PICOP vs. Laguesma

An employee's designation as "manager" does not ipso facto confer managerial status; the actual job description controls, and where the authority to hire, promote, transfer, suspend, or terminate is merely recommendatory and subject to evaluation, review, and final action by higher executives, the employee remains a supervisory employee eligible to join, assist, or form a labor organization.

Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the manufacture of paper and timber products, with its principal place of operations at Tabon, Bislig, Surigao del Sur. It employs over 9,000 workers, 944 of whom are supervisory and technical staff employees, approximately 487 of whom are signatory members of the PICOP-Bislig Supervisory and Technical Staff Employees Union (PBSTSEU). Under Article 245 of the Labor Code, managerial employees are ineligible to join, assist, or form any labor organization, while supervisory employees may join, assist, or form separate labor organizations of their own but not rank-and-file unions. This statutory distinction forms the legal backdrop for the dispute over whether PICOP's section heads and supervisors, redesignated under a corporate reorganization, retained supervisory status or had become managerial employees.

Petitioner Paper Industries Corporation of the Philippines (PICOP) is a manufacturer of paper and timber products based in Tabon, Bislig, Surigao del Sur, with over 9,000 employees. Of these, 944 are supervisory and technical staff employees, and approximately 487 are signatory members of the PICOP-Bislig Supervisory and Technical Staff Employees Union (PBSTSEU). On August 9, 1989, PBSTSEU filed a Petition for Certification Election before the DOLE Regional Office XI in Davao City to determine the sole and exclusive bargaining agent of the supervisory and technical staff employees. The initial hearing was set for August 18, 1989, but was reset to August 25, 1989 at PICOP's request for a fifteen-day period to file comments or a position paper. PICOP, however, failed to file any comment or position paper. Meanwhile, the Federation of Free Workers (FFW) and the Associated Labor Union (ALU) filed their respective petitions for intervention.

On September 14, 1989, Med-Arbiter Arturo L. Gamolo granted the interventions of FFW and ALU and, on the same day, issued an order setting a certification election with four choices: PBSTSEU, FFW, ALU, or no union. PICOP appealed the order on September 21, 1989, contending that the Med-Arbiter had acted with grave abuse of discretion in deciding the case without giving PICOP the opportunity to file its comments or answer, and that PBSTSEU lacked personality to file the petition. The Secretary of Labor issued a Resolution on November 17, 1989 upholding the Med-Arbiter's order, with a modification allowing supervisory and staff employees in Cebu, Davao, and Iligan City to participate.

During the pre-election conference on January 18, 1990, PICOP objected to the inclusion of certain section heads and supervisors in the list of voters, asserting that their positions had been reclassified as managerial under a revised organizational structure. Under this structure, the company was divided into four main business groups—Paper Products, Timber Products, Forest Resource, and Support Services—each headed by a vice-president or assistant vice-president. Division managers headed divisions within each business group, department managers headed departments within each division, and section heads and supervisors, now redesignated as "section managers" and "unit managers," headed sections and independent units within each department. PICOP advanced the view that these section managers and unit managers possessed the authority to hire and fire, rendering them managerial employees ineligible to form or join any labor organization under Article 245 of the Labor Code.

After the parties submitted their respective position papers and evidence, Med-Arbiter Phibun D. Pura issued an Order on March 27, 1990, holding that the supervisors and section heads were managerial employees and excluding them from the list of voters. PBSTSEU and ALU appealed this order to the Office of the Secretary of DOLE. PICOP submitted evidence in opposition to the appeals. Public respondent Bienvenido E. Laguesma, then acting as Undersecretary of Labor, issued the assailed Order dated April 17, 1991, setting aside the Med-Arbiter's order and declaring the subject supervisors and section heads as supervisory employees eligible to vote in the certification election. PICOP sought reconsideration, which was denied by Laguesma's Order dated August 7, 1991. PICOP then elevated the matter to the Supreme Court via a petition for certiorari, arguing that the reorganization was fully implemented only in January 1991 as a supervening event and that Laguesma had disregarded its documentary evidence while relying on PBSTSEU's unsubstantiated claim that the reorganization was a sham designed to frustrate unionization.

