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 rank-
and-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 Lerum’s 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 Baños 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 corporations-
chiefly 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