[G.R. No. 128845.

June 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON.

LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting
Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the
Superintendent of International School-Manila; and INTERNATIONAL SCHOOL,
INC., respondents.

DECISION

KAPUNAN, J.:

Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent
School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than
their colleagues in other schools is, of course, beside the point. The point is that employees
should be given equal pay for work of equal value. That is a principle long honored in this
jurisdiction. That is a principle that rests on fundamental notions of justice. That is the principle
we uphold today.

Private respondent International School, Inc. (the School, for short), pursuant to Presidential
Decree 732, is a domestic educational institution established primarily for dependents of foreign
diplomatic personnel and other temporary residents.[1] To enable the School to continue carrying
out its educational program and improve its standard of instruction, Section 2(c) of the same
decree authorizes the School to employ its own teaching and management personnel selected by
it either locally or abroad, from Philippine or other nationalities, such personnel being exempt
from otherwise applicable laws and regulations attending their employment, except laws that
have been or will be enacted for the protection of employees.

Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four
tests to determine whether a faculty member should be classified as a foreign-hire or a local hire:

a.....What is one's domicile?

b.....Where is one's home economy?

c.....To which country does one owe economic allegiance?

d.....Was the individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines?[2]

Should the answer to any of these queries point to the Philippines, the faculty member is
classified as a local hire; otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also
paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the
difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a)
the "dislocation factor" and (b) limited tenure. The School explains:

A foreign-hire would necessarily have to uproot himself from his home country, leave his family
and friends, and take the risk of deviating from a promising career path-all for the purpose of
pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is
faced with economic realities: decent abode for oneself and/or for one's family, effective means
of transportation, allowance for the education of one's children, adequate insurance against
illness and death, and of course the primary benefit of a basic salary/retirement compensation.

Because of a limited tenure, the foreign hire is confronted again with the same economic reality
after his term: that he will eventually and inevitably return to his home country where he will
have to confront the uncertainty of obtaining suitable employment after a long period in a foreign
land.

The compensation scheme is simply the School's adaptive measure to remain competitive on an
international level in terms of attracting competent professionals in the field of international
education. When negotiations for a new collective bargaining agreement were held on June
1995, petitioner International School Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members"[4] of the School, contested the
difference in salary rates between foreign and local-hires. This issue, as well as the question of
whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a
deadlock between the parties.

On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation
and Mediation Board to bring the parties to a compromise prompted the Department of Labor
and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE
Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing
subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997.
Petitioner now seeks relief in this Court.

Petitioner claims that the point-of-hire classification employed by the School is discriminatory to
Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.

The School disputes these claims and gives a breakdown of its faculty members, numbering 38
in all, with nationalities other than Filipino, who have been hired locally and classified as local
hires.[5]The Acting Secretary of Labor found that these non-Filipino local-hires received the
same benefits as the Filipino local-hires: The compensation package given to local-hires has
been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been
hired locally and who are paid equally as Filipino local hires. The Acting Secretary upheld the
point-of-hire classification for the distinction in salary rates: The principle "equal pay for equal
work" does not find application in the present case. The international character of the School
requires the hiring of foreign personnel to deal with different nationalities and different cultures,
among the student population. We also take cognizance of the existence of a system of salaries
and benefits accorded to foreign hired personnel which system is universally recognized. We
agree that certain amenities have to be provided to these people in order to entice them to render
their services in the Philippines and in the process remain competitive in the international
market.

Furthermore, we took note of the fact that foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other
benefits would also require parity in other terms and conditions of employment which include
the employment contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary
and professional compensation wherein the parties agree as follows:

All members of the bargaining unit shall be compensated only in accordance with Appendix C
hereof provided that the Superintendent of the School has the discretion to recruit and hire
expatriate teachers from abroad, under terms and conditions that are consistent with accepted
international practice.

Appendix C of said CBA further provides:

The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary
schedule. The 25% differential is reflective of the agreed value of system displacement and
contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff
(LRS).

To our mind, these provisions demonstrate the parties' recognition of the difference in the status
of two types of employees, hence, the difference in their salaries.

The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an
established principle of constitutional law that the guarantee of equal protection of the laws is not
violated by legislation or private covenants based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply to all members of the same class.
Verily, there is a substantial distinction between foreign hires and local hires, the former
enjoying only a limited tenure, having no amenities of their own in the Philippines and have to
be given a good compensation package in order to attract them to join the teaching faculty of the
School.[7]

We cannot agree.

That public policy abhors inequality and discrimination is beyond contention. Our Constitution
and laws reflect the policy against these evils. The Constitution[8] in the Article on Social Justice
and Human Rights exhorts Congress to "give highest priority to the enactment of measures that
protect and enhance the right of all people to human dignity, reduce social, economic, and
political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the
exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his
due, and observe honesty and good faith."

International law, which springs from general principles of law,[9] likewise proscribes
discrimination. General principles of law include principles of equity,[10] i.e., the general
principles of fairness and justice, based on the test of what is reasonable.[11] The Universal
Declaration of Human Rights,[12] the International Covenant on Economic, Social, and Cultural
Rights,[13] the International Convention on the Elimination of All Forms of Racial
Discrimination,[14] the Convention against Discrimination in Education,[15] the Convention (No.
111) Concerning Discrimination in Respect of Employment and Occupation[16] - all embody the
general principle against discrimination, the very antithesis of fairness and justice. The
Philippines, through its Constitution, has incorporated this principle as part of its national laws.

In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.

The Constitution[17] specifically provides that labor is entitled to "humane conditions of work."
These conditions are not restricted to the physical workplace - the factory, the office or the field -
but include as well the manner by which employers treat their employees.
The Constitution[18] also directs the State to promote "equality of employment opportunities for
all." Similarly, the Labor Code[19] provides that the State shall "ensure equal work opportunities
regardless of sex, race or creed." It would be an affront to both the spirit and letter of these
provisions if the State, in spite of its primordial obligation to promote and ensure equal
employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of
employment. Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 135, for example, prohibits and penalizes[21] the payment of lesser compensation to a
female employee as against a male employee for work of equal value. Article 248 declares it an
unfair labor practice for an employer to discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7
thereof, provides:

The States Parties to the present Covenant recognize the right of everyone to the enjoyment of
just and favourable conditions of work, which ensure, in particular:

a.....Remuneration which provides all workers, as a minimum, with:

i.....Fair wages and equal remuneration for work of equal value without distinction of any kind,
in particular women being guaranteed conditions of work not inferior to those enjoyed by men,
with equal pay for equal work;

x x x.

The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries.[22] This
rule applies to the School, its "international character" notwithstanding.

The School contends that petitioner has not adduced evidence that local-hires perform work
equal to that of foreign-hires.[23] The Court finds this argument a little cavalier. If an employer
accords employees the same position and rank, the presumption is that these employees perform
equal work. This presumption is borne by logic and human experience. If the employer pays one
employee less than the rest, it is not for that employee to explain why he receives less or why the
others receive more. That would be adding insult to injury. The employer has discriminated
against that employee; it is for the employer to explain why the employee is treated unfairly. The
employer in this case has failed to discharge this burden. There is no evidence here that foreign-
hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar
functions and responsibilities, which they perform under similar working conditions.

The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize
the distinction in salary rates without violating the principle of equal work for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the
"[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National
Labor Relations Commission,[24] we said that:

"salary" means a recompense or consideration made to a person for his pains or industry in
another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the
pay of the Roman soldier, it carries with it the fundamental idea of compensation for services
rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not be used as
an enticement to the prejudice of local-hires. The local-hires perform the same services as
foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the
"dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the
distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel allowances.

The Constitution enjoins the State to "protect the rights of workers and promote their
welfare,"[25] "to afford labor full protection."[26] The State, therefore, has the right and duty to
regulate the relations between labor and capital.[27] These relations are not merely contractual but
are so impressed with public interest that labor contracts, collective bargaining agreements
included, must yield to the common good.[28] Should such contracts contain stipulations that are
contrary to public policy, courts will not hesitate to strike down these stipulations.

In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There
is no reasonable distinction between the services rendered by foreign-hires and local-hires. The
practice of the School of according higher salaries to foreign-hires contravenes public policy and,
certainly, does not deserve the sympathy of this Court.

We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-
hires.

A bargaining unit is "a group of employees of a given employer, comprised of all or less than all
of the entire body of employees, consistent with equity to the employer indicate to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law."[29] The factors in determining the appropriate collective bargaining unit
are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees'
interest, such as substantial similarity of work and duties, or similarity of compensation and
working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history;
and (4) similarity of employment status.[30] The basic test of an asserted bargaining unit's
acceptability is whether or not it is fundamentally the combination which will best assure to all
employees the exercise of their collective bargaining rights.[31]

It does not appear that foreign-hires have indicated their intention to be grouped together with
local-hires for purposes of collective bargaining. The collective bargaining history in the School
also shows that these groups were always treated separately. Foreign-hires have limited tenure;
local-hires enjoy security of tenure. Although foreign-hires perform similar functions under the
same working conditions as the local-hires, foreign-hires are accorded certain benefits not
granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and
home leave travel allowance, are reasonably related to their status as foreign-hires, and justify
the exclusion of the former from the latter. To include foreign-hires in a bargaining unit with
local-hires would not assure either group the exercise of their respective collective bargaining
rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN
PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March
19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of
respondent School of according foreign-hires higher salaries than local-hires.

SO ORDERED.
G.R. No. 77395 November 29, 1988

BELYCA CORPORATION, petitioner,

vs.
DIR. PURA FERRER CALLEJA, LABOR RELATIONS, MANILA, MINISTRY OF
LABOR AND EMPLOYMENT; MED-ARBITER, RODOLFO S. MILADO, MINISTRY
OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 10 AND ASSOCIATED
LABOR UNION (ALU-TUCP), MINDANAO REGIONAL OFFICE, CAGAYAN DE ORO
CITY,respondents.

PARAS, J.:

This is a petition for certiorari and prohibition with preliminary injunction seeking to annul or to
set aside the resolution of the Bureau of Labor Relations dated November 24, 1986 and denying
the appeal, and the Bureau's resolution dated January 13, 1987 denying petitioner's motion for
reconsideration.

The dispositive portion of the questioned resolution dated November 24, 1986 (Rollo, p. 4) reads
as follows:

WHEREFORE, in view of all the foregoing considerations, the Order is affirmed

and the appeal therefrom denied.

Let, therefore, the pertinent records of the case be remanded to the office of origin
for the immediate conduct of the certification election.

The dispositive portion of the resolution dated January 13, 1987 (Rollo, p. 92) reads, as follows:

WHEREFORE, the Motion for Reconsideration filed by respondent Belyca

Corporation (Livestock Agro-Division) is hereby dismissed for lack of merit and
the Bureau's Resolution dated 24 November 1986 is affirmed. Accordingly, let the
records of this case be immediately forwarded to the Office of origin for the
holding of the certification elections.

No further motion shall hereafter be entertained.

The antecedents of the case are as follows:

On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a legitimate labor
organization duly registered with the Ministry of Labor and Employment
underREGISTRATION Certificate No. 783-IP, filed with the Regional Office No. 10, Ministry
of Labor and Employment at Cagayan de Oro City, a petition for direct certification as the sole
and exclusive bargaining agent of all the rank and file employees/workers of Belyca Corporation
(Livestock and Agro-Division), a duly organized, registered and existing corporation engaged in
the business of poultry raising, piggery and planting of agricultural crops such as corn, coffee
and various vegetables, employing approximately 205 rank and file employees/workers, the
collective bargaining unit sought in the petition, or in case of doubt of the union's majority
representation, for the issuance of an order authorizing the immediate holding of a certification
election (Rollo, p. 18). Although the case was scheduled for hearing at least three times, no
amicable settlement was reached by the parties. During the scheduled hearing of July 31, 1986
they, however, agreed to submit simultaneously their respective position papers on or before
August 11, 1986 (rollo. p. 62).

Petitioner ALU-TUCP, private respondent herein, in its petition and position paper alleged,
among others, (1) that there is no existing collective bargaining agreement between the
respondent employer, petitioner herein, and any other existing legitimate labor unions; (2) that
there had neither been a certification election conducted in the proposed bargaining unit within
the last twelve (12) months prior to the filing of the petition nor a contending union requesting
for certification as the. sole and exclusive bargaining representative in the proposed bargaining
unit; (3) that more than a majority of respondent employer's rank-and-file employees/workers in
the proposed bargaining unit or one hundred thirty-eight (138) as of the date of the filing of the
petition, have signed membership with the ALU-TUCP and have expressed their written consent
and authorization to the filing of the petition; (4) that in response to petitioner union's two letters
to the proprietor/ General Manager of respondent employer, dated April 21, 1986 and May 8, 1
986, requesting for direct recognition as the sole and exclusive bargaining agent of the rank-and-
file workers, respondent employer has locked out 119 of its rank-and-file employees in the said
bargaining unit and had dismissed earlier the local union president, vice-president and three other
active members of the local unions for which an unfair labor practice case was filed by petitioner
union against respondent employer last July 2, 1986 before the NLRC in Cagayan de Oro City
(Rollo, pp. 18; 263).<äre||anº•1àw>

Respondent employer, on the other hand, alleged in its position paper, among others, (1) that due
to the nature of its business, very few of its employees are permanent, the overwhelming
majority of which are seasonal and casual and regular employees; (2) that of the total 138 rank-
and-file employees who authorized, signed and supported the filing of the petition (a) 14 were no
longer working as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their
membership from petitioner union (d) 5 were retrenched on June 23, 1986 (e) 12 were dismissed
due to malicious insubordination and destruction of property and (f) 100 simply abandoned their
work or stopped working; (3) that the 128 incumbent employees or workers of the livestock
section were merely transferred from the agricultural section as replacement for those who have
either been dismissed, retrenched or resigned; and (4) that the statutory requirement for holding a
certification election has not been complied with by the union (Rollo, p. 26).

