of the
Code, cease to operate as such and their registration certificates shall be deemed
automatically cancelled. However, existing collective agreements with such unions,
the life of which extends beyond the date of effectivity of the Code, shall be
respected until their expiry date insofar as the economic benefits granted therein
are concerned.
Members of supervisory unions who do not fall within the definition of managerial
employees shall become eligible to join or assist the rank and file labor organization,
and if none exists, to form or assist in the forming of such rank and file
organization. The determination of who are managerial employees and who are not
shall be the subject of negotiation between representatives of the supervisory union
and the employer. If no agreement is reached between the parties, either or both of
them may bring the issue to the nearest Regional Office for determination.
The Department of Labor continued to use the term "supervisory unions"
despite the demise of the legal definition of "supervisor" apparently because these
were the unions of front line managers which were then allowed as a result of the
statutory grant of the right of self-organization under the Industrial Peace Act. Had
the Department of Labor seen fit to similarly ban unions of top and middle managers
which may have been formed following the dictum in Caltex, it obviously would have
done so. Yet it did not, apparently because no such unions of top and middle
managers really then existed.

ART. 212. Definitions . . . .

Real Intent of the 1986 Constitutional Commission

This was the law as it stood at the time the Constitutional

Commission considered the draft of Art. III, 8. Commissioner Lerum sought to
amend the draft of what was later to become Art. III, 8 of the present Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert
between the words "people" and "to" the following: WHETHER EMPLOYED BY THE
STATE OR PRIVATE ESTABLISHMENTS. In other words, the section will now read as
follows: "The right of the people WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations, unions, or societies for purposes not contrary
to law shall not be abridged." [23]23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to form associations is granted
to all persons whether or not they are employed in the government. Under that
provision, we allow unions in the government, in government-owned and controlled
corporations and in other industries in the private sector, such as the Philippine
Government Employees' Association, unions in the GSIS, the SSS, the DBP and other
government-owned and controlled corporations. Also, we have unions of
supervisory employees and of security guards. But what is tragic about this is that
after the 1973 Constitution was approved and in spite of an express recognition of
the right to organize in P.D. No. 442, known as the Labor Code, the right of
government workers, supervisory employees and security guards to form unions was
abolished.
And we have been fighting against this abolition. In every tripartite conference
attended by the government, management and workers, we have always been
insisting on the return of these rights. However, both the government and
employers opposed our proposal, so nothing came out of this until this week when
we approved a provision which states:
Notwithstanding any provision of this article, the right to self-organization shall not
be denied to government employees.

I want to avoid also the possibility of having this interpreted as applicable only to the
employed.
MR. DE LOS REYES. Will the proponent accept an amendment to the amendment,
Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the right of the employees in
the private sector is recognized.[24]
Lerum thus anchored his proposal on the fact that (1) government employees,
supervisory employees, and security guards, who had the right to organize under
the Industrial Peace Act, had been denied this right by the Labor Code, and (2)
there was a need to reinstate the right of these employees. In consonance with his
objective to reinstate the right of government, security, and supervisory
employees to organize, Lerum then made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation with several Members of this
Commission, my amendment will now read as follows: "The right of the people
INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS to form
associations, unions, or societies for purposes not contrary to law shall not be
abridged. In proposing that amendment I ask to make of record that I want the
following provisions of the Labor Code to be automatically abolished, which read:
ART. 245. Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employers shall not be eligible
for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and form any labor
organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say?
FR. BERNAS. The Committee accepts.

We are afraid that without any corresponding provision covering the private sector,
the security guards, the supervisory employees or majority employees [ sic] will still
be excluded, and that is the purpose of this amendment.

THE PRESIDING OFFICER. (Mr.

amendment, as amended.

I will be very glad to accept any kind of wording as long as it will amount to absolute
recognition of private sector employees, without exception, to organize.

Is there any objection? (Silence) The Chair hears none; the amendment, as
amended, is approved.[25]

THE PRESIDENT. What does the Committee say?

The question is what Commissioner Lerum meant in seeking to "automatically

abolish" the then Art. 246 of the Labor Code. Did he simply want "any kind of
wording as long as it will amount to absolute recognition of private sector
employees, without exception, to organize"? [26] Or, did he instead intend to have his
words taken in the context of the cause which moved him to propose the
amendment in the first place, namely, the denial of the right of supervisory
employees to organize, because he said, "We are afraid that without any

FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by
Commissioner Rodrigo is well-taken. Perhaps, we can lengthen this a little bit more
to read: "The right of the people WHETHER UNEMPLOYED OR EMPLOYED BY STATE
OR PRIVATE ESTABLISHMENTS."

Bengzon) The

Committee

has

accepted

the

corresponding provision covering the private sector, security guards, supervisory

employees or majority [of] employees will still be excluded, and that is the purpose
of this amendment"?[27]
It would seem that Commissioner Lerum simply meant to restore the right of
supervisory employees to organize. For even though he spoke of the need to
"abolish" Art. 246 of the Labor Code which, as already stated, prohibited
"managerial employees" in general from forming unions, the fact was that in
explaining his proposal, he repeatedly referred to "supervisory employees" whose
right under the Industrial Peace Act to organize had been taken away by Art.
246. It is noteworthy that Commissioner Lerum never referred to the then definition
of "managerial employees" in Art. 212(m) of the Labor Code which put together,
under the broad phrase "managerial employees," top and middle managers and
supervisors. Instead, his repeated use of the term "supervisory employees," when
such term then was no longer in the statute books, suggests a frame of mind that
remained grounded in the language of the Industrial Peace Act.
Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all
managerial employees to organize, despite the fact that the Industrial Peace Act did
not expressly provide for the right of top and middle managers to organize. If Lerum
was aware of the Caltex dictum, then his insistence on the use of the term
"supervisory employees" could only mean that he was excluding other managerial
employees from his proposal. If, on the other hand, he was not aware of the Caltex
statement sustaining the right to organize to top and middle managers, then the
more should his repeated use of the term "supervisory employees" be taken at face
value, as it had been defined in the then Industrial Peace Act.
At all events, that the rest of the Commissioners understood his proposal to
refer solely to supervisors and not to other managerial employees is clear from the
following account of Commissioner Joaquin G. Bernas, who writes:
In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R.
Lerum explained that the modification included three categories of workers: (1)
government employees, (2) supervisory employees, and (3) security guards. Lerum
made of record the explicit intent to repeal provisions of P.D. 442, the Labor Code.
The provisions referred to were:
ART. 245. Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employers shall not be eligible
for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and form any labor
organization.[28]28
Implications of the Lerum Proposal

In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by

including labor unions in the guarantee of organizational right should be taken in the
context of statements that his aim was the removal of the statutory ban against
security guards and supervisory employees joining labor organizations. The
approval by the Constitutional Commission of his proposal can only mean, therefore,
that the Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. By
implication, no similar absolute constitutional right to organize for labor purposes
should be deemed to have been granted to top-level and middle managers. As to
them the right of self-organization may be regulated and even abridged conformably
to Art. III, 8.
Constitutionality of Art. 245

Finally, the question is whether the present ban against managerial employees,
as embodied in Art. 245 (which superseded Art. 246) of the Labor Code, is
valid. This provision reads:
ART. 245. Ineligibility of managerial employees to join any labor organization; right
of supervisory employees. - Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own.[29]29
This provision is the result of the amendment of the Labor Code in 1989 by R.A.
No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace
Act or the provisions of the Labor Code which it superseded, R.A. No. 6715 provides
separate definitions of the terms "managerial" and "supervisory employees," as
follows:
ART. 212. Definitions. . . .
(m)
"managerial employee" is one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire transfer, suspend, lay
off, recall, discharge, assign or discipline employees. Supervisory employees are
those who, in the interest of the employer, effectively recommend such managerial
actions if the exercise of such authority is not merely routinary or clerical in nature
but requires the use of independent judgment. All employees not falling within any
of the above definitions are considered rank-and-file employees for purposes of this
Book.
Although the definition of "supervisory employees" seems to have been unduly
restricted to the last phrase of the definition in the Industrial Peace Act, the legal
significance given to the phrase "effectively recommends" remains the same. In
fact, the distinction between top and middle managers, who set management policy,
and front-line supervisors, who are merely responsible for ensuring that such policies
are carried out by the rank and file, is articulated in the present definition.
[30]
30 When read in relation to this definition in Art. 212(m), it will be seen that Art.

