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GENARO BAUTISTA, petitioner, vs. HON.

COURT OF APPEALS AND THE OFFICIALS AND BOARD OF DIRECTORS OF KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT KAWANI SA METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM UNION, represented by its president, PRUDENCIO CRUZ, respondents. [G.R. No. 123375. February 28, 2005.] FACTS: Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision 1 and Resolution 2 of the Court of Appeals, dated 09 October 1995 and 08 January 1996, respectively. The court a quo, in said Decision, held that the jurisdiction to determine the proper representative of employees in the Metropolitan Waterworks and Sewerage System pertains to the Department of Labor and Employment, more particularly to the Bureau of Labor Relations. The Facts On 07 May 1993, after a petition for election of officers of Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa Metropolitan Waterworks and Sewerage System (KKMK-MWSS) was filed by Bonifacio De Guzman, former auditor of KKMK-MWSS, a Resolution was issued by Perlita Bathan-Velasco, in her capacity as Director of the Bureau of Labor Relations (BLR) instant petition is hereby granted and the Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa Metropolitan Waterworks and Sewerage System (KKMK-MWSS) is hereby directed to immediately conduct an election of the following union officers: 1. President, 2. 1st Vice President, 3. 2nd Vice President, 4. Executive Secretary, 5. Assistant Executive Secretary, 6. Treasurer, 7. Assistant Treasurer, 8. Auditor, 9. Assistant Auditor, 10. Public Relations Officer, 11. Twenty Three (23) Directors, 12. Four Sergeants at Arms, and 13. Business Manager, after the usual pre-election conferences. The Labor Organizations Division, this Bureau, shall supervise the conduct of said election. A Motion for Reconsideration was filed by the incumbent officers of KKMK-MWSS, led by its President, Genaro Bautista, with the BLR, but was denied by Perlita Bathan-Velasco on 08 July 1993. An appeal was filed with the Office of the Secretary of Labor and Employment where the order of the BLR was assailed as having been issued with grave abuse of discretion and without jurisdiction. 4 Order was issued by the Office of the Secretary of Labor and Employment, through Undersecretary Bienvenido Laguesma, part of which reads: Records clearly show that the subject of the present controversy is an intra union conflict involving an employee's organization in the public sector created and registered pursuant to Executive Order No. 180. Consequently, this office (referring to the Secretary of Labor and Employment) has no other recourse but to dismiss the appeal for lack of jurisdiction. The then incumbent officers of KKMK-MWSS, represented by its President, Genaro C. Bautista, filed a special civil action for certiorari which was, however, dismissed. Acting on the special civil action for certiorari, with prayer for the issuance of a temporary restraining order, the Court Resolved to DISMISS the petition for being insufficient in form and substance, and for want of a genuine justiciable issue the petition argues that public respondents have no jurisdiction over an intra-union dispute among government employees, hence, cannot order a new election of officers. A cursory reading of the Order of 24 August 1993 issued by respondent Undersecretary reveals that he agrees with this view. Thus Earlier, or on 25 November 1993, a Petition for Prohibition with Prayer for a Temporary Restraining Order/Injunction 8 was filed by Genaro Bautista, et al., against Perlita Bathan-Velasco, Director, Eugenia Fernandez, Med-Arbiter, and Johnny P. Garcia, Chief, Labor Organizations Division, all of the BLR, before the Regional Trial Court (RTC), Quezon City, Branch 87. The petition sought to enjoin the herein respondents from proceeding with the election of officers of KKMK-MWSS scheduled on 02 December 1993, and to permanently prohibit them from exercising jurisdiction over the conduct of election of the officers of the KKMK-MWSS. The petition being sufficient in form and substance, and so as not to render the issues raised moot and academic, the defendants are hereby ordered to temporarily refrain from proceeding with the election of officers of the KKMK-MWSS scheduled on December 2, 1993, until further orders from the Court. On 02 December 1993, the election of the officers of KKMK-MWSS pushed through despite the issuance of the temporary restraining order. Another Order was issued by Branch 87 on the same date, hereunder quoted: The defendants in this case together with Teofilo Asuncion and Gregorio Garcia, who were furnished copy of the order and such other persons who are involved in conducting [of] the election and/or sanctioning the same are hereby given up to 4:30 o'clock this afternoon to explain why they should not be punished for contempt in defying the order of this Court dated November 26, 1993. The Court hereby reiterates its order restraining the defendants, their agents, assigns and representatives, and any or all persons having to do with such elections, specifically the management of the MWSS and all others acting in cooperation with them or acting on their behalf or direction, from conducting or continuing or tolerating the elections scheduled today. 11 A motion for reconsideration was filed by Bautista, et al., dated 16 July 1994, alleging among other things, that the RTC has jurisdiction considering that the case before it was an action for prohibition, which was cognizable by it. 19 As a result of which Branch 220 issued another Order 20 dated 27 December 1994 reinstating the Writ of Preliminary Injunction and injunction bond. On 09 October 1995, a Decision was rendered by the Court of Appeals finding for the private respondents, upholding that the BLR had jurisdiction over an intra-union dispute, the dispositive portion of which reads: IN VIEW OF THE FOREGOING PREMISES, the instant petition for certiorari, prohibition and mandamus is hereby GRANTED. The assailed orders of December 27, 1994 and April 27, 1995 are hereby SET ASIDE and NULLIFIED for reasons above-stated. No costs. 23 This Court hereby resolves the following: (1) to DENY the motion for the issuance of temporary restraining order of the petitioners, considering that the instant case has already been decided on October 9, 1995; (2) to DENY the motion for reconsideration of the respondents, it appearing that there are no new issues raised which would warrant the reversal or modification of Our decision. 25 On 13 February 1996, a petition for review on certiorari was filed before this Court by Genaro Bautista 26 seeking the reversal and setting aside of the Decision and Resolution of the Court of Appeals cited earlier. a petition for mandamus was filed by Genaro Bautista, as President, and by the other officers 27 and members of the board 28 of KKMK-MWSS against Angel L. Lazaro III, Administrator, MWSS, and the Board of Trustees of MWSS, before the RTC, Quezon City, raffled again to Branch 220, docketed as Sp. Proc. No. Q-96-27586. 29 In this petition, it was prayed, among other things, that Angel Lazaro III and the Board of Trustees of MWSS give due recognition to Genaro Bautista, et al., as officers of KKMK-MWSS, and that the union dues be released to the latter.

On 27 June 1996, an Urgent Motion for Issuance of Temporary Restraining Order 30 was filed before this Court by the private respondents praying that Regional Trial Court Judge Prudencio Altre Castillo be enjoined from hearing the mandamus case. IcTEaC Then Associate Justice Teodoro R. Padilla, as Chairman of the First Division, issued a Temporary Restraining Order on 08 July 1996, a portion of which reads: you (respondents), your officers, agents, representatives, and/or persons acting upon your orders or, in your place or stead, are hereby ENJOINED to desist from hearing the case in SP Case No. Q-96-27586 entitled "Genaro Bautista, et al. vs. Angel L. Lazaro, Administrator, Metropolitan Waterworks and Sewerage System (MWSS), Board of Trustees (MWSS)." A Motion to Lift Temporary Restraining Order 31 and a Supplemental Motion 32 thereto were later filed by Genaro Bautista, et al. Thereafter, petitioner Genaro Bautista filed an urgent motion to declare the administrator, Angel L. Lazaro III, and manager, Erlich V. Barraquias, of the Legal Department of the MWSS in indirect contempt of court. 33 The petitioner, in this motion, alleged that Lazaro and Barraquias both failed to follow the opinions rendered by the Office of the Government Corporate Counsel (OGCC) to the effect that the petitioner and his set of officers are still the rightful parties with whom MWSS management has to deal with in all union matters as they continue to be the incumbent officers. The Court issued a Resolution 35 dated 18 June 1997 requiring the said administrator and manager to comment on the motion. A joint comment was thereafter filed by Lazaro and Barraquias dated 28 July 1997. In it, they contended that the first two opinions rendered by the OGCC were overtaken by the Decision and Resolution of the Court of Appeals, now the subjects of this petition for review on certiorari, wherein it declared that the regular courts have no jurisdiction to prohibit the holding of the election of the officers and members of the board of KKMK-MWSS, as it is lodged with the BLR. When they again sought the guidance of the OGCC as to the effect of the aforementioned Decision of the Court of Appeals, another opinion was issued by the OGCC which, they said, did not resolve that question but instead merely reiterated its previous opinions deviant to the conclusions of the Court of Appeals. 36 ISSUE: whether or not the RTC has jurisdiction over a case involving an intra-union dispute (election of officers) of an employee's organization in the public sector (MWSS). does the BLR have jurisdiction to call for and conduct the election of officers of an employee's association in the public sector? RULING:The decision of the Court of Appeals relied on our earlier ruling in the case of Association of Court of Appeals Employees (ACAE) v. Ferrer-Calleja. In this case, we held that the BLR has the jurisdiction to call for and supervise the conduct of certification elections in the public sector, viz: In the same way that CSC validly conducts competitive examinations to grant requisite eligibilities to court employees, we see no constitutional objection to DOLE handling the certification process in the Court of Appeals, considering its expertise, machinery, and experience in this particular activity. Executive Order No. 180 requires organizations of government employees to register with both CSC and DOLE. This ambivalence notwithstanding, the CSC has no facilities, personnel, or experience in the conduct of certification elections. The BLR has to do the job. Executive Order No. 180 states that certificates of registration of the legitimate employee representatives must be jointly approved by the CSC Chairman and the DOLE Secretary. Executive Order No. 180 is not too helpful in determining whose opinion shall prevail if the CSC Chairman and the DOLE Secretary arrive at different conclusions. At any rate, we shall deal with that problem when it occurs. Insofar as power to call for and supervise the conduct of certification elections is concerned, we rule against the petitioner. The petitioner contends that the aforecited case finds no application in the case at bar for the following reasons. First, the ACAE case involved a conflict between two government unions in the Court of Appeals, a situation not obtaining in the instant case because what is involved here is only one and the same employee's organization, the KKMK-MWSS. 40 Second, the ACAE case concerned a certification election, i.e., which between the two government unions should be considered as the bargaining unit before the Court of Appeals, while the present case embraces the issue of who among the members of the organization shall be elected as officers and members of the board. 41 The petitioner likewise advances the theory that the power of the BLR, as found in Executive Order No. 180, is limited only to the registration of a union in a government corporation, and to call for a certification election. Moreover, the petitioner assails the ruling of the court a quo to the effect that his group participated in the questioned elections and submitted themselves to the jurisdiction of the BLR. According to him, the records will readily show that they did not in any way join in it. 43 It may be true that the ACAE case involved a certification election between two unions in a government entity. However, this does not mean that our previous ruling cannot apply in the instant case. The authority of the BLR in assuming jurisdiction over a certification election, or any inter-union or intra-union conflicts, is found in Article 226 of the Labor Code of the Philippines, which reads: Art. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the Labor Relations Division in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or nonagricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of the parties. BLR has the original and exclusive jurisdiction on all inter-union and intra-union conflicts. An intra-union conflict would refer to a conflict within or inside a labor union, and an inter-union controversy or dispute, one occurring or carried on between or among unions. The subject of the case at bar, which is the election of the officers and members of the board of KMKK-MWSS, is, clearly, an intra-union conflict, being within or inside a labor union. It is well within the powers of the BLR to act upon. The petitioner is asking us to make an illogical edict by declaring that our ruling in the ACAE case, considering that it involved an inter-union conflict, should not apply to the instant case for the reason that the latter involves an intra-union conflict. This, we cannot do because the law is very clear on this matter.