• Supervening Event and Denial of Due Process: PICOP argued that public respondent Laguesma committed grave abuse of discretion in denying its plea to present additional evidence to prove that some of its employees were disqualified from joining or forming a union, in view of a supervening event brought about by changes in the organizational structure fully implemented in January 1991 after the case was elevated on appeal and submitted for decision.
• Disregard of Documentary Evidence: PICOP maintained that Laguesma committed grave abuse of discretion in totally disregarding the documentary evidence it submitted and relying mainly on the unsubstantiated claim and mere allegations of PBSTSEU that the reorganization was a sham calculated merely to frustrate the unionization of PICOP's supervisory personnel.
• Managerial Employee Status: PICOP contended that the positions of section heads and supervisors, redesignated as section managers and unit managers, were converted to managerial employees under the decentralization and reorganization program implemented in 1989, and that being managerial employees with authority to hire and fire, they were ineligible for union membership under Article 245 of the Labor Code.
• Valid Management Prerogative: PICOP stressed that no malice should be imputed against it for implementing its decentralization program only after the petition for certification election was filed, as the same was a valid exercise of management prerogative, and that the program had long been in the drawing boards of the company, realized only in 1989 and fully implemented in 1991. It could not have conceptualized the decentralization program solely to thwart the right of the concerned employees to self-organization.

• Sham Reorganization: PBSTSEU claimed that the reorganization of PICOP was a sham and calculated merely to frustrate the unionization of PICOP's supervisory personnel.

• Managerial vs. Supervisory Classification: Whether the section heads and supervisors redesignated as section managers and unit managers under PICOP's reorganization are managerial employees ineligible to join a labor organization under Article 245 of the Labor Code.
• Due Process — Additional Evidence: Whether public respondent Laguesma committed grave abuse of discretion in denying PICOP the opportunity to present additional evidence on the supervening implementation of its reorganization program in January 1991.
• Grave Abuse of Discretion — Evaluation of Evidence: Whether public respondent Laguesma committed grave abuse of discretion in disregarding PICOP's documentary evidence and relying on PBSTSEU's claim that the reorganization was a sham.

• Managerial vs. Supervisory Classification: No. The subject employees are supervisory, not managerial, because their authority to hire and fire is merely recommendatory and subject to confirmation and approval by higher executives, not an exercise of independent judgment as required by law.
• Due Process — Additional Evidence: No. No denial of due process occurred, as PICOP had already submitted voluminous supporting documents before the public respondent, and what the law prohibits is the lack of opportunity to be heard.
• Grave Abuse of Discretion — Evaluation of Evidence: No. The public respondent did not commit grave abuse of discretion; law and jurisprudence support the assailed resolutions, and PICOP's belated objection to the certification election bolstered the conclusion that it sought to thwart the employees' right to self-organization.

• Managerial vs. Supervisory Classification: Managerial employees are ranked as Top Managers, Middle Managers, and First-Line Managers. Top and Middle Managers devise, implement, and control strategic and operational policies, while First-Line Managers merely ensure that such policies are carried out by rank-and-file employees. Under this framework, "managers" per se are composed of Top and Middle Managers, while "supervisors" are First-Line Managers. The mere designation of an employee as "manager" does not ipso facto make him one; the designation must be reconciled with the actual job description, for it is the job description that determines the nature of employment. A thorough examination of the job descriptions of the concerned supervisory employees and section heads showed that they do not lay down company policies. PICOP's contention that they exercise authority to hire and fire was ambiguous and misleading, because any authority they exercise is not supreme but merely advisory in character. Their actions on matters relative to hiring, promotion, transfer, suspension, and termination of employees remained subject to confirmation and approval by their respective superiors. Where such power is recommendatory in character and subject to evaluation, review, and final action by department heads and other higher executives, it is not effective and not an exercise of independent judgment as required by law. Accordingly, the employees remained supervisory and eligible to vote in the certification election.
• Due Process — Additional Evidence: No denial of due process could be ascribed to public respondent Laguesma for refusing to allow PICOP to present additional evidence on the implementation of its reorganization program, because in the appeal before him, PICOP had already submitted voluminous supporting documents. The record was replete with position papers and exhibits that dealt with the main thesis PICOP relied upon. What the law prohibits is the lack of opportunity to be heard, and PICOP had long harped on its contentions, which were dealt with and resolved in detail by the public respondent.
• Grave Abuse of Discretion — Evaluation of Evidence: There was no reason or justification to deviate from the assailed resolutions, as law and jurisprudence aptly supported them. The fact that PICOP voiced its objection to the holding of the certification election, despite numerous opportunities to ventilate the same, only after the Undersecretary of Labor affirmed the holding thereof, bolstered the conclusion that PICOP raised the issue merely to prevent and thwart the concerned section heads and supervisory employees from exercising a right granted them by law. No obstacle must be placed to the holding of certification elections, as it is a statutory policy that should not be circumvented.