245 faithfully carries out the intent of the Constitutional Commission in framing Art.
III, 8 of the fundamental law.
Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban
against managerial employees forming a union. The right guaranteed in Art. III, 8 is
subject to the condition that its exercise should be for purposes "not contrary to
law." In the case of Art. 245, there is a rational basis for prohibiting managerial
employees from forming or joining labor organizations. As Justice Davide, Jr., himself
a constitutional commissioner, said in his ponencia in Philips Industrial Development,
Inc. v. NLRC:[31]31
In the first place, all these employees, with the exception of the service engineers
and the sales force personnel, are confidential employees. Their classification as
such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI
and PEO-FFW explicitly considered them as confidential employees. By the very
nature of their functions, they assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial functions in the
field of labor relations. As such, the rationale behind the ineligibility of managerial
employees to form, assist or joint a labor union equally applies to them.
In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this
rationale, thus:
". . . The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the latter might
not be assured of their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-dominated with the presence of
managerial employees in Union membership."[32]
To be sure, the Court in Philips Industrial was dealing with the right of
confidential employees to organize. But the same reason for denying them the right
to organize justifies even more the ban on managerial employees from forming
unions. After all, those who qualify as top or middle managers are executives who
receive from their employers information that not only is confidential but also is not
generally available to the public, or to their competitors, or to other employees. It is
hardly necessary to point out that to say that the first sentence of Art. 245 is
unconstitutional would be to contradict the decision in that case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

G.R. No. 75039 January 28, 1988

FRANKLIN
BAKER
COMPANY
OF
THE
PHILIPPINES, petitioner,
vs.
HONORABLE CRESENCIO B. TRAJANO, DIRECTOR OF BUREAU OF LABOR RELATIONS,
FRANKLIN BAKER BROTHERHOOD ASSOCIATION (TECHNICAL AND OFFICE
EMPLOYEES)-ASSOCIATION OF TRADE UNIONS (ATU), respondents.

Subsequently, on September 17, 1984, Med-Arbiter Conchita J. Martinez issued an

order, the dispositive part of which reads:
Accordingly, the petition is hereby granted and a certification
election among the office and technical employees of Franklin
Baker Company of the Philippines, Davao Plant is ordered within
twenty (20) days from receipt hereof. The choices shall be the
following:
1. Franklin Baker Brotherhood Association-(ATU)

PARAS, J.:
2. No Union
This is a petition for certiorari seeking the annulment of. (a) the Order of MediatorArbiter Conchita J. Martinez of the Ministry of Labor and Employment, Davao City,
dated September 17, 1984 in LRD Case No. R-22 MED-ROXI-UR-28-84 entitled "In Re:
Petition for Certification Election Among the Office and Technical Employees of
Franklin Baker Company of the Philippines, Davao Plant at Coronan, Sta. Cruz, Davao
del Sur, Franklin Baker Company of the Philippines, Davao Plant, Employer, Franklin
Baker Brotherhood Association (Technical and Office Employees)-Association of Trade
Unions (ATU)," insofar as it includes the managerial employees (inspectors, foremen
and supervisors) in the certification election; (b) the Order of April 7, 1986 of
Director Cresencio B. Trajano, also of the MOLE, dismissing the appeal of aforesaid
Order of September 17, 1985 for lack of merit; and (c) the Order of June 6, 1986 of
said Director denying reconsideration of his Order of April 7, 1986 and affirming the
same in toto (Rollo, p. 90).
In brief, the undisputed facts of this case are as follows:
On April 23, 1984, private respondent Franklin Baker Brotherhood Association-(ATU)
filed a petition for certification election among the office and technical employees of
petitioner company with the Ministry of Labor and Employment, Regional Office No.
XI, Davao City, docketed as LRD No. R-22, MED-ROXI-UR-2884. Among other things,
it alleges that Franklin Baker Company of the Phils. Davao Plant, had in its employ
approximately ninety (90) regular technical and office employees, which group is
separate and distinct from the regular rank and file employees and is excluded from
the coverage of existing Collective Bargaining Agreement.
Petitioner company did not object to the holding of such an election but manifested
that out of the ninety (90) employees sought to be represented by the respondent
union, seventy four (74) are managerial employees while two (2) others are
confidential employees, hence, must be excluded from the certification election and
from the bargaining unit that may result from such election (Rollo, p. 3).
Hearings were held and thereafter, the parties agreed to file their respective
memoranda. Likewise, petitioner filed a reply to private respondent's Memorandum
(Rollo, p. 4).

The representation officer assigned shall call the parties for a preelection conference at least five (5) days before the date of the
election to thresh out the mechanics of the election, the
finalization of the list of voters, the posting of notices and other
relevant matters.
The company's latest payroll shall be the basis for determining the
office and technical workers qualified to vote.
SO ORDERED. (Rollo, pp. 47-48).
From the aforequoted order petitioner Company appealed to the Bureau of Labor
Relations, docketed as BLR Case No. A-22884, praying that the appealed order be
set aside and another be issued declaring the seventy four (74) inspectors, foremen
and supervisors as managerial employees.
During the pendency of the appeal, sixty one (61) of the employees involved, filed a
Motion to Withdraw the petition for certification election praying therein for their
exclusion from the Bargaining Unit and for a categorical declaration that they are
managerial employees, as they are performing managerial functions (Rollo, p. 4).
On April 7, 1986, public respondent Bureau of Labor Relations Cresencio B. Trajano
issued a Resolution affirming the order dated September 17, 1984, the dispositive
part of which reads:
WHEREFORE, the appealed Order dated September 17, 1985 is
hereby affirmed and the appeal dismissed for lack of merit. Let the
certification election among the office and technical employees of
Franklin Baker Company of the Philippines proceed without delay.
The latest payrolls of the company shall be used as basis of
determining the list of eligible voters. (Rollo, p. 77),

Petitioner company sought the reconsideration of the aforequoted resolution but its
motion was denied by Director Cresencio B. Trajano in his order dated June 6, 1986,
the dispositive part of which reads:

Code and its Implementing Rules; and (2) whether the Director of the Bureau of
Labor Relations acted with abuse of discretion in affirming the order of MediatorArbiter Conchita J. Martinez.

WHEREFORE, the appeal of respondent company is, dismissed for

lack of merit and the Bureau's Resolution dated April 1986
affirmed in toto.

There is no question that there are in the DAVAO Plant of petitioner company
approximately 90 regular technical and office employees which form a unit, separate
and distinct from the regular rank and file employees and are excluded from the
coverage of existing Collective Bargaining Agreement; that said group of employees
organized themselves as Franklin Baker Brotherhood Association (technical and
office employees) and affiliated with the local chapter of the Association of trade
Unions (ATU), a legitimate labor organization with Registration Permit No. 8745 (Fed)
LC and with office located at the 3rd Floor of Antwell Bldg., Sta. Ana, Davao City;
that petitioner company did not object to the holding of such certification, but only
sought the exclusion of inspectors, foremen and supervisors, members of Franklin
Baker Brotherhood Association (technical and office employees) numbering 76 from
the certification election on the ground that they are managerial employees.

