Franklin Baker Company of the Philippines vs. Trajano

Employees whose recommendatory powers over hiring, suspension, discharge, and discipline are subject to evaluation, review, and final action by department heads and higher executives are not managerial employees, because their authority is not an exercise of independent judgment as required by Article 212(k) of the Labor Code and Section 1(m) of its Implementing Rules, and they may therefore be included in a certification election.

Franklin Baker Company of the Philippines operated a desiccated coconut processing plant at Coronan, Sta. Cruz, Davao del Sur, employing approximately ninety regular technical and office employees as a group separate and distinct from the regular rank-and-file employees covered by an existing collective bargaining agreement. The technical and office employees organized themselves into the Franklin Baker Brotherhood Association (Technical and Office Employees) and affiliated with the Association of Trade Unions (ATU), a legitimate labor organization. The dispute centered on whether seventy-six of these employees—inspectors, foremen, and supervisors—were managerial employees who should be excluded from a certification election and the resulting bargaining unit.

On April 23, 1984, the Franklin Baker Brotherhood Association-(ATU) filed a petition for certification election among the office and technical employees of Franklin Baker Company of the Philippines' Davao Plant with the Ministry of Labor and Employment, Regional Office No. XI, Davao City, docketed as LRD No. R-22, MED-ROXI-UR-2884. The petition alleged that the Davao Plant had approximately ninety regular technical and office employees, a group separate and distinct from the regular rank-and-file employees and excluded from the coverage of the existing collective bargaining agreement. Petitioner company did not object to the holding of the election itself but manifested that of the ninety employees sought to be represented, seventy-four were managerial employees and two others were confidential employees, and that all seventy-six should therefore be excluded from the certification election and the bargaining unit.

Hearings were conducted, after which the parties agreed to file their respective memoranda. On September 17, 1984, Med-Arbiter Conchita J. Martinez issued an order granting the petition and directing that a certification election be held within twenty days, with the choices being the Franklin Baker Brotherhood Association-(ATU) or "No Union," and the company's latest payroll serving as the basis for determining qualified voters. Petitioner company appealed to the Bureau of Labor Relations, docketed as BLR Case No. A-22884, praying that the seventy-four inspectors, foremen, and supervisors be declared managerial employees. During the pendency of the appeal, sixty-one of the employees involved filed a motion to withdraw the petition for certification election, praying for their exclusion from the bargaining unit and for a categorical declaration that they were managerial employees performing managerial functions.

On April 7, 1986, Director Cresencio B. Trajano issued a resolution affirming the Med-Arbiter's order and dismissing the appeal for lack of merit, directing that the certification election proceed without delay. Petitioner's motion for reconsideration was denied on June 6, 1986, with the Director affirming his earlier resolution in toto and ordering the immediate transmittal of records to the office of origin for the conduct of the election. To support its claim that the seventy-six employees were managerial, petitioner cited concrete instances of recommendatory actions: a wet process inspector who recommended the dismissal of an erring trimmer for falsifying time cards; an opening inspector who recommended the suspension of a nut operator caught transferring whole nuts to a co-worker's bin; a line inspector who censured and recommended the suspension of an employee for inaccurate counting; and several employees hired upon the recommendation of inspectors. The Court noted, however, that in all these instances the employees could only recommend, as the ultimate power to hire, fire, or suspend rested upon the plant personnel manager.

• Managerial Employee Status: Petitioner maintained that the seventy-six inspectors, foremen, and supervisors were managerial employees under Article 212(k) of the Labor Code and Section 1(m) of its Implementing Rules, because they participated in the formulation and execution of company policies and regulations, exercised the power to hire, suspend, or dismiss subordinate employees, and effectively recommended such managerial actions, as evidenced by concrete cases of recommendations for dismissal, suspension, and hiring.
• Grave Abuse of Discretion: Petitioner argued that the Director of the Bureau of Labor Relations acted with grave abuse of discretion amounting to lack of jurisdiction in ruling that the seventy-six employees were not managerial employees and must be included in the certification election, contending that such ruling was contrary to jurisprudence and to the factual evidence presented, which private respondent union had not rebutted.
• Statutory Construction of "and/or": Petitioner contended that the use of the words "and/or" in the statutory definition of managerial employee categorically showed that the performance of any of the functions enumerated in the law qualified an employee as a managerial employee.

• Managerial Employee Status: Whether the seventy-six inspectors, foremen, and supervisors of Franklin Baker Company are managerial employees under Article 212(k) of the Labor Code and Section 1(m) of its Implementing Rules and Regulations, such that they should be excluded from the certification election.
• Grave Abuse of Discretion: Whether the Director of the Bureau of Labor Relations acted with grave abuse of discretion amounting to lack of jurisdiction in affirming the Med-Arbiter's order including the subject employees in the certification election.

• Managerial Employee Status: No. The subject employees are not managerial employees because their recommendatory powers over hiring, suspension, discharge, and discipline were subject to evaluation, review, and final action by the plant personnel manager and higher executives, and thus did not constitute an exercise of independent judgment as required by Article 212(k) of the Labor Code and Section 1(m) of its Implementing Rules.
• Grave Abuse of Discretion: No. The Director of the Bureau of Labor Relations did not act with grave abuse of discretion, his findings of fact and conclusions of law being supported by substantial evidence and entitled to great respect by the Court.

