United Pepsi Cola v. Laguesma
United Pepsi Cola v. Laguesma
United Pepsi Cola v. Laguesma
Laguesma (1998)
Petitioners: UNITED PEPSI-COLA SUPERVISORY UNION (UPSU)
Respondents: HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS,
PHILIPPINES, INC.
Ponente: MENDOZA
Topic: Excluded Employees/Workers Managerial Employees
FACTS:
ISSUES:
company, all of which involve the laying down of operating policies for
themselves and their teams. For example, with respect to marketing, route
managers, in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job
Description, are charged, among other things, with expanding the dealership
base of their respective sales areas, maintaining the goodwill of current
dealers, and distributing the company's various promotional items as they
see fit. It is difficult to see how supervisors can be given such responsibility
when this involves not just the routine supervision of operating employees
but the protection and expansion of the company's business vis-a-vis its
competitors.
o While route managers do not appear to have the power to hire and fire
people (the evidence shows that they only "recommended" or "endorsed"
the taking of disciplinary action against certain employees), this is because
this is a function of the Human Resources or Personnel Department of the
company. And neither should it be presumed that just because they are
given set benchmarks to observe, they are ipso facto supervisors. Adequate
control methods (as embodied in such concepts as "Management by
Objectives [MBO]" and "performance appraisals") which require a
delineation of the functions and responsibilities of managers by means of
ready reference cards as here, have long been recognized in management
as effective tools for keeping businesses competitive.
WoN the first sentence of Art. 245 of the Labor Code, prohibiting managerial
employees from forming, assisting or joining any labor organization, is
unconstitutional in light of Art. III, Sec. 8 of the Constitution
o NO, it is not unconstitutional.
o The Court broke down this issue into three questions.
First: WoN managerial employees have a right of self-organization prior to the
Labor Code
o YES, with respect to supervisors. The Industrial Peace Act (RA 875)
defined:
(k) "Supervisor" means any person having authority in the interest of
an employer, to hire, transfer, suspend, lay-off, recall, discharge,
assign, recommend, or discipline other employees, or responsibly to
direct them, and to adjust their grievances, or effectively to
recommend such acts, if, in connection with the foregoing, the
exercise of such authority is not of a merely routinary or clerical
nature but requires the use of independent judgment.
o The right of supervisors to form their own organizations was affirmed:
SEC. 3. Employees' Right to Self-Organization. -- Employees 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 representatives of their own choosing and to
engage in concerted activities for the purpose of collective
bargaining and other mutual aid and protection. Individuals
employed as supervisors shall not be eligible for membership in a
requires the use of independent judgment. All employees not falling within
any of the above definitions are considered rank-and-file employees for
purposes of this Book.
Although the definition of "supervisory employees" seems to have been
unduly restricted to the last phrase of the definition in the Industrial Peace
Act, the legal significance given to the phrase "effectively recommends"
remains the same. In fact, the distinction between top and middle managers,
who set management policy, and front-line supervisors, who are merely
responsible for ensuring that such policies are carried out by the rank and
file, is articulated in the present definition. When read in relation to this
definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the
intent of the Constitutional Commission in framing Art. III, 8 of the
fundamental law.
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. As Justice Davide, Jr., himself a constitutional commissioner,
said in his ponencia in Philips Industrial Development, Inc. v. NLRC:
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."
To be sure, the Court in Philips Industrial was dealing with the right of
confidential employees to organize. But the same reason for denying them
the right to organize justifies even more the ban on managerial employees
from forming unions.
NOTES:
In the United States, as Justice Puno's separate opinion notes, supervisors have no
right to form unions. They are excluded from the definition of the term "employee" in
Section 2(3) of the Labor-Management Relations Act of 1947. The rationale for
excluding supervisors in the United States is given in the Report of the Committee
on Education and Labor of the U.S. House of Representatives, quoted in the US
Supreme Court case of NLRB v. Bell Aerospace Co. (1974):
o Supervisors are management people. They have distinguished themselves
in their work. They have demonstrated their ability to take care of
themselves without depending upon the pressure of collective action. No
one forced them to become supervisors. They abandoned the "collective
security" of the rank and file voluntarily, because they believed the
opportunities thus opened to them to be more valuable to them than such
I concur with the majority that the "route managers" of private respondent PepsiCola Products Philippines, Inc. are managerial employees. However, I respectfully
submit that contrary to the majority's holding, Article 245 of the Labor Code is
unconstitutional, as it abridges Section 8, Article III of the Constitution. xxx
It is then indubitably clear from the foregoing that the intent of the Constitutional
Commission was to abrogate the law prohibiting managerial employees from
joining, assisting, or forming unions or labor organizations. In this regard, there is
absolutely no need to decipher the intent of the framers of the 1987 Constitution
vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or
vagueness in the wording of the present Section 8, Article III of the 1987
Constitution. The provision is clear and written in simple language; neither were
there any confusing debates thereon. More importantly, the purpose of
Commissioner Lerum's amendments was unequivocal: he did not merely intend an
implied repeal, but an express repeal of the offending article of the Labor Code. The
approval of the amendments left no doubt whatsoever, as faithfully disclosed in the
Records of the Constitutional Commission, that all employees - meaning rank-andfile, supervisory and managerial - whether from the public or the private sectors,
have the right to form unions for purposes not contrary to law. xxx
With the abrogation of the former Article 246 of the Labor Code, and the
constitutional prohibition against any law prohibiting managerial employees from
joining, assisting or forming unions or labor organizations, the first sentence then of
the present Article 245 of the Labor Code must be struck down as unconstitutional.