Executive Order No. 180 (1987), 45 particularly Section 16 thereof, is completely lucid as to the settlement of disputes involving government employees, viz: SEC. 16. The Civil Service and labor laws and procedures, whenever applicable, shall be followed in the resolution of complaints, grievances and cases involving government employees. 46 Since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive authority to act on all inter-union and intra-union conflicts, then there should be no more doubt as to its jurisdiction. We likewise find bereft of merit petitioner's claim that his group did not in any way participate in the subject elections, and therefore, the principle of estoppel cannot apply. AcICHD In the Order of the RTC dated 01 July 1994, it appears that the petitioner, indeed, participated in the election. A portion of the Order states: Candidate Votes Genaro C. Bautista 288 Prudencio Cruz 1080 Bonifacio De Guzman 1081 47

The petitioner was, undoubtedly, a candidate in the election. The 288 votes for him were counted in his favor. Further, the petitioner and his group submitted a list of candidates before the BLR dated 04 October 1993 48 , which included the name of petitioner himself. WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court of Appeals being in accord with law, are hereby AFFIRMED. Accordingly, the Urgent Motion to Declare the Administrator and Manager, Legal Department, MWSS, in indirect contempt of court is DENIED, and the temporary restraining order earlier issued is hereby made permanent. Costs against the petitioner. SO ORDERED.

PHILIPS INDUSTRIAL DEVELOPMENT, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PHILIPS EMPLOYEES ORGANIZATION (FFW), respondents. [G.R. No. 88957. June 25, 1992.] FACTS: Philips Industrial Development, Inc. (PIDI) seeks to set aside the Decision and Resolution, respectively, of the National Labor Relations Commission (NLRC) on the ground that it committed grave abuse of discretion amounting to lack of jurisdiction in holding that service engineers, sales representatives and confidential employees of PIDI are qualified to be included in the existing bargaining unit. PIDI is a domestic corporation engaged in the manufacturing and marketing of electronic products. Since 1971, it had a total of six (6) collective bargaining agreements (CBAs) with private respondent Philips Employees Organization-FFW (PEO-FFW), registered labor union and the certified bargaining agent of all the rank and file employees of PIDI. In the first CBA (1971-1974), the supervisors referred to in R.A. No. 875, confidential employees, security guards, temporary employees and sales representatives were excluded from the bargaining unit. In the second to the fifth CBAs (1975-1977; 1978-1980; 1981-1983; and 1984-1986), the sales force, confidential employees and heads of small units, together with the managerial employees, temporary employees and security personnel, were specifically excluded from the bargaining unit. 1 The confidential employees are the division secretaries of light/telecom/data and consumer electronics, marketing managers, secretaries of the corporate planning and business manager, fiscal and financial system manager and audit and EDP manager, and the staff of both the General Management and the Personnel Department. 2 In the sixth CBA covering the years 1987 to 1989, it was agreed upon, among others, that the subject of inclusion or exclusion of service engineers, sales personnel and confidential employees in the coverage of the bargaining unit would be submitted for arbitration. As the parties failed to agree on a voluntary arbitrator, the BLR endorsed the petition to the Executive Labor Arbiter of the National Capital Region for compulsory arbitration pursuant to Article 228 of the Labor Code. the case was assigned to Executive Labor Arbiter Arthur Amansec. It is hereby declared that the Division Secretaries and all Staff of general management, personnel and industrial relations department, secretaries of audit, EDP, financial system are confidential employees and as such are hereby deemed excluded in the bargaining unit. appealed decision of the Executive Labor Arbiter is hereby SET ASIDE and a new one entered declaring respondent company's Service Engineers, Sales Force, division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems are included within the rank and file bargaining unit. The reversal is anchored on the respondent NLRC's conclusion that based on Section 1, 3 Rule II, Book V of the Omnibus Rules Implementing the Labor Code, as amended by Section 3, Implementing Rules of E.O. No. 111; paragraph (c), Section 2, Rule V of the same Code, as amended by Section 6 4 of the Implementing Rules of E.O. No. 111; and Article 245 5 of the Labor Code, as amended: ". . . all workers, except managerial employees and security personnel, are qualified to join or be a part of the bargaining unit . . ." "The Executive Labor Arbiter's directive that the service engineers and sales representatives to (sic) conduct a referendum among themselves is erroneous inasmuch as it arrogates unto said employees the right to define what the law means. It would not be amiss to state at this point that there would be no one more interested in excluding the subject employees from the bargaining unit than management and that it would not be improbable for the latter to lobby and/or exert pressure on the employees concerned, thus agitating unrest among the rank-and-file. Likewise, the Executive Labor Arbiter's declaration that the Division Secretaries and all Staff of general management, personnel and industrial relations department, secretaries of audit, EDP and financial system 'are confidential employees and as such are hereby deemed excluded in (sic) the bargaining unit' is contrary to law for the simple reason that the law, as earlier quoted, does not mention them as among those to be excluded from the bargaining unit only (sic) managerial employees and security guards. As a matter of fact, supervisory unions have already been dissolved and their members who do not fall within the definition of managerial employees have become eligible to join or assist the rank-and-file organization."

ISSUE: whether the NLRC committed grave abuse of discretion in holding that service engineers, sales representatives and confidential employees (division secretaries, staff of general management, personnel and industrial relations department, secretaries of audit, EDP and financial system) are qualified to be included in the existing bargaining unit. Petitioner maintains that it did, and in support of its stand that said employees should not be absorbed by the existing bargaining unit, it urges this Court to consider these points: The rationale for such exclusion is that these employees hold positions which are highly sensitive, confidential and of a highly fiduciary nature; to include them in the bargaining unit may subject the company to breaches in security and the possible revelation of highly sensitive and confidential matters. It would cripple the company's bargaining position and would give undue advantage to the union. 2) The absence of mutuality of interests between this group of employees and the regular rank and file militates against such inclusion. A table prepared by the petitioner shows the disparity of interests between the said groups: The Office of the Solicitor General supports the decision of the Executive Labor Arbiter and refuses to uphold the position of the NLRC. It holds the view that the division secretaries; the staff members of General Management, Personnel and the Industrial Relations Department; and the secretaries of Audit, EDP and Financial Systems, are disqualified from joining the PEO-FFW as they are confidential employees. They cannot even form a union of their own for, as held in Golden Farms, Inc. vs. Ferrer-Calleja, 8 the rationale for the disqualification of managerial employees from joining unions holds true also for confidential employees. Sales representatives and service engineers, however, there is no doubt that they are entitled to join or form a union, as they are not disqualified by law from doing so. Considering that they have interests dissimilar to those of the rank and file employees comprising the existing bargaining unit, and following the Globe Doctrine enunciated in In Re: Globe Machine and Stamping Company 9 to the effect that in determining the proper bargaining unit the express will or desire of the employees shall be considered, they should be allowed to determine for themselves what union to join or form. The best way to determine their preference is through a referendum As shown by the records, such a referendum was decreed by the Executive Labor Arbiter. We express Our agreement with the petitioner's view that respondent NLRC did not quite accurately comprehend the issue raised before it. Indeed, the issue is not whether the subject employees may join or form a union, but rather, whether or not they may be part of the existing bargaining unit for the rank and file employees of PIDI. At the time Case No. NLRC-NCR-00-11-03936-87 was filed in 1987, security personnel were no longer disqualified from joining or forming a union. Section 6 of E.O No. 111, enacted on 24 December 1986, repealed the original provisions of Article 245 of the Labor Code, reading as follows: "ARTICLE 245. Ineligibility of security personnel to join any labor organization. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employer shall not be eligible for membership in any labor organization." and substituted it with the following provision: Right of employees in the public service. "

"ARTICLE 245.

