Case No 1

G.R. No. 77231 May 31, 1989

SAN JOSE CITY ELECTRIC SERVICE COOPERATIVE, INC. (SAJELCO), petitioner, vs.

MINISTRY OF LABOR AND EMPLOYMENT and MAGKAISA-ADLO, respondents.

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court. Petitioner San Jose City Electric Service Cooperative, Inc. (SAJELCO, for brevity) seeks the reversal of the Order (pp. 38-40, Rollo) of Pura Ferrer-Calleja, Director of Bureau of Labor Relations in BLR Case No. A-10-259-86 which affirmed the Order of Med-Arbiter Antonio R. Cortez to conduct a certification election among the rank-and-file employees of SAJELCO.

The antecedent facts of the instant case are as follows:

On July 29, 1986, private respondent Manggagawang Nagkakaisa ng SAJELCO-Association of Democratic Labor Organization (MAGKAISA-ADLO) filed a petition (pp. 16-18, Rollo) for direct certification election with the Regional Office No. 111 of the Department of Labor and Employment in San Fernando, Pampanga. The petition alleged that MAGKAISA-ADLO is a legitimate labor organization duly registered with the Ministry of Labor and Employment; that there are more or less fifty-four (54) rank and file employees in SAJELCO; that almost 62% of the employees sought to be represented have supported the filing of the petition; that there has been no valid certification election held in SAJELCO during the twelve (12) month period prior to the filing of the petition and that there is no other union in the bargaining unit.

In its answer (pp. 19-21, Rollo), SAJELCO opposed the petition for direct certification election contending, inter alia, that the employees who sought to be represented by private respondent are members-consumers of the Cooperative itself and at the same time composed the General Assembly which, pursuant to the By-laws is also the final arbiter of any dispute arising in the Cooperative. Thus:

x x x

5. That some, if not most, of the employees who sought to be represented by the petitioner, are member-consumers, and as such are members of the General or Special Assembly which is the final arbiter on any dispute which a member and/or the Board, or the Cooperative may have, and that such "some"of said alleged supporters, in their capacity as member-consumers, enjoy two personalities in that as employees and/or members of the General Assembly, and therefore cannot fairly and prudently represent such opposing personalities that merge into one juridical or natural person, and these special and unique status or personalities of the supposed supporters cannot qualify to be represented by the petitioner, without doing injustice, in equity and unfair status or advantage to those member-consumers who have not that destiny or status of becoming employees;

6 No valid and lawful representation can be obtained by petitioner in behalf of the supposed supporters, who are also member-consumer, that are bound by the Article of Incorporation, By-laws of the respondent Cooperative and pertinent Decrees and

laws, to support and defend the basic policies of the Government on Electric Cooperatives;

7. There is no possible legal way by which to dismantle the personalities of some of the supporters of the petitioner, as employees, from their status as consumer-members, who are, under the By-laws, part and parcels of the General or Special Assembly that finally decides any dispute, and no reasonable or valid scale of justice could be invoked to divide a person who, in conscience, is also the other fellow against whom a remedy is sought for in allowing this to happen is tantamount to slaughtering a man to his own ends;

x x x

On September 5, 1986, the Med-Arbiter who was assigned to the case issued an Order (pp. 24-26, Rollo) granting the petition for direct certification election on the basis of the pleadings filed. The Order said that while some of the members of petitioner union are members of the cooperative, it cannot be denied that they are also employees within the contemplation of the Labor Code and are therefore entitled to enjoy all the benefits of employees, including the right to self-organization (pp. 25, Rollo). This Order was appealed by SAJELCO to the Bureau of Labor Relations.

In its appeal, (pp. 27-36, Rollo) SAJELCO reiterated its position that:

. . . upon the principle that in electric cooperative — as in the case of respondent, there is a mergerof the consumer-members that composed of the assembly and that of the rank-and-file members of the petitioners-into one person or juridical status thus rendering the proposed collective bargaining agent ineffective and/or uncalled for — considering that a grievance machinery for employees and/or member-consumers of the cooperative-has been provided for by the By-laws as a built-in over-all arbiter involving disputes affecting said cooperative;

Respondent Director of the Bureau of Labor Relations dismissed the appeal and sustained the ruling of the Med-Arbiter in an order dated January 5, 1987.

On February 19, 1987, SAJELCO filed the instant petition for certiorari praying that the order of respondent Director be set aside and another one rendered denying the holding or conduct of a certification election among the rank and file employees of SAJELCO.

In a letter dated June 20, 1987, Atty. Ricardo Soto, Jr., counsel for private respondent union, manifested that a direct certification election was conducted in SAJELCO, there being no restraining order from this Court enjoining the holding thereof Likewise, Atty. Soto was of the opinion that in view of the direct certification election conducted, the petition brought before this Court by SAJELCO has become moot and academic (p. 48, Rollo). Attached to his letter is a copy of the minutes of the certification election held on April 13, 1987 showing that of forty three (43) employees who voted, thirty (30) voted for respondent union and thirteen (13) voted for "no union."

In the resolution of this court (First Division) dated September 29, 1987, respondents were required to comment on the petition. The Solicitor General filed its comment dated October 30, 1987 wherein it took a stand contrary to that of respondent Director. To support its stand, the Solicitor General argued firstly, that the union members who seek to be represented by the union are the very members of the cooperative, thereby resulting in a fusion of two personalities. Thus, it will be inconsistent for the union members to bargain with themselves. Secondly, he said that article 243 of the Labor Code; requires that before one can form, join or assist a labor union, he must first be

employed and to be an employee one must be under hire and must have no involvement in the ownership of the firm. A labor union is formed for purposes of collective bargaining. The duty to bargain exists only between employer and employees and not between an employer and his co-owners. Thirdly, he also said that under the National Electrification Decree (P.D. No. 269, August 6, 1973) members of an electric cooperative such as petitioner, besides contributing financially to its establishments and maintenance, participate in its management. In the latter aspect, they possess the powers and prerogatives of managerial employees who are not eligible to join, assist or form any labor organization (pp. 4-6 of Comment; pp 43-45, Rollo).

On November 25, 1987, We required Atty. Soto, Jr. to comment on the comment of the Solicitor General (p. 47,Rollo). However, the notices sent to him were returned and stamped "moved to an unknown address." But respondent Director of the Bureau of Labor Relations filed a comment on the aforesaid comment of the Solicitor General reiterating his stand that members of private respondent union fall under the general provision of Article 244 of the Code on who are qualified to form, join or assist in the formation of unions as they are neither managerial employees nor persons belonging to subversive organizations. Thus, on May 25, 1988, we gave due course to the petition (p. 79, Rollo).

The only issue presented for resolution in this petition is whether or not the employees-members of an electric cooperative can organize themselves for purposes of collective bargaining.

This Court had the occasion to rule on this issue in the consolidated cases of Batangas I-Electric Cooperative Labor Union vs. Romeo Young, et al., G.R. No. 62386, Bulacan II- Electric Cooperative, Inc., vs. Hon. Eliseo A. Penaflor, et al., G.R. No. 70880 and Albay Electric Cooperative vs. Crescencio B. Trajano et. al., G.R. No. 74560 (November 9, 1988), citing the case of Cooperative Rural Bank of Davao City, Inc. vs. Pura Ferrer-Calleja, G.R. No. 77951, September 26,1988, where it was held that:

A cooperative, therefore, is by its nature different from an ordinary business concern being run either, by persons, partnerships or corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees. As above stated, irrespective of the name of shares owned by its members they are entitled to cast one vote each in deciding upon the affair of the cooperative. Their share capital earn limited interests, They enjoy special privileges as — exemption from income tax and sales taxes, preferential right to supply their products to State agencies and even exemption from minimum wage laws.

An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners. In the opinion of August 14, 1981 of the Solicitor General, he corectly opined that employees of cooperatives who are themselves members of the cooperative have no right to form or join labor organizations for purposes of collective bargaining for being themselves co-owners of the cooperative.

However, in so far as it involves cooperatives with employees who are not members or co-owners thereof, certainly such employees are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as are enshrined in the Constitution and existing laws of the country.

In this petition, San Jose City Electric Service Cooperative, Inc. (SAJELCO) claims that its employees are also members of the cooperative. It cited Section 17(18) of its By-laws which declares that:

The Board shall also create positions for subordinate employees and fix their duties and remunerations. Only member-consumers or members of their immediate family shall be employed by the cooperative (Emphasis supplied).

The above-cited provision, however, mentions two types of employees, namely: the members-consumers and the members of their immediate families. As regards employees of SAJELCO who are members-consumers, the rule is settled that they are not qualified to form, join or assist labor organizations for purposes of collective bargaining. The reason for withholding from employees of a cooperative who are members-co-owners the right to collective bargaining is clear: an owner cannot bargain with himself. However, employees who are not members-consumers may form, join or assist labor organizations for purposes of collective bargaining notwithstanding the fact that employees of SAJELCO who are not members-consumers were employed ONLY because they are members of the immediate family of members-consumers. The fact remains that they are not themselves members-consumers, and as such, they are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as are enshrined in Section 8, Article III and Section 3, Article XIII of the 1987 Constitution, Labor Code of the Philippines and other related laws (Cooperative Rural Bank of Davao City, Inc., supra, p. 10).

ACCORDINGLY, the petition is GRANTED. The assailed Order of respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations is hereby MODIFIED to the effect that only the rank-and-file employees of petitioner who are not its members-consumers are entitled to self-organization, collective bargaining, and negotiations, while other employees who are members-consumers thereof cannot enjoy such right. The direct certification election conducted on April 13, 1987 is hereby set aside. The Regional Office III of the Department of Labor and Employment in San Fernando, Pampanga is hereby directed: (a) to determine the number of rank and file employees of SAJELCO who are not themselves members-consumers; (b) to resolve whether or not there is compliance with the requirements set forth in Article 257 of the Labor Code; and (c) in the affirmative, to immediately conduct a direct certification election among the rank and file employees of SAJELCO who are not members-consumers.

SO ORDERED.

Case No. 2

G.R. No. 76273 July 31, 1987

FEU-DR. NICANOR REYES MEDICAL FOUNDATION, INC., petitioner, vs.HON. CRESENCIANO TRAJANO and RICARDO C. CASTRO, FAR EASTERN UNIVERSITY DR. NICANOR REYES MEDICAL FOUNDATION, INC. ALLIANCE OF FILIPINO WORKERS (AFW), respondents.

