NATU-Republic Planters Bank Supervisors Chapter vs. Torres

Under the doctrine of necessary implication, confidential employees are disqualified from joining, assisting, or forming any labor organization even though Article 245 of the Labor Code expressly disqualifies only managerial employees; and the determination of managerial status turns on the employee's actual functions, not the nomenclature or title of the position. Applying this rule, Branch Managers/OICs, Cashiers and Controllers were held to be confidential employees and ineligible to join or assist petitioner union or any other labor organization, while Department Managers and Assistant Managers were not shown to be managerial or confidential and were not disqualified.

Petitioner National Association of Trade Unions (NATU)-Republic Planters Bank Supervisors Chapter is a labor organization seeking to represent supervisory employees of respondent Republic Planters Bank. The Bank operates under the General Banking Act and the Central Bank Act, with branch operations subject to Central Bank regulations on internal control, dual control, and joint custody. Republic Act No. 6715 restored the right of supervisors to form their own unions while maintaining the proscription on managerial employees' right to self-organization. The Secretary of Labor is the public respondent whose decision and order were challenged.

On March 17, 1989, NATU filed a petition for certification election to determine the exclusive bargaining representative of Republic Planters Bank's employees occupying supervisory positions. The Bank moved to dismiss on April 24, 1989, contending that the supposed supervisory employees were actually managerial and/or confidential employees who were ineligible to join, assist or form a union, and that the petition lacked the 20% signatory requirement under the Labor Code. Med-Arbiter Manases T. Cruz granted the petition on August 17, 1989, ordering a certification election among all regular employees occupying supervisory positions or their equivalent, with the choices being NATU and No Union, and directing that the payroll three months prior to the filing of the petition be used to determine the list of eligible voters.

The Bank appealed to the Secretary of Labor, arguing that Department Managers, Branch Managers/OICs, Cashiers and Controllers were managerial and/or confidential employees and thus ineligible to join, assist or form a union. It submitted annexes detailing the job descriptions and duties of the positions, affidavits of certain employees, and invoked provisions of the General Banking Act and the Central Bank Act to show the duties and responsibilities of the bank and its branches. On March 23, 1990, the Secretary of Labor partially granted the appeal and modified the Med-Arbiter's order by declaring Department Managers, Assistant Managers, Branch Managers, Cashiers and Controllers to be managerial employees, who could not join the union of supervisors such as Division Chiefs, Accounts Officers, Staff Assistants and OICs unless the latter were regular managerial employees. NATU moved for reconsideration, but the Secretary denied it on April 20, 1990.

The Secretary's decision reasoned that, in the banking industry, a branch is a microcosm of the bank and is relatively autonomous and self-governing; that bank policies are laid down and/or executed through the collective action of the Branch Manager, Cashier and Controller at the branch level; and that the branch's dual control and joint custody arrangements under the Central Bank Manual manifested managerial power and authority. The Secretary also relied on affidavits of the Bank's Executive Assistant to the President and Senior Manager of the Human Resource Management Department, which stated that the subject officers formulated and implemented plans, policies and marketing strategies and possessed inherent powers to hire, fire, suspend, transfer, assign or discipline subordinates.

The Branch Manager's job description stated that he was to discharge his duties and authority with a high sense of responsibility and integrity, guided by prudence and sound judgment in accordance with and within the limitations of policies promulgated by the Board of Directors and implemented by Management. The Controller's job summary stated that he supervised the Accounting Unit of the branch, saw to compliance by the Branch with established procedures, policies, rules and regulations of the Bank and external supervising authorities, and saw to the strict implementation of control procedures. The Cashier's job description did not mention any authority to lay down policies. Memoranda issued by the Bank's Assistant Vice President, Executive Vice President and President to Regional Managers and Branch Managers gave only temporary discretionary authority or specific guidelines on interest rates, drawing against uncollected deposits, domestic bills purchased, and lending authority at the branch level. These memoranda contradicted the affidavit of the Executive Assistant to the President that the officers formulated and implemented plans, policies and marketing strategies.