By virtue of such repeal and substitution, security guards became eligible for membership in any labor organization.

quite obvious that respondent NLRC committed grave abuse of discretion in reversing the decision of the Executive Labor Arbiter and in decreeing that PIDI's "Service Engineers, Sales Force, division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems are included within the rank and file bargaining unit." all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. 12 As such, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union equally applies to them. In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, 13 this Court elaborated on this rationale, thus: ". . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership." In Golden Farms, Inc. vs. Ferrer-Calleja, 14 this Court explicitly made this rationale applicable to confidential employees: "This rationale holds true also for confidential employees such as accounting personnel, radio and telegraph operators, who having access to confidential information, may become the source of undue advantage. Said employee(s) may act as a spy or spies of either party to a collective bargaining agreement. This is specially true in the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the establishment. To allow the confidential employees to join the existing Union of the rank-and-file would be in violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are expressly excluded." NLRC practically forced them to become members of PEO-FFW or to be subject to its sphere of influence, it being the certified bargaining agent for the subject bargaining unit. This violates, obstructs, impairs and impedes the service engineers' and the sales representatives' constitutional right to form unions or associations 15 and to self-organization. In Victoriano vs. Elizalde Rope Workers' Union, ". . . Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature and contents of a 'right', it can be safely said that whatever theory one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act for himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join or refrain from joining an association. It is, therefore, the employee who should decide for himself whether he should join or not an association; and should he choose to join, he himself makes up his mind as to which association he would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said organization at any, time. 18 It is clear, therefore, that the right to join a union includes the right to abstain from joining any union. 19 Inasmuch as what both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the employee, is the 'right' to join associations of his choice, it would be absurd to say that the law also imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin an employee to sign up with any association." Article 245 20 of the Labor Code which, as amended by R.A. No. 6715, now reads:

"ARTICLE 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own." (emphasis supplied) The foregoing disquisitions render unnecessary a discussion on the second ground on the alleged grave abuse of discretion on the part of the NLRC in not applying the "Globe Doctrine". Suffice it to state here that since the only issue is the subject employees' inclusion in or exclusion from the bargaining unit in question, and PIDI never questioned the decision of the Executive Labor Arbiter, the Globe Doctrine finds no application. Besides, this doctrine applies only in instances of evenly balanced claims by competitive groups for the right to be established as the bargaining unit, 21 which do not obtain in this case. LexLib WHEREFORE, the petition is hereby GRANTED. The Decision of public respondent National Labor Relations Commission in Case No. NLRC-NCR-00-11-03936-87, promulgated on 16 January 1989, is hereby SET ASIDE while the Decision of the Executive Labor Arbiter in said case dated 17 March 1988 is hereby REINSTATED, subject to the modifications above indicated.

METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of the Department of Labor and Employment and METRO DRUG CORPORATION EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERS, respondents. [G.R. No. 108855. February 28, 1996.]

This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April 1992 and 25 January 1993, respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-91; NCMB-NCR-NS-09-678-91) on grounds that these were issued with grave abuse of discretion and in excess of jurisdiction. Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter referred to as the Union) is a labor organization representing the rank and file employees of petitioner Metrolab Industries, Inc. (hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc. On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union expired. The negotiations for a new CBA, however, ended in a deadlock. Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro Drug Inc. The parties failed to settle their dispute despite the conciliation efforts of the National Conciliation and Mediation Board. To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued an assumption order dated 20 September 1991, the dispositive portion of which reads, thus: pursuant to Article 263 (g) of the Labor Code, as amended, this Office hereby assumes jurisdiction over the entire labor dispute at Metro Drug, Inc. Metro Drug Distribution Division and Metrolab Industries Inc. Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug Corp. Employees Association FFW are likewise directed to cease and desist from committing any and all acts that might exacerbate the situation. then Labor Secretary Torres issued an order resolving all the disputed items in the CBA and ordered the parties involved to execute a new CBA. Union filed a motion for reconsideration. On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab laid off 94 of its rank and file employees. On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the mass layoff, alleging that such act violated the prohibition against committing acts that would exacerbate the dispute as specifically directed in the assumption order. Metrolab contended that the layoff was temporary and in the exercise of its management prerogative. It maintained that the company would suffer a yearly gross revenue loss of approximately sixty-six (66) million pesos due to the withdrawal of its principals in the Toll and Contract Manufacturing Department. Metrolab further asserted that with the automation of the manufacture of its product "Eskinol," the number of workers required its production is significantly reduced. Metrolab recalled some of the laid off workers on a temporary basis due to availability of work in the production lines. Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of Metrolab's 94 rank and file workers illegal and ordered their reinstatement with full backwages.

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

Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not aggravate the dispute since no untoward incident occurred as a result thereof. It, likewise, filed a motion for clarification regarding the constitution of the bargaining unit covered by the CBA. On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The execution, however, was without prejudice to the outcome of the issues raised in the reconsideration and clarification motions submitted for decision to the Secretary of Labor. 5 Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its employees on grounds of redundancy due to lack of work which the Union again promptly opposed Labor Secretary Confesor again issued a cease and desist order. Metrolab moved for a reconsideration. 6 On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution containing the following orders: MII's motion for reconsideration with respect to the consequences of the second wave of layoff affecting 73 employees, to the extent of assailing our ruling that such layoff tended to exacerbate the dispute, is hereby denied. But inasmuch as the legality of the layoff was not submitted for our resolution and no evidence had been adduced upon which a categorical finding thereon can be based, the same is hereby referred to the NLRC for its appropriate action. Finally, all prohibitory injunctions issued as a result of our assumption of jurisdiction over this dispute are hereby lifted. SO RESOLVED. 7 Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-shop provision of the CBA, not from the bargaining unit. On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the present petition for certiorari with application for issuance of a Temporary Restraining Order. A THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY LAYOFF ILLEGAL AND ORDERING THE REINSTATEMENT AND PAYMENT OF BACKWAGES TO THE AFFECTED EMPLOYEES. * B THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF RANK AND FILE EMPLOYEES. 8 Metrolab argues that the Labor Secretary's order enjoining the parties from committing any act that might exacerbate the dispute is overly broad, sweeping and vague and should not be used to curtail the employer's right to manage his business and ensure its viability. This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate business decisions of the employer. However, this privilege is not absolute but subject to limitations imposed by law. 9 In PAL v. NLRC, 10 we issued this reminder: was held that management's prerogatives must be without abuse of discretion It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. The disputed injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor Code specifically provides that: (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same That Metrolab's business is of national interest is not disputed. Metrolab is one of the leading manufacturers and suppliers of medical and pharmaceutical products to the country. Metrolab's management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and tempered by the limitations set by law, taking into account its special character and the particular circumstances in the case at bench. MII is right to the extent that as a rule, we may not interfere with the legitimate exercise of management prerogatives such as layoffs. But it may nevertheless be appropriate to mention here that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts, management prerogatives must always be exercised consistently with the statutory objective. 11 We reaffirm the doctrine that considering their expertise in their respective fields, factual findings of administrative agencies supported by substantial evidence are accorded great respect and binds this Court. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act of exacerbation. One must look at the act itself, not on speculative reactions. A misplaced recourse is not needed to prove that a dispute has been exacerbated. For instance, the Union could not be expected to file another notice of strike. For this would depart from its theory of the case that the layoff is subsumed under the instant dispute, for which a notice of strike had already been filed. On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic action from the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. Under a regime of laws, legal remedies take the place of violent ones. 14 Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the subject layoffs. As a result, motions and oppositions were filed diverting the parties' attention, delaying resolution of the bargaining deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict. there is no circumstance at all from which we can infer an intention from MII not to sever the employment relationship permanently. If there was such an intention, MII could have made it very clear in the notices of layoff. But as it were, the notices are couched in a language so uncertain that the only conclusion possible is the permanent termination, not the continuation, of the employment relationship. second issue raised by petitioner merits our consideration.

