Legal Philosophy

Mid-Term Exam

Paul Vincent V. Ompoc JD1B

PART I

A.1. Digest
Philips Industrial Development Inc. V. NLRC, 210 SCRA 399 (1992)

FACTS:
PIDI is a domestic corporation engaged in the manufacturing and marketing of
electronic products. Since 1971, it had a total of six (6) collective bargaining agreements.
Philips Employees Organization-FFW (PEO-FFW) registered labor union and the certified
bargaining agent of all the rank-and-file employees of PIDI. Temporary employees and
security personnel were specifically excluded from the bargaining unit.
In the sixth CBA covering the years 1987 to 1989, it was agreed upon, among others,
that the subject of inclusion or exclusion of service engineers, sales personnel, and
confidential employees in the coverage of the bargaining unit would be submitted for
arbitration. Pursuant thereto, in June 1987, PEO-FFW filed Labor Arbiter, Executive Labor
Arbiter Arthur Amansec to render a decision.
NLRC-NCR-00-11-03936-87, promulgated on 16 January 1989 which includes
Service Engineers, Salesforce, division secretaries, all Staff of General Management,
Personnel, Industrial Relations Department, and Secretaries of Audit, EDP, and Financial
Systems in the bargaining unit.

ISSUES:
Whether the NLRC committed grave abuse of discretion in holding that service
engineers, sales representatives, and confidential employees (division secretaries, staff of
general management, personnel, and industrial relations department, secretaries of audit,
EDP, and financial system) are qualified to be included in the existing bargaining unit.
RULING:

Article 245 of the Labor Code, substituted it with the following provision:
Under such repeal and substitution, security guards became eligible for membership
in any labor organization all these employees, except for the service engineers and the sales
force personnel, are confidential. The five (5) previous CBAs between PIDI and PEO-FFW
explicitly considered them as confidential employees. By the very nature of their functions,
they assist and act in a confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor relations.
The rationale for this inhibition has been stated to be that if these managerial
employees belong to or are affiliated with a Union, the latter might not be assured of their
loyalty to the Union given the evident conflict of interests. The Union can also become
company-dominated with the presence of managerial employees in Union membership.
This rationale holds also for confidential employees such as accounting personnel,
and radio and telegraph operators, who have access to confidential information, and may
become the source of undue advantage.
As regards the service engineers and the sales representatives, two (2) points which
respondent NLRC likewise arbitrarily and erroneously ruled upon, need to be discussed.
NLRC practically forced them to become members of PEO-FFW or to be subject to its
sphere of influence, it is the certified bargaining agent for the subject bargaining unit.
This violates, obstructs, impairs, and impedes the service engineers and the sales
representatives' constitutional right to form unions or associations. It is, therefore, the
employee who should decide for himself whether he should join or not an association; and
should he choose to join, he makes up his mind as to which association he would join; and
even after he has joined, he still retains the liberty and the power to leave and cancel his
membership with the said organization at any time.
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.
A.2. Digest
United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, G.R. No. 122226,
Promulgated March 25, 1998

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 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 brought this suit challenging the validity of the order, dismissed.
Hence, this petition. 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, Section 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:
Whether the route managers at Pepsi-Cola Products Philippines, Inc. are managerial
employees and whether Art. 245, insofar as it prohibits managerial employees from forming,
joining, or assisting labor unions, violates Art. III, Section 8 of the Constitution.

