THIRD DIVISION

G.R. No. 155395             June 22, 2006

IN RE: PETITION FOR CANCELLATION OF THE UNION REGISTRATION OF AIR PHILIPPINES FLIGHT ATTENDANTS ASSOCIATION, AIR PHILIPPINES CORPORATION, Petitioners, vs.BUREAU OF LABOR RELATIONS and AIR PHILIPPINES FLIGHT ATTENDANTS ASSOCIATION, Respondents.

D E C I S I O N

TINGA, J.:

For resolution is a Petition for Review under Rule 45, filed by petitioner Air Philippines Corporation (APC), assailing the Resolutions of the Court of Appeals dated 10 January 2002 and 13 September 2002.1

The case initially centered on the union registration of respondent Air Philippines Flight Attendants Association (APFLAA), which was issued a Certificate of Registration No. NCR-UR-3-2067-99 by the Department of Labor and Employment (DOLE). APFLAA filed on 17 March 1999 a petition for certification election as the collective bargaining representative of the flight attendants of APC. After the Med-Arbiter rendered a ruling ordering the holding of a certification election, such election was held on 5 August 1999, with majority of the votes cast in favor of APFLAA.2

On 25 November 1999, APC filed a Petition for De-Certification and Cancellation of Union Registration against APFLAA with the DOLE. APC alleged that APFLAA could not be registered as a labor organization, as its composition consisted of "a mixture of supervisory and rank-and-file flight attendants." Particularly, APC alleged that flight attendants holding the position of "Lead Cabin Attendant," which according to it is supervisory in character, were among those who comprised APFLAA.

On 18 July 2001, the DOLE-National Capital Region (NCR) Regional Director Alex E. Maraan rendered a Decision dismissing the petition. The DOLE-NCR held that Article 245 of the Labor Code, which states that supervisory employees are not eligible for membership in labor organizations of rank-and-file employees, does not provide a ground for cancellation of union registration, which is instead governed by Article 239 of the Labor Code.3

APC filed a Motion for Reconsideration/Appeal regarding this Decision of the DOLE-NCR. In a Resolution dated 18 July 2001, the Bureau of Labor Relations (BLR) denied the appeal, affirming the rationale of the DOLE-NCR.4

APC then immediately filed a Petition for Certiorari dated 12 December 2001 with the Court of Appeals, imputing grave abuse of discretion on the part of the BLR in denying its appeal. However, the petition was dismissed outright by the Court of Appeals in a Resolution dated 10 January 2002, on the ground that APC had "failed to avail of the remedy of a prior Motion for Reconsideration" before the filing of the certiorari petition, which step, it stressed, is a "condition sine qua non  to the filing of a petition for certiorari."5

APC filed a Motion for Reconsideration dated 5 February 2002, but this too was denied by the Court of Appeals in a Resolution dated 13 September 2002. This time, the appellate court ruled that the Motion for Reconsideration was "totally defective," for failing to contain the proof of service or registry return receipts to the respondents. The Court of Appeals even noted that the Affidavit of Service attached to the Motion for Reconsideration "failed to indicate the registry return receipts of the registered mails to the respondents."6

Hence, the present petition.

APC argues that its petition before the Court of Appeals involved mere questions of law, among which is whether APFLAA’s union registration may be cancelled considering that the

union is allegedly composed of a mixture of supervisory and rank-and-file employees. It is posited that questions of law may be raised directly in a petition for certiorari without need of a prior motion for reconsideration.7

However, it is clear from the petition filed by APC before the Court of Appeals that the issues involved do not consist of questions of law only. It is insisted therein that employees holding the position of Lead Cabin Attendants are supervisory employees and hence disallowed from joining a union of rank-and-file employees.8 On the other hand, APFLAA countered before the DOLE-NCR and the BLR that only rank-and-file flight attendants comprised its membership.9 Thus, the very question of whether Lead Cabin Attendants are indeed supervisory employees appears to be factual in nature, the proper resolution of which necessitates a factual determination of the actual duties of Lead Cabin Attendants. Indeed, APC made reference therein to such documents as an employee’s manual in support of its argument,10 documents that would evidently require factual evaluation before accorded proper evidentiary value.

There is admittedly some leeway for the Court of Appeals if it was so minded to give due course to APC’s petition, notwithstanding the failure to file a motion for reconsideration. Yet ultimately, the determination of whether or not to admit a petition attended with such defect falls within the sound discretion of the Court of Appeals.