The Labor Arbiter granted the certification election sought for by petitioner union in his order
dated August 18, 1986 (Rollo, p. 62).

On February 4, 1987, respondent employer Belyca Corporation, appealed the order of the Labor
Arbiter to the Bureau of Labor Relations in Manila (Rollo, p. 67) which denied the appeal
(Rollo, p. 80) and the motion for reconsideration (Rollo, p. 92). Thus, the instant petition
received in this Court by mail on February 20, 1987 (Rollo, p. 3).

In the resolution of March 4, 1987, the Second Division of this Court required respondent Union
to comment on the petition and issued a temporary restraining order (,Rollo, p. 95).

Respondent union filed its comment on March 30, 1987 (Rollo, p. 190); public respondents filed
its comment on April 8, 1987 (Rollo, p. 218).

On May 4, 1987, the Court resolved to give due course to the petition and to require the parties
to submit their respective memoranda within twenty (20) days from notice (Rollo, p. 225).

The Office of the Solicitor General manifested on June 11, 1987 that it is adopting the comment
for public respondents as its memorandum (Rollo, p. 226); memorandum for respondent ALU
was filed on June 30, 1987 (Rollo, p. 231); and memorandum for petitioner, on July 30, 1987
(Rollo, p. 435).

The issues raised in this petition are:

I WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN

APPROPRIATE BARGAINING UNIT.

II WHETHER OR NOT THE STATUTORY REQUIREMENT OF 30% (NOW

20%) OF THE EMPLOYEES IN THE PROPOSED BARGAINING UNIT,
ASKING FOR A CERTIFICATION ELECTION HAD BEEN STRICTLY
COMPLIED WITH.
In the instant case, respondent ALU seeks direct certification as the sole and exclusive
bargaining agent of all the rank-and-file workers of the livestock and agro division of petitioner
BELYCA Corporation (Rollo, p. 232), engaged in piggery, poultry raising and the planting of
agricultural crops such as corn, coffee and various vegetables (Rollo, p. 26). But petitioner
contends that the bargaining unit must include all the workers in its integrated business concerns
ranging from piggery, poultry, to supermarts and cinemas so as not to split an otherwise single
bargaining unit into fragmented bargaining units (Rollo, p. 435).<äre||anº•1àw>

The Labor Code does not specifically define what constitutes an appropriate collective
bargaining unit. Article 256 of the Code provides:

Art. 256. Exclusive bargaining representative.—The labor

organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit shall be
exclusive representative of the employees in such unit for the
purpose of collective bargaining. However, an individual employee
or group of employee shall have the right at any time to present
grievances to their employer.

According to Rothenberg, a proper bargaining unit maybe said to be a group of employees of a

given employer, comprised of all or less than all of the entire body of employees, which the
collective interests of all the employees, consistent with equity to the employer, indicate to be
best suited to serve reciprocal rights and duties of the parties under the collective bargaining
provisions of the law (Rothenberg in Labor Relations, p. 482).

This Court has already taken cognizance of the crucial issue of determining the proper
constituency of a collective bargaining unit.

Among the factors considered in Democratic Labor Association v. Cebu Stevedoring Co. Inc.
(103 Phil 1103 [1958]) are: "(1) will of employees (Glove Doctrine); (2) affinity and unity of
employee's interest, such as substantial similarity of work and duties or similarity of
compensation and working conditions; (3) prior collective bargaining history; and (4)
employment status, such as temporary, seasonal and probationary employees".

Under the circumstances of that case, the Court stressed the importance of the fourth factor and
sustained the trial court's conclusion that two separate bargaining units should be formed in
dealing with respondent company, one consisting of regular and permanent employees and
another consisting of casual laborers or stevedores. Otherwise stated, temporary employees
should be treated separately from permanent employees. But more importantly, this Court laid
down the test of proper grouping, which is community and mutuality of interest.

Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al. v. Alhambra
Employees' Association 107 Phil. 28 [1960]) where the employment status was not at issue but
the nature of work of the employees concerned; the Court stressed the importance of the second
factor otherwise known as the substantial-mutual-interest test and found no reason to disturb the
finding of the lower Court that the employees in the administrative, sales and dispensary
departments perform work which has nothing to do with production and maintenance, unlike
those in the raw leaf, cigar, cigarette and packing and engineering and garage departments and
therefore community of interest which justifies the format or existence as a separate appropriate
collective bargaining unit.

Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment status of the
employees concerned was again challenged, the Court reiterating the rulings, both in Democratic
Labor Association v. Cebu Stevedoring Co. Inc. supra and Alhambra Cigar and Cigarette Co. et
al. v. Alhambra Employees' Association (supra) held that among the factors to be considered are:
employment status of the employees to be affected, that is the positions and categories of work to
which they belong, and the unity of employees' interest such as substantial similarity of work and
duties.

In any event, whether importance is focused on the employment status or the mutuality of
interest of the employees concerned "the basic test of an asserted bargaining unit's acceptability
is whether or not it is fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights (Democratic Labor Association v. Cebu Stevedoring
Co. Inc. supra) Hence, still later following the substantial-mutual interest test, the Court ruled
that there is a substantial difference between the work performed by musicians and that of other
persons who participate in the production of a film which suffice to show that they constitute a
proper bargaining unit. (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).

Coming back to the case at bar, it is beyond question that the employees of the livestock and
agro division of petitioner corporation perform work entirely different from those performed by
employees in the supermarts and cinema. Among others, the noted difference are: their working
conditions, hours of work, rates of pay, including the categories of their positions and
employment status. As stated by petitioner corporation in its position paper, due to the nature of
the business in which its livestock-agro division is engaged very few of its employees in the
division are permanent, the overwhelming majority of which are seasonal and casual and not
regular employees (Rollo, p. 26). Definitely, they have very little in common with the employees
of the supermarts and cinemas. To lump all the employees of petitioner in its integrated business
concerns cannot result in an efficacious bargaining unit comprised of constituents enjoying a
community or mutuality of interest. Undeniably, the rank and file employees of the livestock-
agro division fully constitute a bargaining unit that satisfies both requirements of classification
according to employment status and of the substantial similarity of work and duties which will
ultimately assure its members the exercise of their collective bargaining rights.

II

It is undisputed that petitioner BELYCA Corporation (Livestock and Agro Division) employs
more or less two hundred five (205) rank-and-file employees and workers. It has no existing duly
certified collective bargaining agreement with any legitimate labor organization. There has not
been any certification election conducted in the proposed bargaining unit within the last twelve
(12) months prior to the filing of the petition for direct certification and/or certification election
with the Ministry of Labor and Employment, and there is no contending union requesting for
certification as the sole and exclusive bargaining representative in the proposed bargaining unit.

The records show that on the filing of the petition for certification and/or certification election on
June 3, 1986; 124 employees or workers which are more than a majority of the rank-and-file
employees or workers in the proposed bargaining unit had signed membership with respondent
ALU-TUCP and had expressed their written consent and authorization to the filing of the
petition. Thus, the Labor Arbiter ordered the certification election on August 18, 1986 on a
finding that 30% of the statutory requirement under Art. 258 of the Labor Code has been met.

But, petitioner corporation contends that after June 3, 1986 four (4) employees resigned; six (6)
subsequently withdrew their membership; five (5) were retrenched; twelve (12) were dismissed
for illegally and unlawfully barricading the entrance to petitioner's farm; and one hundred (100)
simply abandoned their work.

Petitioner's claim was however belied by the Memorandum of its personnel officer to the 119
employees dated July 28, 1986 showing that the employees were on strike, which was confirmed
by the finding of the Bureau of Labor Relations to the effect that they went on strike on July 24,
1986 (Rollo, p. 419). Earlier the local union president, Warrencio Maputi; the Vice-president,
Gilbert Redoblado and three other active members of the union Carmen Saguing, Roberto
Romolo and Iluminada Bonio were dismissed and a complaint for unfair labor practice, illegal
dismissal etc. was filed by the Union in their behalf on July 2, 1986 before the NLRC of
Cagayan de Oro City (Rollo, p. 415). The complaint was amended on August 20, 1986 for
respondent Union to represent Warrencio Maputi and 137 others against petitioner corporation
and Bello Casanova President and General Manager for unfair labor practice, illegal dismissal,
illegal lockout, etc. (Rollo, p. 416).

Under Art. 257 of the Labor Code once the statutory requirement is met, the Director of Labor
Relations has no choice but to call a certification election (Atlas Free Workers Union AFWU
PSSLU Local v. Noriel, 104 SCRA 565 [1981]; Vismico Industrial Workers Association
(VIWA) v. Noriel, 131 SCRA 569 [1984]) It becomes in the language of the New Labor Code
"Mandatory for the Bureau to conduct a certification election for the purpose of determining the
representative of the employees in the appropriate bargaining unit and certify the winner as the
exclusive bargaining representative of all employees in the unit." (Federacion Obrera de la
Industria Tabaquera y Otros Trabajadores de Filipinas v. Noriel, 72 SCRA 24 [1976]; Kapisanan
Ng Mga Manggagawa v. Noriel, 77 SCRA 414 [1977]); more so when there is no existing
collective bargaining agreement. (Samahang Manggagawa Ng Pacific Mills, Inc. v. Noriel, 134
SCRA 152 [1985]); and there has not been a certification election in the company for the past
three years (PLUM Federation of Industrial and Agrarian Workers v. Noriel, 119 SCRA 299
[1982]) as in the instant case.

It is significant to note that 124 employees out of the 205 employees of the Belyca Corporation
have expressed their written consent to the certification election or more than a majority of the
rank and file employees and workers; much more than the required 30% and over and above the
present requirement of 20% by Executive Order No. 111 issued on December 24, 1980 and
applicable only to unorganized establishments under Art. 257, of the Labor Code, to which the
BELYCA Corporation belong (Ass. Trade Unions (ATU) v. Trajano, G.R. No. 75321, June 20,
1988).) More than that, any doubt cast on the authenticity of signatures to the petition for holding
a certification election cannot be a bar to its being granted (Filipino Metals Corp. v. Ople 107
SCRA 211 [1981]). Even doubts as to the required 30% being met warrant holding of the
certification election (PLUM Federation of Industrial and Agrarian Workers v. Noriel, 119
SCRA 299 [1982]). In fact, once the required percentage requirement has been reached, the
employees' withdrawal from union membership taking place after the filing of the petition for
certification election will not affect said petition. On the contrary, the presumption arises that the
withdrawal was not free but was procured through duress, coercion or for a valuable
consideration (La Suerte Cigar and Cigarette Factory v. Director of the Bureau of Labor
Relations, 123 SCRA 679 [1983]). Hence, the subsequent disaffiliation of the six (6) employees
from the union will not be counted against or deducted from the previous number who had
signed up for certification elections Vismico Industrial Workers Association (VIWA) v. Noriel
131 SCRA 569 [1984]).<äre||anº•1àw> Similarly, until a decision, final in character, has been
issued declaring the strike illegal and the mass dismissal or retrenchment valid, the strikers
cannot be denied participation in the certification election notwithstanding, the vigorous
condemnation of the strike and the fact that the picketing were attended by violence. Under the
foregoing circumstances, it does not necessarily follow that the strikers in question are no longer
entitled to participate in the certification election on the theory that they have automatically lost
their jobs. (Barrera v. CIR, 107 SCRA 596 [1981]). For obvious reasons, the duty of the
employer to bargain collectively is nullified if the purpose of the dismissal of the union members
is to defeat the union in the consent requirement for certification election. (Samahang
Manggagawa Ng Via Mare v. Noriel, 98 SCRA 507 [1980]). As stressed by this Court, the
holding of a certification election is a statutory policy that should not be circumvented. (George
and Peter Lines Inc. v. Associated Labor Unions (ALU), 134 SCRA 82 [1986]).

