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VOL. 324, FEBRUARY 2, 2000 425

Sugbuanon Rural Bank, Inc. vs. Laguesma

*
G.R. No. 116194. February 2, 2000.

SUGBUANON RURAL BANK, INC., petitioner, vs. HON.

UNDERSECRETARY BIENVENIDO E. LAGUESMA,
DEPARTMENT OF LABOR AND EMPLOYMENT,
MEDARBITER ACHILLES MANIT, DEPARTMENT OF
LABOR AND EMPLOYMENT, REGIONAL OFFICE NO.
7, CEBU CITY, AND SUGBUANON RURAL BANK, INC.-
ASSOCIATION OF PROFESSIONAL, SUPERVISORY,
OFFICE, AND TECHNICAL EMPLOYEES UNION-
TRADE UNIONS CONGRESS OF THE PHILIPPINES,
respondents.

Labor Law; Confidential Employees; Confidential 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 labor relations].—
Now may the said bank personnel be deemed confidential
employees? Confidential 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 labor relations]. The two criteria are cumulative, and both
must be met if an employee is to be considered a confidential
employee—that is, the confidential relationship must exist
between the employee and his superior officer; and that officer
must handle the prescribed responsibilities relating to labor
relations.
Same; Same; Right to Self-Organization; When the employee
does not have access to confidential labor relations information,
there is no legal prohibition against confidential employees from
forming, assisting, or joining a union.—Article 245 of the Labor
Code does not directly prohibit confidential employees from
engaging in union activities. However, under the doctrine of
necessary implication, the disqualification of managerial
employees equally applies to confidential employees. The
confidential-employee rule justifies exclusion of confidential
employees because in the normal course of their duties they

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become aware of management policies relating to labor relations.

It must be stressed, however, that when the employee does not
have access to confidential labor relations information,

_______________

* SECOND DIVISION.

426

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Sugbuanon Rural Bank, Inc. vs. Laguesma

there is no legal prohibition against confidential employees from

forming, assisting, or joining a union.
Same; Same; Same; Collective Bargaining Agreement; 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.—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.
Same; Same; Same; Same; Certification Election; 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.—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 MedArbiter upon the filing of a petition by a
legitimate labor organization. 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.

SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari and Prohibition.

The facts are stated in the opinion of the Court.

          Sycip, Salazar, Hernandez & Gatmaitan for
petitioner.

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          Seno, Mendoza and Associates for private

respondents.

QUISUMBING, J.:

In this special civil action for certiorari and prohibition,

petitioner seeks the annulment of the April 27, 1994
Resolution of the Department of Labor and Employment,
affirming the order of the Med-Arbiter, dated December 9,
1993, which denied petitioner’s motion to dismiss
respondent union’s petition for certification election.
427

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Sugbuanon Rural Bank, Inc. vs. Laguesma

Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity)

is a duly-registered banking institution with principal
office in Cebu City and a branch in Mandaue City. Private
respondent SRBI-Association of Professional, Supervisory,
Office, and Technical Employees Union (APSOTEU) is a
legitimate labor organization affiliated with the Trade
Unions Congress of the Philippines (TUCP).
On October 8, 1993, the DOLE Regional Office in Cebu
City granted Certificate of Registration No. R0700-9310-
UR-0064 to APSOTEU-TUCP, hereafter referred to as the
union.
On October 26, 1993, the union filed a petition for
certification election of the supervisory employees of SRBI.
It alleged, among others, that: (1) APSOTEU-TUCP was a
labor organization duly-registered with the Labor
Department; (2) SRBI employed 5 or more supervisory
employees; (3) a majority of these employees supported the
petition; (4) there was no existing collective bargaining
agreement (CBA) between any union and SRBI; and (5) no
certification election had been held in SRBI during the past
12 months prior to the petition.
On October 28, 1993, the Med-Arbiter gave due course to
the petition. The pre-certification election conference
between SRBI and APSOTEU-TUCP was set for November
15, 1993.
On November 12, 1993, SRBI filed a motion to dismiss
the union’s petition. It sought to prevent the holding of a
certification election on two grounds: First, that the
members of APSOTEU-TUCP were in fact managerial or
confidential employees. Thus, following the doctrine in
Philips Industrial Development Corporation v. National
1
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1
Labor Relations Commission, they were disqualified from
forming, joining, or assisting any labor organization.
Petitioner attached the job descriptions of the employees
concerned to its motion. Second, the Association of Labor
Unions-Trade Unions Congress of the Philippines or ALU-
TUCP was representing the union. Since ALU-TUCP also
sought to represent the rank-and-file employees of SRBI,
there was a violation of the principle of sepa-

_______________

1 210 SCRA 339 (1992).

