Republic of the Philippines SUPREMECOURT Manila

CATHAY PACIFIC STEEL CORP. VS.CA. G.R. No.XnoXxdate, 2006.A LABOR RELATION CASE. BELOW THIS DIGEST IS THE FULL TEXT OF THE CASE.

This is a special civil action for Certiorari under Rule 65 of the Rules of Court seeking to annul and set aside, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction, (1) the Decision[1] of the Court of Appeals in CA-G.R. SP No. 57179 dated 28 October 2003 which annulled the Decision[2] of the National Labor Relations Commission (NLRC) in NLRC Case No. 017822-99 dated 25 August 1999, thereby, reinstating the Decision[3] of Acting Executive Labor Arbiter Pedro C. Ramos dated 7 August 1998; and (2) the Resolution[4] of the same court, dated 3 June 2004, which denied the petitioners Motion for Reconsideration.

Herein petitioners are Cathay Pacific Steel Corporation (CAPASCO), a domestic corporation engaged in the business of manufacturing steel products; Benjamin Chua, Jr. (now deceased), the former CAPASCO President; VirgilioAgerro, CAPASCOs Vice -President; and Leonardo Visorro, Jr., CAPASCOs Administrative-Personnel Manager. Herein private respondents are Enrique Tamondong III, the Personnel Superintendent of CAPASCO who was previously assigned at the petitioners Cainta Plant, and CAPASCO Union of Supervisory Employees (CUSE), a duly registered union of CAPASCO.

The facts of the case are as follows:

Four former employees of CAPASCO originally filed this labor case before the NLRC, namely:

Fidel Lacambra, Armando Dayson, Reynaldo Vacalares, and Enrique Tamondong III. However, in the course of the proceedings, Fidel Lacambra[5] and Armando Dayson[6] executed a Release and Quitclaim, thus, waiving and abandoning any and all claims that they may have against petitioner CAPASCO. On 3 November 1999, Reynaldo Vacalares also signed a Quitclaim/Release/Waiver.[7] Hence, this Petition shall focus solely on issues affecting private respondent Tamondong.

Petitioner CAPASCO, hired private respondent Tamondong as Assistant to the Personnel Manager for its Cainta Plant on 16 February 1990. Thereafter, he was promoted to the position of Personnel/Administrative Officer, and later to that of Personnel Superintendent. Sometime in June 1996, the supervisory personnel of CAPASCO launched a move to organize a union among their ranks, later known as private respondent CUSE. Private respondent Tamondong actively involved himself in the formation of the union and was even elected as one of its officers after its creation. Consequently, petitioner CAPASCO sent a memo[8] dated 3 February 1997, to private respondent Tamondong requiring him to explain and to discontinue from his union activities, with a warning that a continuance thereof shall adversely affect his employment in the company. Private respondent Tamondong ignored said warning and made a reply letter[9] on 5 February 1997, invoking his right as a supervisory employee to join and organize a labor union. In view of that, on 6 February 1997, petitioner CAPASCO through a memo[10] terminated the employment of private respondent Tamondong on the ground of loss of trust and confidence, citing his union activities as acts constituting serious disloyalty to the company.

Private respondent Tamondong challenged his dismissal for being illegal and as an act involving unfair labor practice by filing a Complaint for Illegal Dismissal and Unfair Labor Practice before the NLRC, Regional Arbitration Branch IV. According to him, there was no just cause for his dismissal

and it was anchored solely on his involvement and active participation in the organization of the union of supervisory personnel in CAPASCO. Though private respondent Tamondong admitted his active role in the formation of a union composed of supervisory personnel in the company, he claimed that such was not a valid ground to terminate his employment because it was a legitimate exercise of his constitutionally guaranteed right to self-organization.

In contrast, petitioner CAPASCO contended that by virtue of private respondent Tamondongs position as Personnel Superintendent and the functions actually performed by him in the company, he was considered as a managerial employee, thus, under the law he was prohibited from joining a union as well as from being elected as one of its officers. Accordingly, petitioners maintained their argument that the dismissal of private respondent Tamondong was perfectly valid based on loss of trust and confidence because of the latters active participation in the affairs of the union.

On 7 August 1998, Acting Executive Labor Arbiter Pedro C. Ramos rendered a Decision in favor of private respondent Tamondong, decreeing as follows:

WHEREFORE, premises considered, judgment is hereby rendered finding [petitioner CAPASCO] guilty of unfair labor practice and illegal dismissal. Concomitantly, [petitioner CAPASCO] is hereby ordered: 1. To cease and desist from further committing acts of unfair labor practice, as charged; To reinstate [private respondent Tamondong] to his former position without loss of seniority rights and other privileges and his full backwages inclusive of allowances, and to his other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement, and herein partially computed as follows: a) b) c) d) P167,076.00 - backwages from February 7, 1997 to August 7, 1998; P18,564.00 - 13th month pay for 1997 and 1998; P4,284.00 - Holiday pay for 12 days; P3,570.00 - Service Incentive Leave for 1997 and 1998.

2.

P 193,494.00 - Total partial backwages and benefits.[11]

Aggrieved, petitioners appealed the afore-quoted Decision to the NLRC. On 25 August 1999, the NLRC rendered its Decision modifying the Decision of the Acting Executive Labor Arbiter Pedro C. Ramos, thus:

WHEREFORE, premises all considered, the decision appealed from is hereby MODIFIED: a) Dismissing the Complaint for Illegal Dismissal filed by [private respondent Tamondong] for utter lack of merit; Dismissing the Complaint for Unfair Labor Practice for lack of factual basis; Deleting the awards to [private respondent Tamondong] of backwages, moral and exemplary damages, and attorneys fees; Affirming the awards to [private respondent Tamondong], representing 13th month pay for 1997 and 1998, holiday pay for 12 days, and service incentive leave for 1997 totaling P26,418.00; and Ordering the payment of backwages to [private respondent Tamondong] reckoned from 16 September 1998 up to the date of this Decision.[12]

b)

c)

d)

e)

Petitioners filed a Motion for Clarification and Partial Reconsideration, while, private respondent Tamondong filed a Motion for Reconsideration of the said NLRC Decision, but the NLRC affirmed its original Decision in its Resolution[13] dated 25 November 1999.

Dissatisfied with the above-mentioned Decision of the NLRC, private respondents Tamondong and CUSE filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals, alleging grave abuse of discretion on the part of the NLRC. Then, the Court of Appeals in its Decision dated 28 October 2003, granted the said Petition. The dispositive of which states that:

WHEREFORE, premises considered, the instant Petition for Certiorari is GRANTED and the herein assailed Decision dated August 25, 1999 of the NLRC, Third Division is ANNULLED and SET ASIDE. Accordingly, the Decision dated August 7, 1998 of NLRC, RAB IV Acting Executive Labor Arbiter Pedro C. Ramos, insofar as [private respondent Tamondong] is concerned is hereby REINSTATED.[14]

Consequently, petitioners filed a Motion for Reconsideration of the aforesaid Decision of the Court of Appeals. Nonetheless, the Court of Appeals denied the said Motion for Reconsideration for want of convincing and compelling reason to warrant a reversal of its judgment.