Let, therefore, the pertinent papers of this case be immediately

forwarded to the Office of origin for the conduct of the certification
election. (Rollo, p. 90).
Hence, this petition.
In the resolution of July 30, 1986, the Second Division of this Court without giving
due course to the petition required the respondents to file their comment (Rollo, p.
91). On August 28, 1986, public respondent filed its comment (Rollo, pp. 99 to 102).
Likewise private respondent filed its comment on September 5, 1986 (Rollo, pp. 104
to 107).
In the resolution of September 8, 1986, petitioner was required to file its reply to
public respondent's comment (Rollo, p. 119) which reply was filed on September 18,
1986 (Rollo, pp. 122-127).
On October 20, 1986, this Court resolved to give due course to the petition and
required the parties to file their respective Memoranda (Rollo, p. 133). In compliance
with said resolution, petitioner and private respondent filed their Memoranda on
December 8, 1986 and December 29, 1986, respectively (Rollo, pp. 183-187). On
the other hand, public respondent filed with this Court a manifestation (Rollo, p. 153)
to the effect that it is adopting as its memorandum its comment dated August 18,
1986 (Rollo, p. 99) which manifestation was noted by this Court in its resolution
dated
November
26,
1986
(Rollo, p. 155).
The lone assignment of error raised by petitioner states:
Public respondent acted with grave abuse of discretion amounting
to lack of jurisdiction when he ruled that the 76 employees subject
of this petition are not managerial employees (inspectors,
foremen, supervisors and the like) and therefore, may participate
in the certification election among the office and technical
employees. Such ruling is contrary to jurisprudence and to the
factual evidence presented by petitioner which was not rebutted
by private respondent union and is therefore patently baseless.
From this assigned error two questions are raised by petitioner, namely: (1) whether
or not subject employees are managerial employees under the purview of the Labor

A managerial employee is defined as one "who is vested with powers or prerogatives

to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees, or to effectively recommend
such managerial actions." (Reynolds Phil. Corp. v. Eslava, 137 SCRA [1985], citing
Section 212 (K), Labor Code.
Also pertinent thereto is Section 1 (M) of the Implementing Rules and Regulations,
which is practically a restatement of the above provision of law.
To sustain its posture, that the inspectors, foreman and supervisors numbering 76
are managerial employees, petitioner painstakingly demonstrates that subject
employees indeed participate in the formulation and execution of company policies
and regulations as to the conduct of work in the plant, exercised the power to hire,
suspend or dismiss subordinate employees and effectively recommend such action,
by citing concrete cases, among which are: (1) Mr. Ponciano Viola, a wet process
inspector, who while in the performance of his duty, found Mr. Enrique Asuncion, a
trimmer "forging", falsifying and simulating a company time card (timesheet)
resulting in payroll padding, immediately recommended the dismissal of said erring
employee, resulting in the latter's discharge. (Employer's Memo, Rollo, p.18); (2) Mr.
Manuel Alipio, an opening inspector, recommended for suspension Nut Operator
Ephraim Dumayos who was caught in the act of surreptitiously transferring to a coworker's bin some whole nuts which act constitutes a violation of company policy;
(3) Mr. Sofronio Abangan, a line inspector, censured and thereafter recommended
the suspension of Mr. Romeo Fullante, for being remiss in the proper and accurate
counting of nuts; (4) Binleader Dionisio Agtang was required to explain his
inefficiency of Mr. Saturnino Bangkas, Bin Loading Inspector; (5) for disobeying the
orders of Bin Loading Inspector Mauricio Lumanog's order, Macario Mante, Eduardo
Adaptor, Rodolfo Irene and George Rellanos were all recommended for suspension
which culminated in an investigation conducted by Lumanog's higher bosses (Ibid.,
p. 20).

It has also been shown that subject employees have the power to hire, as evidenced
by the hiring of Rolando Asis, Roy Layson, Arcadio Gaudicos and Felix Arciaga, upon
the recommendation of Opening Inspector Serafin Suelo, Processing Inspector
Leonardo Velez and Laureano C. Lim, Opening Inspector (Ibid., p. 21).

of passion or personal hostility and must be so patent and gross as to amount to an

evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to
act at all in contemplation of law (G.R. No. 59880, George Arguelles [Hda. Emma
Arguelles v. Romeo Yang, etc.], September 11, 1987).

It will be noted, however, that in the performance of their duties and functions and
in the exercise of their recommendatory powers, subject employees may only
recommend, as the ultimate power to hire, fire or suspend as the case may be, rests
upon the plant personnel manager.

Moreover, this Court has ruled that findings of administrative agencies which have
acquired expertise, like the Labor Ministry, are accorded respect and finality (Special
Events and Central Shipping Office Workers Union v. San Miguel Corp., 122 SCRA 557
[1983] and that the remedy of certiorari does not lie in the absence of any showing
of abuse or misuse of power properly vested in the Ministry of Labor and
Employment (Buiser v. Leogardo, Jr., 131 SCRA 151 [1984]).

The test of "supervisory" or "managerial status" depends on whether a person

possesses authority to act in the interest of his employer in the matter specified in
Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing Rules and
whether such authority is not merely routinary or clerical in nature, but requires the
use of independent judgment. Thus, where such recommendatory powers as in the
case at bar, are subject to evaluation, review and final action by the department
heads and other higher executives of the company, the same, although present, are
not effective and not an exercise of independent judgment as required by law
(National Warehousing Corp. v. CIR, 7 SCRA 602-603 [1963]).
Furthermore, in line with the ruling of this Court, subject employees are not
managerial employees because as borne by the records, they do not participate in
policy making but are given ready policies to execute and standard practices to
observe, thus having little freedom of action (National Waterworks and Sewerage
Authority v. NWSA Consolidated, L-18938, 11 SCRA 766 [1964]).
Petitioner's contention that the Director of the Bureau of Labor Relations acted with
abuse of discretion amounting to lack of jurisdiction in holding that the 76
employees are not managerial employees and must be included in the certification
election has no basis in fact and in law. Neither is its contention that the use of the
word's "and/or" categorically shows that performance of the functions enumerated
in the law qualifies an employee as a managerial employee.
It is well settled that the findings of fact of the Ministry of Labor and National Labor
Relations Commission are entitled to great respect, unless the findings of fact and
the conclusions made therefrom, are not supported by substantial evidence, or when
there is grave abuse of discretion committed by said public official (Kapisanan ng
Manggagawa sa Camara Shoes, 2nd Heirs of Santos Camara, et al., 111 SCRA 477
[1982]; International hardwood and Veneer Co. of the Philippines v. Leonardo, 117
SCRA 967 [1982]; Pan-Phil-Life, Inc. v. NLRC, 114 SCRA 866 [1982]; Pepsi-Cola Labor
Union-BF LUTUPAS Local Chapter N-896 v. NLRC, 114 SCRA 930 [1982]; Egyptair v.
NLRC, 148 SCRA 125 [1987]; RJL Martinez Fishing Corp. v. NLRC, G.R. Nos. 63550-51,
127 SCRA 455 [1984]; and Reyes v. Phil. Duplicators, G.R. No. 54996, 109 SCRA 489
[1981]).
By "grave abuse of discretion" is meant, such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be
grave as where the power is exercised in an arbitrary or despotic manner by reason

After a careful review of the records, no plausible reason could be found to disturb
the findings of fact and the conclusions of law of the Ministry of Labor.
Even if We regard the employees concerned as "managerial employees," they can
still join the union of the rank and file employees. They cannot however form their
own exclusive union as "managerial employees" (Bulletin Publishing Corporation v.
Sanchez, 144 SCRA 628).
PREMISES CONSIDERED, the petition is DISMISSED, and the assailed resolution and
orders are AFFIRMED.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

G.R. No. L-18710

March 30, 1963

NATIONAL
MERCHANDISING
CORPORATION, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, GOODWILL LABOR ORGANIZATION-CCLU and
NAMERCO EMPLOYEES and LABOR ASSOCIATION (FTLO), respondents.
Sycip,
Salazar,
Luna
and
Associates
for
David B. Advincula, Jr. and Oliver B. Gesmundo for respondents.
BARRERA, J.:

petitioner.