RULING:
As a class, managers constitute three levels of a pyramid: (1) Top management; (2) Middle
Management; and (3) First-line Management (also called supervisors).
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.
Examples of first-line managers are the “foreman” or production supervisor in a
manufacturing plant, the technical supervisor in a research department, and the clerical
supervisor in a large office. First-level managers are often called supervisors.
MIDDLE MANAGERS — The term middle management can refer to more than one level in
an organization. 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. A plant manager in an electronics firm is
an example of a middle manager.
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. Typical
titles of top managers are “chief executive officer,” “president,” and “senior vice president.”
Actual titles vary from one organization to another and are not always a reliable guide to
membership in the highest management classification.
A distinction exists between those who have the authority to devise, implement, and control
strategic and operational policies (top and middle managers) and those whose task is simply
to ensure that such policies are carried out by the rank-and-file employees of an organization
(first-level managers/supervisors). What distinguishes them from the rank-and-file
employees is that they act in the interest of the employer in supervising such rank-and-file
employees.
“Managerial employees” may therefore be said to fall into two distinct categories: the
“managers” per se, who compose the former group described above, and the “supervisors”
who form the latter group.
It appears that this question was the subject of two previous determinations by the Secretary
of Labor and Employment, in accordance with which this case was decided by the med-
arbiter.
To qualify as a managerial employee, there must be a clear showing of the exercise of
managerial attributes under paragraph (m), Article 212 of the Labor Code as amended.
Designations or titles of positions are not controlling. As to the route managers and
accounting managers, we are convinced that they are managerial employees. Their job
descriptions clearly reveal so (Worker’s Alliance Trade Union (WATU) v. Pepsi-Cola
Products Philippines, Inc., Nov. 13, 1991)
This finding was reiterated in Case No. OS-A-3-71-92. entitled In Re: Petition for Direct
Certification and/or Certification Election-Route Managers/Supervisory Employees of Pepsi-
Cola Products Phils.Inc. The doctrine of res judicata certainly applies to adversary
administrative proceedings.
Thus, we have in this case an expert’s view that the employees concerned are managerial
employees within the purview of Art. 212.
At the very least, the principle of finality of administrative determination compels respect for
the finding of the Secretary of Labor that route managers are managerial employees as
defined by law in the absence of anything to show that such determination is without
substantial evidence to support it.
The Court now finds that the job evaluation made by the Secretary of Labor is indeed
supported by substantial evidence. The nature of the job of route managers is given in a
four-page pamphlet, prepared by the company, called “Route Manager Position Description,”
the pertinent parts of which read:
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective
through the skillful MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF YOUR
PEOPLE.
These then are your functions as Pepsi-Cola Route Manager. Within these functions —
managing your job and managing your people — you are accountable to your District
Manager for the execution and completion of various tasks and activities which will make it
possible for you to achieve your sales objectives.
Distinction is evident in the work of the route managers which sets them apart from
supervisors in general. Unlike supervisors who basically merely direct operating employees
in line with set tasks assigned to them, route managers are responsible for the success of
the company’s main line of business through the management of their respective sales
teams. Such management necessarily involves the planning, direction, operation, and
evaluation of their individual teams and areas which the work of supervisors does not entail.

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.

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.
Constitutionality of Art. 245
Art.245 is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715,
otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace Act or the
provisions of the Labor Code which it superseded, R.A. No. 6715 provides separate
definitions of the terms “managerial” and “supervisory employees,” as follows:

Art. 212. Definitions

(m) A “managerial employee” is one who is vested with powers or prerogatives to lay down
and execute management policies and/or to hire transfer, suspend, lay off, recall, discharge,
assign, or discipline employees. 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. All
employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.

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. 30 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.
*Framer’s Intent: MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to
insert between the words “people” and “to” the following: WHETHER EMPLOYED BY THE
STATE OR PRIVATE ESTABLISHMENTS. In other words, the section will now read as
follows: “The right of the people WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations, unions, or societies for purposes not contrary to
law shall not be abridged.”
Nor is the guarantee of organizational rights in Art. III, §8 infringed by a ban against
managerial employees forming a union. The right is 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.

PETITION is DISMISSED.
A. What is the Reason/explanation why managerial and/or supervisory level
“employees are prohibited from joining labor unions or organizations of “rank
and file” employees? Explain.

