Filoil Refinery Corporation vs. Filoil Supervisory & Confidential Employees Association and Court of Industrial Relations

Supervisors and confidential employees are employees within the meaning of Republic Act No. 875 and may form separate labor organizations and bargain collectively with their employer; the inclusion of confidential employees in the supervisors’ bargaining unit and the refusal to fragment the unit are matters within the Court of Industrial Relations’ wide discretion absent arbitrariness or grave abuse of discretion.

Filoil Refinery Corporation operated a refinery in Rosario, Cavite, where its rank-and-file employees were represented by the Filoil Employees & Workers Association (FEWA) under a collective bargaining agreement. That agreement expressly excluded the corporation’s supervisory and confidential employees from its coverage. Those excluded employees formed the Filoil Supervisory & Confidential Employees Association, a labor organization registered with the Department of Labor. The Industrial Peace Act, Republic Act No. 875, supplied the statutory framework governing their right to organize and bargain collectively.

Filoil Refinery Corporation operated a refinery in Rosario, Cavite. Its rank-and-file employees were represented by the Filoil Employees & Workers Association (FEWA), with which the corporation had a collective bargaining agreement. That agreement expressly excluded the corporation’s supervisory and confidential employees from its coverage.

The excluded employees organized the Filoil Supervisory & Confidential Employees Association, a labor organization duly registered with the Department of Labor and composed exclusively of the corporation’s supervisory and confidential employees. On February 18, 1965, the association filed with the Court of Industrial Relations a petition for certification as the sole and exclusive collective bargaining agent of all of the corporation’s supervisory and confidential employees working at the Rosario refinery.

Filoil Refinery moved to dismiss the petition on the grounds of lack of cause of action and lack of jurisdiction over the subject matter, claiming that supervisors are not employees within the meaning of Republic Act No. 875 and, as part of management, have no right to bargain collectively although they may organize their own organization. The Court of Industrial Relations denied the motion on May 26, 1965, and its en banc resolution of September 7, 1965 affirmed that denial; no appeal was taken from the resolution.

The parties then submitted a stipulation of facts. They stipulated that the respondent association had forty-seven members among the supervisory, technical men, and confidential employees of the company, and that all forty-seven members were being checked off by the company for union dues pursuant to individual check-off authorizations. The parties could not agree on the composition of the appropriate bargaining unit. The corporation proposed that the forty-seven members be broken up into five separate collective bargaining units: supervisors as a distinct unit; and the rest divided into confidential employees, professional personnel, fringe employees consisting of five firemen, and twelve office and clerical employees.

Evidence received by the Court of Industrial Relations showed that executive personnel handling personnel matters for the employer were excluded from the respondent association. In its July 23, 1966 order, the Court of Industrial Relations noted that none of the employees listed under Groups I and II, including Leonardo R. Santos under Group III, was a member of the respondent association; that the personnel under Groups I and II were executives who had supervision over the supervisors who were members; and that Marcelo Bernardo handled personnel matters for the employer, so all of them should be excluded from the appropriate bargaining unit. The Court of Industrial Relations also found that the confidential employees were very few and, by practice and tradition, identified with management, and it allowed their inclusion in the supervisors’ bargaining unit except for Marcelo Bernardo. It further observed that the corporation’s proposal would create five bargaining units of about eight employees each, fragmentary units that would not serve industrial peace, and that the respondent association clearly represented the majority of the employees in the appropriate bargaining unit.

• Management Status / No Right to Bargain Collectively: Petitioner argued that supervisors form part of management and are not employees entitled to bargain collectively, such that allowing them to bargain would be tantamount to management bargaining with itself.
• American Concept and Taft-Hartley Act: Petitioner maintained that under the American concept supervisors are not considered employees, and that because Congress copied verbatim the Taft-Hartley Act’s definition of supervisor into Republic Act No. 875, Congress intended to follow the Taft-Hartley Act’s intendment exempting employers from any legal obligation to recognize and negotiate with supervisors.
• Policy and Free Enterprise: Petitioner argued that an employer must give a “better deal” to supervisors and confidential employees who act in its interest and enjoy its trust and confidence; that the Taft-Hartley Act ended the move to align part of the supervisory group with labor; and that giving supervisors the right to compel employers to bargain would align labor and management against stockholders and bondholders (capital), tilt the balance of power, and contradict the philosophy of free enterprise.
• Appropriate Bargaining Unit: Petitioner objected to the inclusion of confidential employees in the supervisors’ bargaining unit and proposed breaking the forty-seven members into five separate units: supervisors, confidential employees, professional personnel, fringe employees consisting of five firemen, and twelve office and clerical employees.
• Lack of Cause of Action and Jurisdiction: Petitioner moved to dismiss the petition on the grounds of lack of cause of action and lack of jurisdiction over the subject matter, asserting that supervisors are not employees within the meaning of Republic Act No. 875 and, as part of management, have no right to bargain collectively.

