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512 SUPREME COURT REPORTS ANNOTATED

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

No. L-26736. August 18, 1972.

FILOIL REFINERY CORPORATION, petitioner, vs.

FILOIL SUPERVISORY & CONFIDENTIAL
EMPLOYEES ASSOCIATION AND COURT OF
INDUSTRIAL R ELATIONS,respondents.

Labor law; Right of supervisors ‘to form a union.—Section 3 of

the Industrial Peace Act explicitly provides that “employees”—
and this term includes supervisors—“shall have the right to self-
organization, and to form, join or assist labor organizations of
their own choosing for the purpose of collective bargaining...” and
that “individuals employed as supervisors... may form separate
organizations of their own.” Indeed, it is well settled that in
relation to his employer, a foreman or supervisor is an employee
within the meaning of the Act. For this reason, supervisors are
entitled to engage in union activities and any discrimination
against them by reason thereof constitutes an unfair labor
practice. (AG & P Co. of Manila vs. C.I.R., 3 SCRA 672 [1961]).
Same; Same.—Supervisors and confidential employees, even
though they may exercise the prerogatives of management as
regards the rank and file employees are indeed employees in
relation to their employer, the company which is owned by the
stockholders and bondholders (capital) and should therefore be
entitled under the law to bargain collectively with the top
management with respect to their terms and conditions of
employment.
Same; Where confidential employees are few in number.—
Since the confidential employees are very few in number and are
by practice and tradition identified with the supervisors in their
role as representatives of management vis-a-vis the rank and file
employees, such identity of interest should allow their inclusion in
the bargaining unit of supervisors-managers for purposes of
collective bargaining in turn as employees in relation to the
company as their employer. This will fulfill the law’s objective of
insuring to them the full benefit of their right to self-organization

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and to collective bargaining, which could hardly be accomplished

if the respondent association’s membership were to be broken up
into five separate ineffective tiny units as urged by the company.
Same; Court of Industrial Relations enjoys wide leeway in
determining appropriate bargaining unit.—The industrial court
enjoys a wide discretion in determining the procedure necessary
to insure the fair and free choice of bargaining representations by
employees.

513

VOL, 46, AUGUST 18, 1072 513

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

APPEAL from the orders and resolution of the Court of

Industrial Relations.

The facts are stated in the opinion of the Court.

     Beltran, Lacson & Associates for petitioner.
     Lanting, Morabe Law Offices for private respondent.

TEEHANKEE, J .:

The present appeal questions the right of supei visors and

confidential employees to organize the respondent labor
association and to bargain collectively with their employer,
petitioner corporation herein, as upheld by respondent
court of industrial relations in its appealed orders and
resolution.
Respondent association is a labor organization duly
registered with the Department of Labor. It is composed
exclusively of the supervisory and confidential employees of
petitioner corporation. There exists another entirely
distinct labor association composed of the corporation’s
rankand-file employees, the Filoil Employees & Workers
Association (FEWA) with which petitioner executed a
collective bargaining agreement. This collective bargaining
agreement expressly excluded from its coverage petitioner’s
supervisory and confidential employees, who in turn
organized their own labor association respondent herein.
Respondent association filed on February 18, 1965 with
the industrial court its petition for certification as the sole
and exclusive collective bargaining agent of all of
petitioner’s supervisory and confidential employees
working at its refinery in Rosario, Cavite.
Petitioner corporation filed a motion to dismiss the
petition on the grounds of lack of cause of action and of
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respondent court’s lack of jurisdiction over the subject-

matter, under its claim that supervisors are not employees
within the meaning of Republic Act 875, the Industrial
Peace Act, and that since they are part of management,
they do not have the right to bargain collectively although
they may organize an organization of their own.

514

514 SUPREME COURT REPORTS ANNOTATED

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

Respondent court in its order of May 26, 1965 denied the

dismissal motion. It ruled that under the express
provisions of section 3 of the Industrial Peace Act,
“(individuals employed as supervisors shall not be eligible
for membership in a labor organization of employees under
their supervision
1
but may form separate organizations of
their own.”
It rejected petitioner’s claim against respondent
association’s right to bargain collectively, holding that such
right was expressly granted under section 24 of the
Industrial Peace Act, and asserting that “if Congress
deemed it wise for supervisors not to have the right to
strike, then it should have been so expressly stated as in
the case of government employees. Section 11 of the
Industrial Peace Act gives to government employees the
right to belong to any labor organization provided no
obligation to strike or join a strike is imposed by such labor
organization. The denial to government employees of the
right to strike is significant in the controversy before this
Court because it manifests to all that Congress in enacting
Republic Act No. 875 was aware of the implications that
when supervisors were given the right to organize
themselves into a labor organization, they have correlative
right to declare a strike. In the case of supervisors, they were
enfranchised by Congress to organize themselves into a
labor organization and were not denied the right to strike.
This means that the right to strike was not denied them
since no special reason obtains among the supervisors
2
as it
does obtain among government employees.”
The industrial court likewise dismissed petitioner’s
objection against the composition of respondent association
in that it included as members technical men and
confidential employees in this wise: “(A)t this point, it may
be stressed that supervisors as a general rule should form
an association of their own and should exclude all other
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types of personnel unless a special consideration exists, like