Finally, as a general rule, a certification election is the sole concern of the workers. The only
exception is where the employer has to file a petition for certification election pursuant to Art.
259 of the Labor Code because the latter was requested to bargain collectively. But thereafter the
role of the employer in the certification process ceases. The employer becomes merely a
bystander (Trade Union of the Phil. and Allied Services (TUPAS) v. Trajano, 120 SCRA 64
[1983]).
There is no showing that the instant case falls under the above mentioned exception. However, it
will be noted that petitioner corporation from the outset has actively participated and consistently
taken the position of adversary in the petition for direct certification as the sole and exclusive
bargaining representative and/or certification election filed by respondent Associated Labor
Unions (ALU)-TUCP to the extent of filing this petition for certiorari in this Court. Considering
that a petition for certification election is not a litigation but a mere investigation of a non-
adversary character to determining the bargaining unit to represent the employees (LVN
Pictures, Inc. v. Philippine Musicians Guild, supra; Bulakena Restaurant & Caterer v. Court of
Industrial Relations, 45 SCRA 88 [1972]; George Peter Lines, Inc. v. Associated Labor Union,
134 SCRA 82 [1986]; Tanduay Distillery Labor Union v. NLRC, 149 SCRA 470 [1987]), and its
only purpose is to give the employees true representation in their collective bargaining with an
employer (Confederation of Citizens Labor Unions CCLU v. Noriel, 116 SCRA 694 [1982]),
there appears to be no reason for the employer's objection to the formation of subject union,
much less for the filing of the petition for a certification election.

PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit (b) resolution of
the Bureau of Labor Relations dated Nov. 24, 1986 is AFFIRMED; and the temporary
restraining order issued by the Court on March 4, 1987 is LIFTED permanently.

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its

President RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D.
CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN MIGUEL
CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and SAN
MIGUEL FOODS, INC. (Formerly, B-Meg Plant), respondents.

DECISION

KAPUNAN, J.:

This is a petition for certiorari assailing the Order of the Secretary of Labor rendered
on February 15, 1993 involving a labor dispute at San Miguel Corporation.

The facts are as follows:

On June 28, 1990, petitioner-union San Miguel Corporation Employees Union - PTGWO entered
into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation
(SMC) to take effect upon the expiration of the previous CBA or on June 30, 1989.

This CBA provided, among others, that:

ARTICLE XIV

DURATION OF AGREEMENT

SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.

SEC. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this
Agreement insofar as the representation aspect is concerned, shall be for five (5) years from July
1, 1989 to June 30, 1994. Hence, the freedom period for purposes of such representation shall be
sixty (60) days prior to June 30, 1994.

SEC. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all
provisions of this Agreement, except insofar as the representation aspect is concerned. If no
agreement is reached in such negotiations, this Agreement shall nevertheless remain in force up
to the time a subsequent agreement is reached by the parties.[1]

In keeping with their vision and long term strategy for business expansion, SMC management
informed its employees in a letter dated August 13, 1991[2]that the company which was
composed of four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks,
(4) Magnolia and Agri-business would undergo a restructuring.[3]

Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and
became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San
Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and
effect.

After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and
Article 253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two
parties submitting their respective proposals and counterproposals. During the negotiations, the
petitioner-union insisted that the bargaining unit of SMC should still include the employees of
the spun-off corporations: Magnolia and SMFI; and that the renegotiated terms of the CBA shall
be effective only for the remaining period of two years or until June 30, 1994.

SMC, on the other hand, contended that the members/employees who had moved to Magnolia
and SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the
CBA should be effective for three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and duration of the CBA,
petitioner-union declared a deadlock on September 29, 1990. On October 2, 1992, a Notice of
Strike was filed against SMC. In order to avert a strike, SMC requested the National Conciliation
and Mediation Board (NCMB) to conduct preventive mediation. No settlement was arrived at
despite several meetings held between the parties. On November 3, 1992, a strike vote was
conducted which resulted in a yes vote in favor of a strike.

On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital
industry. As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute
on November 10, 1992.[4] Several conciliation meetings were held but still no
agreement/settlement was arrived at by both parties.

After the parties submitted their respective position papers, the Secretary of Labor issued the
assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of the
CBA shall be effective for the period of three (3) years from June 30, 1992; and that such CBA
shall cover only the employees of SMC and not of Magnolia and SMFI. Dissatisfied, petitioner-
union now comes to this Court questioning this Order of the Secretary of Labor. Subsequently,
on March 30, 1995,[5] petitioner-union filed a Motion for Issuance of a Temporary Restraining
Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections in the
different companies, maintaining that the employees of Magnolia and SMFI fall within the
bargaining unit of SMC.

On March 29, 1995, the Court issued a resolution granting the temporary restraining order
prayed for.[6]

Meanwhile, an urgent motion for leave to intervene[7]in the case was filed by the Samahan ng
Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-
FFW) through its authorized representiative, Elmer S. Armando, alleging that it is one of the
contending parties adversely effected by the temporary restraining order. The Intervenor cited
the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma,[8] G.R. No. 101766, March 5,
1993, where the Court recognized the separation of the employees of Magnolia from the SMC
bargaining unit. It then prayed for the lifting of the temporary restraining order.

Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the
withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized
the employees right to conclude a new CBA. At the same time, he challenged the legal
personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter
was already officially dismissed from the company on October 4, 1994.

Amidst all these pleadings, the following primordial issues arise:

1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three
years or for only two years; and

2) Whether or not the bargaining unit of SMC includes also the employees of Magnolia and
SMFI.

Petitioner-union contends that the duration for the non-representation provisions of the CBA
should be coterminous with the term of the bargaining agency which in effect shall be for the
remaining two years of the current CBA, citing a previous decision of the Secretary of Labor
on December 14, 1992 in the matter of the labor dispute at Philippine Refining Company.[9]
However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the
renegotiated terms of the CBA at SMC should run for a period of three (3) years.

We agree with the Secretary of Labor. Pertinent to the first issue is Art. 253-A of the Labor Code
as amended which reads:

ART. 253-A. Terms of a Collective Bargaining Agreement. Any Collective Bargaining

Agreement that the parties may enter into shall, insofar as the representation aspect is concerned,
be for a term of five (5) years. No petition questioning the majority status of the incumbent
bargaining agent shall be entertained and no certification election shall be conducted by the
Department of Labor and Employment outside of the sixty-day period immediately before the
date of expiry of such five year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3)
years after its execution. Any agreement on such other provisions of the Collective Bargaining
Agreement entered into within six (6) months from the date of expiry of the term of such other
provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day
immediately following such date. If any such agreement is entered into beyond six months, the
parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the
renegotiation of the collective bargaining agreement, the parties may exercise their rights under
this Code. (underlining supplied.)

Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715
(the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that
the CBA has a term of five (5) years instead of three years, before the amendment of the law as
far as the representation aspect is concerned. All other provisions of the CBA shall be negotiated
not later than three (3) years after its execution. The representation aspect refers to the identity
and majority status of the union that negotiated the CBA as the exclusive bargaining
representative of the appropriate bargaining unit concerned. All other provisions simply refers to
the rest of the CBA, economic as well as non-economic provisions, except representation.[10]
As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the
duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous
with the terms of the other provisions of the CBA. It is a cardinal principle of statutory
construction that the Court must ascertain the legislative intent for the purpose of giving effect to
any statute. The history of the times and state of the things existing when the act was framed or
adopted must be followed and the conditions of the things at the time of the enactment of the law
should be considered to determine the legislative intent.[11] We look into the discussions leading
to the passage of the law:

THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar as the economic provisions are
concerned . . .

THE CHAIRMAN (SEN. HERRERA): Maximum of three years?

THE CHAIRMAN (SEN. VELOSO): Maximum of three years.

THE CHAIRMAN (SEN. HERRERA): Present practice?

THE CHAIRMAN (REP. VELOSO): In other words, after three years puwede nang
magnegotiate in that CBA for the remaining two years.

THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years
but assuming three years which, I think, thats the likelihood. . . .

THE CHAIRMAN (REP. VELOSO): Yes.

THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a
change of agent, at least he has one year to administer and to adjust, to develop rapport with the
management. Yan ang importante.

You know, for us na nagne-negotiate, and hazard talaga sa negotiation, when we negotiate with
somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer ng
Labor; ang mga employer, ito bayaran ko lang ito okay na.

Yan ang nangyayari, but let us give that allowance for one year to let them know.

Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you
encourage union to fight each other. Yan ang problema.[12]

xxxxxxxxx

HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to
provide some doubts later on in the implementation. Sabi kasi rito, insofar as representation issue
is concerned, seven years ang lifetime . . .

HON. CHAIRMAN HERRERA: Five years.

HON. ISIDRO: Five years, all the others three years.

HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later
than three years.

HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA.

HON. CHAIRMAN HERRERA: Yes.

HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan
then, seven years . . .

HON. CHAIRMAN HERRERA: Not later than three years.

HON. ISIDRO: Assuming that they usually follow the period three years nang three years, but
under this law with respect to representation five years, ano? Now, after three years, nagkaroon
ng bagong terms, tapos na iyong term, renewed na iyong terms, ang karapatan noon sa
representation issue mayroon pang two years left.

HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus
three.

HON ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So,
another CBA was formed and this CBA mayroon na naman siyang bagong five years with
respect to representation issue.

HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for
three years.

HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: On the third year you can start negotiating to change the terms
and conditions.

HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .

HON. ISIDRO: Oo.

HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be
questioned, so baka puwedeng magkaroon ng certification election. If the incumbent union loses,
then the new union administers the contract for one year to give him time to know his
counterpart the employer, before he can negotiate for a new term. Iyan ang advantage.

HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and
conditions and then, so you have to renew that in three years you renew for another three years,
mayroon na naman another five years iyong ano . . .

HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.

HON. CHAIRMAN HERRERA: Two years na lang sa representation.

HON. ANIAG: So that if they changed the union, iyong last year. . . .

HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then,
voluntary arbitration na kayo and then mayroon ka nang probisyon retroact on the date of the
expiry date. Pagnatalo and incumbent unyon, mag-aassume and new union, administer the
contract. As far as the term ang condition, for one year, and that will give him time and the
employer to know each other.

HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it
would not want to administer a CBA which has not been negotiated by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening
now in the country is that the term ng contract natin, duon din mage-expire ang
representation. Iyon and nangyari. That is where you have the gulo. Ganoon and nangyari. So,
ang nangyari diyan, pag-mayroon certification election, expire ang contract, ano ang usual issue -
company union. I can you (sic) give you more what the incumbent union is giving. So ang
mangyayari diyan, pag-negotiate mo hardline na agad.

HON. CHAIRMAN VELOSO: Mon, for four years?

HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the
representation aspect why do we have to distinguish between three and five? Whats wrong with
having a uniform expiration period?

HON. CHAIRMAN HERRERA: Five years.

HON. ISIDRO: Puro three years.

HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan,
Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, thats the average, aabot pa
minsan ng one year. Pagkatapos ng negotiation mo, signing kayo. There will be an allowed
period of one year. Third year na, uumpisahan naman ang organizations, papasok na ang ibang
unyon because the reality in Trade Union committee, they organize, we organize. So, actually,
you have only industrial peace for one year, effective industrial peace. That is what we are trying
to change. Otherwise, we will continue to discourage the investors and the union will never grow
because every other year it has to use its money for the certification election. Ang grabe pang
practice diyan, mag-a-advance ang federation for three years union dues para panggastos lang sa
certification election. That is what we are trying to avoid.

HON. JABAR: Although there are unions which really get advances.

HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility here is to create a legal framework to promote
industrial peace and to develop responsible and fair labor movement.

HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . .

xxx

HON. CHAIRMAN VELOSO. (continuing) . . in other words, the longer the period of
effectivity of the CBA, the better for industrial peace.

HON. CHAIRMAN HERRERA: representation status.

HON. CHAIRMAN VELOSO: Only on

HON. CHAIRMAN HERRERA: the representations.

HON. CHAIRMAN VELOSO: But on the economic issues.

HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that.

HON. CHAIRMAN VELOSO: At least on second year.

HON. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga, mag-negotiate
when the company is (interrupted)[13]
xxx

From the aforesaid discussions, the legislators were more inclined to have the period of
effectivity for three (3) years insofar as the economic as well as non-economic provisions are
concerned, except representation.

Obviously, the framers of the law wanted to maintain industrial peace and stability by having
both management and labor work harmoniously together without any disturbance. Thus, no
outside union can enter the establishment within five (5) years and challenge the status of the
incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of
employment (economic and non-economic) can not be questioned by the employers or
employees during the period of effectivity of the CBA. The CBA is a contract between the
parties and the parties must respect the terms and conditions of the agreement.[14] Notably, the
framers of the law did not give a fixed term as to the effectivity of the terms and conditions of
employment. It can be gleaned from their discussions that it was left to the parties to fix the
period.

In the instant case, it is not difficult to determine the period of effectivity for the non-
representation provisions of the CBA. Taking it from the history of their CBAs, SMC intended to
have the terms of the CBA effective for three (3) years reckoned from the expiration of the old or
previous CBA which was on June 30, 1989, as it provides:

SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992. The argument that the PRC case is applicable is indeed misplaced. We quote with favor
the Order of the Secretary of Labor in the light of SMCs peculiar situation as compared with
PRCs company situation.

