UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), vs. HON. BIENVENIDO E.

LAGUESMA

FACTS: Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which provides: Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rankand-file employees but may join, assist or form separate labor organizations of their own. Petitioner filed a motion for reconsideration, pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees to be ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution which provides: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. ISSUES: 1) whether or not the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees and 2) whether or not Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates Art. III, 8 of the Constitution. RULING:

1) YES. The route managers cannot thus possibly be classified as mere supervisors because their
work does not only involve, but goes far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those above them. They are not mere functionaries with simple oversight functions but business administrators in their own right. supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment." Thus, their only power is to recommend. Certainly, the route managers in this case more than merely recommend effective management action. They perform operational, human resource, financial and marketing functions for the company, all of which involve the laying down of operating policies for themselves and their teams The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational resources." Managers constitute three levels of a pyramid: FIRST-LINE MANAGERS: The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers

MIDDLE MANAGERS: Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers' principal responsibilities are to direct the activities that implement their organizations' policies and to balance the demands of their superiors with the capacities of their subordinates TOP MANAGERS: Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organization's interactions with its environment In the Case, entitled Worker's Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found: we find that only those employees occupying the position of route manager and accounting manager are managerial employees. 2) NO. The real intent of Art. III, 8 is evident in Lerums proposal. The Commission intended the absolute right to organize of government workers, supervisory employees, and security guards to be constitutionally guaranteed. By implication, no similar absolute constitutional right to organize for labor purposes should be deemed to have been granted to top-level and middle managers. Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial employees forming a union. The right guaranteed in Art. III, 8 is subject to the condition that its exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor organizations In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus: The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership. 32

ERNESTO L. CALLADO vs. INTERNATIONAL RICE RESEARCH INSTITUTE FACTS: Ernesto Callado, petitioner, was employed as a driver at the IRRI from April 11, 1983 to December 14, 1990. On February 11, 1990, while driving an IRRI vehicle on an official trip to the Ninoy Aquino International Airport and back to the IRRI, petitioner figured in an accident. It was found via an investigation that he was Driving an institute vehicle while on official duty under the influence of liquor; Serious misconduct consisting of your failure to report to your supervisors the failure of your vehicle to start because of a problem with the car battery which, you alleged, required you to overstay in Manila for more than six (6) hours, whereas, had you reported the matter to IRRI, Los Baos by telephone, your problem could have been solved within one or two hours and Gross and habitual neglect of duties. After evaluating petitioner's answer, explanations and other evidence, IRRI issued a Notice of Termination to petitioner on December 7, 1990. Thereafter, petitioner filed a complaint on December 19, 1990 before the Labor Arbiter for illegal dismissal, illegal suspension and indemnity pay with moral and exemplary damages and attorney's fees Private respondent IRRI, through counsel, wrote the Labor Arbiter to inform him that the Institute enjoys immunity from legal process by virtue of Article 3 of Presidential Decree No. 1620, and that it invokes such diplomatic immunity and privileges as an international organization in the instant case filed by petitioner, not having waived the same. It is contended that the immunity of the IRRI as an international organization granted by Article 3 of Presidential Decree No. 1620 may not be invoked in the case at bench inasmuch as it waived the same by virtue of its Memorandum on "Guidelines on the handling of dismissed employees in relation to P.D. 1620."

ISSUE: Whether or not International Rice Research Institute (IRRI) waived its immunity from suit in this dispute which arose from an employer-employee relationship RULING: NO. IRRI's immunity from suit is undisputed. "a categorical recognition by the Executive Branch of the Government that . . . IRRI enjoy(s) immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts in order not to embarass a political department of Government. "(t)he raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies concerned. The grant of immunity from local jurisdiction to . . . and IRRI is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered the performance of their functions. 16

The grant of immunity to IRRI is clear and unequivocal and an express waiver by its Director-General is the only way by which it may relinquish or abandon this immunity. On the matter of waiving its immunity from suit, IRRI had, early on, made its position clear. Through counsel, the Institute wrote the Labor Arbiter categorically informing him that the Institute will not waive its diplomatic immunity. In the second place, petitioner's reliance on the Memorandum with "Guidelines in handling cases of dismissal of employees in relation to P.D. 1620" dated July 26, 1983, is misplaced. The memorandum cannot, by any stretch of the imagination, be considered the express waiver by the Director-General, issued by the former Director-General to a now-defunct division of the IRRI, was meant for internal circulation and not as a pledge of waiver in all cases arising from dismissal of employees. Moreover, the IRRI's letter to the Labor Arbiter in the case at bench made in 1991 declaring that it has no intention of waiving its immunity, at the very least, supplants any pronouncement of alleged waiver issued in previous cases. Furthermore, petitioner was not deprived of due process since he was informed and given a chance to refute the charges and findings. He also opted not to seek the help of the CIEM Grievance Committee, prepared his answer by his own self. He cannot now fault the Institute for not referring his case to the CIEM.

PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN, and FELINO BULANDUS vs. THE COURT OF APPEALS

FACTS: Under the Industrial Peace Act, 1 government-owned or controlled corporations had the duty to bargain collectively and were otherwise subject to the obligations and duties of employers in the private sector. 2 The Act also prohibited supervisors to become, or continue to be, members of labor organizations composed of rank-and-file employees, 3 and prescribed criminal sanctions for breach of the prohibition. 4 Under the regime of said Industrial Peace Act that the Government Service Insurance System (GSIS, for short) became bound by a collective bargaining agreement executed between it and the labor organization representing the majority of its employees, the GSIS Employees Association. The agreement contained a "maintenance-of-membership" clause The petitioners occupied supervisory positions in the GSIS. Pablo Arizala and Sergio Maribao were, respectively, the Chief of the Accounting Division, and the Chief of the Billing Section of said Division, in the Central Visayas Regional Office of the GSIS. Leonardo Joven and Felino Bulandus were, respectively, the Assistant Chief of the Accounting Division (sometimes Acting Chief in the absence of the Chief) and the Assistant Chief of the Field Service and Non-Life Insurance Division (and Acting Division Chief in the absence of the Chief), of the same Central Visayas Regional Office of the GSIS. Demands were made on all four of them to resign from the GSIS Employees Association, in view of their supervisory positions.

They refused to do so. Consequently, two (2) criminal cases for violation of the Industrial Peace Act were lodged against them in the City Court of Cebu: one involving Arizala and Maribao 6 and the other, Joven and Bulandus. Which resulted to their conviction. They argued that when the so called "1973 Constitution" took effect on January 17, 1973 pursuant to Proclamation No. 1104, the case of Arizala and Maribao was still pending in the Court of Appeals and that of Joven and Bulandus, pending decision in the City Court of Cebu; that since the provisions of that constitution and of the Labor Code subsequently promulgated (eff., November 1, 1974), repealing the Industrial Peace Act-placed employees of all categories in government-owned or controlled corporations without distinction within the Civil Service, and provided that the terms and conditions of their employment were to be "governed by the Civil Service Law, rules and regulations" and hence, no longer subject of collective bargaining, the appellants ceased to fall within the coverage of the Industrial Peace Act and should thus no longer continue to be prosecuted and exposed to punishment for a violation thereof. They pointed out further that the criminal sanction in the Industrial Peace Act no longer appeared in the Labor Code ISSUE: whether or not the petitioners' criminal liability for a violation of the Industrial Peace Act may be deemed to have been obliterated in virtue of subsequent legislation and the provisions of the 1973 and 1987 Constitutions. RULING: YES. the right of self-organization and collective bargaining had been withdrawn by the Labor Code from government employees including those in government-owned and controlled corporationschiefly for the reason that the terms and conditions of government employment, all embraced in civil service, may not be modified by collective bargaining because set by law. It is therefore immaterial, they say, whether supervisors are members of rank-and-file unions or not; after all, the possibility of the employer's control of the members of the union thru supervisors thus rendering collective bargaining illusory, which is the main reason for the prohibition, is no longer of any consequence.

the disappearance from the law of the prohibition on supervisors being members of labor organizations composed of employees under their supervision. The Labor Code (PD 442) allowed supervisors (if not managerial) to join rank-and-file unions. And under the Implementing Rules of RA 6715, supervisors who were members of existing labor organizations on the effectivity of said RA 6715 were explicitly authorized to "remain therein." that the maintenance by supervisors of membership in a rank-and-file labor organization even after the enactment of a statute imposing a prohibition on such membership, is not only not a crime, but is explicitly allowed, under present law. The repeal of a penal law deprives the courts of jurisdiction to punish persons charged with a violation of the old penal law prior to its repeal