PARAS, J.:

This is a petition for certiorari seeking to annul and set aside the decision of the respondent Director which affirmed the Order of the Med-Arbiter in the petition for certification election (NCR-LRD-N-2-050-86) filed by private respondent, thus ordering the holding of a certification election among the rank and file employees of the herein petitioner.

The facts of the case are as follows:

The petitioner, Far Eastern University-Dr. Nicanor Reyes Memorial Foundation, Inc., has a work force   of   about   350   rank   and   file   employees,  majority   of  whom   are  members   of   private respondent Alliance of Filipino Workers.

On February  13,  1986,  private   respondent  filed  a  Petition  for  Consent  and/or  Certification Election with The Ministry of Labor and Employment. The petitioner opposed the petition on the ground that a similar petition involving the same issues and the same parties is pending resolution before the Supreme Court, docketed as G.R. No. L-49771.

In   its  position  paper,  private   respondent  admitted:   that  as  early  as  May  10,  1976,  private respondent  filed  a  similar  petition  for  certification election with   the Ministry  of   Labor  and Employment but the petition was denied by the MED Arbiter and the Secretary of Labor on appeal,  on   the  ground   that   the  petitioner  was  a  non-stock,  non-profit  medical   institution, therefore, its employees may not form, join, or organize a union pursuant to Article 244 of the Labor  Code;   that  private  respondent  filed a  petition  for  certiorari  with   the  Supreme Court (docketed as G.R. No. L-49771) assailing the constitutionality of Article 244 of the Labor Code; that pending resolution of the aforesaid petition, or on May 1, 1980, Batas Pambansa Bilang 70 was enacted amending Article 244 of the Labor Code, thus granting even employees of non-stock, non-profit institutions the right to form, join and organize labor unions of their choice; and that in the exercise of such right, private respondent filed another petition for certification election with the Ministry of Labor and Employment (NCR-LRD-N-2-050-86).

On April  17,  1986,   the Med Arbiter   issued an Order granting the petition,  declaring  that a certification election be conducted to determine the exclusive bargaining representative of all the rank and file employees of the petitioner (p. 4, Rollo).

Respondent   Director   affirmed   said   Order   on   appeal.   In   dismissing   the   appeal,   however, respondent Director said that:

...   respondent's   (petitioner  herein,   reliance  on  the  petition with   the Supreme Court involving as it does the provisions of Article 244 of the Labor Code vis-a-vis the character of the hospital, which has been alleged as a non-profit medical foundation, has been rendered  moot   and   academic   by   virtue   of   the   amendatory   BP   #70,  which   allows employees of non-profit medical institutions to unionize.

Whatever doubt there may be on the right of the workers in a medical institution has been laid to rest by BP#70.

WHEREFORE, premises considered, the present appeal is hereby dismissed for lack of merit and the Order of the Med-Arbiter dated 17 April 1986 affirmed. ... (p. 19, Rollo)

Hence, this petition, raising the issue of whether or not respondent Director gravely abused his discretion in granting the petition for certification election, despite the pendency of a similar petition before the Supreme Court (G.R. No. 49771) which involves the same parties for the same cause.

The Petition is devoid of merit.

At the time private respondent filed its petition for certification election on February 13, 1986, Article 244 of the Labor Code was already amended by Batas Pambansa Bilang 70, to wit:

Art. 244. Coverage and employees' right to self-organization. — All persons employed in commercial,   industrial   and   charitable,   medical   or   educational institutions whether operating for profit or not,   shall   have   the   right   to   self-organizations   of   their   own choosing   for  purposes  of   collective  bargaining.  Ambulant   intermittent   and   itinerant workers, self-employed people, rural workers and those without any definite employers may   form   labor   organizations   for   the   purpose   of   enhancing   and   defending   their interests and for their mutual aid and protection. (underscoring supplied).

Under the aforequoted provision, there is no doubt that rank and file employees of non-profit medical institutions (as herein petitioner) are now permitted to form, organize or join labor unions  of   their   choice   for  purposes  of   collective  bargaining.   Since  private   respondent  had complied with the requisites provided by law for calling a certification election (p. 15, Rollo), it was incumbent upon respondent Director to conduct such certification election to ascertain the bargaining representative of petitioner's employees (Samahang Manggagawa Ng Pacific Mills, Inc. vs. Noriel, 134 SCRA 152).

As held in Quimpo v. Dela Victoria, 46 SCRA 139, in order that the pendency of another action between the same parties for the same cause may be availed of as a ground to dismiss a case, there must be, between the action under consideration and the other action: (1) Identity of 

parties, or at least such as representing the same interest in both actions; (2) Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) the Identity on the two preceding particulars should be such that any judgment which may be rendered on the other  action wig,   regardless  of  which party   is   successful,  amount   to res judicata in   the action under consideration.1avvphi1

In the instant case, any judgment which may be rendered in the petition for certiorari pending before the Supreme Court (G. R. No. L-49771) wig not constitute res judicata in the petition for certification   election   under   consideration,   for   while   in   the   former,   private   respondent questioned the constitutionality of Article 244 of the Labor Code before its amendment, in the latter, private respondent invokes the same article as already amended.

Petitioner, however, has pointed out that respondent Director should not have arrogated upon himself the power to declare the aforesaid petition for certiorari (G.R. No. L-49771) moot and academic, as the same is sub-judiceand only the Supreme Court can decide the matter. The Director cannot be faulted for he had to make a decision.

WHEREFORE, this petition is DISMISSED, and the decision appealed from is hereby AFFIRMED.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

Case No. 3

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.

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".

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; 12and 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 well-being 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

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

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.

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.

Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma and Aquino, JJ., concur.

 

 

 

Separate Opinions

 

FERNANDO, J, concurring:

The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the constitutional infirmities imputed to it was demonstrated in a manner wellnigh conclusive in the learned, scholarly, and comprehensive opinion so typical of the efforts of the ponente, Justice Zaldivar. Like the rest of my brethren, I concur fully. Considering moreover, the detailed attention paid to each and every objection raised as to its validity and the clarity and persuasiveness with which it was shown to be devoid of support in authoritative doctrines, it would appear that the last word has been written on this particular subject. Nonetheless, I deem it proper to submit this brief expression of my views on the transcendent character of religious freedom 1 and its primacy even as against the claims of protection to labor, 2 also one of the fundamental principles of the Constitution.

1. Religious freedom is identified with the liberty every individual possesses to worship or not a Supreme Being, and if a devotee of any sect, to act in accordance with its creed. Thus is constitutionally safeguarded, according to Justice Laurel, that "profession of faith to an active power that binds and elevates man to his Creator ...." 3 The choice of what a man wishes to believe in is his and his alone. That is a domain left untouched, where intrusion is not allowed, a citadel to which the law is denied entry, whatever be his thoughts or hopes. In that sphere, what he wills reigns supreme. The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational foundation.

No matter. There is no requirement as to its conformity to what has found acceptance. It suffices that for him such a concept holds undisputed sway. That is a recognition of man's freedom. That for him is one of the ways of self- realization. It would be to disregard the dignity that attaches to every human being to deprive him of such an attribute. The "fixed star on our constitutional constellation," to borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the highest, has it in his power to prescribe what shall be orthodox in matters of conscience — or to mundane affairs, for that matter.

Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm of belief and creed is infinite and limitless bounded only by one's imagination and thought. So is the freedom of belief, including religious belief, limitless and without bounds. One may believe in most anything, however strange, bizarre and unreasonable the same may appear to others, even heretical when weighed in the scales of orthodoxy or doctrinal standards."  5 There was this qualification though: "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. The Government steps in and either restrains said exercise or even prosecutes the one exercising it." 6 It was on that basis that the daily compulsory flag ceremony in accordance with a statute 7 was found free from the constitutional objection on the part of a religious sect, the Jehovah's Witnesses, whose members alleged that their participation would be offensive to their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette, 8 the American Supreme Court reached a contrary conclusion. Justice Jackson's eloquent opinion is, for this writer, highly persuasive. Thus: "The case is made difficult not because the principles of its decision are obscure but because the flag involved is our own. Nevertheless, we apply the limitations of the Constitution with no fear that freedom to be intellectually and spiritually diverse or even contrary will disintegrate the social organization. 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. We can have intellectual individualism and the rich cultural diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When they 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." 9

There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom in the forum of conscience even as against the command of the State itself: "Much has been said of the paramount duty to the state, a duty to be recognized, it is urged, even though it conflicts with convictions of duty to God. Undoubtedly that duty to the state exists within the domain of power, for government may enforce obedience to laws regardless of scruples. When one's belief collides with the power of the state, the latter is supreme within its sphere and submission or punishment follows. But, in the forum of conscience, duty to a moral power higher than the state has always been maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably be made by many of our conscientious and law-abiding citizens. The essence of religion is belief in a relation to God involving duties superior to those arising from any human relation." 10 The American Chief Justice spoke in dissent, it is true, but with him in agreement were three of the foremost jurists who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone.

2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted and entire. With such a cardinal postulate as the basis of our polity, it has a message that cannot be misread. Thus is intoned with a reverberating clang, to paraphrase Cardozo, a fundamental principle that drowns all weaker sounds. The labored effort to cast doubt on the validity of the statutory provision in question is far from persuasive. It is attended by futility. It is not for this Court, as I conceive of the judicial function, to restrict the scope of a preferred freedom.

3. There is, however, the question of whether such an exception possesses an implication that lessens the effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained. Such a view, on the surface, may not be lacking in plausibility, but upon closer analysis, it

cannot stand scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty. For the late Professor Howe a constitutionalist and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic sovereignty. So great is the respect for the autonomy accorded voluntary societies. 11 Such a right implies at the very least that one can determine for himself whether or not he should join or refrain from joining a labor organization, an institutional device for promoting the welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is why, as is unmistakably reflected in our decisions, the latest of which is Guijarno v. Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision then to further curtail its operation, is precisely to follow the dictates of sound public policy.

The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of constitutional tradition. That, for me, is the channel to follow.

 

 

Separate Opinions

FERNANDO, J, concurring:

The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the constitutional infirmities imputed to it was demonstrated in a manner wellnigh conclusive in the learned, scholarly, and comprehensive opinion so typical of the efforts of the ponente, Justice Zaldivar. Like the rest of my brethren, I concur fully. Considering moreover, the detailed attention paid to each and every objection raised as to its validity and the clarity and persuasiveness with which it was shown to be devoid of support in authoritative doctrines, it would appear that the last word has been written on this particular subject. Nonetheless, I deem it proper to submit this brief expression of my views on the transcendent character of religious freedom 1 and its primacy even as against the claims of protection to labor, 2 also one of the fundamental principles of the Constitution.