This reading is obviously contrary to the intent of our 14 April 1992 resolution. By recognizing the expanded scope of the right to self-organization, our intent was to delimit the types of employees excluded from the close shop provision, not from the bargaining unit, to executive secretaries only. Otherwise, the conversion of the exclusionary provision to one that refers to the bargaining unit from one that merely refers to the close shop provision would effectively curtail all the organizational rights of executive secretaries. The issue of exclusion has different dimension in the case of MII. In an earlier motion for clarification, MII points out that it has done away with the positions of Executive Vice-President, Vice-President for Sales, and Director for Corporate Planning. Thus, the foregoing group of exclusions is no longer appropriate in its present organizational structure. Nevertheless, there remain MII officer positions for which there may be executive secretaries. These include the General Manager and members of the Management Committee, specifically i) the Quality Assurance Manager; ii) the Product Development Manager; iii) the Finance Director; iv) the Management System Manager; v) the Human Resources Manager; vi) the Marketing Director; vii) the Engineering Manager; viii) the Materials Manager; and ix) the Production Manager. Metrolab, however, maintains that executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production Manager, who are all members of the company's Management Committee should not only be exempted from the closed-shop provision but should be excluded from membership in the bargaining unit of the rank and file employees as well on grounds that their executive secretaries are confidential employees, having access to "vital labor information." We concur with Metrolab. Although Article 245 of the Labor Code 20 limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records. The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file employees and their disqualification to join any labor organization was succinctly discussed in Philips Industrial Development v. NLRC : 21 In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union equally applies to them. Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale applicable to confidential employees: This rationale holds true also for confidential employees such as accounting personnel, radio and telegraph operators, who having access to confidential information, may become the source of undue advantage. Said employee(s) may act as a spy or spies of either party to a collective bargaining agreement. This is specially true in the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the establishment. To allow the confidential employees to join the existing Union of the rank-and-file would be in violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are expressly excluded." Similarly, in National Association of Trade Union - Republic Planters Bank Supervisors Chapter v. Torres 22 we declared:As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers and Controllers are confidential employees, having control, custody and/or access to confidential matters, e.g., the branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, this claim is not even disputed by petitioner. A confidential employee is one entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer's property. While Art. 245 of the Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of necessary, implication, confidential employees are similarly disqualified. . . . . . . (I)n the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interest are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act "in the interest of the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. . . . Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor, 23 we ruled that: Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically routinary and clerical. However, they should be differentiated from rank-and-file employees because they are tasked with, among others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving notices, and such other duties as required by the legal personnel of the corporation. Legal secretaries therefore fall under the category of confidential employees. . . . There would be no danger of company domination of the Union since the confidential employees would not be members of and would not participate in the decision making processes of the Union. Neither would there be a danger of espionage since the confidential employees would not have any conflict of interest, not being members of the Union. In any case, there is always the danger that any employee would leak management secrets to the Union out of sympathy for his fellow rank and filer even if he were not a member of the union nor the bargaining unit.

Confidential employees are rank and file employees and they, like all the other rank and file employees, should be granted the benefits of the Collective Bargaining Agreement. There is no valid basis for discriminating against them. The mandate of the Constitution and the Labor Code, primarily of protection to Labor, compels such conclusion. The dangers sought to be prevented, particularly the threat of conflict of interest and espionage, are not eliminated by non-membership of Metrolab's executive secretaries or confidential employees in the Union. Forming part of the bargaining unit, the executive secretaries stand to benefit from any agreement executed between the Union and Metrolab.

Such a scenario, thus, gives rise to a potential conflict between personal interests and their duty as confidential employees to act for and in behalf of Metrolab. They do not have to be union members to affect or influence either side. Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature of employment of confidential employees is quite distinct from the rank and file, thus, warranting a separate category. Excluding confidential employees from the rank and file bargaining unit, therefore, is not tantamount to discrimination. WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public respondent Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the extent that executive secretaries of petitioner Metrolab's General Manager and the executive secretaries of the members of its Management Committee are excluded from the bargaining unit of petitioner's rank and file employees.

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President, petitioners, vs. HONORABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL CORPORATION, respondents. [G.R. No. 110399. August 15, 1997.] Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91 1 entitled "In Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Union FACTS: On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for Direct Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis. On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit. respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the Med-Arbiter's error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature. Undersecretary Laguesma, granted respondent company's Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit. Upon petitioner-union's motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis. On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings. On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC 2 case. S3 and S4 Supervisors and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above court's ruling. Consequently, they are not allowed to participate in the certification election. 1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union. 2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit. On the first issue, this Court rules that said employees do not fall within the term "confidential employees" who may be prohibited from joining a union. There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be classified as managerial employees who, under Article 245 4 of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. The only question that need be addressed is whether these employees are properly classified as confidential employees or not. Confidential employees are those who (1) assist or act in a confidential capacity (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. 6 The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the "confidential employee rule." The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests. 7 "Management should not be required to handle labor relations matters through employees who are represented by the union with which the company is required to deal and who in the normal performance of their

duties may obtain advance information of the company's position with regard to contract negotiations, the disposition of grievances, or other labor relations matters." 8 There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez, 9 the Court held that "if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become companydominated with the presence of managerial employees in Union membership." The same rationale was applied to confidential employees in "Golden Farms, Inc. v. Ferrer-Calleja" 10 and in the more recent case of "Philips Industrial Development, Inc. v. NLRC " 11 which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, person who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union was held equally applicable to them. 12

An important element of the "confidential employee rule" is the employee's need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key question frequently considered is the employees' necessary access to confidential labor relations information.

it was also stated that the confidential information handled by questioned employees relate to product formulation, product standards and product specification which by no means relate to "labor relations." 15 If access to confidential labor relations information is to be a factor in the determination of an employee's confidential status, such information must relate to the employer's labor relations policies.

Thus, an employee of a labor union, or of a management association, must have access to confidential labor relations information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not cause an employee to be excluded from the bargaining unit representing employees of the union or association." "Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information 18 or technical trade secrets, will not render an employee a confidential employee." 19 Herein listed are the functions of supervisors 3 and higher: 1. To undertake decisions to discontinue/temporarily stop shift operations when situations require.

2. To effectively oversee the quality control function at the processing lines in the storage of chicken and other products. 3. 4. 5. To administer efficient system of evaluation of products in the outlets. To be directly responsible for the recall, holding and rejection of direct manufacturing materials. To recommend and initiate actions in the maintenance of sanitation and hygiene throughout the plant. 20

It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions. From the foregoing functions, it can be gleaned that the confidential information said employees have access to concern the employer's internal business operations. As held in Westinghouse Electric Corporation v. National Labor Relations Board, 21 "an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential information concerning employer's internal business operations and which is not related to the field of labor relations." It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to "all" workers the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees of their right to bargain collectively through representatives of their choosing. In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle "confidential data" as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union. 23 It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao, Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests. An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. 25 employees in the instant case have "community or mutuality of interests," which is the standard in determining the proper constituency of a collective bargaining unit. 26 It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of the University of the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and the Visayas were

allowed to participate in a certification election. We rule that the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative DELA SALLE UNIVERSITY, petitioner, vs. DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEA) and BUENAVENTURA MAGSALIN, respondents. [G.R. No. 109002. April 12, 2000.]

[G.R. No. 110072. April 12, 2000.] DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION-NATIONAL FEDERATION OF TEACHERS AND EMPLOYEES UNION (DLSUEA-NAFTEU), petitioner, vs. DELA SALLE UNIVERSITY and BUENAVENTURA MAGSALIN, respondents. Filed with this Court are two petitions for certiorari, 1 the first petition with preliminary injunction and/or temporary restraining order, 2 assailing the decision of voluntary arbitrator Buenaventura Magsalin, dated January 19, 1993, as having been rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. These two petitions have been consolidated inasmuch as the factual antecedents, parties involved and issues raised therein are interrelated. 3 FACTS: . On December 1986, Dela Salle University (hereinafter referred to as UNIVERSITY) and Dela Salle University Employees Association-National Federation of Teachers and Employees Union (DLSUEA-NAFTEU), which is composed of regular non-academic rank and file employees, entered into a collective bargaining agreement with a life span of three (3) years, that is, from December 23, 1986 to December 22, 1989. During the freedom period, or 60 days before the expiration of the said collective bargaining agreement, the Union initiated negotiations with the University for a new collective bargaining agreement 6 which, however, turned out to be unsuccessful, hence, the Union filed a Notice of Strike with the National Conciliation and Mediation Board, National Capital Region. After several conciliation-mediation meetings, five (5) out of the eleven (11) issues raised in the Notice of Strike were resolved by the parties. A partial collective bargaining agreement was thereafter executed by the parties. 8 On March 18, 1991, the parties entered into a Submission Agreement, identifying the remaining six (6) unresolved issues for arbitration, namely: "(1) scope of the bargaining unit, (2) union security clause, (3) security of tenure, (4) salary increases for the third and fourth years [this should properly read second and third years] 9 of the collective bargaining agreement, (5) indefinite union leave, reduction of the union presidents workload, special leave, and finally, (6) duration of the agreement." 10 The parties appointed Buenaventura Magsalin as voluntary arbitrator. 11 On January 19, 1993, the voluntary arbitrator rendered the assailed decision. 12 voluntary arbitrator, on the first issue involving the scope of the bargaining unit, ruled that "the Computer Operators assigned at the CSC [Computer Services Center], just like any other Computer Operators in other units, [should be] included as members of the bargaining unit," 13 after finding that "[e]vidently, the Computer Operators are presently doing clerical and routinary work and had nothing to do with [the] setting of management policies for the University, as [may be] gleaned from the duties and responsibilities attached to the position and embodied in the CSC [Computer Services Center] brochure. They may have, as argued by the University, access to vital information regarding the Universitys operations but they are not necessarily confidential."

