THIRD DIVISION [G.R. No. 118562. July 5, 1996.]ALLIANCE OF NATIONALIST AND GENUINE LABOR ORGANIZATION (ANGLO-KMU), petitioner, vs. SAMAHAN NG MGA MANGAGAWANG NAGKAKAISA SA MANILA BAY SPINNING MILLS AT J.P. COATS (SAMANA BAY), GILBERT SUNGAYANN, FERNANDO MELARPIS, ET. AL), respondents.

Flores, Miralles, Raneses & Associates for petitioner.Romero Lagman Valdecantos & Arreza Offices for private respondents.The Solicitor General for public respondents.

SYLLABUS1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR CODE; RIGHT TO SELF ORGANIZATION; DISAFFILIATION OF A LOCAL UNION FROM ITS MOTHER UNION IS VALID EVEN IF CERTAIN PROCEDURAL REQUIREMENTS FOR A VALID DISAFFILIATION WAS NOT COMPLIED WITH PROVIDED THE GENERAL MEMBERSHIP OF THE LOCAL UNION RATIFIED THE DISAFFILIATION ACTION. — Anent the first ground, we reiterate the rule that all employees enjoy the right to self-organization and to form and join labor organizations of their own choosing for the purpose of collective bargaining. This is a fundamental right of labor and derives its existence from the Constitution. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws, rules regulations, we have always adopted the liberal approach which favors the exercise of labor rights. This Court is not ready to bend this principle to yield to a mere procedural defect, to wit: failure to observe certain procedural requirements for a valid disaffiliation. Non-compliance with the procedure on disaffiliation, being premised on purely technical right of self-organization. We quote, with approval, the findings of herein public respondent, that: ". . . the resolution of the general membership ratifying the disaffiliation action initiated by the Board, substantially satisfies the procedural requirements for disaffiliation. No doubt was raised on the support of the majority of the union members on the decision to disaffiliate." This, to our mind, is clearly supported by the evidence. ANGLO's alleged acts inimical to the interests of respondent union have not been sufficiently rebutted. It is clear under the facts that respondent union's members have unanimously decided to disaffiliate from the mother federation and ANGLO has nothing to offer in dispute other than the law prohibiting the disaffiliation outside the freedom period.2. ID.; ID.; ID.; LOCAL UNION HAS THE RIGHT TO DISAFFILIATE FROM ITS MOTHER UNION EVEN BEFORE THE ONSET OF THE FREEDOM PERIOD WHEN THERE IS S SHIFT OF ALLEGIANCE ON THE PART OF THE MAJORITY OF THE LOCAL UNION MEMBERS. — Settled is the rule that a local union has the right to disaffiliate from its mother union when circumstances warrant. Generally, a labor union may disaffiliate from the mother union to form a local or independent union only during the 60-day freedom period immediately preceding the expiration of the CBA. However, even before the onset of the freedom period, disaffiliation may be carried out when there is a shift of allegiance on the part of the majority of the members of the union.3. ID.; ID.; ID.; MERE ACT OF AFFILIATION DOES NOT DIVEST THE LOCAL UNION OF ITS OWN PERSONALITY. — The contention is bereft of merit. A local labor union is a separate and distinct unit primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency where the former acts in representation of the latter. By SAMANA BAY's disaffiliation from ANGLO, the vinculum that previously bound the two entities was completely severed. ANGLO was divested of any and all power to act in representation of SAMANA BAY. Thus, any act performed by ANGLO affecting the interests and affairs

of SAMANA BAY, including the ouster of herein individual private respondents, is rendered without force and effect.

R E S O L U T I O NFRANCISCO, J p:Petitioner Alliance of Nationalist and Genuine Labor Organization (ANGLO for brevity) is a duly registered labor organization while respondent union Samahan Ng Mga Mangagawang Nagkakaisa sa Manila Bay Spinning Mills and J.P. Coats (SAMANA BAY for brevity) is its affiliate. In representation of SAMANA BAY, ANGLO entered and concluded a Collective Bargaining Agreement (CBA) with Manila Bay Spinning Mills and J.P. Coats Manila Bay, Inc. (hereinafter referred to as the corporations) on November 1, 1991. On December 4, 1993, the Executive Committee of SAMANA BAY decided to disaffiliate from ANGLO in view of the latter's dereliction of its duty to promote and advance the welfare of SAMANA BAY and the alleged cases of corruption involving the federation officers. Said disaffiliation was unanimously confirmed by the members of SAMANA BAY.

On April 4, 1994, a petition to stop remittance of federation dues to ANGLO was filed by SAMANA BAY with the Bureau of Labor Relations on the ground that the corporations, despite having been furnished copies of the union resolution relating to said disaffiliation, refused to honor the same. ANGLO counter-acted by unseating all officers and board members of SAMANA BAY and appointing, in their stead, a new set of officers who were duly recognized by the corporations.In its position paper, ANGLO contended that the disaffiliation was void considering that a collective bargaining agreement is still existing and the freedom period has not yet set in. The Med-Arbiter resolved that the disaffiliation was void but upheld the illegality of the ouster officers of SAMANA BAY. Both parties filed their respective appeals with the Department of Labor and Employment. In a resolution dated September 23, 1994, herein public respondent modified the order and ruled in favor of respondent union, disposing as follows:"WHEREFORE, the appeal of respondent ANGLO is hereby denied for lack of merit while the appeal of petitioners is hereby granted. Accordingly, the order of the Med-Arbiter is modified by:1) declaring the disaffiliation of petitioner union from respondent ANGLO as valid;2) directing respondent Manila Bay Spinning Mills, Inc. and J.P. Coats to stop remitting to ANGLO federation dues and instead to remit the whole amount of union dues to the treasurer of petitioner union; and3) enjoining ANGLO-KMU from interfering in the affairs of petitioner union.SO ORDERED." 1

ANGLO filed a motion for reconsideration but the same was denied for lack of merit. Hence, this petition for certiorari under Rule 65.The petition calls upon us to resolve two issues, to wit:1) whether the disaffiliation was valid; and2) whether petitioner can validly oust individual private respondents from their positions.

We rule for the respondents.

For clarity, we shall first consider the issue respecting the validity of the disaffiliation.Petitioner ANGLO wants to impress on us that the disaffiliation was invalid for two reasons, namely: that the procedural requirements for a valid disaffiliation were not followed; and that it was made in violation of P.D. 1391.Anent the first ground, we reiterate the rule that all employees enjoy the right to self-organization and to form and join labor organizations of their own choosing for the purpose of collective bargaining. This is a fundamental right of labor and derives

its existence from the Constitution. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws, rules or regulations, we have always adopted the liberal approach which favors the exercise of labor rights.2 This Court is not ready to bend this principle to yield to a mere procedural defect, to wit: failure to observe certain procedural requirements for a valid disaffiliation. Non-compliance with the procedure on disaffiliation, being premised on purely technical grounds cannot rise above the fundamental right of self- organization.3 We quote, with approval, the findings of herein public respondent, that:". . . the resolution of the general membership ratifying the disaffiliation action initiated by the Board, substantially satisfies the procedural requirements for disaffiliation. No doubt was raised on the support of the majority of the union members on the decision to disaffiliate."4

This, to our mind, is clearly supported by the evidence. ANGLO's alleged acts inimical to the interests of respondent union have not been sufficiently rebutted. It is clear under the facts that respondent union's members have unanimously decided to disaffiliate from the mother federation and ANGLO has nothing to offer in dispute other than the law prohibiting the disaffiliation outside the freedom period.

In the same wise, We find no ground for ruling against the validity of the disaffiliation in the light of recent jurisprudential rules.Although P.D. 1391 provides:"Item No. 6. No petition for certification election, for intervention and disaffiliation shall be entertained or given due course except within the 60-day freedom period immediately preceding the expiration of a collective bargaining agreement."said law is definitely not without exceptions. Settled is the rule that a local union has the right to disaffiliate from its mother union when circumstances warrant. 5 Generally, a labor union may disaffiliate from the mother union to form a local or independent union only during the 60-day freedom period immediately preceding the expiration of the CBA. However, even before the onset of the freedom period, disaffiliation may be carried out when there is a shift of allegiance on the part of the majority of the members of the union. 6 Coming now to the second issue, ANGLO contends that individual private respondents were validly ousted as they have ceased to be officers of the incumbent union (ANGLO-KMU) at the time of disaffiliation. In order to fill the vacuum, it was deemed proper to appoint the individual replacements so as not to put in disarray the organizational structure and to prevent chaos and confusion among the general membership and within the company.The contention is bereft of merit. A local labor union is a separate and distinct unit primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members.7 The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency 8 where the former acts in representation of the latter.By SAMANA BAY's disaffiliation from ANGLO, the vinculum that previously bound the two entities was completely severed. ANGLO was divested of any and all power to act in representation of SAMANA BAY. Thus, any act performed by ANGLO affecting the interests and affairs of SAMANA BAY, including the ouster of herein individual private respondents, is rendered without force and effect.WHEREFORE, premises considered, the petition is hereby DISMISSED.SO ORDERED.Narvasa, C .J ., Davide, Jr., Melo and Panganiban, JJ ., concur.

SECOND DIVISION [G.R. No. 101738. April 12, 2000.]PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner, vs. HON. BIENVENIDO E. LAGUESMA, Undersecretary of Labor and Employment, HON. HENRY PABEL, Director of the Department of Labor and Employment Regional Office No. XI and/or the Representation Officer of the Industrial Relations Division who will act for and in his behalf, PCOP-BISLIG SUPERVISORY AND TECHNICAL STAFF EMPLOYEES UNION, ASSOCIATED LABOR UNION and FEDERATION OF FREE WORKERS, respondents.

De La Rosa Tejero & Nograles for petitioner.The Solicitor General for public respondent.Mamerto B. Alcisio, Jr. for private respondent.

SYNOPSISPBSTSEU instituted a Petition for Certification Election to determine the sole and exclusive bargaining agent of the supervisory and technical staff employees of PICOP for collective bargaining agreement (CBA) purposes. Following the submission by the parties of their respective position papers and evidence, Med-Arbiter Phibun D. Pura issued an Order dated March 27, 1990, holding that supervisors and section heads of the petitioner are managerial employees and therefore excluded from the list of voters for purposes of certification election. Public respondent Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the assailed Order dated April 17, 1991 setting aside the Order dated March 27, 1990 of the Med-Arbiter and declaring that the subject supervisors and section heads are supervisory employees eligible to vote in the certification election. PICOP sought reconsideration of the said order. However, public respondent in his Order dated August 7, 1991 denied PICOP's motion for reconsideration. Hence, this petition. PICOP's main thesis is that the positions of Section Heads and Supervisors, who have been designated as Section Managers and Unit Managers, as the case may be, were converted to managerial employees under the decentralization and reorganization program it implemented in 1989. Being managerial employees, with alleged authority to hire and fire employees, they are ineligible for union membership under Article 245 of the Labor Code.In this petition, a thorough dissection of the job description of the concerned supervisory employees and section heads indisputably showed that they were not actually managerial but only supervisory employees since they do not lay down company policies. The petition was dismissed, and the Resolution and Order of public respondent Bienvenido E. Laguesma dated April 17, 1991 and August 17, 1991, respectively, finding the subject supervisors and section heads as supervisory employees eligible to vote in the certification election were affirmed.

SYLLABUSLABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; MANAGERIAL EMPLOYEES; CONSTRUED. — In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma (288 SCRA 15 [1998]) the Court had occasion to elucidate on the term "managerial employees." Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers. Top and Middle Managers have the authority to devise, implement and control strategic and operational policies while the task of First-Line Managers is simply to ensure that such policies are carried out by the rank-and-file employees of an organization. Under this distinction, "managerial employees" therefore fall in two (2) categories, namely, the "managers" per se composed of Top and Middle Managers, and the "supervisors" composed of First-Line Managers. Thus, the mere fact that an employee is designated "manager" does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee, for it is the job description that determines the nature of employment.

D E C I S I O N

DE LEON, JR., J p:Before us is a petition for certiorari seeking to annul the Resolution1 and the Order2 dated April 17, 1991 and August 7, 1991, respectively, of public respondent Bienvenido E. Laguesma, acting then as Undersecretary, now the Secretary, of the Department of Labor and Employment (DOLE), which reversed the Order dated March 27, 19903 of Med-Arbiter Phibun D. Pura declaring that supervisors and section heads of petitioner under its new organizational structure are managerial employees and should be excluded from the list of voters for the purpose of a certification election among supervisory and technical staff employees of petitioner.4

The facts of the case are the following: Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the manufacture of paper and timber products, with principal place of operations at Tabon, Bislig, Surigao del Sur. It has over 9,0005 employees, 9446 of whom are supervisory and technical staff employees. More or less 487 of these supervisory and technical staff employees are signatory members of the private respondent PICOP-Bislig Supervisory and Technical Staff Employees Union (PBSTSEU).7

On August 9, 1989. PBSTSEU instituted a Petition8 for Certification Election to determine the sole and exclusive bargaining agent of the supervisory and technical staff employees of PICOP for collective bargaining agreement (CBA) purposes.In a Notice9 dated August 10, 1989, the initial hearing of the petition was set on August 18, 1989 but it was reset to August 25, 1989, at the instance of PICOP, as it requested a fifteen (15) day period within which to file its comments and/or position paper. But PICOP failed to file any comment or position paper. Meanwhile, private respondents Federation of Free Workers (FFW) and Associated Labor Union (ALU) filed their respective petitions for intervention.On September 14, 1989, Med-Arbiter Arturo L. Gamolo issued an Order10 granting the petitions for interventions of the FFW and ALU. Another Order 11 issued on the same day set the holding of a certification election among PICOP's supervisory and technical staff employees in Tabon, Bislig, Surigao del Sur, with four (4) choices, namely: (1) PBSTSEU; (2) FFW; (3) ALU; and (4) no union.On September 21, 1989, PICOP appealed12 the Order which set the holding of the certification election contending that the Med-Arbiter committed grave abuse of discretion in deciding the case without giving PICOP the opportunity to file its comments/answer, and that PBSTSEU had no personality to file the petition for certification election.After PBSTSEU filed its Comments13 to petitioner's appeal, the Secretary of the Labor14 issued a Resolution15 dated November 17, 1989 which upheld the Med-Arbiter's Order dated September 17, 1989, with modification allowing the supervising and staff employees in Cebu, Davao and Iligan City to participate in the certification election.During the pre-election conference on January 18, 1990, PICOP questioned and objected to the inclusion of some section heads and supervisors in the list of voters whose positions it averred were reclassified as managerial employees in the light of the reorganization effected by it.16 Under the Revised Organizational Structure of the PICOP, the company was divided into four (4) main business groups, namely: Paper Products Business, Timber Products Business, Forest Resource Business and Support Services Business. A vice-president or assistant vice-president heads each of these business groups. A division manager heads the divisions comprising each business group. A department manager heads the departments comprising each division. Section heads and supervisors, now called section managers and unit managers, head the sections and independent units, respectively, comprising each department.17 PICOP advanced the view that considering the alleged present authority of these section managers and unit managers to hire and fire, they are classified as managerial employees, and hence, ineligible to form or join any labor organization.18

Following the submission by the parties of their respective position papers19 and evidence 20 on this issue, Med-Arbiter Phibun D. Pura issued an Order 21 dated March

27, 1990, holding that supervisors and section heads of the petitioner are managerial employees and therefore excluded from the list of voters for purposes of certification election.PBSTSEU appealed22 the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU likewise appealed.23 PICOP submitted evidence militating against the appeal.24 Public respondent Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the assailed Order25 dated April 17, 1991 setting aside the Order dated March 27, 1990 of the Med-Arbiter and declaring that the subject supervisors and section heads are supervisory employees eligible to vote in the certification election.PICOP sought 26 reconsideration of the Order dated April 7, 1991. However, public respondent in his Order 27 dated August 7, 1991 denied PICOP's motion for reconsideration.Hence, this petition.PICOP anchors its petition on two (2) grounds, to wit:I.THE PUBLIC RESPONDENT HONORABLE BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF LABOR AND EMPLOYMENT, IN A CAPRICIOUS, ARBITRARY AND WHIMSICAL EXERCISE OF POWER ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE DENIED YOUR PETITIONER'S PLEA TO PRESENT ADDITIONAL EVIDENCE TO PROVE THAT SOME OF ITS MANAGERIAL EMPLOYEES ARE DISQUALIFIED FROM JOINING OR FORMING A UNION REPRESENTED BY CO-RESPONDENT PBSTSEU, IN VIEW OF A SUPERVENING EVENT BROUGHT ABOUT BY THE CHANGES IN THE ORGANIZATIONAL STRUCTURE OF YOUR PETITIONER WHICH WAS FULLY IMPLEMENTED IN JANUARY 1991 AFTER THE CASE WAS ELEVATED ON APPEAL AND SUBMITTED FOR DECISION.II.THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA, ALSO ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ARBITRARILY ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE TOTALLY DISREGARDED THE DOCUMENTARY EVIDENCE SO FAR SUBMITTED BY YOUR PETITIONER AND RELIED MAINLY ON THE UNSUBSTANTIATED CLAIM AND MERE ALLEGATIONS OF PRIVATE RESPONDENT, PBSTSEU, THAT THE REORGANIZATION OF YOUR PETITIONER WAS A SHAM AND CALCULATED MERELY TO FRUSTRATE THE UNIONIZATION OF YOUR PETITIONER'S SUPERVISORY PERSONNEL; AND SOLELY ON THIS BASIS, DENIED YOUR PETITIONER'S URGENT MOTION FOR RECONSIDERATION. 28 PICOP's main thesis is that the positions Section Heads and Supervisors, who have been designated as Section Managers and Unit Managers, as the case may be, were converted to managerial employees under the decentralization and reorganization program it implemented in 1989. Being managerial employees, with alleged authority to hire and fire employees, they are ineligible for union membership under Article 245 29 of the Labor Code. Furthermore, PICOP contends that no malice should be imputed against it for implementing its decentralization program only after the petition for certification election was filed inasmuch as the same is a valid exercise of its management prerogative, and that said program has long been in the drawing boards of the company, which was realized only in 1989 and fully implemented in 1991. PICOP emphatically stresses that it could not have conceptualized the decentralization program only for the purpose of "thwarting the right of the concerned employees to self-organization."The petition, not being meritorious, must fail and the same should be as it is hereby dismissed. LLjurFirst. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, 30 we had occasion to elucidate on the term "managerial employees." Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers. Top and Middle Managers have the authority to devise, implement and control strategic and operational policies while the task of First-Line Managers is simply to ensure that such policies are carried out by the rank-and-file employees of an organization.