1. Religious freedom is identified with the liberty every individual possesses to worship or not a Supreme Being, and if a devotee of any sect, to act in accordance with its creed. Thus is constitutionally safeguarded, according to Justice Laurel, that "profession of faith to an active power that binds and elevates man to his Creator ...." 3 The choice of what a man wishes to believe in is his and his alone. That is a domain left untouched, where intrusion is not allowed, a citadel to which the law is denied entry, whatever be his thoughts or hopes. In that sphere, what he wills reigns supreme. The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational foundation. No matter. There is no requirement as to its conformity to what has found acceptance. It suffices that for him such a concept holds undisputed sway. That is a recognition of man's freedom. That for him is one of the ways of self- realization. It would be to disregard the dignity that attaches to every human being to deprive him of such an attribute. The "fixed star on our constitutional constellation," to borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the highest, has it in his power to prescribe what shall be orthodox in matters of conscience — or to mundane affairs, for that matter.

Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm of belief and creed is infinite and limitless bounded only by one's imagination and thought. So is the freedom of belief, including religious belief, limitless and without bounds. One may believe in most anything, however strange, bizarre and unreasonable the same may appear to others, even heretical when weighed in the scales of orthodoxy or doctrinal standards."  5 There was this qualification though: "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. The Government steps in and either restrains said exercise or even prosecutes the one exercising it." 6 It was on that basis that the daily compulsory flag

ceremony in accordance with a statute 7 was found free from the constitutional objection on the part of a religious sect, the Jehovah's Witnesses, whose members alleged that their participation would be offensive to their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette, 8 the American Supreme Court reached a contrary conclusion. Justice Jackson's eloquent opinion is, for this writer, highly persuasive. Thus: "The case is made difficult not because the principles of its decision are obscure but because the flag involved is our own. Nevertheless, we apply the limitations of the Constitution with no fear that freedom to be intellectually and spiritually diverse or even contrary will disintegrate the social organization. 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. We can have intellectual individualism and the rich cultural diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When they 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." 9

There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom in the forum of conscience even as against the command of the State itself: "Much has been said of the paramount duty to the state, a duty to be recognized, it is urged, even though it conflicts with convictions of duty to God. Undoubtedly that duty to the state exists within the domain of power, for government may enforce obedience to laws regardless of scruples. When one's belief collides with the power of the state, the latter is supreme within its sphere and submission or punishment follows. But, in the forum of conscience, duty to a moral power higher than the state has always been maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably be made by many of our conscientious and law-abiding citizens. The essence of religion is belief in a relation to God involving duties superior to those arising from any human relation." 10 The American Chief Justice spoke in dissent, it is true, but with him in agreement were three of the foremost jurists who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone.

2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted and entire. With such a cardinal postulate as the basis of our polity, it has a message that cannot be misread. Thus is intoned with a reverberating clang, to paraphrase Cardozo, a fundamental principle that drowns all weaker sounds. The labored effort to cast doubt on the validity of the statutory provision in question is far from persuasive. It is attended by futility. It is not for this Court, as I conceive of the judicial function, to restrict the scope of a preferred freedom.

3. There is, however, the question of whether such an exception possesses an implication that lessens the effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained. Such a view, on the surface, may not be lacking in plausibility, but upon closer analysis, it cannot stand scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty. For the late Professor Howe a constitutionalist and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic sovereignty. So great is the respect for the autonomy accorded voluntary societies. 11 Such a right implies at the very least that one can determine for himself whether or not he should join or refrain from joining a labor organization, an institutional device for promoting the welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is why, as is unmistakably reflected in our decisions, the latest of which is Guijarno v. Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision then to further curtail its operation, is precisely to follow the dictates of sound public policy.

The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of constitutional tradition. That, for me, is the channel to follow.

Case No. 4

G.R. No. 82914 June 20, 1988

KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027), petitioner, vs.THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND CANNING DIVISION UNIVERSAL ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW EMPLOYEES AND WORKERS UNITED LABOR ORGANIZATION, respondents.

Alar, Comia, Manalo and Associates for petitioner.

Danilo Bolos for respondent Robina Corporation.

R E S O L U T I O N

 

GRIÑO-AQUINO, J.:

The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027) hereinafter referred to as "TUPAS," seeks a review of the resolution dated January 27, 1988 (Annex D) of public respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations, dismissing its appeal from the Order dated November 17, 1987 (Annex C) of the Med-Arbiter Rasidali C. Abdullah ordering a certification election to be conducted among the regular daily paid rank and file employees/workers of Universal Robina Corporation-Meat and Canning Division to determine which of the contending unions:

a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or "TUPAS" for brevity);

b) Meat and Canning Division New Employees and Workers United Labor Organization (or "NEW ULO" for brevity);

c) No union.

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

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

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

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

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

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

TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW ULO were mostly members of the Iglesia ni Kristo sect which three (3) years previous refused to affiliate with any labor union. It also accused the company of using the NEW ULO to defeat TUPAS' bargaining rights (Annex B).

On November 17, 1987, the Med-Arbiter ordered the holding of a certification election within 20 days (Annex C).

TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it was able to negotiate a new 3-year CBA with ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990.

On January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D).

TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On April 30, 1988, it filed this petition alleging that the public respondent acted in excess of her jurisdiction and with grave abuse of discretion in affirming the Med-Arbiter's order for a certification election.

After deliberating on the petition and the documents annexed thereto, We find no merit in the Petition. The public respondent did not err in dismissing the petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision inVictoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union. The public respondent correctly observed that the "recognition of the tenets of the sect ... should not infringe on the basic right of self-organization granted by the constitution to workers, regardless of religious affiliation."

The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a timely petition for certification election on October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a "certification election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can freely choose their bargaining representative thru secret ballot." Since it has not been shown that this order is tainted with unfairness, this Court will not thwart the holding of a certification election (Associated Trade Unions [ATU] vs. Noriel, 88 SCRA 96).

WHEREFORE, the petition for certiorari is denied, with costs against the petitioner.

SO ORDERED.

Case No. 5

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-and-file employees, 3 and prescribed criminal sanctions for breach of the prohibition. 4

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.  9Arizala'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 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.

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

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.

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

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

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 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

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 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:

a) security guards;

b) government employees, including employees of government government-owned and/ or controlled corporations;

c) managerial employees; and

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

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 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

... 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 self-organization, 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 rank-and-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.

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:

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

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.

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 xxxAs held in the Adillo case, 55 the act of pre-reaping and pre-threshing 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 xxxThe 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 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 accused-appellants ACQUITTED of the charges against them, with costs de officio.

SO ORDERED.Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur. 

Case No 6EN BANC

[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.

D E C I S I O NMENDOZA, J.:

Petitioner is a union of supervisory employees.  It appears that on March 20, 1995 the union filed a petition for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc.  However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which provides:

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

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

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

For this reason, the petition was referred to the Court en banc.

The Issues in this Case

Two 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

_________________

Middle Management

_________________

First Line

Management

(also called Supervisor)

____________________

____________________

Operatives

Or Operating Employees

FIRST-LINE MANAGERS – The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management.  First-line managers direct operating employees only; they do not supervise other managers.  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.

MIDDLE MANAGERS – The term middle management can refer to more than one level in an organization.  Middle managers direct the activities of other managers and sometimes also those of operating employees.  Middle managers’ principal responsibilities are to direct the activities that implement their organizations’ policies and to balance the demands of their superiors with the capacities of their subordinates.  A plant manager in an electronics firm is an example of a middle manager.

TOP MANAGERS – Composed of a comparatively small group of executives, top management  is responsible for the overall management of the organization.  It establishes operating policies and guides the organization’s interactions with its environment.   Typical titles of top managers are “chief executive officer,” “president,” and “senior vice-president.”  Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest management classification.[2]

As can be seen from this description, a distinction 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 rank-and-file employees.

“Managerial employees” may therefore be said to fall into two distinct categories: the “managers” per se, who compose the former group described above, and the “supervisors” who form the latter group.  Whether they belong to the first or second category, managers, vis-à-vis employers, are, likewise, employees.[3]

The first question is whether route managers are managers are managerial employees or supervisors.

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

It appears that this question was the subject of two previous determinations by the Secretary of Labor and Employment, in accordance with which this case was decided by the med-arbiter.

In Case No. OS-MA-10318-91, entitled Workers’s Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found:

We examined carefully the pertinent job description of the subject employees and other documentary evidence on record vis-à-vis paragraph (m), Article 212 of the Labor Code, as amended, and we find that only those employees occupying the

position of route manager and accounting manager are managerial employees.  The rest i.e. quality control manager, yard/transport manager and warehouse operations manager are supervisory employees.

To qualify as managerial employee, there must be a clear showing of the exercise of managerial attributes under paragraph (m), Article 212 of the Labor Code as amended.  Designations or titles of positions are not controlling.  In the instant case, nothing on record will support the claim that the quality control manager, yard/transport manager and warehouse operations manager are vested with said attributes.  The warehouse operations manager, for example, merely assists the plant finance manager in planning, organizing, directing and controlling all activities relative to development and implementation of an effective management control information system at the sale offices.  The exercise of authority of the quality control manager, on the other hand, needs the concurrence of the manufacturing manager

As to the route managers and accounting manager, we are convinced that they are managerial employees.  Their job descriptions clearly reveal so.

On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92, entitled In Re:  Petition for Direct Certification and/or Certification Election-Route Managers/Supervisory Employees of Pepsi-Cola Products Phils. Inc., as follows:

The issue brought before us is not of first impression.  At one time, we had the occasion to rule upon the status of route manager in the same company vis a vis the issue as to whether or not it is supervisory employee or a managerial employee.  In the case of Workers Alliance Trade Unions (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

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

The requirement of a clearance to terminate employment was a creation of the Department of labor to carry out the Labor Code provisions on security of tenure

and termination of employment.  The proceeding subsequent to the filing of an application for clearance to terminate employment was outlined in Book V, Rule XIV of the Rules and Regulations Implementing the Labor Code.  The fact that said rule allowed a procedure for the approval of the clearance with or without the opposition of the employee concerned (Secs. 7 & 8), demonstrates the non-litigious and summary nature of the proceeding.  The clearance requirement was therefore necessary only as an expeditious shield against arbitrary dismissal without the knowledge and supervision of the Department of Labor.  Hence, a duly approved clearance implied that the dismissal was legal or for cause (Sec. 2).[7]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:

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

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

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

The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by substantial evidence.    The 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

1.0  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.