• Dual Status of Supervisors: Respondent association countered that if a supervisor were absolutely indistinguishable from management, he would be beyond removal or dismissal, asking how management could remove or dismiss itself; supervisors therefore remain employees in relation to the employer.
• Certification as Bargaining Agent: Respondent association sought certification as the sole and exclusive collective bargaining agent of all of petitioner’s supervisory and confidential employees at the Rosario, Cavite refinery.

• Right of Supervisors to Organize and Bargain Collectively: Whether supervisors are employees within the meaning of the Industrial Peace Act and have the right to organize and bargain collectively with their employer.
• Effect of Taft-Hartley Act Definition: Whether the incorporation of the Taft-Hartley Act’s definition of supervisor into the Industrial Peace Act requires denying supervisors the right to bargain collectively.
• Inclusion of Confidential Employees: Whether confidential employees may be included in the same bargaining unit as supervisors.
• Appropriateness of Bargaining Unit: Whether the Court of Industrial Relations acted with grave abuse of discretion in refusing to break the respondent association into five separate bargaining units and in certifying it as the sole and exclusive bargaining agent.
• Jurisdiction and Cause of Action: Whether the Court of Industrial Relations had jurisdiction over the petition and whether petitioner’s motion to dismiss for lack of cause of action was properly denied.
• Effect of Failure to Appeal: Whether petitioner’s failure to appeal the Court of Industrial Relations en banc resolution of September 7, 1965 foreclosed further challenge to the right of supervisors and confidential employees to organize and bargain collectively.

• Right of Supervisors to Organize and Bargain Collectively: Yes. Supervisors are employees in relation to their employer under Section 3 of Republic Act No. 875 and may form separate organizations and bargain collectively.
• Effect of Taft-Hartley Act Definition: No. The plain and unambiguous language of the Industrial Peace Act controls; the Taft-Hartley Act’s intendment cannot override it.
• Inclusion of Confidential Employees: Yes. Confidential employees may be included in the supervisors’ bargaining unit where they are few and identified with management by practice and tradition, except those handling personnel matters.
• Appropriateness of Bargaining Unit: No grave abuse of discretion. The Court of Industrial Relations’ determination of the appropriate bargaining unit is discretionary and entitled to almost complete finality absent arbitrariness or capriciousness.
• Jurisdiction and Cause of Action: Yes. The Court of Industrial Relations had jurisdiction; the motion to dismiss was properly denied because supervisors are employees under the Act.
• Effect of Failure to Appeal: The failure to appeal the September 7, 1965 en banc resolution rendered the right-to-bargain issue final; in any event, petitioner’s contentions are untenable on the merits.

