G.R. No.

110399 August 15, 1997

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND
ERNESTO L. PONCE, President V. HONORABLE BIENVENIDO E.
LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY
AS MED-ARBITER AND SAN MIGUEL CORPORATION
FACTS: Petitioner union filed before DOLE a Petition for Direct Certification or Certification
Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products
Plants of Cabuyao, San Fernando and Otis.
Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election
among the abovementioned employees of the different plants as one bargaining unit.
San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out,
among others, the Med-Arbiter’s error in grouping together all three (3) separate plants, into
one bargaining unit, and in including supervisory levels 3 and above whose positions are
confidential in nature.
The public respondent, Undersecretary Laguesma, granted respondent company’s Appeal and
ordered the remand of the case to the Med-Arbiter of origin for determination of the true
classification of each of the employees sought to be included in the appropriate bargaining unit.
Upon petitioner-union’s motion, Undersecretary Laguesma granted the reconsideration prayed
for 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.
ISSUE:
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.
RULING:
(1) 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.
They are not qualified to be classified as managerial employees who, under Article 245 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.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons
who formulate, determine, and effectuate management policies in the field of labor relations.
The two criteria are cumulative, and both must be met if an employee is to be considered a
confidential employee — that is, the confidential relationship must exist between the employee
and his supervisor, and the supervisor must handle the prescribed responsibilities relating to
labor relations.
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.
“Management should not be required to handle labor relations matters through employees who
are represented by the union with which the company is required to deal and who in the normal
performance of their duties may obtain advance information of the company’s position with
regard to contract negotiations, the disposition of grievances, or other labor relations matters.”
The Court held that “if these managerial employees would belong to or be affiliated with a
Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of
interest. The Union can also become company-dominated with the presence of managerial
employees in Union membership.”
An important element of the “confidential employee rule” is the employee’s need to use labor
relations information. Thus, in determining the confidentiality of certain employees, a key
question frequently considered is the employee’s necessary access to confidential labor relations
information.
(2) 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.
An appropriate bargaining unit may be defined as “a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interest of
all the employees, consistent with equity to the employer, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions of the law.”
A unit to be appropriate must effect a grouping of employees who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective bargaining.

SAN MIGUEL FOODS, INCORPORATED VS SAN MIGUEL CORPORATION SUPERVISORS and

EXEMPT UNION G.R. No. 146206

Topic: Determination of Appropriate Bargaining Unit; Factors – Unit Determination

QUICKIE FACTS: San Miguel Foods has factory/branches in Cabuyao, San Fernando, and Otis.
The employees from these three branches wanted to form a single bargaining unit. This was
opposed by the company as being against the “one company, one union” policy. SC ruled that
applying the mutuality of interest test, there should only be one bargaining unit.

FACTS:

In the case of San Miguel Corporation Supervisors and Exempt Union v. Laguesma, the Court
held that even if they handle confidential data regarding technical and internal business
operations, supervisory employees 3 and 4 and the exempt employees of petitioner San Miguel
Foods, Inc. are not to be considered confidential employees, because the same do not pertain
to labor relations, particularly, negotiation and settlement of grievances. Consequently, they
were allowed to form an appropriate bargaining unit for the purpose of collective bargaining.
The Court also declared that the employees belonging to the three different plants of San
Miguel Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis,
having community or mutuality of interests, constitute a single bargaining unit.

A certification election was conducted. On the date of the election, petitioner filed the Omnibus
Objections and Challenge to Voters, questioning the eligibility to vote by some of its employees
on the grounds that some employees do not belong to the bargaining unit which respondent
seeks to represent or that there is no existence of employer-employee relationship with
petitioner.

Based on the results of the election, the Med-Arbiter issued the Order stating that since the Yes
vote received 97% of the valid votes cast, respondent is certified to be the exclusive bargaining
agent of the supervisors and exempt employees of petitioner's Magnolia Poultry Products
Plants in Cabuyao, San Fernando, and Otis.