The Senior Manager of the Human Resource Management Department claimed that the power to hire, fire, suspend, transfer, assign or otherwise impose discipline among subordinates was lodged with heads of departments, branch managers and officers-in-charge, branch cashiers and branch controllers, and was inherent in those positions. However, the memorandum of Mr. Renato A. Tuates, the Officer-in-Charge/Branch Cashier of the Dumaguete Branch, stated that his action was issued "upon instruction from Head Office." The memorandum of Mr. Francis D. Robite, Sr. involved an isolated instance. Other evidence showed that Branch Managers/OICs merely recommended penalties or promotional adjustments subject to evaluation, review and final action by higher officials. Department Managers did not possess the power to lay down policies or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees; they occupied supervisory positions charged with recommending proposals to improve and streamline operations. Assistant Managers had no evidence to support the Secretary's finding that they were managerial, and the position was not included in the Bank's appeal.

As to confidentiality, the Bank claimed that Branch Managers/OICs, Cashiers and Controllers had control, custody and/or access to confidential matters such as the branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Section 1166.4 of the Central Bank Manual regarding joint custody. NATU did not dispute this claim. The Secretary had declared Department Managers, Assistant Managers, Branch Managers, Cashiers and Controllers managerial, while the Med-Arbiter had ordered a certification election among supervisory employees. These conflicting determinations brought the matter to the Supreme Court.

• Branch Autonomy: Petitioner argued that a branch does not enjoy relative autonomy because it is treated as one unit with the head office and must comply with uniform policies and guidelines set by the bank; it would be absurd for each branch to adopt different policies for banking transactions, and the Bank's own evidence showed that policies and guidelines covering branches were set by the head office.
• Policy-Making: Petitioner maintained that there was no evidence showing bank policies were laid down through the collective action of the Branch Manager, the Cashier and the Controller.
• Internal Controls: Petitioner argued that the organizational setup in which the Branch Manager exercised control over branch operations, the Controller controlled the Accounting Division, and the Cashier controlled the Cash Division was merely a proper delineation of duties and responsibilities, and that the "dual control" and "joint custody" aspects were Central Bank-prescribed internal control measures intended to establish responsibilities and pinpoint culpability in case of error.
• Managerial Powers: Petitioner contended that there was no evidence that the subject employees were vested with powers or prerogatives to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, and that the affidavits of the Bank's Executive Assistant to the President and Senior Manager of the Human Resource Management Department were self-serving and could not prevail over the actual duties and responsibilities of the employees.
• Department and Assistant Managers: Petitioner asserted that there was no reason in the Secretary's decision why Department Managers and Assistant Managers were managerial employees, and that the Bank itself did not question the inclusion of Assistant Managers among the qualified petitioning employees in its appeal.
• Proper Issue: Petitioner argued that the Secretary deviated from the real issue—whether the subject employees were managerial employees under the Labor Code as amended by RA 6715—and instead concentrated on the nature, conduct and management of banks under the General Banking Act and Central Bank Act.
• Confidential Employees: Petitioner concluded that the subject employees were not managerial but supervisory, and that even assuming they were confidential employees, there was no legal prohibition against confidential employees who were not performing managerial functions from forming and joining a union.

• Managerial Status: Respondent Bank maintained that Department Managers, Branch Managers, Cashiers and Controllers inherently possessed the powers enumerated in Article 212(m) of the Labor Code, relying heavily on the affidavits of its Executive Assistant to the President and Senior Manager of the Human Resource Department.
• Branch Autonomy and Discipline: Respondent Bank argued that Branch Managers, Cashiers and Controllers were vested not only with policy-making powers necessary to run the affairs of the branch, given the independence and relative autonomy it enjoyed in pursuing its goals and objectives, but also with concomitant disciplinary authority over employees.
• Confidential Status: Respondent Bank claimed that Branch Managers/OICs, Cashiers and Controllers were confidential employees, having control, custody and/or access to confidential matters such as the branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Section 1166.4 of the Central Bank Manual regarding joint custody.
• Scope of Appeal: The Solicitor General argued that NATU lost sight of the fact that by virtue of the Bank's appeal, the whole case was thrown open for consideration by the public respondent, and that even errors not assigned in the appeal, such as the exclusion by the Med-Arbiter of Assistant Managers from the managerial employees category, were within the Secretary's discretion to consider as closely related to the errors properly assigned.
• Evidence and Confidentiality: The Solicitor General argued that the fact that Department Managers were managerial employees was borne out by petitioner's own evidence, and that while petitioner assailed the finding that the subject employees were managerial, petitioner never questioned that said officers also occupied confidential positions and thus remained prohibited from forming or joining any labor organization.