Under this distinction, "managerial employees" therefore fall in two (2) categories, namely, the "managers" per se composed of Top and Middle Managers, and the "supervisors" composed of First-Line Managers. 31 Thus, the mere fact that an employee is designated manager" does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee, 32 for it is the job description that determines the nature of employment. 33 In the petition before us, a thorough dissection of the job description 34 of the concerned supervisory employees and section heads indisputably show that they are not actually managerial but only supervisory employees since they do not lay down company policies. PICOP's contention that the subject section heads and unit managers exercise the authority to hire and fire 35 is ambiguous and quite misleading for the reason that any authority they exercise is not supreme but merely advisory in character. Theirs is not a final determination of the company policies inasmuch as any action taken by them on matters relative to hiring, promotion, transfer, suspension and termination of employees is still subject to confirmation and approval by their respective superior. 36 Thus, where such power, which is in effect recommendatory in character, is subject to evaluation, review and final action by the department heads and other higher executives of the company, the same, although present, is not effective and not an exercise of independent judgment as required by law. 37 Second. No denial of due process can be ascribed to public respondent Undersecretary Laguesma for the latter's denial to allow PICOP to present additional evidence on the implementation of its program inasmuch as in the appeal before the said public respondent, PICOP even then had already submitted voluminous supporting documents. 38 The record of the case is replete with position papers and exhibits that dealt with the main thesis it relied upon. What the law prohibits is the lack of opportunity to be heard. 39 PICOP has long harped on its contentions and these were dealt upon and resolved in detail by public respondent Laguesma. We see no reason or justification to deviate from his assailed resolutions for the reason that law and jurisprudence aptly support them.Finally, considering all the foregoing, the fact that PICOP voiced out its objection to the holding of certification election, despite numerous opportunities to ventilate the same, only after respondent Undersecretary of Labor affirmed the holding thereof, simply bolstered the public respondents' conclusion that PICOP raised the issue merely to prevent and thwart the concerned section heads and supervisory employees from exercising a right granted them by law. Needless to stress, no obstacle must be placed to the holding of certification elections, for it is a statutory policy that should not be circumvented. 40 WHEREFORE, the petition is hereby DISMISSED, and the Resolution and Order of public respondent Bienvenido E. Laguesma dated April 17, 1991 and August 17, 1991, respectively, finding the subject supervisors and section heads as supervisory employees eligible to vote in the certification election are AFFIRMED. Costs against petitioner. cdasiaSO ORDERED.

SECOND DIVISION [G.R. No. 116194. February 2, 2000.]SUGBUANON RURAL BANK, INC., petitioner, vs. HON. UNDERSECRETARY BIENVENIDO E. LAGUESMA, DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER ACHILLES MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 7, CEBU CITY, AND SUGBUANON RURAL BANK, INC.-ASSOCIATION OF PROFESSIONAL, SUPERVISORY, OFFICE, AND TECHNICAL EMPLOYEES UNION-TRADE UNIONS CONGRESS THE PHILIPPINES, respondents.

Sycip Salazar Hernandez & Gatmaitan for petitioner.The Solicitor General for public respondent.Seno Mendoza & Associates for private respondent.

SYNOPSISOn October 26, 1993, the SRBI-Association of Professional, Supervisory, Office, and Technical Employees Union (APSOTEU), a union in petitioner Sugbuanon Rural Bank (SRB), filed a petition for certification election of the supervisory employees of SRBI. On October 28, 1993, the Med-Arbiter gave due course to the petition, but SRBI filed a motion to dismiss the union's petition. It sought to prevent the holding of a certification election on the grounds that the members of APSOTEU-TUCP were in fact managerial or confidential employees and ALU-TUCP was representing the union. The union filed its opposition to the motion to dismiss arguing that its members were not managerial but merely supervisory employees. On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment, but the appeal was denied. On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional Office seeking the cancellation of the respondent union's registration. It averred that APSOTEU-TUCP members were actually managerial employees who were prohibited by law from joining or organizing unions. On April 22, 1994, the respondent DOLE Undersecretary denied SRBI's appeal for lack of merit. SRBI moved for reconsideration, but the same was denied. Hence, the instant petition.The Supreme Court found the petition bereft of merit. The Court ruled that the Undersecretary of Labor committed no reversible error or grave abuse of discretion when he found the order of the Med-Arbiter scheduling a certification election in order. The list of employees eligible to vote in said certification was also found in order, for none of the members of the respondent union came into the rank-and-file employees of the bank. Likewise, the claim that the members of respondent union are managerial are not true as the Cashiers, Accountants and Acting Chiefs of the Loans Department of the petitioner did not possess the managerial powers or duties. Neither of the respondent employees' fell under the category of confidential employees prohibited from joining the union as not one of them had any duties specifically connected to labor relations. Accordingly, the instant petition was dismissed.

SYLLABUS1. LABOR AND SOCIAL LEGISLATION; MANAGERIAL EMPLOYEES; CASHIERS, ACCOUNTANT AND ACTING CHIEF OF THE LOANS DEPARTMENT NOT MANAGERIAL EMPLOYEES. — Petitioner submitted detailed job descriptions to support its contention that the union members are managerial employees and/or confidential employees proscribed from engaging in labor activities. Petitioner vehemently argues that the functions and responsibilities of the employees involved constitute the "very core of the bank's business, lending of money to clients and borrowers, evaluating their capacity to pay, approving the loan and its amount, scheduling the terms of repayment, and endorsing delinquent accounts to counsel for collection." Hence, they must be deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations Commission, and Panday v. National Labor Relations Commission, to sustain its submission. In Tabacalera, we sustained the classification of a credit and collection supervisor by management as a managerial/supervisory personnel. But in that case, the credit and collection

supervisor "had the power to recommend the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase." For this reason he was deemed to be a managerial employee. In the present case, however, petitioner failed to show that the employees in question were vested with similar powers. At best they only had recommendatory powers subject to evaluation review, and final decision by the bank's management. The job description forms submitted by petitioner clearly show that the union members in question may not transfer, suspend, lay-off, recall, discharge, assign, or discipline employees. Moreover, the forms also do not show that the Cashiers, Accountants, and Acting Chiefs of the Loans Department formulate expected management policies which are normally expected of management officers.2. ID.; CONFIDENTIAL EMPLOYEES; CRITERIA. — Confidential employees are those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies [specially in the field of labor relations]. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee — that is, the confidential relationship must exist between the employee and his superior officer; and that officer must handle the prescribed responsibilities relating to labor relations. 3. ID.; ID.; WHEN THE EMPLOYEE DOES NOT HAVE ACCESS TO CONFIDENTIAL LABOR RELATIONS INFORMATION, THERE IS NO LEGAL PROHIBITION AGAINST CONFIDENTIAL EMPLOYEES FROM FORMING, ASSISTING OR JOINING A UNION. — Article 245 of the Labor Code does not directly prohibit confidential employees from engaging in union activities. However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies to confidential employees. The confidential-employee rule justifies exclusion of confidential employees because in the normal course of their duties they become aware of management policies relating to labor relations. It must be stressed, however, that when the employee does not have access to confidential labor relations information, there is no legal prohibition against confidential employees from forming, assisting, or joining a union.4. ID.; LABOR UNIONS; CERTIFICATION ELECTION; APPEAL BY THE MANAGEMENT ON THE ISSUE OF THE VALIDITY OF THE UNION'S REGISTRATION DOES NOT DETER THE CONDUCT OF THE CERTIFICATION ELECTION. — One of the rights of a legitimate labor organization under Article 242 (b) of the Labor Code is the right to be certified as the exclusive representative of all employees in an appropriate bargaining unit for purposes of collective bargaining. Having complied with the requirements of Art. 234, it is our view that respondent union is legitimate labor union. Article 257 of the Labor Code mandates that a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization. Nothing is said therein that prohibits such automatic conduct of the certification election if the management appeals on the issue of the validity of the union's registration. On this score, petitioner's appeal was correctly dismissed.5. ID.; ID.; A LOCAL UNION MAINTAINS ITS SEPARATE PERSONALITY DESPITE AFFILIATION WITH A LARGER NATIONAL FEDERATION. — Petitioner argues that giving due course to respondent union's petition for certification election would violate the separation of unions doctrine. Note that the petition was filed by APSOTEU-TUCP, a legitimate labor organization. It was not filed by ALU. Nor was it filed by TUCP, which is a national labor federation of which respondent union is affiliated. Petitioner says that respondent union is a mere alter ego of ALU. The records show nothing to this effect. What the records instead reveal is that respondent union was initially assisted by ALU during its preliminary stages of organization. A local union maintains its separate personality despite affiliation with a larger national federation. Petitioner alleges that ALU seeks to represent both respondent union and the rank-and-file union. Again, we find nothing in the records to support this bare assertion.

D E C I S I O N

QUISUMBING, J p:In this special civil action for certiorari and prohibition, petitioner seeks the annulment of the April 27, 1994 Resolution of the Department of Labor and Employment, affirming the order of the Med-Arbiter, dated December 9, 1993, which denied petitioner's motion to dismiss respondent union's petition for certification election.

Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking institution with principal office in Cebu City and a branch in Mandaue City. Private respondent SRBI — Association of Professional, Supervisory, Office, and Technical Employees Union (APSOTEU) is a legitimate labor organization affiliated with the Trade Unions Congress of the Philippines (TUCP).On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration No. R0700-9310-UR-0064 to APSOTEU-TUCP, hereafter referred to as the union.On October 26, 1993, the union filed a petition for certification election of the supervisory employees of SRBI. It alleged, among others, that: (1) APSOTEU-TUCP was a labor organization duly-registered with the Labor Department; (2) SRBI employed 5 or more supervisory employees; (3) a majority of these employees supported the petition; (4) there was no existing collective bargaining agreement (CBA) between any union and SRBI; and (5) no certification election had been held in SRBI during the past 12 months prior to the petition.On October 28, 1993, the Med-Arbiter gave due course to the petition. The pre-certification election conference between SRBI and APSOTEU-TUCP was set for November 15, 1993.On November 12, 1993, SRBI filed a motion to dismiss the union's petition. It sought to prevent the holding of a certification election on two grounds: First, that the members of APSOTEU-TUCP were in fact managerial or confidential employees. Thus, following the doctrine in Philips Industrial Development Corporation v. National Labor Relations Commission,1 they were disqualified from forming, joining, or assisting any labor organization. Petitioner attached the job descriptions of the employees concerned to its motion. Second, the Association of Labor Unions-Trade Unions Congress of the Philippines or ALU-TUCP was representing the union. Since ALU-TUCP also sought to represent the rank-and-file employees of SRBI, there was a violation of the principle of separation of unions enunciated in Atlas Lithographic Services, Inc. v. Laguesma.2 The union filed its opposition to the motion to dismiss on December 1, 1993. It argued that its members were not managerial employees but merely supervisory employees. The members attached their affidavits describing the nature of their respective duties. The union pointed out that Article 245 of the Labor Code expressly allowed supervisory employees to form, join, or assist their own unions.On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. He scheduled the inclusion-exclusion proceedings in preparation for the certification election on December 16, 1993.SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment. The appeal was denied for lack of merit. The certification election was ordered.On June 16, 1994, the Med-Arbiter scheduled the holding of the certification election for June 29, 1994. His order identified the following SRBI personnel as the voting supervisory employees in the election: the Cashier of the Main Office, the Cashier of the Mandaue Branch, the Accountant of the Mandaue Branch, and the Acting Chief of the Loans Department.On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to suspend proceedings. The Med-Arbiter denied the same on June 21, 1994. SRBI then filed a motion for reconsideration. Two days later, the Med-Arbiter cancelled the certification election scheduled for June 29, 1994 in order to address the motion for reconsideration.The Med-Arbiter later denied petitioner's motion for reconsideration. SRBI appealed the order of denial to the DOLE Secretary on December 16, 1993.

On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional Office seeking the cancellation of the respondent union's registration. It averred that the APSOTEU-TUCP members were actually managerial employees who were prohibited by law from joining or organizing unions.On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal for lack of merit. He ruled that APSOTEU-TUCP was a legitimate labor organization. As such, it was fully entitled to all the rights and privileges granted by law to a legitimate labor organization, including the right to file a petition for certification election. He also held that until and unless a final order is issued cancelling APSOTEU-TUCP's registration certificate, it had the legal right to represent its members for collective bargaining purposes. Furthermore, the question of whether the APSOTEU-TUCP members should be considered as managerial or confidential employees should not be addressed in the proceedings involving a petition for certification election but best threshed out in other appropriate proceedings. On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's decision which was denied on July 7, 1994. The Med-Arbiter scheduled the holding of certification elections on August 12, 1994.Hence the instant petition grounded on the following assignments of error:I.RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED:A. IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE MED-ARBITER TO CONDUCT A CERTIFICATION ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN WHEN THE PETITIONING UNION DOES NOT POSSESS THE QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT; ANDB. IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT UNION'S PETITION FOR CERTIFICATION ELECTION.II.RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN DENYING THE PETITIONER'S APPEAL DESPITE THE FACT THAT:A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE MANAGERIAL EMPLOYEES WHO ARE LEGALLY DISQUALIFIED FROM JOINING ANY LABOR ORGANIZATION.B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT UNION ARE OCCUPYING HIGHLY CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, THE LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES EQUALLY APPLY TO THEM.III.IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT RESOLUTIONS ARE CONTRARY TO LAW AND ARE DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S RECORDED ADMISSIONS AND REPRESENTATIONS.

Considering petitioner's assigned errors, we find two core issues for immediate resolution:(1) Whether or not the members of the respondent union are managerial employees and/or highly-placed confidential employees, hence prohibited by law from joining labor organizations and engaging in union activities?(2) Whether or not the Med-Arbiter may validly order the holding of a certification election upon the filing of a petition for certification election by a registered union, despite the petitioner's appeal pending before the DOLE Secretary against the issuance of the union's registration?

The other issues based on the assigned errors could be resolved easily after the core issues are settled. Respecting the first issue, Article 212 (m) of the Labor Code defines the terms "managerial employee" and "supervisory employees" as follows:"Art. 212. Definitions —xxx xxx xxx(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay-off,

recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is note merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book (Emphasis supplied)."

Petitioner submitted detailed job descriptions to support its contention that the union members are managerial employees and/or confidential employees proscribed from engaging in labor activities. 3 Petitioner vehemently argues that the functions and responsibilities of the employees involved constitute the "very core of the bank's business, lending of money to clients and borrowers, evaluating their capacity to pay, approving the loan and its amount, scheduling the terms of repayment, and endorsing delinquent accounts to counsel for collection." 4 Hence, they must be deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations Commission,5 and Panday v. National Labor Relations Commission, 6 to sustain its submission. In Tabacalera, we sustained the classification of a credit and collection supervisor by management as a managerial/supervisory personnel. But in that case, the credit and collection supervisor "had the power to recommend the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase."7

For this reason he was deemed to be a managerial employee. In the present case, however, petitioner failed to show that the employees in question were vested with similar powers. At best they only had recommendatory powers subject to evaluation, review, and final decision by the bank's management. The job description forms submitted by petitioner clearly show that the union members in question may not transfer, suspend, lay-off, recall, discharge, assign, or discipline employees. Moreover, the forms also do not show that the Cashiers, Accountants, and Acting Chiefs of the Loans Department formulate and execute management policies which are normally expected of management officers.Petitioner's reliance on Panday is equally misplaced. There, we held that a branch accountant is a managerial employee because the said employee had managerial powers, similar to the supervisor in Tabacalera. Their powers included recommending the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase.8 Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the petitioner did not possess managerial powers and duties. We are, therefore, constrained to conclude that they are not managerial employees.Now may the said bank personnel be deemed confidential employees? Confidential employees are those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies [specifically in the field of labor relations].9 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee — that is, the confidential relationship must exist between the employee and his superior officer; and that officer must handle the prescribed responsibilities relating to labor relations.10 Article 245 of the Labor Code11 does not directly prohibit confidential employees from engaging in union activities. However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies to confidential employees.12 The confidential-employee rule justifies exclusion of confidential employees because in the normal course of their duties, they become aware of management policies relating to labor relations.13 It must be stressed, however, that when the employee does not have access to confidential labor relations information, there is no legal prohibition against confidential employees from forming, assisting, or joining a union. 14 Petitioner contends that it has only 5 officers running its day-to-day affairs. They assist in confidential capacities and have complete access to the bank's confidential data. They form the core of the bank's management team. Petitioner explains that:

" . . . Specifically: (1) the Head of the Loans Department initially approves the loan applications before they are passed on to the Board for confirmation. As such, no loan application is even considered by the Board and approved by petitioner without his stamp of approval based upon his interview of the applicant and determination of his (applicant's) credit standing and financial capacity. The same holds true with respect to renewals or restructuring of loan accounts. He himself determines what account should be collected, whether extrajudicially or judicially, and settles the problems or complaints of borrowers regarding their accounts;"(2) the Cashier is one of the approving officers and authorized signatories of petitioner. He approves the opening of accounts, withdrawals and encashment, and acceptance of check deposits. He deals with other banks and, in the absence of the regular Manager, manages the entire office or branch and approves disbursements of funds for expenses; and"(3) the Accountant, who heads the Accounting Department, is also one of the authorized signatories of petitioner and, in the absence of the Manager or Cashier, acts as substitute approving officer and assumes the management of the entire office. She handles the financial reports and reviews the debit/credit tickets submitted by the other departments." 15

Petitioner's explanation, however, does not state who among the employees has access to information specifically relating to its labor relations policies. Even Cashier Patricia Maluya, who serves as the secretary of the bank's Board of Directors may not be so classified. True, the board of directors is responsible for corporate policies, the exercise of corporate powers, and the general management of the business and affairs of the corporation. As secretary of the bank's governing body, Patricia Maluya serves the bank's management, but could not be deemed to have access to confidential information specifically relating to SRBI's labor relations policies, absent a clear showing on this matter. Thus, while petitioner's explanation confirms the regular duties of the concerned employees, it shows nothing about any duties specifically connected to labor relations.As to the second issue. One of the rights of a legitimate labor organization under Article 242(b) of the Labor Code is the right to be certified as the exclusive representative of all employees in an appropriate bargaining unit for purposes of collective bargaining. Having complied with the requirements of Art. 234, it is our view that respondent union is a legitimate labor union. Article 257 of the Labor Code mandates that a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization. 16 Nothing is said therein that prohibits such automatic conduct of the certification election if the management appeals on the issue of the validity of the union's registration. On this score, petitioner's appeal was correctly dismissed. Petitioner argues that giving due course to respondent union's petition for certification election would violate the separation of unions doctrine. 17 Note that the petition was filed by APSOTEU-TUCP, a legitimate labor organization. It was not filed by ALU. Nor was it filed by TUCP, which is a national labor federation of with which respondent union is affiliated. Petitioner says that respondent union is a mere alter ego of ALU. The records show nothing to this effect. What the records instead reveal is that respondent union was initially assisted by ALU during its preliminary stages of organization. A local union maintains its separate personality despite affiliation with a larger national federation.18 Petitioner alleges that ALU seeks to represent both respondent union and the rank-and-file union. Again, we find nothing in the records to support this bare assertion.The law frowns on a union where the membership is composed of both supervisors and rank-and-file employees, for fear that conflicts of interest may arise in the areas of discipline, collective bargaining, and strikes.19 However, in the present case, none of the members of the respondent union came from the rank-and-file employees of the bank.Taking into account the circumstances in this case, it is our view that respondent Undersecretary committed no reversible error nor grave abuse of discretion when he

found the order of the Med-Arbiter scheduling a certification election in order. The list of employees eligible to vote in said certification election was also found in order, for none was specifically disqualified from union membership.WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to costs.SO ORDERED. Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

SECOND DIVISION [G.R. No. 110399. August 15, 1997.]SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President, petitioners, vs. HONORABLE 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.