Should the Court of Appeals decide, as it did, to dismiss the petition outright on such ground, it would commit no reversible error of law nor any grave abuse of discretion, considering that the rule requiring the filing of a motion for reconsideration before resorting to the special civil action of certiorari is well entrenched in jurisprudence.

It also does not escape the attention of the Court that the Motion for Reconsideration filed by APC before the Court of Appeals was itself fatally defective, allowing the appellate court to deny the same without having to evaluate its substantial arguments. The action of the appellate court relative to APC’s missteps is consistent with procedural rules.

Still, the Court has deigned to give a close look at the substantial arguments raised in APC’s petition before the Court of Appeals.

The DOLE-NCR Regional Director, in dismissing the petition for cancellation, cited our minute resolution in SPI Technologies Incorporated v. DOLE11 wherein the Court observed that Article 24512 of the Labor Code, the legal basis for the petition for cancellation, merely prescribed the requirements for eligibility in joining a union and did not prescribe the grounds for cancellation of union registration.13 Since the filing of this petition, the Court has had occasion to rule, in Tagaytay Highlands International Golf Club v. Tagaytay Highlands Employees Union-PGTWO,14that "[t]he 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 23915 of the Labor Code."16

Clearly then, for the purpose of de-certifying a union, it is not enough to establish that the rank-and-file union includes ineligible employees in its membership. Pursuant to Article 239 (a) and (c) of the Labor Code, it must be shown that there was 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, or in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to submit these documents together with the list of the newly elected-appointed officers and their postal addresses to the BLR.17

In its Petition for De-certification and Cancellation of Union Registration, APC did not impute on APFLAA such misrepresentation of the character necessitated under Article 239 (a) and (c) of the Labor Code. APC merely argued that APFLAA was not qualified to become a legitimate labor organization by reason of its mixed composition of rank-and-file and supervisory employees; and that APFLAA committed misrepresentation by making it appear that its composition was composed purely of rank-and-file employees. Such misrepresentation (if it can be called as such) as alleged by APC, is not conformable to Article 239 (a) and (c) of the Labor Code. Indeed, it appears from the record that APC instead devoted the bulk of its arguments in establishing that supervisory employees

comprised part of the membership of APFLAA, a ground which is not sufficient to cause the cancellation of union registration. And this is of course all under the assumption that Lead Cabin Attendants are indeed supervisory employees, a claim consistently denied by APFLAA and which was not confirmed by either the DOLE-NCR or the BLR.

There may be remedies available to enforce the proscription set forth in Article 245 of the Labor Code on supervisory employees joining the union of rank-and-file employees. But consistent with jurisprudence, the rule under Article 245 barring supervisory employees from joining the union of rank-and-file employees is not a ground for cancellation of union registration. Accordingly, we see no error on the part of the DOLE-NCR and the BLR in having dismissed APC’s petition, and thus no cause to compel the Court of Appeals to disregard APC’s procedural errors and accept the petition for certiorari.

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.

G.R. No. 93468 December 29, 1994

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

Filemon G. Tercero for petitioner.

The Government Corporate Counsel for Republic Planters Bank.

BELLOSILLO, J.:

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

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

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

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

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

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

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

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

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

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

NATU submits that an analysis of the decision of public respondent readily yields certain flaws that result in erroneous conclusions. Firstly, a branch does not enjoy relative autonomy precisely because it is treated as one unit with the head office and has to comply with uniform policies and guidelines set by the bank itself. It would be absurd if each branch of a particular bank would be adopting and implementing different policies covering multifarious banking transactions. Moreover, respondent Bank's own evidence clearly shows that policies and guidelines covering the various branches are set by the head office. Secondly, there is absolutely no evidence showing that bank policies are laid down through the collective action of the Branch Manager, the Cashier and the Controller. Thirdly, the organizational setup where the Branch Manager exercises control over branch operations, the Controller controls the Accounting Division, and the Cashier controls the Cash Division, is nothing but a proper delineation of duties and responsibilities. This delineation is a Central Bank prescribed internal control measure intended to objectively establish responsibilities among the officers to easily pinpoint culpability in case of error. The "dual control" and "joint custody" aspects mentioned in the decision of public respondent are likewise internal control measures prescribed by the Central Bank.

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

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

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

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

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

Respondent Bank has no legal personality to move for the dismissal of the petition for certification election on the ground that its supervisory employees are in reality managerial employees. An employer has no standing to question the process since this is the sole

concern of the workers. The only exception is where the employer itself has to file the petition pursuant to Art. 258 of the Labor Code because of a request to bargain collectively. 6

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

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

Art. 212 (m) — Managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions, if the exercise of such managerial authority is not routinary in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees (emphasis supplied).

