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

LAGUESMA
AND PEPSI- COLA PRODUCTS, PHILS. INC.

Topic: Security Guards Organic to Establishment

FACTS: (Note: The facts of this case did not involve security guards, however, I will be citing the
facts still for other references)

Petitioner is a union of supervisory employees. This Union filed a petition for certification
election on behalf of the route managers of Pepsi-Cola Products. This petition was however
denied by the Mediator-Arbiter and Secretary of Labor on the ground that the route managers are
managerial employees and therefore ineligible for union membership under Article 245 of the
Labor Code. The petitioner filed a suit challenging the order of the denial by the Secretary of
Labor but was dismissed. They contend that the first sentence of Article 245 of the Labor Code,
declaring managerial employees as ineligible to for labor organizations is unconstitutional.

ISSUE: Whether or not the Security Guards has the right to self-organization?

HELD:

Yes. In answering the question of the petitioner on the constitutionality of the provisions of
the Labor Code, the Court happened to discuss the transition of the categories of employees
from the Industrial Peace Act to our present Labor Code. Before 1974, the Industrial Peace Act
grants the eligibility of supervisory employees to form labor organizations. The IPA introduces a
wider definition of supervisory employees which already embody the functions of the managerial
employees, thus the law governs the three categories of employees such as: (1) the Managerial
employees; (2) Supervisors; and (3) the Rank and File or Operatives Employees.

However in 1975, the Omnibus Rules Implementing the Labor Code took away the right
granted to the supervisory employees union and unions of security guards under the IPA. The
provision provides that:

Supervisory unions and unions of security guards to cease operation. All existing
supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to
operate as such and their registration certificates shall be deemed automatically canceled.
However, existing collective agreements with such unions, the life of which extends beyond the
date of effectivity of the Code, shall be respected until their expiry date insofar as the economic
benefits granted therein are concerned.

Due to this provision, only two categories of employees exists: (1)Managerial Employees;
and (2) the Rank and File or Operatives Employees. The Court further stated that the Department
of Labor continued to use the term "supervisory unions" despite the demise of the legal
definition of "supervisor" apparently because these were the unions of front line managers which
were then allowed as a result of the statutory grant of the right of self-organization under the
Industrial Peace Act. Had the Department of Labor seen fit to similarly ban unions of top and
middle managers which may have been formed following the dictum in Caltex, it obviously would
have done so. Yet it did not, apparently because no such unions of top and middle managers
really then existed.

Lastly, after the ratification of the 1987 Constitution which guaranteed the right of all
people including those in the public or private sectors to form unions, associations or societies,
the Labor Code was amended by Herrera-Veloso Law in 1989, which is our present Labor Code
which revert back the right of the supervisory employees including the security guards to self-
organization under the IPA. It also restores the 3 categories of employees and intoduced a
separate definition of the managerial employees and the supervisor. Hence, all workers whether
employed in the government or in the private sectors are now eligible to join, form or assist labor
organizations for purposes not contrary to law.