Benigno I. Vivar, Jr. for petitioners.Siguion Reyna Montecillo & Ongsiako for private respondent.

SYNOPSISThis is a Petition for Certiorari with prayer for the issuance of preliminary injunction filed by petitioner San Miguel Corporation Supervisors and Exempt Union seeking to reverse and set aside the Order of public respondent Undersecretary of the Department of Labor and Employment Bienvenido Laguesma excluding 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 questioned order declared that Supervisory 3 and 4 and the so-called exempt employees are confidential employees and therefore they are not allowed to form, join or assist a labor union for purposes of collective bargaining. Consequently, they are not allowed to participate in the certification election. In the instant case, petitioners posed the issue of whether or not supervisory employees 3 and 4 and the exempt employees fall under the category of "confidential employees" and if not, do the employees of the three plants constitute one single bargaining unit. The Supreme Court ruled that petitioner employees do not fall within the term confidential employees who may be prohibited from joining the union. In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle confidential data. They must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. Clearly, the informations they handle are properly classifiable as technical and internal business operation data which has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. 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 function to form and join a union. Anent the issue of employees of the three plants constitute one single bargaining unit, the Court has held that petitioner's contention is meritorious. 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 agreement. The fact that three plants are located in different places is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed. Accordingly, the Court set aside the assailed order and the order of the Med-Arbiter is reinstated.

SYLLABUS1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; CONFIDENTIAL EMPLOYEES, DEFINED. — 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. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee — that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. 2. ID.; ID.; ID.; "CONFIDENTIAL EMPLOYEE RULE"; CONSTRUED. — 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. "Management should not be required to handle labor relations matters through employees who are represented by the union with which 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." 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 question frequently considered is the employees' necessary access to confidential labor relations information. "Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information or technical trade secrets, will not render an employee a confidential employee." As held in Westinghouse Electric Corporation v. National Labor Relations Board, [(CA6) 398 P2d 669 (1968)] "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 to bargain collectively through representatives of their choosing.3. ID.; ID.; ID.; LABOR ORGANIZATION; INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN THEREOF; NOT APPLICABLE IN CASE AT BAR. — There is no question that the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis, supervisors and 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 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.4. ID.; ID.; ID.; APPROPRIATE BARGAINING UNIT; DEFINED. — 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." 5. ID.; ID.; ID.; ID.; STANDARD IN DETERMINING PROPER CONSTITUENCY THEREOF; PRESENT IN CASE AT BAR. — 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. It is readily seen that the employees in the instant case have "community or mutuality of interests," which is the standard in determining the proper constituency of a collective bargaining unit. 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. 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. 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.

D E C I S I O N

ROMERO, J p: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 Products 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 Direct 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 election 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:". . . 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 Supervisors 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 employee 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 which 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, person 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 question 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 relations 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 cause 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." cdrepIt 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 to 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 interests," 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 in Diliman, 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, Puno, Mendoza and Torres, Jr., JJ ., concur.

EN BANC [G.R. No. 91902. May 20, 1991.]MANILA ELECTRIC COMPANY, petitioner, vs. THE HON. SECRETARY OF LABOR AND EMPLOYMENT, STAFF AND TECHNICAL EMPLOYEES ASSOCIATION OF MERALCO, and FIRST LINE ASSOCIATION OF MERALCO SUPERVISORY EMPLOYEES, respondents.

Rolando R. Arbues, Atilano S. Guevarra, Jr. and Gil S. San Diego for petitioner.The Solicitor General for public respondent.Felipe Gojar for TEAM-PCWF.Wakay & Wakay Legal Services for First Line Association of Meralco Supervisory Employees.

SYLLABUS1. LABOR LAW; CLASSIFICATION OF EMPLOYEES; MANAGERIAL AND SUPERVISORY, DISTINGUISHED. — Pursuant to the Department of Labor's goal of strengthening the constitutional right of workers to self-organization, RA 6715 was subsequently passed which reorganized the employee-ranks by including a third group, or the supervisory employees, and laying down the distinction between supervisory employees and those of managerial ranks in Art. 212,renumbered par. [m], depending on whether the employee concerned has the power to lay down and execute management policies, in the case of managerial employees, or merely to recommend them, in the case of supervisory employees. Failure of the Secretary of Labor to establish a demarcation line for purposes of segregating the supervisory from the managerial employees, the required parameter is really not necessary since the law itself, Art. 212-m, (as amended by Sec. 4 of RA 6715) has already laid down the guidelines. In his Resolution, the Secretary of Labor elaborated: " . . . Thus, the determinative factor in classifying an employee as managerial, supervisory or rank-and-file is the nature of the work of the employee concerned. In National Waterworks and Sewerage Authority vs. National Waterworks and Sewerage Authority Consolidated Unions (11 SCRA 766) the Supreme Court had the occasion to come out with an enlightening dissertation of the nature of the work of a managerial employee as follows: ' . . . that the employee's primary duty consists of the management of the establishment or of a customarily recognized department or subdivision thereof, that he customarily and regularly directs the work of other employees therein, that he has the authority to hire or discharge other employees or that his suggestions and recommendations as to the hiring and discharging and or to the advancement and promotion or any other change of status of other employees are given particular weight, that he customarily and regularly exercises discretionary powers . . . (56 CJS, pp. 666-668).' "2. ID.; SECURITY GUARDS; ENJOY THE RIGHT TO JOIN ANY LABOR ORGANIZATION. — On December 24, 1986, Pres. Corazon C. Aquino issued E.O. 111 which eliminated the provision on the disqualification of security guards. What was retained was the disqualification of managerial employees, renumbered as Art. 245 (previously Art. 246), as follows: "ART. 245. Ineligibility of managerial employees to join any labor organization. — Managerial employees are not eligible to join, assist or form any labor organization." With the elimination, security guards were thus free to join a rank and file organization. On March 2, 1989, the present Congress passed RA 6715. Section 18 thereof amended Art. 245 to read as follows: "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 organization of their own." As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying supervisory employees from membership in a labor organization of the rank-and-file employees. It does not include security guards in the disqualification. The implementing rule of RA 6715, therefore, insofar as they disqualify security guards from joining a rank and file organization are null and void for being not germane to the object and

purposes of EO 111 and RA 6715 upon which such rules purportedly derive statutory moorings.3. ID.; ID.; ID.; LEGAL CONSEQUENCES. — We are aware however of possible consequences in the implementation of the law in allowing security personnel to join labor unions within the company they serve. The law is apt to produce divided loyalties in the faithful performance of their duties. Economic reasons would present the employees concerned with the temptation to subordinate their duties to the allegiance they owe the union of which they are members, aware as they are that it is usually union action that obtains for them increased pecuniary benefits. Thus, in the event of a strike declared by their union, security personnel may neglect or outrightly abandon their duties, such as protection of property of their employer and the persons of its officials and employees, the control of access to the employer's premises, and the maintenance of order in the event of emergencies and untoward incidents. It is hoped that the corresponding amendatory and/or suppletory laws be passed by Congress to avoid possible conflict of interest in security personnel.

D E C I S I O NMEDIALDEA, J p:This petition seeks to review the Resolution of respondent Secretary of Labor and Employment Franklin M. Drilon dated November 3, 1989 which affirmed an Order of Med-Arbiter Renato P. Parungo (Case No. NCR-O-D-M-1-70), directing the holding of a certification election among certain employees of petitioner Manila Electric Company (hereafter "MERALCO") as well as the Order dated January 16, 1990 which denied the Motion for Reconsideration of MERALCO.

The facts are as follows:On November 22, 1988, the Staff and Technical Employees Association of MERALCO (hereafter "STEAM-PCWF") a labor organization of staff and technical employees of MERALCO, filed a petition for certification election, seeking to represent regular employees of MERALCO who are: (a) non-managerial employees with Pay Grades VII and above; (b) non-managerial employees in the Patrol Division, Treasury Security Services Section, Secretaries who are automatically removed from the bargaining unit; and (c) employees within the rank and file unit who are automatically disqualified from becoming union members of any organization within the same bargaining unit.Among others, the petition alleged that "while there exists a duly-organized union for rank and file employees in Pay Grade I-VI, which is the MERALCO Employees and Worker's Association (MEWA) which holds a valid CBA for the rank and file employees,1 there is no other labor organization except STEAM-PCWF claiming to represent the MERALCO employees.The petition was premised on the exclusion/disqualification of certain MERALCO employees pursuant to Art. I, Secs. 2 and 3 of the existing MEWA CBA as follows:"ARTICLE ISCOPExxx xxx xxxSECTION 2. Excluded from the appropriate bargaining unit and therefore outside the scope of this Agreement are:(a) Employees in Patrol Division;(b) Employees in Treasury Security Services Section;(c) Managerial Employees; and(d) Secretaries.Any member of the Union who may now or hereafter be assigned or transferred to Patrol Division or Treasury Security Services Section, or becomes Managerial Employee or a Secretary, shall be considered automatically removed from the bargaining unit and excluded from the coverage of this agreement. He shall thereby likewise be deemed automatically to have ceased to be member of the union, and shall desist from further engaging in union activity of any kind.

SECTION 3. Regular rank-and-file employees in the organization elements herein below listed shall be covered within the bargaining unit, but shall be automatically disqualified from becoming union members:1. Office of the Corporate Secretary2. Corporate Staff Services Department3. Managerial Payroll Office4. Legal Service Department5. Labor Relations Division6. Personnel Administration Division7. Manpower Planning & Research Division8. Computer Services Department9. Financial Planning & Control Department10. Treasury Department, except Cash Section 11. General Accounting Section.". . ." (p. 19, Rollo).

MERALCO moved for the dismissal of the petition on the following grounds:I. The employees sought to be represented by petitioner are either 1) managerial who are prohibited by law from forming or joining supervisory union; 2) security services personnel who are prohibited from joining or assisting the rank-and-file union; 3) secretaries who do not consent to the petitioner's representation and whom petitioner can not represent; and 4) rank-and-file employees represented by the certified or duly recognized bargaining representative of the only rank-and-file bargaining unit in the company, the Meralco Employees Workers Association (MEWA), in accordance with the existing Collective Bargaining Agreement with the latter.II.The petition for certification election will disturb the administration of the existing Collective Bargaining Agreement in violation of Art. 232 of the Labor Code.III.The petition itself shows that it is not supported by the written consent of at least twenty percent (20%) of the alleged 2,500 employees sought to be represented. (Resolution, Sec. of Labor, pp. 223-224, Rollo)

Before Med-Arbiter R. Parungo, MERALCO contended that employees from Pay Grades VII and above are classified as managerial employees who, under the law, are prohibited from forming, joining or assisting a labor organization of the rank and file. As regards those in the Patrol Division and Treasury Security Service Section, MERALCO maintains that since these employees are tasked with providing security to the company, they are not eligible to join the rank and file bargaining unit, pursuant to Sec. 2(c), Rule V, Book V of the then Implementing Rules and Regulations of the Labor Code (1988) which reads as follows:"Sec. 2. Who may file petition. — The employer or any legitimate labor organization may file the petition."The petition, when filed by a legitimate labor organization, shall contain, among others:"xxx xxx xxx;"(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require, and provided, further: that the appropriate bargaining unit of the rank and file employees shall not include security guards (As amended by Sec. 6, Implementing Rules of EO 111).". . ." (p. 111, Labor Code, 1988 Ed.)

As regards those rank and file employees enumerated in Sec. 3, Art. I, MERALCO contends that since they are already beneficiaries of the MEWA-CBA, they may not be treated as a separate and distinct appropriate bargaining unit.MERALCO raised the same argument with respect to employees sought to be represented by STEAM-PCWF, claiming that these were already covered by the MEWA-CBA.On March 15, 1989, the Med-Arbiter ruled that having been excluded from the existing Collective Bargaining Agreement for rank and file employees, these

employees have the right to form a union of their own, except those employees performing managerial functions. With respect to those employees who had resented their alleged involuntary membership in the existing CBA, the Med-Arbiter stated that the holding of a certification election would allow them to fully translate their sentiment on the matter, and thus directed the holding of a certification election. The dispositive portion of the Resolution provides as follows:"WHEREFORE, premises considered, a certification election is hereby ordered conducted among the regular rank-and-file employees of MERALCO to wit:"1. Non-managerial employees with Pay Grades VII and above;"2. Non-managerial employees of Patrol Division, Treasury Security Services Section and Secretaries; and"3. Employees prohibited from actively participating as members of the union.within 20 days from receipt hereof, subject to the usual pre-election conference with the following choices:"1. Staff and Technical Employees Association of MERALCO (STEAM-PCWF);"2. No Union."SO ORDERED." (p. 222, Rollo)

On April 4, 1989, MERALCO appealed, contending that "until such time that a judicial finding is made to the effect that they are not managerial employee, STEAM-PCWF cannot represent employees from Pay Grades VII and above, additionally reiterating the same reasons they had advanced for disqualifying respondent STEAM-PCWF.On April 7, 1989, MEWA filed an appeal-in-intervention, submitting as follows:A. The Order of the Med-Arbiter is null and void for being in violation of Article 245 of the Labor Code;B. The Order of the Med-Arbiter violates Article 232 of the Labor Code; andC. The Order is invalid because the bargaining unit it delineated is not an appropriated (sic) bargaining unit.

On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.With the enactment of RA 6715 and the rules and regulations implementing the same, STEAM-PCWF renounced its representation of the employees in Patrol Division, Treasury Security Services Section and rank-and-file employees in Pay Grades I-VI.On September 13, 1989, the First Line Association of Meralco Supervisory Employees (hereafter FLAMES) filed a similar petition (NCR-OD-M-9-731-89) seeking to represent those employees with Pay Grades VII to XIV, since "there is no other supervisory union at MERALCO." (p. 266, Rollo). The petition was consolidated with that of STEAM-PCWF.On November 3, 1989, the Secretary of Labor affirmed with modification, the assailed order of the Med-Arbiter, disposing as follows:"WHEREFORE, premises considered, the Order appealed from is hereby affirmed but modified as far as the employees covered by Section 3, Article I of the existing CBA in the Company are concerned. Said employees shall remain in the unit of the rank-and file already existing and may exercise their right to self organization as above enunciated."Further, the First Line Association of Meralco Supervisory Employees (FLAMES) is included as among the choices in the certification election."Let, therefore, the pertinent records of the case be immediately forwarded to the Office of origin for the conduct of the certification election."SO ORDERED." (p. 7, Rollo)

MERALCO's motion for reconsideration was denied on January 16, 1990.On February 9, 1990, MERALCO filed this petition, premised on the following ground:"RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF DISCRETION AND/OR IN EXCESS OF JURISDICTION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT:

"I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE ESTABLISHED INDEPENDENT, DISTINCT AND SEPARATE FROM THE EXISTING RANK-AND-FILE BARGAINING UNIT."II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE RANK-AND-FILE EMPLOYEES."III. THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED TOGETHER WITH THE RANK-AND-FILE UNION AND/OR THE SUPERVISORY UNION." (p. 8, Rollo)

On February 26, 1990, We issued a temporary restraining order (TRO) against the implementation of the disputed resolution.In its petition, MERALCO has relented and recognized respondents STEAM-PCWF and FLAMES' desired representation of supervisory employees from Grades VII up. However, it believes that all that the Secretary of Labor has to do is to establish a demarcation line between supervisory and managerial rank, and not to classify outright the group of employees represented by STEAM-PCWF and FLAMES as rank and file employees.In questioning the Secretary of Labor's directive allowing security guards (Treasury/Patrol Services Section) to be represented by respondents, MERALCO contends that this contravenes the provisions of the recently passed RA 6715 and its implementing rules (specifically par. 2, Sec. 1, Rule II, Book V) which disqualifies supervisory employees and security guards from membership in a labor organization of the rank and file (p. 11, Rollo).The Secretary of Labor's Resolution was obviously premised on the provisions of Art. 212, then par. (k), of the 1988 Labor Code defining "managerial" and "rank and file" employees, the law then in force when the complaint was filed. At the time, only two groups of employees were recognized, the managerial and rank and file. This explains the absence of evidence on job descriptions on who would be classified managerial employees. It is perhaps also for this reason why the Secretary of Labor limited his classification of the Meralco employees belonging to Pay Grades VII and up, to only two groups, the managerial and rank and file. However, pursuant to the Department of Labor's goal of strengthening the constitutional right of workers to self-organization, RA 6715 was subsequently passed which reorganized the employee-ranks by including a third group, or the supervisory employees, and laying down the distinction between supervisory employees and those of managerial ranks in Art. 212, renumbered par. [m], depending on whether the employee concerned has the power to lay down and execute management policies, in the case of managerial employees, or merely to recommend them, in case of supervisory employees.

In this petition, MERALCO has admitted that the employees belonging to Pay Grades VII and up are supervisory (p. 10, Rollo). The records also show that STEAM-PCWF had "renounced its representation of the employees in Patrol Division, Treasury Security Service Section and rank and file employees in Pay Grades I-VI" (p. 6, Rollo); while FLAMES, on the other hand, had limited its representation to employees belonging to Pay Grades VII-XIV, generally accepted as supervisory employees, as follows:"It must be emphasized that private respondent First Line Association of Meralco Supervisory Employees seeks to represent only the Supervisory Employees with Pay Grades VII to XIV."Supervisory Employees with Pay Grades VII to XIV are not managerial employees. In fact the petition itself of petitioner Manila Electric Company on page 9, paragraph 3 of the petition stated as follows, to wit:'There was no need for petitioner to prove that these employees are not rank-and-file. As adverted to above, the private respondents admit that these are not the rank-and-file but the supervisory employees, whom they seek to represent. What needs to be established is the rank where supervisory ends and managerial begins.'and First Line Association of Meralco Supervisory Employees herein states that Pay Grades VII to XIV are not managerial employees. In fact, although employees with

Pay Grade XV carry the Rank of Department Managers, these employees only enjoys (sic) the Rank Manager but their recommendatory powers are subject to evaluation, review and final action by the department heads and other higher executives of the company." (FLAMES' Memorandum, p. 305, Rollo).