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

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

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

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

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

Conformably with the above, bank policies are laid down and/or executed through the collective action of the Branch Manager, Cashier and Controller at the branch level. The Branch Manager exercises over-all control and supervision over branch operation being on the top of the branch's pyramid structure. However, both the controller and the cashier who are called in banking parlance as "Financial Managers" due to their fiscal functions are given such a share and sphere of responsibility in the operations of the bank. The cashier controls and supervises the cash division while the controller that of the Accounting Division. Likewise, their assigned task is of great significance, without which a bank or branch for that matter cannot operate or function.

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

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

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

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

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

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

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

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

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

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

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

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

Neither do the Branch Managers, Cashiers and Controllers have the power to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. The Senior Manager of the Human Resource Management Department of respondent Bank, in her affidavit, stated that "the power to hire, fire, suspend, transfer, assign or otherwise impose discipline among subordinates within their respective jurisdictions is lodged with the heads of the various departments, the branch managers and officers-in-charge, the branch cashiers and the branch controllers. Inherent as it is in the aforementioned positions, the authority to hire, fire, suspend, transfer, assign or otherwise discipline employees within their respective domains was deemed unnecessary to be incorporated in their individual job descriptions; By way of illustration, on August 24, 1989, Mr. Renato A. Tuates, the Officer-in-Charge/Branch Cashier of the Bank's Dumaguete Branch, placed under preventive suspension and thereafter terminated the teller of the same branch . . . . Likewise, on February 22, 1989, Mr. Francis D. Robite, Sr., the Officer-in-Charge of International Department, assigned the cable assistant of the International Department as the concurrent FCDU Accountable Forms Custodian." 19

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

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

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

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

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

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

respondent's finding that they are managerial employees; understandably so, because this position is not included in the appeal of respondent Bank.

As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers and Controllers are confidential employees, having control, custody and/or access to confidential matters, e.g., the branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, 23 pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, 24 this claim is not even disputed by petitioner. A confidential employee is one entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer's property. 25 While Art. 245 of the Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of necessary implication, confidential employees are similarly disqualified. This doctrine states that what is implied in a statute is as much a part thereof as that which is expressed, as elucidated in several cases 26 the latest of which is Chua v. Civil Service Commission 27 where we said:

No statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation. What is thought, at the time of enactment, to be an all-embracing legislation may be inadequate to provide for the unfolding events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of statutory construction used to fill in the gap is the doctrine of necessary implication . . . . Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitatelegis . . . .

In applying the doctrine of necessary implication, we took into consideration the rationale behind the disqualification of managerial employees expressed in Bulletin Publishing Corporation v. Sanchez, 28 thus: ". . . if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership." Stated differently, in the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. 29 It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act "in the interest of" the employers. 30 It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. Along the same line of reasoning we held in Golden Farms, Inc. v. Ferrer-Calleja 31 reiterated in Philips Industrial Development, Inc. v. NLRC, 32 that "confidential employees such as accounting personnel, radio and telegraph operators who, having access to confidential information, may become the source of undue advantage. Said employee(s) may act as spy or spies of either party to a collective bargaining agreement."

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

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

SO ORDERED.

EN BANC

G.R. No. 132593 June 25, 1999

PHILIPPINE INTERNATIONAL TRADING CORPORATION, petitioner, vs.COMMISSION ON AUDIT, respondent.

GONZAGA-REYES, J.:

This is a petition for certiorari under Rule 64 of the 1997 Rules of Civil Procedure to annul Decision No. 2447 dated July 27, 1992 of the Commission on Audit (COA) denying Philippine International Trading Corporation's (PITC) appeal from the disallowances made by the resident COA auditor on PITC's car plan benefits; and Decision No. 98-048 dated January 27, 1998 of the COA denying PITC's motion for reconsideration.