This petition was filed by the National Merchandising Corporation to contest the
correctness of the order of the Court of Industrial Relations (in Case No. 857-MC),
and affirmed by the court en banc on July 21, 1961, holding that petitioner's 8
section chiefs are minor supervisory employees who should be included in the
appropriate Employer's Unit, and entitled to vote in his certification election to be
conducted for the purpose of determining the proper bargaining agent for the
employees.
Insofar as pertinent to the instant proceeding, the following facts had been
established:.
Through a petition filed in the Court of Industrial Relations, the National
Merchandising Corporation asked for its aid in ascertaining, whether the Goodwill
Labor Organization CCLU, which had sought to bargain collectively with it (the
Company) for and in behalf of its employees, may properly act as bargaining agent
for the latter. It was therein claimed that petitioner had in its employ 10 supervisors,
1 confidential employee, 3 salesmen, 22 office employees, and 54 mechanics,
painters, carpenters, and laborers, and it doubts whether the aforesaid union
represents a majority thereof.
Respondent union answered maintaining its right to represent the Company's
employees, and prayed the court for the holding of a certification election after all
the employees entitled to vote shall have been determined.
The parties entered into trial solely to determine the appropriate unit and bargaining
agent for the employees. During the hearing, the Company and the Union agreed to
the holding of a certification election, the appropriate bargaining unit or Employer
Unit to be composed of all regular and temporary employees and laborers working in
the different departments of the company, while a Casual Unit shall be constituted
by the casual employees. However, aside from the 16 officers and employees who,
by reason of their managerial, supervisory/or confidential positions, were to be
excluded from the appropriate bargaining unit, the Company insisted in the noninclusion therein of 8 employees allegedly performing supervisory functions, namely:

5. Jesus Avila Chief Welder, Welding Shop, Repairs & Maintenance

Department;
6. Jose Padilla Chief Mechanic, Motor Pool, Repairs & Maintenance
Department;
7. Alejandro Justo Chief Painter, Painting Shop, Repairs & Maintenance
Department;
8. Eulogio Candelaria Chief Carpenter, Carpentry Shop, Repairs &
Maintenance Department;
In its order of May 5, 1961, the court, finding them to be at most minor supervisory
employees who work in close association with the few men under them, allowed
their inclusion in the Employer Unit, and directed the Department of Labor to
conduct secret-ballot-elections among the employees to determine the exclusive
bargaining representative for the 2 groups constituting the Employer and Casual
Units.1 Hence, the institution of the instant proceeding by the petitioner company on
the sole issue of whether the 8 employees concerned are supervisors, as defined in
Section 2(k) of Republic Act 875, which reads:
SEC. 2. Definition. As used in this Act
xxx

xxx

xxx

(k) "Supervisor" means any person having authority in the interest of an

employer, to hire, transfer, suspend, lay-off, recall, discharge, assign
recommend or discipline other employees, or responsibly to direct them,
and to adjust their grievances, or effectively to recommend such acts if, in
connection with the foregoing, the exercise of such authority is not of a
merely routinary or clerical nature but requires the use of independent
judgment.

1. Cornelio Vitug Chief Mechanic, Agricultural Shop, Repairs &

Maintenance Department;

In rejecting this claim of petitioner, also raised in the court below, the trial judge
took into account the following:

2. Eufronio & Atienza Chief Mechanic, Industrial Shop, Repairs &

Maintenance Department;

Alfonso Panganiban, Personnel Manager, declared that he has the direct

supervision over all personnel of the Company; that Vitug, Atienza,
Rodriguez, Enriquez, Avila, Padilla, and Candelaria are in charge of
supervision of the work and personnel working under them in their
respective sections; that as section heads, they can recommend the hiring,
expulsion or dismissal of workers under their respective shops whenever
proper and necessary. No evidence, however, was adduced with respect to
Alejandro Justo.

3. Ricardo Rodriguez
Maintenance Department;

In

Charge,

Automotive

Shop,

Repairs

&

4. Edilberto Enriquez Chief Mechanic, Lambretta Shop, Repairs &

Maintenance Department;

According to the list of officers and employees (Exh. X-Court), Vitug has 7
men under him; Atienza, 3; Rodriguez, 1; Enriquez, 5; Avila, 3; Padilla, 3;

and Candelaria, 2 men all working in the Repairs and Maintenance

Department. Granting arguendo that these controverted employees are
group or unit heads exercising such functions and recommendatory
prerogatives, yet we believe that that alone do not encompass them within
the meaning and definition of 'supervisor'. According to the evidence, they
are directly under the Service Manager, Justo Sycip, who gives work
assignments to all personnel under the Repairs and Maintenance
Department. As admitted by the Company, they have no authority to hire,
promote, transfer, suspend or fire employees. As regards their alleged
recommendatory powers, it is correct to state that the same are subject to
evaluation, review and final approval by the department head and other
higher executives of the company. There was, however, no showing that
such recommendatory prerogatives had been exercised by these
employees effectively and of their own independent judgment. The
Company failed to adduce evidence-nay, even a superficial attempt to
show concrete instances that these controverted employees ever exercised
such alleged recommendatory powers. As a matter of fact, Personnel
Manager Panganiban, on cross examination, admitted that he had no
occasion to know of anyone who was recommended by the said employees
for hiring, expulsion, separation, transfer, reprimand, or for increase in
salary to the management. This must be so, because according to the
unrebutted testimony of Cornelio Vitug, although he sometimes makes
work assignment of the four or five mechanics under him, he has not hired
or fired nor recommended anybody for hiring or firing and that he had
reprimanded nobody because he has no power to reprimand. It may be
noteworthy to note that Vitug, who is claimed to be a supervisor for being
allegedly a section head, is only receiving P200.00, whereas, a mechanic
under him Federico Balbalosa, is receiving P250.00 a month. This fact was
never denied or contradicted by the Company.
Petitioner now contends that neither the absence of power to hire, discharge,
promote, transfer, discipline, etc. subordinate personnel, nor the lack of the use
thereof, if present, is determinative of the supervisory status or classification of an
employee under the Industrial Peace Act. It is proposed that to be classified as a
supervisor, it would be sufficient that he has the power to recommend the hiring,
dismissal, promotion, disciplining, etc. of personnel under him or responsibly direct
them, which the 8 employees involved in the cases allegedly have.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1wph1.t
It is to be noted, however, that the power to recommend, in order to qualify an
employee as a supervisor, must not only be effective but the exercise of such
authority should not be merely of a routinary or clerical nature but should require
the use of independent judgment. In the case at bar, it appears in the first place
that, as found by the trial court, there are no clear appointments in favor of the
employees in question including the alleged power or recommend, and while Alfonso

Panganiban, Personnel Manager of the petitioner company, declared that these

employees as section heads could recommend the hiring, expulsion or dismissal of
the workers under their respective shops, the fact remains that as admitted by him,
no such recommendations have ever been made by them. There is also evidence
that other employees have been appointed, transferred, or discharged and laid-off
without any recommendation of the employees involved in these proceedings.
Furthermore, such recommendatory powers are subject to evaluation, review and
final action by the department heads and other higher executives of the company. It,
therefore, appears that the conclusion of the trial court that the authority to
recommend even if present, is not effective and not an exercise of independent
judgment as required by law, is not incorrect.
Neither is it borne by the records that the employees herein involved
can responsibly direct those under them, for the evidence discloses that the service
manager, Justo Sycip, is the one who gives work assignments to all personnel under
the Repairs and Maintenance Department in which the employees herein concerned
are working. The mere designation of these employees as chief mechanic, chief
welder, chief painter and chief carpenter does not indicate more than the fact that
they are the number one mechanic, welder, painter or carpenter among the many of
the same category.
WHEREFORE, finding no error in the order and resolution of the court en
banc subject to this proceedings, the same are hereby affirmed, with costs against
the petitioner. The preliminary injunction herein issued is dissolved. So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes,
Dizon, Regala and Makalintal, JJ., concur.