• Managerial Status of Bank Officers: Whether Department Managers, Assistant Managers, Branch Managers/OICs, Cashiers and Controllers of respondent Bank are managerial employees under Article 212(m) of the Labor Code, as amended by RA 6715, and thus ineligible to join or assist petitioner union.
• Confidential Employee Disqualification: Whether Branch Managers/OICs, Cashiers and Controllers are confidential employees and, if so, whether they are disqualified from joining or assisting petitioner union or joining, assisting or forming any other labor organization.
• Department Managers and Assistant Managers: Whether Department Managers and Assistant Managers were validly declared managerial employees and disqualified from joining the supervisors' union.

• Managerial Status of Bank Officers: No. Branch Managers, Cashiers and Controllers are not managerial employees but supervisory employees; Department Managers occupy supervisory positions; and Assistant Managers were not shown to be managerial. Article 212(m) of the Labor Code defines managerial employees by actual powers to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees.
• Confidential Employee Disqualification: Yes. Branch Managers/OICs, Cashiers and Controllers are confidential employees and are disqualified from joining or assisting petitioner union or joining, assisting or forming any other labor organization. Although Article 245 of the Labor Code expressly disqualifies only managerial employees, confidential employees are similarly disqualified under the doctrine of necessary implication.
• Department Managers and Assistant Managers: No. Department Managers and Assistant Managers were not shown to be managerial employees; Department Managers occupied supervisory positions, and there was no evidence to substantiate the finding that Assistant Managers were managerial. They are not included in the declaration of ineligibility.

• Managerial Status of Bank Officers: Article 212(m) of the Labor Code, as amended by RA 6715, 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; a supervisory employee is one who, in the interest of the employer, effectively recommends such managerial actions if the exercise of such authority is not routinary in nature but requires the use of independent judgment. The Secretary's finding that bank policies were laid down and/or executed through the collective action of the Branch Manager, Cashier and Controller was erroneous. The Branch Manager's duties were to be discharged in accordance with and within the limitations of policies promulgated by the Board of Directors and implemented by Management; the Controller supervised the Accounting Unit and saw to compliance with established procedures, policies, rules and regulations and strict implementation of control procedures; and the Cashier's job description did not mention any authority to lay down policies. The memoranda issued by the Bank's Assistant Vice President, Executive Vice President and President to Regional Managers and Branch Managers gave only temporary discretionary authority or specific guidelines on interest rates, drawing against uncollected deposits, domestic bills purchased, and lending authority at the branch level. These contradicted the affidavit of the Executive Assistant to the President that the officers formulated and implemented plans, policies and marketing strategies. The officers also did not have the power to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. The memorandum of Mr. Tuates stated that his action was issued "upon instruction from Head Office"; the memorandum of Mr. Robite, Sr. involved an isolated instance; and other evidence showed that Branch Managers/OICs merely recommended penalties or promotional adjustments subject to evaluation, review and final action by higher officials. Department Managers likewise did not possess the power to lay down policies or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees; they occupied supervisory positions charged with recommending proposals to improve and streamline operations. Assistant Managers had no evidence to support the Secretary's finding that they were managerial, and the position was not included in the Bank's appeal. It is the nature of the employee's functions, and not the nomenclature or title given to the job, that determines whether the employee has rank-and-file, supervisory or managerial status.
• Confidential Employee Disqualification: Article 245 of the Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization. Under the doctrine of necessary implication, confidential employees are similarly disqualified. The doctrine states that what is implied in a statute is as much a part thereof as that which is expressed, and that every statute is understood by implication to contain all such provisions as may be necessary to effectuate its object and purpose. The rationale behind disqualifying managerial employees—that their union membership would create a conflict of interests, allow company domination of the union, and make collective bargaining one-sided because they are supposed to act in the employer's interest—applies equally to confidential employees. If confidential employees could unionize to bargain for advantages for themselves, they could be governed by their own motives rather than the employer's interest, and they might jeopardize the interest they are duty-bound to protect. Confidential employees such as accounting personnel, radio and telegraph operators who have access to confidential information may become a source of undue advantage and may act as spies for either party to a collective bargaining agreement. Here, Branch Managers/OICs, Cashiers and Controllers had control, custody and/or access to confidential matters such as the branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Section 1166.4 of the Central Bank Manual regarding joint custody; this claim was not disputed by petitioner. They are therefore confidential employees disqualified from joining or assisting petitioner union or joining, assisting or forming any other labor organization.
• Department Managers and Assistant Managers: The Secretary declared Department Managers and Assistant Managers managerial without providing any basis. The Court analyzed the evidence submitted by the Bank and concluded that Department Managers were not managerial: like Branch Managers, Cashiers and Controllers, they did not possess the power to lay down policies nor to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, and they occupied supervisory positions charged with recommending proposals to improve and streamline operations. With respect to Assistant Managers, there was absolutely no evidence to substantiate the Secretary's finding that they were managerial employees; the position was not included in the Bank's appeal. While the Solicitor General correctly argued that the Secretary had discretion to consider an unassigned issue closely related to an issue properly assigned, the Secretary's finding had no evidentiary basis. Department Managers and Assistant Managers are therefore not disqualified from joining the supervisors' union.