Regarding the discipline officers, the voluntary arbitrator ". . . believes that this type of employees belong (sic) to the rankand-file on the basis of the nature of their job."

With respect to the employees of the College of St. Benilde, the voluntary arbitrator found that the College of St. Benilde has a personality separate and distinct from the University and thus, held ". . . that the employees therein are outside the bargaining unit of the Universitys rank-and-file employees." second issue regarding the propriety of the inclusion of a union shop clause in the collective bargaining agreement, in addition to the existing maintenance of membership clause, the voluntary arbitrator opined that a union shop clause ". . . is not a restriction on the employees right of (sic) freedom of association but rather a valid form of union security while the CBA is in force and in accordance with the Constitutional policy to promote unionism and collective bargaining and negotiations. The parties therefore should incorporate such union shop clause in their CBA." third issue with respect to the use of the "last-in-first-out" method in case of retrenchment and transfer to other schools or units, the voluntary arbitrator upheld the ". . . elementary right and prerogative of the management of the University to select and/or choose its employees, a right equally recognized by the Constitution and the law. The employer, in the exercise of this right, can adopt valid and equitable grounds as basis for lay-off or separation, like performance, qualifications, competence, etc. Similarly, the right to transfer or reassign an employee is an employers exclusive right and prerogative." fourth issue concerning salary increases for the second and third years of the collective bargaining agreement, the voluntary arbitrator opined that the ". . . proposed budget of the University for SY 1992-93 could not sufficiently cope up with the demand for increases by the Union. . . With the present financial condition of the University, it cannot now be required to grant another round of increases through collective bargaining without exhausting its coffers for other legitimate needs of the University as an institution," 19 thus, he ruled that ". . . the University can no longer be required to grant a second round of increase for the school years under consideration and charge the same to the incremental proceeds." fifth issue as to the Union's demand for a reduction of the workload of the union president, special leave benefits and indefinite union leave with pay, the voluntary arbitrator rejected the same, ruling that unionism ". . . is no valid reason for the reduction of the workload of its President," 21 and that there is ". . . no sufficient justification to grant an indefinite leave." 22 Finding that the Union and the Faculty Association are not similarly situated, technically and professionally, 23 and that "[w]hile professional growth is highly encouraged on the part of the rank-and-file employees, this educational advancement would not serve in the same degree as demanded of the faculty members," 24 the voluntary arbitrator denied the Union's demand for special leave benefits. LexLib

On the last issue regarding the duration of the collective bargaining agreement, the voluntary arbitrator ruled that ". . . when the parties forged their CBA and signed it on 19 November 1990, where a provision on duration was explicitly included, the same became a binding agreement between them. Notwithstanding the Submission Agreement, thereby

10

reopening this issue for resolution, this Voluntary Arbitrator is constrained to respect the original intention of the parties, the same being not contrary to law, morals or public policy." 25 As to the economic aspect of the collective bargaining agreement, the voluntary arbitrator opined that the ". . . economic provisions of the CBA shall be re-opened after the third year in compliance with the mandate of the Labor Code, as amended." 26 Subsequently, both parties filed their respective motions for reconsideration which, however, were not entertained by the voluntary arbitrator "pursuant to existing rules and jurisprudence governing voluntary arbitration cases." 27 On March 5, 1993, the University filed with the Second Division of this Court, a petition for certiorari with temporary restraining order and/or preliminary injunction assailing the decision of the voluntary arbitrator, as having been rendered "in excess of jurisdiction and/or with grave abuse of discretion." 28 Subsequently, on May 24, 1993, the Union also filed a petition for certiorari with the First Division. 29 Without giving due course to the petition pending before each division, the First and Second Divisions separately resolved to require the respondents in each petition, including the Solicitor General on behalf of the voluntary arbitrator, to file their respective Comments. 30 Upon motion by the Solicitor General dated July 29, 1993, both petitions were consolidated and transferred to the Second Division. 31 In his consolidated Comment 32 filed on September 9, 1993 on behalf of voluntary arbitrator Buenaventura C. Magsalin, the Solicitor General agreed with the voluntary arbitrators assailed decision on all points except that involving the employees of the College of St. Benilde. According to the Solicitor General, the employees of the College of St. Benilde should have been included in the bargaining unit of the rank-and-file employees of the University. 33 The Solicitor General came to this conclusion after finding ". . . sufficient evidence to justify the Union's proposal to consider the University and the CSB [College of St. Benilde] as only one entity because the latter is but a mere integral part of the University," to wit: 34 "1. One of the duties and responsibilities of the CSBs Director of Academic Services is to coordinate with the Universitys Director of Admissions regarding the admission of freshmen, shiftees and transferees (Annex "3" of the Universitys Reply); "2. Some of the duties and responsibilities of the CSBs Administrative Officer are as follows: 4. Recommends and implements personnel policies and guidelines (in accordance with the Staff Manual) as well as pertinent existing general policies of the university as a whole. . . 12. Conducts and establishes liaison with all the offices concerned at the Main Campus as well (sic) with other government agencies on all administrative-related matters. . . . 7. Handles processing, canvassing and direct purchasing of all requisitions worth more than P10,000 or less. Coordinates and canvasses with the Main Campus all requisitions worth more than P10,000. . . 7. Plans and coordinates with the Security and Safety Committee at the Main Campus the development of a security and safety program during times of emergency or occurrence of fire or other natural calamities. . . . (Annex "4" of the Universitys Reply). "3. The significant role which the University assumes in the admission of students at the CSB is revealed in the following provisions of the CSBs Bulletin for Arts and Business Studies Department for the schoolyear 1992-1993, thus: 'Considered in the process of admission for a (sic) high school graduate applicants are the following criteria: results of DLSU College Entrance Examination . . . 'Admission requirements for transferees are: . . . and an acceptable score in the DLSU admission test. . . 'Shiftees from DLSU who are still eligible to enroll may be admitted in accordance with the DLSU policy on shifting. Considering that there sometimes exist exceptional cases where a very difficult but temporary situation renders a DLSU student falling under this category a last chance to be re-admitted provided he meets the cut-off scores required in the qualifying examination administered by the university. . . 'He may not be remiss in his study obligations nor incur any violation whatsoever, as such will be taken by the University to be an indication of his loss of initiative to pursue further studies at DLSU. In sch (sic) a case, he renders himself ineligible to continue studying at DLSU. DLSU thus reserves the right to the discontinuance of the studies of any enrollee whose presence is inimical to the objectives of the CSB/DLSU. . . 'As a college within the university, the College of St. Benilde subscribes to the De La Salle Mission." (Annexes "C-1," "C2," and "C-3" of the Unions Consolidated Reply and Rejoinder) "4. The academic programs offered at the CSB are likewise presented in the Universitys Undergraduate Prospectus for schoolyear 1992-1993 (Annex "D" of the Unions Consolidated Reply and Rejoinder). "5. The Leave Form Request (Annex "F" of the Unions Position Paper) at the CSB requires prior permission from the University anent leaves of CSB employees, to wit: 'AN EMPLOYEE WHO GOES ON LEAVE WITHOUT PRIOR PERMISSION FROM THE UNIVERSITY OR WHO OVEREXTENDS THE PERIOD OF HIS APPROVED LEAVE WITHOUT SECURING AUTHORITY FROM THE UNIVERSITY, OR WHO REFUSE TO BE RECALLED FROM AN APPROVED LEAVE SHALL BE CONSIDERED ABSENT WITHOUT LEAVE AND SHALL BE SUBJECT TO DISCIPLINARY ACTION. "6. The University officials themselves claimed during the 1990 University Athletic Association of the Philippines (UAAP) meet that the CSB athletes represented the University since the latter and the CSB comprise only one entity." On February 9, 1994, this Court resolved to give due course to these consolidated petitions and to require the parties to submit their respective memoranda. 35 In its memorandum filed on April 28, 1994, 36 pursuant to the above-stated Resolution, 37 the University raised the following issues for the consideration of the Court: 38 I. "WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE INCLUDED, WITHIN THE BARGAINING UNIT COMPRISING THE UNIVERSITYS RANK-AND-FILE EMPLOYEES, THE COMPUTER OPERATORS ASSIGNED AT THE UNIVERSITYS COMPUTER SERVICES CENTER AND THE UNIVERSITYS DISCIPLINE OFFICERS, AND WHEN HE EXCLUDED THE COLLEGE OF SAINT BENILDE EMPLOYEES FROM THE SAID BARGAINING UNIT. II. "WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE UPHELD THE UNIONS DEMAND FOR THE INCLUSION OF A UNION SHOP CLAUSE IN THE PARTIES COLLECTIVE BARGAINING AGREEMENT.

