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SECOND DIVISION

[G.R. No. 131457. April 24, 1998]

HON.

CARLOS O. FORTICH, PROVINCIAL


GOVERNOR OF BUKIDNON, HON. REY B.
BAULA,
MUNICIPAL
MAYOR
OF
SUMILAO,
BUKIDNON,
NQSR
MANAGEMENT
AND
DEVELOPMENT
CORPORATION, petitioners, vs. HON.
RENATO
C.
CORONA,
DEPUTY
EXECUTIVE SECRETARY, HON. ERNESTO
D. GARILAO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM,
respondents.
DECISION

MARTINEZ, J.:

The dramatic and well-publicized hunger strike staged


by some alleged farmer-beneficiaries in front of the
Department of Agrarian Reform compound in Quezon City
on October 9, 1997 commanded nationwide attention that
even church leaders and some presidential candidates tried
to intervene for the strikers cause.
The strikers protested the March 29, 1996 Decision
of the Office of the President (OP), issued
through then Executive Secretary Ruben D. Torres in OP
Case No. 96-C-6424, which approved the conversion of a
one hundred forty-four (144)-hectare land from agricultural to
agro-industrial/institutional area. This led the Office of the
President, through then Deputy Executive Secretary Renato
C. Corona, to issue the so-called Win-Win Resolution
on November 7, 1997, substantially modifying
its earlier Decision after it had already become final and
executory. The said Resolution modified the approval of the

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land conversion to agro-industrial area only to the extent of


forty-four (44) hectares, and ordered the remaining one
hundred (100) hectares to be distributed to qualified farmerbeneficiaries.
But, did the Win-Win Resolution culminate in victory for
all the contending parties?
The above-named petitioners cried foul. They have
come to this Court urging us to annul and set aside the WinWin Resolution and to enjoin respondent Secretary Ernesto
D. Garilao of the Department of Agrarian Reform from
implementing the said Resolution.
Thus, the crucial issue to be resolved in this case is:
What is the legal effect of the Win-Win Resolution issued by
the Office of the President on its earlier Decision involving
the same subject matter, which had already become final
and executory?
The antecedent facts of this controversy, as culled from
the pleadings, may be stated as follows:
1. This case involves a 144-hectare land located at San
Vicente, Sumilao, Bukidnon, owned by the Norberto
Quisumbing, Sr. Management and Development Corporation
(NQSRMDC), one of the petitioners. The property is covered
by a Transfer Certificate of Title No. 14371
of the
Registry of Deeds of the Province of Bukidnon.
2. In 1984, the land was leased as a pineapple
plantation to the Philippine Packing Corporation, now Del
Monte Philippines, Inc. (DMPI), a multinational corporation,
for a period of ten (10) years under the Crop Producer and
Growers Agreement duly annotated in the certificate of title.
The lease expired in April, 1994.
3. In October, 1991, during the existence of the lease,
the Department of Agrarian Reform (DAR) placed the entire
144-hectare property under compulsory acquisition and
assessed the land value at P2.38 million.
4. NQSRMDC resisted the DARs action. In February,
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1992, it sought and was granted by the DAR Adjudication


Board (DARAB), through its Provincial Agrarian Reform
Adjudicator (PARAD) in DARAB Case No. X-576, a writ of
prohibition with preliminary injunction which ordered the DAR
Region X Director, the Provincial Agrarian Reform Officer
(PARO) of Bukidnon, the Municipal Agrarian Reform Office
(MARO) of Sumilao, Bukidnon, the Land Bank of the
Philippines
(Land
Bank),
and
their
authorized
representatives to desist from pursuing any activity or
activities concerning the subject land until further orders.

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5. Despite the DARAB order of March 31, 1992, the DAR


Regional Director issued a memorandum, dated May 21,
1992, directing the Land Bank to open a trust account for
P2.38 million in the name of NQSRMDC and to conduct
summary proceedings to determine the just compensation of
the subject property. NQSRMDC objected to these moves
and filed on June 9, 1992 an Omnibus Motion to enforce the
DARAB order of March 31, 1992 and to nullify the summary
proceedings undertaken by the DAR Regional Director and
Land Bank on the valuation of the subject property.
6. The DARAB, on October 22, 1992, acted favorably on
the Omnibus Motion by (a) ordering the DAR Regional
Director and Land Bank to seriously comply with the terms of
the order dated March 31, 1992; (b) nullifying the DAR
Regional Directors memorandum, dated May 21, 1992, and
the summary proceedings conducted pursuant thereto; and
(c) directing the Land Bank to return the claim folder of
Petitioner NQSRMDCs subject property to the DAR until
further orders.
7. The Land Bank complied with the DARAB order and
cancelled the trust account it opened in the name of
petitioner NQSRMDC.
8. In the meantime, the Provincial Development Council
(PDC) of Bukidnon, headed by Governor Carlos O. Fortich,
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passed Resolution No. 6,


dated January 7, 1993,
designating certain areas along Bukidnon-Sayre Highway as
part of the Bukidnon Agro-Industrial Zones where the subject
property is situated.
9. What happened thereafter is well-narrated in the OP
(TORRES) Decision of March 29, 1996, pertinent portions of
which we quote:
Pursuant to Section 20 of R.A. No. 7160, otherwise known
as the Local Government Code, the Sangguniang Bayan of
Sumilao, Bukidnon, on March 4, 1993, enacted Ordinance
No. 24 converting or re-classifying 144 hectares of land in
Bgy. San Vicente, said Municipality, from agricultural to
industrial/institutional with a view of providing an opportunity
to attract investors who can inject new economic vitality,
provide more jobs and raise the income of its people.
Parenthetically, under said section, 4th to 5th class
municipalities may authorize the classification of five percent
(5%) of their agricultural land area and provide for the
manner of their utilization or disposition.
On 12 October 1993, the Bukidnon Provincial Land Use
Committee approved the said Ordinance. Accordingly, on 11
December 1993, the instant application for conversion was
filed by Mr. Gaudencio Beduya in behalf of
NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development
Association).
Expressing support for the proposed project, the Bukidnon
Provincial Board, on the basis of a Joint Committee Report
submitted by its Committee on Laws, Committee on Agrarian
Reform and Socio-Economic Committee approved, on 1
February 1994, the said Ordinance now docketed as
Resolution No. 94-95. The said industrial area, as conceived
by NQSRMDC (project proponent) is supposed to have the
following components:
1. The Development Academy of Mindanao which
constitutes the following: Institute for Continuing Higher
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Education; Institute for Livelihood Science (Vocational and


Technical School); Institute for Agribusiness Research;
Museum, Library, Cultural Center, and Mindanao Sports
Development Complex which covers an area of 24 hectares;
2. Bukidnon Agro-Industrial Park which consists of corn
processing for corn oil, corn starch, various corn products;
rice processing for wine, rice-based snacks, exportable rice;
cassava processing for starch, alcohol and food delicacies;
processing plants, fruits and fruit products such as juices;
processing plants for vegetables processed and prepared for
market; cold storage and ice plant; cannery system;
commercial stores; public market; and abattoir needing
about 67 hectares;
3. Forest development which includes open spaces and
parks for recreation, horse-back riding, memorial and minizoo estimated to cover 33 hectares; and
4. Support facilities which comprise the construction of a
360-room hotel, restaurants, dormitories and a housing
project covering an area of 20 hectares.
The said NQSRMDC Proposal was, per Certification dated
January 4, 1995, adopted by the Department of Trade and
Industry, Bukidnon Provincial Office, as one of its flagship
projects. The same was likewise favorably recommended by
the Provincial Development Council of Bukidnon; the
municipal, provincial and regional office of the DAR; the
Regional Office (Region X) of the DENR (which issued an
Environmental Compliance Certificate on June 5, 1995); the
Executive Director, signing By Authority of PAUL G.
DOMINGUEZ, Office of the President Mindanao; the
Secretary of DILG; and Undersecretary of DECS Wilfredo D.
Clemente.
In the same vein, the National Irrigation Administration,
Provincial Irrigation Office, Bagontaas Valencia, Bukidnon,
thru Mr. Julius S. Maquiling, Chief, Provincial Irrigation
Office, interposed NO OBJECTION to the proposed

conversion as long as the development cost of the irrigation


systems thereat which is P2,377.00 per hectare be
replenished by the developer x x x. Also, the Kisolon-San
Vicente Irrigators Multi Purpose Cooperative, San Vicente,
Sumilao, Bukidnon, interposed no objection to the proposed
conversion of the land in question as it will provide more
economic benefits to the community in terms of outside
investments that will come and employment opportunities
that will be generated by the projects to be put up x x x.
On the same score, it is represented that during the public
consultation held at the Kisolan Elementary School on 18
March 1995 with Director Jose Macalindong of DAR Central
Office and DECS Undersecretary Clemente, the people of
the affected barangay rallied behind their respective officials
in endorsing the project.
Notwithstanding the foregoing favorable recommendation,
however, on November 14, 1994, the DAR, thru Secretary
Garilao, invoking its powers to approve conversion of lands
under Section 65 of R.A. No. 6657, issued an Order denying
the instant application for the conversion of the subject land
from agricultural to agro-industrial and, instead, placed the
same under the compulsory coverage of CARP and directed
the distribution thereof to all qualified beneficiaries on the
following grounds:
1. The area is considered as a prime agricultural land with
irrigation facility;
2. The land has long been covered by a Notice of
Compulsory Acquisition (NCA);
3. The existing policy on withdrawal or lifting on areas
covered by NCA is not applicable;
4. There is no clear and tangible compensation package
arrangements for the beneficiaries;
5. The procedures on how the area was identified and
reclassified for agro-industrial project has no reference to
Memo Circular No. 54, Series of 1993, E.O. No. 72, Series

of 1993, and E.O. No. 124, Series of 1993.


