Coca-Cola FEMSA Philippines, Inc. vs. Central Luzon Regional Sales Executive Union of Coca-Cola San Fernando (FDO) Plant

The inclusion as union members of employees who are outside the bargaining unit — including managerial employees ineligible to join a labor organization — is not a ground for cancellation of the union's certificate of registration; such ineligible employees are automatically deemed removed from the list of membership, and the union continues to be registered. Cancellation of union registration is confined to the grounds enumerated in Article 247 (formerly Article 239) of the Labor Code.

Coca-Cola FEMSA Philippines, Inc. is a domestic corporation engaged in the manufacture of carbonated drinks and other beverages, while the Central Luzon Regional Sales Executive Union of Coca-Cola San Fernando (FDO) Plant is a legitimate labor organization established to represent Coca-Cola's sales executives in Central Luzon, covering Pampanga, Bataan, Zambales, and Tarlac. Coca-Cola FEMSA, an entity based in Mexico and the mother company of most Coca-Cola companies, acquired Coca-Cola Philippines, and the acquisition resulted in the reorganization, abolishment, and creation of positions within the company. The statutory backdrop is Book V of the Labor Code, as amended and renumbered on July 21, 2015, which governs the cancellation of union registration, together with its implementing rules issued by the Department of Labor and Employment.

Coca-Cola is a domestic corporation engaged in the business of manufacturing carbonated drinks and other beverages. The Union is a legitimate labor organization established to represent the sales executives of Coca-Cola in Central Luzon, specifically the provinces of Pampanga, Bataan, Zambales, and Tarlac.

On October 28, 2015, Coca-Cola received a letter from the Union seeking recognition as the certified bargaining agent of the company's sales executives in Central Luzon. On January 21, 2016, Coca-Cola filed a petition for cancellation of the Union's registration with the DOLE Regional Office in San Fernando, Pampanga, alleging that the Union's members comprised managers who are ineligible to join, assist, or form any labor organization.

Coca-Cola averred that the position of sales executives, previously classified as supervisory, had become imbued with managerial and executive functions. This change of function began when Coca-Cola FEMSA, an entity based in Mexico and the mother company of most Coca-Cola companies, bought and acquired Coca-Cola Philippines, and the acquisition resulted in reorganization, abolishment, and creation of some positions. According to Coca-Cola, the sales executives' functions now include business planning, performance management, project implementation, cost management, hiring, managing, training, and layoff of personnel. The sales executives manage the company's regional departments and customarily and regularly direct the work of two to fifteen employees, overseeing the day-to-day functions of their subordinates. They recommend potential hirees for employment, initiate administrative investigations, and execute decisions such as reprimand, suspension, or termination of erring employees. These functions, Coca-Cola asserted, require discretion and the exercise of judgment.

For its part, the Union claimed that its members are neither occupying managerial positions nor performing managerial functions. Their job description does not entail the exercise of discretion and independent judgment because their recommendations are subject to evaluation, review, and final action of the department heads or other executives. Their role in the hiring and firing of employees is merely recommendatory, and it is the Human Resource Department that has the final say on the eligibility of an applicant. Their decision in the termination of employees requires the concurrence of two other employees. These circumstances, the Union argued, show that its members cannot be classified as managers but are merely supervisors who have the right to form a separate union.

The DOLE Regional Office ruled in the Union's favor on May 25, 2016, finding no substantial proof of misrepresentation, false statement, or fraud during the course of the Union's registration, and clarifying that the inclusion of union members outside the bargaining unit is not a ground for cancellation of registration because ineligible employees are automatically removed from the list of union members. The BLR affirmed, and the Court of Appeals thereafter denied Coca-Cola's petition for certiorari and its subsequent motion for reconsideration. The labor tribunals uniformly found that no ground for cancellation existed and that Coca-Cola failed to substantiate its claim that the Union's entire membership was composed of managerial employees.