It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic), Labor Dispute at
Philippine Refining Company), we ruled that the term of the renegotiated provisions of the CBA
should coincide with the remaining term of the agency. In doing so, we placed premium on the
fact that PRC has only two (2) unions and no other union had yet executed a renewed term of 3
years. Nonetheless, in ruling for a shortened term, we were guided by our considered perception
that the said term would improve, rather than ruin, the general welfare of both the workers and
the company. It is equally true that once the economic provisions of the CBA expire, the residual
representative status of the union is effective for only 2 more years. However, if circumstances
warrant that the contract duration which it is soliciting from the company for the benefit of the
workers, shall be a little bit longer than its lifespan, then this Office cannot stand in the way of a
more ideal situation. We must not lose sight of the fact that the primordial purpose of a collective
contract is to promote industrial harmony and stability in the terms and conditions of
employment. To our mind, this objective cannot be achieved without giving due consideration to
the peculiarities and unique characteristics of the employer. In the case at bar, there is no dispute
that the mother corporation (SMC) spun-off two of its divisions and thereby gave birth to two (2)
other entities now known as Magnolia Corporation and San Miguel Foods, Inc. In order to effect
a smooth transition, the companies concerned continued to recognize the existing unions as the
bargaining agents of their respective bargaining units. In the meantime, the other unions in these
companies eventually concluded their CBA negotiations on the remaining term and all of them
agreed on a 3-year cycle. Notably, the following CBAs were forged incorporating a term of 3-
years on the renegotiated provisions, to wit:

1. SMC - daily-paid employees union (IBM)

2. SMF - monthly-paid employees and daily-paid employees at the Cabuyao Plant.

There is a direct link between the voluntary recognition by the company of the continuing
representative status of the unions after the aforementioned spin-offs and the stand of the
company for a 3-year renegotiated cycle when the economic provisions of the existing CBAs
expired, i.e., to maintain stability and avoid confusion when the umbilical cord of the two
divisions were severed from their parent. These two cannot be considered independently of each
other for they were intended to reinforce one another. Precisely, the company conceded to face
the same union notwithstanding the spin-offs in order to preserve industrial peace during the
infancy of the two corporations. If the union would insist on a shorter renegotiated term, then all
the advantages gained by both parties in this regard, would have gone to naught. With this in
mind, this office feels that it will betray its mandate should we order the parties to execute a 2-
year renegotiated term for then chaos and confusion, rather than tranquility, would be the order
of the day. Worse, there is a strong likelihood that such a ruling might spawn discontent and
possible mass actions against the company coming from the other unions who had already agreed
to a 3-year renegotiated terms. If this happens, the purpose of this Offices intervention into the
parties controversy would have been defeated.[15]

The issue as to the term of the non-representation provisions of the CBA need not belabored
especially when we take note of the Memorandum of the Secretary of Labor dated February 24,
1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on
January 16, 1995 in the certification election case involving the SMC employees. [16] In said
memorandum, the Secretary of Labor had occasion to clarify the term of the renegotiated terms
of the CBA vis-a-vis the term of the bargaining agent, to wit:

As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a
term which would coincidde (sic) with the aforesaid five (5) year term of the bargaining
representative.

In the event however, that the parties, by mutual agreement, enter into a renegotiated contract
with a term of three (3) years or one which does not coincide with the said 5-year term, and said
agreement is ratified by majority of the members in the bargaining unit, the subject contract is
valid and legal and therefore, binds the contracting parties. The same will however not adversely
affect the right of another union to challenge the majority status of the incumbent bargaining
agent within sixty (60) days before the lapse of the original five (5) year term of the CBA.

Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling
that the effectivity of the renegotiated terms of the CBA shall be for three (3) years.

With respect to the second issue, there is, likewise, no merit in petitioner-unions assertion that
the employees of Magnolia and SMFI should still be considered part of the bargaining unit of
SMC.

Magnolia and SMFI were spun-off to operate as distinct companies on October 1,

1991. Management saw the need for these transformations in keeping with its vision and long
term strategy as it explained in its letter addressed to the employees dated August 13, 1991:

x x x As early as 1986, we announced the decentralization program and spoke of the need for
structures that can react fast to competition, a changing environment, shorter product life cycles
and shifts in consumer preference. We further stated in the 1987 Annual Report to Stockholders
that San Miguels businesses will be more autonomous and self sufficient so as to better acquire
and master new technologies, cope with a labor force with different expertises and expectations,
and master and satisfy the changing needs of our customers and end-consumers. As subsidiaries,
Magnolia and FLD will gain better industry focus and flexibility, greater awareness of operating
results, and speedier, more responsive decision making.

xxx

We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this
company was organized about ten years ago, to see the benefits that arise from restructuring a
division of San Miguel into a more competitive organization. As a stand-alone enterprise, CCBPI
engineered a dramatic turnaround and has sustained its sales and market share leadership ever
since.

We are confident that history will repeat itself, and the transformation of Magnolia and FLD will
be successful as that of CCBPI.[17]

Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or
morals. Neither can we impute any bad faith on the part of SMC so as to justify the application
of the doctrine of piercing the corporate veil.[18] Ever mindful of the employees interests,
management has assured the concerned employees that they will be absorbed by the new
corporations without loss of tenure and retaining their present pay and benefits according to the
existing CBAs.[19] They were advised that upon the expiration of the CBAs, new agreements will
be negotiated between the management of the new corporations and the bargaining
representatives of the employees concerned. As a result of the spin-offs:

1. Each of the companies are run by, supervised and controlled by different management teams
including separate human resource/personnel managers.

2. Each Company enforces its own administrative and operational rules and policies and are not
dependent on each other in their operations.

3. Each entity maintains separate financial statements and are audited separately from each
other.[20]

Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical
personalities. Thus, they can not belong to a single bargaining unit as held in the case
of Diatagon Labor Federation Local 110 of the ULGWP v. Ople.[21] We elucidate:

The fact that their businesses are related and that the 236 employees of Georgia Pacific
International Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a
justification for disregarding their separate personalities. Hence, the 236 employees, who are
now attached to Georgia Pacific International Corporation, should not be allowed to vote in the
certification election at the Lianga Bay Logging Co., Inc. They should vote at a separate
certification election to determine the collective bargaining representative of the employees of
Georgia Pacific International Corporation.

Petitioner-unions attempt to include the employees of Magnolia and SMFI in the SMC
bargaining unit so as to have a bigger mass base of employees has, therefore, no more valid
ground.

Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or

commonality of interests. The employees sought to be represented by the collective bargaining
agent must have substantial mutual interests in terms of employment and working conditions as
evinced by the type of work they performed.[22] Considering the spin-offs, the companies would
consequently have their respective and distinctive concerns in terms of the nature of work,
wages, hours of work and other conditions of employment. Interests of employees in the
different companies perforce differ. SMC is engaged in the business of beer
manufacturing. Magnolia is involved in the manufacturing and processing of dairy
products[23] while SMFI is involved in the production of feeds and the processing of
chicken.[24] The nature of their products and scales of business may require different skills which
must necessarily be commensurated by different compensation packages. The different
companies may have different volumes of work and different working conditions. For such
reason, the employees of the different companies see the need to group themselves together and
organize themselves into distinctive and different groups. It would then be best to have separate
bargaining units for the different companies where the employees can bargain separately
according to their needs and according to their own working conditions.

We reiterate what we have explained in the case of University of the Philippines v. Ferrer-
Calleja[25] that:

[T]here are various factors which must be satisfied and considered in determining the proper
constituency of a bargaining unit. No one particular factor is itself decisive of the
determination. The weight accorded to any particular factor varies in accordance with the
particular question or questions that may arise in a given case. What are these
factors? Rothenberg mentions a good number, but the most pertinent to our case are: (1) will of
the employees (Globe Doctrine); (2) affinity and unit of employees interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions; (3) prior
collective bargaining history; and (4) employment status, such as temporary, seasonal and
probationary employees x x.

xxx

An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in

the 10th Annual Report of the National Labor Relations Board wherein it is emphasized that the
factors which said board may consider and weigh in fixing appropriate units are: the history,
extent and type of organization of employees; the history of their collective bargaining; the
history, extent and type of organization of employees in other plants of the same employer, or
other employers in the same industry; the skill wages, work, and working conditions of the
employees; the desires of the employees; the eligibility of the employees for membership in the
union or unions involved; and the relationship between the unit or units proposed and the
employers organization, management, and operation x x.

x x In said report, it is likewise emphasized that the basic test in determining the appropriate
bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and other subjects of collective
bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162) x x.

Finally, we take note of the fact that the separate interests of the employees of Magnolia and
SMFI from those of SMC has been recognized in the case of Daniel Borbon v. Laguesma.[26] We
quote:

Even assuming in gratia argumenti that at the time of the election they were regular employees
of San Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation
in any manner because Magnolia has ceased to be a division of San Miguel Corporation and has
been formed into a separate corporation with a personality of its own (p. 305, Rollo). This
development, which was brought to our attention by private respondents, necessarily renders
moot and academic any further discourse on the propriety of the elections which petitioners
impugn via the present recourse (p. 319, Rollo).

In view of all the foregoing, we do not find any grave abuse of discretion on the part of the
Secretary of Labor in rendering the assailed Order.

WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining
Order issued on March 29, 1995 is lifted.

G.R. No. 100485 September 21, 1994

SAN MIGUEL CORPORATION, petitioner,

vs.
THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH LUZON MAGNOLIA
SALES LABOR UNION-INDEPENDENT, respondents.

PUNO, J.:

Petitioner San Miguel Corporation (SMC) prays that the Resolution dated March 19, 1991 and
the Order dated April 12, 1991 of public respondent Undersecretary Bienvenido E. Laguesma
declaring respondent union as the sole and exclusive bargaining agent of all the Magnolia sales
personnel in northern Luzon be set aside for having been issued in excess of jurisdiction and/or
with grave abuse of discretion.

On June 4, 1990, the North Luzon Magnolia Sales Labor Union (respondent union for brevity)
filed with the Department of Labor a petition for certification election among all the regular sales
personnel of Magnolia Dairy Products in the North Luzon Sales Area. 1

Petitioner opposed the petition and questioned the appropriateness of the bargaining unit sought
to be represented by respondent union. It claimed that its bargaining history in its sales offices,
plants and warehouses is to have a separate bargaining unit for each sales office.

The petition was heard on November 9, 1990 with petitioner

being represented by Atty. Alvin C. Batalla of the Siguion Reyna law office. Atty. Batalla
withdrew petitioner's opposition to a certification election and agreed to consider all the sales
offices in northern Luzon as one bargaining unit. At the pre-election conference, the parties
agreed inter alia, on the date, time and place of the consent election. Respondent union won the
election held on November 24, 1990. In an Order dated December 3, 1990, 2 Mediator-Arbiter
Benalfre J. Galang certified respondent union as the sole and exclusive bargaining agent for all
the regular sales personnel in all the sales offices of Magnolia Dairy Products in the North Luzon
Sales Area.

Petitioner appealed to the Secretary of Labor. It claimed that

Atty. Batalla was only authorized to agree to the holding of certification elections subject to the
following conditions: (1) there would only be one general election; (2) in this general election,
the individual sales offices shall still comprise separate bargaining units. 3

In a Resolution dated March 19, 1991, 4 public respondent, by authority of the Secretary of
Labor, denied SMC's appeal and affirmed the Order of the Med- Arbiter.

Hence this petition for certiorari.

Petitioner claims that:

THE HONORABLE UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF
DISCRETION WHEN HE IGNORED AND TOTALLY DISREGARDED PETITIONER'S
VALID AND JUSTIFIABLE GROUNDS WHY THE ERROR MADE IN GOOD FAITH BY
PETITIONER'S COUNSEL BE CORRECTED, AND INSTEAD RULED:

THAT PRIVATE RESPONDENT IS "THE SOLE AND EXCLUSIVE BARGAINING AGENT

FOR ALL THE REGULAR SALES OFFICES OF MAGNOLIA DAIRY PRODUCTS, NORTH
LUZON SALES AREA", COMPLETELY IGNORING THE ESTABLISHED BARGAINING
HISTORY OF PETITIONER SMC.

THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE "AGREEMENT"

ENTERED INTO AT THE HEARING ON 9 NOVEMBER 1990, IN CONTRAVENTION OF
THE ESTABLISHED FACTS OF THE CASE AND THE APPLICABLE LAW ON THE
MATTER.

We find no merit in the petition.

The issues for resolution are: (1) whether or not respondent union represents an appropriate
bargaining unit, and (2) whether or not petitioner is bound by its lawyer's act of agreeing to
consider the sales personnel in the north Luzon sales area as one bargaining unit.Petitioner
claims that in issuing the impugned Orders, public respondent disregarded its collective
bargaining history which is to have a separate bargaining unit for each sales office. It insists that
its prior collective bargaining history is the most persuasive criterion in determining the
appropriateness of the collective bargaining unit.

There is no merit in the contention.

A bargaining unit is a "group of employees of a given employer, comprised of all or less than all
of the entire body of employees, consistent with equity to the employer, indicate to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law." 5

The fundamental factors in determining the appropriate collective bargaining unit are: (1) the
will of the employees (Globe Doctrine); 6 (2) affinity and unity of the employees' interest, such
as substantial similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status. 7

Contrary to petitioner's assertion, this Court has categorically ruled that the existence of a prior
collective bargaining history is neither decisive nor conclusive in the determination of what
constitutes an appropriate bargaining unit. Indeed, the test of grouping is mutuality or
commonality of interests. The employees sought to be represented by the collective bargaining
agent must have substantial mutual interests in terms of employment and working conditions as
evinced by the type of work they perform.