A Motion for Reconsideration of the aforesaid Order was
filed on January 9, 1995 by applicant but the same was
denied (in an Order dated June 7, 1995).
10. Thus, the DAR Secretary ordered the DAR Regional
Director to proceed with the compulsory acquisition and
distribution of the property.
11. Governor Carlos O. Fortich of Bukidnon appealed
the order of denial to the Office of the President
and prayed for the conversion/reclassification of the subject
land as the same would be more beneficial to the people of
Bukidnon.
12. To prevent the enforcement of the DAR Secretarys
order, NQSRMDC, on June 29, 1995, filed with the Court of
Appeals a petition for certiorari, prohibition with preliminary
injunction,
docketed as CA-G.R. SP No. 37614.
13. Meanwhile, on July 25, 1995, the Honorable Paul G.
Dominguez, then Presidential Assistant for Mindanao, after
conducting an evaluation of the proposed project, sent a
memorandum
to the President favorably
endorsing the project with a recommendation that the DAR
Secretary reconsider his decision in denying the application
of the province for the conversion of the land.
14. Also, in a memorandum
to the President
dated August 23, 1995, the Honorable Rafael Alunan III, then
Secretary of the Department of the Interior and Local
Government (DILG), recommended the conversion of the
subject land to industrial/institutional use with a request that
the President hold the implementation of the DAR order to
distribute the land in question.
15. On October 23, 1995, the Court of Appeals, in CAG.R. SP No. 37614, issued a Resolution
ordering the parties to observe status quo pending resolution
of the petition. At the hearing held in said case on October 5,
1995, the DAR, through the Solicitor General, manifested
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before the said court that the DAR was merely in the
processing stage of the applications of farmers-claimants
and has agreed to respect status quo pending the resolution
of the petition.
16. In resolving the appeal, the Office of the President,
through then Executive Secretary Ruben D. Torres, issued a
Decision in OP Case No. 96-C-6424, dated March 29, 1996,
reversing the DAR Secretarys decision, the pertinent
portions of which read:
After a careful evaluation of the petition vis--vis the grounds
upon which the denial thereof by Secretary Garilao was
based, we find that the instant application for conversion by
the Municipality of Sumilao, Bukidnon is impressed with
merit. To be sure, converting the land in question from
agricultural to agro-industrial would open great opportunities
for employment and bring about real development in the
area towards a sustained economic growth of the
municipality. On the other hand, distributing the land to
would-be beneficiaries (who are not even tenants, as there
are none) does not guarantee such benefits.
Nevertheless, on the issue that the land is considered a
prime agricultural land with irrigation facility it maybe
appropriate to mention that, as claimed by petitioner, while it
is true that there is, indeed, an irrigation facility in the area,
the same merely passes thru the property (as a right of way)
to provide water to the ricelands located on the lower portion
thereof. The land itself, subject of the instant petition, is not
irrigated as the same was, for several years, planted with
pineapple by the Philippine Packing Corporation.
On the issue that the land has long been covered by a
Notice of Compulsory Acquisition (NCA) and that the existing
policy on withdrawal or lifting on areas covered by NCA is
not applicable, suffice it to state that the said NCA was
declared null and void by the Department of Agrarian Reform
Adjudication Board (DARAB) as early as March 1, 1992.
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Deciding in favor of NQSRMDC, the DARAB correctly


pointed out that under Section 8 of R.A. No. 6657, the
subject property could not validly be the subject of
compulsory acquisition until after the expiration of the lease
contract with Del Monte Philippines, a Multi-National
Company, or until April 1994, and ordered the DAR Regional
Office and the Land Bank of the Philippines, both in Butuan
City, to `desist from pursuing any activity or activities
covering petitioners land.
On this score, we take special notice of the fact that the
Quisumbing family has already contributed substantially to
the land reform program of the government, as follows: 300
hectares of rice land in Nueva Ecija in the 70s and another
400 hectares in the nearby Municipality of Impasugong,
Bukidnon, ten (10) years ago, for which they have not
received just compensation up to this time.
Neither can the assertion that there is no clear and tangible
compensation package arrangements for the beneficiaries
hold water as, in the first place, there are no beneficiaries to
speak about, for the land is not tenanted as already stated.
Nor can procedural lapses in the manner of
identifying/reclassifying the subject property for agroindustrial purposes be allowed to defeat the very purpose of
the law granting autonomy to local government units in the
management of their local affairs. Stated more simply, the
language of Section 20 of R.A. No. 7160, supra, is clear and
affords no room for any other interpretation. By unequivocal
legal mandate, it grants local government units autonomy in
their local affairs including the power to convert portions of
their agricultural lands and provide for the manner of their
utilization and disposition to enable them to attain their fullest
development as self-reliant communities.
WHEREFORE, in pursuance of the spirit and intent of the
said legal mandate and in view of the favorable
recommendations of the various government agencies

abovementioned, the subject Order, dated November 14,


1994 of the Hon. Secretary, Department of Agrarian Reform,
is hereby SET ASIDE and the instant application of
NQSRMDC/BAIDA is hereby APPROVED.
17.On May 20, 1996, DAR filed a motion for
reconsideration of the OP decision.
18 On September 11, 1996, in compliance with the OP
decision of March 29, 1996, NQSRMDC and the Department
of Education, Culture and Sports (DECS) executed a
Memorandum of Agreement whereby the former donated
four (4) hectares from the subject land to DECS for the
establishment of the NQSR High School.
When NQSRMDC was about to transfer the title over the
4-hectare donated to DECS, it discovered that the title over
the subject property was no longer in its name. It soon found
out that during the pendency of both the Petition for
Certiorari, Prohibition, with Preliminary Injunction it filed
against DAR in the Court of Appeals and the appeal to the
President filed by Governor Carlos O. Fortich, the DAR,
without giving just compensation, caused the cancellation of
NQSRMDCs title on August 11, 1995 and had it transferred
in the name of the Republic of the Philippines under TCT No.
T-50264
of the Registry of Deeds of Bukidnon.
Thereafter, on September 25, 1995, DAR caused the
issuance of Certificates of Land Ownership Award (CLOA)
No. 00240227 and had it registered in the name of 137
farmer-beneficiaries under TCT No. AT-3536
of
the Registry of Deeds of Bukidnon.
19. Thus, on April 10, 1997, NQSRMDC filed a
complaint
with the Regional Trial Court (RTC) of
Malaybalay, Bukidnon (Branch 9), docketed as Civil Case
No. 2687-97, for annulment and cancellation of title,
damages and injunction against DAR and 141 others. The
RTC then issued a Temporary Restraining Order on April 30,
1997
and a Writ of Preliminary Injunction on
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May 19, 1997,


restraining the DAR and 141
others from entering, occupying and/or wresting from
NQSRMDC the possession of the subject land.
20. Meanwhile, on June 23, 1997, an Order
was issued by then Executive Secretary Ruben D. Torres
denying DARs motion for reconsideration for having been
filed beyond the reglementary period of fifteen (15) days.
The said order further declared that the March 29, 1996 OP
decision had already become final and executory.
21. The DAR filed on July 11, 1997 a second motion for
reconsideration of the June 23, 1997 Order of the President.
22. On August 12, 1997, the said writ of preliminary
injunction issued by the RTC was challenged by some
alleged farmers before the Court of Appeals through a
petition for certiorari and prohibition, docketed as CA-G.R.
SP No. 44905, praying for the lifting of the injunction and for
the issuance of a writ of prohibition from further trying the
RTC case.
23. On October 9, 1997, some alleged farmerbeneficiaries began their hunger strike in front of the DAR
Compound in Quezon City to protest the OP Decision of
March 29, 1996. On October 10, 1997, some persons
claiming to be farmer-beneficiaries of the NQSRMDC
property filed a motion for intervention (styled as
Memorandum In Intervention) in O.P. Case No. 96-C-6424,
asking that the OP Decision allowing the conversion of the
entire 144-hectare property be set aside.
24. President Fidel V. Ramos then held a dialogue with
the strikers and promised to resolve their grievance within
the framework of the law. He created an eight (8)-man Fact
Finding Task Force (FFTF) chaired by Agriculture Secretary
Salvador Escudero to look into the controversy and
recommend possible solutions to the problem.
25. On November 7, 1997, the Office of the President
resolved the strikers protest by issuing the so-called Win/Win
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Resolution penned by then Deputy Executive Secretary


Renato C. Corona, the dispositive portion of which reads:
WHEREFORE, premises considered, the decision of the
Office of the President, through Executive Secretary Ruben
Torres, dated March 29, 1996, is hereby MODIFIED as
follows:
1. NQSRMDCs application for conversion is APPROVED
only with respect to the approximately fortyfour (44) hectare portion of the land adjacent
to the highway, as recommended by the
Department of Agriculture.
2. The remaining approximately one hundred (100) hectares
traversed by an irrigation canal and found to
be suitable for agriculture shall be distributed
to qualified farmer-beneficiaries in
accordance with RA 6657 or the
Comprehensive Agrarian Reform Law with a
right of way to said portion from the highway
provided in the portion fronting the highway.
For this purpose, the DAR and other
concerned government agencies are directed
to immediately conduct the segregation
survey of the area, valuation of the property
and generation of titles in the name of the
identified farmer-beneficiaries.
3. The Department of Agrarian Reform is hereby directed to
carefully and meticulously determine who
among the claimants are qualified farmerbeneficiaries.
4. The Department of Agrarian Reform is hereby further
directed to expedite payment of just
compensation to NQSRMDC for the portion
of the land to be covered by the CARP,
including other lands previously surrendered
by NQSRMDC for CARP coverage.