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.

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.

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

The Route Manager is accountable for the following:

2.1  Route Sales Team Development

2.1.1     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.

2.1.2     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

From       : REGGIE M. SANTOS

Subj        : SALARY INCREASE

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 to deliver 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:

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 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 self-organization has arisen with respect to first-level managers or supervisors, as shown by a review of the course of labor legislation in this country. 

Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws

Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the Industrial Peace Act (R.A. No. 875).

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: 

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 self-organization was upheld as a general proposition, thus:

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

. . .  The basic question is whether the managerial personnel can organize.  What respondent Company failed to take into account is that the right to self-organization is not merely a statutory creation.  It is fortified by our Constitution.  All are free to exercise such right unless their purpose is contrary to law.  Certainly it would be to attach unorthodoxy to, not to say an emasculation of, the concept of law if managers as such were precluded from organizing.  Having done so and having been duly registered, as did occur in this case, their union is entitled to all the rights under Republic Act No.  875.  Considering what is denominated as unfair labor practice under Section 4 of such Act and the facts set forth in our decision, there can be only one answer to the objection raised that no unfair labor practice could be committed by respondent Company insofar as managerial personnel is concerned.  It is, as is quite obvious, in the negative.[20]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

Payroll Position Title

Assistant to Mgr. - National Acct. Sales

Jr. Sales Engineer

Retail Development Asst.

Staff Asst. - 0 Marketing

Sales Supervisor

Supervisory Assistant

Jr. Supervisory Assistant

Credit Assistant

Lab. Supvr. - Pandacan

Jr. Sales Engineer B

Operations Assistant B

Field Engineer

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

Asst. Dist. Accountant B

Sr. Opers. Supervisor

Jr. Sales Engineer A

Asst. Bulk Ter. Supt.

Sr. Opers. Supvr.

Credit Supervisor A

Asst. Stores Supvr. A

Ref. Supervisory Draftsman

Refinery Shift Supvr. B

Asst. Supvr. A - Operations (Refinery)

Refinery Shift Supvr. B

Asst. Lab. Supvr. A (Refinery)

St. Process Engineer B (Refinery)

Asst. Supvr. A - Maintenance (Refinery)

Asst. Supvr. B - Maintenance (Refinery)

Supervisory Accountant (Refinery)

Communications Supervisor (Refinery)

Finally, also deemed included are all other employees excluded from the rank and file unions but not classified as managerial or otherwise excludable by law or applicable judicial precedents.

Right of Self-Organization of Managerial Employees under the Labor Code

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

ART.  212.  Definitions . . . .

(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank and file employees for purposes of this Book.[22]22

The definition shows that it is actually a combination of the commonly understood definitions of both groups of managerial employees, grammatically joined by the phrase "and/or."

This general definition was perhaps legally necessary at that time for two reasons. First, the 1974 Code denied supervisors their right to self-organize as theretofore guaranteed to them by the Industrial Peace Act.  Second, it stood the dictum in the Caltex case on its head by prohibiting all types of managers from forming unions. The explicit general prohibition was contained in the then Art. 246 of the Labor Code.

The practical effect of this synthesis of legal concepts was made apparent in the Omnibus Rules Implementing the Labor Code which the Department of Labor promulgated on January 19, 1975.  Book V, Rule II,  §11 of the Rules provided:

Supervisory unions and unions of security guards to cease operation. - All existing supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their registration certificates shall be deemed automatically 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.  

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.

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

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

THE PRESIDENT.  What does the Committee say?

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

I want to avoid also the possibility of having this interpreted as applicable only to the employed.

MR. DE LOS REYES.  Will the proponent accept an amendment to the amendment, Madam President?

MR. LERUM.     Yes, as long as it will carry the idea that the right of the employees in the private sector is recognized. [24]

Lerum thus anchored his proposal on the fact that (1) government employees, supervisory employees, and security guards, who had the right to organize under the Industrial Peace Act,  had been denied this right by the Labor Code, and  (2) there was a need to reinstate the right of these employees.   In consonance with his objective to reinstate the right of government, security, and supervisory employees  to organize, Lerum then made his proposal:

MR. LERUM.  Mr. Presiding Officer, after a consultation with several Members of this Commission, my amendment will now read as follows: "The right of the people INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS to form associations, unions, or societies for purposes not contrary to law shall not be abridged.  In proposing that amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished, which read:

ART.  245.  Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization.

ART.  246.  Managerial employees are not eligible to join, assist, and form any labor organization.

THE PRESIDING OFFICER (Mr. Bengzon).  What does the Committee say?

FR. BERNAS.  The Committee accepts.

THE PRESIDING OFFICER.  (Mr. Bengzon)  The Committee has accepted the amendment, as amended.

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

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

employees or majority [of] employees will still be excluded, and that is the purpose of this amendment"?[27]

It would seem that Commissioner Lerum simply meant to restore the right of supervisory employees to organize.  For even though he spoke of the need to "abolish" Art. 246 of the Labor Code which, as already stated, prohibited "managerial employees" in general from forming unions, the fact was that in explaining his proposal, he repeatedly referred to "supervisory employees" whose right  under the Industrial Peace Act to organize had been taken away by Art. 246.   It is noteworthy that Commissioner Lerum never referred to the then definition of "managerial employees" in Art. 212(m) of the Labor Code which put together, under the broad phrase "managerial employees,"  top and middle managers and supervisors.  Instead, his repeated use of the term "supervisory employees," when such term then was no longer in the statute books, suggests a frame of mind that remained grounded in the language of the Industrial Peace Act.  

Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all managerial employees to organize, despite the fact that the Industrial Peace Act did not expressly provide for the right of top and middle managers to organize.  If Lerum was aware of the Caltex dictum, then his insistence on the use of the term "supervisory employees" could only mean that he was excluding other managerial employees from his proposal.  If, on the other hand, he was not aware of the Caltex statement sustaining the right to organize to top and middle managers, then the more should his repeated use of the term "supervisory employees" be taken at face value,  as  it had been defined in the then Industrial Peace Act. 

At all events, that the rest of the Commissioners understood his proposal to refer solely to supervisors and not to other managerial employees is clear from the following account of Commissioner Joaquin G. Bernas, who writes:  

In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R. Lerum explained that the modification included three categories of workers:  (1) government employees, (2) supervisory employees, and (3) security guards. Lerum made of record the explicit intent to repeal provisions of P.D. 442, the Labor Code. The provisions referred to were:

ART.  245.  Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization.

ART.  246.  Managerial employees are not eligible to join, assist, and form any labor organization.[28]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.Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez, and Purisima,

JJ., concur.Davide, Melo, Puno, Vitug, Kapunan, Panganiban, and Quisumbing, JJ., has

separate, concurring and dissenting opinion.

Case No. 7

G.R. No. 93468 December 29, 1994

NATIONAL ASSOCIATION OF TRADE UNIONS (NATU)-REPUBLIC PLANTERS BANK SUPERVISORS CHAPTER,petitioner, vs.HON. RUBEN D. TORRES, SECRETARY OF LABOR AND EMPLOYMENT and REPUBLIC PLANTERS BANK,respondents.

Filemon G. Tercero for petitioner.

The Government Corporate Counsel for Republic Planters Bank.

 

BELLOSILLO, J.:

NATIONAL ASSOCIATION OF TRADE UNIONS (NATU)-REPUBLIC PLANTERS BANK SUPERVISORS CHAPTER seeks nullification of the decision of public respondent Secretary of Labor dated 23 March 1990, which modified the order of Med-Arbiter Manases T. Cruz dated 17 August 1989 as well as his order dated 20 April 1990 denying reconsideration.

On 17 March 1989, NATU filed a petition for certification election to determine the exclusive bargaining representative of respondent Bank's employees occupying supervisory positions. On 24 April 1989, the Bank moved to dismiss the petition on the ground that the supposed supervisory employees were actually managerial and/or confidential employees thus ineligible to join, assist or form a union, and that the petition lacked the 20% signatory requirement under the Labor Code.

On 17 August 1989, Med-Arbiter Manases T. Cruz granted the petition thus —

WHEREFORE, . . . let a certification election be ordered conducted among all the regular employees of the Republic Planters Bank occupying supervisory positions or the equivalent within 20 days from receipt of a copy of this Order. The choice shall be: (1) National Association of Trade Unions (NATU)-Republic Planters Bank Supervisors Chapter; and (2) No Union.

The payroll three months prior to the filing of this petition shall be utilized in determining the list of eligible voters . . . . 1

Respondent Bank appealed the order to the Secretary of Labor on the main ground that several of the employees sought to be included in the certification election, particularly the Department Managers, Branch Managers/OICs, Cashiers and Controllers were managerial and/or confidential employees and thus ineligible to join, assist or form a union. It presented annexes detailing the job description and duties of the positions in question and affidavits of certain employees. It also invoked provisions of the General Banking Act and the Central Bank Act to show the duties and responsibilities of the bank and its branches.

On 23 March 1990, public respondent issued a decision partially granting the appeal, which is now being challenged before us —

WHEREFORE, . . . the appeal is hereby partially granted. Accordingly, the Order dated 17 August 1989 is modified to the extent that Department Managers, Assistant Managers, Branch Managers, Cashiers and Controllers are declared managerial employees. Perforce, they cannot join the union of supervisors such as Division Chiefs, Accounts Officers, Staff Assistants and OIC's (sic) unless the latter are regular managerial employees . . . . 2

NATU filed a motion for reconsideration but the same was denied on 20 April 1990.  3 Hence this recourse assailing public respondent for rendering the decision of 23 March 1990 and the order of 20 April 1990 both with grave abuse of discretion.

The crucial issue presented for our resolution is whether the Department Managers, Assistant Managers, Branch Managers/OICs, Cashiers and Controllers of respondent Bank are managerial and/or confidential employees hence ineligible to join or assist the union of petitioner.