Based on the foregoing, it is clear that the employees from Pay Grades VII and up have been recognized and accepted as supervisory. On the other hand, those employees who have been automatically disqualified have been directed by the Secretary of Labor to remain in the existing labor organization for the rank and file, (the condition in the CBA deemed as not having been written into the contract, as unduly restrictive of an employee's exercise of the right to self-organization). We shall discuss the rights of the excluded employees (or those covered by Sec. 2, Art. I, MEWA-CBA later.Anent the instant petition therefore, STEAM-PCWF, and FLAMES would therefore represent supervisory employees only. In this regard, the authority given by the Secretary of Labor for the establishment of two labor organizations for the rank and file will have to be disregarded since We hereby uphold certification elections only for supervisory employees from Pay Grade VII and up, with STEAM-PCWF and FLAMES as choices. As to the alleged failure of the Secretary of Labor to establish a demarcation line for purposes of segregating the supervisory from the managerial employees, the required parameter is really not necessary since the law itself, Art. 212-m, (as amended by Sec. 4 of RA 6715) has already laid down the corresponding guidelines:"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."

In his resolution, the Secretary of Labor further elaborated:". . . Thus, the determinative factor in classifying an employee as managerial, supervisory or rank-and-file is the nature of the work of the employee concerned.

"In National Waterworks and Sewerage Authority vs. National Waterworks and Sewerage Authority Consolidated Unions (11 SCRA 766) the Supreme Court had the occasion to come out with an enlightening dissertation of the nature of the work of a managerial employee as follows:'. . . that the employee's primary duty consists of the management of the establishment or of a customarily recognized department or subdivision thereof, that he customarily and regularly directs the work of other employees therein, that he has the authority to hire or discharge other employees or that his suggestions and recommendations as to the hiring and discharging and or to the advancement and promotion or any other change of status of other employees are given particular weight, that he customarily and regularly exercises discretionary powers . . . (56 CJS, pp. 666-668.)'" (p. 226, Rollo)

We shall now discuss the rights of the security guards to self-organize. MERALCO has questioned the legality of allowing them to join either the rank and file or the supervisory union, claiming that this is a violation of par. 2, Sec. 1, Rule II, Book V of the Implementing Rules of RA 6715, which states as follows:"Sec. 1. Who may join unions . . . ."xxx xxx xxx

"Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own; . . .". . ." (emphasis supplied).

Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c) Rule V, also of Book V of the implementing rules of RA 6715:"Rule V.REPRESENTATION CASES ANDINTERNAL-UNION CONFLICTS'Sec. 1. . . ."Sec. 2. Who may file. — Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition."The petition, when filed by a legitimate labor-organization shall contain, among others:"(a) . . ."(b) . . ."(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards;". . ." (emphasis supplied)

Both rules, barring security guards from joining a rank and file organization, appear to have been carried over from the old rules which implemented then Art. 245 of the Labor Code, and which provided thus:"Art. 245. Ineligibility of security personnel to join any labor organization. — Security guards and other personnel employed for the protection and security of the person, properties and premises of the employer shall not be eligible for membership in any labor organization."

On December 24, 1986, Pres. Corazon C. Aquino issued E.O No. 111 which eliminated the above-cited provision on the disqualification of security guards. What was retained was the disqualification of managerial employees, renumbered as Art. 245 (previously Art. 246), as follows:"ART. 245. Ineligibility of managerial employees to joint any labor organization. — Managerial employees are not eligible to join, assist or form any labor organization."

With the elimination, security guards were thus free to join a rank and file organization.On March 2, 1989, the present Congress passed RA 6715. 2 Section 18 thereof amended Art. 245, to read as follows:"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." (emphasis supplied).

As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying supervisory employees from membership in a labor organization of the rank-and-file employees. It does not include security guards in the disqualification.The implementing rules of RA 6715, therefore, insofar as they disqualify security guards from joining a rank and file organization are null and void, for being not germane to the object and purposes of EO 111 and RA 6715 upon which such rules purportedly derive statutory moorings. In Shell Philippines, Inc. vs. Central Bank, G.R. No. 51353, June 27, 1988, 162 SCRA 628, We stated:

The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned." (citing University of Sto. Tomas vs. Board of Tax Appeals, 93 Phil. 376).

While therefore under the old rules, security guards were barred from joining a labor organization of the rank and file, under RA 6715, they may now freely join a labor organization of the rank and file or that of the supervisory union, depending on their rank. By accommodating supervisory employees, the Secretary of Labor must likewise apply the provisions of RA 6715 to security guards by favorably allowing them free access to a labor organization, whether rank and file or supervisory, in recognition of their constitutional right to self-organization.We are aware however of possible consequences in the implementation of the law in allowing security personnel to join labor unions within the company they serve. The law is apt to produce divided loyalties in the faithful performance of their duties. Economic reasons would present the employees concerned with the temptation to subordinate their duties to the allegiance they owe the union of which they are members, aware as they are that it is usually union action that obtains for them increased pecuniary benefits.Thus, in the event of a strike declared by their union, security personnel may neglect or outrightly abandon their duties, such as protection of property of their employer and the persons of its officials and employees, the control of access to the employer's premises, and the maintenance of order in the event of emergencies and untoward incidents.It is hoped that the corresponding amendatory and/or suppletory laws be passed by Congress to avoid possible conflict of interest in security personnel.ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with modification the Resolution of the Secretary of Labor dated November 3, 1989 upholding an employee's right to self-organization. A certification election is hereby ordered conducted among supervisory employees of MERALCO, belonging to Pay Grades VII and above, using as guideliness an employee's power to either recommend or execute management policies, pursuant to Art. 212 (m), of the Labor Code, as amended by Sec. 4 of RA 6715, with respondents STEAM-PCWF and FLAMES as choices.Employees of the Patrol Division, Treasury Security Services Section and Secretaries may freely join either the labor organization of the rank and file or that of the supervisory union depending on their employee rank. Disqualified employees covered by Sec. 3, Art. I of the MEWA-CBA, shall remain with the existing labor organization of the rank and file, pursuant to the Secretary of Labor's directive:"By the parties' own agreement, they find the bargaining unit, which includes the positions enumerated in Section 3, Article I of their CBA, appropriate for purposes of collective bargaining. The composition of the bargaining unit should be left to the agreement of the parties, and unless there are legal infirmities in such agreement, this Office will not substitute its judgment for that of the parties. Consistent with the history of collective bargaining in the company, the membership of said group of employees in the existing rank-and-file unit should continue, for it will enhance stability in that unit already well established. However, we cannot approve of the condition set in Section 3, Article I of the CBA that the employees covered are automatically disqualified from becoming union members. The condition unduly restricts the exercise of the right to self organization by the employees in question. It is contrary to law and public policy and, therefore, should be considered to have not been written into the contract. Accordingly, the option to join or not to join the union should be left entirely to the employees themselves." (p. 229, Rollo)

The Temporary Restraining Order (TRO) issued on February 26, 1990 is hereby LIFTED. Costs against petitioner.SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Griño-Aquino, Regalado and Davide, Jr., JJ., concur.

Footnotes 1. This CBA expired on November 30, 1989. There is an on-going CBA negotiation with National Capitol Region, Dole, per Comment of FLAMES, dated March 6, 1990, p. 248, Rollo. 2. Published in two newspapers, the law took effect on March 21, 1989.

THIRD DIVISION [G.R. No. 79025. December 29, 1989.]BENGUET ELECTRIC COOPERATIVE, INC., petitioner, vs. HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, and BENECO EMPLOYEES LABOR UNION, respondents.

E.L. Gayo & Associates for petitioner.

SYLLABUS1. LABOR LAW; LABOR RELATIONS; RIGHT TO SELF-ORGANIZATION; NOT AVAILABLE TO EMPLOYEES OF A COOPERATIVE WHO AT THE SAME TIME IS A MEMBER-OWNER THEREOF. — The issue of whether or not employees of a cooperative are qualified to form or join a labor organization for purposes of collective bargaining has already been resolved and clarified in the case of Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al. [G.R. No. 77951, September 26, 1988] and reiterated in the cases of Batangas-I Electric Cooperative Labor Union v. Young, et al. [G.R. Nos. 62386, 70880 and 74560, November 9, 1988] and San Jose City Electric Service Cooperative, Inc. v. Ministry of Labor and Employment, et al. [G.R. No. 77231, May 31, 1989] wherein the Court had stated that the right to collective bargaining is not available to an employee of a cooperative who at the same time is a member and co-owner thereof. With respect, however, to employees who are neither members nor co-owners of the cooperative they are entitled to exercise the rights to self-organization, collective bargaining and negotiation as mandated by the 1987 Constitution and applicable statutes.2. ID.; ID.; ID.; ID.; RATIONALE. — Contrary to respondents' claim, the fact that the members-employees of petitioner do not participate in the actual management of the cooperative does not make them eligible to form, assist or join a labor organization for the purpose of collective bargaining with petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a labor union for purposes of collective bargaining was based on the fact that as members of the cooperative they are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly an owner cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative, and not involvement in the management thereof, which disqualifies a member from joining any labor organization within the cooperative. Thus, irrespective of the degree of their participation in the actual management of the cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of collective bargaining.3. ID.; ID.; ID.; ID.; MEMBERSHIP IN THE COOPERATIVE; DISTINGUISHED FROM STOCKHOLDERS OF ORDINARY CORPORATIONS. — While cooperatives may exercise some of the rights and privileges given to ordinary corporations provided under existing laws, such cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres. Decree No. 175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members of cooperatives have rights and obligations different from those of stockholders of ordinary corporations. It was precisely because of the special nature of cooperatives, that the Court held in the Davao City case that members-employees thereof cannot form or join a labor union for purposes of collective bargaining. The Court held that: A cooperative . . . is by its nature different from an ordinary business concern being run either by persons, partnerships, or corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees. As above stated, irrespective of the number of shares owned by each member they are entitled to cast one vote each in deciding upon the affairs of the cooperative. Their share capital earn limited interest. They enjoy special privileges as — exemption from income tax and sales taxes, preferential light to supply their products to State agencies and even exemption from the minimum wage laws. An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the

right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners.

D E C I S I O NCORTES, J p:On June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations (hereinafter referred to as BWLU-ADLO) filed a petition for direct certification as the sole and exclusive bargaining representative of all the rank and file employees of Benguet Electric Cooperative, Inc. (hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging, inter alia, that BENECO has in its employ two hundred and fourteen (214) rank and file employees; that one hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of the petition; that no certification election has been conducted for the last 12 months; that there is no existing collective bargaining representative of the rank and file employees sought to be represented by BWLU-ADLO; and, that there is no collective bargaining agreement in the cooperative.

An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to as BELU) contending that it was certified as the sole and exclusive bargaining representative of the subject workers pursuant to an order issued by the med-arbiter on October 20, 1980; that pending resolution by the National Labor Relations Commission are two cases it filed against BENECO involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars any representation question.BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit electric cooperative engaged in providing electric services to its members and patron-consumers in the City of Baguio and Benguet Province; and, that the employees sought to be represented by BWLU-ADLO are not eligible to form, join or assist labor organizations of their own choosing because they are members and joint owners of the cooperative. On September 2, 1985 the med-arbiter issued an order giving due course to the petition for certification election. However, the med-arbiter limited the election among the rank and file employees of petitioner who are non members thereof and without any involvement in the actual ownership of the cooperative. Based on the evidence during the hearing the med-arbiter found that there are thirty-seven (37) employees who are not members and without any involvement in the actual ownership of the cooperative. The dispositive portion of the med-arbiter's order is as follows:WHEREFORE, premises considered, a certification election should be as it is hereby ordered to be conducted at the premises of Benguet, Electric Cooperative, Inc., at Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among all the rank and file employees (non-members/consumers and without any involvement in the actual ownership of the cooperative) with the following choices:1. BENECO WORKERS LABOR UNION-ADLO2. BENECO EMPLOYEES LABOR UNION3. NO UNIONThe payroll for the month of June 1980 shall be the basis in determining the qualified voters who may participate in the certification election to be conducted.SO ORDERED. [Rollo, pp. 22-23.]BELU and BENECO appealed from this order but the same was dismissed for lack of merit on March 25, 1986. Whereupon BENECO filed with this Court a petition for certiorari with prayer for preliminary injunction and or restraining order, docketed as G.R. No. 74209, which the Supreme Court dismissed for lack of merit in a minute resolution dated April 28, 1986.The ordered certification election was held on October 1, 1986. Prior to the conduct thereof BENECO's counsel verbally manifested that "the cooperative is protesting that employees who are members-consumers are being allowed to vote when . . . they are not eligible to be members of any labor union for purposes of collective

bargaining; much less, to vote in this certification election." [Rollo, p. 28]. Petitioner submitted a certification showing that only four (4) employees are not members of BENECO and insisted that only these employees are eligible to vote in the certification election. Canvass of the votes showed that BELU garnered forty-nine (49) of the eighty-three (83) "valid" votes cast.Thereafter BENECO formalized its verbal manifestation by filing a Protest. Finding, among others, that the issue as to whether or not member-consumers who are employees of BENECO could form, assist or join a labor union has been answered in the affirmative by the Supreme Court in G.R. No. 74209, the med-arbiter dismissed the protest on February 17, 1987. On June 23, 1987, Bureau of Labor Relations (BLR) director Pura Ferrer-Calleja affirmed the med-arbiter's order and certified BELU as the sole and exclusive bargaining agent of all the rank and file employees of BENECO.Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of jurisdiction BENECO filed the instant petition for certiorari. In his Comment the Solicitor General agreed with BENECO's stance and prayed that the petition be given due course. In view of this, respondent director herself was required by the Court to file a Comment. On April 19, 1989 the Court gave due course to the petition and required the parties to submit their respective memoranda.The main issue in this case is whether or not respondent director committed grave abuse of discretion in certifying respondent BELU as the sole and exclusive bargaining representative of the rank and file employees of BENECO.Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification election, "at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit." Petitioner BENECO asserts that the certification election held on October 1, 1986 was null and void since members-employees of petitioner cooperative who are not eligible to form and join a labor union for purposes of collective bargaining were allowed to vote therein. Respondent director and private respondent BELU on the other hand submit that members of a cooperative who are also rank and file employees are eligible to form, assist or join a labor union [Comment of Respondent Director, p. 4; Rollo, p. 125; Comment of BELU, pp. 9-10; Rollo pp. 99-100].The Court finds the present petition meritorious.The issue of whether or not employees of a cooperative are qualified to form or join a labor organization for purposes of collective bargaining has already been resolved and clarified in the case of Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al. [G.R. No. 77951, September 26, 1988] and reiterated in the cases of Batangas-I Electric Cooperative Labor Union v. Young, et al. [G.R. Nos. 62386, 70880 and 74560, November 9, 1988] and San Jose City Electric Service Cooperative, Inc. v. Ministry of Labor and Employment, et al. [G.R. No. 77231, May 31, 1989] wherein the Court had stated that the right to collective bargaining is not available to an employee of a cooperative who at the same time is a member and co-owner thereof. With respect, however, to employees who are neither members nor co-owners of the cooperative they are entitled to exercise the rights to self-organization, collective bargaining and negotiation as mandated by the 1987 Constitution and applicable statutes. Respondent director argues that to deny the members of petitioner cooperative the right to form, assist or join a labor union of their own choice for purposes of collective bargaining would amount to a patent violation of their right to self-organization. She points out that:"albeit a person assumes a dual capacity as rank and file employee and as member of a certain cooperative does not militate, as in the instant case, against his/her exercise of the right to self-organization and to collective bargaining guaranteed by the Constitution and Labor Code because, while so doing, he/she is acting in his/her capacity as rank and file employee thereof. It may be added that while the employees concerned became members of petitioner cooperative, their status

employment as rank and filers who are hired for fixed compensation had not changed. They still do not actually participate in the management of the cooperative as said function is entrusted to the Board of Directors and to the elected or appointed officers thereof. They are not vested with the powers and prerogatives to lay down and execute managerial policies; to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees; and/or to effectively recommend such managerial functions [Comment of Respondent Director, p. 4; Rollo, p. 125.]

Private respondent BELU concurs with the above contention of respondent director and, additionally, claims that since membership in petitioner cooperative is only nominal, the rank and file employees who are members thereof should not be deprived of their right to self-organization.The above contentions are untenable. Contrary to respondents' claim, the fact that the members-employees of petitioner do not participate in the actual management of the cooperative does not make them eligible to form, assist or join a labor organization for the purpose of collective bargaining with petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a labor union for purposes of collective bargaining was based on the fact that as members of the cooperative they are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly an owner cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative, and not involvement in the management thereof, which disqualifies a member from joining any labor organization within the cooperative. Thus, irrespective of the degree of their participation in the actual management of the cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of collective bargaining.Respondent union further claims that if nominal ownership in a cooperative is "enough to take away the constitutional protections afforded to labor, then there would be no hindrance for employers to grant, on a scheme of generous profit sharing, stock bonuses to their employees and thereafter claim that since their employees are not stockholders [of the corporation], albeit in a minimal and involuntary manner, they are now also co-owners and thus disqualified to form unions." To allow this, BELU argues, would be "to allow the floodgates of destruction to be opened upon the rights of labor which the Constitution endeavors to protect and which welfare it promises to promote." [Comment of BELU, p. 10; Rollo, p. 100].The above contention of respondent union is based on the erroneous presumption that membership in a cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives may exercise some of the rights and privileges given to ordinary corporations provided under existing laws, such cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres. Decree No. 175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members of cooperatives have rights and obligations different from those of stockholders of ordinary corporations. It was precisely because of the special nature of cooperatives, that the Court held in the Davao City case that members-employees thereof cannot form or join a labor union for purposes of collective bargaining. The Court held that:A cooperative . . . is by its nature different from an ordinary business concern being run either by persons, partnerships, or corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees. As above stated, irrespective of the number of shares owned by each member they are entitled to cast one vote each in deciding upon the affairs of the cooperative. Their share capital earn limited interest. They enjoy special privileges as — exemption from income tax and sales taxes, preferential light to supply their products to State agencies and even exemption from the minimum wage laws.