428

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Sugbuanon Rural Bank, Inc. vs. Laguesma

ration of unions enunciated

2
in Atlas Lithographic Services,
Inc. v. Laguesma.
The union filed its opposition to the motion to dismiss on
December 1, 1993. It argued that its members were not
managerial employees but merely supervisory employees.
The members attached their affidavits describing the
nature of their respective duties. The union pointed out
that Article 245 of the Labor Code expressly allowed
supervisory employees to form, join, or assist their own
unions.
On December 9, 1993, the Med-Arbiter denied
petitioner’s motion to dismiss. He scheduled the inclusion-
exclusion proceedings in preparation for the certification
election on December 16, 1993.
SRBI appealed the Med-Arbiter’s decision to the
Secretary of Labor and Employment. The appeal was
denied for lack of merit. The certification election was
ordered.
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 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.
On June 17, 1994, SRBI filed with the Med-Arbiter an
urgent motion to suspend proceedings. The Med-Arbiter
denied the same on June 21, 1994. SRBI then filed a
motion for reconsideration. Two days later, the Med-
Arbiter cancelled the certification election scheduled for
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June 29, 1994 in order to address the motion for

reconsideration.
The Med-Arbiter later denied petitioner’s motion for
reconsideration. SRBI appealed the order of denial to the
DOLE Secretary on December 16, 1993.
On December 22, 1993, petitioner proceeded to file a
petition with the DOLE Regional Office seeking the
cancellation of the respondent union’s registration. It
averred that the APSOTEU-TUCP members were actually
managerial em-

_______________

2 205 SCRA 12 (1992).

429

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Sugbuanon Rural Bank, Inc. vs. Laguesma

ployees who were prohibited by law from joining or

organizing unions.
On April 22, 1994, respondent DOLE Undersecretary
denied SRBI’s appeal, for lack of merit. He ruled that
APSOTEU-TUCP was a legitimate labor organization. As
such, it was fully entitled to all the rights and privileges
granted by law to a legitimate labor organization, including
the right to file a petition for certification election. He also
held that until and unless a final order is issued cancelling
APSOTEU-TUC’s registration certificate, it had the legal
right to represent its members for collective bargaining
purposes. Furthermore, the question of whether the
APSOTEU-TUCP members should be considered as
managerial or confidential employees should not be
addressed in the proceedings involving a petition for
certification election but best threshed out in other
appropriate proceedings.
On May 25, 1994, SRBI moved for reconsideration of the
Undersecretary’s decision which was denied on July 7,
1994. The Med-Arbiter scheduled the holding of
certification elections on August 12, 1994.
Hence the instant petition grounded on the following
assignments of error:

RESPONDENT UNDERSECRETARY LAGUESMA ACTED

WITH GRAVE ABUSE OF DISCRETION AND PALPABLY

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ERRED:

A. IN HOLDING THAT ART. 257 OF THE LABOR CODE

REQUIRES THE MED-ARBITER TO CONDUCT A
CERTIFICATION ELECTION IN ANY UNORGANIZED
ESTABLISHMENT EVEN WHEN THE PETITIONING
UNION DOES NOT POSSESS THE QUALIFICATION
FOR AN APPROPRIATE BARGAINING AGENT; AND
B. IN REFUSING TO ASSUME JURISDICTION OVER
THE PETITIONER’S APPEAL AND TO DISMISS THE
RESPONDENT UNION’S PETITION FOR
CERTIFICATION ELECTION.

430

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Sugbuanon Rural Bank, Inc. vs. Laguesma

II

RESPONDENT UNDERSECRETARY LAGUESMA ACTED

WITH GRAVE ABUSE OF DISCRETION AND PALPABLY
ERRED IN DENYING THE PETITIONER’S APPEAL DESPITE
THE FACT THAT:

A. THE ALLEGED MEMBERS OF RESPONDENT UNION

ARE MANAGERIAL EMPLOYEES WHO ARE LEGALLY
DISQUALIFIED FROM JOINING ANY LABOR
ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF
RESPONDENT UNION ARE OCCUPYING HIGHLY
CONFIDENTIAL POSITIONS IN PETITIONER AND,
THUS, THE LEGAL DISQUALIFICATION OF
MANAGERIAL EMPLOYEES EQUALLY APPLY TO
THEM.