The following facts are undisputed:

The PITC is a government-owned and controlled corporation created under Presidential Decree (PD) No. 252 on July 21, 1973 1, primarily for the purpose of promoting and developing Philippine trade in pursuance of national economic development. On October 19, 1988, the PITC Board of Directors approved a Car Plan Program for qualified PITC officers. 2 Under such car plan program, an eligible officer is entitled to purchase a vehicle, fifty percent (50%) of the value of which shall be shouldered by PITC while the remaining fifty percent (50%) will be shouldered by the officer through salary deduction over a period of five (5) years. Maximum value of the vehicle to be purchased ranges from Two Hundred Thousand Pesos (P200,000.00) to Three Hundred and Fifty Thousand Pesos (P350,000.00), depending on the position of the officer in the corporation. In addition, PITC will reimburse the officer concerned fifty percent (50%) of the annual car registration, insurance premiums and costs of registration of the chattel mortgage over the car for a period of five (5) years from the date the vehicle was purchased. The terms and conditions of the car plan are embodied in a "Car Loan Agreement". 3 Per PITC's car plan guidelines, the purpose of the plan is to provide financial assistance to qualified employees in purchasing their own transportation facilities in the performanced of their work, for representation, and personal use. 4 The plan is envisioned to facilitate greater mobility during official trips especially within Metro Manila or the employee's principal place of assignment, without having to rely on PITC vehicles, taxis or cars for hire. 5

On July 1, 1989, Republic Act No. 6758 (RA 6758), entitled "An Act Prescribing a Revised Compensation and Position Classification System in the Government and For Other Purposes", took effect. Section 12 of said law provides for the consolidation of allowances and additional compensation into standardized salary rates save for certain additional compensation such as representation and transportation allowances which were exempted from consolidation into the standardized rate. Said section likewise provides that other additional compensation being received by incumbents as by of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.

Sec. 12, RA 6758, reads —

Sec. 12. Consolidation of All Allowances and Compensation. — All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be

deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.

To implement RA 6758, the Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10 (DBM-CCC No. 10). Paragraph 5.6 of DBM-CCC No. 10 discontinued effective November 1, 1989, all allowances and fringe benefits granted on top of basic salary, not otherwise enumerated under paragraphs 5.4 and 5.5 thereof.

Paragraph 5.6 of DBM-CCC No. 10 provides:

5.6 Payment of other allowances/fringe benefits and all other forms of compensation granted on top of basic salary, whether in cash or in kind, not mentioned in Sub-paragraphs 5.4 and 5.5 6 above shall be discontinued effective November 1, 1989. Payment made for such allowance/fringe benefits after said date shall be considered as illegal disbursement of public funds.

On post audit, the payment/reimbursement of the above-mentioned expenses (50% of the yearly car registration and insurance premiums and 50% of the costs of registration of the chattel mortgage over the car) made after November 1, 1989 was disallowed by the resident COA auditor. The disallowance was made on the ground that the subject car plan benefits were not one of the fringe benefits or form of compensation allowed to be continued after said date under the aforequoted paragraph 5.6 of DBM-CCC No. 10 7, in relation to Paragraphs 5.4 and 5.5 thereof.

PITC, on its behalf, and that of the affected PITC officials, appealed the decision of the resident COA auditor to the COA. On July 27, 1992, COA denied PITC's appeal and affirmed the disallowance of the said car plan expenses in the assailed Decision No. 2447 dated July 27, 1992. Relevant portions of the decision read thus:

Upon circumspect evaluation thereof, this Commission finds the instant appeal to be devoid of merit. It should be noted that the reimbursement/payment of expenses in question is based on the Car Plan benefit granted under Board Resolution No. 10-88-03 adopted by the PITC Board of Directors on October 19, 1988. The Car Plan is undeniably a fringe benefit as appearing in PITC's "Compensation Policy under the heading "3. Other Fringe Benefits", particularly Item No. 3.13 thereof. Inasmuch as PITC is a government-owned and/or controlled corporation, the grant of the Car Plan (being a fringe benefit) should be governed by the provisions of Corporate Compensation Circular No. 10, implementing RA 6758. Under sub-paragraph 5.6 of said Circular, it explicitly provides:

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Since the Car Plan benefit is not one of those fringe benefits or other forms of compensation mentioned in Sub-paragraphs 5.4 and 5.5 of CCC No. 10, consequently the reimbursement of the 50% share of PITC in the yearly registration and insurance premium of the cars purchased under said Car Plan benefit should not be allowed. . . . 8

PITC's motion for reconsideration was denied by the COA in its Resolution dated January 27, 1998. 9

Hence, the instant petition on the following grounds:

1. That the legislature did not intend to revoke existing benefits being received by incumbent government employees as of July 1, 1989 (including subject car plan benefits) when RA 6758 was passed;

2. That the Car Loan Agreements signed between PITC and its officers pursuant to PITC's Car Plan Program, including the Car Loan Agreements, duly executed prior to the effectivity of RA 6758, constitute the law between the parties and as such, protected by Section 10, Article III of the 1987 Philippine Constitution which prohibits the impairment of contracts; and

3. Finally, that the provisions of PD 985 do not apply to PITC inasmuch as under its Revised Charter, PD 1071, as amended by E.O. 756 and E.O. 1067, PITC is not only expressly exempted from OCPC rules and regulations but its Board of Directors was expressly authorized to adopt compensation policies and other related benefits to its officers/employees without need for further approval thereof by any government office, agency or authority. 10

The petition is meritorious.