• Distinction Between Managerial and Supervisory Employees — Managerial employees are those who devise, implement, and control strategic and operational policies (Top and Middle Managers), while supervisory employees (First-Line Managers) merely ensure that such policies are carried out by rank-and-file employees. Managerial employees are ineligible to join any labor organization; supervisory employees may form separate labor organizations of their own but not rank-and-file unions. The Court applied this distinction by examining the actual job descriptions of PICOP's section heads and supervisors and finding that they did not lay down company policies, thus remaining supervisory despite their redesignation as "managers."

• Job Description Over Designation — The mere fact that an employee is designated "manager" does not ipso facto make him one. The designation must be reconciled with the actual job description, for it is the job description that determines the nature of employment. The Court relied on this principle to reject PICOP's claim that its reclassification of section heads and supervisors as "section managers" and "unit managers" converted them into managerial employees.

• Recommendatory Authority Does Not Constitute Managerial Status — Where an employee's authority to hire, promote, transfer, suspend, or terminate is merely recommendatory and subject to evaluation, review, and final action by department heads and other higher executives, such authority, although present, is not effective and does not constitute an exercise of independent judgment as required for managerial employee status. The Court found that the subject employees' actions were all subject to confirmation and approval by their superiors.

• Statutory Policy Favoring Certification Elections — No obstacle must be placed to the holding of certification elections, as it is a statutory policy that should not be circumvented. The Court invoked this principle to affirm that PICOP's belated objections, raised only after the certification election was affirmed, were calculated to thwart the employees' right to self-organization.

• "Thus, the mere fact that an employee is designated 'manager' does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee, for it is the job description that determines the nature of employment." — This passage articulates the controlling principle that actual job description, not titular designation, governs the classification of employees as managerial or supervisory, and is the ratio decidendi for rejecting PICOP's reclassification argument.

• "PICOP's contention that the subject section heads and unit managers exercise the authority to hire and fire is ambiguous and quite misleading for the reason that any authority they exercise is not supreme but merely advisory in character." — This passage explains why the purported hire-and-fire authority of the redesignated employees failed to satisfy the standard for managerial status, forming a critical part of the Court's application of the recommendatory-authority doctrine.

• "Needless to stress, no obstacle must be placed to the holding of certification elections, for it is a statutory policy that should not be circumvented." — This passage states the statutory policy underlying the Court's affirmance of the certification election and its rejection of PICOP's belated objections as attempts to thwart self-organization.

• United Pepsi-Cola Supervisory Union (UPSU) vs. Laguesma, 288 SCRA 15 (1998) — Controlling authority cited for the classification of managerial employees into Top Managers, Middle Managers, and First-Line Managers, and for the distinction between "managers" per se and "supervisors." The Court relied on this framework to determine that PICOP's section heads and supervisors were First-Line Managers, i.e., supervisory employees.

• Dunlop Slazenger (Phils.) vs. Secretary of Labor and Employment, 300 SCRA 120 (1998) — Followed for the principle that it is the job description, not the designation, that determines the nature of employment.

• Philippine Appliance Corporation vs. Laguesma, 226 SCRA 730 (1993) — Followed for the principle that recommendatory authority subject to review and final action by higher executives does not constitute effective or independent judgment required for managerial status.

• Atlas Lithographic Services, Inc. vs. Laguesma, 205 SCRA 12 (1992) — Cited in support of the finding that the subject employees' authority was subject to confirmation and approval by their superiors, as shown by PICOP's Authority Chart.

• Franklin Baker Company of the Philippines vs. Trajano, 157 SCRA 416 (1988) — Cited as underlying authority for the principle that recommendatory power subject to evaluation does not amount to managerial authority.

• Alliance of Democratic Free Labor Organization vs. Laguesma, 254 SCRA 565 (1996) — Followed for the principle that what the law prohibits is the lack of opportunity to be heard, supporting the finding that no due process violation occurred.

• Trade Unions of the Philippines vs. Laguesma, 233 SCRA 565 (1994) — Followed for the principle that no obstacle must be placed to the holding of certification elections, as it is a statutory policy that should not be circumvented.

• Progressive Development Corporation vs. Secretary, Department of Labor and Employment, 205 SCRA 802 (1992) — Cited alongside Trade Unions of the Philippines vs. Laguesma for the statutory policy favoring certification elections.

• Article 245, Labor Code — Provides that managerial employees are not eligible to join, assist, or form any labor organization, while supervisory employees may not join rank-and-file organizations but may join, assist, or form separate labor organizations of their own. The provision was applied to determine whether PICOP's section heads and supervisors, redesignated as section managers and unit managers, were managerial employees (ineligible for union membership) or supervisory employees (eligible to form their own union and vote in a certification election). The Court found them to be supervisory employees, as their authority was merely recommendatory and not an exercise of independent judgment.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concurred.