An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners.It is important to note that, in her order dated September 2, 1985, med-arbiter Elnora V. Balleras made a specific finding that there are only thirty-seven (37) employees of petitioner who are not members of the cooperative and who are, therefore, the only employees of petitioner cooperative eligible to form or join a labor union for purposes of collective bargaining [Annex "A" of the Petition, p. 12; Rollo, p. 22]. However, the minutes of the certification election [Annex "C" of the Petition: Rollo, p. 28] show that a total of eighty-three (83) employees were allowed to vote and of these, forty-nine (49) voted for respondent union. Thus, even if We agree with respondent union's contention that the thirty seven (37) employees who were originally non-members of the cooperative can still vote in the certification election since they were only "forced and compelled to join the cooperative on pain of disciplinary action," the certification election held on October 1, 1986 is still null and void since even those who were already members of the cooperative at the time of the issuance of the med-arbiter's order, and therefore cannot claim that they were forced to join the union, were allowed to vote in the election. Article 256 of the Labor Code provides, among others, that:To have a valid, election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit . . . [Emphasis supplied.]

In this case it cannot be determined whether or not respondent union was duly elected by the eligible voters of the bargaining unit since even employees who are ineligible to join a labor union within the cooperative because of their membership therein were allowed to vote in the certification election.Considering the foregoing, the Court finds that respondent director committed grave abuse of discretion in certifying respondent union as the sole and exclusive bargaining representative of the rank and file employees of petitioner cooperative.WHEREFORE, the petition is hereby GRANTED and the assailed resolution of respondent director is ANNULLED. The certification election conducted on October 1, 1986, is SET ASIDE. The Regional Office No. 1 of San Fernando, La Union is hereby directed to immediately conduct new certification election proceedings among the rank and file employees of the petitioner who are not members of the cooperative. SO ORDERED.Fernan (C.J.), Gutierrez, Jr., and Bidin, JJ., concur.Feliciano, J., is on leave.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

FIRST DIVISION [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 NGRIÑO-AQUINO, J p: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 in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union. The public respondent correctly observed that the "recognition of the tenets of the sect . . . should not infringe on the basic right of self-organization granted by the constitution to workers, regardless of religious affiliation."The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a timely petition for certification election on October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a "certification election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can freely choose their bargaining representative thru secret ballot." Since it has not been shown that this order is tainted with unfairness, this Court will not thwart the holding of a certification election (Associated Trade Unions [ATU] vs. Noriel, 88 SCRA 96).WHEREFORE, the petition for certiorari is denied, with costs against the petitioner.SO ORDERED.Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

FIRST DIVISION [G.R. No. 80887. September 30, 1994.]BLISS DEVELOPMENT CORPORATION EMPLOYEES UNION (BDCEU)-FDTU SENTRO NG DEMOKRATIKONG MANGGAGAWA (SDM), petitioner, vs. HON. PURA FERRER CALLEJA and BLISS DEVELOPMENT CORPORATION, respondents.

D E C I S I O NKAPUNAN, J p:The focal issue in the case at bench is whether or not Bliss Development Corporation (BDC) is a government-owned or controlled corporation subject to Civil Service laws, rules and regulations. Corollary to this issue is the question of whether or not petitioner is covered by Executive Order No. 180 and must register under Section 7 thereof as a pre-condition for filing a petition for certification election.

The antecedents of the case are:On October 10, 1986, petitioner, a duly registered labor union, filed with the Department of Labor, National Capital Region, a petition for certification election of private respondent Bliss Development Corporation (BDC).

Based on the position papers submitted by the parties, Med-Arbiter Napoleon V. Fernando, in an order dated January 26, 1987, dismissed the petition for lack of jurisdiction stating that the majority of BDC's stocks is owned by the Human Settlement Development Corporation (HSDC), a wholly-owned government corporation. Therefore, BDC is subject to Civil Service law, rules and regulations. The pertinent portion of said Order reads: It may not be amised (sic) to further state that the Supreme Court in its Decision in the case of National Housing Corporation versus Benjamin Juco and the National Labor Relations Commission G-R 63313 promulgated on January 17, 1985 has pronounced that:There should no longer be any question at this time that employees of government owned or controlled corporations are governed by the Civil Service Rules and Regulations.'

Corollary to the issue of whether or not employees of BDC may form or join labor organizations therefore is the issue of whether or not BDC is a government owned corporation.The pertinent law on the matter is P.D. No. 2029 which provides that:Section 2 — Definition — A government-owned or controlled corporation is a stock or non-stock corporation whether performing government or proprietary functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by the government or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting stock.

In the case at bar, it is not disputed that majority of the stocks of BDC are owned by Human Settlement Development Corporation, a wholly government owned corporation, hence, this Office cannot, but otherwise conclude, that Bliss Development Corporation is a government owned corporation whose employees are governed not by the Labor Code but by the Civil Service law, rules and regulations. Its employees therefore, are prohibited to join or form labor organization. Further, this Office is without authority to entertain the present petition for obvious lack of jurisdiction.Indeed, Opinion No. 94, series of 1985, the Minister of Justice has declared:In determining whether a corporation created under the Corporation Code is government owned or controlled or not, this ministry has consistently applied the ownership test whereby a corporation will be deemed owned by the government if the majority of its voting stocks are owned by the government.

It appearing that Human Settlement Development Corporation (HSDC), which is a wholly-owned government corporation, owns a majority of the stocks of Bliss Development Corporation (BDC), our conclusion is that BDC is a government-owned corporation subject to the coverage of the Civil Service law, rules and regulations as pronounced by the Supreme Court in the case of NHA versus Juco.1 Petitioner then filed an appeal with the Bureau of Labor Relations.In the meantime, or on June 1, 1987 Executive Order No. 180 was issued by the then President Corazon C. Aquino extending to government employees the right to organize and bargain collectively. Sections 1 and 7 of said Order provide:Section 1. This Executive Order applies to all employees of all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations with original charters. . . . (Emphasis supplied)Section 7. Government employees' organizations shall register with the Civil Service Commission and the Department of Labor and Employment. The application shall be filed with the Bureau of Labor Relations of the Department which shall process the same in accordance with the provisions of the Labor Code of the Philippines, as amended. Applications may also be filed with the Regional Offices of the Department of Labor and Employment which shall immediately transmit the said applications to the Bureau of Labor Relations within three (3) days from receipt hereof.

On August 7, 1987, Director Pura Ferrer-Calleja of the Bureau of Labor Relations issued an Order dismissing the appeal. Said Order is reproduced hereunder: For disposition is an appeal of the Bliss Development Corporation Employees Union Sentro ng Demokratikong Manggagawa (BDCEU-SDM) from the Order of the Med-Arbiter dismissing its petition for direct certification/certification election dated January 26, 1987.

On January 26, 1987, the Med-Arbiter issued an Order dismissing the petition filed by BDCEU-SDM. He ruled that the Bliss Development Corporation which is under the then Ministry of Human Settlement, is a government corporation where the workers are prohibited from organizing and joining labor unions. The Med-Arbiter cited Opinion No. 94 series of 1985, of the Minister of Justice which is hereunder quoted as follows:In determining whether a corporation created under the Corporation Code is a government-owned or a controlled or not, this Ministry has consistently applied the ownership test whereby a corporation will be deemed owned by the government if all or a majority of its stocks are owned by the government, and it will be deemed controlled by the government, if the majority of its voting stocks are owned by the government.It appearing that HSDC, which is a wholly-owned government corporation, owns a majority of the stocks of BDC, our conclusion is that BDC is a government-owned corporation subject to the coverage of the Civil Service Law and rules as pronounced by the Supreme Court in the case of NHA vs. Juco.But circumstances have changed. With the issuance of Executive Order No. 180 dated June 1, 1987, government employees are now given the right to organize and bargain collectively. This, therefore, renders academic the order subject of the appeal.xxx xxx xxxConsequently, this Bureau hereby enjoins the Petitioner to register in accordance with the aforecited provision. Meantime, the petition is dismissed without prejudice to its refiling after petitioner is granted registration to avoid legal complications.WHEREFORE, in view of the foregoing, the case is hereby dismissed without prejudice.SO ORDERED.2

Taking exception to the Director's Order, petitioner brought the instant petition to annul the same on the following grounds:I.THE DIRECTOR GRAVELY ABUSED HER DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN SHE ORDERED PETITIONER TO REGISTER UNDER SECTION 7 OF EXECUTIVE ORDER NO. 180 WHICH DOES NOT COVER PETITIONER;.II.THE DIRECTOR GRAVELY ABUSED HER DISCRETION WHEN SHE INSISTED ON ENFORCING AN OPINION OF THE MINISTER OF JUSTICE WHICH RESPONDENT BDC ITSELF HAS CONSISTENTLY IGNORED AND CONTINUES TO IGNORE AND WHICH THE ENTIRE GOVERNMENT DOES NOT CARE TO ENFORCE.3

In a resolution dated May 29, 1989 the Court gave due course to the petition and required the parties to file their respective memoranda which was complied with. The Solicitor General begged leave to be relieved from filing a comment on the petition and a memorandum, averring that he could not sustain the position of respondent Director.The petition is impressed with merit.Section 1 of Executive Order No. 180 expressly limits its application to only government-owned or controlled corporations with original charters. Hence, public respondent's order dated August 7, 1987 requiring petitioner to register in accordance with Section 7 of Executive Order No. 180 is without legal basis. Without categorically saying so, public respondent sustained the Med-Arbiter's invocation of the case of National Housing Corporation v. Juco, 4 which ruled that the inclusion of "government-owned or controlled corporations" within the embrace of the civil service shows a deliberate effort of the framers of the 1973 Constitution to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the all encompassing coverage of the civil service system. In said case, we stressed that:Section 1 of Article XII-B, Constitution uses the word 'every' to modify the phrase "government-owned or controlled corporation."'Every' means each one of a group, without exception. It means all possible and all, taken one by one. Of course, our decision in this case refers to a corporation created as a government-owned or controlled entity. . . . . 5

However, our ruling in NHC v. Juco 6 case, which was decided under the 1973 Constitution, lost its applicability with the advent of the 1987 Constitution. Thus, in National Service Corporation v. NLRC,7 we held that:. . . (I)n the matter of coverage by the civil service of government-owned or controlled corporations, the 1987 Constitution starkly varies from the 1973 Constitution, [upon which National Housing Corporation vs. Juco is based. Under the 1973 Constitution,] it was provided that:The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or controlled corporation. . . . [Constitution, 1973, Art. II-B, Sec. I (1)].

On the other hand, the 1987 Constitution provides that:The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charter. (Emphasis supplied) [Constitution (1987), Art. IX-B, Sec. 2(1).

Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the National Housing Corporation case in the following manner —The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section 1, Article XII-B of the Constitution. It would be possible for a regular ministry of government to create a host of subsidiary corporations under the Corporation Code funded by a willing legislature. A government-owned corporation could create several subsidiary corporations. These subsidiary corporations would enjoy the best of two worlds. Their officials and employees would be privileged

individuals, free from the strict accountability required by the Civil Service Decree and the regulations of the Commission on Audit. Their incomes would not be subject to the competitive restrains of the open market nor to the terms and conditions of civil service employment. Conceivably, all government-owned or controlled corporations could be created, no longer by special charters, but through incorporations under the general law. The Constitutional amendment including such corporations in the embrace of the civil service would cease to have application. Certainly, such a situation cannot be allowed to exist. [134 SCRA 182-183]appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces government-owned or controlled corporations with original charter; and, therefore, by clear implication, the Civil Service does not include government-owned or controlled corporations which are organized as subsidiaries of government-owned or controlled corporations under the general corporation law.8

A corporation is created by operation of law. It acquires a juridical personality either by special law or a general law. The general law under which a private corporation may be formed or organized is the Corporation Code, the requirements of which must be complied with by those wishing to incorporate. Only upon such compliance will the corporation come into being and acquire a juridical personality, thus giving rise to its right to exist and act as a legal entity. On the other hand, a government corporation is normally created by special law, referred to often as a charter.9 BDC is a government-owned corporation created under the Corporation Law. It is without a charter, governed by the Labor Code and not by the Civil Service Law hence, Executive Order No. 180 does not apply to it. Consequently, public respondent committed grave abuse of discretion in ordering petitioner to register under Section 7, of Executive Order No. 180 as a precondition for filing a petition for certification election.WHEREFORE, the instant petition is hereby GRANTED. The Order of public respondent dated August 7, 1987 is SET ASIDE and the Director of Labor Relations is hereby directed to give due course to petitioner's application for certification election.SO ORDERED.Cruz, Davide, Jr., Bellosillo and Quiason, JJ., concur.

EN BANC [G.R. No. 124540. November 14, 1997.]MERLINDA JACINTO, ADELINA AGUSTIN, SUSAN AGUSTIN, EVELYN ATIENZA, NIDA BALANE, ANICIA CARLOS, CELEDONIA CARLOS, LIWANAG CASTILLO, JOSEFINA DE GUZMAN, MINERVA GARCIA, MARIA GATDULA, ALICIA GUNDA, AURORA LOPEZ, CARMENCITA MANANSALA, ERLINDA MARTINEZ, LOLITA NAVARRETE, GUADALUPE PANERGO, MARIA PULGA, PAZ SERRA and VIRGINIA ZAMORA, petitioners, vs. HON. COURT OF APPEALS, THE CIVIL SERVICE COMMISSION, and THE SECRETARY OF EDUCATION, CULTURE AND SPORTS, respondents.

Froilan M. Bacungan & Associates for petitioners.The Solicitor General for respondents.

SYNOPSISPetitioners are public school teachers who incurred unauthorized absences in connection with the mass actions which they staged. DECS Secretary Cariño issued a return-to-work order, or dismissal proceedings shall be instituted against them. The directive was ignored and petitioners were administratively charged with gross misconduct, gross neglect of duty, etc. Sec. Cariño, in his decisions, found them guilty as charged and imposed the penalty of dismissal. The decisions were appealed to the Merit Systems Protection Board but they were dismissed. When appealed to the Civil Service Commission, petitioners were found guilty of Conduct Prejudicial to the Best Interest of the Service. Imposed upon them was the penalty of 6 months suspension without pay, and automatic reinstatement to service without payment of back salaries. Hence, the petition. The Supreme Court held that the petitioners here were not penalized for the exercise of their right to assemble peacefully and to petition the government for a redress of grievances. Rather, the Civil Service Commission found them guilty of conduct prejudicial to the best interest of the service for having absented themselves without proper authority from their schools during regular school days in order to participate in the mass protest. Their absence ineluctably resulted in the non-holding of classes and in the deprivation of students of education for which they were responsible. Thus, petitioners' demand for backwages cannot be granted, for they had given cause for their suspension — their unjustified abandonment of classes to the prejudice of their students. Although they were not found guilty of an offense warranting their dismissal from the service, they were not fully innocent of the charges against them.

SYLLABUS1. LABOR AND SOCIAL LEGISLATION; STRIKE, DEFINED. — Strike, as defined by law, means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute includes any controversy or matter concerning terms and conditions of employment; or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employers and employees. 2. POLITICAL LAW; CIVIL SERVICE LAW; PROHIBITED ACTS; STRIKE; COMMITTED IN CASE AT BAR. — The mass action or assembly staged by the petitioners resulted in the non-holding of classes in several public schools during the corresponding period. Petitioners do not dispute that the grievances for which they sought redress concerned the alleged failure of public authorities — essentially, their "employers" — to fully and justly implement certain laws and measures intended to benefit them materially. However, as in the, case of Balingasan vs. Court of Appeals, this Court said that the fact that the conventional term "strike" was not used by the participants to describe their common course of action was insignificant, since the substance of the situation, and not its appearance, was deemed controlling. Petitioners here were not penalized for the exercise of their right to assemble peacefully and to petition the government for a redress of grievances. Rather, the Civil Service Commission found them guilty of conduct prejudicial to the best

interest of the service for having absented themselves without proper authority, from their schools during regular school days, in order to participate in the mass protest, their absence ineluctably resulting in the non-holding of classes and in the deprivation of students of education, for which they were responsible. Had petitioners availed themselves of their free time — recess, after classes, weekends or holidays — to dramatize their grievances and to dialogue with the proper authorities within the bounds of law, no one — not the DECS, the CSC or even this Court — could have held them liable for the valid exercise of their constitutionally guaranteed rights. As it was, the temporary stoppage of classes resulting from their activity necessarily disrupted public services, the very evil sought to be forestalled by the prohibition against strikes by government workers. Their act by its nature was enjoined by the Civil Service law, rules and regulations, for which they must, therefore, be made answerable. 3. REMEDIAL LAW; EVIDENCE; FINDINGS OF ADMINISTRATIVE AGENCIES, RESPECTED. — Findings of administrative agencies, which have acquired expertise because their jurisdiction is confined to specific matters, are accorded not only respect but even finality particularly when affirmed by the appellate tribunal. It is not a function of this Court to examine and evaluate the probative value of the evidence proffered in the concerned forum, which formed the basis of the latter's impugned decision, resolution or order absent a clear showing of arbitrariness and want of any rational basis therefor. The regulation requires (1) the filing of the application for sick leave on the prescribed form immediately upon the employee's return from such leave and (2) a notice of absence to be sent to the immediate supervisor and/or office head. But the Commission found that "the records are bereft of any showing that Jacinto asked permission from school authorities to go out of school premises and seek medical attention outside nor did she file an application for sick leave . . ." Hence, its conclusion that petitioner violated reasonable office rules and regulations. The totality of the evidence on record sustains the findings and conclusions of the Commission, as affirmed by the Court of Appeals. We have no reason to reverse them. The Civil Service rules clearly provide that violation of reasonable office rules and regulations, on first offense, carries the penalty of reprimand.4. ADMINISTRATIVE LAW; PREVENTIVE SUSPENSION; PROPER IN CASE AT BAR. — The charges filed against petitioners warranted their preventive suspension from the service, as provided under Section 51, Chapter 7 (on Discipline) of the Administrative Code. The petitioners' alleged lapses, initially found substantiated by the DECS, qualify as grave misconduct or neglect in the performance of duty under the said rule. Thus, former Education Secretary Cariño had the legal authority to suspend them pending further investigation.5. POLITICAL LAW; CIVIL SERVICE LAW; PENALTY OF DISMISSAL RENDERED BY THE DEPARTMENT SECRETARY, IMMEDIATELY EXECUTORY. — The Secretary's immediate execution of his decisions imposing the penalty of dismissal finds legal basis in Sec. 47 (2) of the Civil Service law. The department secretary's decision confirming the removal of an officer or employee under his jurisdiction is executory in character, i.e., such decision may be immediately executed even pending further remedy, such as an appeal, by the dismissed officer or employee. In the case at bar, it was already the final judgments of Secretary Cariño which were forthwith carried out. The statutory provision rules out the alleged illegality of the actions of the DECS Secretary.6. LABOR AND SOCIAL LEGISLATION; BACKWAGES; PROPRIETY IN CASE AT BAR. — Backwages may be granted only to those who have been illegally dismissed and thenceforth ordered reinstated, or to those acquitted of the charge against them. In the case of Balingasan, petitioners therein participated in the unlawful mass actions for which they were meted suspension. The Court opined that they were not completely exonerated of the charges against them. They were denied back salaries because they had given ground for their suspension. This means that being found liable for a lesser offense is not equivalent to exoneration from the original complaint against the concerned public officer or employee. Here,

petitioners' demand for backwages cannot be granted, for they had given cause for their suspension — their unjustified abandonment of classes to the prejudice of their students. Although they were eventually found guilty only of conduct prejudicial to the best interest of the service, and not grave misconduct or other offense warranting their dismissal from the service, they were not fully innocent of the charges against them. In the case of Petitioner Jacinto however, the Civil Service Commission found her culpable only of violation of reasonable office rules and regulations, for not having asked permission from school authorities to leave the school premises and seek medical attention and for not filing an application for sick leave for approval by the school authorities. There was no proof that she joined the mass actions which caused prejudice to the school system. Hence, We grant back salaries to Petitioner Jacinto who did not join the illegal activity.

