Title
Paper Industries Corporation of the Philippines vs. Hon. Bienvenido Laguesma
Case
G.R. No. 101738
Decision Date
Apr 12, 2000
PICOP's managers' union eligibility contested. Supervisory, not managerial, roles affirmed. Certification election proceeds.
certification election
labor law
managerial employee

Case Summary (G.R. No. 101738)

Factual Background

On August 9, 1989, PBSTSEU filed a petition for certification election to determine the bargaining representative of PICOP’s supervisory and technical staff employees for purposes of a collective bargaining agreement (CBA). A notice set the initial hearing, which was reset at PICOP’s request to allow it to file comments or a position paper. PICOP, however, failed to submit any comment or position paper.

On September 14, 1989, Med-Arbiter Arturo L. Gamolo granted intervention by FFW and ALU. On September 21, 1989, the Med-Arbiter set the certification election among PICOP’s supervisory and technical staff employees in Tabon, Bislig, Surigao del Sur, with four choices: (one) PBSTSEU, (two) FFW, (three) ALU, and (four) “no union.” PICOP appealed, alleging grave abuse of discretion in the Med-Arbiter’s alleged failure to give it opportunity to file its comments/answer and in PBSTSEU’s alleged lack of personality.

Meanwhile, the Secretary of Labor issued a Resolution dated November 17, 1989 upholding the Med-Arbiter’s order, with modification that allowed supervisory and staff employees in Cebu, Davao, and Iligan City to participate in the certification election. During the pre-election conference on January 18, 1990, PICOP questioned and objected to the inclusion of certain section heads and supervisors in the list of voters. PICOP argued that under a new organizational structure implemented through a decentralization program, these positions had been reclassified as managerial employees and should be excluded from the voters’ list.

PICOP’s Revised Organizational Structure divided the company into four main business groups: Paper Products Business, Timber Products Business, Forest Resource Business, and Support Services Business. Vice-presidents or assistant vice-presidents headed business groups; division managers headed divisions; department managers headed departments; and section heads and supervisors were redesignated as section managers and unit managers, respectively, heading sections and independent units within each department.

PICOP maintained that because these section managers and unit managers allegedly possessed authority to hire and fire, they were managerial employees. Under Article 245 of the Labor Code, managerial employees were ineligible to join, assist, or form labor organizations, while supervisory employees were allowed to form separate labor organizations.

Proceedings Before the Med-Arbiter and the Administrative Appeal

After the parties submitted position papers and evidence on the classification issue, Med-Arbiter Phibun D. Pura issued an order dated March 27, 1990 ruling that PICOP’s supervisors and section heads were managerial employees and therefore excluded from the voters’ list for the certification election. PBSTSEU appealed to the Office of the Secretary of Labor, and ALU likewise appealed. PICOP submitted evidence to support its appeal position.

On April 17, 1991, Undersecretary Laguesma issued the assailed Resolution setting aside the Med-Arbiter’s March 27, 1990 Order. He declared that the subject supervisors and section heads were supervisory employees eligible to vote in the certification election. PICOP moved for reconsideration, but Undersecretary Laguesma denied the motion in an Order dated August 7, 1991. PICOP then filed the present petition for certiorari.

Issues Raised by PICOP

PICOP anchored its petition on two grounds of alleged grave abuse of discretion amounting to acting without or in excess of jurisdiction.

First, PICOP claimed denial of due process in the Undersecretary’s refusal to allow it to present additional evidence. PICOP argued that subsequent to the appeal and submission for decision, a supervising event occurred as a result of changes in PICOP’s organizational structure, which PICOP fully implemented in January 1991. PICOP submitted that this development would show that some of the positions earlier treated as managerial employees were disqualified from joining or forming a labor organization represented by PBSTSEU.

Second, PICOP asserted that Undersecretary Laguesma disregarded PICOP’s documentary evidence and relied instead on unsubstantiated claims and mere allegations by PBSTSEU that the reorganization was a sham and was calculated merely to frustrate supervisory personnel unionization. PICOP argued that, on that basis alone, the Undersecretary denied its urgent motion for reconsideration.

PICOP’s Position: Designation, Decentralization, and Authority

PICOP’s substantive position was that the positions of section heads and supervisors—redesignated as section managers and unit managers—were converted into managerial employees by the decentralization and reorganization program PICOP implemented. PICOP emphasized that the decentralization program was a valid management prerogative and that PICOP did not implement it for the purpose of thwarting the self-organization rights of supervisory and technical staff employees. PICOP stressed that the program was being developed as early as the company’s plans and was realized only in 1989 and fully implemented in 1991.

Underlying Legal Framework: Managerial vs. Supervisory Employees

In resolving the dispute, the Court discussed the meaning of “managerial employees” using the doctrinal framework earlier elucidated in United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma. Managerial employees were treated as falling under Top Managers, Middle Managers, and First Line Managers, with Top and Middle Managers having authority to devise, implement, and control strategic and operational policies, while the task of First-Line Managers was to ensure implementation of those policies by rank-and-file employees.

Thus, the Court held that the classification did not depend on the mere label “manager.” Designation alone did not make an employee managerial. The designation had to be reconciled with the employee’s actual job description. The Court reiterated that it was the job description that determined the true nature of employment.

The Court’s Ruling on the Classification of the PICOP Supervisory Personnel

The Court held that a thorough dissection of the job descriptions of PICOP’s concerned supervisory employees and section heads showed that they were not actually managerial employees. They did not lay down company policies. PICOP’s argument that the subject section heads and unit managers had authority to hire and fire was treated as ambiguous and misleading.

The Court reasoned that even if these positions exercised some authority over personnel actions, the authority was not supreme. It was advisory and recommendatory rather than final. The Court observed that any actions taken—covering hiring, promotion, transfer, suspension, and termination—still required confirmation and approval by superior officers. Consequently, although the power existed in some form, it was not the independent judgment required by law for managerial classification because it remained subject to review and final action by higher executives.

Due Process and the Alleged Refusa

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