First of all, we must mention that this Court has confirmed in Philippine Post Authority vs. Commission on Audit 11 the legislative intent to protect incumbents who are receiving salaries and/or allowances over and above those authorized by RA 6758 to continue to receive the same even after RA 6758 took effect. In reserving the benefit to incumbents, the legislature has manifested its intent to gradually phase out this privilege without upsetting the policy of non-diminution of pay and consistent with the rule that laws should only be applied prospectively in the spirit of fairness and justice. 12 Addressing the issue as to whether the petitioners-officials may still receive their representation and transportation allowance (RATA) at the higher rates provided by Letter of Implementation (LOI) No. 97 in light of Section 12, RA 6758, this Court said:

Now, under the second sentence of Section 12, first paragraph, the RATA enjoyed by these PPA officials shall continue to be authorized only if they are "being received by incumbents only as of July 1, 1989." RA 6758 has therefore, to this extent, amended LOI No. 97. By limiting the benefit of the RATA granted by LOI No. 97 to incumbents, Congress has manifested its intent to gradually phase out this privilege without upsetting its policy of non-diminution of pay.

The legislature has similarly adhered to this policy of non-diminution of pay when it provided for the transition allowance under Section 17 of RA 6758 which reads:

Sec. 17. Salaries of Incumbents. — Incumbents of position presently receiving salaries and additional compensation/fringe benefits including those absorbed from local government units and other emoluments the aggregate of which exceeds the standardized salary rate as herein prescribed, shall continue to receive such excess compensation, which shall be referred to as transition allowance. The transition allowance shall be reduced by the amount of salary adjustment that the incumbent shall receive in the future.

While Section 12 refers to allowances that are not integrated into the standardized salaries whereas Section 17 refers to salaries and additional compensation or fringe benefits, both sections are intended to protect incumbents who are receiving said salaries and/or allowances at the time RA 6758 took effect. 13 (Emphasis supplied.)

Based on the foregoing pronouncement, petitioner correctly pointed out that there was no intention on the part of the legislature to revoke existing benefits being enjoyed by incumbents of government positions at the time of the virtue of Sections 12 and 17 thereof. There is no dispute that the PITC officials who availed of the subject car plan benefits were incumbents of their positions as of July 1, 1989. Thus, it was legal and proper for them to continue enjoying said benefits within the five year period from date of purchase of the vehicle allowed by their Car Loan Agreements with PITC.

Further, we see the rationale for the corporation's fifty percent (50%) participation and contribution to the subject expenses. As to the insurance premium, PITC, at least, up to the extent of 50% of the value of the vehicle, has an insurable interest in said vehicle in case of loss or damage thereto. As to the costs of registration of the vehicle in the employee's name and of

the chattel mortgage in favor of PITC, this is to secure PITC of the repayment of the "Car Loan Agreement" and the fulfillment of the other obligations contained therein by the employee.

Still further, the vehicle being utilized by the officer is actually being used for corporate purposes because the officer concerned is no longer entitled to utilize company-owned vehicles for official business once he/she has availed of a car plan. Neither is said officer allowed to reimburse the costs of other land transportation used within his principal place of assignment (i.e. Metro Manila) as the vehicle is presumed to be his official vehicle. 14 In the event that the employee resigns, retires or is separated from the company without cause prior to the completion of the 60-month car plan, the employee shall be given the privilege to buy the car provided he pays the remaining installments of the loan and the amount equivalent to that portion of the company's contribution corresponding to the unexpired period of the car plan. On the other hand, if the employee has been separated from the company for cause, the company has the other option aside from the foregoing to repossess the car from the employee, in which case, the company shall pay back to the employee all amortizations already made by the employee to the company, interest free. 15

Secondly, COA relied on DBM-CCC No. 10 16 as basis for the disallowance of the subject car plan benefits. DBM-CCC No. 10 which was issued by the DBM pursuant to Section 23 17 of RA 6758 mandating the said agency to issue the necessary guidelines to implement RA 6758 has been declared by this Court in De Jesus, et al. vs. Commission on Audit, et al. 18 as of no force and effect due to the absence of publication thereof in the Official Gazette or in a newspaper of general circulation. Salient portions of said decision read:

On the need publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine enunciated in Tanada 19, publication in the Official Gazette or in a newspaper of general circulation in the Philippines is required since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which is to enforce or implement an existing law. Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go through the requisite publication in the Official Gazette or in a newspaper of general circulation in the Philippines.