Hence, this present Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure.

In the Memorandum[15] filed by petitioners, they aver that private respondent Tamondong as Personnel Superintendent of CAPASCO was performing functions of a managerial employee because he was the one laying down major management policies on personnel relations such as: issuing memos on company rules and regulations, imposing disciplinary sanctions such as warnings and suspensions, and executing the same with full power and discretion. They claim that no further approval or review is necessary for private respondent Tamondong to execute these functions, and the notations NOTED BY of petitioner Agerro, the Vice-President of petitioner CAPASCO, on the aforesaid memos are nothing but mere notice that petitioner Agerro was aware of such company actions performed by private respondent Tamondong. Additionally, private respondent Tamondong was not only a managerial employee but also a confidential employee having knowledge of confidential information involving company policies on personnel relations. Hence, the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it held that private respondent Tamondong was not a managerial employee but a mere supervisory employee, therefore, making him eligible to participate in the union activities of private respondent CUSE.

Petitioners further argue that they are not guilty of illegal dismissal and unfair labor practice because private respondent Tamondong was validly dismissed and the reason for preventing him to join a labor union was the nature of his position and functions as Personnel Superintendent, which position was incompatible and in conflict with his union activities. Consequently, it was grave abuse of discretion on the part of the Court of Appeals to rule that petitioner CAPASCO was guilty of illegal dismissal and unfair labor practice.

Lastly, petitioners maintain that the Court of Appeals gravely abused its discretion when it reinstated the Decision of Executive Labor Arbiter Pedro C. Ramos holding CAPASCO liable for backwages, 13th month pay, service incentive leave, moral damages, exemplary damages, and attorneys fees.

On the other hand, private respondents, assert that the assailed Decision being a final disposition of the Court of Appeals is appealable to this Court by a Petition for Review on Certiorari under Rule 45 of the Rules of Court and not under Rule 65 thereof. They also claim that petitioners new ground that private respondent Tamondong was a confidential employee of CAPASCO, thus, prohibited from participating in union activities, is not a valid ground to be r aised in this Petition for Certiorari seeking the reversal of the assailed Decision and Resolution of the Court of Appeals.

Now, given the foregoing arguments raise by both parties, the threshold issue that must first be resolved is whether or not the Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure is the proper remedy for the petitioners, to warrant the reversal of the Decision and Resolution of the Court of Appeals dated 28 October 2003 and 3 June 2004, respectively.

The petition must fail.

The special civil action for Certiorari is intended for the correction of errors of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of jurisdiction.[16]

The essential requisites for a Petition for Certiorari under Rule 65 are: (1) the writ is directed against a tribunal, a board, or an officer exercising judicial or quasi-judicial function; (2) such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.[17] Excess of jurisdiction as distinguished from absence of jurisdiction means that an act, though within the general power of a tribunal, board or officer is not authorized, and invalid with respect to the particular proceeding, because the conditions which alone authorize the exercise of the general power in respect of it are wanting.[18] Without jurisdiction means lack or want of legal power, right or authority to hear and determine a cause or causes, considered either in general or with reference to a particular matter. It means lack of power to exercise authority.[19] Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[20]

In the case before this Court, petitioners fail to meet the third requisite for the proper invocation

of Petition for Certiorari under Rule 65, to wit: that there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. They simply alleged that the Court of Appeals gravely abuse its discretion which amount to lack or excess of jurisdiction in rendering the assailed Decision and Resolution. They did not bother to explain why an appeal cannot possibly cure the errors committed by the appellate court. It must be noted that the questioned Decision of the Court of Appeals was already a disposition on the merits; this Court has no remaining issues to resolve, hence, the proper remedy available to the petitioners is to file Petition for Review under Rule 45 not under Rule 65.

Additionally, the general rule is that a writ of certiorari will not issue where the remedy of appeal is available to the aggrieved party. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or cumulative.[21] Time and again this Court reminded members of the bench and bar that the special civil action of Certiorari cannot be used as a substitute for a lost appeal[22] where the latter remedy is available. Such a remedy will not be a cure for failure to timely file a Petition for Review on Certiorari under Rule 45. Nor can it be availed of as a substitute for the lost remedy of an ordinary appeal, especially if such loss or lapse was occasioned by ones own negligence or error in the choice of remedies.[23]

In the case at bar, petitioners received on 9 June 2004 the Resolution of the Court of Appeals dated 3 June 2004 denying their Motion for Reconsideration. Upon receipt of the said Resolution, they had 15 days or until 24 June 2004 within which to file an appeal by way of Petition for Review under Rule 45, but instead of doing so, they just allowed the 15 day period to lapse, and then on the 61stday from receipt of the Resolution denying their Motion for Reconsideration, they filed this Petition for

Certiorari under Rule 65 alleging grave abuse of discretion on the part of the appellate court. Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the interest of justice, has the discretion to treat a Petition for Certiorari as a Petition for Review on Certiorari under Rule 45, especially if filed within the reglementary period for filing a Petition for Review.[24] However, in the present case, this Court finds no compelling reason to justify a liberal application of the rules, as this Court did in the case of Delsan Transport Lines, Inc. v. Court of Appeals.[25] In the said case, this Court treated the Petition for Certiorari filed by the petitioner therein as having been filed under Rule 45 because said Petition was filed within the 15-day reglementary period for filing a Petition for Review on Certiorari. Petitioners counsel therein received the Court of Appeals Resolution denying their Motion for Reconsideration on 26 October 1993 and filed the Petition for Certiorari on 8 November 1993, which was within the 15-day reglementary period for filing a Petition for Review on Certiorari. It cannot therefore be claimed that the Petition was used, as a substitute for appeal after that remedy has been lost thr ough the fault of the petitioner.[26] Conversely, such was not the situation in the present case. Hence, this Court finds no reason to justify a liberal application of the rules.

Accordingly, where the issue or question involves or affects the wisdom or legal soundness of the decision, and not the jurisdiction of the court to render said decision, the same is beyond the province of a petition for certiorari.[27] It is obvious in this case that the arguments raised by the petitioners delved into the wisdom or legal soundness of the Decision of the Court of Appeals, therefore, the proper remedy is a Petition for Review on Certiorari under Rule 45. Consequently, it is incumbent upon this Court to dismiss this Petition.