III

IN ANY EVENT, THE CONCLUSIONS REACHED IN THE

SUBJECT RESOLUTIONS ARE CONTRARY TO LAW AND
ARE DIAMETRICALLY OPPOSED TO RESPONDENT UNION’S
RECORDED ADMISSIONS AND REPRESENTATIONS.

Considering petitioner’s assigned errors, we find two core

issues for immediate resolution:

(1) Whether or not the members of the respondent

union are managerial employees and/or highly-
placed confidential employees, hence prohibited by
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law from joining labor organizations and engaging

in union activities?
(2) Whether or not the Med-Arbiter may validly order
the holding of a certification election upon the filing
of a petition for certification election by a registered
union, despite the petitioner’ appeal pending before
the DOLE Secretary against the issuance of the
union’s registration?

The other issues based on the assigned errors could be

resolved easily after the core issues are settled.

431

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Sugbuanon Rural Bank, Inc. vs. Laguesma

Respecting the first issue, Article 212(m) of the Labor Code

defines the terms “managerial employee” and “supervisory
employees” as follows:

“Art. 212. Definitions—

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

Petitioner submitted detailed job descriptions to support its

contention that the union members are managerial
employees and/or confidential3
employees proscribed from
engaging in labor activities. Petitioner vehemently argues
that the functions and responsibilities of the employees
involved constitute the “very core of the bank’s business,
lending of money to clients and borrowers, evaluating their
capacity to pay, approving the loan and its amount,
scheduling the terms of repayment, and 4
endorsing
delinquent accounts to counsel for collection.” Hence, they
must be deemed managerial employees. Petitioner cites
Tabacalera Insurance
5
Co. v. National Labor Relations
Commission,6 and Panday v. National Labor Relations
Commission, to sustain its submission. In Tabacalera, we
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sustained the classification of a credit and collection

supervisor by management as a managerial/supervisory
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

_______________

3 Records, pp. 80-82.

4 Id. at 16.
5 152 SCRA 667 (1987).
6 209 SCRA 122 (1992).

432

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Sugbuanon Rural Bank, Inc. vs. Laguesma

7
promotion and/or increase.” For this reason he was deemed
to be a managerial employee. In the present case, however,
petitioner failed to show that the employees in question
were vested with similar powers. At best they only had
recommendatory powers subject to evaluation, review, and
final decision by the bank’s management. The job
description forms submitted by petitioner clearly show that
the union members in question may not transfer, suspend,
lay-off, recall, discharge, assign, or discipline employees.
Moreover, the forms also do not show that the Cashiers,
Accountants, and Acting Chiefs of the Loans Department
formulate and execute management policies which are
normally expected of management officers.
Petitioner’s reliance on Panday is equally misplaced.
There, we held that a branch 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 8as the power to
recommend any promotion and/or increase.
Here, we find that that the Cashiers, Accountant, and
Acting Chief of the Loans Department of the petitioner did
not possess managerial powers and duties. We are,
therefore, constrained to conclude that they are not
managerial employees.
Now may the said bank personnel be deemed
confidential employees? Confidential employees are those
who (1) assist or act in a confidential capacity, in regard (2)
to persons who formulate, determine, and effectuate
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management 9
policies [specifically in the field of labor
relations]. The two criteria are cumulative, and both must
be met if an employee is to be considered a confidential
employee—that is, the confidential

_________________

7 152 SCRA 667, 674 (1987).

8 Supra; 209 SCRA 122, 126 (1992).
9 San Miguel Corp. Supervisors and Exempt Employees Union v.
Laguesma, 277 SCRA 370, 374 (1997) citing Westinghouse Electric Corp. v.
NLRB (CAS) 398 F2d. 689; Ladish Co., 178 NLRB 90 (1969), B.F.
Goodrich Co., 115 NLRB 722.

433

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Sugbuanon Rural Bank, Inc, vs. Laguesma

relationship must exist between the employee and his

superior officer; and that officer must handle 10
the prescribed
responsibilities relating to labor 11relations.
Article 245 of the Labor Code does not directly prohibit
confidential employees from engaging in union activities.
However, under the doctrine of necessary implication, the
disqualification of managerial
12
employees equally applies to
confidential employees. The confidential-employee rule
justifies exclusion of confidential employees because in the
normal course of their duties they become 13aware of
management policies relating to labor relations. It must
be stressed, however, that when the employee does not
have access to confidential labor relations information,
there is no legal prohibition against confidential
14
employees
from forming, assisting, or joining a union.
Petitioner contends that it has only 5 officers running its
day-to-day affairs. They assist in confidential capacities
and have complete access to the bank’s confidential data.
They form the core of the bank’s management team.
Petitioner explains that:

“. . . Specifically: (1) the Head of the Loans Department initially

approves the loan applications before they are passed on to the

_______________

10 Supra.
11 ART. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees.—Managerial employees are not

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eligible to join, assist or form any labor organization. Supervisory employees shall
not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own.
12 Golden Farms, Inc. v. Ferrer-Calleja, 175 SCRA 471, 477 (1989); Bulletin
Publishing Co., Inc. v. Hon. Augusto Sanchez, etc., 144 SCRA 628, 634 (1986).
13 San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma,
supra, 375.
14 Id. at 376; National Association of Trade Unions-Republic Planters Bank
Supervisor Chapter v. Torres, 239 SCRA 546, 560 (1994).

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Sugbuanon Rural Bank, Inc. vs. Laguesma

Board for confirmation. As such, no loan application is even

considered by the Board and approved by petitioner without his
stamp of approval based upon his interview of the applicant and
determination of his (applicant’s) credit standing and financial
capacity. The same holds true with respect to renewals or
restructuring of loan accounts. He himself determines what
account should be collected, whether extrajudicially or judicially,
and settles the problems or complaints of borrowers regarding
their accounts;

“(2) the Cashier is one of the approving officers and authorized

signatories of petitioner. He approves the opening of
accounts, withdrawals and encashment, and acceptance of
check deposits. He deals with other banks and, in the
absence of the regular Manager, manages the entire office
or branch and approves disbursements of funds for
expenses; and
“(3) the Accountant, who heads the Accounting Department, is
also one of the authorized 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
15
tickets submitted by the other
departments.”

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

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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.

_______________

15 Rollo, pp. 13-14.

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Sugbuanon Rural Bank, Inc. vs. Laguesma

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 the16
filing of a petition by a legitimate labor organization.
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.
Petitioner argues that giving due course to respondent
union’s petition for certification
17
election would violate the
separation of unions doctrine. Note that the petition was
filed by APSOTEU-TUCP, a legitimate labor organization.
It was not filed by ALU. Nor was it filed by TUCP, which is
a national labor federation with which respondent union is
affiliated. Petitioner says that respondent union is a mere
alter ego of ALU. The records show nothing to this effect.
What the records instead reveal is that respondent union
was initially assisted by ALU during its preliminary stages
of organization. A local union maintains its separate
personality18 despite affiliation with a larger national
federation. Petitioner alleges that ALU seeks to represent
both respondent union and the rank-and-file union. Again,

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we find nothing in the records to support this bare

assertion.

________________

16 Emphasis supplied. Furusawa Rubber Philippines, Inc. v. Secretary

of Labor and Employment, 282 SCRA 635, 641 (1997); California
Manufacturing Corp. v. Laguesma, 209 SCRA 606, 610-611 (1992).
17 Atlas Lithographic Services, Inc. v. Bienvenido Laguesma, et al., 205
SCRA 12 (1992).
18 Pambansang Kapatiran Ng Mga Anak Pawis sa Formey Plastic
National Workers Brotherhood v. Secretary of Labor, 253 SCRA 96, 103
(1995).

436

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Sugbuanon Rural Bank, Inc. vs. Laguesma

The law frowns on a union where the membership is

composed of both supervisors and rank-and-file employees,
for fear that conflicts of interest may arise in 19
the areas of
discipline, collective bargaining, and strikes. However, in
the present case, none of the members of the respondent
union came from the rank-and-file employees of the bank.
Taking into account the circumstances in this case, it is
our view that respondent Undersecretary committed no
reversible error nor grave abuse of discretion when he
found the order of the Med-Arbiter scheduling a
certification election in order. The list of employees eligible
to vote in said certification election was also found in order,
for none was specifically disqualified from membership.
WHEREFORE, the instant petition is hereby
DISMISSED. No pronouncement as to costs.
SO ORDERED.

          Bellosillo (Chairman), Mendoza, Buena and De

Leon, Jr., JJ., concur.

Petition dismissed.

Note.—Certification election is the most effective and

the most democratic way of determining which labor
organization can truly represent the working force in the
appropriate bargaining unit of a company. (Samahang
Manggagawa sa Permex vs. Secretary of Labor, 286 SCRA
692 [1998])

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——o0o——

_________________

19 Philippine Phosphate Corporation v. Torres, 231 SCRA 335, 342

(1994).

437

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