NATU submits that an analysis of the decision of public respondent readily yields certain flaws that result in erroneous conclusions. Firstly, a branch does not enjoy relative autonomy precisely because it is treated as one unit with the head office and has to comply with uniform policies and guidelines set by the bank itself. It would be absurd if each branch of a particular bank would be

adopting and implementing different policies covering multifarious banking transactions. Moreover, respondent Bank's own evidence clearly shows that policies and guidelines covering the various branches are set by the head office. Secondly, there is absolutely no evidence showing that bank policies are laid down through the collective action of the Branch Manager, the Cashier and the Controller. Thirdly, the organizational setup where the Branch Manager exercises control over branch operations, the Controller controls the Accounting Division, and the Cashier controls the Cash Division, is nothing but a proper delineation of duties and responsibilities. This delineation is a Central Bank prescribed internal control measure intended to objectively establish responsibilities among the officers to easily pinpoint culpability in case of error. The "dual control" and "joint custody" aspects mentioned in the decision of public respondent are likewise internal control measures prescribed by the Central Bank.

Neither is there evidence showing that subject employees are vested with powers or prerogatives to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. The bare allegations in the affidavits of respondent Bank's Executive Assistant to the President  4 and the Senior Manager of the Human Resource Management Department 5 that those powers and prerogatives are inherent in subject positions are self-serving. Their claim cannot be made to prevail upon the actual duties and responsibilities of subject employees.

The other evidence of respondent Bank which purports to show that subject employees exercise managerial functions even belies such claim. Insofar as Department Managers and Assistant Managers are concerned, there is absolutely no reason mentioned in the decision why they are managerial employees. Not even respondent Bank in its appeal questioned the inclusion of Assistant Managers among the qualified petitioning employees. Public respondent has deviated from the real issue in this case, which is, the determination of whether subject employees are managerial employees within the contemplation of the Labor Code, as amended by RA 6715; instead, he merely concentrated on the nature, conduct and management of banks conformably with the General Banking Act and the Central Bank Act.

Petitioner concludes that subject employees are not managerial employees but supervisors. Even assuming that they are confidential employees, there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union.

On the other hand, respondent Bank maintains that the Department Managers, Branch Managers, Cashiers and Controllers are inherently possessed of the powers enumerated in Art. 212, par. (m), of the Labor Code. It relies heavily on the affidavits of its Executive Assistant to the President and Senior Manager of the Human Resource Department. The Branch Managers, Cashiers and Controllers are vested not only with policy-making powers necessary to run the affairs of the branch, given the independence and relative autonomy which it enjoys in the pursuit of its goals and objectives, but also with the concomitant disciplinary authority over the employees.

The Solicitor General argues that NATU loses sight of the fact that by virtue of the appeal of respondent Bank, the whole case is thrown open for consideration by public respondent. Even errors not assigned in the appeal, such as the exclusion by the Med-Arbiter of Assistant Managers from the managerial employees category, is within his discretion to consider as it is closely related to the errors properly assigned. The fact that Department Managers are managerial employees is borne out by the evidence of petitioner itself. Furthermore, while it assails public respondent's finding that subject employees are managerial employees, petitioner never questioned the fact that said officers also occupy confidential positions and thus remain prohibited from forming or joining any labor organization.

Respondent Bank has no legal personality to move for the dismissal of the petition for certification election on the ground that its supervisory employees are in reality managerial employees. An employer has no standing to question the process since this is the sole concern of the workers. The only exception is where the employer itself has to file the petition pursuant to Art. 258 of the Labor Code because of a request to bargain collectively. 6

Public respondent, invoking RA 6715 and the inherent functions of Department Managers, Assistant Managers, Branch Managers, Cashiers and Controllers, held that these officers properly fall within the definition of managerial employees. The ratiocination in his Decision of 23 March 1990  7 is that —

Republic Act No. 6715, otherwise known as the Herrera-Veloso Law, restored the right of supervisors to form their own unions while maintaining the proscription on the right to self-organization of managerial employees. Accordingly, the Labor Code, as amended, distinguishes managerial, supervisory and rank-and-file employees thus:

Art. 212 (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 managerial authority is not routinary 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 (emphasis supplied).

At first glance, pursuant to the above-definitions and based on their job descriptions as guideposts, there would seem to be no difficulty in distinguishing a managerial employee from that of a supervisor, or from that of a mere rank-and-file employee. Yet, this task takes on a different dimension when applied to banks, particularly the branches thereof. This is so because unlike ordinary corporations, a bank's organizational operation is governed and regulated by the General Banking Act and the Central Bank Act, both special laws . . . .

As pointed out by the respondent, in the banking industry, a branch is the microcosm of a banking institution, uniquely autonomous andself-governing.

This relative autonomy of a branch finds legal basis in Section 27 of the General Banking Act, as amended, thus:

. . . . The bank shall be responsible for all business conducted in such branches to the same extent and in the same manner as though such business had all been conducted in the head office.

For the purpose of this Act, a bank and its branches shall be treated as a unit (emphasis supplied).

Conformably with the above, bank policies are laid down and/or executed through the collective action of the Branch Manager, Cashier and Controller at the branch level. The Branch Manager exercises over-all control and supervision over branch operation being on the top of the branch's pyramid structure. However, both the controller and the cashier who are called in banking parlance as "Financial

Managers" due to their fiscal functions are given such a share and sphere of responsibility in the operations of the bank. The cashier controls and supervises the cash division while the controller that of the Accounting Division. Likewise, their assigned task is of great significance, without which a bank or branch for that matter cannot operate or function.

Through the collective action of these three branch officers operational transactions are carried out like: The two (2)-signature requirement of the manager, on one hand, and that of the controller or cashier on the other hand as required in bank's issuances and releases. This is the so-called "dual control" through check-and-balance as prescribed by the Central Bank, per Section 1166.6, Book I, Manual of Regulations for Banks and Financial Intermediaries. Another is in the joint custody of the branch's cash in vault, accountable forms, collaterals, documents of title, deposit, ledgers and others, among the branch manager and at least two (2) officers of the branch as required under Section 1166.6 of the Manual of Regulations for Banks and Other Financial Intermediaries.

This structural set-up creates a triad of managerial authority among the branch manager, cashier and controller. Hence, no officer of the bank ". . . have (sic) complete authority and responsibility for handling all phases of any transaction from beginning to end without some control or balance from some other part of the organization" (Section 1166.3, Division of Duties and Responsibilities, Ibid).This aspect in the banking system which calls for the division of duties and responsibilities is a clear manifestation of managerial power and authority. No operational transaction at branch level is carried out by the singular act of the Branch Manager but rather through the collective act of the Branch Manager, Cashier/Controller (emphasis supplied).

Noteworthy is the "on call client" set up in banks. Under this scheme, the branch manager is tasked with the responsibility of business development and marketing of the bank's services which place him on client call. During such usual physical absences from the branch, the cashier assumes the reins of branch control and administration. On those occasions, the "dual control system" is clearly manifest in the transactions and operations of the branch bank as it will then require the necessary joint action of the controller and the cashier.

The grave abuse of discretion committed by public respondent is at once apparent. Art. 212, par. (m), of the Labor Code is explicit. A managerial employee is (a) one who is vested with powers or prerogatives to lay down and execute management policies, or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees; or (b) one who is vested with both powers or prerogatives. A supervisory employee is different from a managerial employee in the sense that the supervisory employee, in the interest of the employer, effectively recommends such managerial actions, if the exercise of such managerial authority is not routinary in nature but requires the use of independent judgment.

Ranged against these definitions and after a thorough examination of the evidence submitted by both parties, we arrive at a contrary conclusion. Branch Managers, Cashiers and Controllers of respondent Bank are not managerial employees but supervisory employees. The finding of public respondent that bank policies are laid down and/or executed through the collective action of these employees is simply erroneous. His discussion on the division of their duties and responsibilities does not logically lead to the conclusion that they are managerial employees, as the term is defined in Art. 212, par. (m).

Among the general duties and responsibilities of a Branch Manager is "[t]o discharge his duties and authority with a high sense of responsibility and integrity and shall at all times be guided by prudence like a good father of the family, and sound judgment in accordance with and within the limitations of the policy/policies promulgated by the Board of Directors and implemented by the Management until suspended, superseded, revoked or modified" (par. 5, emphasis supplied).  8 Similarly, the job summary of a Controller states: "Supervises the Accounting Unit of the branch;sees to the compliance by the Branch with established procedures, policies, rules and regulations of the Bank and external supervising authorities; sees to the strict implementation of control procedures (emphasis supplied). 9 The job description of a Cashier does not mention any authority on his part to lay down policies, either. 10 On the basis of the foregoing evidence, it is clear that subject employees do not participate in policy-making but are given approved and established policies to execute and standard practices to observe,  11 leaving little or no discretion at all whether to implement said policies or not.12 It is the nature of the employee's functions, and not the nomenclature or title given to his job, which determines whether he has rank-and-file, supervisory or managerial status. 13

Moreover, the bare statement in the affidavit of the Executive Assistant to the President of respondent Bank that the Branch Managers, Cashiers and Controllers "formulate and implement the plans, policies and marketing strategies of the branch towards the successful accomplishment of its profit targets and objectives," 14 is contradicted by the following evidence submitted by respondent Bank itself:

(a) Memorandum issued by respondent Bank's Assistant Vice President to all Regional Managers and Branch Managers giving them temporary discretionary authority to grant additional interest over the prescribed board rates for both short-term and long-term CTDs subject, however, to specific limitations and guidelines set forth in the same memorandum; 15

(b) Memorandum issued by respondent Bank's Executive Vice President to all Regional Managers and Branch Officers regarding the policy and guidelines on drawing against uncollected deposits (DAUD); 16

(c) Memorandum issued by respondent Bank's President to all Field Offices regarding the guidelines on domestic bills purchased(DBP); 17 and

(d) Memorandum issued by the same officer to all Branch Managers regarding lending authority at the branch level and the terms and conditions thereof.  18

As a consequence, the affidavit of the Executive Assistant cannot be given any weight at all.