D E C I S I O NPANGANIBAN, J p:While we recognize and appreciate the toil and hardship of our public schoolteachers in fulfilling the state's responsibility of educating our children, and realize their inadequately addressed plight as compared to other professionals, we have the equal task of promoting the larger public interest which withholds from them and other similarly situated government workers the right to engage in mass actions resulting in work stoppages for any purpose. Although the Constitution vests in them the fight to organize, to assemble peaceably and to petition the government for a redress of grievances, there is no like express provision granting them the right to strike. Rather, the constitutional grant of the right to strike is restrained by the proviso that its exercise shall be done in accordance with law.

The CaseBefore us is a petition for review under Rule 45 of the Rules of Court seeking to set aside the November 27, 1995 Decision 1 of the Court of Appeals 2 in CA-G.R. SP No. 37596, which found no grave abuse of discretion on the part of the Civil Service Commission (CSC) in issuing its resolutions 3 disposing of the separate appeals and motions for reconsideration of herein petitioners. The dispositive portions of most of the CSC resolutions, with the exception of the name of the appellant concerned, uniformly read:"WHEREFORE, foregoing premises considered, the Commission hereby resolves to find Susan Agustin guilty of Conduct Prejudicial to the Best Interest of the Service. She is meted out the penalty of six (6) months suspension without pay. Agustin is now automatically reinstated in the service without payment of back salaries." 4

As regards Petitioner Merlinda Jacinto, the decretal portion of the resolution pertaining to her case reads:"WHEREFORE, foregoing premises considered, the Commission hereby resolves to find Merlinda Jacinto guilty of Violation of Reasonable Office Rules and Regulations. She is hereby meted out the penalty of reprimand. She is automatically reinstated in the service without payment of back salaries." 5

In a Resolution6 dated March 29, 1996, Respondent Court of Appeals denied the petitioners' motion for reconsideration. The FactsThe following are the antecedents of the case as narrated by the Court of Appeals, which we find substantiated by the records:"Petitioners are public school teachers from various schools in Metropolitan Manila. Between the period September 17 to 21, 1990, they incurred unauthorized absences in connection with the mass actions then staged; and on September 17, 1990, DECS Secretary Isidro Cariño immediately issued a return-to-work order worded as follows:'TO: ALL PUBLIC SCHOOL TEACHERS AND OTHER DECS PERSONNELSUBJECT: RETURN TO WORK ORDER

Under Civil Service law and rules, strikes, unauthorized mass leaves and other forms of mass actions by civil servants which disrupt public services are strictly prohibited.Those of you who are engaged in the above-mentioned prohibited acts are therefore ordered, in the interest of public service, to return to work within 24 hours from your walkout otherwise dismissal proceedings shall be instituted against you.' (Emphasis supplied).

The directive was ignored by petitioners. Consequently, on separate dates, Secretary Cariño issued formal charges and preventive suspension orders against them. They were administratively charged with gross misconduct; gross neglect of duty, etc. for joining unauthorized mass actions; ignoring report-to-work directives; unjustified abandonment of teaching posts; non-observance of Civil Service law, rules and regulations; non-compliance with reasonable office rules and regulations; and incurring unauthorized absences without leave, etc. An investigation committee was then created by Sec. Cariño to look into the matter. However, during the investigation, petitioners did not file their answers or controvert the charges against them. As a consequence, Sec. Cariño, in his decisions found them guilty as charged and imposed the penalty of dismissal, except with respect to petitioners Merlinda Jacinto and Adelina Agustin who were meted only six (6) months suspension.The decisions were appealed to the Merit Systems Protection Board (MSPB) which dismissed the appeals for lack of merit and then to the Civil Service Commission which set aside the Orders of the MSPB in the contested resolutions. The Civil Service Commission, in separate resolutions, found the petitioners (except Merlinda Jacinto) guilty of Conduct Prejudicial to the Best Interest of the Service; imposed upon them the penalty of six (6) months suspension without pay; and automatically reinstated them to the service without payment of back salaries. . . . In the case of Petitioner Merlinda Jacinto, the CSC found her guilty of Violation of Reasonable Office Rules and Regulations; imposed upon her the penalty of reprimand; and automatically reinstated her in the service without payment of back salaries. . . .Acting on the motions for reconsideration, the CSC rendered the assailed resolutions denying the motions for lack of merit."7 Petitioners initially questioned the CSC resolutions directly before this Court in petitions docketed as G.R. Nos. 118252 to 118271. In accordance with Revised Administrative Circular 1-95, we referred them to the Court of Appeals.Respondent Court found that the "petitioners absented themselves from their classes in furtherance of or in connection with the 'mass action' for the purpose of pressuring the government to grant their demands." Citing the resolution of this Court in MPSTA vs. Laguio8 that the mass actions staged by the public schoolteachers from September 17 to September 19, 1990, were "to all intents and purposes a strike," it denied the petition, since the right to strike did not extend to civil service employees. In the case of Merlinda Jacinto, Respondent Court found no error on the part of the CSC in finding her guilty of violation of reasonable office rules and regulations. Neither did it find the petitioners entitled to backwages for the period of their preventive suspension, as they were "not exonerated of the charges against them."Hence, this petition.9 IssuesPetitioners raise the following grounds for their appeal:"I. The Respondent Court of Appeals committed grave abuse of discretion when it upheld the resolutions of the Civil Service Commission that penalized all the petitioners whose only 'offense' (except Jacinto) was to exercise their constitutional right peaceably to assemble and petition the government for redress of grievances."II. The Respondent Court of Appeals committed grave abuse of discretion when it upheld the resolutions of the Civil Service Commission that penalized Petitioner Jacinto for an alleged offense which has no basis whatsoever thereby violating her right to security of tenure."III. The Respondent Court of Appeals committed grave abuse of discretion when it upheld the resolutions of the Civil Service Commission that denied

petitioners their right to backwages covering the period when they were illegally not allowed to teach." 10

Preliminarily, we note that the remedy resorted to by petitioners is a petition for review under Rule 45 of the Rules of Court which, however, allows "only questions of law." 11 Jurisprudence has extended this remedy to questions of fact in exceptional cases. 12 Where the issues raised involve lack of jurisdiction or grave abuse of discretion as in this case, the Rules provide for a different remedy — Rule 65. In the interest of substantial justice, however, we hereby decide to deal with this petition as one filed under Rule 45, as denominated in its prefatory paragraph, and treat the "grave abuse of discretion" on the part of Respondent Court of Appeals as allegations of "reversible errors."The Court's RulingThe petition, which fails to convince us, merits only dismissal.First Issue: Improper Exercise of the Right to Peaceful Assembly and to Petition for a Redress of GrievancesThere is no question as to the petitioners' rights to peaceful assembly to petition the government for a redress of grievances and, for that matter, to organize or form associations for purposes not contrary to law, as well as to engage in peaceful concerted activities. These rights are guaranteed by no less than the Constitution, particularly Sections 4 13 and 8 14 of the Bill of Rights, Section 2(5) 15 of Article IX, and Section 3 16 of Article XIII. Jurisprudence abounds with hallowed pronouncements defending and promoting the people's exercise of these rights. As early as the onset of this century, this Court, in U.S. vs. Apurado, 17 already upheld the right to assembly and petition and even went as far as to acknowledge:"It is rather to be expected that more or less disorder will mark the public assembly of the people to protest against grievances whether real or imaginary, because on such occasions feeling is always wrought to a high pitch of excitement, and the greater the grievance and the more intense the feeling, the less perfect, as a rule, will be the disciplinary control of the leaders over their irresponsible followers. But if the prosecution be permitted to seize upon every instance of such disorderly conduct by individual members of a crowd as an excuse to characterize the assembly as a seditious and tumultuous rising against the authorities, then the right to assemble and to petition for redress of grievances would become a delusion and a snare and the attempt to exercise it on the most righteous occasion and in the most peaceable manner would expose all those who took part therein to the severest and most unmerited punishment, if the purposes which they sought to attain did not happen to be pleasing to the prosecuting authorities. If instances of disorderly conduct occur on such occasions, the guilty individuals should be sought out and punished therefor, but the utmost discretion must be exercised in drawing the line between disorderly and seditious conduct and between an essentially peaceable assembly and a tumultuous uprising." 18 Primicia vs. Fugoso 19 further sustained the supremacy of the freedoms of speech and of assembly over comfort and convenience in the use of streets or parks. Although the Court opined that the exercise of the rights of free speech and of peaceful assembly to petition the government for redress of grievances "is not absolute for it may be so regulated that it shall not be injurious to the equal enjoyment of others having equal rights, nor injurious to the rights of the community or society," regulation was limited to the mayor's reasonable discretion in issuing a permit to determine or specify only the streets or public places to be used for the purpose and to provide adequate and proper policing to minimize the risk of disorder. Quoting Justice Brandeis in his concurring opinion in Whitney vs. California, the Court said: 20 "Fear of serious injury cannot alone justify suppression of free speech and assembly. . . . To justify suppression of free speech there must be reasonable ground to fear that serious evil will result if free speech is practiced. There must be reasonable ground to believe that the danger apprehended is imminent. There must be reasonable ground to believe that the evil to be prevented is a serious one. . . .

xxx xxx xxx. . . The fact that speech is likely to result in some violence or in destruction of property is not enough to justify its suppression. There must be the probability of serious injury to the state. . . ." This limitation was strictly applied in Reyes vs. Bagatsing, 21 in which "the Court [was] called upon to protect the exercise of the cognate rights to free speech and peaceful assembly, arising from the denial of a permit." In that case, retired Justice J.B.L. Reyes, on behalf of the Anti-Bases Coalition, sought a permit from the mayor of Manila to hold a march and a rally starting from Luneta, proceeding through Roxas Boulevard to the gates of the U.S. Embassy, to be attended by local and foreign participants to the International Conference for General Disarmament, World Peace and the Removal of All Foreign Military Bases. The Manila mayor denied them the permit "due to police intelligence reports which strongly militate against the advisability of issuing such permit at this time and at the place applied for." In reversing the mayor, this Court stated that to justify limitations on freedom of assembly, there must be proof of sufficient weight to satisfy the "clear and present danger" 22 test. Thereafter, the Court proceeded to summarize the rules on assembly and petition, 23 making the clear-and-present danger rule the standard for refusing or modifying the grant of a permit. But it stressed that "the presumption must be to incline the weight of the scales of justice on the side of such rights [of free speech and peaceable assembly], enjoying as they do precedence and primacy."Philippine Blooming Mills Employees Organization vs. Philippine Blooming Mills Co., Inc., 24 which was promulgated after the proclamation of martial law, further underscored the supremacy of these basic constitutional rights, this time over property rights. Speaking through Mr. Justice Makasiar, the Court explained:". . . the primacy of human rights — freedom of expression, of peaceful assembly and of petition for redress of grievances — over property rights has been sustained. Emphatic reiteration of this basic tenet as a coveted boon — at once the shield and armor of the dignity and worth of the human personality, the all-consuming ideal of our enlightened civilization — becomes [o]ur duty, if freedom and social justice have any meaning at all for him who toils so that capital can produce economic goods that can generate happiness for all. To regard the demonstration against police officers, not against the employer, as evidence of bad faith in collective bargaining and hence a violation of the collective bargaining agreement and a cause for the dismissal from employment of the demonstrating employees, stretches unduly the compass of the collective bargaining agreement, is 'a potent means of inhibiting speech' and therefore inflicts a moral as well as mortal wound on the constitutional guarantees of free expression, of peaceful assembly and of petition." 25

Specifically, the right of civil servants to organize themselves was positively recognized in Association of Court of Appeals Employees (ACAE) vs. Ferrer-Calleja. 26

But, as in the exercise of the rights of free expression and of assembly, there are standards for allowable limitations such as the legitimacy of the purposes of the association, 27 the overriding considerations of national security and the preservation of democratic institutions. 28 As regards the right to strike, the Constitution itself qualifies its exercise with the proviso "in accordance with law." This is a clear manifestation that the state may, by law, regulate the use of this right, or even deny certain sectors such right. Executive Order 180 29 which provides guidelines for the exercise of the right of government workers to organize, for instance, implicitly endorsed an earlier CSC circular which "enjoins under pain of administrative sanctions, all government officers and employees from staging strikes, demonstrations, mass leaves, walkouts and other forms of mass action which will result in temporary stoppage or disruption of public service," 30 by stating that the Civil Service law and rules governing concerted activities and strikes in the government service shall be observed. 31

It is also settled in jurisprudence that, in general, workers in the public sector do not enjoy the right to strike. Alliance of Government Workers vs. Minister of Labor and Employment 32 rationalized the proscription thus:"The general rule in the past and up to the present is that the 'terms and conditions of employment in the Government, including any political subdivision or instrumentality thereof are governed by law.' . . . Since the terms and conditions of government employment are fixed by law, government workers cannot use the same weapons employed by the workers in the private sector to secure concessions from their employers. The principle behind labor unionism in private industry is that industrial peace cannot be secured through compulsion by law. Relations between private employers and their employees rest on an essentially voluntary basis. Subject to the minimum requirements of wage laws and other labor and welfare legislation, the terms and conditions of employment in the unionized private sector are settled through the process of collective bargaining. In government employment, however, it is the legislature and, where properly given delegated power, the administrative heads of government which fix the terms and conditions of employment. And this is effected through statutes or administrative circulars, rules, and regulations, not through collective bargaining agreements." 33 After delving into the intent of the framers of the Constitution, the Court affirmed the above rule in Social Security System Employees Association (SSSEA) vs. Court of Appeals 34 and explained:"Government employees may, therefore, through their unions or associations, either petition the Congress for the betterment of the terms and conditions of employment which are within the ambit of legislation or negotiate with the appropriate government agencies for the improvement of those which are not fixed by law. If there be any unresolved grievances, the dispute may be referred to the Public Sector Labor-Management Council for appropriate action. But employees in the civil service may not resort to strikes, walkouts and other temporary work stoppages, like workers in the private sector, to pressure the Government to accede to their demands. As now provided under Sec. 4, Rule III of the Rules and Regulations to Govern the Exercise of the Right of Government Employees to Self-Organization, which took effect after the instant dispute arose, '[t]he 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 and employees therein shall not strike for the purpose of securing changes [thereto].'" 35 We now come to the case before us. Petitioners, who are public schoolteachers and thus government employees, do not seek to establish that they have a right to strike. Rather, they tenaciously insist that their absences during certain dates in September 1990 were a valid exercise of their constitutional right to engage in peaceful assembly to petition the government for a redress of grievances. They claim that their gathering was not a strike; therefore, their participation therein did not constitute any offense. MPSTA vs. Laguio 36 and ACT vs. Cariño, 37 in which this Court declared that "these 'mass actions' were to all intents and purposes a strike; they constituted a concerted and unauthorized stoppage of, or absence from, work which it was the teachers' duty to perform, undertaken for essentially economic reasons," should not principally resolve the present case, as the underlying facts are allegedly not identical. Strike, as defined by law, means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. 38 A labor dispute includes any controversy or matter concerning terms and conditions of employment; or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employers and employees. 39 With these premises, we now evaluate the circumstances of the instant petition.It cannot be denied that the mass action or assembly staged by the petitioners resulted in the non-holding of classes in several public schools during the corresponding period. Petitioners do not dispute that the grievances for which they

sought redress concerned the alleged failure of public authorities — essentially, their "employers" — to fully and justly implement certain laws and measures intended to benefit them materially, such as:"1. Immediate release of P680 million Secondary Education Fund (SEF) fringe benefits of teachers under Section 17 of Republic Act 6758.2. Clothing allowance at P500 to P1,000 per teachers [sic] under the General Appropriations Act of 19903. DMB Circular 9044. Increase in minimum wage to P5,000 for teachers." 40

And probably to clothe their action with permissible character, 41 they also raised national issues such as the removal of the U.S. bases and the repudiation of foreign debt. In Balingasan vs. Court of Appeals, 42 however, this Court said that the fact that the conventional term "strike" was not used by the participants to describe their common course of action was insignificant, since the substance of the situation, and not its appearance, was deemed controlling. 43 Moreover, the petitioners here, except Merlinda Jacinto, were not penalized for the exercise of their right to assemble peacefully and to petition the government for a redress of grievances. Rather, the Civil Service Commission found them guilty of conduct prejudicial to the best interest of the service for having absented themselves without proper authority, from their schools during regular school days, in order to participate in the mass protest, their absence ineluctably resulting in the non-holding of classes and in the deprivation of students of education, for which they were responsible. Had petitioners availed themselves of their free time — recess, after classes, weekends or holidays — to dramatize their grievances and to dialogue with the proper authorities within the bounds of law, no one — not the DECS, the CSC or even this Court — could have held them liable for the valid exercise of their constitutionally guaranteed rights. As it was, the temporary stoppage of classes resulting from their activity necessarily disrupted public services, the very evil sought to be forestalled by the prohibition against strikes by government workers. Their act by its nature was enjoined by the Civil Service law, rules and regulations, for which they must, therefore, be made answerable.Second Issue: Violation by Petitioner Jacinto of Reasonable Office Rules and RegulationsPetitioner Jacinto, for her part, pleads for exoneration. She asks the Court to reexamine and give due weight to the certification 44 issued by her school principal that she met her class on September 20, 1990 but failed to sign in the attendance logbook. Stated elsewise, Jacinto wants us to scrutinize firsthand a document already ruled upon by the Civil Service Commission and the Court of Appeals to be of doubtful credibility. Time and again, we have held that findings of administrative agencies, which have acquired expertise because their jurisdiction is confined to specific matters, are accorded not only respect but even finality 45 particularly when affirmed by the appellate tribunal. It is not a function of this Court to examine and evaluate the probative value of the evidence proffered in the concerned forum, which formed the basis of the latter's impugned decision, resolution or order, 46 absent a clear showing of arbitrariness and want of any rational basis therefor. 47 In the instant case, we find no sufficient reason to reverse the findings of the CSC.In any event, as observed by the Commission, said certification, dated December 19, 1990, was belatedly submitted by Petitioner Jacinto only with her motion for reconsideration of the CSC resolution promulgated September 21, 1993; thus, it was correctly rejected as a newly discovered evidence. Additionally, the Commission explained:". . . such certification contradicts the allegation that she filed an application for leave. If she was really present on September 20, 1990, there would have been no need for her to file an application for leave. Apparently, this is a vain effort to present documents of doubtful credibility just to have Jacinto exonerated of the charges against her." 48

The futility of the tactics of Petitioner Jacinto to evade culpability is further exemplified by her contradictory assertions. In a sworn explanation submitted to Secretary Cariño, she claimed that she left the school premises on the day in question, because she "was emotionally and mentally depressed," and went to see a physician. 49 In her motion for reconsideration before the CSC, she submitted the above certification to the effect that she was not absent. Now, in assailing the Commission's decision to reprimand her for violation of reasonable office rules and regulations in not filing an application for leave of absence, she invokes Sec. 15, Rule XVI of the Civil Service rules, which provides:"Sec. 15.Applications for vacation leave of absence for one full day or more shall be submitted on the prescribed form for action by the proper chief of agency in advance, whenever possible, of the effective date of such leave."