• Managerial Status of Union Members: Coca-Cola maintained that the Union's members comprised managers who are ineligible to join, assist, or form any labor organization, and that the sales executives' positions, previously classified as supervisory, had become imbued with managerial and executive functions following its acquisition by Coca-Cola FEMSA.
• Exercise of Discretion and Judgment: Coca-Cola argued that the sales executives' functions — business planning, performance management, project implementation, cost management, hiring, managing, training, and layoff of personnel — require discretion and the exercise of judgment, and that they customarily and regularly direct the work of two to fifteen employees, recommend potential hirees, initiate administrative investigations, and execute decisions such as reprimand, suspension, or termination.
• Ground for Cancellation: Coca-Cola insisted that the Union's certificate of registration should be revoked because its members are composed of employees performing managerial functions.
• Grave Abuse of Discretion: Before the Court of Appeals, Coca-Cola raised the sole issue of whether the BLR committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in affirming the dismissal of the petition for cancellation of registration.

• Absence of Managerial Functions: The Union claimed that its members are neither occupying managerial positions nor performing managerial functions, their job description not entailing the exercise of discretion and independent judgment since their recommendations are subject to evaluation, review, and final action of the department heads or other executives.
• Merely Recommendatory Role in Hiring and Firing: The Union argued that its members' role in the hiring and firing of employees is merely recommendatory, that it is the Human Resource Department that has the final say on the eligibility of an applicant, and that their decision in the termination of employees needs the concurrence of two other employees.
• Supervisory Status and Right to Form a Separate Union: These circumstances, the Union contended, show that its members cannot be classified as managers but are merely supervisors who have the right to form a separate union.

• Motion for Reconsideration: Whether the Court of Appeals erred in dismissing Coca-Cola's petition for certiorari for failure to file a motion for reconsideration from the BLR Resolution.
• Grounds for Cancellation of Union Registration: Whether the Court of Appeals erred in affirming the BLR and DOLE Regional Office rulings dismissing the petition for cancellation of the Union's certificate of registration on the ground that the Union's members are managerial employees.

• Motion for Reconsideration: No, the procedural dismissal cannot stand on that ground. The case falls under the exception recognized in Novateknika Land Corp. vs. Philippine National Bank, since the question raised in the certiorari proceeding had been duly raised and passed upon by the DOLE Regional Office and the BLR, and the petition may thus be entertained without a prior motion for reconsideration.
• Grounds for Cancellation of Union Registration: No. Article 247 (formerly Article 239) of the Labor Code limits cancellation of union registration to misrepresentation, false statement or fraud in the adoption or ratification of the constitution and by-laws or in the election of officers, and voluntary dissolution by the members; the inclusion of employees outside the bargaining unit is not among these grounds.

• Motion for Reconsideration: The general rule is that the filing of a motion for reconsideration is a prerequisite to the filing of a special civil action for certiorari, subject to certain exceptions, among which is the situation where the questions raised in the certiorari proceeding have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court. The rationale for the requirement is to afford the tribunal, board, or office an opportunity to rectify its errors and mistakes before resort to courts of justice can be had, a rationale implied from the nature of certiorari as an extraordinary remedy available only when there is no other plain, speedy, and adequate remedy in the course of law. Here, the basic issue to be resolved by the Court of Appeals was whether there is a ground to cancel the Union's certificate of registration, the same issue decided by both the DOLE Regional Office and the BLR, which determined that there was no basis for cancellation because none of the grounds in Article 247, formerly Article 239, of the Labor Code was present. Because of this repetition of the issue from the DOLE Regional Office to the BLR up to the Court of Appeals, the case falls under the second enumeration of exceptions, and the petition for certiorari before the Court of Appeals may be entertained without a prior motion for reconsideration.