In any event, granting arguendo, that the present petition is proper, still it is dismissible. The

Court of Appeals cannot be said to have acted with grave abuse of discretion amounting to lack or excess of jurisdiction in annulling the Decision of the NLRC because the findings of the Court of Appeals that private respondent Tamondong was indeed a supervisory employee and not a managerial employee, thus, eligible to join or participate in the union activities of private respondent CUSE, were supported by evidence on record. In the Decision of the Court of Appeals dated 28 October 2003, it made reference to the Memorandum[28] dated 12 September 1996, which required private respondent Tamondong to observe fixed daily working hours from 8:00 am to 12:00 noon and from 1:00 pm to 5:00 pm. This imposition upon private respondent Tamondong, according to the Court of Appeals, is very uncharacteristic of a managerial employee. To support such a conclusion, the Court of Appeals cited the case of Engineering Equipment, Inc. v. NLRC[29] where this Court held that one of the essential characteristics[30] of an employee holding a managerial rank is that he is not subjected to the rigid observance of regular office hours or maximum hours of work.

Moreover, the Court of Appeals also held that upon careful examination of the documents submitted before it, it found out that:

[Private respondent] Tamondong may have possessed enormous powers and was performing important functions that goes with the position of Personnel Superintendent, nevertheless, there was no clear showing that he is at liberty, by using his own discretion and disposition, to lay down and execute major business and operational policies for and in behalf of CAPASCO. [Petitioner] CAPASCO miserably failed to establish that [private respondent] Tamondong was authorized to act in the interest of the company using his independent judgment. xxx. Withal, [private respondent] Tamondong may have been exercising certain important powers, such as control and supervision over erring rank-and-file employees, however, x xx he does not possess the power to hire, transfer, terminate, or discipline erring employees of the company. At the most, the record merely showed that [private respondent] Tamondong informed and warned rank-and-file employees with respect to their violations of CAPASCOs rules and regulations. xxx. [Also, the functions performed by private respondent such as] issuance of warning[31] to employees with irregular attendance and unauthorized leave of absences and requiring employees to explain regarding charges of abandonment of work, are normally performed by a mere supervisor, and not by a manager.[32]

Accordingly, Article 212(m) of the Labor Code, as amended, differentiates supervisory employees from managerial employees, to wit: 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; whereas, managerial employees are those who are 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. Thus, from the foregoing provision of the Labor Code, it can be clearly inferred that private respondent Tamondong was just a supervisory employee. Private respondent Tamondong did not perform any of the functions of a managerial employee as stated in the definition given to it by the Code. Hence, the Labor Code[33] provisions regarding disqualification of a managerial employee from joining, assisting or forming any labor organization does not apply to herein private respondent Tamondong. Being a supervisory employee of CAPASCO, he cannot be prohibited from joining or participating in the union activities of private respondent CUSE, and in making such a conclusion, the Court of Appeals did not act whimsically, capriciously or in a despotic manner, rather, it was guided by the evidence submitted before it. Thus, given the foregoing findings of the Court of Appeals that private respondent is a supervisory employee, it is indeed an unfair labor practice[34] on the part of petitioner CAPASCO to dismiss him on account of his union activities, thereby curtailing his constitutionally guaranteed right to self-organization.[35]

With regard to the allegation that private respondent Tamondong was not only a managerial employee but also a confidential employee, the same cannot be validly raised in this Petition for Certiorari. It is settled that an issue which was not raised in the trial court cannot be raised for the first time on appeal. This principle applies to a special civil action for certiorari under Rule 65.[36] In addition, petitioners failed to adduced evidence which will prove that, indeed, private respondent was

also a confidential employee.

WHEREFORE, premises considered, the instant Petition is DISMISSED. The Decision and Resolution of the Court of Appeals dated 28 October 2003 and 3 June 2004, respectively, in CA-G.R. SP No. 57179, which annulled the Decision of the NLRC in NLRC Case No. 017822-99 dated 25 August 1999, thereby, reinstating the Decision of Acting Executive Labor Arbiter Pedro C. Ramos dated 7 August 1998, is hereby AFFIRMED. With costs against petitioners.

SO ORDERED.

[G.R. No. 142000. January 22, 2003]

TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner, vs. TAGAYTAY HIGHLANDS EMPLOYEES UNION -PGTWO, respondent. DECISION CARPIO-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 Comment[1] 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 annexed[2] to its Comment to the petition for certification election. And it therein incorporated the following tabulation[3] 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 Disqualification

13 6 2 53

Supervisors of THIGCI Resigned employees of THIGCI AWOL employees of THIGCI Rank-and-file employees of The Country Club at Tagaytay Highlands, Inc. Supervisors of The Country Club at Tagaytay Highlands, Inc. Resigned employees of The Country Club at Tagaytay Highlands, Inc. Terminated employees of The Country Club at Tagaytay Highlands, Inc. AWOL employees of The Country Club at Tagaytay Highlands, Inc. Signatures that cannot be deciphered Names in list that were erased Names with first names only

14

6

3

1

4 16 2

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 Reply[7] 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 AnastacioBactin 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 petiti oner 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 DimalipisBaldoz, by authority of the DOLE Secretary, issued DOLE Resolution of November 12, 1998[10] setting aside the June 4, 1998 Resolution dismissing the petition for certification election. In the November 12, 1998 Resolution, UndersecretaryDimapilis-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 preelection 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 al[16] 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 RE SPONDENT 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 CASE [18] 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 rankand-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 Toyota[19]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. Ledesma[20] 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, SumasaklawsaManggagawasa 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 x Clearly, 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 cert ification 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 assessment s 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, itsfailure 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 xxThe 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. Republic of the Philippines SUPREMECOURT Manila THIRD DIVISION

G.R. No. 96566 January 6, 1992 ATLAS LITHOGRAPHIC SERVICES, INC., petitioner, vs. UNDERSECRETARY BIENVENIDO E. LAGUESMA (Department of Labor and Employment) and ATLAS LITHOGRAPHIC SERVICES, INC. SUPERVISORY, ADMINISTRATIVE, PERSONNEL,

PRODUCTION, ACCOUNTING AND CONFIDENTIAL EMPLOYEES A SSOCIATIONKAISAHAN NG MANGGAWANG PILIPINO (KAMPIL -KATIPUNAN), respondents. Romero, Lagman, Valdecantos&Arreza Law Offices for petitioner. Esteban M. Mendoza for private respondent.