September 25, 1968

G.R.

No.

L-28927

LAGUNA

COLLEGE, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, LAGUNA COLLEGE TEACHERS ASSOCIATION
(LACTA)-CCLU and THE DIRECTOR, BUREAU OF LABOR RELATIONS, respondents.

De

Lara,

Puno

&

Pampolina

for

petitioner.

Oliver B. Gesmundo for respondent Laguna College Teachers Association.

MAKALINTAL, J.:

This case started with a petition for certification election filed by the Laguna College,
also petitioner before us, in the Court of Industrial Relations on October 20, 1967
(Case No. 2037-MC). The purpose was "to determine whether the Laguna College
Teachers Association (LACTA) or any other labor organization is the true and
voluntary

choice

of

the

majority

of

the

teachers

working

establishment, as the sole and exclusive bargaining representative."

in

petitioner's

LACTA intervened and filed an answer on November 18, 1967, praying that the

choice limited to Laguna College Teachers Association, LACTA for short, c/o Atty.

petition for certification election be dismissed and that it be directly certified as the

Oliver B. Gesmundo, 303 Free Press Bldg., Manila, and NO UNION, and thereafter, to

sole and exclusive bargaining representative of all the teachers, excluding "those

submit the results thereof for further disposition by the Court.

occupying supervisory and confidential positions (as) defined and settled by

jurisprudence."

Petitioner thereafter elevated the case to the court en banc on motion for
reconsideration insofar as the decision (1) authorized the inclusion of eight teachers

While the certification proceeding was pending before the Industrial Court,

as rank and file employees and therefore declared them eligible to vote in the

specifically on January 2, 1968, LACTA staged a strike, but the same was settled by a

certification election, and (2) authorized only one (LACTA) instead of two bargaining

return to work agreement executed by union and management on January 4, 1968.

units to be voted upon. LACTA interposed its opposition to the motion. In the

One of the stipulations in the said agreement is as follows: "That, except on

meantime the Bureau of Labor Relations scheduled the election for March 26, 1968,

questions of law, both parties hereby waive the right to appeal any decision or order

but upon petitioner's motion respondent Court suspended it until further orders. The

that may be rendered by the Trial Court of the Court of Industrial Relations (not

motion for reconsideration was denied by the Court en banc on April 5, 1968, and

Court en banc) in case 2037-MC pending in said Court."

the Director of Labor Relations thereupon reset the election for April 22.

On March 11, 1968 the trial Judge, Hon. Ansberto P. Paredes, issued an order of

On April 20, 1968 petitioner came to this Court on a petition for review of the orders

which the dispositive part reads as follows:

of March 11 and April 5, seeking a modification thereof so that employees "holding

supervisory and/or confidential positions . . . (may) be excluded from whatever

WHEREFORE, the appropriate collective bargaining unit is hereby declared to be the

appropriate bargaining unit or units may be finally determined," and praying that a

employer unit comprising all the teachers of the Laguna College of San Pablo City;

restraining order be issued by this Court to stop respondents from implementing the

the certification election prayed for is hereby granted; Trinidad Alvera, Palermo

orders appealed from. This Court, however, while it gave due course to the petition,

Baagale, Severo Belarmino, Eden Brion, Teofilo Desamero, Senen Faylon, Natividad

did not issue the restraining order prayed for.

Evangelista, Juan B. Hernandez, Ricardo Maala, Vicente Maneso, Wenceslao Retizos,

and Julio Tunguhan, being supervisors and/or holding confidential positions, are

On April 26, 1968 respondent LACTA filed a motion to dismiss the petition on two

excluded from the bargaining unit and therefore ineligible to vote; Moises Belen,

grounds, namely: "(1) the appeal is (a) dilatory and not conducive to industrial

Eduardo Lainez, Gregorio Briones, Olimpio Cortez, Sr., Adventor Neri, Guillermo

peace; (b) has become moot and academic, with petitioner having actively

Pisigan, Marcelo Almanzor and Pantaleon Torres are hereby declared rank-and-file

participated in the election and is therefore already in estoppel; and (c) raises flimsy

employees; Yolanda Almeda, Gertrudis Evangelista and Marlita Evangelista are

and unsubstantial issues; and (2) the petition raises questions of fact (and), aside

hereby declared within the the employer unit and they, together with the teachers

from the agreement between petitioner and LACTA that they would not appeal the

whose names are listed in Annex "A" herewith attached, are hereby declared eligible

order of the trial Court of the Court of Industrial Relations; this Honorable Court,

to vote; and the Department of Labor or its authorized representative or

therefore, has no jurisdiction over the present appeal (sic)." A supplemental motion

representatives are hereby requested to conduct the certification election with the

to dismiss followed, after which petitioner submitted its comment.

The main issue raised in the petition refers to the classification of the following

lay-off, discharge, suspend, transfer, discipline (p. 151, t.s.n., December 14, 1967),

employees in the rank-and-file category: Marcelo Almanzor, Eduardo R. Lainez,

or adjust the grievances of any teacher of the Laguna College (p. 152, t.s.n.,

Adventor C. Neri, Moises Belen, Gregorio Briones, Olimpio Cortez, Sr., Guillermo

December 14, 1967). The case of Belen Briones, Cortez, Sr., Lainez, and Neri are no

Pisigan and Pantaleon Torres. Petitioner claims that these eight are supervisors and

different. Although they are area supervisors they do not exercise any of the

therefore should not have been considered as eligible to vote in the selection of the

attributes or functions of a supervisor as defined in Section 2(k) of R.A. 875. To

appropriate bargaining unit.

better understand their functions, it is best to know what is an area supervisor. The
word "area" in the designation refers to a particular subject, like English,

The issue, however, is mainly one of fact. In his resolution thereof the trial Judge

Mathematics and Physics, Filipino, General Science, Biology and Chemistry, and

analyzed in detail the evidence before it, both oral and documentary. The analysis

Social Science-History and Economics. It is a fact that not one of these area

shows that there is substantial support for the conclusion reached, and the

supervisors has the power to hire or fire, lay-off, suspend, discharge or discipline the

substantial-evidence rule applicable to cases like the present precludes our

teacher under them or adjust their grievances. The power to rate the efficiency of

reviewing the matter on appeal. The trial Judge, in his order of March 11, 1968,

the teachers under them is even subject to review or revision by the principal, Mr.

found as follows:

Wenceslao Retizos (pp. 30 to 40, t.s.n., December 14, 1967). As a matter of fact,
their functions are but recommendatory (p. 48, t.s.n., December 14, 1967). Thus,