5. The Philippine National Police is hereby directed to render


full assistance to the Department of Agrarian
Reform in the implementation of this Order.
We take note of the Memorandum in Intervention filed by 113
farmers on October 10, 1997 without ruling on the propriety
or merits thereof since it is unnecessary to pass upon it at
this time.
SO ORDERED.
A copy of the Win-Win Resolution was received by
Governor Carlos O. Fortich of Bukidnon, Mayor Rey B.
Baula of Sumilao, Bukidnon, and NQSRMDC on November
24, 1997
and, on December 4, 1997, they filed
the present petition for certiorari, prohibition (under Rule 65
of the Revised Rules of Court) and injunction with urgent
prayer for a temporary restraining order and/or writ of
preliminary injunction (under Rule 58, ibid.), against then
Deputy Executive Secretary Renato C. Corona and DAR
Secretary Ernesto D. Garilao.
On December 12, 1997, a Motion For Leave To
Intervene
was filed by alleged farmerbeneficiaries, through counsel, claiming that they are real
parties in interest as they were previously identified by
respondent DAR as agrarian reform beneficiaries on the
144-hectare property subject of this case. The motion was
vehemently opposed
by the petitioners.
In seeking the nullification of the Win-Win Resolution,
the petitioners claim that the Office of the President was
prompted to issue the said resolution after a very wellmanaged hunger strike led by fake farmer-beneficiary Linda
Ligmon succeeded in pressuring and/or politically
blackmailing the Office of the President to come up with this
purely political decision to appease the farmers, by reviving
and modifying the Decision of 29 March 1996 which has
been declared final and executory in an Order of 23 June
1997.
Thus, petitioners further allege,
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respondent then Deputy Executive Secretary Renato C.


Corona committed grave abuse of discretion and acted
beyond his jurisdiction when he issued the questioned
Resolution of 7 November 1997.
They availed of
this extraordinary writ of certiorari because there is no other
plain, speedy and adequate remedy in the ordinary course of
law.
They never filed a motion for
reconsideration of the subject Resolution because (it) is
patently illegal or contrary to law and it would be a futile
exercise to seek a reconsideration .
The respondents, through the Solicitor General, opposed
the petition and prayed that it be dismissed outright on the
following grounds:
(1) The proper remedy of petitioners should have been
to file a petition for review directly with the Court of Appeals
in accordance with Rule 43 of the Revised Rules of Court;
(2) The petitioners failed to file a motion for
reconsideration of the assailed Win-Win Resolution before
filing the present petition; and
(3) Petitioner NQSRMDC is guilty of forum-shopping.
These are the preliminary issues which must first be
resolved, including the incident on the motion for intervention
filed by the alleged farmer-beneficiaries.
Anent the first issue, in order to determine whether the
recourse of petitioners is proper or not, it is necessary to
draw a line between an error of judgment and an error of
jurisdiction. An error of judgment is one which the court
may commit in the exercise of its jurisdiction, and which error
is reviewable only by an appeal.
On the other
hand, an error of jurisdiction is one where the act
complained of was issued by the court, officer or a quasijudicial body without or in excess of jurisdiction, or with
grave abuse of discretion which is tantamount to lack or in
excess of jurisdiction.
This error is correctable
only by the extraordinary writ of certiorari.
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It is true that under Rule 43, appeals from awards,


judgments, final orders or resolutions of any quasi-judicial
agency exercising quasi-judicial functions,
including the Office of the President,
may be
taken to the Court of Appeals by filing a verified petition for
review
within fifteen (15) days from notice of the
said judgment, final order or resolution,
whether
the appeal involves questions of fact, of law, or mixed
questions of fact and law.
However, we hold that, in this particular case, the
remedy prescribed in Rule 43 is inapplicable considering that
the present petition contains an allegation that the
challenged resolution is patently illegal
and was
issued with grave abuse of discretion and beyond his
(respondent Secretary Renato C. Coronas) jurisdiction
when said resolution substantially modified the
earlier OP Decision of March 29, 1996 which had long
become final and executory. In other words, the crucial issue
raised here involves an error of jurisdiction, not an error of
judgment which is reviewable by an appeal under Rule 43.
Thus, the appropriate remedy to annul and set aside the
assailed resolution is an original special civil action for
certiorari under Rule 65, as what the petitioners have
correctly done. The pertinent portion of Section 1 thereof
provides:
SECTION 1. Petition for certiorari. When any tribunal, board
or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting
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such incidental reliefs as law and justice may require.


x x x x x x x x x.
The office of a writ of certiorari is restricted to truly
extraordinary cases cases in which the act of the lower court
or quasi-judicial body is wholly void.
The aforequoted Section 1 of Rule 65 mandates that the
person aggrieved by the assailed illegal act may file a
verified petition (for certiorari) in the proper court. The
proper court where the petition must be filed is stated in
Section 4 of the same Rule 65 which reads:
SEC. 4. Where petition filed.- The petition may be filed not
later than sixty (60) days from notice of the judgment, order
or resolution sought to be assailed in the Supreme Court or,
if it relates to the acts or omissions of a lower court or of a
corporation, board, officer or person, in the Regional Trial
Court exercising jurisdiction over the territorial area as
defined by the Supreme Court. It may also be filed in the
Court of Appeals whether or not the same is in aid of its
appellate jurisdiction, or in the Sandiganbayan if it is in aid of
its jurisdiction. If it involves the acts or omissions of a quasijudicial agency, and unless otherwise provided by law or
these Rules, the petition shall be filed in and cognizable only
by the Court of Appeals. (4a)
Under the above-quoted Section 4, the Supreme Court,
Court of Appeals and Regional Trial Court have original
concurrent jurisdiction to issue a writ of certiorari,
prohibition
and mandamus.
But
the jurisdiction of these three (3) courts are also delineated
in that, if the challenged act relates to acts or omissions of a
lower court or of a corporation, board, officer or person, the
petition must be filed with the Regional Trial Court which
exercises jurisdiction over the territorial area as defined by
the Supreme Court. And if it involves the act or omission of a
quasi-judicial agency, the petition shall be filed only with the
Court of Appeals, unless otherwise provided by law or the
[if !supportFootnotes][45][endif]

[if !supportFootnotes][46]

[endif]

[if !supportFootnotes][47][endif]

[if !supportFootnotes][48][endif]

Rules of Court. We have clearly discussed this matter of


concurrence of jurisdiction in People vs. Cuaresma, et. al.,
through now Chief Justice Andres R. Narvasa,
thus:
x x x. This Courts original jurisdiction to issue writs of
certiorari (as well as prohibition, mandamus, quo warranto,
habeas corpus and injunction) is not exclusive. It is shared
by this Court with Regional Trial Courts (formerly Courts of
First Instance), which may issue the writ, enforceable in any
part of their respective regions. It is also shared by this
Court, and by the Regional Trial Court, with the Court of
Appeals (formerly, Intermediate Appellate Court), although
prior to the effectivity of Batas Pambansa Bilang 129 on
August 14, 1981, the latters competence to issue the
extraordinary writs was restricted to those in aid of its
appellate jurisdiction. This concurrence of jurisdiction is not,
however, to be taken as according to parties seeking any of
the writs an absolute, unrestrained freedom of choice of the
court to which application therefor will be directed. There is
after all a hierarchy of courts. That hierarchy is determinative
of the venue of appeals, and should also serve as a general
determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial
hierarchy most certainly indicates that petitions for the
issuance of extraordinary writs against first level (inferior)
courts should be filed with the Regional Trial Court, and
those against the latter, with the Court of Appeals. (Citations
omitted)
But the Supreme Court has the full discretionary power
to take cognizance of the petition filed directly to it if
compelling reasons, or the nature and importance of the
issues raised, warrant. This has been the judicial policy to be
observed and which has been reiterated in subsequent
cases, namely:
Uy vs. Contreras, et. al.,
Torres vs. Arranz,
Bercero vs. De Guzman,

[if !

supportFootnotes][49][endif]

[if !supportFootnotes][50][endif]

[51][endif]

[if !supportFootnotes][52][endif]

[if !supportFootnotes]

and Advincula vs. Legaspi, et. al.