GUTIERREZ, JR., J.:p This is a petition for certiorari under Rule 65 of the Rules of Court seeking the modification of the Order dated 14 December 1990 and the Resolution dated 21 November 1990 issued by the public respondents. The antecedent facts of the case as gathered from the records are as follows: On July 16, 1990, the supervisory, administrative personnel, production, accounting and confidential employees of the petitioner Atlas Lithographic Services, Inc. (ALSI) affiliated with private respondent KaisahanngManggagawang Pilipino, a national labor organization. The local union adopted the name Atlas Lithographic Services, Inc. Supervisory, Administrative, Personnel, Production, Accounting and Confidential Employees Association or ALSI-SAPPACEA-KAMPIL in short and which we shall hereafter refer to as the "supervisors" union. Shortly thereafter, private respondent Kampil-Katipunan filed on behalf of the "supervisors" union a petition for certification election so that it could be the sole and exclusive bargaining agent of the supervisory employees. The petitioners opposed the private respondent's petition claiming that under Article 245 of the Labor code the private respondent cannot represent the supervisory employees for collective bargaining purposes because the private respondent also represents the rank-and-file employees' union. On September 18, 1990, the Med-Arbiter issued an order in favor of the private respondent, the dispositive portion of which provides: WHEREFORE, premises considered, a certification election among the supervisory employees belonging to the Administrative, Personnel, Production, Accounting Departments as well as confidential employees performing supervisory functions of Atlas Lithographic Services, Incorporated is hereby ordered conducted within 20 days from receipt hereof, subject to usual pre-election conference, with the following choices: 1. KAMPIL (KATIPUNAN); 2. No union. SO ORDERED. (Rollo, pp. 39-40) The petitioners, as expected, appealed for the reversal of the above order. The public respondent, however, issued a resolution affirming the Med-Arbiter's order. The petitioners, in turn, filed a motion for reconsideration but the same was denied. Hence, this petition for certiorari. The sole issue to be resolved in this case is whether or not, under Article 245 of the Labor Code, a local union of supervisory employees may be allowed to affiliate with a national federation of labor organizations of rank-and-file employees and which national federation actively represents its affiliates

in collective bargaining negotiations with the same employer of the supervisors and in the implementation of resulting collective bargaining agreements. The petitioner argues that KAMPIL-KATIPUNAN already represents its rank-and-file employees and, therefore, to allow the supervisors of those employees to affiliate with the private respondent is tantamount to allowing the circumvention of the principle of the separation of unions under Article 245 of the Labor Code. It further argues that the intent of the law is to prevent a single labor organization from representing different classes of employees with conflicting interests. The public respondent, on the other hand, contends that despite affiliation with a national federation, the local union does not lose its personality which is separate, and distinct from the nat ional federation. It cites as its legal basis the case of Adamson & Adamson, Inc. v. CIR (127 SCRA 268 [1984]). It maintains that Rep. Act No. 6715 contemplates the principle laid down by this Court in the Adamson case interpreting Section 3 of Rep. Act No. 875 (the Industrial Peace Act) on the right of a supervisor's union to affiliate. The private respondent asserts that the legislature must have noted the Adamson ruling then prevailing when it conceived the reinstatement in the present Labor Code of a similar provision on the right of supervisors to organize. Under the Industrial Peace Act of 1953, employees were classified into three groups, namely: (1) managerial employees; (2) supervisors; and (3) rank-and file employees. Supervisors, who were considered employees in relation to their employer could join a union but not a union of rank-and-file employees. With the enactment in 1974 of the Labor Code (Pres Decree No. 442), employees were classified into managerial and rank-and-file employees. Neither the category of supervisors nor their right to organize under the old statute were recognized. So that, in Bulletin Publishing Corporation v. Sanchez (144 SCRA 628 [1986]), the Court interpreted the superseding labor law to have removed from supervisors the right to unionize among themselves. The Court ruled: In the light of the factual background of this case, We are constrained to hold that the supervisory employees of petitioner firm may not, under the law, form a supervisors union, separate and distinct from the existing bargaining unit (BEU), composed of the rank-and-file employees of the Bulletin Publishing Corporation. It is evident that most of the private respondents are considered managerial employees. Also, it is distinctly stated in Section 11, Rule II, of the Omnibus Rules Implementing the Labor Code, that supervisory unions are presently no longer recognized nor allowed to exist and operate as such. (pp. 633, 634) In Section 11, Rule II, Book V of the Omnibus Rules implementing Pres. Decree No. 442, the supervisory unions existing since the effectivity of the New Code in January 1, 1975 ceased to operate as such and the members who did not qualify as managerial employees under this definition in Article 212 (k) therein became eligible to form, to join or assist a rank -and-file union. A revision of the Labor Code undertaken by the bicameral Congress brought about the enactment of Rep. Act No. 6715 in March 1989 in which employees were reclassified into three groups, namely: (1) the managerial employees; (2) supervisors; and (3) the rank and file employees. Under the present law, the category of supervisory employees is once again recognized. Hence, Art. 212 (m) states: (m) . . . 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. . . . The rationale for the amendment is the government's recognition of the right of supervisors to organize with the qualification that they shall not join or assist in the organization of rank-and-file employees. The reason behind the Industrial Peace Act provision on the same subject matter has been adopted in the present statute. The interests of supervisors on the one hand, and the rank-and-file employees on the

other, are separate and distinct. The functions of supervisors, being recommendatory in nature, are more identified with the interests of the employer. The performance of those functions may, thus, run counter to the interests of the rank-and-file. This intent of the law is made clear in the deliberations of the legislators on then Senate Bill 530 now enacted as Rep. Act No. 6715. The definition of managerial employees was limited to those having authority to hire and fire while those who only recommend effectively the hiring or firing or transfers of personnel would be considered as closer to rank-and-file employees. The exclusion, therefore, of middle level executives from the category of managers brought about a third classification, the supervisory employees. These supervisory employees are allowed to form their own union but they are not allowed to join the rankand-file union because of conflict of interest (Journal of the Senate, First Regular Session, 1987, 1988, Volume 3, p. 2245). In terms of classification, however, while they are more closely identified with the rank-and-file they are still not allowed to join the union of rank-and-file employees. To quote the Senate Journal: In reply to Sen. Guingona's query whether "supervisors" are included in the term "employee", Sen. Herrera stated that while they are considered as rank-and-file employees, they cannot join the union and they would have to form their own supervisors' union pursuant to Rep. Act 875. (supra, p. 2288) The peculiar role of supervisors is such that while they are not managers, when they recommend action implementing management policy or ask for the discipline or dismissal of subordinates, they identify with the interests of the employer and may act contrary to the interests of the rank -and-file. We agree with the petitioner's contention that a conflict of interest may arise in the areas of disci pline, collective bargaining and strikes. Members of the supervisory union might refuse to carry out disciplinary measures against their comember rank-and-file employees. In the area of bargaining, their interests cannot be considered identical. The needs of one are different from those of the other. Moreover, in the event of a strike, the national federation might influence the supervisors' union to conduct a sympathy strike on the sole basis of affiliation. More important, the factual issues in the Adamson case are different from the present case. First, the rank-and-file employees in the Adamson case are not directly under the supervisors who comprise the supervisors' union. In the case at bar, the rank-and file employees are directly under the supervisors organized by one and the same federation. The contemplation of the law in Sec. 3 of the Industrial Peace Act is to prohibit supervisors from joining a labor organization of employees under their supervision. Sec. 3 of the Industrial Peace Act provides: Sec. 3 Employees' Right to Self Organization. Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own (Emphasis supplied). This was not the consideration in the Adamson case because as mentioned earlier, the rank-and-file employees in the Adamson case were not under the supervision of the supervisors involved. Meanwhile, Article 245 of the Labor Code as amended by Rep. Act No. 6715 provides:

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. The Court construes Article 245 to mean that, as in Section 3 of the Industrial Peace Act, supervisors shall not be given an occasion to bargain together with the rank-and-file against the interests of the employer regarding terms and conditions of work Second, the national union in the Adamson case did not actively represent its local chapters. In the present case, the local union is actively represented by the national federation. In fact, it was the national federation, the KAMPIL-KATIPUNAN, which initially filed a petition for certification in behalf of the respondent union. Thus, if the intent of the law is to avoid a situation where supervisors would merge with the rank and file or where the supervisors' labor organization would represent conflicting interests, then a local supervisors' union should not be allowed to affiliate with the national federation of union of rank-andfile employees where that federation actively participates in union activity in the company. The petitioner further contends that the term labor organization includes a federation considering that Art. 212 (g) mentions "any union or association of employees." The respondent, however, argues that the phrase refers to a local union only in which case, the prohibition in Art. 245 is inapplicable to the case at bar. The prohibition against a supervisors' union joining a local union of rank-and-file is replete with jurisprudence. The Court emphasizes that the limitation is not confined to a case of supervisors wanting to join a rank-and-file local union. The prohibition extends to a supervisors' local union applying for membership in a national federation the members of which include local unions of rank-and-file employees. The intent of the law is clear especially where, as in the case at bar, the supervisors will be co-mingling with those employees whom they directly supervise in their own bargaining unit. Technicalities should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. (Rapid Manpower Consultants, Inc. v. NLRC, 190 SCRA 747 [1990]) What should be paramount is the intent behind the law, not its literal construction. Where one interpretation would result in mischievous consequences while another would bring about equity, justice, and the promotion of labor peace, there can be no doubt as to what interpretation shall prevail. Finally, the respondent contends that the law prohibits the employer from interfering with the employees' right to self-organization. There is no question about this intendment of the law. There is, however, in the present case, no violation of such a guarantee to the employee. Supervisors are not prohibited from forming their own union. What the law prohibits is their membership in a labor organization of rank-and-file employees (Art. 245, Labor Code) or their joining a national federation of rank-and-file employees that includes the very local union which they are not allowed to directly join. In a motion dated November 15, 1991 it appears that the petitioner has knuckled under to the respondents' pressures and agreed to let the national federation KAMPIL-KATIPUNAN represent its supervisors in negotiating a collective bargaining agreement. Against the advise of its own counsel and on the basis of alleged "industrial peace", the petitioner expressed a loss of interest in pursuing this action. The petitioner is, of course, free to grant whatever concessions it wishes to give to its employees unilaterally or through negotiations but we cannot allow the resulting validation of an erroneous ruling and policy of the Department of Labor and Employment (DOLE) to remain on the basis of the petitioner's loss of interest. The December 14, 1990 order and the November 21, 1990 resolution of DOLE are contrary to law and must be declared as such. WHEREFORE, the petition is hereby GRANTED. The private respondent is disqualified from

affiliating with a national federation of labor organizations which includes the petitioner's rank -and-file employees. SO ORDERED. SECOND DIVISION [G.R. No. 102084. August 12, 1998]

DE LA SALLE UNIVERSITY MEDICAL CENTER AND COLLEGE OF MEDICINE, petitioner, vs. HON. BIENVENIDO E. LAGUESMA, Undersecretary of Labor and Employment; ROLANDO S. DE LA CRUZ, Med -Arbiter Regional Office No. IV, DE LA SALLE UNIVERSITY MEDICAL CENTER AND COLLE GE OF MEDICINE SUPERVISORY UNION-FEDERATION OF FREE WORKERS, respondents. DECISION MENDOZA, J.: Petitioner De La Salle University Medical Center and College of Medicine (DLSUMCCM) is a hospital and medical school at Dasmarias, Cavite. Private respondent Federation of Free WorkersDe La Salle University Medical Center and College of Medicine Supervisory Union Chapter (FFWDLSUMCCMSUC), on the other hand, is a labor organization composed of the supervisory employees of petitioner DLSUMCCM. On April 17, 1991, the Federation of Free Workers (FFW), a national federation of labor unions, issued a certificate to private respondent FFW-DLSUMCCMSUC recognizing it as a local chapter. On the same day, it filed on behalf of private respondent FFW-DLSUMCCMSUC a petition for certification election among the supervisory employees of petitioner DLSUMCCM. Its petition was opposed by petitioner DLSUMCCM on the grounds that several employees who signed the petition for certification election were managerial employees and that the FFW-DLSUMCCMSUC was composed of both supervisory and rank-and-file employees in the company.[1] In its reply dated May 22, 1991, private respondent FFW-DLSUMCCMSUC denied petitioners allegations. It contended that 2. Herein petition seeks for the holding of a certification election among the supervisory employees of herein respondent. It does not intend to include managerial employees. .... 6. It is not true that supervisory employees are joining the rank-and-file employees union. While it is true that both regular rank-and-file employees and supervisory employees of herein respondent have affiliated with FFW, yet there are two separate unions organized by FFW. The supervisory employees have a separate charter certificate issued by FFW.[2] On July 5, 1991, respondent Rolando S. de la Cruz, med-arbiter of the Department of Labor and Employment Regional Office No.IV, issued an order granting respondent unions petition for certification election. He said: . . . . [petitioner] . . . claims that based on the job descriptions which will be presented at th e hearing, the covered employees who are considered managers occupy the positions of purchasing officers, personnel officers, property officers, cashiers, heads of various sections and the like. [Petitioner] also argues that assuming that some of the employees concerned are not managerial but mere supervisory employees, the Federation of Free Workers (FFW) cannot extend a charter certificate