On the issue as to whether the eight named teachers are supervisors or not, there
is, in the first place, no evidence adduced to show that Almanzor is a supervisor.
With respect to Pisigan, the only evidence offered to show that he is a supervisor is
Exhibit "R" which is nothing more than his designation as ". . . Moderator and/or
Adviser of the Sampaloc Lake News, School Organ of the Students of the Laguna
College, San Pablo City." From this document, it is shown that the principal functions
of Pisigan are to select, by competitive examinations, the students who will occupy
the positions of editor-in-chief, associate editor, news-in-charge, feature-in-charge,
literary-in-charge; and to tone down, or totally disapprove publication of articles
which, in his opinion, are derogatory to the good name of any person or institution.
These functions and the others enumerated in Exhibit "R" are not within the purview
of the definition of supervisor as provided in Section 2(k) of R.A. 875. So is the case
of Pantaleon Torres. Being a consultant of the College Organ, the Sampaloc Lake
News, and have (sic) duties as enumerated in Exhibit "S", do not make him a
supervisor. This is specially true when his testimony was not denied or rebutted,
disclosing that he is not an area supervisor; that there are no teachers under him (p.
153, t.s.n., December 14, 1967); and that he does not have the power to hire, fire,

the assistant principal and general supervisor admitted that the recommendations of
the area supervisors are subject to evaluation, review and final approval by the
principal, as ". . . most recommendations of area supervisors are considered with a
grain of salt." (pp. 17 to 19, t.s.n., December 27, 1967.) It is established by the
evidence that even as the efficiency ratings given by Lainez, an area supervisor, is
(sic) based on his own observations of the teachers under him, he was prevailed
upon by the principal to change them (p. 65, t.s.n., December 14, 1967), which he
did, and that his remarks and observations of some of the teachers under him made
in Exhibit "G" were deleted in the copy furnished the Bureau of Private Education
(pp. 82 to 84, t.s.n., December 14, 1967). In the case of area supervisor Neri, as was
admitted by the assistant principal and general supervisor, his recommendations,
indeed, are considered with a grain of salt. Neri's testimony is not denied that when
he recommended a teacher to teach biology, his recommendation was rejected (p.
108, t.s.n., December 14, 1967); and when he assigned a teacher to teach Science,
without so much as notifying him, the teacher was given Arithmetic (p. 109, t.s.n.,
December 14, 1967). The preparation of program of supervision by area supervisors

is, likewise, not indicative that they are supervisors, for, as testified to by Lainez

the factors in favor of employer unit far outweight the reasons for the establishment

which testimony is not rebutted, it is nothing more than the enumerations of

of two separate bargaining units as proposed by petitioner. It is not denied that

activities in the area, many of them merely routinary, as for instance, the checking

college teachers are governed by rules and regulations of the Bureau of Private

of the formal themes, notebooks, survey of textbooks, and regulating the number of

Education, which are different from the rules and regulations for high school

students in a class (p. 52, t.s.n., December 14, 1967). For all the foregoing lessons, it

teachers; that the high school department of petitioner was organized at a different

is believed that Lainez, Belen, Neri, Briones, Cortez, Sr., Torres, Pisigan and Almanzor

time from the college department; that the set-up in the two departments are

are not supervisors.

different; and that the high school teachers are paid per period or subject, while the
college teachers are paid on the hourly basis. But it is also not denied that these two

What is more, in the return-to-work agreement entered into by the parties on

departments are under the control of only one board of trustees; that they are

January 4, 1968, to settle the strike declared by LACTA on January 2, 1968, they both

housed in one and the same building (p. 68, t.s.n., December 8, 1967); that there is

waived the right to appeal, except on questions of law, from any decision or order

but one cashier and only one registrar who himself is the administrative officer of

that might be rendered by the trial Court in the case then pending, No. 2037-MC.

the whole Laguna College (pp. 68 and 70, t.s.n., December 8, 1967). As a matter of

The question of whether the eight employees aforementioned were supervisors or

fact the function of the Administrative Officer who is no other than Wenceslao

belonged to the rank and file was one of fact and consequently was covered by the

Retizos extends even to the high school department (pp. 71-73, t.s.n., December 8,

waiver.

1967). It is a fact that there are some teachers involved in this case who are
teaching both in the college and high school departments (pp. 69 to 70, t.s.n.,

The second issue raised in the instant petition concerns the declaration in the order
of March 11, 1968 that only one bargaining unit should represent all the teachers
employed in the Laguna College. Petitioner insists that there should be two units,
one for college professors and another for high school teachers. This is a matter that
is addressed to the sound discretion of respondent Court, upon its own consideration
of all the pertinent circumstances; and unless such discretion has been gravely
abused there is no justification to rule otherwise. The following rationale of the
court's decision appears to be well-advised, and the allegations in the petition do
not make out a sufficient case for the review thereof.

On the appropriate bargaining unit, petitioner, changing its original stand, proposed
two separate units, namely, college unit composed of the professors and instructors
in the College, and high school units comprising the high school teachers. On the
other hand, LACTA proposed only one unit the employer unit composed of all the
teachers in the entire Laguna College. From the evidence adduced, it is believed that

December 8, 1967; pp., 28, 111 and 131, t.s.n., December 14, 1967), which is a
decisive proof of the community of interest of these teachers and which negates the
establishment of two bargaining units. Besides, in the proposed two separate
bargaining units, the elementary teachers of the petitioner will be left out without a
bargaining representative. Moreover, considering that there are only one-hundredand-thirty (130) teachers involved in this proceedings, after twelve of the teachers
were considered supervisors and/or holding confidential positions, to divide the
collective bargaining unit into two would assuredly be dissipating their strength for
collective bargaining purposes. Furthermore, the proposition would not be conducive
to industrial peace for the possibility is great that, with the establishment of two
bargaining units, petitioner would be contending with two different unions vying
against each other for better benefits to gain more members.

Respondent LACTA avers in its answer that the certification election authorized by

resulted in the filing of a formal complaint by the prosecuting officers of the Court of

respondent court has actually been held. The instant petition, therefore, insofar as it

Industrial Relations. Besides, as likewise alleged by respondents in their opposition

seeks to enjoin said election has already become moot, particularly in view of the

to the supplemental petition, the strikers returned to work on May 6, 1968 and were

fact that petitioner participated therein actively, as also alleged in the same answer

accepted back by petitioner, thus rendering the issue of illegality moot and

and nowhere denied by petitioner. Whatever other questions there are relative to

academic.

the conduct of such election may be ventilated before respondent Court, which has
jurisdiction over the main case.

In a supplemental petition filed on August 12, 1968, petitioner alleges that

respondents acted with grave abuse of discretion in ordering the certification
election to be held on April 22, 1968, before the lapse of the "ten-day period" for
review of the resolution of respondent Court dated April 5, 1968, copy of which was
received by petitioners on the following April 15. This new allegation deserves no
serious consideration. In the first place, it is a new matter which should have been
included in the original petition filed on April 20, 1968, wherein the prayer was that
the certification election scheduled for April 22 be suspended so that the matter of
excluding certain employees from voting therein could first be settled. No reference
whatsoever was made to the fact that the election, if held as thus scheduled, would
be premature for the reason now advanced. To admit the supplemental petition
would in effect be to authorize an appeal beyond the 30-day reglementary period.
Secondly, the supplemental petition has not cited any specific rule to the effect that
a certification election may not be held until after the expiration of 10 days from
receipt by the parties of the enabling resolution of the Industrial Court. Finally, as
already adverted to, petitioner took part actively in the election, and in fact
challenged the right of 59 LACTA members to vote therein, raising no objection with
respect to the others.

Regarding the allegation that the strike staged on April 3, 1968 was illegal and
hence rendered the strikers disqualified to vote, this is a matter that properly
pertains to the ULP charge filed by petitioner precisely questioning the legality of
said strike, but which charge, according to respondents, has up to the present not

WHEREFORE, the petition is dismissed, without pronouncement as to costs.

G.R. No. 88957 June 25, 1992

PHILIPS
INDUSTRIAL
DEVELOPMENT,
INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPS EMPLOYEES ORGANIZATION
(FFW),respondents.

DAVIDE, JR., J.:

In this petition for certiorari and prohibition under Rule 65 of the Rules of Court with
a prayer for a temporary restraining order and/or a writ of preliminary injunction,
petitioner Philips Industrial Development, Inc. (PIDI) seeks to set aside the Decision
and Resolution, dated 16 January 1989 and 17 March 1989, respectively, of the
National Labor Relations Commission (NLRC) in Case No. NLRC-NCR-00-11-03936-87
on the ground that it committed grave abuse of discretion amounting to lack of
jurisdiction in holding that service engineers, sales representatives and confidential
employees of PIDI are qualified to be included in the existing bargaining unit.

