G.R. No. 122226, March 25, 1998.
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC., respondents.

FACTS

Petitioner United Pepsi-Cola Supervisory Union (UPSU), a union of supervisory employees, filed a petition for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. The med-arbiter and, on appeal, the Secretary of Labor and Employment denied the petition on the ground that route managers are managerial employees and thus ineligible for union membership under the first sentence of Article 245 of the Labor Code. Petitioner challenged the Secretary’s orders, contending that the prohibition against managerial employees joining, assisting, or forming any labor organization contravenes Article III, Section 8 of the Constitution. The petition was initially dismissed by the Third Division but was referred to the Court en banc upon petitioner’s motion for reconsideration pressing the constitutional issue.

ISSUE

1. Whether the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees.
2. Whether Article 245 of the Labor Code, insofar as it prohibits managerial employees from forming, joining, or assisting labor unions, violates Article III, Section 8 of the Constitution.

RULING

1. Yes, the route managers are managerial employees. The Court upheld the previous administrative determinations by the Secretary of Labor in two prior cases (Case No. OS-MA-10-318-91 and Case No. OS-A-3-71-92), which found that route managers at Pepsi-Cola are managerial employees based on their job descriptions and the authority they wield. The doctrine of res judicata applies to these quasi-judicial certification election proceedings, making the prior findings binding. Managerial employees are defined under Article 212(m) of the Labor Code as those vested with powers to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline employees. The route managers fall within this definition.
2. No, Article 245 of the Labor Code does not violate the Constitution. The constitutional right to form unions under Article III, Section 8 is not absolute and may be regulated by law. The exclusion of managerial employees from union membership is a valid exercise of police power to prevent conflicts of interest and ensure loyalty to the employer, as managerial employees act in the interest of the employer in formulating and executing company policies. The prohibition is rooted in the principle that these employees, due to their managerial functions and access to confidential information, should not be placed in a position where their union activities could conflict with their duty to act in the employer’s best interest. The Court cited historical context, noting that the 1987 Constitutional Commission deliberately excluded managerial employees from the scope of the right to self-organization to avoid divided loyalties. Thus, the statutory prohibition is a legitimate limitation on the constitutional right.