Answer:
Labor Code, Article 245 States; 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 the collective bargaining unit of the rank-and-
file employees but may join, assist, or form separate collective bargaining units
and/or legitimate labor organizations of their own.
In the case of Philips Industrial Development Inc. V. NLRC, the Collective
Bargaining Agreement (CBA) was created to support the mutual interest of rank-and-
file employees. The absence of mutuality of interests between this group of
employees (service engineers, sales personnel, and confidential employees) and the
regular rank-and-file militates against such inclusion.

B. Is there a contradiction between the two laws?

Labor Code, Article 245 States;

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 the collective bargaining unit of the rank-and-file employees but may
join, assist, or form separate collective bargaining units and/or legitimate labor
organizations of their own. The rank-and-file union and the supervisors' union
operating within the same establishment may join the same federation or national
union.
Bill of Rights, Article III, Section 8 States;
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.
Answer:
Yes. However, the contradiction between the provisions of Article III Section 8
and Article 245 of the Labor Code, merely specifies that managerial and confidential
employees be excluded from the rank-and-file unions, this is in favor of the
personnel/employee and it does not impair his rights to form or join unions as stated
in the Bill of rights, Article III Section 8 of the 1987 constitution. Both provisions aim
to protect the working citizens with their rights and privileges. Inconsistencies to the
Bill of Rights of the 1987 Constitution, the Constitution must always prevail, as stated
in United Pepsi-Cola Supervisory Union v. Laguesma.
D. Does this cover or guarantee also the right or liberty “not to join a union,
organization, association, etc.?
Answer:
No. On the contrary, the Bill of Rights Section 8, Article III, provides for the
privilege to create unions and organizations as long as it is not contrary to law,
morals, good customs, public order, or public policy, it does not limit our Liberty,
rather, it extends our privilege, specifically, to create unions, organization, and
associations.

E.1. Section 8, Article III of the Constitution includes the freedom of contract. Why?
Answer:
No. Bill of Rights, Article III, Section 8 clearly states, 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. In
the above-stated Case of PIDI V LNRC, the Collective Bargaining Agreement (CBA)
is an example of the exercise of “freedom of association and liberty” between the
employer and the union protecting the interest of rank-and-file employees.

E.2. The general right of liberty is also provided in Section 1, Article III of the
Constitution. Is the general right of liberty provided for and allowed under Section 1,
Article III absolute? Explain.
Answer:
Article III, Section 1 States that no person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be denied the equal
protection of the laws.
No. Article III Section 1, Is not absolute. Liberty is a self-executing provision
as long as it is not contrary to law, morals, good customs, public order, or public
policy.
Liberty is similar to many other fundamental rights, however, there are
exceptions, where certain rights can be limited or suspended in the interest of public
safety or national security, but such acts would need to be justifiable and in
compliance with established legal procedures.
 PART II

FACTS:
On June 13, 1963, the Municipal Board of Manila passed Ordinance No. 4760 with
the following provisions questioned for its violation of due process: refraining from
entertaining or accepting any guest or customer unless it fills out a prescribed form in the
lobby in open view; prohibiting admission of less than 18 years old; usurious increase of
license fee to P4,500 and 6,000 o 150% and 200% respectively (tax issue also); making
unlawful lease or rent more than twice every 24 hours; and cancellation of license for
subsequent violation. The lower court issued a preliminary injunction and petitioners raised
the case to SC on certiorari.

ISSUE:
Is the ordinance compliant with the due process requirement of the Constitution?

HELD:
The ordinance is a valid exercise of police power to minimize certain practices hurtful
to public morals. There is no violation of constitutional due process for being reasonable and
the ordinance is enjoying the presumption of constitutionality absent any irregularity on its
face. As such a limitation cannot be viewed as a transgression against the command of due
process. It is neither unreasonable nor arbitrary. Precisely it was intended to curb the
opportunity for the immoral or illegitimate use to which such premises could be, and,
according to the explanatory note, are being devoted. Taxation may be made to implement a
police power and the amount, object, and instance of taxation is dependent upon the local
legislative body. The judgment of the lower court was reversed and the injunction was lifted.