to this group of employees without violating the express provision of Article 245 which provides that supervisory employees shall not be eligible for membership in a labor organization of the rank-andfile employees but may join, assist or form separate labor organizations of their own because the FFW had similarly issued a charter certificate to its rank-and-file employees. .... In its position paper, [petitioner] stated that most, if not all, of the employees listed in . . . the petition are considered managerial employees, thereby admitting that it has supervisory employees who are undoubtedly qualified to join or form a labor organization of their own. The record likewise shows that [petitioner] promised to present the job descriptions of the concerned employees during the hearing but failed to do so. Thus, this office has no basis in determining at this point i n time who among them are considered managerial or supervisory employees. At any rate, there is now no question that [petitioner] has in its employ supervisory employees who are qualified to join or form a labor union. Consequently, this office is left with no alternative but to order the holding of certification election pursuant to Article 257 of the Labor Code, as amended, which mandates the holding of certification election if a petition is filed by a legitimate labor organization involving an unorgan ized establishment, as in the case of herein respondent. As to the allegation of [petitioner] that the act of the supervisory employees in affiliating with FFW to whom the rank-and-file employees are also affiliated is violative of Article 245 of the Labor Code, suffice it to state that the two groups are considered separate bargaining units and local chapters of FFW. They are, for all intents and purposes, separate with each other and their affiliation with FFW would not make them members of the same labor union. This must be the case because it is settled that the locals are considered the basic unit or principal with the labor federation assuming the role of an agent. The mere fact, therefore, that they are represented by or under the same agent is of no moment. They are still considered separate with each other.[3] On July 30, 1991, petitioner DLSUMCCM appealed to the Secretary of Labor and Employment, citing substantially the same arguments it had raised before the med-arbiter. However, its appeal was dismissed. In his resolution, dated August 30, 1991, respondent Undersecretary of Labor and Employment Bienvenido E. Laguesma found the evidence presented by petitioner DLSUMCCM concerning the alleged managerial status of several employees to be insufficient. He also held that, following the ruling of this Court in Adamson & Adamson, Inc. v. CIR,[4] unions formed independently by supervisory and rank-and-file employees of a company may legally affiliate with the same national federation. Petitioner moved for a reconsideration but its motion was denied. In his order dated September 19, 1991, respondent Laguesma stated: We reviewed the records once more, and find that the issues and arguments adduced by movant have been squarely passed upon in the Resolution sought to be reconsidered. Accordingly, we find no legal justification to alter, much less set aside, the aforesaid resolution. Perforce, the motion for reconsideration must fail. WHEREFORE, the instant motion for reconsideration is hereby denied for lack of merit and the resolution of this office dated 30 August 1991 STANDS. No further motions of a similar nature shall hereinafter be entertained. [5] Hence, this petition for certiorari. Petitioner DLSUMCCM contends that respondent Laguesma gravely abused his discretion. While it does not anymore insist that several of those who joined the petition for certification election are holding managerial positions in the company, petitioner nonetheless pursues the question whether unions formed independently by supervisory and rank-and-file employees of a company may validly affiliate with the same national federation. With respect to this question, it argues:

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 AMOUNTING TO ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE DENIED THE PETITIONERS APPEAL AND ORDERED THE HOLDING OF A CERTIFICAT ION ELECTION AMONG THE MEMBERS OF THE SUPERVISORY UNION EMPLOYED IN PETITIONERS COMPANY DESPITE THE FACT THAT SAID SUPERVISORY UNION WAS AFFILIATED WITH THE FEDERATION OF FREE WORKERS TO WHICH THE RANK -AND-FILE EMPLOYEES OF THE SAME COMPANY ARE LIKEWISE AFFILIATED, CONTRARY TO THE EXPRESS PROVISIONS OF ARTICLE 245 OF THE LABOR CODE, AS AMENDED. [6] The contention has no merit. Supervisory employees have the right to self-organization as do other classes of employees save only managerial ones. The Constitution states that 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.[7] As we recently held in UnitedPepsi-Cola Supervisory Union v. Laguesma,[8] the framers of the Constitution intended, by this provision, to restore the right of supervisory employees to self-organization which had been withdrawn from them during the period of martial law. Thus: Commissioner Lerum sought to amend the draft of what was later to become Art. III, 8 of the present Constitution: .... MR. LERUM. . . . Also, we have unions of supervisory employees and of security guards. But what is tragic about this is that after the 1973 Consti tution was approved and in spite of an express recognition of the right to organize in P.D. No. 442, known as the Labor Code, the right of government workers, supervisory employees and security guards to form unions was abolished. .... We are afraid that without any corresponding provision covering the private sector, the security guards, the supervisory employees ... will still be excluded and that is the purpose of this amendment. .... In sum, Lerums proposal to amend Art. III, 8 of the draft Constitution by including labor unions in the guarantee of organizational right should be taken in the context of statements that his aim was the removal of the statutory ban against security guards and supervisory employees joining labor organizations. The approval by the Constitutional Commission of his proposal can only mean, therefore, that the Commission intended the absolute right to organize of government workers, supervisory employees, and security guards to be constitutionally guaranteed.[9] Conformably with the constitutional mandate, Art. 245 of the Labor Code now provides for the right of supervisory employees to self-organization, subject to the limitation that they cannot join an organization of rank-and-file employees: 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. The reason for the segregation of supervisory and rank-and-file employees of a company with respect to the exercise of the right to self-organization is the difference in their interests. Supervisory employees are more closely identified with the employer than with the rank-and-file employees. If supervisory and rank-and-file employees in a company are allowed to form a single union, the

conflicting interests of these groups impair their relationship and adversely affect discipline, collective bargaining, and strikes.[10] These consequences can obtain not only in cases where supervisory and rank-and-file employees in the same company belong to a single union but also where unions formed independently by supervisory and rank-andfile employees of a company are allowed to affiliate with the same national federation. Consequently, this Court has held in Atlas Lithographic Services Inc. v. Laguesma[11]that To avoid a situation where supervisors would merge with the rank-and-file or where the supervisors labor organization would represent conflicting interests, then a local supervisors union should not be allowed to affiliate with a national federation of unions of rank -and-file employees where that federation actively participates in union activities in the company. As we explained in that case, however, such a situation would obtain only where two conditions concur: First, the rank-and-file employees are directly under the authority of supervisory employees.[12] Second, the national federation is actively involved in union activities in the company.[13] Indeed, it is the presence of these two conditions which distinguished Atlas Lithographic Services, Inc. v. Laguesmafrom Adamson & Adamson, Inc. v. CIR[14]where a different conclusion was reached. The affiliation of two local unions in a company with the same national federation is not by itself a negation of their independence since in relation to the employer, the local unions are considered as the principals, while the federation is deemed to be merely their agent. This conclusion is in accord with the policy that any limitation on the exercise by employees of the right to self-organization guaranteed in the Constitution must be construed strictly. Workers should be allowed the practice of this freedom to the extent recognized in the fundamental law. As held in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.:[15] The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power between the employer and their employee members in the economic struggle for the fruits of the joint productive effort of labor and capital; and the association of locals into the national unionwas in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their members. The essential purpose was the affiliation of the local unions into a common enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it to existence. [16] The questions in this case, therefore, are whether the rank-and-file employees of petitioner DLSUMCCM who compose a labor union are directly under the supervisory employees whose own union is affiliated with the same national federation (Federation of Free Workers) and whether such national federation is actively involved in union activities in the company so as to make the two unions in the same company, in reality, just one union. Although private respondent FFW-DLSUMCCMSUC and another union composed of rankand-file employees of petitioner DLSUMCCM are indeed affiliated with the same national federation, the FFW, petitioner DLSUMCCM has not presented any evidence showing that the rank-and-file employees composing the other union are directly under the authority of the supervisory employees. As held in Adamson & Adamson, Inc. v. CIR,[17] the fact that the two groups of workers are employed by the same company and the fact that they are affiliated with a common national federation are not sufficient to justify the conclusion that their organizations are actually just one. Their immediate professional relationship must be established. To borrow the language of Adamson & Adamson, Inc. v. CIR:[18] We find without merit the contention of petitioner that if affiliation will be allowed, only one union will in fact represent both supervisors and rank-and-file employees of the petitioner; that there would be an indirect affiliation of supervisors and rank-andfile employees with one labor organization; that there would be a merging of the two bargaining units; and that the respondent union will lose its independence because it becomes an alter ego of the federation.[19] Mention has already been made of the fact that the petition for certification election in this case

was filed by the FFW on behalf of the local union. This circumstance, while showing active involvement by the FFW in union activities at the company, is by itself insufficient to justify a finding of violation of Art. 245 since there is no proof that the supervisors who compose the local union have direct authority over the rank-and-file employees composing the other local union which is also affiliated with the FFW. This fact differentiates the case from Atlas Lithographic Services, Inc. v. Laguesma,[20] in which, in addition to the fact that the petition for certi fication election had been filed by the national federation, it was shown that the rank-and-file employees were directly under the supervisors organized by the same federation. It follows that respondent labor officials did not gravely abuse their discret ion. WHEREFORE, the petition is DISMISSED. SO ORDERED.