PIDI is a domestic corporation engaged in the manufacturing and marketing of

electronic products Since 1971, it had a total of six (6) collective bargaining
agreements (CBAs) with private respondent Philips Employees Organization-FFW
(PEO-FFW), a registered labor union and the certified bargaining agent of all the rank
and file employees of PIDI. In the first CBA (1971-1974), the supervisors referred to
in R.A. No. 875, confidential employees, security guards, temporary employees and
sales representatives were excluded from the bargaining unit. In the second to the
fifth CBAs (1975-1977; 1978-1980; 1981-1983; and 1984-1986), the sales force,
confidential employees and heads of small units, together with the managerial
employees, temporary employees and security personnel, were specifically excluded
from the bargaining unit. 1 The confidential employees are the division secretaries of
light/telecom/data and consumer electronics, marketing managers, secretaries of
the corporate planning and business manager, fiscal and financial system manager
and audit and EDP manager, and the staff of both the General Management and the
Personnel Department. 2
In the sixth CBA covering the years 1987 to 1989, it was agreed upon, among
others, that the subject of inclusion or exclusion of service engineers, sales
personnel and confidential employees in the coverage of the bargaining unit would
be submitted for arbitration. Pursuant thereto, on June 1987, PEO-FFW filed a
petition before the Bureau of Labor Relations (BLR) praying for an order "directing
the parties to select a voluntary arbitrator in accordance with its rules and
regulations."
As the parties failed to agree on a voluntary arbitrator, the BLR endorsed the
petition to the Executive Labor Arbiter of the National Capital Region for compulsory
arbitration pursuant to Article 228 of the Labor Code. Docketed as Case No. NLRCNCR-00-11-03936-87, the case was assigned to Executive Labor Arbiter Arthur
Amansec.
On 17 March 1988, Labor Arbiter Amansec rendered a decision, the dispositive
portion of which states:
In view of the foregoing, a decision is hereby rendered, ordering
the respondent to conduct a referendum to determine the will of
the service engineers, sales representatives as to their inclusion or
exclusion in the bargaining unit.
It is hereby declared that the Division Secretaries and all Staff of
general management, personnel and industrial relations
department, secretaries of audit, EDP, financial system are
confidential employees and as such are hereby deemed excluded
in the bargaining unit.
SO ORDERED.
PEO-FFW appealed from the decision to the NLRC.

On 16 January 1989, the NLRC rendered the questioned decision, the dispositive
portion of which reads:
WHEREFORE, the foregoing premises considered, the appealed
decision of the Executive Labor Arbiter is hereby SET ASIDE and a
new one entered declaring respondent company's 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.
SO ORDERED.
The reversal is anchored on the respondent NLRC's conclusion that based on Section
1, 3 Rule II, Book V of the Omnibus Rules Implementing the Labor Code, as amended
by Section 3, Implementing Rules of E.O. No. 111; paragraph (c) Section 2, Rule V of
the same Code, as amended by Section 6 4 of the Implementing Rules of E.O. No.
111; and Article 245 5 of the Labor Code, as amended:
. . . all workers, except managerial employees and security
personnel, are qualified to join or be a part of the bargaining unit. .
..
It further ruled that:
The Executive Labor Arbiters directive that the service engineers
and sales representatives to (sic) conduct a referendum among
themselves is erroneous inasmuch as it arrogates unto said
employees the right to define what the law means. It would not be
amiss to state at this point that there would be no one more
interested in excluding the subject employees from the bargaining
unit than management and that it would not be improbable for the
latter to lobby and/or exert pressure on the employees concerned,
thus agitating unrest among the rank-and-file. Likewise, the
Executive Labor Arbiter's declaration that the Division Secretaries
and all Staff of general management, personnel and industrial
relations department, secretaries of audit, EDP and financial
system "are confidential employees and as such are hereby
deemed excluded in (sic) the bargaining unit" is contrary to law for
the simple reason that the law, as earlier quoted, does not
mention them as among those to be excluded from the bargaining
unit only (sic) managerial employees and security guards. As a
matter of fact, supervisory unions have already been dissolved
and their members who do not fall within the definition of
managerial employees have become eligible to join or assist the
rank-and-file organization. 6

Its motion for the reconsideration of this decision having been denied by the NLRC in
its Resolution of 16 March 1989, a copy of which it received on 8 June 1989,
petitioner PIDI filed the instant petition on 20 July 1989, alleging that:
I
THE NLRC COMMITTED ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION IN HOLDING THAT SERVICE ENGINEERS,
SALES REPRESENTATIVES AND CONFIDENTIAL EMPLOYEES OF
PETITIONER ARE QUALIFIED TO BE PART OF THE EXISTING
BARGAINING UNIT.
II
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION IN NOT APPLYING THE TIME HONORED
"GLOBE DOCTRINE." 7
On 31 July 1989, this Court; required the respondents to comment on the petition,
which PEO-FFW complied with on 28 August 1989. Public respondent NLRC, thru its
counsel, the Solicitor General, moved for, and was granted a 30-day extension to file
its Comment.
On 18 September 1989, this Court required the parties to show cause why the
petition should not be dismissed in view of the finality of the NLRC decision as
provided for by the penultimate sentence of Article 223 of the Labor Code, as
amended by R.A. No. 6715 R..A. No. 6715, which amended Article 223 of the Labor
Code, was enacted on 2 March 1989 and took effect on 21 March 1989. The parties
subsequently complied with the Resolution.
On 16 May 1990, this Court required the parties to submit Memoranda explaining
the effect in this case of Article 223 of the Labor Code, as amended by Section 12 of
R.A. No-6715 with respect to the finality of decisions of the NLRC. The parties
complied separately with the same.
On 10 September 1990, this Court gave due course to the petition and required the
parties to submit their respective Memoranda. The petitioner and the Office of the
Solicitor General filed their separate Memoranda. On the other hand, PEO-FFW
moved that its Motion and manifestation dated 23 August 1989 be considered as its
Memorandum; this Court granted the same.

As stated earlier, the principal issue in this case is whether the NLRC committed
grave abuse of discretion in holding that service engineers, sales representatives
and confidential employees (division secretaries, staff of general management,
personnel and industrial relations department, secretaries of audit, EDP and financial
system) are qualified to be included in the existing bargaining unit. Petitioner
maintains that it did, and in support of its stand that said employees should not be
absorbed by the existing bargaining unit, it urges this Court to consider these points:
1) The inclusion of the group in the existing bargaining unit would run counter to the
history of this parties CBA. The parties' five (5) previous CBAs consistently excluded
this group of employees from the scope of the bargaining unit. The rationale for such
exclusion is that these employees hold positions which are highly sensitive,
confidential and of a highly fiduciary nature; to include them in the bargaining unit
may subject the company to breaches in security and the possible revelation of
highly sensitive and confidential matters. It would cripple the company's bargaining
position and would give undue advantage to the union.
2) The absence of mutuality of interests between this group of employees and the
regular rank and file militates against such inclusion. A table prepared by the
petitioner shows the disparity of interests between the said groups:
SERVICE
ENGINEERS
SALES REPRESENTATIVES TECHNICIANS

SERVICE

(Non-Bargaining
(Bargaining
AREAS OF INTEREST Unit Employees) Unit Employees)
Qualifications
Professional
Employees
High
School/
Vocational
Grads.
Work
Schedule
With
Night
Shift
None
Schedule
Night
Shift
10%
of
Basic
Rate
None
Differential
Pay
Stand-By
Call
&
On
Stand-By
Call
with:
None
Allowance
First
Line:15%
of
basic
rate
Second
Line:
10%
of
basic
rate
Uniforms
None
2
sets
of
polo
&
pants
every
6
months
Retirement Benefits 15 yrs. ser.70% 15 yrs. serv. 50%
16
75%
16
85%
17
80%
17
90%
18
85%
18
100%
19
90%
19
115%
20
100%
20
135%

Year
End
Performance
Merit
Increase
Evaluation
Sales
Commission
Yes
Car
Loan
Yes
Precalculated
Yes
Kilometer allowance

system

None
None
None
None

of the employer shall not be eligible for membership, in any labor

organization.
and substituted it with the following provision:
Art. 245. Right of employees in the public service.