She contends that the filing of an application for vacation leave need not always be in advance of the effective date thereof. 50 Clearly, her present stance is diametric to her "illness" justification before the DECS. In the latter case, it is Section 16 of said rules that is pertinent:"Sec. 16.All applications for sick leaves of absence for one full day or more shall be on the prescribed form and shall be filed immediately upon the employee's return from such leave. Notice of absence, however, should be sent to the immediate supervisor and/or to the office head. . . ."

The regulation requires (1) the filing of the application for sick leave on the prescribed form immediately upon the employee's return from such leave and (2) a notice of absence to be sent to the immediate supervisor and/or office head. But the Commission found that "the records are bereft of any showing that Jacinto asked permission from school authorities to go out of school premises and seek medical attention outside nor did she file an application for sick leave . . ." 51 Hence, its conclusion that petitioner violated reasonable office rules and regulations.The totality of the evidence on record sustains the findings and conclusions of the Commission, as affirmed by the Court of Appeals. We have no reason to reverse them. The Civil Service rules clearly provide that violation of reasonable office rules and regulations, on first offense, carries the penalty of reprimand. 52 Third Issue: No Right to BackwagesPetitioners anchor their claim for backwages on the supposed illegality of (1) their preventive suspension upon the filing of the charges against them and (2) the immediate execution of the DECS Secretary's decisions ordering their dismissal.The charges against petitioners consisted of the following: (1) grave misconduct; (2) gross neglect of duty; (3) gross violation of Civil Service law, rules and regulations and reasonable office regulations; (4) refusal to perform official duty; (5) gross insubordination; (6) conduct prejudicial to the best interest of the service; and (7) absence without approved leave. These were based on their alleged unauthorized participation in the mass actions in September 1990, disregard of report-to-work directives, unjustified abandonment of teaching posts, unauthorized absences without leave, and other similar violations reported to the DECS Secretary by their respective school supervisors. 53 We find that the charges filed against petitioners warranted their preventive suspension from the service, as provided under Section 51, Chapter 7 (on Discipline) of the Administrative Code, which reads:"Sec. 51.Preventive Suspension. — The proper disciplining authority may preventively suspend any subordinate officer or employee under his authority pending an investigation, if the charge against such officer or employee involves dishonesty, oppression or grave misconduct, or neglect in the performance of duty, or if there are reasons to believe that the respondent is guilty of charges which would warrant his removal from the service."

The petitioners' alleged lapses, initially found substantiated by the DECS, qualify as grave misconduct or neglect in the performance of duty under the above rule. Thus,

former Education Secretary Cariño had the legal authority to suspend them pending further investigation.The Secretary's immediate execution of his decisions imposing the penalty of dismissal finds legal basis in Sec. 47 (2) of the Civil Service law 54 which provides:"Sec. 47.Disciplinary Jurisdiction. — . . .(2) The Secretaries and heads of agencies and instrumentalities, provinces, cities and municipalities shall have jurisdiction to investigate and decide matters involving disciplinary action against officers and employees under their jurisdiction. Their decisions shall be final in case the penalty imposed is suspension for not more than thirty days or fine in an amount not exceeding thirty days' salary. In case the decision rendered by a bureau or office head is appealable to the Commission, the same may be initially appealed to the department and finally to the Commission and pending appeal, the same shall be executory except when the penalty is removal, in which case the same shall be executory only after confirmation by the Secretary concerned."

As can be gleaned from the above, the department secretary's decision confirming the removal of an officer or employee under his jurisdiction is executory in character, i.e. such decision may be immediately executed even pending further remedy, such as an appeal, 55 by the dismissed officer or employee. In the case at bar, it was already the final judgments of Secretary Cariño which were forthwith carried out. The aforequoted statutory provision rules out the alleged illegality of the actions of the DECS Secretary.In any event, the rule is settled that backwages may be granted only to those who have been illegally dismissed and thenceforth ordered reinstated, or to those acquitted of the charge against them. 56 Even a pardoned convicted employee is not automatically entitled to backpay. Monsanto vs. Factoran Jr. 57 established the general rule that — while pardon has been commonly regarded as eliminating the existence of guilt so that in the eyes of the law the offender is as innocent as though he never committed the offense — such exoneration does not operate for all purposes. It does not erase the fact of the commission of the offense and the conviction therefor. It frees the convict from all penalties and legal disabilities and restores to him all his civil rights; but unless expressly grounded on the person's innocence, it does not ipso facto restore him to public office necessarily relinquished or forfeited by reason of the conviction. Pardon does not generally result in automatic reinstatement because the offender has to apply for reappointment; neither is he entitled to backpay. 58 Thus, in Sabello vs. DECS, 59 although we reinstated the petitioner-pardonee to his previous position in the interest of "justice and equity," we did not grant him backwages since he "was lawfully separated from the government service upon his conviction for an offense." We reiterated that the right to backwages was afforded only to those who were illegally dismissed but thereafter ordered reinstated, or to those otherwise acquitted of the charge against them.Again, in City Mayor of Zamboanga vs. Court of Appeals, 60 we said that "back salaries may be ordered paid to an officer or employee only if he is exonerated of the charge against him and his suspension or dismissal is found and declared to be illegal." Hence, in Garcia vs. Chairman, Commission on Audit, 61 we said that "if the pardon is based on the innocence of the individual, it affirms this innocence and makes him a new man and as innocent as if he had not been found guilty of the offense charged." 62 In that case, Garcia was found administratively liable for dishonesty. He was, however, acquitted by the trial court of the complaint for qualified theft based on the very same acts. The acquittal was founded not on lack of proof beyond reasonable doubt but on the fact that he did not commit the offense imputed to him. This Court said that after having been declared innocent of the criminal complaint, which had the same basis as the administrative charge, for all legal purposes the petitioner should not be considered to have left his office, so that he was entitled to all the rights and privileges that accrued to him by virtue of the office held, including backwages. He was restored to his office ipso facto upon the

issuance of the clemency. The grant of backwages was justified "to afford relief to [the] petitioner who [was] innocent from the start and to make reparation for what he [had] suffered as a result of his unjust dismissal from the service." 63 However, in Balingasan, finding that petitioners therein indeed participated in the unlawful mass actions for which they were similarly meted suspension, the Court opined that they were not completely exonerated of the charges against them. They were denied back salaries because they had given ground for their suspension. This means that being found liable for a lesser offense is not equivalent to exoneration from the original complaint against the concerned public officer or employee. Balingasan referred to the earlier case of Yacia vs. City of Baguio, 64 in which this Court denied the claim of an employee for backwages for the period during which he was not allowed to work because of the execution of the CSC decision dismissing him for dishonesty, even though, on appeal, his penalty was reduced to a fine equivalent to six months' pay.Based on the above premises, petitioners' demand for backwages cannot be granted, for they had given cause for their suspension — their unjustified abandonment of classes to the prejudice of their students. Although they were eventually found guilty only of conduct prejudicial to the best interest of the service, and not grave misconduct or other offense warranting their dismissal from the service, they were not fully innocent of the charges against them.

We find the case of Petitioner Jacinto different, however. The Civil Service Commission found her culpable only of violation of reasonable office rules and regulations, for not having asked permission from school authorities to leave the school premises and seek medical attention and for not filing an application for sick leave for approval by the school authorities. There was no proof that she joined the mass actions which caused prejudice to the school system. In Balingasan, this Court, after finding that Rodolfo Mariano was not involved in the mass actions but was absent because he attended the wake and burial of his grandmother in Ilocos Sur without however the benefit of an approved leave of absence, held that "[t]o deny petitioner Mariano his back wages during his suspension would be tantamount to punishing him after his exoneration from the charges which caused his dismissal from the service," i.e. participation in the unlawful mass actions. Therefore, in line with Balingasan, we likewise grant back salaries to Petitioner Jacinto who did not join the illegal activity.

WHEREFORE, in view of the foregoing, the petition is hereby DENIED and the assailed Decision of the Court of Appeals is hereby AFFIRMED with the modification that Petitioner Merlinda Jacinto is granted backwages, without deduction or qualification, from the time she was suspended until her actual reinstatement, the total of which, consistent with prevailing jurisprudence, 65 should not exceed five years.SO ORDERED.Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ ., concur.Narvasa, C .J ., is on official leave.

SECOND DIVISION [G.R. No. 85750. September 28, 1990.]INTERNATIONAL CATHOLIC MIGRATION COMMISSION, petitioner, vs. HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU, respondents.

[G.R. No. 89331. September 28, 1990.]KAPISANAN NG MANGGAGAWA AT TAC SA IRRI - ORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE, petitioner, vs. SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH INSTITUTE, INC., respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750. Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.Jimenez & Associates for IRRI.Alfredo L. Bentulan for private respondent in 85750.

D E C I S I O NMELENCIO-HERRERA, J p:Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by the International Catholic Migration Commission (ICMC) and the International Rice Research Institute, Inc. (IRRI) from the application of Philippine labor laws.

I.Facts and IssuesA. G.R. No. 85750 — the International Catholic Migration Commission (ICMC) Case.As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's communist rule confronted the international community.In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine Government and the United Nations High Commissioner for Refugees whereby an operating center for processing Indo-Chinese refugees for eventual resettlement to other countries was to be established in Bataan (Annex "A," Rollo, pp. 22-32).ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a non-profit agency involved in international humanitarian and voluntary work. It is duly registered with the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As an international organization rendering voluntary and humanitarian services in the Philippines, its activities are parallel to those of the International Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. I].On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry of Labor and Employment a Petition for Certification Election among the rank and file members employed by ICMC. The latter opposed the petition on the ground that it is an international organization registered with the United Nations and, hence, enjoys diplomatic immunity.On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lack of jurisdiction.On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-Arbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC's request for recognition as a specialized agency was still pending with the Department of Foreign Affairs (DEFORAF).Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking the immunity expressly granted but the same was denied by respondent BLR Director who, again, ordered the immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration were denied despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's diplomatic immunity.Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction assailing the BLR Order.On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the certification election.On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive department with the competence and authority to act on matters involving diplomatic immunity and privileges, and tasked with the conduct of Philippine diplomatic and consular relations with foreign governments and UN organizations, it has a legal interest in the outcome of this case.Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal of memoranda by the parties, which has been complied with.As initially stated, the issue is whether or not the grant of diplomatic privileges and immunities to ICMC extends to immunity from the application of Philippine labor laws.ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the Philippine Government giving it the status of a specialized agency, (infra); (2) the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949 (the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and deposited with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the generally accepted principles of international law as part of the law of the land.Intervenor DEFORAF upholds ICMC's claim of diplomatic immunity and seeks an affirmance of the DEFORAF determination that the BLR Order for a certification election among the ICMC employees is violative of the diplomatic immunity of said organization.Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy and Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid. In addition, she contends that a certification election is not a litigation but a mere investigation of a non-adversary, fact-finding character. It is not a suit against ICMC, its property, funds or assets, but is the sole concern of the workers themselves.B. G.R. No. 89331 — (The International Rice Research Institute [IRRI] Case).Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989, resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered case pending with the Second Division, upon manifestation by the Solicitor General that both cases involve similar issues.The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of Understanding establishing the International Rice Research Institute (IRRI) at Los Baños, Laguna. It was intended to be an autonomous, philanthropic, tax-free non-profit, non-stock organization designed to carry out the principal objective of conducting "basic research on the rice plant, on all phases of rice production, management, distribution and utilization with a view to attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international organization.The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI.On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of the Department of Labor and Employment (DOLE).IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international organization and granting it immunity from all civil, criminal and administrative proceedings under Philippine laws.On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No. 1620 and dismissed the Petition for Direct Certification.On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's Order and authorized the calling of a certification election among the rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra, and Article XIII, Section 3 of the 1987 Constitution,1 and held that "the immunities and privileges granted to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration sought by IRRI was denied.On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order, dismissed the Petition for Certification Election, and held that the grant of specialized agency status by the Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRI. Said Resolution reads in part as follows:"Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges and immunities of an international organization is clear and explicit. It provides in categorical terms that:"Art. 3 — The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as immunity has been expressly waived by the Director-General of the Institution or his authorized representative."Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena, orders, decisions or proceedings ordered by any court or administrative or quasi-judicial agency are enforceable as against the Institute. In the case at bar there was no such waiver made by the Director-General of the Institute. Indeed, the Institute, at the very first opportunity already vehemently questioned the jurisdiction of this Department by filing an ex-parte motion to dismiss the case."

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by respondent Secretary of Labor in upholding IRRI's diplomatic immunity.The Third Division, to which the case was originally assigned required the respondents to comment on the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "not adopting as his own" the decision of the BLR Director in the ICMC Case as well as the Comment of the Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excused from filing a comment "it appearing that in the earlier case of International Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750, the Office of the Solicitor General had sustained the stand of Director Calleja on the very same issue now before it, which position has been superseded by respondent Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor General's prayer.The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of discretion in dismissing the Petition for Certification Election filed by Kapisanan.Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges, prerogatives and immunities of an international organization, invoked by

the Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional right to form trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution. A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI's appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of a certification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V2 of the Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final and unappealable and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal.On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No. 6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-Arbiter to the Office of the Secretary of Labor and Employment instead of to the Director of the Bureau of Labor Relations in cases involving certification election orders.III. Findings in Both Cases.There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17 May 1949, explicitly provides:"Article III, Section 4. The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case they have expressly waived their immunity. It is however, understood that no waiver of immunity shall extend to any measure of execution."Sec. 5. — The premises of the specialized agencies shall be inviolable. The property and assets of the specialized agencies, wherever located and by whomsoever held shall be immune from search, requisition, confiscation, expropriation and any other form of interference, whether by executive, administrative, judicial or legislative action." (Emphasis ours).

IRRI is similarly situated. Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus:"Article 3. Immunity from Legal Process. — The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as that immunity has been expressly waived by the Director-General of the Institute or his authorized representatives."

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC's invocation of immunity when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of the Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this particular instance."The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government that ICMC and IRRI enjoy immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts in order not to embarrass a political department of Government."It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the

government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty of courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government . . . or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that in such cases the judicial department of (this) government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction." 3 A brief look into the nature of international organizations and specialized agencies is in order. The term "international organization" is generally used to describe an organization set up by agreement between two or more states. 4 Under contemporary international law, such organizations are endowed with some degree of international legal personality 5 such that they are capable of exercising specific rights, duties and powers. 6 They are organized mainly as a means for conducting general international business in which the member states have an interest. 7 The United Nations, for instance, is an international organization dedicated to the propagation of world peace."Specialized agencies" are international organizations having functions in particular fields. The term appears in Articles 57 8 and 63 9 of the Charter of the United Nations:"The Charter, while it invests the United Nations with the general task of promoting progress and international cooperation in economic, social, health, cultural, educational and related matters, contemplates that these tasks will be mainly fulfilled not by organs of the United Nations itself but by autonomous international organizations established by inter-governmental agreements outside the United Nations. There are now many such international agencies having functions in many different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology, atomic energy, finance, trade, education and culture, health and refugees. Some are virtually world-wide in their membership, some are regional or otherwise limited in their membership. The Charter provides that those agencies which have 'wide international responsibilities' are to be brought into relationship with the United Nations by agreements entered into between them and the Economic and Social Council, are then to be known as 'specialized agencies.'" 10

The rapid growth of international organizations under contemporary international law has paved the way for the development of the concept of international immunities."It is now usual for the constitutions of international organizations to contain provisions conferring certain immunities on the organizations themselves, representatives of their member states and persons acting on behalf of the organizations. A series of conventions, agreements and protocols defining the immunities of various international organizations in relation to their members generally are now widely in force; . . ." 11 There are basically three propositions underlying the grant of international immunities to international organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international institutions should have a status which protects them against control or interference by any one government in the performance of functions for the effective discharge of which they are responsible to democratically constituted international bodies in which all the nations concerned are represented; 2) no country should derive any national financial advantage by levying fiscal charges on common international funds; and 3) the international organization should, as a collectivity of States members, be accorded the facilities for the conduct of its official business customarily extended to each other by its individual member States. 12 The theory behind all three propositions is said to be essentially institutional in character. "It is not concerned with the status, dignity or privileges of individuals, but with the elements of functional independence

necessary to free international institutions from national control and to enable them to discharge their responsibilities impartially on behalf of all their members." 13 The raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies concerned.The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice a member States of the organization, and to ensure the unhampered performance of their functions.ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which are guarantee by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor Code, 16 relied on by the BLR Director and by Kapisanan.For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations 17 provides that "each specialized agency shall make provision for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to which the specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement between ICMC and the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and immunities accorded. Thus:"Article IV. Cooperation with Government Authorities. — 1. The Commission shall cooperate at all times with the appropriate authorities of the Government to ensure the observance of Philippine laws, rules and regulations, facilitate the proper administration of justice and prevent the occurrences of any abuse of the privileges and immunities granted its officials and alien employees in Article III of this Agreement to the Commission."2. In the event that the Government determines that there has been an abuse of the privileges and immunities granted under this Agreement, consultations shall be held between the Government and the Commission to determine whether any such abuse has occurred and, if so, the Government shall withdraw the privileges and immunities granted the Commission and its officials."

Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had been organized a forum for better management-employee relationship as evidenced by the formation of the Council of IRRI Employees and Management (CIEM) wherein "both management and employees were and still are represented for purposes of maintaining mutual and beneficial cooperation between IRRI and its employees." The existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI the status, privileges and Immunities of an international organization, deprives its employees of the right to self-organization. The immunity granted being "from every form of legal process except in so far as in any particular case they have expressly waived their immunity," it is inaccurate to state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification election cannot be viewed as an independent or isolated process. It could trigger off a series of events in the collective bargaining process together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process," which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is neither remote and from which international organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional immunity are said to be standard provisions in the constitutions of international

organizations. "The immunity covers the organization concerned, its property and its assets. It is equally applicable to proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary employment), the Court is now estopped from passing upon the question of DOLE jurisdiction over ICMC.We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding immunities, but also because ICMC in that case did not invoke its immunity and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying such immunity.Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration filed by IRRI. Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides for direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in certification election cases either from the order or the results of the election itself, was already in effect, specifically since 21 March 1989. Hence, no grave abuse of discretion may be imputed to respondent Secretary of Labor in his assumption of appellate jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of that law provides:"Article 259. — Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the conduct of the election have been violated. Such appeal shall be decided within 15 calendar days" (Emphasis ours).

En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two departments of the executive branch of government have been rectified and the resultant embarrassment to the Philippine Government in the eyes of the international community now, hopefully, effaced.WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary Restraining Order earlier issued is made PERMANENT.In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having been committed by the Secretary of Labor and Employment in dismissing the Petition for Certification Election.No pronouncement as to costs.SO ORDERED.Padilla, Sarmiento and Regalado, JJ., concur.Paras, J., is on leave.Footnotes 1. Article XIII, Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations and peaceful concerted activities including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. 2. RULE V. Section 7. Appeal — Any aggrieved party may appeal the order of the Med-Arbiter to the Bureau only on the following grounds: a) grave abuse of

discretion and b) gross incompetence. The appeal shall specifically state the grounds relied upon by the appellant with supporting memorandum.

Section 8. Where to file appeal — The appellant shall file his appeal which shall be under oath, in the Regional Office where the case originated, copy furnished the appellee.

Section 9. Period to Appeal. — The appeal shall be filed within ten (10) working days from receipt of the Order by the appellant. Likewise, the appellee shall file his answer thereto within ten (10) working days from receipt of the appeal. The Regional Director shall immediately forward the entire records of the case to the Bureau.

Section 10. Decision of the Bureau is final and unappealable. — The Bureau shall have twenty (20) working days within which to decide the appeal from receipt of the records of the case. The decision of the Bureau in all cases shall be final and unappealable. 3. World Health Organization and Dr. Leonce Verstuyft v. Hon. Benjamin Aquino, et al., L-35131, 29 November 1972, 48 SCRA 242. 4. MICHAEL AKEHURST, A MODERN INTRODUCTION TO INTERNATIONAL LAW (1984) at 69. 5. The leading judicial authority on the personality of international organizations is the advisory opinion given by the ICJ in the Reparation for Injuries Suffered in the Service of the United Nations Case ([1949] I.C.J. Rep 174) where the Court recognized the UN's international personality. 6. M. AKEHURST, supra, at 70. 7. J.L. BRIERLY, THE LAW OF NATIONS (1963) at 95. 8. Article 57. — 1. The various specialized agencies, established by intergovernmental agreement and having wide international responsibilities, as defined in their basic instruments, in economic, social cultural, educational, health, and related fields, shall be brought into relationship with the United Nations in accordance with the provisions of Article 63.

2. Such agencies thus brought into relationship with the United Nations are hereinafter referred to as specialized agencies. 9. Article 63. — 1. The Economic and Social Council may enter into agreements with any of the agencies referred to in Article 57 defining the terms on which the agency concerned shall be brought into relationship with the United Nations. Such agreements shall be subject to approval by the General Assembly.

2. It may co-ordinate the activities of the specialized agencies through consultation with and recommendations to such agencies and through recommendations to the General Assembly and to the Members of the United Nations.10. BRIERLY, supra, at 121-122.11. C. WILFRED JENKS, INTERNATIONAL IMMUNITIES (1961) at 2-3.12. Ibid., at 17.13. Ibid.14. Article II, Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.15. Article III, Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged.16. Article 243. Coverage and Employees' Right to Self-Organization. — All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employees may form labor organizations for their mutual aid and protection.

Article 246. Non-abridgement of Right to Self-organization. — It shall be unlawful for any person to restrain, coerce, discriminate against or unduly

interfere with employees and workers in the exercise of the right to self-organization. Such right shall include the right to form, join, or assist labor organizations for the purpose of collective bargaining through representatives of their own choosing and to engage in lawful concerted activities for the same purpose or for their mutual aid and protection, subject to the provisions of Article 264 of this Code.17. This Convention, adopted by the U.N. General Assembly on November 21, 1947, was concurred in by the Philippine Senate under Senate Resolution No. 21, dated 17 May 1949. The Philippine Instrument of Ratification was signed by the Philippine President on 21 February 1959. (Vol. 1, Phil. Treaty Series, p. 621).18. JENKS, supra at 38.

THIRD DIVISION G.R. No. 142000. January 22, 2003TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, Petitioner, v. TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO, respondent.

D E C I S I O NCARPIO-MORALES, J.:Before this Court on certiorari under Rule 45 is the petition of the Tagaytay Highlands International Golf Club Incorporated (THIGCI) assailing the February 15, 2002 decision of the Court of Appeals denying its petition to annul the Department of Labor and Employment (DOLE) Resolutions of November 12, 1998 and December 29, 1998.

On October 16, 1997, the Tagaytay Highlands Employees Union (THEU)Philippine Transport and General Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor organization said to represent majority of the rank-and-file employees of THIGCI, filed a petition for certification election before the DOLE Mediation-Arbitration Unit, Regional Branch No. IV.

THIGCI, in its Comment1 filed on November 27, 1997, opposed THEUs petition for certification election on the ground that the list of union members submitted by it was defective and fatally flawed as it included the names and signatures of supervisors, resigned, terminated and absent without leave (AWOL) employees, as well as employees of The Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of the 192 signatories to the petition, only 71 were actual rank-and-file employees of THIGCI.

THIGCI thus submitted a list of the names of its 71 actual rank-and-file employees which it annexed2 to its Comment to the petition for certification election. And it therein incorporated the following tabulation3 showing the number of signatories to said petition whose membership in the union was being questioned as disqualified and the reasons for disqualification:# of Signatures Reasons for Disqualification13 Supervisors of THIGCI6 Resigned employees of THIGCI2 AWOL employees of THIGCI53 Rank-and-file employees of The Country Club at Tagaytay Highlands, Inc.14 Supervisors of The Country Club at Tagaytay Highlands, Inc.6 Resigned employees of The Country Club at Tagaytay Highlands, Inc.3 Terminated employees of The Country Club at Tagaytay Highlands, Inc.1 AWOL employees of The Country Club at Tagaytay Highlands, Inc.4 Signatures that cannot be deciphered16 Names in list that were erased2 Names with first names only

THIGCI also alleged that some of the signatures in the list of union members were secured through fraudulent and deceitful means, and submitted copies of the handwritten denial and withdrawal of some of its employees from participating in the petition.4

Replying to THIGCIs Comment, THEU asserted that it had complied with all the requirements for valid affiliation and inclusion in the roster of legitimate labor organizations pursuant to DOLE Department Order No. 9, series of 1997,5 on account of which it was duly granted a Certification of Affiliation by DOLE on October 10, 1997;6 and that Section 5, Rule V of said Department Order provides that the legitimacy of its registration cannot be subject to collateral attack, and for as long as there is no final order of cancellation, it continues to enjoy the rights accorded to a legitimate organization.

THEU thus concluded in its Reply7 that under the circumstances, the Med-Arbiter should, pursuant to Article 257 of the Labor Code and Section 11, Rule XI of DOLE Department Order No. 09, automatically order the conduct of a certification election.

By Order of January 28, 1998,8 DOLE Med-Arbiter Anastacio Bactin ordered the holding of a certification election among the rank-and-file employees of THIGCI in this wise, quoted verbatim:We evaluated carefully this instant petition and we are of the opinion that it is complete in form and substance. In addition thereto, the accompanying documents show that indeed petitioner union is a legitimate labor federation and its local/chapter was duly reported to this Office as one of its affiliate local/chapter. Its due reporting through the submission of all the requirements for registration of a local/chapter is a clear showing that it was already included in the roster of legitimate labor organizations in this Office pursuant to Department Order No. 9 Series of 1997 with all the legal right and personality to institute this instant petition. Pursuant therefore to the provisions of Article 257 of the Labor Code, as amended, and its Implementing Rules as amended by Department Order No. 9, since the respondents establishment is unorganized, the holding of a certification election is mandatory for it was clearly established that petitioner is a legitimate labor organization. Giving due course to this petition is therefore proper and appropriate.9 (Emphasis supplied)

Passing on THIGCIs allegation that some of the union members are supervisory, resigned and AWOL employees or employees of a separate and distinct corporation, the Med-Arbiter held that the same should be properly raised in the exclusion-inclusion proceedings at the pre-election conference. As for the allegation that some of the signatures were secured through fraudulent and deceitful means, he held that it should be coursed through an independent petition for cancellation of union registration which is within the jurisdiction of the DOLE Regional Director. In any event, the Med-Arbiter held that THIGCI failed to submit the job descriptions of the questioned employees and other supporting documents to bolster its claim that they are disqualified from joining THEU.

THIGCI appealed to the Office of the DOLE Secretary which, by Resolution of June 4, 1998, set aside the said Med-Arbiters Order and accordingly dismissed the petition for certification election on the ground that there is a clear absence of community or mutuality of interests, it finding that THEU sought to represent two separate bargaining units (supervisory employees and rank-and-file employees) as well as employees of two separate and distinct corporate entities.

Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda Dimalipis-Baldoz, by authority of the DOLE Secretary, issued DOLE Resolution of November 12, 199810 setting aside the June 4, 1998 Resolution dismissing the petition for certification election. In the November 12, 1998 Resolution, Undersecretary Dimapilis-Baldoz held that since THEU is a local chapter, the twenty percent (20%) membership requirement is not necessary for it to acquire legitimate status, hence, the alleged retraction and withdrawal of support by 45 of the 70 remaining rank-and-file members . . . cannot negate the legitimacy it has already acquired before the petition; that rather than disregard the legitimate status already conferred on THEU by the Bureau of Labor Relations, the names of alleged disqualified supervisory employees and employees of the Country Club, Inc., a separate and distinct corporation, should simply be removed from the THEUs roster of membership; and that regarding the participation of alleged resigned and AWOL employees and those whose signatures are illegible, the issue can be resolved during the inclusion-exclusion proceedings at the pre-election stage.

The records of the case were thus ordered remanded to the Office of the Med-Arbiter for the conduct of certification election.

THIGCIs Motion for Reconsideration of the November 12, 1998 Resolution having been denied by the DOLE Undersecretary by Resolution of December 29, 1998,11 it filed a petition for certiorari before this Court which, by Resolution of April 14, 1999,12 referred it to the Court of Appeals in line with its pronouncement in National Federation of Labor (NFL) v. Hon. Bienvenido E. Laguesma, et al.,13 and in strict observance of the hierarchy of courts, as emphasized in the case of St. Martin Funeral Home v. National Labor Relations Commission.14

By Decision of February 15, 2000,15 the Court of Appeals denied THIGCIs Petition for Certiorari and affirmed the DOLE Resolution dated November 12, 1998. It held that while a petition for certification election is an exception to the innocent bystander rule, hence, the employer may pray for the dismissal of such petition on the basis of lack of mutuality of interests of the members of the union as well as lack of employer-employee relationship following this Courts ruling in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union et al16 and Dunlop Slazenger [Phils.] v. Hon. Secretary of Labor and Employment et al,17 petitioner failed to adduce substantial evidence to support its allegations.

Hence, the present petition for certiorari, raising the following

ISSUES/ASSIGNMENT OF ERRORS:THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12 NOVEMER 1998 HOLDING THAT SUPERVISORY EMPLOYEES AND NON-EMPLOYEES COULD SIMPLY BE REMOVED FROM APPELLEES ROSTER OF RANK-AND-FILE MEMBERSHIP INSTEAD OF RESOLVING THE LEGITIMACY OF RESPONDENT UNIONS STATUS

THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION DATED 12 NOVEMBER 1998 HOLDING THAT THE DISQUALIFIED EMPLOYEES STATUS COULD READILY BE RESOLVED DURING THE INCLUSION AND EXCLUSION PROCEEDINGS

THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT HOLDING THAT THE ALLEGATIONS OF PETITIONER HAD BEEN DULY PROVEN BY FAILURE OF RESPONDENT UNION TO DENY THE SAME AND BY THE SHEER WEIGHT OF EVIDENCE INTRODUCED BY PETITIONER AND CONTAINED IN THE RECORDS OF THE CASE18

The statutory authority for the exclusion of supervisory employees in a rank-and-file union, and vice-versa, is Article 245 of the Labor Code, to wit:Article 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own.

While above-quoted Article 245 expressly prohibits supervisory employees from joining a rank-and-file union, it does not provide what would be the effect if a rank-and-file union counts supervisory employees among its members, or vice-versa.

Citing Toyota19 which held that a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all, and the subsequent case of Progressive Development Corp. Pizza Hut v. Ledesma20 which held that:The Labor Code requires that in organized and unorganized establishments, a petition for certification election must be filed by a legitimate labor organization. The acquisition of rights by any union or labor organization, particularly the right to file a petition for certification election, first and foremost, depends on whether or not the labor organization has attained the status of a legitimate labor organization.

In the case before us, the Med-Arbiter summarily disregarded the petitioners prayer that the former look into the legitimacy of the respondent Union by a sweeping declaration that the union was in the possession of a charter certificate so that for all intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate organization,21 (Underscoring and emphasis supplied),

petitioner contends that, quoting Toyota, [i]t becomes necessary . . ., anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code.22

Continuing, petitioner argues that without resolving the status of THEU, the DOLE Undersecretary conveniently deferred the resolution on the serious infirmity in the membership of [THEU] and ordered the holding of the certification election which is frowned upon as the following ruling of this Court shows:We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity in the membership of the respondent union can be remedied in the pre-election conference thru the exclusion-inclusion proceedings wherein those employees who are occupying rank-and-file positions will be excluded from the list of eligible voters. Public respondent gravely misappreciated the basic antipathy between the interest of supervisors and the interest of rank-and-file employees. Due to the irreconcilability of their interest we held in Toyota Motor Philippines v. Toyota Motors Philippines Corporation Labor Union, viz:x x xClearly, based on this provision [Article 245], a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot posses any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. (Emphasis by petitioner) (Dunlop Slazenger (Phils.), v. Secretary of Labor, 300 SCRA 120 [1998]; Underscoring and emphasis supplied by petitioner.)

The petition fails. After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book IV of the Rules to Implement the Labor Code (Implementing Rules) which section reads:Sec. 5. Effect of registration. The labor organization or workers association shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be subject to collateral attack, but may be questioned only in an independent petition for cancellation in accordance with these Rules. (Emphasis supplied)

The grounds for cancellation of union registration are provided for under Article 239 of the Labor Code, as follows:Art. 239. Grounds for cancellation of union registration. The following shall constitute grounds for cancellation of union registration:(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification;(b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto;

(c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to subject these documents together with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days from election;(d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the losing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself;(e) Acting as a labor contractor or engaging in the cabo system, or otherwise engaging in any activity prohibited by law;(f) Entering into collective bargaining agreements which provide terms and conditions of employment below minimum standards established by law;(g) Asking for or accepting attorneys fees or negotiation fees from employers;

(h) Other than for mandatory activities under this Code, checking off special assessments or any other fees without duly signed individual written authorizations of the members;(i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau; and(j) Failure to comply with the requirements under Articles 237 and 238, (Emphasis supplied),while the procedure for cancellation of registration is provided for in Rule VIII, Book V of the Implementing Rules.

The inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted Article 239 of the Labor Code.

THEU, having been validly issued a certificate of registration, should be considered to have already acquired juridical personality which may not be assailed collaterally.As for petitioners allegation that some of the signatures in the petition for certification election were obtained through fraud, false statement and misrepresentation, the proper procedure is, as reflected above, for it to file a petition for cancellation of the certificate of registration, and not to intervene in a petition for certification election.

Regarding the alleged withdrawal of union members from participating in the certification election, this Courts following ruling is instructive:[T]he best forum for determining whether there were indeed retractions from some of the laborers is in the certification election itself wherein the workers can freely express their choice in a secret ballot. Suffice it to say that the will of the rank-and-file employees should in every possible instance be determined by secret ballot rather than by administrative or quasi-judicial inquiry. Such representation and certification election cases are not to be taken as contentious litigations for suits but as mere investigations of a non-adversary, fact-finding character as to which of the competing unions represents the genuine choice of the workers to be their sole and exclusive collective bargaining representative with their employer.23

As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie given, as found by the court a quo, its failure to present substantial evidence that the assailed employees are actually occupying supervisory positions.

While petitioner submitted a list of its employees with their corresponding job titles and ranks,24 there is nothing mentioned about the supervisors respective duties, powers and prerogatives that would show that they can effectively recommend managerial actions which require the use of independent judgment.25

As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor:26

Designation should be reconciled with the actual job description of subject employees x x x The mere fact that an employee is designated manager does not necessarily make him one. Otherwise, there would be an absurd situation where one can be given the title just to be deprived of the right to be a member of a union. In the case of National Steel Corporation vs. Laguesma (G. R. No. 103743, January 29, 1996), it was stressed that:What is essential is the nature of the employees function and not the nomenclature or title given to the job which determines whether the employee has rank-and-file or managerial status or whether he is a supervisory employee. (Emphasis supplied).27

WHEREFORE, the petition is hereby DENIED. Let the records of the case be remanded to the office of origin, the Mediation-Arbitration Unit, Regional Branch No. IV, for the immediate conduct of a certification election subject to the usual pre-election conference.SO ORDERED.Puno, (Chairman), Panganiban, Sandoval-Gutierrez and Corona, JJ., concur.