• Grounds for Cancellation of Union Registration: Article 247 (formerly Article 239) of the Labor Code, as amended and renumbered on July 21, 2015, provides that the following may constitute grounds for cancellation of union registration: (a) misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; and (c) voluntary dissolution by the members. The same grounds are reiterated in Section 3, Rule XIV of DOLE Department Order No. 40-F-03-08 dated October 30, 2008. As correctly and consistently determined by the DOLE Regional Office, the BLR, and the Court of Appeals, Coca-Cola failed to prove that any of these grounds were present; there were no misrepresentations, false statements, or fraud in the adoption, ratification, or amendment of the constitution and by-laws, the minutes of ratification, the list of members who took part in the ratification, the election of officers, the minutes of the election of officers, and the list of voters. Coca-Cola's claim that the Union is composed of managerial employees who are forbidden to join, assist, or form a labor organization does not supply a ground for cancellation, because the Labor Code does not include such a situation as a ground for cancellation of a union's registration. Section 6, Rule XIV of DOLE Department Order No. 40-F-03-08 directly addresses the situation, providing that the inclusion as union members of employees who are outside the bargaining unit shall not be a ground to cancel the union registration and that ineligible employees are automatically deemed removed from the list of membership of the union. Thus, if there are any managerial employees who are union members, they are automatically removed from the union membership, and the Union continues to be registered. The Court also reiterated that it is not a trier of facts, a doctrine that applies with greater force in labor cases, since questions of fact are for the labor tribunals to resolve and only errors of law are generally reviewed in petitions for review on certiorari criticizing decisions of the Court of Appeals; the findings of the Labor Arbiter, when affirmed by the NLRC and the Court of Appeals, are binding on the Supreme Court unless patently erroneous. Accordingly, the Court sustained the Court of Appeals' findings and conclusion, as unanimously decided by the DOLE Regional Office and the BLR.

• Grounds for Cancellation of Union Registration Are Limited and Exclusive — Under Article 247 (formerly Article 239) of the Labor Code, as reiterated in Section 3, Rule XIV of DOLE Department Order No. 40-F-03-08, the grounds for cancellation of a labor organization's registration are limited to (a) misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; and (c) voluntary dissolution by the members. The Court applied this by holding that Coca-Cola's failure to prove any of these grounds was fatal to its petition for cancellation.
• Ineligible Union Members Are Automatically Removed, Not a Ground for Cancellation — Section 6, Rule XIV of DOLE Department Order No. 40-F-03-08 provides that the inclusion as union members of employees who are outside the bargaining unit shall not be a ground to cancel the union registration, and that ineligible employees are automatically deemed removed from the list of membership of the union. The Court applied this provision to hold that even if managerial employees were union members, they would simply be removed from the membership list while the Union's registration subsists.
• Motion for Reconsideration as Prerequisite to Certiorari and Its Exceptions — The filing of a motion for reconsideration is a prerequisite to the filing of a special civil action for certiorari, subject to the exceptions enumerated in Novateknika Land Corp. vs. Philippine National Bank: (a) where the order is a patent nullity, as where the court a quo has no jurisdiction; (b) where the questions raised in the certiorari proceeding have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the government or the petitioner or the subject matter of the action is perishable; (d) where, under the circumstances, a motion for reconsideration would be useless; (e) where petitioner was deprived of due process and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; (g) where the proceedings in the lower court are a nullity for lack of due process; (h) where the proceedings was ex parte or in which the petitioner had no opportunity to object; and (i) where the issue raised is one purely of law or where public interest is involved. The Court applied exception (b), because the same issue had been raised and passed upon by the DOLE Regional Office, the BLR, and the Court of Appeals.
• The Supreme Court Is Not a Trier of Facts, Especially in Labor Cases — Questions of fact are for the labor tribunals to resolve, and only errors of law are generally reviewed in petitions for review on certiorari criticizing decisions of the Court of Appeals. The findings of the Labor Arbiter, when affirmed by the NLRC and the Court of Appeals, are binding on the Supreme Court unless patently erroneous. The Court applied this doctrine in sustaining the uniform findings of the DOLE Regional Office, the BLR, and the Court of Appeals.

