VOL.

324, FEBRUARY 2, 2000 425 QUISUMBING, J.:

Sugbuanon Rural Bank, Inc. vs. Laguesma
G.R. No. 116194. February 2, 2000.* In this special civil action for certiorari and prohibition, petitioner seeks the annulment of the
SUGBUANON RURAL BANK, INC., petitioner, vs. HON. UNDERSECRETARY April 27, 1994 Resolution of the Department of Labor and Employment, affirming the order of
BIENVENIDO E. LAGUESMA, DEPARTMENT OF LABOR AND EMPLOYMENT, the Med-Arbiter, dated December 9, 1993, which denied petitioner’s motion to dismiss
MEDARBITER ACHILLES MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, respondent union’s petition for certification election.
REGIONAL OFFICE NO. 7, CEBU CITY, AND SUGBUANON RURAL BANK, INC.- Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking
ASSOCIATION OF PROFESSIONAL, SUPERVISORY, OFFICE, AND TECHNICAL institution with principal office in Cebu City and a branch in Mandaue City. Private
EMPLOYEES UNION-TRADE UNIONS CONGRESS OF THE PHILIPPINES, respondents. respondent SRBI-Association of Professional, Supervisory, Office, and Technical Employees
Labor Law; Confidential Employees; Confidential employees are those who (1) assist Union (APSOTEU) is a legitimate labor organization affiliated with the Trade Unions
or act in a confidential capacity, in regard (2) to persons who formulate, determine, and Congress of the Philippines (TUCP).
effectuate management policies [specifically in the field of labor relations].—Now may the On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of
said bank personnel be deemed confidential employees? Confidential employees are those Registration No. R0700-9310-UR-0064 to APSOTEU-TUCP, hereafter referred to as the
who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, union.
determine, and effectuate management policies [specifically in the field of labor relations]. On October 26, 1993, the union filed a petition for certification election of the supervisory
The two criteria are cumulative, and both must be met if an employee is to be considered a employees of SRBI. It alleged, among others, that: (1) APSOTEU-TUCP was a labor
confidential employee—that is, the confidential relationship must exist between the employee organization duly-registered with the Labor Department; (2) SRBI employed 5 or more
and his superior officer; and that officer must handle the prescribed responsibilities relating to supervisory employees; (3) a majority of these employees supported the petition; (4) there was
labor relations. no existing collective bargaining agreement (CBA) between any union and SRBI; and (5) no
Same; Same; Right to Self-Organization; When the employee does not have access to certification election had been held in SRBI during the past 12 months prior to the petition.
confidential labor relations information, there is no legal prohibition against confidential On October 28, 1993, the Med-Arbiter gave due course to the petition. The pre-
employees from forming, assisting, or joining a union.—Article 245 of the Labor Code does certification election conference between SRBI and APSOTEU-TUCP was set for November
not directly prohibit confidential employees from engaging in union activities. However, 15, 1993.
under the doctrine of necessary implication, the disqualification of managerial employees On November 12, 1993, SRBI filed a motion to dismiss the union’s petition. It sought to
equally applies to confidential employees. The confidential-employee rule justifies exclusion prevent the holding of a certification election on two grounds: First, that the members of
of confidential employees because in the normal course of their duties they become aware of APSOTEU-TUCP were in fact managerial or confidential employees. Thus, following the
management policies relating to labor relations. It must be stressed, however, that when the doctrine in Philips Industrial Development Corporation v. National Labor Relations
employee does not have access to confidential labor relations information, there is no legal Commission,1 they were disqualified from forming, joining, or assisting any labor
prohibition against confidential employees from forming, assisting, or joining a union. organization. Petitioner attached the job descriptions of the employees concerned to its
Same; Same; Same; Collective Bargaining Agreement; One of the rights of a motion. Second, the Association of Labor Unions-Trade Unions Congress of the Philippines or
legitimate labor organization under Article 242(b) of the Labor Code is the right to be ALU-TUCP was representing the union. Since ALU-TUCP also sought to represent the rank-
certified as the exclusive representative of all employees in an appropriate bargaining unit for and-file employees of SRBI, there was a violation of the principle of separation of unions
purposes of collective bargaining.—One of the rights of a legitimate labor organization under enunciated in Atlas Lithographic Services, Inc. v. Laguesma.2
Article 242(b) of the Labor Code is the right to be certified as the exclusive representative of The union filed its opposition to the motion to dismiss on December 1, 1993. It argued
all employees in an appropriate bargaining unit for purposes of collective bargaining. that its members were not managerial employees but merely supervisory employees. The
Same; Same; Same; Same; Certification Election; Article 257 of the Labor Code members attached their affidavits describing the nature of their respective duties. The union
mandates that a certification election shall automatically be conducted by the Med-Arbiter pointed out that Article 245 of the Labor Code expressly allowed supervisory employees to
upon the filing of a petition by a legitimate labor organization.—Having complied with the form, join, or assist their own unions.