Neither do the Branch Managers, Cashiers and Controllers have the power to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. The Senior Manager of the Human Resource Management Department of respondent Bank, in her affidavit, stated that "the power to hire, fire, suspend, transfer, assign or otherwise impose discipline among subordinates within their respective jurisdictions is lodged with the heads of the various departments, the branch managers and officers-in-charge, the branch cashiers and the branch controllers. Inherent as it is in the aforementioned positions, the authority to hire, fire, suspend, transfer, assign or otherwise discipline employees within their respective domains was deemed unnecessary to be incorporated in their individual job descriptions; By way of illustration, on August 24, 1989, Mr. Renato A. Tuates, the Officer-in-Charge/Branch Cashier of the Bank's Dumaguete Branch, placed under preventive suspension and thereafter terminated the teller of the same branch . . . . Likewise, on February 22, 1989, Mr. Francis D. Robite, Sr., the Officer-in-Charge of International Department, assigned the

cable assistant of the International Department as the concurrent FCDU Accountable Forms Custodian." 19

However, a close scrutiny of the memorandum of Mr. Tuates reveals that he does not have said managerial power because as plainly stated therein, it was issued "upon instruction from Head Office." 20 With regard to the memorandum of Mr. Robite, Sr., it appears that the power he exercised was merely in an isolated instance, taking into account the other evidence submitted by respondent Bank itself showing lack of said power by other Branch Managers/OICs:

(a) Memorandum from the Branch Manager for theAVP-Manpower Management Department expressing the opinion that a certain employee, due to habitual absenteeism and tardiness, must be penalized in accordance with respondent Bank's Code of Discipline; and

(b) Memorandum from a Branch OIC for the Assistant Vice President recommending a certain employee's promotional adjustment to the present position he occupies.

Clearly, those officials or employees possess only recommendatory powers subject to evaluation, review and final action by higher officials. Therefore, the foregoing affidavit cannot bolster the stand of respondent Bank.

The positions of Department Managers and Assistant Managers were also declared by public respondent as managerial, without providing any basis therefor. Petitioner asserts that the position of Assistant Manager was not even included in the appeal filed by respondent Bank. While we agree with the Office of the Solicitor General that it is within the discretion of public respondent to consider an unassigned issue that is closely related to an issue properly assigned, still, public respondent's error lies in the fact that his finding has no leg to stand on. Anyway, inasmuch as the entire records are before us, now is the opportunity to discuss this issue.

We analyzed the evidence submitted by respondent Bank in support of its claim that Department Managers are managerial employees 21 and concluded that they are not. Like Branch Managers, Cashiers and Controllers, Department Managers do not possess the power to lay down policies nor to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. They occupy supervisory positions, charged with the duty among others to "recommend proposals to improve and streamline operations." 22 With respect to Assistant Managers, there is absolutely no evidence submitted to substantiate public respondent's finding that they are managerial employees; understandably so, because this position is not included in the appeal of respondent Bank.

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 branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, 23 pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, 24 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 employer's property. 25 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. This doctrine states that what is implied in a statute is as much a part thereof as that which is expressed, as elucidated in several cases 26 the latest of which is Chua v. Civil Service Commission27 where we said:

No statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation. What is thought, at the time of enactment, to be an all-embracing legislation may be

inadequate to provide for the unfolding events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of statutory construction used to fill in the gap is the doctrine of necessary implication . . . . Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitatelegis . . . .

In applying the doctrine of necessary implication, we took into consideration the rationale behind the disqualification of managerial employees expressed in Bulletin Publishing Corporation v. Sanchez, 28 thus: ". . . if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership." Stated differently, in the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interests 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. 29 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. 30 It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. Along the same line of reasoning we held in Golden Farms, Inc. v. Ferrer-Calleja 31 reiterated in Philips Industrial Development, Inc. v. NLRC, 32that "confidential employees such as accounting personnel, radio and telegraph operators who, having access to confidential information, may become the source of undue advantage. Said employee(s) may act as spy or spies of either party to a collective bargaining agreement."

In fine, only the Branch Managers/OICs, Cashiers and Controllers of respondent Bank, being confidential employees, are disqualified from joining or assisting petitioner Union, or joining, assisting or forming any other labor organization. But this ruling should be understood to apply only to the present case based on the evidence of the parties, as well as to those similarly situated. It should not be understood in any way to apply to banks in general.

WHEREFORE, the petition is partially GRANTED. The decision of public respondent Secretary of Labor dated 23 March 1990 and his order dated 20 April 1990 are MODIFIED, hereby declaring that only the Branch Managers/OICs, Cashiers and Controllers of respondent Republic Planters Bank are ineligible to join or assist petitioner National Association of Trade Unions (NATU)-Republic Planters Bank Supervisors Chapter, or join, assist or form any other labor organization.

SO ORDERED.

Davide, Jr., Quiason and Kapunan, JJ., concur.

 

 

 

Separate Opinions

 

PADILLA, J., concurring and dissenting:

I concur in the majority opinion's conclusion that respondent Bank's Branch Managers/OICs, Cashiers and Controllers, being confidential employees of the Bank, are disqualified from joining or assisting petitioner labor union or joining, assisting or forming any other labor organization, including a supervisor's union.

However, I dissent from its conclusion that respondent Bank's Department Managers and Department Assistant Managers are not disqualified from joining a labor union including a supervisors' union. My years of experience in the banking industry (perhaps irrelevant to this case) have shown that positions of such Department Heads (Managers) are as confidential, if not more, than the position of Branch Managers. In fact, most of such Department Heads are Vice-Presidents of the Bank, which underscores their status both as managerial employees and confidential personnel of the Bank. It would be incongruous for a Department Manager who, as already stated, is usually a Vice-President, to be a member of the same labor organization as his messenger or supervisory account executives. It would be even more untenable and dangerous for a Department Manager who usually is a Vice-President, being a member of a labor union, to be designated a union representative for purposes of collective bargaining with the management of which he is a part. I think the public respondent is correct in disqualifying from membership in a labor union of supervisors, those who are Department Managers and Assistant Managers.

I, therefore, vote for the affirmance in toto of public respondent's decision of 23 March 1990 and order of 20 April 1990.

 

# Separate Opinions

 

PADILLA, J., concurring and dissenting:

I concur in the majority opinion's conclusion that respondent Bank's Branch Managers/OICs, Cashiers and Controllers, being confidential employees of the Bank, are disqualified from joining or assisting petitioner labor union or joining, assisting or forming any other labor organization, including a supervisor's union.

However, I dissent from its conclusion that respondent Bank's Department Managers and Department Assistant Managers are not disqualified from joining a labor union including a supervisors' union. My years of experience in the banking industry (perhaps irrelevant to this case) have shown that positions of such Department Heads (Managers) are as confidential, if not more, than the position of Branch Managers. In fact, most of such Department Heads are Vice-Presidents of the Bank, which underscores their status both as managerial employees and confidential personnel of the Bank. It would be incongruous for a Department Manager who, as already stated, is usually a Vice-President, to be a member of the same labor organization as his messenger or supervisory account executives. It would be even more untenable and dangerous for a Department Manager who usually is a Vice-President, being a member of a labor union, to be designated a union

representative for purposes of collective bargaining with the management of which he is a part. I think the public respondent is correct in disqualifying from membership in a labor union of supervisors, those who are Department Managers and Assistant Managers.

I, therefore, vote for the affirmance in toto of public respondent's decision of 23 March 1990 and order of 20 April 1990.

FIRST DIVISION

[G.R. No. 108855.  February 28, 1996]

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

SYLLABUS1.     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 petitioner’s allegations, the Union strongly condemned the layoffs and threatened mass action if the Secretary of Labor fails to timely intervene: x x x 3. This unilateral action of management is a blatant violation of the injunction of this Office against committing acts which would exacerbate the dispute.  Unless such act is enjoined the Union will be compelled to resort to its legal right to mass actions and concerted activities to protest and stop the said management action.  This mass layoff is clearly one which would result in a very serious dispute unless this Office swiftly intervenes. x x x Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the subject layoffs.  As a result, motions and oppositions were filed diverting the parties’ attention, delaying resolution of the bargaining deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict.

2.     LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EXERCISE OF MANAGEMENT PREROGATIVES; NOT ABSOLUTE; SUBJECT TO EXCEPTIONS IMPOSED BY LAW. - This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate business decisions of the employer.  However, this privilege is not absolute but subject to limitations imposed by law. In PAL vs. NLRC, (225 SCRA 301 [1993]), we issued this reminder: ... the exercise of management prerogatives was never considered boundless.  Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that management’s 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 Metrolab’s 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. Metrolab’s management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and tempered by the limitations set by law, taking into account its special character and the particular circumstances in the case at bench.

4.     ID.; LABOR RELATIONS; INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN, FORM AND ASSIST ANY LABOR ORGANIZATION; PROHIBITION EXTENDED TO CONFIDENTIAL EMPLOYEES. - Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records.

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

APPEARANCES OF COUNSELBautista Picazo Buyco Tan & Fider for petitioner.The Solicitor General for public respondent.Perfecto V. Fernandez, Jose P. Fernandez & Cristobal P. Fernandez for Metro Drug Corporation.

D E C I S I O NKAPUNAN, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution and Omnibus Resolution of the Secretary of Labor and

Employment dated 14 April 1992 and 25 January 1993, respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-9 1; NCMB-NCR-NS-09-678-91) on grounds that these were issued with grave abuse of discretion and in excess of jurisdiction.

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

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

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

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

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

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

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

SO ORDERED.[1] (Italics ours.)

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

Thereafter, the Union filed a motion for reconsideration.

On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab laid off 94 of its rank and file employees.

On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the mass layoff, alleging that such act violated the prohibition against committing acts that would exacerbate the dispute as specifically directed in the assumption order.[2]

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

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

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

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

SO RESOLVED.[4]

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

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

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

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

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

        xxx                                        xxx                                        xxx.

1. MII’s 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. MII’s motion for reconsideration with respect to the consequences of the second wave of layoff affecting 73 employees, to the extent of assailing our ruling that such layoff tended to exacerbate the dispute, is hereby denied.  But inasmuch as the legality of the layoff was not submitted for our resolution and no evidence had been adduced upon which a categorical finding thereon can be based, the same is hereby referred to the NLRC for its appropriate action.

Finally, all prohibitory injunctions issued as a result of our assumption of jurisdiction over this dispute are hereby lifted.

SO RESOLVED.[7]

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

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

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

In its petition, Metrolab assigns the following errors:

A

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

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 Secretary’s 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 employer’s right to manage his business and ensure its viability.

We cannot give credence to Metrolab’s 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 management’s prerogatives must be without abuse of discretion....

        xxx                                         xxx                                         xxx

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

        xxx                                         xxx                                         xxx.