As we have further stated in Cuaresma:
x x x. A direct invocation of the Supreme Courts original
jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and
specifically set out in the petition. This is established policy. It
is a policy that is necessary to prevent inordinate demands
upon the Courts time and attention which are better devoted
to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Courts docket.
Pursuant to said judicial policy, we resolve to take
primary jurisdiction over the present petition in the interest of
speedy justice
and to avoid future litigations so
as to promptly put an end to the present controversy which,
as correctly observed by petitioners, has sparked national
interest because of the magnitude of the problem created by
the issuance of the assailed resolution. Moreover, as will be
discussed later, we find the assailed resolution wholly void
and requiring the petitioners to file their petition first with the
Court of Appeals would only result in a waste of time and
money.
That the Court has the power to set aside its own rules
in the higher interests of justice is well-entrenched in our
jurisprudence. We reiterate what we said in Piczon vs. Court
of Appeals:
Be it remembered that rules of procedure are but mere tools
designed to facilitate the attainment of justice. Their strict
and rigid application, which would result in technicalities that
tend to frustrate rather than promote substantial justice, must
always be avoided. Time and again, this Court has
suspended its own rules and excepted a particular case from
their operation whenever the higher interests of justice so
require. In the instant petition, we forego a lengthy
disquisition of the proper procedure that should have been
taken by the parties involved and proceed directly to the
[if !supportFootnotes][53][endif]

[if !supportFootnotes][54][endif]

[if !supportFootnotes][55][endif]

[if !supportFootnotes][56][endif]

merits of the case."


As to the second issue of whether the petitioners
committed a fatal procedural lapse when they failed to file a
motion for reconsideration of the assailed resolution before
seeking judicial recourse, suffice it to state that the said
motion is not necessary when the questioned resolution is a
patent nullity,
as will be taken up later.
With respect to the third issue, the respondents claim
that the filing by the petitioners of: (a) a petition for certiorari,
prohibition with preliminary injunction (CA-G.R. SP No.
37614) with the Court of Appeals; (b) a complaint for
annulment and cancellation of title, damages and injunction
against DAR and 141 others (Civil Case No. 2687-97) with
the Regional Trial Court of Malaybalay, Bukidnon; and (c) the
present petition, constitute forum shopping.
We disagree.
The rule is that:
There is forum-shopping whenever, as a result of an adverse
opinion in one forum, a party seeks a favorable opinion
(other than by appeal or certiorari) in another. The principle
applies not only with respect to suits filed in the courts but
also in connection with litigation commenced in the courts
while an administrative proceeding is pending, as in this
case, in order to defeat administrative processes and in
anticipation of an unfavorable administrative ruling and a
favorable court ruling. This specially so, as in this case,
where the court in which the second suit was brought, has
no jurisdiction (citations omitted).
The test for determining whether a party violated the rule
against forum shopping has been laid down in the 1986 case
of Buan vs. Lopez (145 SCRA 34), x x x and that is, forum
shopping exists where the elements of litis pendentia
are present or where a final judgment in one case will
amount to res judicata in the other, as follows:
There thus exists between the action before this Court and
[if !supportFootnotes][57][endif]

RTC Case No. 86-36563 identity of parties, or at least such


parties as represent the same interests in both actions, as
well as identity of rights asserted and relief prayed for,
the relief being founded on the same facts, and the identity
on the two preceding particulars is such that any judgment
rendered in the other action, will, regardless of which
party is successful, amount to res adjudicata in the
action under consideration: all the requisites, in fine, of
auter action pendant.'
It is clear from the above-quoted rule that the petitioners
are not guilty of forum shopping. The test for determining
whether a party has violated the rule against forum shopping
is where a final judgment in one case will amount to res
adjudicata in the action under consideration. A cursory
examination of the cases filed by the petitioners does not
show that the said cases are similar with each other. The
petition for certiorari in the Court of Appeals sought the
nullification of the DAR Secretarys order to proceed with the
compulsory acquisition and distribution of the subject
property. On the other hand, the civil case in RTC of
Malaybalay, Bukidnon for the annulment and cancellation of
title issued in the name of the Republic of the Philippines,
with damages, was based on the following grounds: (1) the
DAR, in applying for cancellation of petitioner NQSRMDCs
title, used documents which were earlier declared null and
void by the DARAB; (2) the cancellation of NQSRMDCs title
was made without payment of just compensation; and (3)
without notice to NQSRMDC for the surrender of its title. The
present petition is entirely different from the said two cases
as it seeks the nullification of the assailed Win-Win
Resolution of the Office of the President dated November 7,
1997, which resolution was issued long after the previous
two cases were instituted.
The fourth and final preliminary issue to be resolved is
the motion for intervention filed by alleged farmer[if !supportFootnotes][58][endif]

beneficiaries, which we have to deny for lack of merit. In


their motion, movants contend that they are the farmerbeneficiaries of the land in question, hence, are real parties
in interest. To prove this, they attached as Annex I in their
motion a Master List of Farmer-Beneficiaries. Apparently, the
alleged master list was made pursuant to the directive in the
dispositive portion of the assailed Win-Win Resolution which
directs the DAR to carefully and meticulously determine who
among the claimants are qualified farmer-beneficiaries.
However, a perusal of the said document reveals that
movants are those purportedly Found Qualified and
Recommended for Approval. In other words, movants are
merely recommendee farmer-beneficiaries.
The rule in this jurisdiction is that a real party in interest
is a party who would be benefited or injured by the judgment
or is the party entitled to the avails of the suit. Real interest
means a present substantial interest, as distinguished from a
mere expectancy or a future, contingent, subordinate or
consequential interest.
Undoubtedly, movants
interest over the land in question is a mere expectancy.
Ergo, they are not real parties in interest.
Furthermore, the challenged resolution upon which
movants based their motion is, as intimated earlier, null and
void. Hence, their motion for intervention has no leg to stand
on.
Now to the main issue of whether the final and executory
Decision dated March 29,1996 can still be substantially
modified by the Win-Win Resolution.
We rule in the negative.
The rules and regulations governing appeals to the
Office of the President of the Philippines are embodied in
Administrative Order No. 18. Section 7 thereof provides:
SEC. 7. Decisions/resolutions/orders of the Office of the
President shall, except as otherwise provided for by special
laws, become final after the lapse of fifteen (15) days
[if

!supportFootnotes][59][endif]

from receipt of a copy thereof by the parties, unless a


motion for reconsideration thereof is filed within such
period.
Only one motion for reconsideration by any one party
shall be allowed and entertained, save in exceptionally
meritorious cases. (Emphasis ours)
It is further provided for in Section 9 that The Rules of Court
shall apply in a suppletory character whenever practicable.
When the Office of the President issued the Order dated
June 23,1997 declaring the Decision of March 29, 1996 final
and executory, as no one has seasonably filed a motion for
reconsideration thereto, the said Office had lost its
jurisdiction to re-open the case, more so modify its Decision.
Having lost its jurisdiction, the Office of the President has no
more authority to entertain the second motion for
reconsideration filed by respondent DAR Secretary, which
second motion became the basis of the assailed Win-Win
Resolution. Section 7 of Administrative Order No. 18 and
Section 4, Rule 43 of the Revised Rules of Court mandate
that only one (1) motion for reconsideration is allowed to be
taken from the Decision of March 29, 1996. And even if a
second motion for reconsideration was permitted to be filed
in exceptionally meritorious cases, as provided in the second
paragraph of Section 7 of AO 18, still the said motion should
not have been entertained considering that the first motion
for reconsideration was not seasonably filed, thereby
allowing the Decision of March 29, 1996 to lapse into finality.
Thus, the act of the Office of the President in re-opening the
case and substantially modifying its March 29,1996 Decision
which had already become final and executory, was in gross
disregard of the rules and basic legal precept that accord
finality to administrative determinations.
In San Luis, et al. vs. Court of Appeals, et al.
we held:
Since the decisions of both the Civil Service Commission
[if !supportFootnotes][60][endif]

and the Office of the President had long become final and
executory, the same can no longer be reviewed by the
courts. It is well-established in our jurisprudence that the
decisions and orders of administrative agencies, rendered
pursuant to their quasi-judicial authority, have upon their
finality, the force and binding effect of a final judgment within
the purview of the doctrine of res judicata [Brillantes v.
Castro, 99 Phil. 497 (1956), Ipekdijna Merchandizing Co.,
Inc. v. Court of Tax Appeals, G.R. No. L-15430, September
30, 1963, 9 SCRA 72.] The rule of res judicata which forbids
the reopening of a matter once judicially determined by
competent authority applies as well to the judicial and quasijudicial acts of public, executive or administrative officers and
boards acting within their jurisdiction as to the judgments of
courts having general judicial powers [Brillantes v. Castro,
supra at 503].
The orderly administration of justice requires that the
judgments/resolutions of a court or quasi-judicial body must
reach a point of finality set by the law, rules and regulations.
The noble purpose is to write finis to disputes once and for
all.
This is a fundamental principle in our justice
system, without which there would be no end to litigations.
Utmost respect and adherence to this principle must always
be maintained by those who wield the power of adjudication.
Any act which violates such principle must immediately be
struck down.
Therefore, the assailed Win-Win Resolution which
substantially modified the Decision of March 29, 1996 after it
has attained finality, is utterly void. Such void resolution, as
aptly stressed by Justice Thomas A. Street
in a
1918 case,
is a lawless thing, which can be
treated as an outlaw and slain at sight, or ignored wherever
and whenever it exhibits its head.
WHEREFORE, the present petition is hereby GRANTED.
The challenged Resolution dated November 7, 1997, issued
[if !supportFootnotes][61][endif]