requirements of Art. 234, it is our view that respondent union is a legitimate labor union. On December 9, 1993, the Med-Arbiter denied petitioner’s motion to dismiss. He
Article 257 of the Labor Code mandates that a certification election shall  automatically be scheduled the inclusion-exclusion proceedings in preparation for the certification election on
conducted by the MedArbiter upon the filing of a petition by a legitimate labor organization. December 16, 1993.
Nothing is said therein that prohibits such automatic conduct of the certification election if the SRBI appealed the Med-Arbiter’s decision to the Secretary of Labor and Employment.
management appeals on the issue of the validity of the union’s registration. On this score, The appeal was denied for lack of merit. The certification election was ordered.
petitioner’s appeal was correctly dismissed. On June 16, 1994, the Med-Arbiter scheduled the holding of the certification election for
June 29, 1994. His order identified the following SRBI personnel as the voting supervisory
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and Prohibition. employees in the election: the Cashier of the Main Office, the Cashier of the Mandaue Branch,
the Accountant of the Mandaue Branch, and the Acting Chief of the Loans Department.
The facts are stated in the opinion of the Court. On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to suspend
     Sycip, Salazar, Hernandez & Gatmaitan for petitioner. proceedings. The Med-Arbiter denied the same on June 21, 1994. SRBI then filed a motion for
     Seno, Mendoza and Associates for private respondents. reconsideration. Two days later, the Med-Arbiter cancelled the certification election scheduled
for June 29, 1994 in order to address the motion for reconsideration.

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 The Med-Arbiter later denied petitioner’s motion for reconsideration. SRBI appealed the (1)Whether or not the members of the respondent union are managerial employees and/or
order of denial to the DOLE Secretary on December 16, 1993. highly-placed confidential employees, hence prohibited by law from joining labor
On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional organizations and engaging in union activities?
Office seeking the cancellation of the respondent union’s registration. It averred that the (2)Whether or not the Med-Arbiter may validly order the holding of a certification election
APSOTEU-TUCP members were actually managerial employees who were prohibited by law upon the filing of a petition for certification election by a registered union, despite the
from joining or organizing unions. petitioner’ appeal pending before the DOLE Secretary against the issuance of the union’s
On April 22, 1994, respondent DOLE Undersecretary denied SRBI’s appeal, for lack of registration?
merit. He ruled that APSOTEU-TUCP was a legitimate labor organization. As such, it was The other issues based on the assigned errors could be resolved easily after the core issues are
fully entitled to all the rights and privileges granted by law to a legitimate labor organization, settled.
including the right to file a petition for certification election. He also held that until and unless Respecting the first issue, Article 212(m) of the Labor Code defines the terms “managerial
a final order is issued cancelling APSOTEU-TUC’s registration certificate, it had the legal employee” and “supervisory employees” as follows:
right to represent its members for collective bargaining purposes. Furthermore, the question of “Art. 212. Definitions—
whether the APSOTEU-TUCP members should be considered as managerial or confidential xxx
employees should not be addressed in the proceedings involving a petition for certification (m) ‘Managerial employee’ one who is vested with powers or prerogatives to lay down
election but best threshed out in other appropriate proceedings. and execute management policies and/or hire, transfer, suspend, lay-off, recall, discharge,
On May 25, 1994, SRBI moved for reconsideration of the Undersecretary’s decision assign or discipline employees. Supervisory employees are those who, in the interest of the
which was denied on July 7, 1994. The Med-Arbiter scheduled the holding of certification employer, effectively recommend such managerial actions if the exercise of such authority is
elections on August 12, 1994. not merely routinary or clerical in nature but requires the use of independent judgment. All
Hence the instant petition grounded on the following assignments of error: employees not falling within any of the above definitions are considered rank-and-file
I employees for purposes of this Book (Italic supplied).”