The case at bench constitutes one of the exceptions.  The Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest.  The disputed

injunction is subsumed under this special grant of authority.  Art. 263 (g) of the Labor Code specifically provides that:

        xxx                                        xxx                                        xxx

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

        xxx                                        xxx                                        xxx.

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

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

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

         xxx                                       xxx                                        xxx.

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

        xxx                                        xxx                                        xxx.

Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no untoward incident occurred after the layoffs were implemented.  There were no work disruptions or stoppages and no mass actions were threatened or

undertaken.  Instead, petitioner asserts, the affected employees calmly accepted their fate “as this was a matter which they had been previously advised would be inevitable.”[12]

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

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

The Secretary of Labor ruled, thus:

        xxx                                        xxx                                        xxx.

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

        xxx                                        xxx                                        xxx.

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

        xxx                                        xxx                                        xxx.

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

        xxx                                        xxx                                        xxx.

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

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

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

        xxx                                        xxx                                        xxx.

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

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

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

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

        xxx                                        xxx                                        xxx.

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

        xxx                                        xxx                                        xxx.

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

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

Here, there is no circumstance at all from which we can infer an intention from MII not to sever the employment relationship permanently.  If there was such an intention, MII could have made it very clear in the notices of layoff. But as it were, the notices are couched in a language so uncertain that the only conclusion possible is the permanent termination, not the continuation, of the employment relationship.

MII also seeks to excuse itself from compliance with the 30-day notice with a tautology.  While insisting that there is really no best time to announce a bad news, (sic) it also claims that it broke the bad news only on 27 January 1992 because had it complied with the 30-day notice, it could have broken the bad news on 02 January 1992, the first working day of the year.  If there is really no best time to announce a bad news (sic), it wouldn’t have mattered if the same was announced at the first working day of the year.  That way, MII could have at least complied with the requirement of the law.[17]

The second issue raised by petitioner merits our consideration.

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

        xxx                                        xxx                                        xxx.

Appropriateness of the bargaining unit.

        xxx                                        xxx                                        xxx.

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

These aside, we reconsider our denial of the modifications which the Union proposes to introduce on the close shop provision.  While we note that the provision as presently worded has served’ the relationship of the parties well under previous

CBA’s, the shift in constitutional policy toward expanding the right of all workers to self-organization should now be formally recognized by the parties, subject to the following exclusions only:

1.        Managerial employees; and

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

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

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

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

On the other hand, Attachment I provides:

Exclusion from the Scope of the Close Shop Provision

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

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

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

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

4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at Head Office, Accounting Department at Head Office, and Budget Staff, who

because of the nature of their duties and responsibilities need not join the Association as a condition for their employment.

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

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

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

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

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

        xxx                                        xxx                                        xxx

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

Metrolab, however, maintains that executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager, Product Development

Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production Manager, who are all members of the company’s 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 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.  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 branch’s 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 employer’s property.  While Art. 245 of the Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of necessary, implication, confidential employees are similarly disqualified. . . .

        xxx                                        xxx                                        xxx.

. . .(I)n the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interest are well protected.  The employer is not assured of such protection if these employees themselves are union members.  Collective bargaining in such a situation can become one-sided.  It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision.  If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers.  Moreover, unionization of confidential employees for the purpose

of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act “in the interest of the employers.  It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. . . .

        xxx                                        xxx                                        xxx.

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

        xxx                                        xxx                                        xxx.

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

        xxx                                        xxx                                        xxx.

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

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

        xxx                                        xxx                                        xxx.

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

Neither would there be a danger of espionage since the confidential employees would not have any conflict of interest, not being members of the Union.  In any case, there is always the danger that any employee would leak management secrets to the Union out of sympathy for his fellow rank and filer even if he were not a member of the union nor the bargaining unit.Confidential employees are rank and file employees and they, like all the other rank and file employees, should be granted the benefits of the Collective Bargaining Agreement.  There is no valid basis for discriminating against them. The mandate of the Constitution and the Labor Code, primarily of protection to Labor, compels such conclusion.[24]

        xxx                                        xxx                                        xxx.The Union’s 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 Metrolab’s 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 Metrolab’s General Manager and the executive secretaries of the members of its Management Committee are excluded from the bargaining unit of petitioner’s rank and file employees.

SO ORDERED.

Case No 9

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.

D E C I S I O NROMERO, 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-Arbiter’s error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature.

On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent company’s Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit.

Upon petitioner-union’s motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis.

On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings.

On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC[2] case.  Said Order reads in part:

“x x x Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining.

In this case, S3 and S4 and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above court’s ruling.  Consequently, they are not allowed to participate in the certification election.

WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could participate in the certification election.” [3]

Hence this petition.

For resolution in this case are the following issues:1.  Whether Supervisory employees 3 and 4 and the exempt employees of the

company are considered confidential employees, hence ineligible from joining a union.

2.  If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit.

On the first issue, this Court rules that said employees do not fall within the term “confidential employees” who may be prohibited from joining a union.

There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees.  They are, therefore, not qualified to be classified as managerial employees who, under Article 245 [4] of the Labor Code, are not eligible to join, assist or form any labor organization.  In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own.  The only question that need be addressed is whether these employees are properly classified as confidential employees or not.

Confidential employees are those who (1) assist or act in a confidential capacity,  (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations.[5] The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee – that is, the confidential relationship must exist

between the employees and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations.[6]

The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the “confidential employee rule.”  The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests.[7] “Management should not be required to handle labor relations matters through employees who are represented by the union with the company is required to deal and who in the normal performance of their duties may obtain advance information of the company’s position with regard to contract negotiations, the disposition of grievances, or other labor relations matters.”[8]

There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez,[9] the Court held that “if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest.  The Union can also become company-dominated with the presence of managerial employees in Union membership.” The same rationale was applied to confidential employees in “Golden Farms, Inc. v. Ferrer-Calleja”[10] and in the more recent case of “Philips Industrial Development, Inc. v. NLRC”[11] which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union was held equally applicable to them.[12]

An important element of the “confidential employee rule” is the employee’s need to use labor relations information.  Thus, in determining the confidentiality of certain employees, a key questions frequently considered is the employees’ necessary access to confidential labor relations information.[13]

It is the contention of respondent corporation that Supervisory employees 3 and 4 and the exempt employees come within the meaning of the term “confidential employees” primarily because they answered in the affirmative when asked “Do you handle confidential data or documents?” in the Position Questionnaires submitted by the Union.[14] In the same questionnaire, however, it was also stated that the confidential information handled by questioned employees relate to product formulation, product standards and product specification which by no means relate to “labor relations.”[15]

Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such duties, said access does not render the employee a confidential employee. [16] “If access to confidential labor relations information is to be a factor in the determination of an employee’s confidential status, such information must relate to the employer’s labor relations policies.  Thus, an employee of a labor union, or of a management association, must have access to confidential labor information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not clause an employee to be excluded from the bargaining unit representing employees of the union or association.”[17] “Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information[18] or technical trade secrets, will not render an employee a confidential employee.”[19]

Herein listed are the functions of supervisors 3 and higher:1.  To undertake decisions to discontinue/temporarily stop shift operations when

situations require.

2.  To effectively oversee the quality control function at the processing lines in the storage of chicken and other products.

3.  To administer efficient system of evaluation of products in the outlets.

4.  To be directly responsible for the recall, holding and rejection of direct manufacturing materials.

5.  To recommend and initiate actions in the maintenance of sanitation and hygiene throughout the plant.[20]

It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions.  From the foregoing functions, it can be gleaned that the confidential information said employees have access to concern the employer’s internal business operations.  As held in Westinghouse Electric Corporation   v . National Labor Relations Board ,[21] “an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential information concerning employer’s internal business operations and which is not related to the field of labor relations.”

It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to “all” workers the right to self-organization.  Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many

employees of their right bargain collectively through representatives of their choosing.[22]

In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle “confidential data” as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions.  The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial.  Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining.  Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union.[23]

In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out.

It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy.  It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests.

This Court finds the contention of the petitioner meritorious.

An appropriate bargaining unit may be defined as “a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.”[24]

A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining.[25]

It is readily seen that the employees in the instant case have “community or mutuality of interest,” which is the standard in determining the proper constituency of a collective bargaining unit. [26] It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation.  This means that, although they belong to three different plants, they perform work

of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities.

In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage.  Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity.  This situation will clearly frustrate the provisions of the Labor Code and the Mandate of the Constitution.[27]

The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial.  Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of the University of the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los Baños, Laguna and the Visayas were allowed to participate in a certification election.  We rule that the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs.  Neither are there regional differences that are likely to impede the operations of a single bargaining representative.

WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted.

SO ORDERED.Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur

Case no 10

G.R. No. L-22228             February 27, 1969

PHILIPPINE ASSOCIATION OF LABOR UNIONS (PAFLU) SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION-PAFLU, AL FAJARDO AND ALL THE OTHER MEMBERS AND OFFICERS OF THE SOCIAL SECURITY AND EMPLOYEES ASSOCIATION-PAFLU, petitioners, vs.THE SECRETARY OF LABOR, THE DIRECTOR OF LABOR RELATIONS and THE REGISTRAR OF LABOR ORGANIZATIONS, respondents.

Cipriano Cid and Associates and Israel Bocobo for petitioners. Office of the Solicitor General Arturo A. Alafriz and Solicitor Camilo D. Quiason for respondents.

CONCEPCION, C.J.:

Petitioners pray for writs of certiorari and prohibition to restrain respondents, the Secretary of Labor, the Director of Labor Relations and the Registrar of Labor Organizations, from enforcing an order of cancellation of the registration certificate of the Social Security System Employees Association — hereinafter referred to as the SSSEA — which is affiliated to the Philippine Association of Free Labor Unions — hereinafter referred to as PAFLU — as well as to annul all proceedings in connection with said cancellation and to prohibit respondents from enforcing Section 23 of Republic Act No. 875. Petitioners, likewise, pray for a writ of preliminary injunction pending the final determination of this case. In their answer, respondents traversed some allegations of fact and the legal conclusions made in the petition. No writ of preliminary injunction pendente lite has been issued.