• Doctrine of necessary implication — What is implied in a statute is as much a part thereof as that which is expressed. Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including collateral and subsidiary consequences fairly and logically inferred from its terms. The Court applied this doctrine to Article 245 of the Labor Code: although the provision expressly disqualifies only managerial employees from joining, assisting or forming any labor organization, confidential employees are similarly disqualified by necessary implication.
• Managerial, supervisory, and rank-and-file employees under Article 212(m), Labor Code — A managerial employee is 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. A supervisory employee is one who, in the interest of the employer, effectively recommends such managerial actions if the exercise of such authority is not routinary in nature but requires the use of independent judgment. All employees not falling within these definitions are rank-and-file employees. The Court applied these definitions to hold that Branch Managers, Cashiers, Controllers and Department Managers were not managerial employees because they did not lay down policies or exercise hire/fire powers, but merely executed established policies or made recommendations subject to review.
• Nature of functions over nomenclature — The determination of whether an employee is rank-and-file, supervisory or managerial depends on the nature of the employee's functions, not on the nomenclature or title given to the job. The Court used this principle to reject the Bank's reliance on job titles and affidavits and to examine the actual duties and evidence of authority.
• Confidential employee disqualification — A confidential employee is one entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer's property. Although Article 245 of the Labor Code expressly disqualifies only managerial employees, confidential employees are similarly disqualified from joining, assisting or forming any labor organization under the doctrine of necessary implication. The rationale is that their unionization would create a conflict of interests, allow company domination of the union, make collective bargaining one-sided, and permit confidential employees to use access to confidential information to the disadvantage of the employer.
• Bank branch autonomy and Central Bank internal controls do not confer managerial status — The claimed relative autonomy of a bank branch and the Central Bank Manual's requirements of dual control and joint custody are internal control measures and do not, by themselves, make branch officers managerial employees under Article 212(m) of the Labor Code. The Court held that the Secretary erred in treating the division of duties and responsibilities among the Branch Manager, Cashier and Controller as a manifestation of managerial power.

• "It is the nature of the employee's functions, and not the nomenclature or title given to his job, which determines whether he has rank-and-file, supervisory or managerial status." — This states the controlling test for employment status and supports the Court's rejection of the Bank's reliance on job titles and affidavits.
• "While Art. 245 of the Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of necessary implication, confidential employees are similarly disqualified." — This is the core holding extending the statutory disqualification to confidential employees.
• "Branch Managers, Cashiers and Controllers of respondent Bank are not managerial employees but supervisory employees." — This is the Court's direct conclusion on the managerial status of the principal bank positions challenged in the certification election.
• "In fine, only the Branch Managers/OICs, Cashiers and Controllers of respondent Bank, being confidential employees, are disqualified from joining or assisting petitioner Union, or joining, assisting or forming any other labor organization." — This summarizes the ultimate scope of the disqualification and the partial grant of the petition.