In the case at bench, respondent union sought to represent the sales personnel in the various
Magnolia sales offices in northern Luzon. There is similarity of employment status for only the
regular sales personnel in the north Luzon area are covered. They have the same duties and
responsibilities and substantially similar compensation and working conditions. The
commonality of interest among he sales personnel in the north Luzon sales area cannot be
gainsaid. In fact, in the certification election held on November 24, 1990, the employees
concerned accepted respondent union as their exclusive bargaining agent. Clearly, they have
expressed their desire to be one.

Petitioner cannot insist that each of the sales office of Magnolia should constitute only one
bargaining unit. What greatly militates against this position is the meager number of sales
personnel in each of the Magnolia sales office in northern Luzon. Even the bargaining unit
sought to be represented by respondent union in the entire north Luzon sales area consists only of
approximately
fifty-five (55) employees. 9 Surely, it would not be for the best interest of these employees if they
would further be fractionalized. The adage "there is strength in number" is the very rationale
underlying the formation of a labor union.

Anent the second issue, petitioner claims that Atty. Batalla was merely a substitute lawyer for
Atty. Christine Ona, who got stranded in Legaspi City. Atty. Batalla was allegedly unfamiliar
with the collective bargaining history of its establishment. Petitioner claims it should not be
bound by the mistake committed by its substitute lawyer. We are not persuaded. As discussed
earlier, the collective bargaining history of a company is not decisive of what should comprise
the collective bargaining unit. Insofar as the alleged "mistake" of the substitute lawyer is
concerned, we find that this mistake was the direct result of the negligence of petitioner's
lawyers. It will be noted that Atty. Ona was under the supervision of two (2) other lawyers,
Attys. Jacinto de la Rosa, Jr. and George C. Nograles. There is nothing in the records to show
that these two (2) counsels were likewise unavailable at that time. Instead of deferring the
hearing, petitioner's counsels chose to proceed therewith. Indeed, prudence dictates that, in such
case, the lawyers allegedly actively involved in SMC's labor case should have adequately and
sufficiently briefed the substitute lawyer with respect to the matters involved in the case and the
specific limits of his authority. Unfortunately, this was not done in this case. The negligence of
its lawyers binds petitioner. As held by this Court in the case of Villa Rhecar Bus v. De la
Cruz: 10

. . . As a general rule, a client is bound by the mistakes of his counsel. Only when the application
of the general rule would result in serious injustice should an exception thereto be called for.

In the case at bench, petitioner insists that each of the sales offices in northern Luzon should be
considered as a separate bargaining unit for negotiations would be more expeditious. Petitioner
obviously chooses to follow the path of least resistance. It is not, however, the convenience of
the employer that constitutes the determinative factor in forming an appropriate bargaining unit.
Equally, if not more important, is the interest of the employees. In choosing and crafting an
appropriate bargaining unit, extreme care should be taken to prevent an employer from having
any undue advantage over the employees' bargaining representative. Our workers are weak
enough and it is not our social policy to further debilitate their bargaining representative.

In sum, we find that no arbitrariness or grave abuse of discretion can be attributed to public
respondents certification of respondent union as the sole and exclusive bargaining agent of all the
regular Magnolia sales personnel of the north Luzon sales area.

WHEREFORE, premises considered, the challenged Resolution and Order of public respondent
are hereby AFFIRMED in toto, there being no showing of grave abuse of discretion or lack of
jurisdiction
[G.R. No. 110399. August 15, 1997]

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND

ERNESTO L. PONCE, President, petitioners, vs. HONARABLE BIENVENIDO E.
LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-
ARBITER AND SAN MIGUEL CORPORATION, respondents.

DECISION

ROMERO, J.:

This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to
reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor
and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-
91[1] entitled In Re: Petition for Certification Election Among the Supervisory and Exempt
Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando
and Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner. The Order
excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees
from the proposed bargaining unit and ruled out their participation in the certification election.

The antecedent facts are undisputed:

On October 5, 1990, petitioner union filed before the Department of Labor and Employment
(DOLE) a Petition for District Certification or Certification Election among the supervisors and
exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and
Otis. On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the
conduct of certification among the supervisors and exempt employees of the SMC Magnolia
Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit.

On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with
Memorandum on Appeal, pointing out, among others, the Med-Arbiters error in grouping
together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit,
and in including supervisory levels 3 and above whose positions are confidential in nature.

On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent
companys 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-unions motion dated August 7, 1991, Undersecretary Laguesma granted the
reconsideration prayed for on September 3, 1991 and directed the conduct of separate
certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and
the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis.

On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for
Reconsideration with Motion to suspend proceedings. On March 11, 1993, an Order was issued
by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial
Development, Inc. v. NLRC[2] case. Said Order reads in part:

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

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

Hence this petition.

For resolution in this case are the following issues:

1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are
considered confidential employees, hence ineligible from joining a union.

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

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

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

Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons
who formulate, determine, and effectuate management policies in the field of labor
relations.[5] The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee that is, the confidential relationship must exist between the
employees and his supervisor, and the supervisor must handle the prescribed responsibilities
relating to labor relations.[6]

The exclusion from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal objective sought
to be accomplished by the confidential employee rule. The broad rationale behind this rule is
that employees should not be placed in a position involving a potential conflict of
interests.[7] Management should not be required to handle labor relations matters through
employees who are represented by the union with the company is required to deal and who in the
normal performance of their duties may obtain advance information of the companys 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
beAFFILIATED with a Union, the latter might not be assured of their loyalty to the Union in
view of evident conflict of interest. The Union can also become company-dominated with the
presence of managerial employees in Union membership. The same rationale was applied to
confidential employees in Golden Farms, Inc. v. Ferrer-Calleja[10] and in the more recent case of
Philips Industrial Development, Inc. v. NLRC[11] which held that confidential employees, by the
very nature of their functions, assist and act in a confidential capacity to, or have access to
confidential matters of, persons who exercise managerial functions in the field of labor
relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist
or join a labor union was held equally applicable to them.[12]

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

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

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

Herein listed are the functions of supervisors 3 and higher:

1. To undertake decisions to discontinue/temporarily stop shift operations when situations

require.

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

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

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

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

It is evident that whatever confidential data the questioned employees may handle will have to
relate to their functions. From the foregoing functions, it can be gleaned that the confidential
information said employees have access to concern the employers 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 employers internal business operations and
which is not related to the field of labor relations.

It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the
State to guarantee to all workers the right to self-organization. Hence, confidential employees
who may be excluded from bargaining unit must be strictly defined so as not to needlessly
deprive many employees of their right bargain collectively through representatives of their
choosing.[22]

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

In this connection, the issue of whether the employees of San Miguel Corporation Magnolia
Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit
needs to be threshed out. It is the contention of the petitioner union that the creation of three (3)
separate bargaining units, one each for Cabuyao Otis and San Fernando as ruled by the
respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that
Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a
community of interests.

This Court finds the contention of the petitioner meritorious.

An appropriate bargaining unit may be defined as a group of employees of a given employer,

comprised of all or less than all of the entire body of employees, which the collective interest of
all the employees, consistent with equity to the employer, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions of the
law.[24]

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

It is readily seen that the employees in the instant case have community or mutuality of interest,
which is the standard in determining the proper constituency of a collective bargaining unit.[26] It
is undisputed that they all belong to the Magnolia Poultry Division of San Miguel
Corporation. This means that, although they belong to three different plants, they perform work
of the same nature, receive the same wages and compensation, and most importantly, share a
common stake in concerted activities.

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

The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna,
in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical
location can be completely disregarded if the communal or mutual interests of the employees are
not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file
employees of the University of the Philippines inDiliman, Quezon City, Padre Faura, Manila,
Los 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.

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

SO ORDERED.

G.R. No. 96189 July 14, 1992

UNIVERSITY OF THE PHILIPPINES, petitioner,

vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations,
Department of Labor and Employment, and THE ALL U.P. WORKERS' UNION,
represented by its President, Rosario del Rosario,respondent.

NARVASA, C.J.:

In this special civil action of certiorari the University of the Philippines seeks the nullification of
the Order dated October 30, 1990 of Director Pura Ferrer-Calleja of the Bureau of Labor
Relations holding that "professors, associate professors and assistant professors (of the
University of the Philippines) are . . rank-and-file employees . . ;" consequently, they should,
together with the so-called non-academic, non-teaching, and all other employees of the
University, be represented by only one labor organization. 1 The University is joined in this
undertaking by the Solicitor General who "has taken a position not contrary to that of petitioner
and, in fact, has manifested . . that he is not opposing the petition . . ." 2

The case 3 was initiated in the Bureau of Labor Relations by a petition filed on March 2, 1990 by
a REGISTERED labor union, the "Organization of Non-Academic Personnel of UP"
(ONAPUP). 4 Claiming to have a membership of 3,236 members — comprising more than 33%
of the 9,617 persons constituting the non-academic personnel of UP-Diliman, Los Baños,
Manila, and Visayas, it sought the holding of a certification election among all said non-
academic employees of the University of the Philippines. At a conference thereafter held on
March 22, 1990 in the Bureau, the University stated that it had no objection to the election.

On April 18, 1990, another registered labor union, the "All UP Workers' Union," 5 filed a
comment, as intervenor in the certification election proceeding. Alleging that its membership
covers both academic and non-academic personnel, and that it aims to unite all UP rank-and-file
employees in one union, it declared its assent to the holding of the election provided the
appropriate organizational unit was first clearly defined. It observed in this connection that the
Research, Extension and Professional Staff (REPS), who are academic non-teaching personnel,
should not be deemed part of the organizational unit.

For its part, the University, through its General Counsel, 6 made of record its view that there
should be two (2) unions: one for academic, the other for non-academic or administrative,
personnel considering the dichotomy of interests, conditions and rules governing these employee
groups.Director Calleja ruled on the matter on August 7, 1990. 7 She declared that "the
appropriate organizational unit . . should embrace all the regular rank-and-file employees,
teaching and non-teaching, of the University of the Philippines, including all its branches" and
that there was no sufficient evidence "to justify the grouping of the non-academic or
administrative personnel into an organization unit apart and distinct from that of the academic or
teaching personnel." Director Calleja adverted to Section 9 of Executive Order No. 180, viz.:

Sec. 9. The appropriate organizational unit shall be the employer unit consisting of rank-and-file
employees, unless circumstances otherwise require.

and Section 1, Rule IV of the Rules Implementing said EO 180 (as amended by SEC. 2,
Resolution of Public Sector Labor Management Council dated May 14, 1989, viz.:

xxx xxx xxx

For purposes ofREGISTRATION , an appropriate organizational unit may refer to:

xxx xxx xxx

d. State universities or colleges, government-owned or controlled corporations with original

charters.

She went on to say that the general intent of EO 180 was "not to fragmentize the employer unit,
as "can be gleaned from the definition of the term "accredited employees' organization," which
refers to:

. . aREGISTERED organization of the rank-and-file employees as defined in these rules

recognized to negotiate for the employees in an organizational unit headed by an officer with
sufficient authority to bind the agency, such as . . . . . . state colleges and universities.

The Director thus commanded that a certification election be "conducted among rank-and-file
employees, teaching and non-teaching" in all four autonomous campuses of the UP, and that
management appear and bring copies of the corresponding payrolls for January, June, and July,
1990 at the "usual pre-election conference . . ."

At the pre-election conference held on March 22, 1990 at the Labor Organizational Division of
the DOLE, 8 the University sought further clarification of the coverage of the term, "rank-and-
file" personnel, asserting that not every employee could properly be embraced within both
teaching and non-teaching categories since there are those whose positions are in truth
managerial and policy-determining, and hence, excluded by law. At a subsequent hearing (on
October 4, 1990), the University filed a Manifestation seeking the exclusion from the
organizational unit of those employees holding supervisory positions among non-academic
personnel, and those in teaching staff with the rank of Assistant Professor or higher, submitting
the following as grounds therefor:
1) Certain "high-level employees" with policy-making, managerial, or confidential functions, are
ineligible to join rank-and-file employee organizations under Section 3, EO 180:

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;

2) In the University hierarchy, not all teaching and non-teaching personnel belong the rank-and
file: just as there are those occupying managerial positions within the non-teaching roster, there
is also a dichotomy between various levels of the teaching or academic staff;

3) Among the non-teaching employees composed of Administrative Staff and Research

personnel, only those holding positions below Grade 18 should be regarded as rank-and-file,
considering that those holding higher grade positions, like Chiefs of Sections, perform
supervisory functions including that of effectively recommending termination of appointments or
initiating appointments and promotions; and

4) Not all teaching personnel may be deemed included in the term, "rank-and-file;" only those
holding appointments at the instructor level may be so considered, because those holding
appointments from Assistant Professor to Associate Professor to full Professor take part, as
members of the University Council, a policy-making body, in the initiation of policies and rules
with respect to faculty tenure and promotion. 9

The ONAPUP quite categorically made of record its position; that it was not opposing the
University's proferred classification of rank-and file employees. On the other hand, the "All UP
Workers' Union" opposed the University's view, in a Position Paper presented by it under date of
October 18, 1990. Director Calleja subsequently promulgated an Order dated October 30, 1990,
resolving the "sole issue" of "whether or not professors, associate professors and assistant
professors are included in the definition of high-level employee(s)" in light of Rule I, Section (1)
of the Implementing Guidelines of Executive Order No. 180, defining "high level employee" as
follows:

1. High Level Employee — is one whose functions are normally considered policy determining,
managerial or one whose duties are highly confidential in nature. A managerial function refers to
the exercise of powers such as:

1. To effectively recommend such managerial actions;

2. To formulate or execute management policies and decisions; or

3. To hire, transfer, suspend, lay-off, recall, dismiss, assign or discipline employees.

The Director adjudged that said teachers are rank-and-file employees "qualified to join unions
and vote in certification elections." According to her —

A careful perusal of the University Code . . shows that the policy-making powers of the Council
are limited to academic matters, namely, prescribing courses of study and rules of discipline,
fixing student admission and graduation requirements, recommending to the Board of Regents
the conferment of degrees, and disciplinary power over students. The policy-determining
functions contemplated in the definition of a high-level employee pertain to managerial,
executive, or organization policies, such as hiring, firing, and disciplining of employees, salaries,
teaching/working hours, other monetary and non-monetary benefits, and other terms and
conditions of employment. They are the usual issues in collective bargaining negotiations so that
whoever wields these powers would be placed in a situation of conflicting interests if he were
allowed to join the union of rank-and-file employees.