[if !supportFootnotes][62][endif]

[if !supportFootnotes][63][endif]

[if !supportFootnotes][64][endif]

by the Office of the President in OP Case No. 96-C-6424, is


hereby NULLIFIED and SET ASIDE. The Motion For Leave
To Intervene filed by alleged farmer-beneficiaries is hereby
DENIED.
No pronouncement as to costs.
SO ORDERED.
Regalado, (Chairman), Melo, Puno, and Mendoza, JJ.,
concur.
[if!supportEndnotes]
[endif]
Annex AA, Petition; Rollo, pp. 163-167.
Annex A, Petition; Ibid., pp. 48-63.
[if !supportFootnotes][3][endif]
Annex B, Petition; Rollo, pp. 64-65.
[if !supportFootnotes][4][endif]
Par. 12, Petition; Ibid., p. 6.
[if !supportFootnotes][5][endif]
Annex C, Petition; ibid., pp. 66-67.
[if !supportFootnotes][6][endif]
Annex D, Petition; ibid., p. 68.
[if !supportFootnotes][7][endif]
Annexes E, F and G, Petition; ibid., pp. 69-71.
[if !supportFootnotes][8][endif]
Annex H, Petition; Ibid., p. 72.
[if !supportFootnotes][9][endif]
Annex AA, Petition; Ibid., pp. 163-166.
[if !supportFootnotes][10][endif]
Annex S, Petition; Ibid., p. 113.
[if !supportFootnotes][11][endif]
Annex T, Petition; Ibid., pp. 115-120.
[if !supportFootnotes][12][endif]
Annex U, Petition; Ibid., pp. 121-146.
[if !supportFootnotes][13][endif]
Annexes V and V-1, Petition; Ibid., pp. 147-150.
[if !supportFootnotes][14][endif]
Annex W, Petition; Ibid., pp. 151-153.
[if !supportFootnotes][15][endif]
Annex X, Petition; Ibid., pp. 154-156.
[if !supportFootnotes][16][endif]
Annex Y, Petition; Ibid., pp. 157-158.
[if !supportFootnotes][17][endif]
Ibid., pp. 166-167.
[if !supportFootnotes][18][endif]
Par. 37, Petition, rollo, pp. 14-15.
[if !supportFootnotes][19][endif]
Annex BB, Petition; Ibid., p. 168.
[if !supportFootnotes][20][endif]
Annex CC, Petition; Ibid., pp. 169-176.
[if !supportFootnotes][21][endif]
Annex DD, Petition; Ibid., pp. 177-189.
[if !supportFootnotes][22][endif]
Annex EE, Petition; Rollo, pp. 190-191.
[if !supportFootnotes][23][endif]
Annex GG, Petition; Ibid., pp. 193-194.
[if !supportFootnotes][24][endif]
Annex FF, Petition; Ibid., p. 192.
[if !supportFootnotes][25][endif]
Par. 17, Respondents Comment, rollo, p. 532.
[if !supportFootnotes][26][endif]
Par. 18, ibid., p. 533.
[if !supportFootnotes][27][endif]
Rollo, pp. 61-62.
[if !supportFootnotes][28][endif]
Par. 3, Petition; Ibid., p. 4.
[if !supportFootnotes][29][endif]
Rollo, pp. 195-200.
[if !supportFootnotes][1][endif]
[if !supportFootnotes][2][endif]

Ibid., pp. 280-282.


Petition, ibid., p. 17.
[if !supportFootnotes][32][endif]
Ibid., p. 18.
[if !supportFootnotes][33][endif]
Ibid., p. 4.
[if !supportFootnotes][34][endif]
Ibid., p. 5.
[if !supportFootnotes][35][endif]
Fernando vs. Vasquez, et. al., 31 SCRA 288.
[if !supportFootnotes][36][endif]
Ibid; Section 1, Rule 65, Revised Rules of Court.
[if !supportFootnotes][37][endif]
Ibid.
[if !supportFootnotes][38][endif]
Except those issued under the Labor Code of the
Philippines (Sec. 2, Rule 43, Revised Rules of Court).
[if !supportFootnotes][39][endif]
Section 1, Rule 43, Revised Rules of Court.
[if !supportFootnotes][40][endif]
Sections 3 & 5, ibid.
[if !supportFootnotes][41][endif]
Section 4, ibid.
[if !supportFootnotes][42][endif]
Section 3, ibid.
[if !supportFootnotes][43][endif]
Petition, rollo, p. 5.
[if !supportFootnotes][44][endif]
Ibid., p. 18.
[if !supportFootnotes][45][endif]
Fernando vs. Vasquez, et al., 31 SCRA 288.
[if !supportFootnotes][46][endif]
Section 1, Rule 65, Revised Rules of Court; People vs.
Cuaresma, et. al., 172 SCRA 415, 423; Vergara, Sr. vs. Suelto, et. al., 156
SCRA 753, 766.
[if !supportFootnotes][47][endif]
Section 2, ibid.
[if !supportFootnotes][48][endif]
Section 3, ibid.
[if !supportFootnotes][49][endif]
Supra.
[if !supportFootnotes][50][endif]
Cited in Regalado, Remedial Law Compendium, Vol. One,
1997 edition, p. 721.
[if !supportFootnotes][51][endif]
G.R. Nos. 111416-17, Sept. 26, 1994.
[if !supportFootnotes][52][endif]
G.R. No. 123352, Feb. 7, 1996.
[if !supportFootnotes][53][endif]
G.R. No. 123573, Feb. 28, 1996.
[if !supportFootnotes][54][endif]
G.R. No. 125500, Aug. 7, 1996.
[if !supportFootnotes][55][endif]
Eugenio vs. Drilon, et. al., G.R. No. 109404, Jan. 22, 1996;
252 SCRA 106,110.
[if !supportFootnotes][56][endif]
190 SCRA 31, 38.
[if !supportFootnotes][57][endif]
Vigan Electric Light Co., Inc. vs. Public Service
Commission, L-19850, Jan. 30, 1964; Luzon Surety Co. vs. Marbella, et
al., L-16088, Sept. 30, 1960; Dir. Of Lands vs. Santamaria, 44 Phil. 594, all
cited in Regalado, Remedial Law Compendium, supra, p. 710.
[if !supportFootnotes][58][endif]
First Philippine International Bank, et. al. vs. Court of
Appeals, et. al., 252 SCRA 259, 283 (Jan. 24, 1996).
[if !supportFootnotes][59][endif]
Garcia vs. David, 67 Phil. 27.
[if !supportFootnotes][60][endif]
174 SCRA 258, 271.
[if !supportFootnotes][61][endif]
Legarda, et al. vs. Savellano, et al., 158 SCRA 194, 200.
[if !supportFootnotes][62][endif]
One of the first Justices of the Supreme Court of the
Philippines.
[if !supportFootnotes][30][endif]
[if !supportFootnotes][31][endif]

[if !supportFootnotes][63][endif]
[if !supportFootnotes][64][endif]

El Banco Espaol-Filipino vs. Palanca, 37 Phil. 921.


Ibid., at p. 949.

EN BANC
[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.
DECISION
MENDOZA, J.:

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 brought this suit challenging the validity of the
order dated August 31, 1995, as reiterated in the order dated
September 22, 1995, of the Secretary of Labor and
Employment. Its petition was dismissed by the Third Division
for lack of showing that respondent committed grave abuse
of discretion. But 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 the purposes not contrary to law shall not be
abridged.
For this reason, the petition was referred to the Court en
banc.
The Issues in this Case

Two question are presented by the petition: (1) whether


the route managers at Pepsi-Cola Products Philippines, Inc.
are managerial employees and (2) whether Art. 245, insofar
as it prohibits managerial employees from forming, joining or
assisting labor unions, violates Art. III, 8 of the Constitution.
In resolving these issues it would be useful to begin by
defining who are managerial employees and considering the
types of managerial employees.
Types of Managerial Employees

The term manager generally refers to anyone who is


responsible for subordinates and other organization
resources.[if !supportFootnotes][1][endif] As a class, managers constitute
three levels of a pyramid:
Top Management
_________________
Middle Management
_________________
First Line
Management
(also called Supervisor)
____________________
____________________
Operatives
Or Operating Employees
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. Example 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 organizations 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.[if !supportFootnotes][2][endif]
As can be seen from this description, a distinction exist
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 polices 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. Whether they belong to the first or
second category, managers, vis--vis employers, are,
likewise, employees.[if !supportFootnotes][3][endif]
The first question is whether route managers are
managers are managerial employees or supervisors.
Previous Administrative Determinations of the Question Whether Route Managers are Managerial
Employees