• Managerial Employee Status: The statutory definition of a managerial employee under Article 212(k) of the Labor Code and Section 1(m) of its Implementing Rules requires that the employee be vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign, or discipline employees, or to effectively recommend such managerial actions. The test of supervisory or managerial status depends on whether the person possesses authority to act in the interest of the employer in the matters specified and whether such authority is not merely routinary or clerical in nature but requires the use of independent judgment. While petitioner demonstrated that the subject employees exercised recommendatory powers—recommending dismissal, suspension, and hiring in concrete instances—the ultimate power to hire, fire, or suspend rested upon the plant personnel manager. Because the recommendatory powers were subject to evaluation, review, and final action by department heads and higher executives, they were not effective and did not constitute an exercise of independent judgment as required by law. Furthermore, the employees did not participate in policy-making but were given ready policies to execute and standard practices to observe, thus having little freedom of action. The use of "and/or" in the statutory definition did not aid petitioner's position. Even assuming arguendo that the employees were managerial, they could still join the rank-and-file union, though they could not form their own exclusive managerial union.
• Grave Abuse of Discretion: The findings of fact of the Ministry of Labor and the National Labor Relations Commission are entitled to great respect unless unsupported by substantial evidence or tainted by grave abuse of discretion. Grave abuse of discretion means a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and so patent and gross as to amount to an evasion of positive duty. Findings of administrative agencies which have acquired expertise, such as the Labor Ministry, are accorded respect and finality, and the remedy of certiorari does not lie absent any showing of abuse or misuse of power properly vested in the Ministry. After a careful review of the records, no plausible reason was found to disturb the findings of fact and conclusions of law of the Ministry of Labor.

• Test of Managerial or Supervisory Status — The test depends on whether a person possesses authority to act in the interest of the employer in the matters specified in Article 212(k) of the Labor Code and Section 1(m) of its Implementing Rules, and whether such authority is not merely routinary or clerical in nature but requires the use of independent judgment. Where recommendatory powers are subject to evaluation, review, and final action by department heads and higher executives, they are not effective and do not constitute an exercise of independent judgment, even if present. The Court applied this test to find that the seventy-six inspectors, foremen, and supervisors were not managerial employees because their recommendations were always subject to the plant personnel manager's final action.
• Respect for Findings of Administrative Agencies — Findings of fact of the Ministry of Labor and the National Labor Relations Commission are entitled to great respect unless unsupported by substantial evidence or when grave abuse of discretion has been committed. Findings of administrative agencies which have acquired expertise are accorded respect and finality. The Court relied on this doctrine to affirm the BLR Director's findings and to deny the petition for certiorari.
• Grave Abuse of Discretion — Grave abuse of discretion means a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined by law. The Court found no such abuse in the BLR Director's rulings.
• Managerial Employees and Union Membership — Even if employees are regarded as managerial employees, they may still join the union of rank-and-file employees; they cannot, however, form their own exclusive union as managerial employees. The Court noted this as an additional ground rendering petitioner's exclusionary plea untenable.

• "The test of 'supervisory' or 'managerial status' depends on whether a person possesses authority to act in the interest of his employer in the matter specified in Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing Rules and whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment." — This passage articulates the controlling test for determining managerial employee status, the central legal question in the case.
• "Thus, where such recommendatory powers as in the case at bar, are subject to evaluation, review and final action by the department heads and other higher executives of the company, the same, although present, are not effective and not an exercise of independent judgment as required by law." — This statement explains why the subject employees' recommendatory powers did not qualify them as managerial employees, forming the ratio decidendi of the ruling.
• "subject employees are not managerial employees because as borne by the records, they do not participate in policy making but are given ready policies to execute and standard practices to observe, thus having little freedom of action" — This passage distinguishes mere execution of established policies from genuine managerial policy-making, reinforcing the distinction between managerial and non-managerial employees.

• Reynolds Phil. Corp. vs. Eslava, 137 SCRA (1985) — Cited for the definition of a managerial employee under Section 212(k) of the Labor Code, providing the statutory framework for the Court's analysis.
• National Warehousing Corp. vs. CIR, 7 SCRA 602 (1963) — Followed for the principle that recommendatory powers subject to evaluation, review, and final action by higher executives are not effective and do not constitute an exercise of independent judgment.
• National Waterworks and Sewerage Authority vs. NWSA Consolidated, L-18938, 11 SCRA 766 (1964) — Followed for the principle that employees who do not participate in policy-making but are given ready policies to execute and standard practices to observe, having little freedom of action, are not managerial employees.
• Bulletin Publishing Corporation vs. Sanchez, 144 SCRA 628 — Followed for the rule that managerial employees may join a rank-and-file union but cannot form their own exclusive managerial union.
• Buiser vs. Leogardo, Jr., 131 SCRA 151 (1984) — Cited for the principle that certiorari does not lie absent any showing of abuse or misuse of power properly vested in the Ministry of Labor and Employment.

• Article 212(k), Labor Code — Defines a managerial employee as one vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign, or discipline employees, or to effectively recommend such managerial actions. The Court applied this provision to determine whether the seventy-six employees qualified as managerial, finding they did not because their recommendatory powers lacked the element of independent judgment.
• Section 1(m), Implementing Rules and Regulations of the Labor Code — Practically a restatement of Article 212(k), defining managerial employee status. Applied in conjunction with the Labor Code provision to assess the subject employees' authority and functions.

Teehankee, C.J., Narvasa, Cruz, and Gancayco, JJ., concurred.