The University seasonably moved for reconsideration, seeking to make the following points, to
wit:

1) UP professors do "wield the most potent managerial powers: the power to rule on tenure, on
the creation of new programs and new jobs, and conversely, the abolition of old programs and
the attendant re-assignment of employees.

2) To say that the Council is "limited to (acting on) academic matters" is error, since academic
decisions "are the most important decisions made in a University . . (being, as it were) the heart,
the core of the University as a workplace.

3) Considering that the law regards as a "high level" employee, one who performs either policy-
determining, managerial, or confidential functions, the Director erred in applying only the
"managerial functions" test, ignoring the "policy-determining functions" test.

4) The Director's interpretation of the law would lead to absurd results, e.g.: "an administrative
officer of the College of Law is a high level employee, while a full Professor who has published
several treatises and who has distinguished himself in argument before the Supreme Court is a
mere rank-and-file employee. A dormitory manager is classified as a high level employee, while
a full Professor or Political Science with a Ph. D. and several Honorary doctorates is classified as
rank-and-file." 10

The motion for reconsideration was denied by Director Calleja, by Order dated November 20,
1990.

The University would now have this Court declare void the Director's Order of October 30, 1990
as well as that of November 20, 1990. 11 A temporary restraining order was issued by the Court,
by Resolution dated December 5, 1990 conformably to the University's application therefor.

Two issues arise from these undisputed facts. One is whether or not professors, associate
professors and assistant professors are "high-level employees" "whose functions are normally
considered policy determining, managerial or . . highly confidential in nature." The other is
whether or not, they, and other employees performing academic functions, 12 should comprise a
collective bargaining unit distinct and different from that consisting of the non-academic
employees of the University, 13 considering the dichotomy of interests, conditions and rules
existing between them. As regards the first issue, the Court is satisfied that it has been correctly
resolved by the respondent Director of Bureau Relations. In light of Executive Order No. 180
and its implementing rules, as well as the University's charter and relevant regulations, the
professors, associate professors and assistant professors (hereafter simply referred to as
professors) cannot be considered as exercising such managerial or highly confidential functions
as would justify their being categorized as "high-level employees" of the institution.

The Academic Personnel Committees, through which the professors supposedly exercise
managerial functions, were constituted "in order to foster greater involvement of the faculty and
other academic personnel in appointments, promotions, and other personnel matters that directly
affect them." 14 Academic Personnel Committees at the departmental and college levels were
organized "consistent with, and demonstrative of the very idea of consulting the faculty and other
academic personnel on matters directly affecting them" and to allow "flexibility in the
determination of guidelines peculiar to a particular department or college." 15
Personnel actions affecting the faculty and other academic personnel should, however, "be
considered under uniform guidelines and consistent with the Resolution of the Board (of
Regents) adopted during its 789th Meeting (11-26-69) creating the University Academic
Personnel Board." 16 Thus, the Departmental Academic Personnel Committee is given the
function of "assist(ing) in the review of the recommendations initiated by the Department
Chairman with regard to recruitment, selection, performance evaluation, tenure and staff
development, in accordance with the general guidelines formulated by the University Academic
Personnel Board and the implementing details laid down by the College Academic Personnel
Committee;" 17 while the College Academic Personnel Committee is entrusted with the
following functions: 18

1. Assist the Dean in setting up the details for the implementation of policies, rules, standards or
general guidelines as formulated by the University Academic Personnel Board;

2. Review the recommendation submitted by the DAPCs with regard to recruitment, selection,
performance evaluation, tenure, staff development, and promotion of the faculty and other
academic personnel of the College;

3. Establish departmental priorities in the allocation of available funds for promotion;

4. Act on cases of disagreement between the Chairman and the members of the DAPC
particularly on personnel matters covered by this Order;

5. Act on complaints and/or protests against personnel actions made by the Department
Chairman and/or the DAPC.

The University Academic Personnel Board, on the other hand, performs the following
functions: 19

1. Assist the Chancellor in the review of the recommendations of the CAPC'S.

2. Act on cases of disagreement between the Dean and the CAPC.

3. Formulate policies, rules, and standards with respect to the selection, compensation, and
promotion of members of the academic staff.

4. Assist the Chancellor in the review of recommendations on academic promotions and on other
matters affecting faculty status and welfare.

From the foregoing, it is evident that it is the University Academic Personnel Committee,
composed of deans, the assistant for academic affairs and the chief of personnel, which
formulates the policies, rules and standards respecting selection, compensation and promotion of
members of the academic staff. The departmental and college academic personnel committees'
functions are purely recommendatory in nature, subject to review and evaluation by the
University Academic Personnel Board. In Franklin Baker Company of the Philippines vs.
Trajano,20 this Court reiterated the principle laid down in National Merchandising Corp. vs.
Court of Industrial Relations, 21 that the power to recommend, in order to qualify an employee as
a supervisor or managerial employee "must not only be effectivebut the exercise of such
authority should not be merely of a routinary or clerical nature but should require the use
ofindependent judgment." Where such recommendatory powers, as in the case at bar, are subject
to evaluation, review and final action by the department heads and other higher executives of the
company, the same, although present, are not effective and not an exercise of independent
judgment as required by law.
Significantly, the personnel actions that may be recommended by the departmental and college
academic personnel committees must conform with the general guidelines drawn up by the
university personnel academic committee. This being the case, the members of the departmental
and college academic personnel committees are not unlike the chiefs of divisions and sections of
the National Waterworks and Sewerage Authority whom this Court considered as rank-and-file
employees in National Waterworks & Sewerage Authority vs. NWSA Consolidated
Unions, 22 because "given ready policies to execute and standard practices to observe for their
execution, . . . they have little freedom of action, as their main function is merely to carry out the
company's orders, plans and policies."

The power or prerogative pertaining to a high-level employee "to effectively recommend such
managerial actions, to formulate or execute management policies or decisions and/or to hire,
transfer, suspend, lay-off, recall, dismiss, assign or discipline employees" 23 is exercised to a
certain degree by the university academic personnel board/committees and ultimately by the
Board of Regents in accordance with Section 6 of the University
24
Charter, thus:

(e) To appoint, on the recommendation of the President of the University, professors, instructors,
lecturers and other employees of the University; to fix their compensation, hours of service, and
such other duties and conditions as it may deem proper; to grant them in its discretion leave of
absence under such regulations as it may promulgate, any other provision of law to the contrary
notwithstanding, and to remove them for cause after investigation and hearing shall have been
had.

Another factor that militates against petitioner's espousal of managerial employment status for all
its professors through membership in the departmental and college academic personnel
committees is that not all professors are members thereof. Membership and the number of
members in the committees are provided as follows: 25

Sec. 2. Membership in Committees. — Membership in committees may be made either through

appointment, election, or by some other means as may be determined by the faculty and other
academic personnel of a particular department or college.

Sec. 3. Number of Members. — In addition to the Chairman, in the case of a department, and the
Dean in the case of a college, there shall be such number of members representing the faculty
and academic personnel as will afford a fairly representative, deliberative and manageable group
that can handle evaluation of personnel actions.

Neither can membership in the University Council elevate the professors to the status of high-
level employees. Section 6 (f) and 9 of the UP Charter respectively provide: 26

Sec. 6. The Board of Regents shall have the following powers and duties . . . ;

xxx xxx xxx

(f) To approve the courses of study and rules of discipline drawn up by the University Council as
hereinafter provided; . . .

Sec. 9. There shall be a University Council consisting of the President of the University and of
all instructors in the university holding the rank of professor, associate professor, or assistant
professor. The Council shall have the power to prescribe the courses of study and rules of
discipline, subject to the approval of the Board of Regents. It shall fix the requirements for
admission to any college of the university, as well as for graduation and the receiving of a
degree. The Council alone shall have the power to recommend students or others to be recipients
of degrees. Through its president or committees, it shall have disciplinary power over the
students within the limits prescribed by the rules of discipline approved by the Board of Regents.
The powers and duties of the President of the University, in addition to those specifically
provided in this Act shall be those usually pertaining to the office of president of a university.

It is readily apparent that the policy-determining functions of the University Council are subject
to review, evaluation and final approval by the Board of Regents. The Council's power of
discipline is likewise circumscribed by the limits imposed by the Board of Regents. What has
been said about the recommendatory powers of the departmental and college academic personnel
committees applies with equal force to the alleged policy-determining functions of the University
Council.

Even assuming arguendo that UP professors discharge policy-determining functions through the
University Council, still such exercise would not qualify them as high-level employees within
the context of E.O. 180. As correctly observed by private respondent, "Executive Order No. 180
is a law concerning public sector unionism. It must therefore be construed within that context.
Within that context, the University of the Philippines represents the government as an employer.
'Policy-determining' refers to policy-determination in university mattes that affect those same
matters that may be the subject of negotiation between public sector management and labor. The
reason why 'policy-determining' has been laid down as a test in segregating rank-and-file from
management is to ensure that those who lay down policies in areas that are still negotiable in
public sector collective bargaining do not themselves become part of those employees who seek
to change these policies for their collective welfare." 27

The policy-determining functions of the University Council refer to academic matters, i.e. those
governing the relationship between the University and its students, and not the University as an
employer and the professors as employees. It is thus evident that no conflict of interest results in
the professors being members of the University Council and being classified as rank-and-file
employees.

Be that as it may, does it follow, as public respondent would propose, that all rank-and-file
employees of the university are to be organized into a single collective bargaining unit?

A "bargaining unit" has been 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 the best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions of the law. 28

Our labor laws do not however provide the criteria for determining the proper collective
bargaining unit. Section 12 of the old law, Republic Act No. 875 otherwise known as the
Industrial Peace Act, simply reads as follows: 29

Sec. 12. Exclusive Collective Bargaining Representation for Labor Organizations. — The labor
organization designated or selected for the purpose of collective bargaining by the majority of
the employees in an appropriate collective bargaining unit shall be the exclusive representative
of all the employees in such unit for the purpose of collective bargaining in respect to rates of
pay, wages, hours of employment, or other conditions of employment; Provided, That any
individual employee or group of employees shall have the right at any time to present grievances
to their employer. Although said Section 12 of the Industrial Peace Act was subsequently
incorporated into the Labor Code with minor changes, no guidelines were included in said Code
for determination of an appropriate bargaining unit in a given case. 30 Thus, apart from the single
descriptive word "appropriate," no specific guide for determining the proper collective
bargaining unit can be found in the statutes.

Even Executive Order No. 180 already adverted to is not much help. All it says, in its Section 9,
is that "(t)he appropriate organizational unit shall be the employer unit consisting of rank-and-
file employees, unless circumstances otherwise require." Case law fortunately furnishes some
guidelines.

When first confronted with the task of determining the proper collective bargaining unit in a
particular controversy, the Court had perforce to rely on American jurisprudence. In Democratic
Labor Association vs. Cebu Stevedoring Company, Inc., decided on February 28, 1958, 31 the
Court observed that "the issue of how to determine the proper collective bargaining unit and
what unit would be appropriate to be the collective bargaining
agency" . . . "is novel in this jurisdiction; however, American precedents on the matter abound . .
(to which resort may be had) considering that our present Magna Carta has been patterned after
the American law on the subject." Said the Court:

. . . Under these precedents, there are various factors which must be satisfied and considered in
determining the proper constituency of a bargaining unit. No one particular factor is itself
decisive of the determination. The weight accorded to any particular factor varies in accordance
with the particular question or questions that may arise in a given case. What are these factors?
Rothenberg mentions a good number, but the most pertinent to our case are: (1) will of the
employees (Globe Doctrine); (2) affinity and unit of employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions; (3) prior
collective bargaining history; and (4) employment status, such as temporary, seasonal
probationary employees. . . .

xxx xxx xxx

An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in

the 10th Annual Report of the National Labor Relations Board wherein it is emphasized that the
factors which said board may consider and weigh in fixing appropriate units are: the history,
extent and type of organization of employees; the history of their collective bargaining; the
history, extent and type of organization of employees in other plants of the same employer, or
other employers in the same industry; the skill, wages, work, and working conditions of the
employees; the desires of the employees; the eligibility of the employees for membership in the
union or unions involved; and the relationship between the unit or units proposed and the
employer's organization, management, and operation. . . .