• Right of Supervisors to Organize and Bargain Collectively: Section 3 of Republic Act No. 875 expressly provides that employees — a term that 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 representatives of their own choosing and to engage in concerted activities for collective bargaining and other mutual aid or protection. It further provides that individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. The Court held that petitioner’s argument that supervisors are part of management and therefore cannot bargain collectively ignores the dual status of a supervisor as a representative of management and as an employee. If a supervisor were absolutely indistinguishable from management, he would be beyond removal or dismissal, which is not the case. In relation to his employer, a foreman or supervisor is an employee within the meaning of the Act; supervisors are therefore entitled to engage in union activities, and discrimination against them on that basis constitutes an unfair labor practice. The Court also noted that petitioner failed to appeal the en banc resolution of September 7, 1965 upholding the right of supervisors and confidential employees to organize and bargain collectively, but it proceeded to rule on the merits and found the contentions untenable.
• Effect of Taft-Hartley Act Definition: Petitioner’s argument that the express provisions of Section 3 of the Industrial Peace Act must give way to the intendment of the Taft-Hartley Act was rejected. The language of the Philippine statute is plain and unambiguous and admits of no other interpretation. The Industrial Peace Act expressly grants supervisors the right to organize and bargain collectively, and arguments going to the wisdom and policy of that legislative choice are beyond the Court’s power of review. The Court also pointed out that the supervisors and confidential employees, even though they may exercise management prerogatives as regards rank-and-file employees, are employees in relation to the employer, the company owned by the stockholders and bondholders referred to by petitioner, and should therefore be entitled under the law to bargain collectively with top management with respect to their terms and conditions of employment.
• Inclusion of Confidential Employees: The Court upheld the Court of Industrial Relations’ inclusion of confidential employees in the supervisors’ bargaining unit. The Court of Industrial Relations had found that the confidential employees were very few and were, by practice and tradition, identified with the supervisors in their role as representatives of management vis-à-vis rank-and-file employees. Such identity of interest allowed their inclusion in the bargaining unit of supervisors-managers for purposes of collective bargaining, in turn as employees in relation to the company as their employer. The Court noted that petitioner itself admitted that the supervisors and confidential employees enjoyed its trust and confidence, and that this identity of interest logically called for their inclusion in the same bargaining unit. The inclusion also fulfilled the law’s objective of insuring to them the full benefit of their right to self-organization and collective bargaining, which could hardly be accomplished if the respondent association’s membership were broken up into five separate ineffective tiny units. Marcelo Bernardo, who handled personnel matters for the employer, was properly excluded.
• Appropriateness of Bargaining Unit: The Court held that no arbitrariness or grave abuse of discretion could be attributed to the Court of Industrial Relations for allowing the inclusion of the confidential employees in the supervisors’ association and for refusing to fragment the unit. The industrial court enjoys a wide discretion in determining the procedure necessary to insure the fair and free choice of bargaining representatives by employees. Its action in deciding upon an appropriate unit for collective bargaining purposes is discretionary, and its judgment in this respect is entitled to almost complete finality unless its action is arbitrary or capricious. The Court of Industrial Relations had reasoned that breaking the respondent association into five bargaining units of about eight employees each would create fragmentary units that would not serve industrial peace, especially in an industry indispensable to the national interest, and would impair the organizational value of the bargaining agent. The Court found no grave abuse of discretion justifying intervention and sustained the Court of Industrial Relations’ action in line with its consistent rulings upholding the exercise of that court’s discretion in matters concerning the representation of employee groups.
• Jurisdiction and Cause of Action: The Court of Industrial Relations had jurisdiction over the petition, and petitioner’s motion to dismiss for lack of cause of action and lack of jurisdiction was properly denied. Supervisors are employees within the meaning of Republic Act No. 875 and may form separate organizations of their own and bargain collectively. The petition for certification as sole and exclusive bargaining agent therefore stated a proper cause and fell within the Court of Industrial Relations’ authority.
• Effect of Failure to Appeal: Petitioner’s failure to appeal in due course the Court of Industrial Relations’ en banc resolution of September 7, 1965, which upheld the right of supervisors and confidential employees to organize the respondent association and to compel petitioner to negotiate and bargain collectively, rendered that matter final and binding. The Court nevertheless stated that, prescinding from that failure to appeal, petitioner’s contentions were untenable on the merits.

• Dual Status of Supervisors — A supervisor is both a representative of management and an employee in relation to the employer. This dual status means that supervisors may form separate labor organizations of their own and bargain collectively with the employer; they are not absolutely indistinguishable from management. The Court applied this doctrine to reject petitioner’s argument that allowing supervisors to bargain collectively would be management bargaining with itself.
• Right of Supervisors to Self-Organization and Collective Bargaining — Under Section 3 of Republic Act No. 875, employees, including supervisors, have the right to self-organization, to form, join, or assist labor organizations of their own choosing for collective bargaining, and to engage in concerted activities for collective bargaining and other mutual aid or protection. Supervisors may not join a labor organization of employees under their supervision but may form separate organizations. The Court applied this to uphold the respondent association’s right to organize and bargain collectively.
• Plain Meaning Rule in Statutory Construction — Where the language of a statute is plain and unambiguous, it admits of no other interpretation. The Court applied this rule to hold that the express provisions of the Philippine Industrial Peace Act granting supervisors the right to organize and bargain collectively could not be overridden by the alleged intendment of the American Taft-Hartley Act.
• Identity of Interest of Confidential Employees — Confidential employees who are very few in number and are, by practice and tradition, identified with management may be included in the bargaining unit of supervisors who are likewise identified with management, except those who handle personnel matters for the employer. The Court applied this doctrine to sustain the inclusion of confidential employees in the respondent association’s bargaining unit.
• Wide Discretion of the Court of Industrial Relations in Determining the Appropriate Bargaining Unit — The Court of Industrial Relations enjoys wide discretion in determining the procedure necessary to insure the fair and free choice of bargaining representatives and in deciding upon an appropriate unit for collective bargaining. Its judgment is entitled to almost complete finality unless its action is arbitrary or capricious. The Court applied this doctrine to sustain the refusal to break the respondent association into five separate bargaining units.
• Policy Against Fragmentary Bargaining Units — Breaking a bargaining agent into tiny units impairs its organizational value and does not serve industrial peace. The Court relied on this policy to uphold the single bargaining unit for supervisors and confidential employees.