It appears that on September 25, 1963, the Registration of Labor Organizations — hereinafter referred to as the Registrar — issued a notice of hearing, on October 17, 1963, of the matter of cancellation of the registration of the SSSEA, because of:

1. Failure to furnish the Bureau of Labor Relations with copies of the reports on the finances of that union duly verified by affidavits which its treasurer or treasurers rendered to said union and its members covering the periods from September 24, 1960 to September 23, 1961 and September 24, 1961 to September 23, 1962, inclusive, within sixty days of the 2 respective latter dates, which are the end of its fiscal year; and

2. Failure to submit to this office the names, postal addresses and non-subversive affidavits of the officers of that union within sixty days of their election in October (1st Sunday), 1961 and 1963, in conformity with Article IV (1) of its constitution and by-laws.

in violation of Section 23 of Republic Act No. 875. Counsel for the SSSEA moved to postpone the hearing to October 21, 1963, and to submit then a memorandum, as well as the documents specified in the notice. The motion was granted, but, nobody appeared for the SSSEA on the date last mentioned. The next day, October 22, 1963, Manuel Villagracia, Assistant Secretary of the SSSEA filed with the Office of the Registrar, a letter dated October 21, 1963, enclosing the following:

1. Joint non-subversive affidavit of the officers of the SSS Employees' Association-PAFLU;

2. List of newly-elected officers of the Association in its general elections held on April 29, 1963; and

3. Copy of the amended constitution and by-laws of the Association.

Holding

1. That the joint non-subversive affidavit and the list of officers mentioned in the letter of Mr. Manuel Villagracia were not the documents referred to in the notice of hearing and made the subject matter of the present proceeding; and

2. That there is no iota of evidence on records to show and/or warrant the dismissal of the present proceeding.

on October 23, 1963, the Registrar rendered a decision cancelling the SSSEA's Registration Certificate No. 1-IP169, issued on September 30, 1960. Soon later, or on October 28, 1963, Alfredo Fajardo, president of the SSSEA moved for a reconsideration of said decision and prayed for time, up to November 15, within which to submit the requisite papers and data. An opposition thereto having been filed by one Paulino Escueta, a member of the SSSEA, upon the ground that the latter had never submitted any financial statement to its members, said motion was heard on November 27, 1963. Subsequently, or on December 4, 1963, the Registrar issued an order declaring that the SSSEA had "failed to submit the following requirements to wit:

1. Non-subversive affidavits of Messrs. Teodoro Sison, Alfonso Atienza, Rodolfo Zalameda, Raymundo Sabino and Napoleon Pefianco who were elected along with others on January 30, 1962.

2. Names, postal addresses and non-subversive affidavits of all the officers who were supposedly elected on October (1st Sunday), of its constitution and by-laws.

and granting the SSSEA 15 days from notice to comply with said requirements, as well as meanwhile holding in abeyance the resolution of its motion for reconsideration.

Pending such resolution, or on December 16, the PAFLU, the SSSEA, Alfredo Fajardo "and all the officers and members" of the SSSEA commenced the present action, for the purpose stated at the beginning of this decision, upon the ground that Section 23 of Republic Act No. 875 violates their freedom of assembly and association, and is inconsistent with the Universal Declaration of Human Rights; that it unduly delegates judicial power to an administrative agency; that said Section 23 should be deemed repealed by ILO-Convention No. 87; that respondents have acted without or in excess of jurisdiction and with grave abuse of discretion in promulgating, on November 19, 1963, its decision dated October 22, 1963, beyond the 30-day period provided in Section 23(c) of Republic Act No. 875; that "there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law"; that the decision complained of had not been approved by the Secretary of Labor; and that the cancellation of the SSSEA's certificate of registration would cause irreparable injury.

The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of assembly and association guaranteed in the Bill of Rights is devoid of factual basis. The registration prescribed in paragraph (b) of said section 1 is not a limitation to the right of assembly or association, which may be exercised with or withoutsaid registration. 2 The latter is merely a condition sine qua non for the acquisition of legal personality by labor organizations, associations or unions and the possession of the "rights and privileges granted by law to legitimate labor organizations". The Constitution does not guarantee these rights and privileges, much less said personality, which are mere statutory creations, for the possession and exercise of which registration is required to protect both labor and the public against abuses, fraud, or impostors who pose as organizers, although not truly accredited agents of the union they purport to represent. Such requirement is a valid exercise of the police power, because the activities in which labor organizations, associations and union of workers are engaged affect public interest, which should be protected. 3 Furthermore, the obligation to submit financial statements, as a condition for the non-cancellation of a certificate of registration, is a reasonable regulation for the benefit of the members of the organization, considering that the same generally solicits funds or membership, as well as oftentimes collects, on behalf of its members, huge amounts of money due to them or to the organization. 4

For the same reasons, said Section 23 does not impinge upon the right of organization guaranteed in the Declaration of Human Rights, or run counter to Articles 2, 4, 7 and Section 2 of Article 8 of the ILO-Convention No. 87, which provide that "workers and employers, ... shall have the right to establish and ... join organizations of their own choosing, without previous authorization"; that "workers and employers organizations shall not be liable to be dissolved or suspended by administrative authority"; that "the acquisition of legal personality by workers' and employers' organizations, ... shall not be made subject to conditions of such a character as to restrict the application of the provisions" above mentioned; and that "the guarantees provided for in" said Convention shall not be impaired by the law of the land.

In B.S.P. v. Araos, 5 we held that there is no incompatibility between Republic Act No. 875 and the Universal Declaration of Human Rights. Upon the other hand, the cancellation of the SSSEA's registration certificate would not entail a dissolution of said association or its suspension. The existence of the SSSEA would not be affected by said cancellation, although its juridical personality and its statutory rights and privileges — as distinguished from those conferred by the Constitution — would be suspended thereby.

To be registered, pursuant to Section 23(b) of Republic Act No. 875, a labor organization, association or union of workers must file with the Department of Labor the following documents:

(1) A copy of the constitution and by-laws of the organization together with a list of all officers of the association, their addresses and the address of the principal office of the organization;

(2) A sworn statement of all the officers of the said organization, association or union to the effect that they are not members of the Communist Party and that they are not members of any organization which teaches the overthrow of the Government by force or by any illegal or unconstitutional method; and

(3) If the applicant organization has been in existence for one or more years, a copy of its last annual financial report.

Moreover, paragraph (d) of said-Section ordains that:

The registration and permit of a legitimate labor organization shall be cancelled by the Department of Labor, if the Department has reason to believe that the labor organization no longer meets one or more of the requirements of paragraph (b) above; or fails to file with the Department Labor either its financial reportwithin the sixty days of the end of its fiscal year or the names of its new officers along with their non-subversive affidavits as outlined in paragraph (b) above within sixty days of their election; however, the Department of Labor shall not order the cancellation of the registration and permit without due notice and hearing, as provided under paragraph (c) above and the affected labor organization shall have the same right of appeal to the courts as previously provided.6

The determination of the question whether the requirements of paragraph (b) have been met, or whether or not the requisite financial report or non-subversive affidavits have been filed within the period above stated, is not judicial power. Indeed, all officers of the government, including those in the executive department, are supposed, to act on the basis of facts, as they see the same. This is specially true as regards administrative agencies given by law the power to investigate and render decisions concerning details related to the execution of laws the enforcement of which is entrusted thereto. Hence, speaking for this Court, Mr. Justice Reyes (J.B.L.) had occassion to say:

The objections of the appellees to the constitutionality of Republic Act No. 2056, not only as an undue delegation of judicial power to the Secretary of Public Works but also for being unreasonable and arbitrary, are not tenable. It will be noted that the Act (R.A. 2056) merely empowers the Secretary to remove unauthorized obstructions or encroachments upon public streams, constructions that no private person was anyway entitled to make because the bed of navigable streams is public property, and ownership thereof is not acquirable by adverse possession (Palanca vs. Commonwealth, 69 Phil., 449).

It is true that the exercise of the Secretary's power under the Act necessarily involves the determination of some question of fact, such as the existence of the stream and its previous navigable character; but these functions, whether judicial or quasi-judicial, are merely incidental to the exercise of the power granted by law to clear navigable streams of unauthorized obstructions or encroachments, and authorities are clear that they are validly conferable upon executive officials provided the party affected is given opportunity to be heard, as is expressly required by Republic Act No. 2056, section 2.7

It should be noted also, that, admittedly, the SSSEA had not filed the non-subversive affidavits of some of its officers — "Messrs. Sison, Tolentino, Atienza, Zalameda, Sabino and Pefianca" — although said organization avers that these persons "were either resigned or out on leave as

directors or officers of the union", without specifying who had resigned and who were on leave. This averment is, moreover, controverted by respondents herein.

Again, the 30-day period invoked by the petitioners is inapplicable to the decision complained of. Said period is prescribed in paragraph (c) 8 of Section 23, which refers to the proceedings for the "registration" of labor organizations, associations or unions not to the "cancellation" of said registration, which is governed by the abovequoted paragraph (d) of the same section.

Independently of the foregoing, we have repeatedly held that legal provisions prescribing the period within which a decision should be rendered are directory, not mandatory in nature — in the sense that, a judgment promulgated after the expiration of said period is not null and void, although the officer who failed to comply with law may be dealt with administratively, in consequence of his delay 9 — unless the intention to the contrary is manifest. Such, however, is not the import of said paragraph (c). In the language of Black:

When a statute specifies the time at or within which an act is to be done by a public officer or body, it is generally held to be directory only as to the time, and not mandatory, unless time is of the essence of the thing to be done, or the language of the statute contains negative words, or shows that the designation of the time was intended as a limitation of power, authority or right. 10

Then, again, there is no law requiring the approval, by the Secretary of Labor, of the decision of the Registrar decreeing the cancellation of a registration certificate. In fact, the language of paragraph (d) of Section 23, suggests that, once the conditions therein specified are present, the office concerned "shall" have no choice but to issue the order of cancellation. Moreover, in the case at bar, there is nothing, as yet, for the Secretary of Labor to approve or disapprove, since petitioners, motion for reconsideration of the Registrar's decision of October 23, 1963, is still pending resolution. In fact, this circumstance shows, not only that the present action is premature, 11but, also, that petitioners have failed to exhaust the administrative remedies available to them. 12 Indeed, they could ask the Secretary of Labor to disapprove the Registrar's decision or object to its execution or enforcement, in the absence of approval of the former, if the same were necessary, on which we need not and do not express any opinion.

IN VIEW OF THE FOREGOING, the petition herein should be, as it is hereby dismissed, and the writs prayed for denied, with costs against the petitioners. It is so ordered. lawphi1.nêt

Reyes, J.B.L., Dizon, Makalintal,. Zaldivar, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.

Case No 11