. . In said report, it is likewise emphasized that the basic test in determining the appropriate
bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and other subjects of collective
bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162). . . .

The Court further explained that "(t)he test of the grouping is community or mutuality of
interests. And this is so because 'the basic test of an asserted bargaining unit's acceptability is
whether or not it is fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights' (Rothenberg on Labor Relations, 490)." Hence, in
that case, the Court upheld the trial court's conclusion that two separate bargaining units should
be formed, one consisting of regular and permanent employees and another consisting of casual
laborers or stevedores.
Since then, the "community or mutuality of interests" test has provided the standard in
determining the proper constituency of a collective bargaining unit. In Alhambra Cigar &
Cigarette Manufacturing Company, et al. vs. Alhambra Employees' Association (PAFLU), 107
Phil. 23, the Court, noting that the employees in the administrative, sales and dispensary
departments of a cigar and cigarette manufacturing firm perform work which have nothing to do
with production and maintenance, unlike those in the raw lead (malalasi), cigar, cigarette,
packing (precintera) and engineering and garage departments, authorized the formation of the
former set of employees into a separate collective bargaining unit. The ruling in the Democratic
Labor Association case, supra, was reiterated in Philippine Land-Air-Sea Labor Unit vs. Court of
Industrial Relations, 110 Phil. 176, where casual employees were barred from joining the union
of the permanent and regular employees.

Applying the same "community or mutuality of interests" test, but resulting in the formation of
only one collective bargaining units is the case of National Association of Free Trade Unions vs.
Mainit Lumber Development Company Workers Union-United Lumber and General Workers of
the Phils., G.R. No. 79526, December 21, 1990, 192 SCRA 598. In said case, the Court ordered
the formation of a single bargaining unit consisting of the Sawmill Division in Butuan City and
the Logging Division in Zapanta Valley, Kitcharao, Agusan Norte of the Mainit Lumber
Development Company. The Court reasoned:

Certainly, there is a mutuality of interest among the employees of the Sawmill Division and the
Logging Division. Their functions mesh with one another. One group needs the other in the same
way that the company needs them both. There may be difference as to the nature of their
individual assignments but the distinctions are not enough to warrant the formation of a separate
bargaining unit.

In the case at bar, the University employees may, as already suggested, quite easily be
categorized into two general classes: one, the group composed of employees whose functions are
non-academic, i.e., janitors, messengers, typists, clerks, receptionists, carpenters, electricians,
grounds-keepers, chauffeurs, mechanics, plumbers; 32 and two, the group made up of those
performing academic functions, i.e., full professors, associate professors, assistant professors,
instructors — who may be judges or government executives — and research, extension and
professorial staff. 33 Not much reflection is needed to perceive that the community or mutuality
of interests which justifies the formation of a single collective bargaining unit is wanting
between the academic and non-academic personnel of the university. It would seem obvious that
teachers would find very little in common with the University clerks and other non-academic
employees as regards responsibilities and functions, working conditions, compensation rates,
social life and interests, skills and intellectual pursuits, cultural activities, etc. On the contrary,
the dichotomy of interests, the dissimilarity in the nature of the work and duties as well as in the
compensation and working conditions of the academic and non-academic personnel dictate the
separation of these two categories of employees for purposes of collective bargaining. The
formation of two separate bargaining units, the first consisting of the rank-and-file non-academic
personnel, and the second, of the rank-and-file academic employees, is the set-up that will best
assure to all the employees the exercise of their collective bargaining rights. These special
circumstances, i.e., the dichotomy of interests and concerns as well as the dissimilarity in the
nature and conditions of work, wages and compensation between the academic and non-
academic personnel, bring the case at bar within the exception contemplated in Section 9 of
Executive Order No. 180. It was grave abuse of discretion on the part of the Labor Relations
Director to have ruled otherwise, ignoring plain and patent realities.
WHEREFORE, the assailed Order of October 30, 1990 is hereby AFFIRMED in so far as it
declares the professors, associate professors and assistant professors of the University of the
Philippines as rank-and-file employees. The Order of August 7, 1990 is MODIFIED in the sense
that the non-academic rank-and-file employees of the University of the Philippines shall
constitute a bargaining unit to the exclusion of the academic employees of the institution — i.e.,
full professors, associate professors, assistant professors, instructors, and the research, extension
and professorial staff, who may, if so minded, organize themselves into a separate collective
bargaining unit; and that, therefore, only said non-academic rank-and-file personnel of the
University of the Philippines in Diliman, Manila, Los Baños and the Visayas are to participate in
the certification election.

SO ORDERED

G.R. No. L-28223 August 30, 1968

MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE NATIONAL

RAILWAYS, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and SAMAHAN NG MGA MANGGAGAWA SA
CALOOCAN SHOPS,respondents.

REYES, J.B.L., J.:

Petition by the "Mechanical Department Labor Union sa PNR" for a review of an order of the Court of
Industrial Relations, in its Case No. 1475-MC, directing the holding of a plebiscite election to
determine whether the employees at the Caloocan Shops desire the respondent union, "Samahan
ng mga Manggagawa sa Caloocan Shops", to be separated from the Mechanical Department Labor
Union, with a view to the former being recognized as a separate bargaining unit.

The case began on 13 February 1965 by a petition of the respondent "Samahan ng mga
Manggagawa, etc." calling attention to the fact that there were three unions in the Caloocan shops of
the Philippine National Railways: the "Samahan", the "Kapisanan ng Manggagawa sa Manila
Railroad Company", and the Mechanical Department Labor Union; that no certification election had
been held in the last 12 months in the Caloocan shops; that both the "Samahan" and the Mechanical
Department Labor Union had submitted different labor demands upon the management for which
reason a certification election was needed to determine the proper collective bargaining agency for
the Caloocan shop workers.

The petition was opposed by the management as well as by the Mechanical Department Labor
Union, the latter averring that it had been previously certified in two cases as sole and exclusive
bargaining agent of the employees and laborers of the PNR'S mechanical department, and had
negotiated two bargaining agreements with management in 1961 and 1963; that before the
expiration of the latter, a renewal thereof had been negotiated and the contract remained to be
signed; that the "Samahan" had been organized only in 21 January 1965; that the Caloocan shops
unit was not established nor separated from the Mechanical Department unit; that the "Samahan" is
composed mainly of supervisors who had filed a pending case to be declared non-supervisors; and
that the purpose of the petition was to disturb the present smooth working labor management
relations.

By an order of 18 August 1967, Judge Arsenio Martinez, after receiving the evidence, made the
following findings:.
1äw phï1.ñët

The Court, after a cursory examination of the evidence presented made the following
findings: That petitioner union is composed of workers exclusively at the Caloocan shops of
the Philippine National Railways charged with the maintenance of rolling stocks for repairs;
major repairs of locomotive, engines, etc. are done in the Caloocan shops while minor ones
in the Manila sheds; workers in the Caloocan shops do not leave their station unlike Manila
shop workers who go out along the routes and lines for repairs; workers both in the Caloocan
shops and Manila sheds are exposed to hazards occasioned by the nature of their work; that
with respect to wages and salaries of employees, categories under the Job Classification
and Evaluation Plan of the company apply to all workers both in the Caloocan Shops and
 Manila sheds; administration over employees, members of petitioner union as well as
oppositor is under the Administrative Division of the company; that from the very nature of
their work, members of petitioner union and other workers of the Mechanical Department
have been under the coverage of the current collective bargaining agreement which was a
result of a certification by this Court of the Mechanical Department Labor union, first in 1960
and later in 1963. Subsequently, when the latter contract expired, negotiations for its renewal
were had and at the time of the filing of this petition was already consummated, the only act
remaining to be done was to affix the signatures of the parties thereto; that during the
pendency of this petition, on June 14, 1965, the aforesaid collective bargaining agreement
was signed between the Philippine National Railways and the Mechanical Department Labor
Union sa Philippine National Railways (Manila Railroad Company).

The main issue involved herein is: Whether or not a new unit should be established, the
Caloocan shops, separate and distinct from the rest of the workers under the Mechanical
Department now represented by the Mechanical Department Labor Union.

The Caloocan Shops, all located at Caloocan City have 360 workers more or less. It is part
and parcel of the whole Mechanical Department of the Philippine National Railways. The
department is composed of four main divisions or units, namely: Operations, Manila Area
and Lines; Locomotive Crew; Motor Car Crew; and the Shops Rolling Stocks Maintenance.
(Exhibits "D" and "D-1").

The Locomotive crew and Motor Car Crew, though part of the Mechanical Department, is a
separate unit, and is represented by the Union de Maquinistas, Fogoneros Y Motormen. The
workers under the other two main units of the departments are represented by the
Mechanical Department Labor Union. The workers of the Shops Rolling Stocks Maintenance
Division or the Caloocan Shops now seek to be separated from the rest of the workers of the
department and to be represented by the "Samahan Ng Mga Manggagawa sa Caloocan
Shops." .

There is certainly a community of interest among the workers of the Caloocan Shops. They
are grouped in one place. They work under one or same working condition, same working
time or schedule and are exposed to same occupational risk.

Though evidence on record shows that workers at the Caloocan Shops perform the same
nature of work as their counterparts in the Manila Shed, the difference lies in the fact that
workers at the Caloocan Shops perform major repairs of locomotives, rolling stocks, engines,
etc., while those in the Manila Shed, works on minor repairs. Heavy equipment and
machineries are found in the Caloocan Shops.

The trial judge then reviewed the collective bargaining history of the Philippine National Railways, as
follows:1äw phï1.ñët

On several similar instances, this Court allowed the establishment of new and separate
bargaining unit in one company, even in one department of the same company, despite the
existence of the same facts and circumstances as obtaining in the case at bar.

The history of the collective bargaining in the Manila Railroad Company, now the Philippine
National Railways shows that originally, there was only one bargaining unit in the company,
represented by the Kapisanan Ng Manggagawa sa MRR. Under Case No. 237-MC, this
Court ordered the establishment of two additional units, the engine crew and the train crew to
be represented by the Union de Maquinistas, Fogoneros, Ayudante Y Motormen and Union
de Empleados de Trenes, respectively. Then in 1961, under Cases Nos. 491-MC, 494-MC
and 507-MC three new separate units were established, namely, the yard crew unit, station
employees unit and engineering department employees unit, respectively, after the
employees concerned voted in a plebiscite conducted by the court for the separation from
existing bargaining units in the company. Then again, under Case No. 763-MC, a new unit,
composed of the Mechanical Department employees, was established to be represented by
the Mechanical Department Labor Union. Incidentally, the first attempt of the employees of
the Mechanical Department to be separated as a unit was dismissed by this Court of Case
No. 488-MC.

In the case of the yard crew, station employees and the Engineering Department employees,
the Supreme Court sustained the order of this Court in giving the employees concerned the
 right to vote and decide whether or not they desire to be separate units (See G.R. Nos. L-
16292-94, L-16309 and L-16317-18, November, 1965).

In view of its findings and the history of "union representation" in the railway company, indicating that
bargaining units had been formed through separation of new units from existing ones whenever
plebiscites had shown the workers' desire to have their own representatives, and relying on the
"Globe doctrine" (Globe Machine & Stamping Co., 3 NLRB 294) applied in Democratic Labor Union
vs. Cebu Stevedoring Co., L-10321, 28 February 1958, Judge Martinez held that the employees in
the Caloocan Shops should be given a chance to vote on whether their group should be separated
from that represented by the Mechanical Department Labor Union, and ordered a plebiscite held for
the purpose. The ruling was sustained by the Court en banc; wherefore, the Mechanical Department
Labor Union appealed to this Court questioning the applicability under the circumstances of the
"Globe doctrine" of considering the will of the employees in determining what union should represent
them.

Technically, this appeal is premature, since the result of the ordered plebiscite among the workers of
the Caloocan shops may be adverse to the formation of a separate unit, in which event, as stated in
the appealed order, all questions raised in this case would be rendered moot and academic.
Apparently, however, the appellant Mechanical Department Labor Union takes it for granted that the
plebiscite would favor separation.

We find no grave abuse of discretion in the issuance of the ruling under appeal as would justify our
interfering with it. Republic Act No. 875 has primarily entrusted the prosecution of its policies to the
Court of Industrial Relations, and, in view of its intimate knowledge concerning the facts and
circumstances surrounding the cases brought before it, this Court has repeatedly upheld the
exercise of discretion of the Court of Industrial Relations in matters concerning the representation of
employee groups (Manila Paper Mills Employees & Workers' Association vs. C.I.R. 104 Phil. 10;
Benguet Consolidated vs. Bobok Lumber Jack Association, 103 Phil. 1150).