Republic of the Philippines SUPREMECOURT Manila

THIRD DIVISION G.R. No. 157117 November 20, 2006 COASTAL SUBIC BAY TERMINAL, INC., Petitioner, vs. DEPARTMENT OF LABOR and EMPLOYMENT OFFICE OF THE SECRETARY, COASTAL SUBIC BAY TERMINAL, INC. SUPERVISORY UNION-APSOTEU, and COASTAL SUBIC BAY TERMINAL, INC. RANK-AND-FILE UNION-ALU-TUCP, Respondents. DECISION QUISUMBING, J.: For review on certiorari is the Court of Appeals Decision [1] dated August 31, 2001, in CA-G.R. SP No. 54128 and the Resolution [2] dated February 5, 2003, denying petitioners motion for reconsideration. The Court of Appeals had affirmed the Decision [3] dated March 15, 1999 of the Secretary of the Department of Labor and Employment (DOLE) reversing the Mediator Arbiters dismissal of private respondents petitions for certification election. The facts are as follows: On July 8, 1998, private respondents Coastal Subic Bay Terminal, Inc. Rank-and-File Union (CSBTIRFU) and Coastal Subic Bay Terminal, Inc. Supervisory Union (CSBTI-SU) filed separate petitions for certification election before Med-Arbiter Eladio de Jesus of the Regional Office No. III. The rank-andfile union insists that it is a legitimate labor organization having been issued a charter certificate by the Associated Labor Union (ALU), and the supervisory union by the Associated Professional, Supervisory, Office and Technical Employees Union (APSOTEU). Private respondents also alleged that the establishment in which they sought to operate was unorganized. Petitioner Coastal Subic Bay Terminal, Inc. (CSBTI) opposed both petitions for certification election alleging that the rank-and-file union and supervisory union were not legitimate labor organizations, and that the proposed bargaining units were not particularly described. Without ruling on the legitimacy of the respondent unions, the Med-Arbiter dismissed, without prejudice to refiling, both petitions which had been consolidated. The Med-Arbiter held that the ALU and APSOTEU are one and the same federation having a common set of officers. Thus, the supervisory and the rank-and-file unions were in effect affiliated with only one federation .[4]

The Med-Arbiter ruled as follows: Viewed in the light of all the foregoing, this Office finds the simultaneous filing of the instant petitions to be invalid and unwarranted. Consequently, this Office has no recourse but to dismiss both petitions without prejudice to the refiling of either. WHEREFORE, PREMISES CONSIDERED, let the instant petitions be, as they are hereby DISMISSED. SO ORDERED. [5] Both parties appealed to the Secretary of Labor and Employment, who reversed the decision of the Med-Arbiter. The Secretary thru Undersecretary R. Baldoz, ruled that CSBTI-SU and CSBTI-RFU have separate legal personalities to file their separate petitions for certification election. The Secretary held that APSOTEU is a legitimate labor organization because it was properly registered pursuant to the 1989 Revised Rules and Regulations implementing Republic Act No. 6715, the rule applicable at the time of its registration. It further ruled that ALU and APSOTEU are separate and distinct labor unions having separate certificates of registration from the DOLE. They also have different sets of locals. The Secretary declared CSBTI-RFU and CSBTI-SU as legitimate labor organizations having been chartered respectively by ALU and APSOTEU after submitting all the requirements with the Bureau of Labor Relations (BLR). Accordingly, the Secretary ordered the holding of separate certification election, viz: WHEREFORE, the decision of the Med-Arbiter, Regional Office No. III is hereby REVERSED. Let separate certification elections be conducted immediately among the appropriate employees of CSBTI, after the usual pre-election conference, with the following choices: I. For all rank and file employees of CSBTI: 1. COASTAL SUBIC BAY TERMINAL, INC. RANK -AND-FILE UNION-ALU-TUCP; and 2. NO UNION. II. For all supervisory employees of CSBTI: 1. COASTAL SUBIC BAY TERMINAL, INC. SUPERVISORY EMPLOYEES UNION -APSOTEU; and 2. NO UNION. The latest payroll of the employer, including its payrolls for the last three months immediately preceding the issuance of this decision, shall be the basis for determining the qualified list of voters. SO DECIDED. [6] The motion for reconsideration was also denied. [7] On appeal, the Court of Appeals affirmed the decision of the Secretary. [8] It held that there was no grave abuse of discretion on the part of the Secretary; its findings are supported by evidence on record; and thus should be accorded with respect and finality. [9] The motion for reconsideration was likewise denied. [10] Hence, the instant petition by the company anchored on the following grounds: I

THE HONORABLE COURT OF APPEALS ERRED IN RELYING ON THE "1989 REVISED RULES AND REGULATIONS IMPLEMENTING RA 6715" AS BASIS TO RECOGNIZE PRIVATE RESPONDENT APSOTEUS REGISTRATION BY THE DOLE REGIONAL DIRECTOR. II THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED PUBLIC RESPONDENTS APPLICATION OF THE PRINCIPLE OF STARE DECISIS TO HASTILY DISPOSE OF THE LEGAL PERSONALITY ISSUE OF APSOTEU. III THE HONORABLE COURT OF APPEALS DID NOT DECIDE IN ACCORD WITH LAW AND JURISPRUDENCE WHEN IT AFFIRMED PUBLIC RESPONDENTS APPLICATION OF THE "UNION AUTONOMY" THEORY. IV IN AFFIRMING PUBLIC RESPONDENTS FINDING THAT PRIVATE RESPONDENTS ARE "SEPARATE FEDERATIONS," THE HONORABLE COURT OF APPEALS: (1) IGNORED JURISPRUDENCE RECOGNIZING THE BINDING NATURE OF A MED ARBITERS FACTUAL FINDINGS; AND (2) DISREGARDED EVIDENCE ON RECORD OF "ILLEGAL COMMINGLING." [11] Plainly, the issues are (1) Can the supervisory and the rank-and-file unions file separate petitions for certification election?; (2) Was the Secretarys decision based on stare decisis correct?; and (3) Were private respondents engaged in commingling? The issue on the status of the supervisory union CSBTI-SU depends on the status of APSOTEU, its mother federation. Petitioner argues that APSOTEU improperly secured its registration from the DOLE Regional Director and not from the BLR; that it is the BLR that is authorized to process applications and issue certificates of registration in accordance with our ruling in Phil. Association of Free Labor Unions v. Secretary of Labor;[12] that the certificates of registration issued by the DOLE Regional Director pursuant to the rules are questionable, and possibly even void ab initio for being ultra vires; and that the Court of Appeals erred when it ruled that the law applicable at the time of APSOTEUs registration was the 1989 Revised Implementing Rules and Regulations of Rep. Act No. 6715. Petitioner insists that APSOTEU lacks legal personality, and its chartered affiliate CSBTI -SU cannot attain the status of a legitimate labor organization to file a petition for certification election. It relies on Villar v. Inciong,[13]where we held therein that Amigo Employees Union was not a duly registered independent union absent any record of its registration with the Bureau. Pertinent is Article 235 [14] of the Labor Code which provides that applications for registration shall be acted upon by the Bureau. "Bureau" as defined under the Labor Code means the BLR and/or the Labor Relations Division in the Regional Offices of the Department of Labor. [15] Further, Section 2, Rule II, Book V of the 1989 Revised Implementing Rules of the Labor Code (Implementing Rules) provides that: Section 2. Where to file application; procedure Any national labor organization or labor federation or local union may file an application for registration with the Bureau or the Regional Office where the applicants principal offices is located. The Bureau or the Regional Office shall immediately process and approve or deny the application. In case of approval, the Bureau or the Regional Office shall issue