• "individuals employed as supervisors ... may form separate organizations of their own" — This statutory language, quoted from Section 3 of the Industrial Peace Act, is the basis for the Court’s holding that supervisors may organize separately from the rank-and-file employees under their supervision.
• "in relation to his employer," a foreman or supervisor "is an employee within the meaning of the Act" ... For this reason, supervisors are entitled to engage in union activities and any discrimination against them by reason thereof constitutes an unfair labor practice." — This passage states the ratio decidendi on the dual status of supervisors and their protection under the Industrial Peace Act.
• "The language of our own statute is plain and unambiguous and admits of no other interpretation." — This is the Court’s answer to petitioner’s argument that the Taft-Hartley Act’s intendment should control the interpretation of Republic Act No. 875.
• "its judgment in this respect is entitled to almost complete finality, unless its action is arbitrary or capricious" — This passage defines the standard of review over the Court of Industrial Relations’ determination of the appropriate bargaining unit and explains why the Court sustained the certification.

• AG & P Co. of Manila, Inc. vs. C.I.R., 3 SCRA 672 (1961) — Cited as controlling precedent for the rule that Section 3 of the Industrial Peace Act includes supervisors within the term “employees,” that supervisors are entitled to engage in union activities, and that discrimination against them constitutes an unfair labor practice.
• Lopez vs. Chronicle Publication Employees' Ass'n., 12 SCRA 694 (1964) — Cited together with AG & P as supporting authority for the same proposition regarding supervisors’ rights under the Industrial Peace Act.
• LVN Pictures, Inc. vs. Phil. Musicians Guild, 1 SCRA 132, 135-136 (1961) — Cited for the rule that the Court of Industrial Relations enjoys wide discretion in determining the procedure necessary to insure the fair and free choice of bargaining representatives.
• Mech, Dept. Labor Union sa PNR vs. CIR, 24 SCRA 925, 930 (1968) — Cited for the Court’s consistent rulings upholding the exercise of the Court of Industrial Relations’ discretion in matters concerning the representation of employee groups.
• Union de Maquinistas, Fogoneros y Motormen vs. Philippine National Railways, Case No. 67-IPA — Cited by the Court of Industrial Relations as an example of an industry indispensable to the national interest where fragmentation into many unions was undesirable.
• Wilson & Co., 68 NLRB 84 — Cited by the Court of Industrial Relations for the “identity of interest” rationale allowing confidential employees to be included in the bargaining unit of supervisors identified with management.
• 20 NLRB 705 — Cited for the policy that inclusion or exclusion of employees from a bargaining unit should insure to employees the full benefit of their right to self-organization and collective bargaining and otherwise effectuate the policies of the Act.

• Section 3, Republic Act No. 875 (Industrial Peace Act) — Provides that employees, including supervisors, shall have the right to self-organization, to form, join, or assist labor organizations of their own choosing for collective bargaining, and to engage in concerted activities for collective bargaining and other mutual aid or protection; it also provides that individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. The Court applied this provision to hold that supervisors are employees and may organize and bargain collectively.
• Section 24, Republic Act No. 875 — Cited by the Court of Industrial Relations as expressly granting supervisors the right to bargain collectively. The Court affirmed the ruling that this right exists under the Act.
• Section 11, Republic Act No. 875 — Cited by the Court of Industrial Relations for the proposition that government employees may belong to any labor organization provided no obligation to strike or join a strike is imposed; the denial of the right to strike to government employees was considered significant in showing that Congress knew how to withhold such a right expressly and did not do so for supervisors.
• Section 2(k), Republic Act No. 875 — Defines “supervisor” and was noted by petitioner as having been copied verbatim from the Taft-Hartley Act. The Court held that this did not require following the Taft-Hartley Act’s intendment because the Philippine statute’s language is plain and unambiguous.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ., concur. Castro, J., concurs in the result.

• Judge Salvador (Court of Industrial Relations, en banc) — Concurred with the supervisors’ right of self-organization and collective bargaining but dissented on the ground that the Industrial Peace Act did not contemplate or provide for supervisors and confidential employees to be under one bargaining unit; as to executive personnel who have supervision over supervisors being excluded from any representation, urged that another supervisors’ unit be created for these executive personnel. The second point was not in contention at bar because the executive personnel concerned did not appeal their exclusion.