for example, that they are so few in number and that there

________________

1 Italics in text of Act supplied.

2 Italics supplied.

515

VOL. 46, AUGUST 18, 1972 515

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

are other technical men or confidential men equally few in

number. In the latter case, the supervisors, technical men
and confidential
3
employees may be constituted into one
unit.”
Petitioner’s motion for reconsideration of said order of
May 26, 1965 was denied by respondent court en banc per
its resolution dated September 7, 1965 which affirmed the
said order. No appeal having been taken from the
resolution, the petition was accordingly set for hearing and
the parties submitted their stipulation of facts, stipulating
inter alia that respondent association “has forty-seven (47)
members among the supervisory, technical men and
confidential employees of the company” and that “all the
forty seven (47) members of the (respondent association)
are being checked-off by the company for union dues
pursuant to the individual check-off authorization
submitted to the company.”
The parties could not agree, however, on the composition
of the appropriate bargaining unit with petitioner
corporation proposing that the 47 members of respondent
association should be broken up into five (5) separate
collective bargaining units, viz, the supervisors should form
a distinct unit separate from the rest of the personnel who
in turn would be divided into separate and independent
units or confidential employees, professional personnel,
“fringe” employees consisting of five firemen, and twelve
(12) office and clerical employees.
Evidence was received by respondent court and it was
satisfied that executive personnel handling personnel
matters for the employer were duly excluded from
respondent association. Thus, per respondent court’s order
of July 23, 1966, it is noted that “not one of the employees
listed under Groups I and II including (their supervisor)
Leonardo R. Santos under Group III, is a member of
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(respondent association)”, since “(I)t appears that the

personnel listed under Groups I and Group II . . . . are in
the category of executives who have supervision over the
supervisors who

_______________

3 Idem.

516

516 SUPREME COURT REPORTS ANNOTATED

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

are members of (respondent association) and that Marcelo

Bernardo handles personnel matters of the employer
... All of them should, therefore,
4
be excluded from the
appropriate bargaining unit.”
Respondent court in its said order of July 23, 1966
consequently cast aside petitioner’s sedulous objections
against the inclusion of the confidential employees in the
supervisors’ respondent association, thus: “(F)rom the
memorandum and manifestation of the company, a
persistent assault against the inclusion of the confidential
employees with supervisors under one bargaining unit
would seem to be evident. Although this inclusion has
already been raised in the motion to dismiss filed by the
company and which has already been resolved by the Court
en banc, with no appeal to the Supreme Court having been
taken by the company, we shall try once more to show why
such inclusion. It is admitted by the company that
confidential employees are outside the coverage of the
existing collective bargaining agreement between the
respondent company and the rank and file union (FEWA)
by specific agreement. Since the confidential employees are
very few and are, by practice and tradition, identified with
management, the NLRB, because of such ‘identity of
interest’ (Wilson & Co., 68 NLRB 84), has allowed their
inclusion in the bargaining unit of supervisors who are
likewise identified with management This Court, a
counterpart of the NLRB, for the same reason, should also
allow the inclusion of the confidential employees in the
bargaining unit of supervisors, except of course Marcelo
Bernardo who, pursuant to the Order of May 26, 1965, as
affirmed by the Court en banc, should be excluded
5
because
he handles personnel matters for the employer.”

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Respondent court pointed out that “in fact, out of the

forty-three (43), excluding the twelve (12) executive
personnel under Groups I and II, the company proposes
five (5) bargaining units or eight (8) employees per unit.
This Court will be creating fragmentary units which would
not