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III. "WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNIONS PROPOSAL FOR THE "LAST-IN-FIRST-OUT" METHOD OF LAY-OFF IN CASES OF RETRENCHMENT. cdphil IV. "WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE RULED THAT THE UNIVERSITY CAN NO LONGER BE REQUIRED TO GRANT A SECOND ROUND OF WAGE INCREASES FOR THE SCHOOL YEARS 1991-92 AND 1992-93 AND CHARGE THE SAME TO THE INCREMENTAL PROCEEDS. V. "WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNIONS PROPOSALS ON THE DELOADING OF THE UNION PRESIDENT, IMPROVED LEAVE BENEFITS AND INDEFINITE UNION LEAVE WITH PAY." The Union, on the other hand, raised the following issues, in its memorandum, 39 filed pursuant to Supreme Court Resolution dated February 9, 1994, 40 to wit; that the voluntary arbitrator committed grave abuse of discretion in: "(1) FAILING AND/OR REFUSING TO PIERCE THE VEIL OF CORPORATE FICTION OF THE COLLEGE OF ST. BENILDE-DLSU DESPITE THE PRESENCE OF SUFFICIENT BASIS TO DO SO AND IN FINDING THAT THE EMPLOYEES THEREAT ARE OUTSIDE OF THE BARGAINING UNIT OF THE DLSU'S RANK-AND-FILE EMPLOYEES. HE ALSO ERRED IN HIS INTERPRETATION OF THE APPLICATION OF THE DOCTRINE; "(2) DENYING THE PETITIONERS PROPOSAL FOR THE 'LAST-IN FIRST-OUT METHOD OF LAY-OFF IN CASE OF RETRENCHMENT AND IN UPHOLDING THE ALLEGED MANAGEMENT PREROGATIVE TO SELECT AND CHOOSE ITS EMPLOYEES DISREGARDING THE BASIC TENETS OF SOCIAL JUSTICE AND EQUITY UPON WHICH THIS PROPOSAL WAS FOUNDED; "(3) FINDING THAT THE MULTISECTORAL COMMITTEE IN THE RESPONDENT UNIVERSITY IS THE LEGITIMATE GROUP WHICH DETERMINES AND SCRUTINIZES ANNUAL SALARY INCREASES AND FRINGE BENEFITS OF THE EMPLOYEES; "(4) HOLDING THAT THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS IS THE ONLY SOURCE OF SALARY INCREASES AND FRINGE BENEFITS OF THE EMPLOYEES; "(5) FAILING/REFUSING/DISREGARDING TO CONSIDER THE RESPONDENT UNIVERSITYS FINANCIAL STATEMENTS FACTUALLY TO DETERMINE THE FORMERS CAPABILITY TO GRANT THE PROPOSED SALARY INCREASES OVER AND ABOVE THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS AND IN GIVING WEIGHT AND CONSIDERATION TO THE RESPONDENT UNIVERSITYS PROPOSED BUDGET WHICH IS MERELY AN ESTIMATE. "(6) FAILING TO EQUATE THE POSITION AND RESPONSIBILITIES OF THE UNION PRESIDENT WITH THOSE OF THE PRESIDENT OF THE FACULTY ASSOCIATION WHICH IS NOT EVEN A LEGITIMATE LABOR ORGANIZATION AND IN SPECULATING THAT THE PRESIDENT OF THE FACULTY ASSOCIATION SUFFERS A CORRESPONDING REDUCTION IN SALARY ON THE ACCOUNT OF THE REDUCTION OF HIS WORKLOAD; IN FAILING TO APPRECIATE THE EQUAL RIGHTS OF THE MEMBERS OF THE UNION AND OF THE FACULTY FOR PROFESSIONAL ADVANCEMENT AS WELL AS THE DESIRABLE EFFECTS OF THE INSTITUTIONALIZATION OF THE SPECIAL LEAVE AND WORKLOAD REDUCTION BENEFITS." 41 ISSUE: The question which now confronts us is whether or not the voluntary arbitrator committed grave abuse of discretion in rendering the assailed decision, particularly, in resolving the following issues: (1) whether the computer operators assigned at the Universitys Computer Services Center and the Universitys discipline officers may be considered as confidential employees and should therefore be excluded from the bargaining unit which is composed of rank and file employees of the University, and whether the employees of the College of St. Benilde should also be included in the same bargaining unit; (2) whether a union shop clause should be included in the parties' collective bargaining agreement, in addition to the existing maintenance of membership clause; (3) whether the denial of the Unions proposed "last-in-firstout" method of laying-off employees, is proper; (4) whether the ruling that on the basis of the Universitys proposed budget, the University can no longer be required to grant a second round of wage increases for the school years 1991-92 and 1992-93 and charge the same to the incremental proceeds, is correct; (5) whether the denial of the Union's proposals on the deloading of the union president, improved leave benefits and indefinite union leave with pay, is proper; (6) whether the finding that the multi-sectoral committee in the University is the legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of the employees of the University, is correct; and (7) whether the ruling that the 70% share in the incremental tuition proceeds is the only source of salary increases and fringe benefits of the employees, is proper.

Now, before proceeding to the discussion and resolution of the issues raised in the pending petitions, certain preliminary matters call for disposition. As we reiterated in the case of Caltex Refinery Employees Association (CREA) vs. Jose S. Brillantes, 42 the following are the well-settled rules in a petition for certiorari involving labor cases. "First, the factual findings of quasi-judicial agencies (such as the Department of Labor and Employment), when supported by substantial evidence, are binding on this Court and entitled to great respect, considering the expertise of these agencies in their respective fields. It is well-established that findings of these administrative agencies are generally accorded not only respect but even finality. 43 "Second, substantial evidence in labor cases is such amount of relevant evidence which a reasonable mind will accept as adequate to justify a conclusion. 44 "Third, in Flores vs. National Labor Relations Commission, 45 we explained the role and function of Rule 65 as an extraordinary remedy: "It should be noted, in the first place, that the instant petition is a special civil action for certiorari under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only and restrictively in truly exceptional cases those wherein the action of an inferior court, board or officer performing judicial or quasi-judicial acts is challenged for being wholly void on grounds of jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of public respondent NLRC's evaluation of the evidence and factual findings based thereon, which are generally accorded not only great respect but even finality. "No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench. Instead, what is being sought is a judicial re-evaluation of the adequacy or inadequacy of the evidence on record, which is certainly beyond the province

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of the extraordinary writ of certiorari. Such demand is impermissible for it would involve this Court in determining what evidence is entitled to belief and the weight to be assigned it. As we have reiterated countless times, judicial review by this Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction." (emphasis supplied). With the foregoing rules in mind, we shall now proceed to discuss the merit of these consolidated petitions. On the first issue involving the classification of the computer operators assigned at the Universitys Computer Services Center and discipline officers, the University argues that they are confidential employees and that the Union has already recognized the confidential nature of their functions when the latter agreed in the parties 1986 collective bargaining agreement to exclude the said employees from the bargaining unit of rank-and-file employees. As far as the said computer operators are concerned, the University contends that ". . . the parties have already previously agreed to exclude all positions in the Universitys Computer Services Center (CSC), which include the positions of computer operators, from the collective bargaining unit. . ." 46 The University further contends that ". . . the nature of the work done by these Computer Operators is enough justification for their exclusion from the coverage of the bargaining unit of the Universitys rank-and-file employees. . ." 47 According to the University, the Computer Services Center, where these computer operators work, ". . . processes data that are needed by management for strategic planning and evaluation of systems. It also houses the Universitys confidential records and information [e. g. student records, faculty records, faculty and staff payroll data, and budget allocation and expenditure related data] which are contained in computer files and computer-generated reports. . . Moreover, the Computer Operators are in fact the repository of the Universitys confidential information and data, including those involving and/or pertinent to labor relations. . ." 48 As to the discipline officers, the University maintains that ". . . they are likewise excluded from the bargaining unit of the rank-and-file employees under the parties' 1986 CBA. The Discipline Officers are clearly alter egos of management as they perform tasks which are inherent in management [e. g. enforce discipline, act as peace officers, secure peace and safety of the students inside the campus, conduct investigations on violations of University regulations, or of existing criminal laws, committed within the University or by University employees] . . ." 49 The University also alleges that "the Discipline Officers are privy to highly confidential information ordinarily accessible only to management." 50 With regard to the employees of the College of St. Benilde, the Union, supported by the Solicitor General at this point, asserts that the veil of corporate fiction should be pierced, thus, according to the Union, the University and the College of St. Benilde should be considered as only one entity because the latter is but a mere integral part of the University. 51 The University's arguments on the first issue fail to impress us. The Court agrees with the Solicitor General that the express exclusion of the computer operators and discipline officers from the bargaining unit of rank-and-file employees in the 1986 collective bargaining agreement does not bar any renegotiation for the future inclusion of the said employees in the bargaining unit. During the freedom period, the parties may not only renew the existing collective bargaining agreement but may also propose and discuss modifications or amendments thereto. With regard to the alleged confidential nature of the said employees functions, after a careful consideration of the pleadings filed before this Court, we rule that the said computer operators and discipline officers are not confidential employees. As carefully examined by the Solicitor General, the service record of a computer operator reveals that his duties are basically clerical and non-confidential in nature. 52 As to the discipline officers, we agree with the voluntary arbitrator that based on the nature of their duties, they are not confidential employees and should therefore be included in the bargaining unit of rank-and-file employees. The Court also affirms the findings of the voluntary arbitrator that the employees of the College of St. Benilde should be excluded from the bargaining unit of the rank-and-file employees of Dela Salle University, because the two educational institutions have their own separate juridical personality and no sufficient evidence was shown to justify the piercing of the veil of corporate fiction. 53 On the second issue involving the inclusion of a union shop clause in addition to the existing maintenance of membership clause in the collective bargaining agreement, the University avers that ". . . it is in the spirit of the exercise of the constitutional right to self-organization that every individual should be able to freely choose whether to become a member of the Union or not. The right to join a labor organization should carry with it the corollary right not to join the same. This position of the University is but in due recognition of the individuals free will and capability for judgment." 54 The University assails the Unions demand for a union shop clause as ". . . definitely unjust and amounts to oppression. Moreover, such a demand is repugnant to democratic principles and the constitutionally guaranteed freedom of individuals to join or not to join an association as well as their right to security of tenure, particularly, on the part of present employees." 55 The Union, on the other hand, counters that the Labor Code, as amended, recognizes the validity of a union shop agreement in Article 248 thereof which reads: "ARTICLE 248. Unfair labor practices of employers.