10

xxx xxx xxx

The Office of the Solicitor General supports the decision of the Executive Labor
Arbiter and refuses to uphold the position of the NLRC. It holds the view that the
division Secretaries; the staff members of General Management, Personnel and the
Industrial Relations Department; and the secretaries of Audit, EDP and Financial
Systems, are disqualified from joining the PEO-FFW as they are confidential
employees. They cannot even form a union of their own for, as held in Golden
Farms, Inc. vs. Ferrer-Calleja, 8 the rationale for the disqualification of managerial
employees from joining unions holds true also for confidential employees. As regards
the sales representatives and service engineers, however, there is no doubt that
they are entitled to join or form a union, as they are not disqualified by law from
doing so. Considering that they have interests dissimilar to those of the rank and file
employees comprising the existing bargaining unit, and following the Globe Doctrine
enunciated in In Re: Globe Machine and Stamping Company 9 to the effect that in
determining the proper bargaining unit the express will or desire of the employees
shall be considered, they should be allowed to determine for themselves what union
to join or form. The best way to determine their preference is through a referendum.
As shown by the records, such a. referendum was decreed by the Executive Labor
Arbiter.

By virtue of such repeal and substitution, security guards became eligible

for membership in any labor organization. 11
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 PIDI's "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. 12 As such, the rationale behind the ineligibility of managerial
employees to form, assist or join a labor union equally applies to them.

The petition is impressed with merit.

At the outset, We express Our agreement with the petitioner's view that respondent
NLRC did not quite accurately comprehend the issue raised before it. Indeed, the
issue is not whether the subject employees may join or form a union, but rather,
whether or not they may be part of the existing bargaining unit for the rank and file
employees of PIDI.
Even if the issue was, indeed, as perceived by the NLRC, still, a palpable error was
committed by it in ruling that under the law, all workers, except managerial
employees and security personnel, are qualified to join a union, or form part of a
bargaining unit. At the time Case No. NLRC-NCR-00-11-03936-87 was filed in 1987,
security personnel were no longer disqualified from joining or forming a union.
Section 6 of E.O. No. 111, enacted on 24 December 1986, repealed the original
provisions of Article 245 of the Labor Code, reading as follows:
Art. 245. Ineligibility of security personnel to join any labor
organization. Security guards and other personnel employed for
the protection and security of the person, properties and premises

In Bulletin Publishing Co., Inc. vs. Hon Augusto Sanchez,

this rationale, thus:

13

this Court elaborated on

. . . 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,
applicable to confidential employees:

14

this Court explicitly made this rationale

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.
As regards the service engineers and the sales representatives, two (2) points which
respondent NLRC likewise arbitrarily and erroneously ruled upon agreed to be
discussed. Firstly, in holding that they are included in the bargaining unit for the
rank and file employees of PIDI, the NLRC practically forced them to become
members of PEO-FFW or to be subject to its sphere of influence, it being the certified
bargaining agent for the subject bargaining unit. This violates, obstructs, impairs
and impedes the service engineers' and the sales representatives' constitutional
right to form unions or associations 15 and to self-organization. 16 In Victoriano vs.
Elizalde Rope Workers Union, 17 this Court already ruled:
. . . Notwithstanding the different theories propounded by the
different schools of jurisprudence regarding the nature and
contents of a "right", it can be safely said that whatever theory
one subscribes to, a right comprehends at least two broad notions,
namely: first, liberty or freedom, i.e., the absence of legal
restraint, whereby an employee may act for himself without being
prevented by law; and second, power, whereby an employee may,
as he pleases, join or refrain from joining an association. It is,
therefore, the employee who should decide for himself whether he
should join or not an association; and should he choose to join, he
himself makes up his mind as to which association he would join;
and even after he has joined, he still retains the liberty and the
power to leave and cancel his membership with said organization
at any time. 18 It is clear, therefore, that the right to join a union
includes
the
right
to
abstain
from
joining
any
union. 19 Inasmuch as what both the Constitution and the Industrial
Peace Act have recognized, and guaranteed to the employee, is
the "right" to join associations of his choice, it would be absurd to
say that the law also imposes, in the same breath, upon the
employee the duty to join associations. The law does not enjoin an
employee to sign up with any association.
The decision then of the Executive Labor Arbiter in merely directing the holding of a
referendum "to determine the will of the service engineers, sales representatives as
to their inclusion or exclusion in (sic) the bargaining unit" is the most appropriate
procedure that conforms with their right to form, assist or join in labor union or
organization. However, since this decision was rendered before the effectivity of R.A.
No. 6715, it must now be stressed that its future application to the private parties in
this case should, insofar as service engineers and sales representatives holding
supervisory positions or functions are concerned, take into account the present
Article 245 20 of the Labor Code which, as amended by R.A. No. 6715, now reads:

ARTICLE 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. (emphasis supplied)
The foregoing disquisitions render unnecessary a discussion on the second ground
on the alleged grave abuse of discretion on the part of the NLRC in not applying the
"Globe Doctrine". Suffice it to state here that since the only issue is the subject
employees' inclusion in or exclusion from the bargaining unit in question, and PIDI
never questioned the decision of the Executive Labor Arbiter, the Globe Doctrine
finds no application. Besides, this doctrine applies only in instances of evenly
balanced claims by competitive groups for the right to be established as the
bargaining unit, 21 which do not obtain in this case.
WHEREFORE, the petition is hereby GRANTED. The Decision of public respondent
National Labor Relations Commission in Case No. NLRC-NCR-00-11-03936-87,
promulgated on 16 January 1989, is hereby SET ASIDE while the Decision of the
Executive Labor Arbiter in said case dated 17 March 1988 is hereby REINSTATED,
subject to the modifications above indicated. Costs against private respondent.
SO ORDERED.
FIRST DIVISION

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.

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

METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE MA. NIEVES ROLDANCONFESOR, in her capacity as Secretary of the Department of Labor and
Employment and METRO DRUG CORPORATION EMPLOYEES ASSOCIATIONFEDERATION 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.

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.

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.

APPEARANCES OF COUNSEL
Bautista Picazo Buyco Tan & Fider for petitioner.

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.

The Solicitor General for public respondent.

SO ORDERED.[1] (Italics ours.)
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.

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]

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.

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.

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:

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.

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.

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]

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:
A

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]

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. *
B

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

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

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]

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

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.

xxx.

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.

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.

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.

. . .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, 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.

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.

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

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]

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:

The second issue raised by petitioner merits our consideration.

Exclusion from the Scope of the Close Shop Provision
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

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

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

Appropriateness of the bargaining unit.

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

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 selforganization 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. RoldanConfesor,[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.

SECOND DIVISION
[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.
DECISION
ROMERO, J.:
This is a Petition for Certiorari with Prayer for the Issuance of Preliminary
Injunction seeking to reverse and set aside the Order of public respondent,
Undersecretary of the Department of Labor and Employment, Bienvenido E.
Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91 [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-Arbiters
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 companys Appeal and ordered the remand of the case to the MedArbiter of origin for determination of the true classification of each of the employees
sought to be included in the appropriate bargaining unit.
Upon petitioner-unions 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 courts
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 companys
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 employees
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 employees confidential
status, such information must relate to the employers 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 employers 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 employers 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 selforganization. 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 Baos, 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.