• "The inclusion as union members of employees who are outside the bargaining unit shall not be a ground to cancel the union registration. The ineligible employees are automatically deemed removed from the list of membership of the union." — This is the Court's opening statement of the controlling rule, drawn from Section 6, Rule XIV of DOLE Department Order No. 40-F-03-08, and it supplies the ratio decidendi for the denial of the petition for cancellation.
• "Well established is the rule that the filing of a motion for reconsideration is a prerequisite to the filing of a special civil action for certiorari, subject to certain exceptions, to wit: xxx" — The Court's restatement of the general rule on the motion-for-reconsideration requirement, which it then qualified by applying the second enumerated exception to excuse Coca-Cola's procedural lapse.
• "Well-settled is the rule that this Court is not a trier of facts and this doctrine applies with greater force in labor cases. Questions of fact are for the labor tribunals to resolve. Only errors of law are generally reviewed in petitions for review on certiorari criticizing decisions of the CA." — This passage, drawn from Nahas vs. Olarte, states the standard of review that constrained the Court to defer to the uniform factual findings of the labor tribunals.
• "Coca-Cola claims that the Union is composed of managerial employees who are forbidden to join, assist, or form a labor organization. However, the Labor Code does not include such situation as a ground for cancellation of a union's registration." — This passage articulates the decisive substantive holding: managerial status of union members is not among the statutory grounds for cancellation of union registration.

• Novateknika Land Corp. vs. Philippine National Bank, 706 Phil. 414 (2013) — Controlling precedent on the procedural issue. The Court reiterated the general rule that a motion for reconsideration is a prerequisite to a special civil action for certiorari and adopted the nine exceptions enumerated therein, applying the second exception to hold that the Court of Appeals could entertain Coca-Cola's petition despite the absence of a prior motion for reconsideration.
• Nahas vs. Olarte, 734 Phil. 569 (2014) — Precedent on the standard of review. The Court reiterated the rule that it is not a trier of facts, that this doctrine applies with greater force in labor cases, and that the findings of the Labor Arbiter, when affirmed by the NLRC and the Court of Appeals, are binding on the Supreme Court unless patently erroneous.

• Article 247 (formerly Article 239), Labor Code of the Philippines — Enumerates the grounds for cancellation of union registration: (a) misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; and (c) voluntary dissolution by the members. The Court held that Coca-Cola neither claimed nor proved the existence of any of these grounds, and that managerial status of members is not among them.
• Article 238, Labor Code of the Philippines — Provides that the certificate of registration of any legitimate labor organization, whether national or local, may be cancelled by the Bureau, after due hearing, only on the grounds specified in Article 239 (now Article 247). The Court cited this provision, as discussed by the Court of Appeals, to underscore that cancellation is confined to the enumerated grounds.
• Section 3, Rule XIV, DOLE Department Order No. 40-F-03-08 (October 30, 2008) — Reiterates the statutory grounds for cancellation of registration of labor organizations, mirroring Article 247 of the Labor Code. The Court cited it as the implementing rule confirming the exclusive enumeration of grounds.
• Section 6, Rule XIV, DOLE Department Order No. 40-F-03-08 (October 30, 2008) — Provides that the inclusion as union members of employees who are outside the bargaining unit shall not be a ground to cancel the union registration, and that ineligible employees are automatically deemed removed from the list of membership of the union. The Court applied this provision to hold that any managerial employees who are union members are automatically removed from membership while the Union continues to be registered.
• Rule 45 and Rule 65, Rules of Court — Rule 45 governs the petition for review on certiorari filed before the Supreme Court, while Rule 65 governs the special civil action for certiorari filed before the Court of Appeals. The Court applied the procedural rules in resolving the effect of Coca-Cola's failure to file a motion for reconsideration before resorting to certiorari.

Peralta, C.J. (Chairperson), Caguioa, Reyes, J. Jr., Lazaro-Javier, and Lopez, JJ., concurred in the decision.