(e) To discriminate in regard to hire or tenure of employment or any term or condition of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall prevent the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement. . ." (emphasis supplied) We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop provision in addition to the existing maintenance of membership clause in the collective bargaining agreement. As the Solicitor General asserted in his consolidated Comment, the University's reliance on the case of Victoriano vs. Elizalde Rope Workers Union 56 is clearly misplaced. In that case, we ruled that ". . . the right to join a union includes the right to abstain from joining any union. . . The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only members of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. . . ." 57 On the third issue regarding the Unions proposal for the use of the "last-in-first-out" method in case of lay-off, termination due to retrenchment and transfer of employees, the Union relies on social justice and equity to support its proposition, and submits that the Universitys prerogative to select and/or choose the employees it will hire is limited, either by law or agreement, especially where the exercise of this prerogative might result in the loss of employment. 58 The Union further insists that its proposal is ". . . in keeping with the avowed State policy '(q) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare' (Art. 211, Labor Code, as amended)." 59

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On the other hand, the University asserts its management prerogative and counters that "[w]hile it is recognized that this right of employees and workers to 'participate in policy and decision-making processes affecting their rights and benefits as may be provided by law' has been enshrined in the Constitution (Article III, [should be Article XIII], Section 3, par. 2), said participation, however, does not automatically entitle the Union to dictate as to how an employer should choose the employees to be affected by a retrenchment program. The employer still retains the prerogative to determine the reasonable basis for selecting such employees." 60 We agree with the voluntary arbitrator that as an exercise of management prerogative, the University has the right to adopt valid and equitable grounds as basis for terminating or transferring employees. As we ruled in the case of Autobus Workers' Union (AWU) and Ricardo Escanlar vs. National Labor Relations Commission, 61 "[a] valid exercise of management prerogative is one which, among others, covers: work assignment, working methods, time, supervision of workers, transfer of employees, work supervision, and the discipline, dismissal and recall of workers. Except as provided for, or limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment." (emphasis supplied) On the fourth issue involving the voluntary arbitrators ruling that on the basis of the Universitys proposed budget, the University can no longer be required to grant a second round of wage increases for the school years 1991-92 and 199293 and charge the same to the incremental proceeds, we find that the voluntary arbitrator committed grave abuse of discretion amounting to lack or excess of jurisdiction. As we ruled in the case of Caltex Refinery Employees Association (CREA) vs. Jose S. Brillantes, 62 ". . . [w]e believe that the standard proof of a company's financial standing is its financial statements duly audited by independent and credible external auditors." 63 Financial statements audited by independent external auditors constitute the normal method of proof of profit and loss performance of a company. 64 The financial capability of a company cannot be based on its proposed budget because a proposed budget does not reflect the true financial condition of a company, unlike audited financial statements, and more importantly, the use of a proposed budget as proof of a companys financial condition would be susceptible to abuse by scheming employers who might be merely feigning dire financial condition in their business ventures in order to avoid granting salary increases and fringe benefits to their employees. LLphil On the fifth issue involving the Unions proposals on the deloading of the union president, improved leave benefits and indefinite union leave with pay, we agree with the voluntary arbitrators rejection of the said demands, there being no justifiable reason for the granting of the same. On the sixth issue regarding the finding that the multi-sectoral committee in the University is the legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of the employees of the University, the Court finds that the voluntary arbitrator did not gravely abuse his discretion on this matter. From our reading of the assailed decision, it appears that during the parties negotiations for a new collective bargaining agreement, the Union demanded for a 25% and 40% salary increase for the second and third years, respectively, of the collective bargaining agreement. 65 The Universitys counter-proposal was for a 10% increase for the third year. 66 After the meeting of the multi-sectoral committee on budget, which is composed of students, parents, faculty, administration and union, the University granted across-the-board salary increases of 11.3% and 19% for the second and third years, respectively. 67 While the voluntary arbitrator found that the said committee ". . . decided to grant the said increases based on the Universitys viability which were exclusively sourced from the tuition fees. . .," no finding was made as to the basis of the committees decision. Be that as it may, assuming for the sake of argument that the said committee is the group responsible for determining wage increases and fringe benefits, as ruled by the voluntary arbitrator, the committees determination must still be based on duly audited financial statements following our ruling on the fourth issue. On the seventh and last issue involving the ruling that the 70% share in the incremental tuition proceeds is the only source of salary increases and fringe benefits of the employees, the Court deems that any determination of this alleged error is unnecessary and irrelevant, in view of our rulings on the fourth and preceding issues and there being no evidence presented before the voluntary arbitrator that the University held incremental tuition fee proceeds from which any wage increase or fringe benefit may be satisfied. WHEREFORE, premises considered, the petitions in these consolidated cases, G.R. No. 109002 and G.R. No. 110072 are partially GRANTED. The assailed decision dated January 19, 1993 of voluntary arbitrator Buenaventura Magsalin is hereby AFFIRMED with the modification that the issue on salary increases for the second and third years of the collective bargaining agreement be REMANDED to the voluntary arbitrator for definite resolution within one month from the finality of this Decision, on the basis of the externally audited financial statements of the University already submitted by the Union before the voluntary arbitrator and forming part of the records. LLphil SO ORDERED.

KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN), respondents. [G.R. No. L-54334. January 22, 1986.]

Petition for CERTIORARI to annul the decision 1 of the National Labor Relations Commission (NLRC) dated July 20, 1979 which found petitioner Sweden Ice Cream guilty of unfair labor practice for unjustified refusal to bargain, in violation of par. (g) of Article 249 2 of the New Labor Code, 3 and declared the draft proposal of the Union for a collective bargaining agreement as the governing collective bargaining agreement between the employees and the management. cdrep FACTS: In a certification election held on October 3, 1978, the Pambansang Kilusan ng Paggawa (Union for short), a legitimate labor federation, won and was subsequently certified in a resolution dated November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company's motion for reconsideration of the said resolution was denied on January 25, 1978. Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with two copies of its proposed collective bargaining agreement. At the same time, it requested the Company for its counter proposals, Eliciting no response to the aforesaid request, the Union again wrote the Company reiterating its request for collective bargaining

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negotiations and for the Company to furnish them with its counter proposals. Both requests were ignored and remained unacted upon by the Company. Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground of unresolved economic issues in collective bargaining. 5 Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was assigned, set the initial hearing for April 29, 1979. For failure however, of the parties to submit their respective position papers as required, the said hearing was cancelled and reset to another date. Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for a resetting which was granted. The Company was directed anew to submit its financial statements for the years 1976, 1977, and 1978.

The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered his appearance as counsel for the Company only to request for another postponement allegedly for the purpose of acquainting himself with the case. Meanwhile, the Company submitted its position paper on May 28, 1979.