_______________

4 Rollo, p. 103, notes in parentheses supplied.

5 Italics supplied.

517

VOL. 46, AUGUST 18, 1972 517

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

serve the interest of industrial peace, much less in an

industry indispensable to the national interest like the one
at bar, as is now obtaining in the Philippine National
Railways, also an industry indispensable to the national
interest (Union de Maquinistas, Fogoneros y Motormen vs.
Philippine National Railways, Case No. 67-IPA), with
thirteen (13) unions, if it breaks up the petitioner union
into five (5) bargaining units. The Court is likewise aware
of the ineffectiveness of a small union with a scanty
members as bargaining unit. The breaking up of bargaining
agents into tiny units will greatly impair their
organizational value. It has always been the policy of the
United States National Labor Relations Board that, in
deciding upon whether to include or exclude a group of
employees from a bargaining unit, the Board has always
allowed itself to be guided by the determination as to
whether its action ‘will insure to the employees of the
Company the full benefit of their right to self-organization
and to collective bargaining and otherwise effectuate the
policies of the Act’ (20 NLRB 705). We see no reason why
this Tribunal whose basic functions are the same as that of
the NLRB, should
6
do less or otherwise depart from this
sound policy.”
Since respondent association “clearly represents the
majority of the employees in the appropriate bargaining
unit,” respondent court therefore certified it as the sole and
exclusive bargaining agent for all the employees in the
unit.
Respondent court per its resolution en banc dated
September 15, 1966 dismissed petitioner’s motion for
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reconsideration, holding that “as to the question of the

right of supervisors and confidential employees to compel
their employer to bargain collectively, this has already
been passed upon by the Trial Court in its Order dated
May 26, 1965 which Order was affirmed by the Court en
banc in a resolution dated September 7, 1965. The
Company did not appeal this resolution to the Supreme
Court. Hence, this matter, as far as we are concerned, has
already been resolved. We find it, therefore, unnecessary to
pass upon the same again,”

_______________

6 Idem.

518

518 SUPREME COURT REPORTS ANNOTATED

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

and that it found no sufficient justification to alter or

modify the trial court’s order upholding the
appropriateness of the bargaining unit. On this latter
point, Judge Salvador, while concurring with the
supervisors’ right of self-organization and collective
bargaining, cast a dissenting vote on the ground that the
Industrial Peace Act did not contemplate nor provide for
supervisors and confidential employees to be under one
bargaining unit and as to “executive personnel” who have
supervision over the supervisors being excluded from any
representation, urged that “another supervisors’ unit must
be created for these executive personnel.” The second point
is not in contention at bar since the “executive personnel”
concerned have not appealed their exclusion.
In this appeal, petitioner pursues anew its contention
that supervisors form part of management and are not
considered as employees entitled to bargain collectively,
arguing that “as supervisors form part and parcel of
management, it is absurd for management to bargain
collectively with itself.” Petitioner further argues that
under the American concept, supervisors are not
considered employees and that since our Congress copied 7
verbatim the Taft-Hartley Act’s definition of supervisor, its
act of “incorporating the definition in the Taft-Hartley Act”
must be deemed an expression of its intention “to follow the
intendment of said Act.”

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Petitioner’s contentions are untenable, prescinding from

the fact of its failure to appeal in due course respondent
court’s en banc resolution of September 7, 1965 upholding
the right of the supervisors and confidential employees to
organize respondent association and to compel petitioner to
negotiate and bargain collectively with it. Petitioner’s
argument that since supervisors form part of management,
to allow them to bargain collectively would be tantamount
to management bargaining with itself may be a well-turned
phrase but ignores the dual status of a supervisor as a
representative of management and as an employee.

_______________

7 Section 2 (k), Rep. Act 875.

519

VOL. 46, AUGUST 18, 1972 519

Filoil Refinery Corporation vs, Filoil Supervisory &
Confidential Employees Association

If indeed the supervisor is absolutely undistinguishable

from management, then he would be beyond removal or
dismissal, for as respondent association counters, “how can
management remove or dismiss itself?”
As stated for the Court by the 8
now Chief Justice in AG
& P Co. of Manila, Inc. vs. C.I.R. section 3 of the Industrial
Peace Act “explicitly provides that ‘employees’—and this
term includes supervisors—‘shall have the right to self-
organization, and to form, join or assist labor organizations
of their own choosing for the purpose of collective
bargaining through representations of their own choosing
and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection’
and that ‘individuals employed as supervisors xxx may
form separate organizations of their own’. Indeed, it is well
settled that ‘in relation to his employer,’ a foreman or
supervisor ‘is an employee within the meaning of the Act’
xxx For this reason, supervisors are entitled to engage in
union activities and any discrimination against them by
reason thereof constitutes an unfair labor practice.”
Petitioner’s arguments go in reality to the wisdom and
policy of the Industrial Peace Act which expressly grants
supervisors the right to organize and bargain collectively,
which are beyond the Court’s power of review. Thus, the
argument that “it is axiomatic in the law of self-interest
that an employer must give a ‘better deal’ to those who act
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in his interest and in whom he has trust and confidence.

9
These are the supervisors and confidential employees” and
that “In the United States there was a move to have a part
of the supervisory group to be aligned with labor. But the
enactment
10
of the Taft-Hartley Act put an end to this
move.”
So with petitioner’s thesis that “(T)o then give
supervisors the right to compel employers to bargain would
in

_________________

8 3 SCRA 672 (1961); vide Lopez vs. Chronicle Publication Employees’

Ass’n., 12 SCRA 694 (1964).
9 Petitioner’s reply brief, p. 15; italics supplied.
10 Idem, pp. 20-21.