the registration certificate within thirty (30) calendar days from receipt of the application, together with all the requirements for registration as hereinafter provided.[16] The Implementing Rules specifically Section 1, Rule III of Book V, as amended by Department Order No. 9, thus: SECTION 1. Where to file applications. The application for registration of any federation, national or industry union or trade union center shall be filed with the Bureau. Where the application is filed with the Regional Office, the same shall be immediately forwarded to the Bureau within forty-eight (48) hours from filing thereof, together with all the documents supporting the registration. The applications for registration of an independent union shall be filed with and acted upon by the Regional Office where the applicants principal office is located . xxxx The DOLE issued Department Order No. 40-03, which took effect on March 15, 2003, further amending Book V of the above implementing rules. The new implementing rules explicitly provide that applications for registration of labor organizations shall be filed either with the Regional Office or with the BLR. [17] Even after the amendments, the rules did not divest the Regional Office and the BLR of their jurisdiction over applications for registration by labor organizations. The amendments to the implementing rules merely specified that when the application was filed with the Regional Office, the application would be acted upon by the BLR. The records in this case showed that APSOTEU was registered on March 1, 1991. Accordingly, the law applicable at that time was Section 2, Rule II, Book V of the Implementing Rules, and not Department Order No. 9 which took effect only on June 21, 1997. Thus, considering further that APSOTEUs principal office is located in Diliman, Quezon City, and its registration was filed with the NCR Regional Office, the certificate of registration is valid. The petitioner misapplied Villar v. Inciong.[18] In said case, there was no record in the BLR that Amigo Employees Union was registered. [19] Did the Court of Appeals err in its application of stare decisis when it upheld the Secretarys ruling that APSOTEU is a legitimate labor organization and its personality cannot be assailed unless in an independent action for cancellation of registration certificate? [20] We think not. Section 5, Rule V, Book V of the Implementing Rules states: Section 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 maybe questioned only in an independent petition for cancellation in accordance with these Rules. [21] Thus, APSOTEU is a legitimate labor organization and has authority to issue charter to its affiliates. [22] It may issue a local charter certificate to CSBTI -SU and correspondingly, CSBTI-SU is legitimate. Are ALU, a rank-and-file union and APSOTEU, a supervisory union one and the same because of the commonalities between them? Are they commingled? The petitioner contends that applying by analogy, the doctrine of piercing the veil of corporate fiction, APSOTEU and ALU are the same federation. Private respondents disagree.

First, as earlier discoursed, once a labor union attains the status of a legitimate labor organization, it continues as such until its certificate of registration is cancelled or revoked in an independent action f or cancellation. [23] In addition, the legal personality of a labor organization cannot be collaterally attacked. [24] Thus, when the personality of the labor organization is questioned in the same manner the veil of corporate fiction is pierced, the action partakes the nature of a collateral attack. Hence, in the absence of any independent action for cancellation of registration against either APSOTEU or ALU, and unless and until their registrations are cancelled, each continues to possess a separate legal personality. The CSBTI-RFU and CSBTI-SU are therefore affiliated with distinct and separate federations, despite the commonalities of APSOTEU and ALU. Under the rules implementing the Labor Code, a chartered local union acquires legal personality through the charter certificate issued by a duly registered federation or national union, and reported to the Regional Office in accordance with the rules implementing the Labor Code. [25] 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. Mere 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. [26] Hence, local unions are considered principals while the federation is deemed to be merely their agent. [27] As such principals, the unions are entitled to exercise the rights and privileges of a legitimate labor organization, including the right to seek certification as the sole and exclusive bargaining agent in the appropriate employer unit. A word of caution though, under Article 245 of the Labor Code, [28] supervisory employees are not eligible for membership in a labor union of rank-and-file employees. The supervisory employees are allowed to form their own union but they are not allowed to join the rank-and-file union because of potential conflicts of interest. [29] Further, to avoid a situation where supervisors would merge with the rank-and-file or where the supervisors labor union would represent conflicting interests, a local supervisors union should not be allowed to affiliate with the national federation of unions of rank-andfile employees where that federation actively participates in the union activity within the company. [30] Thus, the limitation is not confined to a case of supervisors wanting to join a rank-and-file union. The prohibition extends to a supervisors local union applying for membership in a national federation the members of which include local unions of rank-and-file employees. [31] In De La Salle University Medical Center and College of Medicine v. Laguesma, we reiterated the rule that for the prohibition to apply, it is not enough that the supervisory union and the rank-and-file union are affiliated with a single federation. In addition, the supervisors must have direct authority over the rank-and-file employees. [32] In the instant case, the national federations that exist as separate entities to which the rank-and-file and supervisory unions are separately affiliated with, do have a common set of officers. In addition, APSOTEU, the supervisory federation, actively participates in the CSBTI-SU while ALU, the rankand-file federation, actively participates in the CSBTI-RFU, giving occasion to possible conflicts of interest among the common officers of the federation of rank-and-file and the federation of supervisory unions. For as long as they are affiliated with the APSOTEU and ALU, the supervisory and rank-andfile unions both do not meet the criteria to attain the status of legitimate labor organizations, and thus could not separately petition for certification elections. The purpose of affiliation of the local unions into a common enterprise is to increase the collective bargaining power in respect of the terms and conditions of labor. [33] When there is commingling of officers of a rank-and-file union with a supervisory union, the constitutional policy on labor is circumvented. Labor organizations should ensure the freedom of employees to organize themselves for the purpose of leveling the bargaining process but also to ensure the freedom of workingmen and to keep open the corridor of opportunity to enab