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.
In Case No. OS-MA-10318-91, entitled Workerss
Alliance Trade Union (WATU) v. Pepsi-Cola Products
Philippines, Inc., decided on November 13, 1991, the
Secretary of Labor found:
We examined carefully the pertinent job description of the
subject employees and other documentary evidence on
record vis--vis paragraph (m), Article 212 of the Labor Code,
as amended, and we find that only those employees
occupying the position of route manager and accounting
manager are managerial employees. The rest i.e. quality
control manager, yard/transport manager and warehouse
operations manager are supervisory employees.
To qualify as 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. In the
instant case, nothing on record will support the claim that the
quality control manager, yard/transport manager and
warehouse operations manager are vested with said
attributes. The warehouse operations manager, for example,
merely assists the plant finance manager in planning,
organizing, directing and controlling all activities relative to

development and implementation of an effective


management control information system at the sale offices.
The exercise of authority of the quality control manager, on
the other hand, needs the concurrence of the manufacturing
manager
As to the route managers and accounting manager, we are
convinced that they are managerial employees. Their job
descriptions clearly reveal so.
On July 6, 1992, 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., as follows:
The issue brought before us is not of first impression. At one
time, we had the occasion to rule upon the status of route
manager in the same company vis a vis the issue as to
whether or not it is supervisory employee or a managerial
employee. In the case of Workers Alliance Trade Unions
(NATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-10318-91), 15 November 1991, we ruled that a route manager
is a managerial employee within the context of the definition
of the law, and hence, ineligible to join, form or assist a
union. We have once more passed upon the logic of our
Decision aforecited in the light of the issues raised in the
instant appeal, as well as the available documentary
evidence on hand, and have come to the view that there is
no cogent reason to depart from our earlier holding. Route
Managers are, by the very nature of their functions and the
authority they wield over their subordinates, managerial
employees. The prescription found in Art. 245 of the Labor
Code, as amended therefore, clearly applies to them.[if !
supportFootnotes][4][endif]
4
Citing our ruling in Nasipit Lumber Co. v. National Labor
Relations Commission,[if !supportFootnotes][5][endif]5 however, petitioner
argues that these previous administrative determinations do
not have the effect of res judicata in this case, because

"labor relations proceedings" are "non-litigious and summary


in nature without regard to legal technicalities."[if !supportFootnotes][6][endif]
Nasipit Lumber Co. involved a clearance to dismiss an
employee issued by the Department of Labor. The question
was whether in a subsequent proceeding for illegal
dismissal, the clearance was res judicata. In holding it was
not, this Court made it clear that it was referring to labor
relations proceedings of a non-adversary character, thus:
The requirement of a clearance to terminate employment
was a creation of the Department of labor to carry out the
Labor Code provisions on security of tenure and termination
of employment. The proceeding subsequent to the filing of
an application for clearance to terminate employment was
outlined in Book V, Rule XIV of the Rules and Regulations
Implementing the Labor Code. The fact that said rule allowed
a procedure for the approval of the clearance with or without
the opposition of the employee concerned (Secs. 7 & 8),
demonstrates the non-litigious and summary nature of the
proceeding. The clearance requirement was therefore
necessary only as an expeditious shield against arbitrary
dismissal without the knowledge and supervision of the
Department of Labor. Hence, a duly approved clearance
implied that the dismissal was legal or for cause (Sec. 2).[if !
supportFootnotes][7][endif]
v. National Labor Relations Commission, 177
SCRA 93, 100 (1989).7
But the doctrine of res judicata certainly applies to
adversary administrative proceedings. As early as 1956, in
Brillantes v. Castro,[if !supportFootnotes][8][endif]8 we sustained the
dismissal of an action by a trial court on the basis of a prior
administrative determination of the same case by the Wage
Administration Service, applying the principle of res judicata.
Recently, in Abad v. NLRC[if !supportFootnotes][9][endif]9 we applied the
related doctrine of stare decisis in holding that the prior
determination that certain jobs at the Atlantic Gulf and Pacific
Co. were project employments was binding in another case

involving another group of employees of the same company.


Indeed, in Nasipit Lumber Co., this Court clarified toward the
end of its opinion that "the doctrine of res judicata applies . . .
to judicial or quasi judicial proceedings and not to the
exercise of administrative powers."[if !supportFootnotes][10][endif]v. National
Labor Relations Commission, supra note 7.10 Now
proceedings for certification election, such as those involved
in Case No. OS-M-A-10-318-91 and Case No. OS-A-3-7192, are quasi judicial in nature and, therefore, decisions
rendered in such proceedings can attain finality.[if !supportFootnotes][11]
[endif]
v. B.F. Goodrich (Marikina Factory) Confidential and
Salaries Employees Union-NATU, 49 SCRA 532 (1973).11
Thus, we have in this case an expert's view that the
employees concerned are managerial employees within the
purview of Art. 212 which provides:
(m) "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.
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. Nonetheless, the Court, concerned that
employees who are otherwise supervisors may wittingly or
unwittingly be classified as managerial personnel and thus
denied the right of self- organization, has decided to review

the record of this case.


DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial
Evidence in the Record

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. BASIC PURPOSE
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.
B. PRINCIPAL ACCOUNTABILITIES
1.0 MANAGING YOUR JOB
The Route Manager is accountable for the following:
1.1 SALES DEVELOPMENT
1.1.1 Achieve the sales plan.
1.1.2 Achieve all distribution and new account objectives.
1.1.3 Develop new business opportunities thru personal
contacts with dealers.
1.1.4 Inspect and ensure that all merchandizing [sic]
objectives are achieved in all outlets.
1.1.5 maintain and improve productivity of all cooling
equipment and kiosks.
1.1.6 Execute and control all authorized promotions.

1.1.7 Develop and maintain dealer goodwill.


1.1.8 Ensure all accounts comply with company suggested
retail pricing.
1.1.9 Study from time to time individual route coverage and
productivity for possible adjustments to
maximize utilization of resources.
1.2 Administration
1.2.1 Ensure the proper loading of route trucks before checkout and the proper sorting of bottles
before check-in.
1.2.2 Ensure the upkeep of all route sales reports and all
other related reports and forms required
on an accurate and timely basis.
1.2.3 Ensure proper implementation of the various company
policies and procedures incl. but not
limited to shakedown; route shortage;
progressive discipline; sorting;
spoilages; credit/collection; accident;
attendance.
1.2.4 Ensure collection of receivables and delinquent
accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate and develop all
assigned route salesmen and helpers at
least 3 days a week, to be supported by
required route ride documents/reports &
back check/spot check at least 2 days a
week to be supported by required
documents/reports.
2.1.2 Conduct sales meetings and morning huddles. Training
should focus on the enhancement of
effective sales and merchandizing [sic]
techniques of the salesmen and helpers.

Conduct group training at least 1 hour


each week on a designated day and of
specific topic.
2.2 Code of Conduct
2.2.1 Maintain the company's reputation through strict
adherence to PCPPI's code of conduct
and the universal standards of
unquestioned business ethics.[if !supportFootnotes]
[12][endif]
12
Earlier in this opinion, reference was made to the
distinction between managers per se (top managers and
middle managers) and supervisors (first-line managers).
That 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 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. They are not mere functionaries
with simple oversight functions but business administrators
in their own right. An idea of the role of route managers as
managers per se can be gotten from a memo sent by the
director of metro sales operations of respondent company to
one of the route managers. It reads:[if !supportFootnotes][13][endif]
03 April 1995
To : CESAR T. REOLADA
From : REGGIE M. SANTOS
Subj : SALARY INCREASE

Effective 01 April 1995, your basic monthly salary of


P11,710 will be increased to P12,881 or an increase of
10%. This represents the added managerial responsibilities
you will assume due to the recent restructuring and
streamlining of Metro Sales Operations brought about by the
continuous losses for the last nine (9) months.
Let me remind you that for our operations to be profitable,
we have to sustain the intensity and momentum that
your group and yourself have shown last March. You just
have to deliver the desired volume targets, better
negotiated concessions, rationalized sustaining
deals, eliminate or reduced overdues, improved
collections, more cash accounts, controlled
operating expenses, etc. Also, based on the agreed set
targets, your monthly performance will be closely
monitored.
You have proven in the past that your capable of
achieving your targets thru better planning,
managing your group as a fighting team, and thru
aggressive selling. I am looking forward to your
success and I expect that you just have to exert
your doubly best in turning around our operations
from a losing to a profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers, quoted in
the separate opinion of Justice Vitug, although entitled "RM's
Job Description," is only a summary of performance
standards. It does not show whether route managers are
managers per se or supervisors. Obviously, these
performance standards have to be related to the specific
tasks given to route managers in the four-page "Route
Manager Position Description," and, when this is done, the
managerial nature of their jobs is fully revealed. Indeed, if
any, the card indicates the great latitude and discretion given

to route managers - from servicing and enhancing company


goodwill to supervising and auditing accounts, from trade
(new business) development to the discipline, training and
monitoring of performance of their respective sales teams,
and so forth, - if they are to fulfill the company's expectations
in the "key result areas."
Article 212(m) says that "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. 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-avis its competitors.
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.[if !supportFootnotes][14][endif]14 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.
This brings us to the second question, whether the first
sentence of Art. 245 of the Labor Code, prohibiting
managerial employees from forming, assisting or joining any
labor organization, is constitutional in light of 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.
As already stated, whether they belong to the first
category (managers per se) or the second category
(supervisors), managers are employees. Nonetheless, 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 2(3) of the
Labor-Management Relations Act of 1947.[if !supportFootnotes][15][endif]v.
Bell Aerospace Co., 416 U.S. 281, n 11, 40 L.Ed.2d 134,
147, n. 11 (1974), thus:
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
"security". It seems wrong, and it is wrong, to subject people of this kind,
who have demonstrated their initiative, their ambition and their ability to get
ahead, to the leveling processes of seniority, uniformity and
standardization that the Supreme Court recognizes as being fundamental
principles of unionism. (J.I. Case Co. v. National Labor Relations Board,
321 U.S. 332, 88 L.Ed. 762, 64 S. Ct. 576 (1994). It is wrong for the
foremen, for it discourages the things in them that made them foremen in

the first place. For the same reason, that it discourages those best
qualified to get ahead, it is wrong for industry, and particularly for the future
strength and productivity of our country.15 In the Philippines, the

question whether managerial employees have a right of selforganization has arisen with respect to first-level managers
or supervisors, as shown by a review of the course of labor
legislation in this country.
Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws

Before the promulgation of the Labor Code in 1974, the


field of labor relations was governed by the Industrial Peace
Act (R.A. No. 875).
In accordance with the general definition above, this law
defined "supervisor" as follows:
SECTION 2. . . .
(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.[if !supportFootnotes][16][endif]16
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 labor
organization of employees under their supervision but may
form separate organizations of their own.[if !supportFootnotes][17][endif]
For its part, the Supreme Court upheld in several of its

decisions the right of supervisors to organize for purposes of


labor relations.[if !supportFootnotes][18][endif]v. Filoil Supervisory and
Confidential Employees Association, 6 SCRA 522 (1972);
Kapisanan ng mga Manggagawa sa Manila Railroad Co. v.
CIR, 106 Phil 607 (1959).18
Although it had a definition of the term "supervisor," the
Industrial Peace Act did not define the term "manager." But,
using the commonly-understood concept of "manager," as
above stated, it is apparent that the law used the term
"supervisors" to refer to the sub-group of "managerial
employees" known as front-line managers. The other subgroup of "managerial employees," known as managers per
se, was not covered.
However, in Caltex Filipino Managers and Supervisors
Association v. Court of Industrial Relations,[if !supportFootnotes][19]
[endif]
J.)19 the right of all managerial employees to selforganization was upheld as a general proposition, thus:
It would be going too far to dismiss summarily the point
raised by respondent Company - that of the alleged identity
of interest between the managerial staff and the employing
firm. That should ordinarily be the case, especially so where
the dispute is between management and the rank and file. It
does not necessarily follow though that what binds the
managerial staff to the corporation forecloses the possibility
of conflict between them. There could be a real difference
between what the welfare of such group requires and the
concessions the firm is willing to grant. Their needs might not
be attended to then in the absence of any organization of
their own. Nor is this to indulge in empty theorizing. The
record of respondent Company, even the very case cited by
it, is proof enough of their uneasy and troubled relationship.
Certainly the impression is difficult to erase that an alien firm
failed to manifest sympathy for the claims of its Filipino
executives. To predicate under such circumstances that
agreement inevitably marks their relationship, ignoring that

discord would not be unusual, is to fly in the face of reality.


. . . The basic question is whether the managerial personnel
can organize. What respondent Company failed to take into
account is that the right to self-organization is not merely a
statutory creation. It is fortified by our Constitution. All are
free to exercise such right unless their purpose is contrary to
law. Certainly it would be to attach unorthodoxy to, not to say
an emasculation of, the concept of law if managers as such
were precluded from organizing. Having done so and having
been duly registered, as did occur in this case, their union is
entitled to all the rights under Republic Act No. 875.
Considering what is denominated as unfair labor practice
under Section 4 of such Act and the facts set forth in our
decision, there can be only one answer to the objection
raised that no unfair labor practice could be committed by
respondent Company insofar as managerial personnel is
concerned. It is, as is quite obvious, in the negative.[if !
supportFootnotes][20][endif]
20
Actually, the case involved front-line managers or
supervisors only, as the plantilla of employees, quoted in the
main opinion,[if !supportFootnotes][21][endif]J.) (emphasis added).21 clearly
indicates:
CAFIMSA members holding the following Supervisory
Payroll Position Title are Recognized by the Company
Payroll Position Title
Assistant to Mgr. - National Acct. Sales
Jr. Sales Engineer
Retail Development Asst.
Staff Asst. - 0 Marketing
Sales Supervisor
Supervisory Assistant
Jr. Supervisory Assistant
Credit Assistant
Lab. Supvr. - Pandacan
Jr. Sales Engineer B

Operations Assistant B
Field Engineer
Sr. Opers. Supvr. - MIA A/S
Purchasing Assistant
Jr. Construction Engineer
St. Sales Supervisor
Deport Supervisor A
Terminal Accountant B
Merchandiser
Dist. Sales Prom. Supvr.
Instr. - Merchandising
Asst. Dist. Accountant B
Sr. Opers. Supervisor
Jr. Sales Engineer A
Asst. Bulk Ter. Supt.
Sr. Opers. Supvr.
Credit Supervisor A
Asst. Stores Supvr. A
Ref. Supervisory Draftsman
Refinery Shift Supvr. B
Asst. Supvr. A - Operations (Refinery)
Refinery Shift Supvr. B
Asst. Lab. Supvr. A (Refinery)
St. Process Engineer B (Refinery)
Asst. Supvr. A - Maintenance (Refinery)
Asst. Supvr. B - Maintenance (Refinery)
Supervisory Accountant (Refinery)
Communications Supervisor (Refinery)
Finally, also deemed included are all other employees
excluded from the rank and file unions but not classified as
managerial or otherwise excludable by law or applicable
judicial precedents.
Right of Self-Organization of Managerial Employees under the Labor Code

Thus, the dictum in the Caltex case which allowed at


least for the theoretical unionization of top and middle

managers by assimilating them with the supervisory group


under the broad phrase "managerial personnel," provided
the lynchpin for later laws denying the right of selforganization not only to top and middle management
employees but to front line managers or supervisors as well.
Following the Caltex case, the Labor Code, promulgated in
1974 under martial law, dropped the distinction between the
first and second sub-groups of managerial employees.
Instead of treating the terms "supervisor" and "manager"
separately, the law lumped them together and called them
"managerial employees," as follows:
ART. 212. Definitions . . . .
(k) "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, or to effectively
recommend such managerial actions. All employees not
falling within this definition are considered rank and file
employees for purposes of this Book.[if !supportFootnotes][22][endif]22
The definition shows that it is actually a combination of the
commonly understood definitions of both groups of
managerial employees, grammatically joined by the phrase
"and/or."
This general definition was perhaps legally necessary at
that time for two reasons. First, the 1974 Code denied
supervisors their right to self-organize as theretofore
guaranteed to them by the Industrial Peace Act. Second, it
stood the dictum in the Caltex case on its head by prohibiting
all types of managers from forming unions. The explicit
general prohibition was contained in the then Art. 246 of the
Labor Code.
The practical effect of this synthesis of legal concepts
was made apparent in the Omnibus Rules Implementing the
Labor Code which the Department of Labor promulgated on
January 19, 1975. Book V, Rule II, 11 of the Rules provided:

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 cancelled. 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.
Members of supervisory unions who do not fall within the
definition of managerial employees shall become eligible to
join or assist the rank and file labor organization, and if none
exists, to form or assist in the forming of such rank and file
organization. The determination of who are managerial
employees and who are not shall be the subject of
negotiation between representatives of the supervisory union
and the employer. If no agreement is reached between the
parties, either or both of them may bring the issue to the
nearest Regional Office for determination.
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.
Real Intent of the 1986 Constitutional Commission

This was the law as it stood at the time the Constitutional


Commission considered the draft of Art. III, 8. Commissioner
Lerum sought to amend the draft of what was later to
become Art. III, 8 of the present Constitution:

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."[if !supportFootnotes][23][endif]23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to form
associations is granted to all persons whether or not they are
employed in the government. Under that provision, we allow
unions in the government, in government-owned and
controlled corporations and in other industries in the private
sector, such as the Philippine Government Employees'
Association, unions in the GSIS, the SSS, the DBP and other
government-owned and controlled corporations. Also, we
have unions of supervisory employees and of security
guards. But what is tragic about this is that after the 1973
Constitution was approved and in spite of an express
recognition of the right to organize in P.D. No. 442, known as
the Labor Code, the right of government workers,
supervisory employees and security guards to form unions
was abolished.
And we have been fighting against this abolition. In every
tripartite conference attended by the government,
management and workers, we have always been insisting on
the return of these rights. However, both the government and
employers opposed our proposal, so nothing came out of
this until this week when we approved a provision which
states:
Notwithstanding any provision of this article, the right to selforganization shall not be denied to government employees.
We are afraid that without any corresponding provision

covering the private sector, the security guards, the


supervisory employees or majority employees [sic] will still
be excluded, and that is the purpose of this amendment.
I will be very glad to accept any kind of wording as long as it
will amount to absolute recognition of private sector
employees, without exception, to organize.
THE PRESIDENT. What does the Committee say?
FR. BERNAS. Certainly, the sense is very acceptable, but
the point raised by Commissioner Rodrigo is well-taken.
Perhaps, we can lengthen this a little bit more to read: "The
right of the people WHETHER UNEMPLOYED OR
EMPLOYED BY STATE OR PRIVATE ESTABLISHMENTS."
I want to avoid also the possibility of having this interpreted
as applicable only to the employed.
MR. DE LOS REYES. Will the proponent accept an
amendment to the amendment, Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the
right of the employees in the private sector is recognized.[if !
supportFootnotes][24][endif]

