G.R. No. L-26736 - Filoil Refinery Corp. vs. Filoil Supervisory and Confidential Employees Association

FILOIL REFINERY CORPORATION, PETITIONER was the employer operating a refinery in Rosario, Cavite.
FILOIL SUPERVISORY & CONFIDENTIAL EMPLOYEES ASSOCIATION, RESPONDENT, was a labor organization duly registered with the Department of Labor, composed exclusively of the supervisory and confidential employees of petitioner.
A separate rank-and-file labor association, the Filoil Employees & Workers Association (FEWA), represented petitioner’s rank-and-file employees and had an existing collective bargaining agreement which expressly excluded supervisory and confidential employees.

On February 18, 1965, respondent filed with the Court of Industrial Relations a petition for certification as the sole and exclusive collective bargaining agent of all of petitioner’s supervisory and confidential employees at the refinery.
Petitioner moved to dismiss the petition on grounds of lack of cause of action and lack of jurisdiction, contending supervisors are not “employees” under Republic Act 875, the Industrial Peace Act, and that supervisors, being part of management, could organize but could not bargain collectively with their employer.

By order dated May 26, 1965, the Court of Industrial Relations denied petitioner’s motion to dismiss, citing section 3 of the Industrial Peace Act providing 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 trial court held that supervisors’ right to bargain collectively was expressly granted under section 24 of the Industrial Peace Act, and contrasted the lack of an express denial of the right to strike for supervisors with the explicit denial for government employees under section 11.
Petitioner’s motion for reconsideration was denied by the Court en banc by resolution dated September 7, 1965; petitioner did not appeal that resolution to the Supreme Court.

At hearing, the parties stipulated that respondent association had forty-seven members among supervisory, technical, and confidential employees and that all forty-seven members were being checked off by the company for union dues pursuant to individual authorizations.
Petitioner proposed breaking the forty-seven members into five separate bargaining units (supervisors separate; confidential employees separate; professional personnel separate; a “fringe” unit of five firemen; and twelve office and clerical employees separate).
Evidence established certain executive personnel who handled personnel matters were not members of respondent association and should be excluded from the bargaining unit.

By order dated July 23, 1966, the industrial court excluded the executive personnel who supervised supervisors and those handling personnel matters from the appropriate bargaining unit.
The court rejected petitioner’s objections to inclusion of confidential employees with supervisors, citing the small number of confidential employees and an “identity of interest” with supervisors as recognized by NLRB precedent (Wilson & Co., 68 NLRB 84) and analogous policy considerations.
The court noted that breaking the group into five fragmentary units would produce ineffective, tiny unions and harm industrial peace, citing NLRB policy (20 NLRB 705) and comparable Philippine practice.
Because respondent association clearly represented the majority of employees in the appropriate bargaining unit, the industrial court certified it as sole and exclusive bargaining agent.
The Court en banc by resolution dated September 15, 1966 dismissed petitioner’s motion for reconsideration and declined to revisit the en banc September 7, 1965 resolution; Judge Salvador concurred on the supervisors’ rights but dissented on the single-unit composition for supervisors and confidential employees, urging creation of another supervisors’ unit for certain executive personnel.

Petitioner appealed to the Supreme Court renewing the contention that supervisors form part of management and therefore are not employees entitled to bargain collectively, asserting it would be “absurd for management to bargain collectively with itself.”
Petitioner argued that the Congress’s verbatim adoption of the Taft-Hartley Act definition of “supervisor” (section 2(k), Rep. Act 875) manifested an intention to follow the American exclusion of supervisors from employee collective bargaining rights.
Petitioner also renewed objection to inclusion of confidential employees in the supervisors’ bargaining unit on grounds of identity with management.

Whether supervisors and confidential employees may organize the FILOIL SUPERVISORY & CONFIDENTIAL EMPLOYEES ASSOCIATION and compel their employer, FILOIL REFINERY CORPORATION, to bargain collectively with that association under Republic Act 875, the Industrial Peace Act.

Whether the industrial court erred in including confidential employees in the supervisors’ bargaining unit.
Whether the industrial court abused its discretion in refusing petitioner’s proposed fragmentation of the bargaining unit into five smaller units.
Whether the reference in Republic Act 875 to the Taft-Hartley Act’s definition of “supervisor” required adopting the American rule excluding supervisors from collective bargaining rights.