However, due to an obvious conflict of interest - being closely identified with the
interests of management in view of the inherent nature of their functions, duties and
responsibilities -- managerial employees may only be eligible to join, assist or form
unions or labor organizations of their own rank, and not those of the supervisory
employees nor the rank-and-file employees.
In the instant case, the petitioner's name -- United Pepsi-Cola Supervisory Union
(UPSU) -- indubitably attests that it is a union of supervisory employees. In light of
the earlier discussion, the route managers who are managerial employees, cannot
join or assist UPSU.
With due respect, I do not subscribe to the view that section 8, Article III of the
Constitution abrogated Article 245 of the Labor Code. A textual analysis of section
8, Article III of the Constitution will not justify this conclusion. With due respect, the
resort by Mr. Justice Davide to the deliberations of the Constitutional Commission
does not suffice. It is generally recognized that debates and other proceedings in a
constitutional convention are of limited value and are an unsafe guide to the intent
of the people.
Notably, however, Article 245 does not absolutely disqualify managerial employees
from exercising their right of association. What it prohibits is merely the right to join
labor organizations. Managerial employees may form associations or organizations
so long as they are not labor organizations. The freedom of association guaranteed
under the Constitution remains and has not been totally abrogated by Article 245.
To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing
industrial life and will open the floodgates to unionization at all levels of the
industrial hierarchy. Such a ruling will wreak havoc on the existing set-up between
management and labor. If all managerial employees will be allowed to unionize,
then all who are in the payroll of the company, starting from the president, vicepresident, general managers and everyone, with the exception of the directors, may
go on strike or picket the employer. Company officers will join forces with the
supervisors and rank-and-file. Management and labor will become a solid phalanx
with bargaining rights that could be enforced against the owner of the company.
The basic opposing forces in the industry will not be management and labor but the
operating group on the one hand and the stockholder and bondholder group on the
other. The industrial problem defined in the Labor Code comes down to a contest
over a fair division of the gross receipts of industry between these two groups. And
this will certainly bring ill-effects on our economy.
The framers of the Constitution could not have intended a major upheaval of our
labor and socio-economic systems. Their intent cannot be made to override
substantial policy considerations and create absurd or impossible situations.
Vitug, J., separate (concurring and dissenting) to whom Kapunan, Panganiban and
Quisumbing, JJ. concur
The managerial level is the source, as well as prescribes the compliance, of broad
mandates which, in the field of labor relations, are to be carried out through the next
rank of employees charged with actually seeing to the specific personnel action
required. In fine, the real authority, such as in hiring or firing of employees, comes
from management and exercised by means of instructions, given in general terms,
by the "managerial employees;" the supervisory employees, although ostensibly
holding that power, in truth, however, only act in obedience to the directives handed
down to them. The latter unit, unlike the former, cannot be considered the alter ego
of the owner of enterprise. xxx
The duties and responsibilities of the members of petitioner union, shown by their
"job description" xxx convey no more than those that are aptly consigned to the
"supervisory" group by the relatively small unit of "managerial" employees.
I submit, with due respect, that the members of petitioning union, not really being
"managerial employees" in the true sense of the term, are not disqualified from
forming or joining labor organizations under Article 245 of the Labor Code. xxx
The restriction embodied in Article 245 of the Labor Code is not without proper
rationale. Concededly, the prohibition to form labor organizations on the part of
managerial employees narrows down their freedom of association. The very nature
of managerial functions, however, should preclude those who exercise them from
taking a position adverse to the interest they are bound to serve and protect. The
mere opportunity to undermine that interest can validly be restrained. To say that
the right of managerial employees to form a "labor organization" within the context
and ambit of the Labor Code should be deemed totally separable from the right to
bargain collectively is not justified by related provisions of the Code.
I find it hard to believe that the fundamental law could have envisioned the use by
managerial employees of coercive means against their own employers over matters
entrusted by the latter to the former. Whenever trust and confidence is a major
aspect of any relationship, a conflict of interest on the part of the person to whom
that trust and confidence is reposed must be avoided and when, unfortunately, it
does still arise its containment can rightly be decreed.