When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative, Mr. Ching, who was supposed to be examined, failed to appear. Atty. Panganiban then requested for another postponement which the labor arbiter denied. He also ruled that the Company has waived its right to present further evidence and, therefore, considered the case submitted for resolution. On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations Commission. On July 20, 1979, the National Labor Relations Commission rendered its decision, the dispositive portion of which reads as follows: LLjur "WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. Further, the draft proposal for a collective bargaining agreement (Exh."E") hereto attached and made an integral part of this decision, sent by the Union (Private respondent) to the respondent (petitioner herein) and which is hereby found to be reasonable under the premises, is hereby declared to be the collective agreement which should govern the relationship between the parties herein. Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor Relations Commission acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in rendering the challenged decision. On August 4, 1980, this Court dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of dismissal was reconsidered and the petition was given due course in a Resolution dated April 1, 1981. Petitioner Company now maintains that its right to procedural due process has been violated when it was precluded from presenting further evidence in support of its stand and when its request for further postponement was denied. Petitioner further contends that the National Labor Relations Commission's finding of unfair labor practice for refusal to bargain is not supported by law and the evidence considering that it was only on May 24. 1979 when the Union furnished them with a copy of the proposed Collective Bargaining Agreement and it was only then that they came to know of the Union's demands; and finally, that the Collective Bargaining Agreement approved and adopted by the National Labor Relations Commission is unreasonable and lacks legal basis. The petition lacks merit. Consequently, its dismissal is in order. Collective bargaining which is defined as negotiations towards a collective agreement, 6 is one of the democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment including proposals for adjusting any grievance or question arising under such an agreement and executing a contract incorporating such agreement, if requested by either party."

While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to initiate contract negotiation. 7 The mechanics of collective bargaining is set in motion only when the following jurisdictional preconditions are present, namely, (1) possession of the status of majority representation of the employees' representative in accordance with any of the means of selection or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to bargain under Article 251, par. (a) of the New Labor Code . . . all of which preconditions are undisputedly present in the instant case. From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union has a valid cause to complain against its (Company's) attitude, the totality of which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by the Labor Code to bargain in good faith. Cdpr

We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of unfair labor practice. It has been indubitably established that (1) respondent Union was a duly certified bargaining agent; (2) it made a definite request to bargain, accompanied with a copy of the proposed Collective Bargaining Agreement, to the Company not only once but twice which were left unanswered and unacted upon; and (3) the Company made no counter proposal whatsoever all of which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's refusal to make counter proposal if considered in relation to the entire bargaining process, may indicate bad faith and this is specially true where the Union's request for a counter proposal is left unanswered. 9 Even during the period of compulsory arbitration before the NLRC, petitioner Company's approach and attitude stalling the negotiation by a series of postponements, nonappearance at the hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its opposition thereto. 10 Herald Delivery Carriers Union (PAFLU) vs. Herald Publications 11 the rule had been laid down that "unfair labor practice is committed when it is shown that the respondent employer, after having been served with a written bargaining proposal by the petitioning Union, did not even bother to submit an answer or reply to the said proposal. This doctrine was reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it was further ruled that "while the law does not

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compel the parties to reach an agreement, it does contemplate that both parties will approach the negotiation with an open mind and make a reasonable effort to reach a common ground of agreement". As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner capitalizes on the issue of due process claiming, that it was denied the right to be heard and present its side when the Labor Arbiter denied the Company's motion for further postponement. Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements granted in its behalf, the claimed denial of due process appeared totally bereft of any legal and factual support. As herein earlier stated, petitioner had not even honored respondent Union with any reply to the latter's successive letters, all geared towards bringing the Company to the bargaining table. It did not even bother to furnish or serve the Union with its counter proposal despite persistent requests made therefor. Certainly, the moves and overall behavior of petitioner-company were in total derogation of the policy enshrined in the New Labor Code which is aimed towards expediting settlement of economic disputes. Hence, this Court is not prepared to affix its imprimatur to such an illegal scheme and dubious maneuvers. Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement which was approved and adopted by the NLRC is a total nullity for it lacks the company's consent, much less its argument that once the Collective Bargaining Agreement is implemented, the Company will face the prospect of closing down because it has to pay a staggering amount of economic benefits to the Union that will equal if not exceed its capital. Such a stand and the evidence in support thereof should have been presented before the Labor Arbiter which is the proper forum for the purpose. We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning negotiations by going through empty gestures. 13 More so, as in the instant case, where the intervention of the National Labor Relations Commission was properly sought for after conciliation efforts undertaken by the BLR failed. The instant case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D. 873, as amended, which authorizes the said body to determine the reasonableness of the terms and conditions of employment embodied in any Collective Bargaining Agreement. To that extent, utmost deference to its findings of reasonableness of any Collective Bargaining Agreement as the governing agreement by the employees and management must be accorded due respect by this Court. petition is DISMISSED. The temporary restraining order issued on August 27, 1980, is LIFTED and SET ASIDE.

EXECUTIVE ORDER NO. 180 June 1, 1987 PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF GOVERNMENT EMPLOYEES, CREATING A PUBLIC SECTOR LABOR-MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES In accordance with the provisions of the 1987 Constitution, I, CORAZON C. AQUINO, President of the Philippines, do hereby order: I. Coverage Sec. 1. This Executive Order applies to all employees of all branches, subdivisions, instrumentalities, and agencies, of the Government, including government-owned or controlled corporations with original charters. For this purpose, employees, covered by this Executive Order shall be referred to as "government employees". Sec. 2. All government employees can form, join or assist employees' organizations of their own choosing for the furtherance and protection of their interests. They can also form, in conjunction with appropriate government authorities, labor-management committees, works councils and other forms of workers' participation schemes to achieve the same objectives. Sec. 3. High-level employees whose functions are normally considered as policy-making or managerial or whose duties are of a highly confidential nature shall not be eligible to join the organization of rank-and-file government employees. Sec. 4. The Executive Order shall not apply to the members of the Armed Forces of the Philippines, including police officers, policemen, firemen and jail guards. II. Protection of the Right to Organize Sec. 5. Government employees shall not be discriminated against in respect of their employment by reason of their membership in employees' organizations or participation in the normal activities of their organization. Their employment shall not be subject to the condition that they shall not join or shall relinquish their membership in the employees' organizations. Sec. 6. Government authorities shall not interfere in the establishment, functioning or administration of government employees' organizations through acts designed to place such organizations under the control of government authority. III. Registration of Employees' Organization Sec. 7. Government employees' organizations shall register with the Civil Service Commission and the Department of Labor and Employment. The application shall be filed with the Bureau of Labor Relations of the Department which shall process the same in accordance with the provisions of the Labor Code of the Philippines, as amended. Applications may also be filed with the Regional Offices of the Department of Labor and Employment which shall immediately transmit the said applications to the Bureau of Labor Relations within three (3) days from receipt thereof. Sec. 8. Upon approval of the application, a registration certificate be issued to the organization recognizing it as a legitimate employees' organization with the right to represent its members and undertake activities to further and defend its interest. The corresponding certificates of registration shall be jointly approved by the Chairman of the Civil Service Commission and Secretary of Labor and Employment. IV. Sole and Exclusive Employees' Representatives Sec. 9. The appropriate organizational unit shall be the employers unit consisting of rank-and-file employees unless circumstances otherwise require. Sec. 10. The duly registered employees' organization having the support of the majority of the employees in the appropriate organizational unit shall be designated as the sole and exclusive representative of the employees. Sec. 11. A duly registered employees' organization shall be accorded voluntary recognition upon a showing that no other employees' organization is registered or is seeking registration, based on records of the Bureau of Labor Relations, and that the said organizations has the majority support of the rank-and-file employees in the organizational unit.

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Sec. 12. Where there are two or more duly registered employees' organizations in the appropriate organizational unit, the Bureau of Labor Relations shall, upon petition, order the conduct of a certification election and shall certify the winner as the exclusive representative of the rank-and-file employees in said organization unit. D. Terms and Conditions of Employment in Government Services Sec. 13. Terms and conditions of employment or improvements thereof, except those that are fixed by law, may be the subject of negotiations between duly recognized employees' organizations and appropriate government authorities. VI. Peaceful Concerted Activities and Strikes Sec. 14. The Civil Service laws and rules governing concerted activities and strikes in the government service shall be observed, subject to any legislation that may be enacted by Congress. VII. Public Sector Labor-Management Council Sec. 15. A Public Sector Labor Management Council, hereinafter referred to as the Council, is hereby constituted to be composed of the following: 1) Chairman, Civil Service Commission Chairman 2) Secretary, Department of Labor and Employment Vice Chairman 3) Secretary, Department of Finance Member 4) Secretary, Department of Justice Member 5) Secretary, Department of Budget and Management Member The Council shall implement and administer the provisions of this Executive Order. For this purpose, the Council shall promulgate the necessary rules and regulations to implement this Executive Order. VIII. Settlement of Disputes Sec. 16. The Civil Service and labor laws and procedures, whenever applicable, shall be followed in the resolution of complaints, grievances and cases involving government employees. In case any dispute remains unresolved after exhausting all the available remedies under existing laws and procedures, the parties may jointly refer the dispute to the Council, for appropriate action. IX. Effectivity Sec. 17. This Executive Order shall take effect immediately. Done in the City of Manila, this 1st day of June, in the year of Our Lord, nineteen hundred and eighty-seven.

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