Petitioner submitted detailed job descriptions to support its contention that the union members
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF are managerial employees and/or confidential employees proscribed from engaging in labor
DISCRETION AND PALPABLY ERRED: activities.3 Petitioner vehemently argues that the functions and responsibilities of the
A.IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE MED- employees involved constitute the “very core of the bank’s business, lending of money to
ARBITER TO CONDUCT A CERTIFICATION ELECTION IN ANY UNORGANIZED clients and borrowers, evaluating their capacity to pay, approving the loan and its amount,
ESTABLISHMENT EVEN WHEN THE PETITIONING UNION DOES NOT POSSESS scheduling the terms of repayment, and endorsing delinquent accounts to counsel for
THE QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT; AND collection.”4 Hence, they must be deemed managerial employees. Petitioner cites Tabacalera
B.IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER’S APPEAL Insurance Co. v. National Labor Relations Commission,5 and Panday v. National Labor
AND TO DISMISS THE RESPONDENT UNION’S PETITION FOR CERTIFICATION Relations Commission,6 to sustain its submission. In Tabacalera, we sustained the
ELECTION. classification of a credit and collection supervisor by management as a managerial/supervisory
II personnel. But in that case, the credit and collection supervisor “had the power to recommend
the hiring and appointment of his subordinates, as well as the power to recommend any
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF promotion and/or increase.”7 For this reason he was deemed to be a managerial employee. In
DISCRETION AND PALPABLY ERRED IN DENYING THE PETITIONER’S APPEAL the present case, however, petitioner failed to show that the employees in question were vested
DESPITE THE FACT THAT: with similar powers. At best they only had recommendatory powers subject to evaluation,
A.THE ALLEGED MEMBERS OF RESPONDENT UNION ARE MANAGERIAL review, and final decision by the bank’s management. The job description forms submitted by
EMPLOYEES WHO ARE LEGALLY DISQUALIFIED FROM JOINING ANY LABOR petitioner clearly show that the union members in question may not transfer, suspend, lay-off,
ORGANIZATION. recall, discharge, assign, or discipline employees. Moreover, the forms also do not show that
B.AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT UNION ARE the Cashiers, Accountants, and Acting Chiefs of the Loans Department formulate and execute
OCCUPYING HIGHLY CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, management policies which are normally expected of management officers.
THE LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES EQUALLY Petitioner’s reliance on Panday is equally misplaced. There, we held that a branch
APPLY TO THEM. accountant is a managerial employee because the said employee had managerial powers,
similar to the supervisor in Tabacalera. Their powers included recommending the hiring and
appointment of his subordinates, as well as the power to recommend any promotion and/or
III
increase.8
Here, we find that that the Cashiers, Accountant, and Acting Chief of the Loans
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT Department of the petitioner did not possess managerial powers and duties. We are, therefore,
RESOLUTIONS ARE CONTRARY TO LAW AND ARE DIAMETRICALLY OPPOSED constrained to conclude that they are not managerial employees.
TO RESPONDENT UNION’S RECORDED ADMISSIONS AND REPRESENTATIONS. Now may the said bank personnel be deemed confidential employees? Confidential
Considering petitioner’s assigned errors, we find two core issues for immediate resolution: employees are those who (1) assist or act in a confidential capacity, in regard (2) to persons
who formulate, determine, and effectuate management policies [specifically in the field of

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labor relations].9 The two criteria are cumulative, and both must be met if an employee is to be Petitioner argues that giving due course to respondent union’s petition for certification
considered a confidential employee—that is, the confidential relationship must exist between election would violate the separation of unions doctrine. 17 Note that the petition was filed by
the employee and his superior officer; and that officer must handle the prescribed APSOTEU-TUCP, a legitimate labor organization. It was not filed by ALU. Nor was it filed
responsibilities relating to labor relations.10 by TUCP, which is a national labor federation with which respondent union is affiliated.