Appellant contends that the application of the "Globe doctrine" is not warranted because the workers
of the Caloocan shops do not require different skills from the rest of the workers in the Mechanical
Department of the Railway Company. This question is primarily one of facts. The Industrial Court
has found that there is a basic difference, in that those in the Caloocan shops not only have a
community of interest and working conditions but perform major repairs of railway rolling stock, using
heavy equipment and machineries found in said shops, while the others only perform minor repairs.
It is easy to understand, therefore, that the workers in the Caloocan shops require special skill in the
use of heavy equipment and machinery sufficient to set them apart from the rest of the workers. In
addition, the record shows that the collective bargaining agreements negotiated by the appellant
union have been in existence for more than two (2) years; hence, such agreements can not
constitute a bar to the determination, by proper elections, of a new bargaining representative (PLDT
Employees' Union vs. Philippine Long Distance Telephone Co., 51 Off. Gaz., 4519).

As to the charge that some of the members of the appellee, "Samahan Ng Manggagawa", are
actually supervisors, it appears that the question of the status of such members is still pending final
decision; hence, it would not constitute a legal obstacle to the holding of the plebiscite. At any rate,
the appellant may later question whether the votes of those ultimately declared to be supervisors
should be counted.

Whether or not the agreement negotiated by the appellant union with the employer, during the
pendency of the original petition in the Court of Industrial Relations, should be considered valid and
binding on the workers of the Caloocan shops is a question that should be first passed upon by the
Industrial Court.

IN VIEW OF THE FOREGOING, the order appealed from is affirmed, with costs against appellant
Mechanical Department Labor Union sa Philippine National Railways.
[G.R. No. 79526 : December 21, 1990.]
192 SCRA 598
NATIONAL ASSOCIATION OF FREE TRADE UNIONS (NAFTU), Petitioner, vs.MAINIT
LUMBER DEVELOPMENT COMPANY WORKERS UNION-UNITED LUMBER AND
GENERAL WORKERS OF THE PHILIPPINES. (MALDECOWU-ULGWP), Respondents.

DECISION
PARAS, J.:

This is a petition for Certiorari to annul and set aside the resolution ** of the public
respondent Bureau of Labor Relation dated January 29,1987 in BLR Case No. A-5-99-85
entitled: IN RE: Petition for Direct Certification or Certification Election, Mainit Lumber
Development Company Workers Union-United Lumber and General Workers of the
Philippines (MALDECOWU-ULGWP), petitioner-appellee vs. Mainit Lumber and Development
Company, Inc. (MALDECO), respondent; National Association of Free Trade Unions (NAFTU),
compulsory intervenor-appellant, affirming the Order of the Med-Arbiter date September 24,
1986 and denying petitioner's motion for reconsideration.
The facts are as follows:
On January 28, 1985, private respondent Mainit Lumber Development Company Workers
Union-United Lumber and General Workers of the Philippines, MALDECOWU-ULGWP
(ULGWP, for short), a legitimate labor organization duly registered with the Ministry of
Labor and Employment under Registry No. 2944-IP, filed with Regional Office No. 10,
Ministry of Labor and Employment at Cagayan de Oro City, a petition for certification
election to determine the sole and exclusive collective bargaining representative among the
rank and file workers/employees of Mainit Lumber Development Company Inc. (MALDECO),
a duly organized, registered and existing corporation engaged in the business of logging and
saw-mill operations employing approximately 136 rank and file employees/workers (Rollo,
p. 11; Petition; Annex "A"). The case was scheduled for hearing two (2) times. During the
first scheduled hearing on February 20, 1985, the counsel for compulsory intervenor (now
petitioner), National Association of Free Trade Union (NAFTU) requested for postponement
on the ground that he was leaving for abroad. During the scheduled hearing of March 13,
1985, they, however, agreed to submit simultaneously their respective position papers
within twenty (20) days (Rollo, p. 17; Petition; Annex "D").
Petitioner ULGWP, private respondent herein, in its petition and position paper alleged,
among others: (1) that there was no certification election conducted within 12 months prior
to the filing of the petition; (2) that the petition was filed within the 60 day freedom period,
i.e. CBA expired on February 28, 1985; (3) that the petition is supported by the signatures
of 101 rank and file employees out of a total of 201 employees of the employer or more
than thirty percent (30%) than that required by law (Rollo, p. 13; Petition; Annex "B"). :-cralaw

On April 11, 1985, the Med-Arbiter granted the petition for certification election. On April
26, 1985, NAFTU appealed the decision of the Med-Arbiter on the ground that MALDECO
was composed of two (2) bargaining units, the Sawmill Division and the Logging Division,
but both the petition and decision treated these separate and distinct units only as one
(Rollo, p. 20; Petition; Annex "E").
On April 28, 1986, the Bureau of Labor Relations affirmed the decision (Rollo, p. 26;
Petition; Annex "J"). Thus, a certification election was held on separate dates at the
employer's sawmill division and logging area respectively. In said election MALDECOWU-
ULGWP garnered a total vote of 146 while NAFTU garnered a total of 2 votes (Rollo, p. 42;
Petition; Annex "O").
On July 26, 1986, NAFTU filed an election protest alleging massive vote buying accompanied
with grave and serious threat force and intimidation on the lives of 25 applicants as stated
in a Joint Affidavit attached thereto (Rollo, p. 28; Petition; Annexes "K", "K-3").
MALDECO filed its Manifestation on August 3, 1986, which corroborated petitioner's stand.
Attached to the said Manifestation was a joint affidavit executed by thirty five (35) of its
employees/workers (Rollo, p. 33; Petition; Annexes "L", "L-1").
On September 3, 1986, private respondent filed its position paper (Rollo, p. 36; Petition;
Annex "I"). On September 8, 1986 petitioner filed its opposition to private respondent's
position paper (Rollo, p. 39; Petition; Annex "N"). On September 24, 1986, the Med-Arbiter
dismissed the election protest (Rollo, p. 42; Petition; Annex "O").
On October 10, 1986, petitioner NAFTU appealed the order of the Med-Arbiter to the Bureau
of Labor Relations in Manila (Rollo, p. 46) which denied the appeal (Rollo, p. 48) and the
two motions for reconsideration (Rollo, pp. 51, 55).
Hence, this petition.
The issues raised in this petition are:
I
WHETHER OR NOT IT WAS RIGHT FOR THE MED-ARBITER TO CHANGE THE EMPLOYER
FROM TWO SEPARATE BARGAINING UNITS TO ONLY ONE.
II
WHETHER OR NOT THERE WAS MASSIVE VOTE BUYING AND SERIOUS THREAT TO LIFE TO
JUSTIFY INVALIDATING THE RESULT OF THE ELECTION.
III
WHETHER OR NOT AN ELECTION PROTEST IN A CERTIFICATION ELECTION CAN BE GIVEN
DUE COURSE EVEN IF NOT ENTERED IN THE MINUTES OF THE ELECTION.
In the case at bar, petitioner alleges that the employer MALDECO was composed of two
bargaining units, the Sawmill Division in Butuan City and the Logging Division, in Zapanta
Valley, Kitcharao, Agusan Norte, about 80 kilometers distant from each other and in fact,
had then two separate CBA's, one for the Sawmill Division and another for the Logging
Division, both the petition and decision referred only to one bargaining unit; that from 1979
to 1985, the Ministry of Labor and Employment recognized the existence of two (2) separate
bargaining units at MALDECO, one for its Logging Division and another for its Sawmill
Division.
Significantly, out of two hundred and one (201) employees of MALDECO, one hundred
seventy five (175) consented and supported the petition for certification election, thereby
confirming their desire for one bargaining representative (Rollo, p. 104). :- nad

Moreover, while the existence of a bargaining history is a factor that may be reckoned with
in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other
factors must be considered. The test of grouping is community or mutuality of interests.
This is so because "the basic test of an asserted bargaining unit's acceptability is whether or
not it is fundamentally the combination which will best assure to all employees the exercise
of their collective bargaining rights." (Democratic Labor Association v. Cebu Stevedoring
Company, Inc., et al., 103 Phil. 1103 [1958]).
Certainly, there is a mutuality of interest among the employees of the Sawmill Division and
the Logging Division. Their functions mesh with one another. One group needs the other in
the same way that the company needs them both. There may be difference as to the nature
of their individual assignments but the distinctions are not enough to warrant the formation
of a separate bargaining unit.
Secondly, the issue had been raised earlier by petitioner. The respondent Bureau of Labor
Relations had already ruled on the same in its decision dated April 28, 1986 affirming the
Med-Arbiter's Order dated April 11, 1985 which granted the petition for Certification
Election. NAFTU did not elevate the April 28, 1986 decision to this Court. On the contrary, it
participated in the questioned election and later it did not raise the issue in its election
protest (Rollo, p. 210). Hence, the principle of res judicata applies. It was settled as early as
1956 that "the rule which forbids the reopening of a matter once judicially determined by
competent authority applies as well to the judicial and quasi-judicial acts of public,
executive or administrative officers and boards acting within their jurisdiction as to the
judgments of courts having general judicial powers . . ." (B.F. Goodrich Philippines, Inc. v.
Workmen's Compensation Commission and Leandro M. Castro, 159 SCRA 355 [1988]).
With regard to the second and third issues raised by petitioner, the public respondent
Bureau of Labor Relations in its order dated September 24, 1986 found the following, to wit:
"After a careful perusal of the records of this case and after considering, adducing and
weighing all the pleadings, arguments, etc. and the circumstances attendant to the instant
case, this Office is of the opinion that the grounds relied upon by the protestant NAFTU in its
protest are bereft of any merit, hence, this Office finds no cogent reason to order the
invalidation or annulment of the certification election under protest or the holding of a run-
off election thereat between no union and the protestee, MALDECOWU-ULGWP. Indeed, the
minutes of said certification elections conducted both at the sawmill and logging
departments on August 15 and 21, 1986 respectively, of the respondent/employer showed
that there was no protest on massive vote buying accompanied with grave and serious
threats, force and intimidation raised by any of the parties who were ably represented in
said elections. Paragraph 2, Section 9, Rule 6 of the Rules and Regulations implementing
the Labor Code of the Philippines (now Section 3, Rule VI, Book 5 of the Omnibus Rules
Implementing the Labor Code) provides that protests not so raised and contained in the
minutes of the proceedings are deemed waived. Allegations of vote buying, grave and
serious threats, force and intimidation are questions of fact which should be contained in the
minutes of said proceedings. There is no clear and convincing proof presented by the
protestant in support of its contention, hence, we have no other alternative than to uphold
the election results."
In the case of Philippine Airlines Employees' Association (PALEA) v. Hon. Pura Ferrer-Calleja,
et al., 162 SCRA 425 [1988]), this Court held that factual findings of the Bureau of Labor
Relations which are supported by substantial evidence are binding on this Court and must
be respected. : nad

PREMISES CONSIDERED, the resolution of public respondent Bureau of Labor Relations

dated January 29, 1987 is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.

[G.R. No. 109002. April 12, 2000]

DELA SALLE UNIVERSITY, petitioner, vs. DELA SALLE UNIVERSITY EMPLOYEES

ASSOCIATION (DLSUEA) and BUENAVENTURA MAGSALIN, respondents.

[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.

DECISION

BUENA, J.:

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] Missc

The facts are not disputed and, as summarized by the voluntary arbitrator, are as follows. 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,[4] (hereinafter referred to as UNION) entered into a collective bargaining agreement
with a life span of three (3) years, that is, from December 23, 1986 to December 22,
1989.[5] 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.[7] 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] Spped

In the said decision, the 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."[14] Regarding the discipline officers, the voluntary
arbitrator "believes that this type of employees belong (sic) to the rank-and-file on the basis of
the nature of their job."[15] 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."[16]

On the 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."[17]

On the 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."[18]

Regarding the 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. xxx xxx. 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."[20] Misspped

On the fifth issue as to the Unions 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 Unions
demand for special leave benefits.

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 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] Josp-ped

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 Unions 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:

A. xxx xxx xxx.

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. xxx.
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. xxx Spp-edjo

B. xxx xxx xxx

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. xxx

C. xxx xxx xxx

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. xxx (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 xxx.

Admission requirements for transferees are: xxx and an acceptable score in the DLSU admission
test. xxx

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. xxx

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 enrolee whose presence is
inimical to the objectives of the CSB/DLSU. xxx Mi-so

As a college within the university, the College of St. Benilde subscribes to the De La Salle
Mission." (Annexes "C-1," "C-2," 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] Ne-xold

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.

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. Sc

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 DLSUS RANK-AND-FILE EMPLOYEES. HE ALSO
ERRED IN HIS INTERPRETATION OF THE APPLICATION OF THE DOCTRINE; x-sc
"(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] xl-aw

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-first-out" 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 Unions 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] Man-ikx

"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 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.

We affirm in part and modify in part. Scl-aw

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. xxx
xxx."[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. xxx xxx."[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. xxx xxx. 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. xxx xxx."[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] xxx
xxx."[49] The University also alleges that "the Discipline Officers are privy to highly confidential
information ordinarily accessible only to management."[50] Manik-s

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 Universitys 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 re-negotiation 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] Man-ikan

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:

"ART. 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. xxx xxx." (emphasis supplied) Ol-dmiso

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 Universitys
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. xxx xxx. 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. xxx xxx."[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]

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] Nc-m

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 1992-93 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] "xxx xxx. [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.

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. Nc-mmis

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. xxx xxx.," 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. Scnc-m

SO ORDERED.