• Chua vs. Civil Service Commission, G.R. No. 88979, 7 February 1992, 206 SCRA 65 — Cited for the doctrine of necessary implication; the Court quoted its explanation that what is implied in a statute is as much a part thereof as that which is expressed, and that gaps in the law may be filled by necessary implication.
• Bulletin Publishing Corporation vs. Sanchez, G.R. No. 74425, 7 October 1986, 144 SCRA 628, 635 — Cited for the rationale behind disqualifying managerial employees from union membership: conflict of interests, possible company domination of the union, and one-sided collective bargaining.
• Golden Farms, Inc. vs. Ferrer-Calleja, G.R. No. 78755, 19 July 1989, 175 SCRA 471 — Cited for the rule that confidential employees such as accounting personnel, radio and telegraph operators with access to confidential information may become a source of undue advantage and may act as spies for either party to a collective bargaining agreement.
• Philips Industrial Development, Inc. vs. NLRC, G.R. No. 88957, 25 June 1992, 210 SCRA 339 — Cited as reiterating the Golden Farms ruling on confidential employees and their access to confidential information.
• Franklin Baker Company of the Philippines vs. Trajano, G.R. No. 75039, 28 January 1988, 157 SCRA 416 — Cited for the principle that employees who are given approved and established policies to execute and standard practices to observe, with little or no discretion whether to implement them, are not managerial employees.
• Southern Philippines Federation of Labor (SPFL) vs. Calleja, G.R. No. 80882, 24 April 1989, 172 SCRA 676 — Cited together with Franklin Baker for the same principle on execution of established policies.
• Batongbacal vs. Associated Bank, G.R. No. 72977, 21 December 1988, 168 SCRA 600 — Cited for the rule that the nature of the employee's functions, not the job title, determines employment status.
• Panday vs. NLRC, G.R. No. 67664, 20 May 1992, 209 SCRA 122 — Cited for the definition of a confidential employee as one entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer's property.

• Article 212(m), Labor Code, as amended by Republic Act No. 6715 — Defines managerial, supervisory, and rank-and-file employees. The Court applied this provision to hold that Branch Managers, Cashiers, Controllers, Department Managers, and Assistant Managers did not meet the definition of managerial employees because they did not lay down management policies or exercise hire/fire powers, but merely executed established policies or made recommendations subject to review.
• Article 245, Labor Code — Provides that managerial employees are ineligible to join, assist or form any labor organization. The Court applied this provision expressly to managerial employees and, through the doctrine of necessary implication, extended the disqualification to confidential employees.
• Republic Act No. 6715 (Herrera-Veloso Law) — Restored the right of supervisors to form their own unions while maintaining the proscription on the right to self-organization of managerial employees. The Court used this statutory backdrop to distinguish managerial from supervisory employees and to determine which positions could join petitioner union.
• Section 27, General Banking Act, as amended — Provides that a bank and its branches shall be treated as a unit and that the bank is responsible for all business conducted in its branches. The Secretary invoked this provision in discussing the relative autonomy of a branch; the Court did not treat it as conferring managerial status on branch officers.
• Section 1166.6, Book I, Manual of Regulations for Banks and Financial Intermediaries — Prescribes the "dual control" and "joint custody" requirements for bank transactions. The Secretary relied on this provision to find managerial authority, but the Court held that these are internal control measures and do not by themselves make branch officers managerial employees.
• Section 1166.3, Division of Duties and Responsibilities, Manual of Regulations for Banks and Financial Intermediaries — Cited by the Secretary for the principle that no officer has complete authority and responsibility for handling all phases of a transaction without control or balance from another part of the organization. The Court rejected its use as a basis for managerial status.
• Section 1166.4, Central Bank Manual — Concerns joint custody. The Court cited this provision in finding that Branch Managers/OICs, Cashiers and Controllers had control, custody and/or access to confidential matters, making them confidential employees disqualified from union membership.
• Article 258, Labor Code — Mentioned in connection with the exception to the rule that an employer has no standing to question the certification election process, namely where the employer itself must file a petition because of a request to bargain collectively. The Court did not rely on this provision in its disposition.

Davide, Jr., Quiason, and Kapunan, JJ., concurred. Justice Padilla filed a separate opinion concurring in part and dissenting in part.

• Justice Padilla — Concurred in the majority's conclusion that respondent Bank's Branch Managers/OICs, Cashiers and Controllers, being confidential employees, are disqualified from joining or assisting petitioner labor union or joining, assisting or forming any other labor organization, including a supervisors' union. Dissented from the majority's conclusion that Department Managers and Department Assistant Managers are not disqualified from joining a labor union including a supervisors' union. Based on experience in the banking industry, Department Heads (Managers) are as confidential, if not more, than Branch Managers; most are Vice-Presidents, underscoring their status both as managerial employees and confidential personnel. It would be incongruous for a Department Manager, usually a Vice-President, to be a member of the same labor organization as his messenger or supervisory account executives, and even more untenable and dangerous for such a Department Manager to be a union representative for collective bargaining with the management of which he is a part. Justice Padilla voted for the affirmance in toto of public respondent's decision of 23 March 1990 and order of 20 April 1990.