Article 245 of the Labor Code11 does not directly prohibit confidential employees from Petitioner says that respondent union is a mere alter ego of ALU. The records show nothing to
engaging in union activities. However, under the doctrine of necessary implication, the this effect. What the records instead reveal is that respondent union was initially assisted by
disqualification of managerial employees equally applies to confidential employees. 12 The ALU during its preliminary stages of organization. A local union maintains its separate
confidential-employee rule justifies exclusion of confidential employees because in the normal personality despite affiliation with a larger national federation. 18 Petitioner alleges that ALU
course of their duties they become aware of management policies relating to labor seeks to represent both respondent union and the rank-and-file union. Again, we find nothing
relations.13 It must be stressed, however, that when the employee does not have access to in the records to support this bare assertion.
confidential labor relations information, there is no legal prohibition against confidential The law frowns on a union where the membership is composed of both supervisors and rank-
employees from forming, assisting, or joining a union.14 and-file employees, for fear that conflicts of interest may arise in the areas of discipline,
Petitioner contends that it has only 5 officers running its day-to-day affairs. They assist in collective bargaining, and strikes.19 However, in the present case, none of the members of the
confidential capacities and have complete access to the bank’s confidential data. They form respondent union came from the rank-and-file employees of the bank.
the core of the bank’s management team. Petitioner explains that: Taking into account the circumstances in this case, it is our view that respondent
“. . . Specifically: (1) the Head of the Loans Department initially approves the loan Undersecretary committed no reversible error nor grave abuse of discretion when he found the
applications before they are passed on to the Board for confirmation. As such, no loan order of the Med-Arbiter scheduling a certification election in order. The list of employees
application is even considered by the Board and approved by petitioner without his stamp of eligible to vote in said certification election was also found in order, for none was specifically
approval based upon his interview of the applicant and determination of his (applicant’s) disqualified from membership.
credit standing and financial capacity. The same holds true with respect to renewals or WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to
restructuring of loan accounts. He himself determines what account should be collected, costs.
whether extrajudicially or judicially, and settles the problems or complaints of borrowers SO ORDERED.
regarding their accounts;      Bellosillo (Chairman), Mendoza, Buena and De Leon, Jr., JJ., concur.
“(2)the Cashier is one of the approving officers and authorized signatories of petitioner. He Petition dismissed.
approves the opening of accounts, withdrawals and encashment, and acceptance of check Note.—Certification election is the most effective and the most democratic way of
deposits. He deals with other banks and, in the absence of the regular Manager, manages the determining which labor organization can truly represent the working force in the appropriate
entire office or branch and approves disbursements of funds for expenses; and bargaining unit of a company. (Samahang Manggagawa sa Permex vs. Secretary of
“(3)the Accountant, who heads the Accounting Department, is also one of the authorized Labor, 286 SCRA 692 [1998])
signatories of petitioner and, in the absence of the Manager or Cashier, acts as substitute
approving officer and assumes the management of the entire office. She handles the financial
reports and reviews the debit/credit tickets submitted by the other departments.” 15
Petitioner’s explanation, however, does not state who among the employees has access to
information specifically relating to its labor relations policies. Even Cashier Patricia Maluya,
who serves as the secretary of the bank’s Board of Directors may not be so classified. True,
the board of directors is responsible for corporate policies, the exercise of corporate powers,
and the general management of the business and affairs of the corporation. As secretary of the
bank’s governing body, Patricia Maluya serves the bank’s management, but could not be
deemed to have access to confidential information specifically relating to SRBI’s labor
relations policies, absent a clear showing on this matter. Thus, while petitioner’s explanation
confirms the regular duties of the concerned employees, it shows nothing about any duties
specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate labor organization under Article
242(b) of the Labor Code is the right to be certified as the exclusive representative of all
employees in an appropriate bargaining unit for purposes of collective bargaining. Having
complied with the requirements of Art. 234, it is our view that respondent union is a legitimate
labor union. Article 257 of the Labor Code mandates that a certification election
shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a
legitimate labor organization.16 Nothing is said therein that prohibits such automatic conduct
of the certification election if the management appeals on the issue of the validity of the
union’s registration. On this score, petitioner’s appeal was correctly dismissed.

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