On appeal, the then Acting DOLE Undersecretary, in the Resolution, affirmed the Order of the
Med-Arbiter.

CA affirmed the Resolution of DOLE Undersecretary with modification stating that those
holding the positions of Human Resource Assistant and Personnel Assistant are excluded from
the bargaining unit.

Hence, this petition by the San Miguel Foods

ISSUE: W/N CA departed from jurisprudence when it expanded the scope of the bargaining unit.

RULING: No. In San Miguel vs Laguesma, the Court explained that the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a
single bargaining unit, which is not contrary to the one-company, one-union policy. An
appropriate bargaining unit is 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.

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

The Court affirms the finding of the CA that there should be only one bargaining unit for the employees
in Cabuyao, San Fernando, and Otis of Magnolia Poultry Products Plant involved in dressed chicken
processing and Magnolia Poultry Farms engaged in live chicken operations. Certain factors, such as
specific line of work, working conditions, location of work, mode of compensation, and other relevant
conditions do not affect or impede their commonality of interest. Although they seem separate and
distinct from each other, the specific tasks of each division are actually interrelated and there
exists mutuality of interests which warrants the formation of a single bargaining unit.

DISPOSITIVE: Respondent won

DOCTRINE: An appropriate bargaining unit is 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.

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

FilOil Refinery Corp. vs. FilOil Supervisory & Confidential Employees Asso. And Court of
Industrial Relations

G.R. No. L-26736 August 18, 1972

Facts: Respondent association is a labor organization duly registered with the Department of
Labor. It is composed exclusively of the supervisory and confidential employees of petitioner
corporation. There exists another entirely distinct labor association composed of the
corporation’s rank-and-file employees, the Filoil Employees & Workers Association (FEWA) with
which petitioner executed a collective bargaining agreement. This collective bargaining
agreement expressly excluded from its coverage petitioner’s supervisory and confidential
employees, who in turn organized their own labor association, respondent herein.

Respondent association filed on February 18, 1965 with the industrial court its petition for
certification as the sole and exclusive collective bargaining agent of all of petitioner’s
supervisory and confidential employees working at its refinery in Rosario, Cavite.

Petitioner corporation filed a motion to dismiss the petition claiming that supervisors are not
employees within the meaning of Republic Act 875, the Industrial Peace Act, and that since they
are part of management, they do not have the right to bargain collectively although they may
organize an organization of their own and that supervisors form part of management and are
not considered as employees entitled to bargain collectively, arguing that “as supervisors form
part and parcel of management, it is absurd for management to bargain collectively with itself.”

Respondent court denied the dismissal motion. It ruled that under the express provisions of
section 3 of the Industrial Peace Act, “(I)ndividuals employed as supervisors shall not be eligible
for membership in a labor organization of employees under their supervision but may form
separate organizations their own.”

Issue: Whether the respondent Supervisors (and confidential employees) may form a labor
organization and enjoy right to collective bargaining?

Held: Yes. Supervisors (and confidential employees), even though they may exercise the
prerogatives of management as regards the rank and file employees are indeed employees in
relation to their employer, the company which is owned by the stockholders and bondholders
(capital) and should therefore be entitled under the law to bargain collectively with the top
management with respect to their terms and conditions of employment.

As stated for the SC in AG & P Co. of Manila, Inc. vs. C.I.R., section 3 of the Industrial Peace Act
“explicitly provides that “employees” — and this term includes supervisors — “shall have the
right to self-organization, and to form, join or assist labor organizations of their own choosing
for the purpose of collective bargaining through representations of their own choosing and to
engage in concerted activities for the purpose of collective bargaining and other mutual aid or
protection” and that “individuals employed as supervisors … may form separate organizations
of their own”. For this reason, supervisors are entitled to engage in union activities and any
discrimination against them by reason thereof constitutes an unfair labor practice.