In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows payment of allowances and other additional compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative or internal regulation. It is something more than that. And why not, when it tends to deprive government workers of their allowances and additional compensation sorely needed to keep body and soul together. At the very least, before the circular under attack may be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted by the publication of said circular in the Official Gazette or in a newspaper or general circulation in the Philippines — to the end that they be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter. This approach is more in keeping with democratic precepts and rudiments of fairness and transparency.

In the case at bar, the disallowance of the subject car plan benefits would hamper the officials in the performance of their functions to promote and develop trade which requires mobility in the performance of official business. Indeed, the car plan benefits are supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation and responsive to the exigencies of the service.

It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety and submitted for publication in the Official Gazette per letter to the National Printing Office dated March 9, 1999. Would the subsequent publication thereof cure the defect and retroact to the time that the above-mentioned items were disallowed in audit?

The answer is in the negative, precisely, for the reason that publication is required as a condition precedent to the effectivity of a law to inform the public of the contents of the law or rules and regulations before their rights and interests are affected by the same. From the time the COA

disallowed the expenses in audit up to the filing of herein petition the subject circular remained in legal limbo due to its non-publication. As was stated in Tanada vs. Tuvera, 21, "prior publication of laws before they become effective cannot be dispensed with, for the reason that such omission would offend due process insofar as it would deny the public knowledge of the laws that are supposed to govern it.

In view of the nullity of DBM-CCC No. 10 relied upon by the COA as basis for the disallowance of the subject car plan benefits, we deem it unnecessary to discuss the second issue raised in the instant petition.

We deem it necessary though to resolve the third issue as to whether PITC is exempt from RA 985 22 as subsequently amended by RA 6758. According to petitioner, PITC's Revised Charter, PD 1071 dated January 25, 1977, as amended by EO 756 dated December 29, 1981, and further amended by EO 1067 dated November 25, 1985, expressly exempted PITC from the Office of the Compensation and Position Classification (OCPC) rules and regulations. Petitioner cites Section 28 of P.D. 1071 23; Section 6 of EO 756 24; and Section 3 of EO 1067. 25

According to the COA in its Decision No. 98-048 dated January 27, 1998, the exemption granted to the PITC has been repealed and revoked by the repealing provisions of RA 6758, particularly Section 16 thereof which provides:

Sec. 16. Repeal of Special Salary Laws and Regulations. — All laws, decrees, executive, orders, corporate charters, and other issuances or parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classifications, salaries, pay rates or allowances of specified positions, or groups of officials, and employees or of agencies, which are inconsistent with the System, including the proviso under Section 2 and Section 16 of PD No. 985 are hereby repealed.

To this, petitioner argues that RA 6758 which is a law of general application cannot repeal provisions of the Revised Charter of PITC and its amendatory laws expressly exempting PITC from OCPC coverage being special laws. Our rules on statutory construction provide that a special law cannot be repealed, amended or altered by a subsequent general law by mereimplication 26; that a statute, general in character as to its terms and application, is not to be construed as repealing a special or specific enactment, unless the legislative purpose to do so is manifested 27; that if repeal of particular or specific law or laws is intended, the proper step is to so express it. 28

In the case at bar, the repeal by Section 16 of RA 6758 of "all corporate charters that exempt agencies from the coverage of the System" was clear and expressed necessarily to achieve the purposes for which the law was enacted, that is, the standardization of salaries of all employees in government owned and/or controlled corporations to achieve "equal pay for substantially equal work". Henceforth, PITC should now be considered as covered by laws prescribing a compensation and position classification system in the government including RA 6758. This is without prejudice, however, as discussed above, to the non-diminution of pay of incumbents as of July 1, 1989 as provided in Sections 12 and 17 of said law.

WHEREFORE, the Petition is hereby GRANTED, the assailed Decisions of the Commission on Audit are SET ASIDE.

SO ORDERED.