Lerum thus anchored his proposal on the fact that (1)


government employees, supervisory employees, and
security guards, who had the right to organize under the
Industrial Peace Act, had been denied this right by the Labor
Code, and (2) there was a need to reinstate the right of
these employees. In consonance with his objective to
reinstate the right of government, security, and supervisory
employees to organize, Lerum then made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation with
several Members of this Commission, my amendment will
now read as follows: "The right of the people INCLUDING
THOSE EMPLOYED IN THE PUBLIC AND PRIVATE
SECTORS to form associations, unions, or societies for
purposes not contrary to law shall not be abridged. In
proposing that amendment I ask to make of record that I
want the following provisions of the Labor Code to be

automatically abolished, which read:


ART. 245. Security guards and other personnel employed for
the protection and security of the person, properties and
premises of the employers shall not be eligible for
membership in a labor organization.
ART. 246. Managerial employees are not eligible to join,
assist, and form any labor organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does the
Committee say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The Committee
has accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the
amendment, as amended, is approved.[if !supportFootnotes][25][endif]
The question is what Commissioner Lerum meant in
seeking to "automatically abolish" the then Art. 246 of the
Labor Code. Did he simply want "any kind of wording as long
as it will amount to absolute recognition of private sector
employees, without exception, to organize"?[if !supportFootnotes][26][endif]
Or, did he instead intend to have his words taken in the
context of the cause which moved him to propose the
amendment in the first place, namely, the denial of the right
of supervisory employees to organize, because he said, "We
are afraid that without any corresponding provision covering
the private sector, security guards, supervisory employees or
majority [of] employees will still be excluded, and that is the
purpose of this amendment"?[if !supportFootnotes][27][endif]
It would seem that Commissioner Lerum simply meant to
restore the right of supervisory employees to organize. For
even though he spoke of the need to "abolish" Art. 246 of the
Labor Code which, as already stated, prohibited "managerial
employees" in general from forming unions, the fact was that
in explaining his proposal, he repeatedly referred to
"supervisory employees" whose right under the Industrial
Peace Act to organize had been taken away by Art. 246. It is

noteworthy that Commissioner Lerum never referred to the


then definition of "managerial employees" in Art. 212(m) of
the Labor Code which put together, under the broad phrase
"managerial employees," top and middle managers and
supervisors. Instead, his repeated use of the term
"supervisory employees," when such term then was no
longer in the statute books, suggests a frame of mind that
remained grounded in the language of the Industrial Peace
Act.
Nor did Lerum ever refer to the dictum in Caltex
recognizing the right of all managerial employees to
organize, despite the fact that the Industrial Peace Act did
not expressly provide for the right of top and middle
managers to organize. If Lerum was aware of the Caltex
dictum, then his insistence on the use of the term
"supervisory employees" could only mean that he was
excluding other managerial employees from his proposal. If,
on the other hand, he was not aware of the Caltex statement
sustaining the right to organize to top and middle managers,
then the more should his repeated use of the term
"supervisory employees" be taken at face value, as it had
been defined in the then Industrial Peace Act.
At all events, that the rest of the Commissioners
understood his proposal to refer solely to supervisors and
not to other managerial employees is clear from the following
account of Commissioner Joaquin G. Bernas, who writes:
In presenting the modification on the 1935 and 1973 texts,
Commissioner Eulogio R. Lerum explained that the
modification included three categories of workers: (1)
government employees, (2) supervisory employees, and (3)
security guards. Lerum made of record the explicit intent to
repeal provisions of P.D. 442, the Labor Code. The
provisions referred to were:
ART. 245. Security guards and other personnel employed for
the protection and security of the person, properties and

premises of the employers shall not be eligible for


membership in a labor organization.
ART. 246. Managerial employees are not eligible to join,
assist, and form any labor organization.[if !supportFootnotes][28][endif]28
Implications of the Lerum Proposal

In sum, Lerum's proposal to amend Art. III, 8 of the draft


Constitution by including labor unions in the guarantee of
organizational right should be taken in the context of
statements that his aim was the removal of the statutory ban
against security guards and supervisory employees joining
labor organizations. The approval by the Constitutional
Commission of his proposal can only mean, therefore, that
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 toplevel and middle managers. As to them the right of selforganization may be regulated and even abridged
conformably to Art. III, 8.
Constitutionality of Art. 245

Finally, the question is whether the present ban against


managerial employees, as embodied in Art. 245 (which
superseded Art. 246) of the Labor Code, is valid. This
provision reads:
ART. 245. 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 rankand-file employees but may join, assist or form separate
labor organizations of their own.[if !supportFootnotes][29][endif]29
This provision 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) "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.
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.[if !supportFootnotes][30][endif]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.
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:[if !supportFootnotes][31][endif]31
In the first place, all these employees, with the exception of
the service engineers and the sales force personnel, are
confidential employees. Their classification as such is not
seriously disputed by PEO-FFW; 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. As such,
the rationale behind the ineligibility of managerial employees
to form, assist or joint a labor union equally applies to them.
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."[if !supportFootnotes][32][endif]
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. After all, those who qualify as top or middle
managers are executives who receive from their employers
information that not only is confidential but also is not
generally available to the public, or to their competitors, or to
other employees. It is hardly necessary to point out that to
say that the first sentence of Art. 245 is unconstitutional
would be to contradict the decision in that case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez,


and Purisima, JJ., concur.
Davide, Melo, Puno, Vitug, Kapunan, Panganiban, and
Quisumbing, JJ., has separate, concurring and dissenting
opinion.
[if!supportEndnotes]
[endif]
[if !supportFootnotes][1][endif]

JAMES A.F. STONER & CHARLES WANKEL,


MANAGEMENT 11 (3rd. ed., 1987).
[if !supportFootnotes][2][endif]
Id. (emphasis added)
[if !supportFootnotes][3][endif]
Atlantic Gulf & Pac. Co. of Manila v. Cir 113 Phil. 650
(1961).
[if !supportFootnotes][4][endif]
Record, pp. 53-54.
[if !supportFootnotes][5][endif]
177 SCRA 93 (1989).
[if !supportFootnotes][6][endif]
Id., p. 1006
[if !supportFootnotes][7][endif]
Nasipit Lumber Co.
[if !supportFootnotes][8][endif]
99 Phil. 497 (1956).
[if !supportFootnotes][9][endif]
G.R. No. 108996, Feb. 20, 1998.
[if !supportFootnotes][10][endif]
Nasipit Lumber Co.
[if !supportFootnotes][11][endif]
B.F. Goodrich Philippines, Inc.
[if !supportFootnotes][12][endif]
DOLE Record, pp. 144-145.
[if !supportFootnotes][13][endif]
Rollo, p. 46 (emphasis in original).
[if !supportFootnotes][14][endif]
Record, pp. 133-141.
[if !supportFootnotes][15][endif]
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 NLRB
[if !supportFootnotes][16][endif]
R.A. No. 875 (1953), 2(k).
[if !supportFootnotes][17][endif]
Id., 3.17
[if !supportFootnotes][18][endif]
E.g., Filoil Refinery Corp.
[if !supportFootnotes][19][endif]
47 SCRA 112 (1972) (res. on motion for reconsideration,
per Fernando,
[if !supportFootnotes][20][endif]
47 SCRA at 115-117.
[if !supportFootnotes][21][endif]
44 SCRA 350, 363, n.3 (1972) (per Villamor,
[if !supportFootnotes][22][endif]
LABOR CODE, ART, 212(m).
[if !supportFootnotes][23][endif]
1 RECORD OF THE CONSTITUTIONAL COMMISSION
761 (Session of July 18, 1986)
[if !supportFootnotes][24][endif]
Id., (emphasis added).
[if !supportFootnotes][25][endif]
Id., p. 762 (emphasis added).
[if !supportFootnotes][26][endif]
Id., at. 761.
[if !supportFootnotes][27][endif]
Ibid.

[if !supportFootnotes][28][endif]

THE 1987 CONSTITUTION OF THE REPUBLIC OF


THE PHILIPPINES: A COMMENTARY 340-341 (1996).
[if !supportFootnotes][29][endif]
LABOR CODE, ART. 245, as amended by R.A. No.
6715, 18.
[if !supportFootnotes][30][endif]
2 CESARIO A. AZUCENA, THE LABOR CODE WITH
COMMENTS AND CASES 172-173 (1996).
[if !supportFootnotes][31][endif]
210 SCRA 339 (1992).
[if !supportFootnotes][32][endif]
Id., at 347-348.

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