520

520 SUPREME COURT REPORTS ANNOTATED

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

effect align labor and management together against

stockholders and bondholders (capital) and inexorably tilt
the balance of power in favor of these hitherto conflicting
forces. This 11is contrary to the nature and philosophy of free
enterprise.” This further serves to point up the validity
and rationale of the Industrial Peace Act’s provision, since
the supervisors and confidential employees, even though
they may exercise the prerogatives of management as
regards the rank and file employees are indeed employees
in relation to their employer, the company which is owned
by the “stockholders and bondholders (capital)” in
petitioner’s own words, and should therefore be entitled
under the law to bargain collectively with the top
management with respect to their terms and conditions of
employment.
Petitioner’s argument that the express provisions of
section 3 of our Industrial Peace Act must give way to the
intendment of the Taft-Hartley Act which exempts
employers from the legal obligation to recognize and
negotiate with supervisors is tenuous and groundless. The
language of our own statute is plain and unambiguous and
admits of no other interpretation.
The other principal ground of petitioner’s appeal
questioning the confidential employees’ inclusion in the
supervisors’ bargaining unit is equally untenable.
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Respondent court correctly held that since the confidential

employees are very few in number and are by practice and
tradition identified with the supervisors in their role as
representatives of management vis-a-vis the rank and file
employees, such identity of interest has allowed their
inclusion in the bargaining unit of supervisors-managers
for purposes of collective bargaining in turn as employees
in relation to the company as their employer.
No arbitrariness or grave abuse of discretion can be
attributed against respondent court’s allowing the
inclusion of the confidential employees in the supervisors’
association for as admitted by petitioner itself, supra, the
supervisors and confidential employees enjoy its trust and
confidence. This

________________

11 Idem, p. 21.

521

VOL. 46, AUGUST 18, 1972 521

Filoil Refinery Corporation vs. Filoil Supervisory &
Confidential Employees Association

identity of interest logically calls for their inclusion in the

same bargaining unit and at the same time fulfills the
law’s objective of insuring to them the full benefit of their
right to self-organization and to collective bargaining,
which could hardly be accomplished if the respondent
association’s membership were to be broken up into five
separate ineffective tiny units, as urged by petitioner.
Respondent court’s action not being vulnerable to
challenge as being arbitrary or capricious is therefore
sustained, in line with the Court’s consistent rulings that
the industrial court “enjoys a wide discretion in
determining the procedure necessary to insure the fair and
free choice of bargaining representations by employees,”
and that its action “in deciding upon an appropriate unit
for collective bargaining purposes is discretionary . . . . and
(that) its judgment in this respect is entitled to almost
complete 12finality, unless its action is arbitrary or
capricious” and that absent any grave abuse of discretion
as to justify the Court’s intervention, “this Court has
repeatedly upheld the exercise of the Court of Industrial
Relations in matters
13
concerning the representation of
employee groups.”

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ACCORDINGLY, the orders and resolution appealed

from are hereby affirmed and the petition at bar is
dismissed. No pronouncement as to costs.

          Concepcion, CJ., Reyes, J.B.L., Makalintal,

Zaldivar, Fernando, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.
     Castro, J., concurs in the result.

Orders and resolution affirmed,

Notes.—Where an employee is given the right to

recommend or suggest the disciplinary measures that
should be taken against erring employees, he falls within
the legal de-

_________________

12 LVN Pictures, Inc. v. Phil. Musicians Guild, 1 SCRA 132, 135-136

(1961), per Concepcion, J.
13 Mech. Dept. Labor Union sa PNR vs. CIR, 24 SCRA 925, 930 (1968)
and cases cited, per Reyes, J.

522

522 SUPREME COURT REPORTS ANNOTATED

People vs. Encomienda

finition of supervisor. (Binalbagan-Isabela Sugar Co. vs.

Philippine Association of Labor Unions, 8 SCRA 700).
Employees who have little freedom of action and whose
main function is merely to carry out the company’s orders,
plans and policies, are not managerial employees and
hence are covered by C.A. 444. (National Waterworks &
Sewerage Authority vs. NWSA Consolidated Unions, 11
SCRA 766).
The legislature, in drafting the Industrial Peace Act
(R.A. 875), particularly the portion defining employer and
employee, did not deem it necessary or advisable to make
obvious and necessary exemptions or exceptions, but left
that to the courts in interpreting and applying the statute,
in this respect diverting from similar federal labor
legislation in the United States. (Boy Scouts vs. Araos, L-
10091, Jan. 29, 1958. See dissent of four justices in this
case.)

———————

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