CASE 1: SAN MIGUEL v.
BERSAMIRA RATIO: A "labor dispute" as defined in Article 212 (1) of the
June 13, 1990
G.R. No. 87700
FACTS: Sometime in 1983 and 1984, SanMig entered into
contracts for merchandising services with Lipercon and D'Rite
(independent contractors duly licensed by the DOLE). In said
contracts, it was expressly understood and agreed that the
workers employed by the contractors were to be paid by the
latter and that none of them were to be deemed employees or
agents of SanMig. There was to be no employer-employee
relation between the contractors and/or its workers, on the one
hand, and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO
(Union) is the duly authorized representative of the monthly
paid rank-and-file employees of SanMig with whom the latter
executed a Collective Bargaining Agreement. In a letter, dated
20 November 1988, the Union advised SanMig that some
Lipercon and D'Rite workers had signed up for union
membership and sought the regularization of their employment
with SMC.
On 12 January 1989 on the ground that it had failed to receive
any favorable response from SanMig, the Union filed a notice
of strike for unfair labor practice, CBA violations, and union
busting Beginning 14 February 1989 until 2 March 1989,
series of pickets were staged by Lipercon and D'Rite workers
in various SMC plants and offices. On 6 March 1989, SMC
filed a verified Complaint for Injunction and Damages
ISSUE: WON the case at bar involves, or is in connection with,
or relates to a labor dispute
HELD: YES
Labor Code includes "any controversy or matter concerning
terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of
employment, regardless of whether the disputants stand in the
proximate relation of employer and employee."
A labor dispute can nevertheless exist "regardless of whether
the disputants stand in the proximate relationship of employer
and employee" That a labor dispute, as defined by the law,
does exist herein is evident. At bottom, what the Union seeks
is to regularize the status of the employees contracted by
Lipercon and D'Rite in effect, that they be absorbed into the
working unit of SanMig. This matter definitely dwells on the
working relationship between said employees vis-a-vis
SanMig. Terms, tenure and conditions of their employment
and the arrangement of those terms are thus involved bringing
the matter within the purview of a labor dispute. Further, the
Union also seeks to represent those workers, who have signed
up for Union membership, for the purpose of collective
bargaining. SanMig, for its part, resists that Union demand on
the ground that there is no employer-employee relationship
between it and those workers and because the demand
violates the terms of their CBA.
CASE 2: Patrcia Halagueña et,al. v. PAL
October 2, 2009
G.R. No. 172013
FACTS: Petitioners were employed as flight attendants of
respondent on different dates prior to November 1996. They
are members of FASAP union exclusive bargaining
organization of the flight attendants, flight stewards and
pursers. On July 2001, respondent and FASAP entered into a
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 1
CBA incorporating the terms and conditions of their agreement
for the years 2000 to 2005 (compulsory retirement of 55 for
female and 60 for males)
In July 2003, petitioner and several female cabin crews, in a
letter, manifested that the provision in CBA on compulsory
retirement is discriminatory. On July 2004, FASAP president
submitted their willingness to commence the collective
bargaining negotiations at the soonest possible time. On the
same month, petitioners filed a Special Civil Action for
Declaratory Relief with issuance of TRO with the RTC Makati.
The RTC issued a TRO. After the denial of the respondent on
its motion for reconsideration for the TRO, it filed a Petition
with the CA. CA granted respondent’s petition and ordered
lower court to dismiss the case. Hence, this petition.
ISSUE: WON the RTC has jurisdiction over the petitioners'
action challenging the legality or constitutionality of the
provisions on the compulsory retirement age contained in the
CBA between respondent PAL and FASAP.
HELD: YES
RATIO: Jurisdiction of the court is determined on the basis of
the material allegations of the complaint and the character of
the relief prayed for irrespective of whether plaintiff is entitled
to such relief. The said issue cannot be resolved solely by
applying the Labor Code. Rather, it requires the application of
the Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination
Against Women, and the power to apply and interpret the
constitution and CEDAW is within the jurisdiction of trial courts,
a court of general jurisdiction.
In Georg Grotjahn GMBH & Co. v. Isnani, this Court held that
not every dispute between an employer and employee
involves matters that only labor arbiters and the NLRC can
resolve in the exercise of their adjudicatory or quasi-judicial
powers. The jurisdiction of labor arbiters and the NLRC under
Article 217 of the Labor Code is limited to disputes arising from
an employer-employee relationship which can only be
resolved by reference to the Labor Code, other labor statutes,
or their collective bargaining agreement.
Where the principal relief sought is to be resolved not by
reference to the Labor Code or other labor relations statute or
a collective bargaining agreement but by the general civil law,
the jurisdiction over the dispute belongs to the regular courts
of justice and not to the labor arbiter and the NLRC.
In such situations, resolution of the dispute requires expertise,
not in labor management relations or in wage structures and
other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily
ascribed to labor arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies
disappears
CASE 3: Portillo vs. Lietz Inc.
October 10, 2012
G.R. 196539
FACTS: In a letter agreement, signed by individual respondent
Rudolf Lietz and conformed to by Portillo, the latter was hired
by the former under the conditions that Portillo “will not engage
in any other gainful employment by herself or with any other
company either directly or indirectly without written consent of
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 2
Lietz Inc.” and “a breach of which will render Portillo liable to
Lietz Inc. for liquidated damages.”
On her 10th year of service with Lietz Inc., Portillo was
promoted to Sales Representative. In this regard, Portillo
signed another letter agreement containing a "Goodwill
Clause:" It remains understood and you agreed that, on the
termination of your employment by act of either you or Lietz
Inc., and for a period of 3 years thereafter, you shall not
engage directly or indirectly as employee, manager, proprietor,
or solicitor for yourself or others in a similar or competitive
business or the same character of work which you were
employed by Lietz Inc. to do and perform. Should you breach
this good will clause of this Contract, you shall pay Lietz Inc.
as liquidated damages the amount of 100% of your gross
compensation over the last 12 months, it being agreed that
this sum is reasonable and just.
3 years thereafter Portillo resigned. Lietz Inc. accepted
Portillo’s resignation and reminded her of the "Goodwill
Clause" in the last letter agreement she had signed.
Subsequently, Lietz Inc. learned that Portillo had been hired by
Ed Keller Philippines, Limited to head its Pharma Raw Material
Department. Ed Keller Limited is purportedly a direct
competitor of Lietz Inc. Meanwhile, Portillo’s demands from
Lietz Inc. for the payment of her remaining salaries and
commissions went unheeded.
On 14 September 2005, Portillo filed a complaint with the
NLRC for non- payment of 1½ months’ salary, 2 months’
commission, 13th month pay, plus moral, exemplary and
actual damages and attorney’s fees. In its position paper, Lietz
Inc. admitted liability for Portillo’s money claims in the total
amount of P110,66 2.16. However, Lietz Inc. raised the
defense of legal compensation: Portillo’s money claims should
be offset against her liability to Lietz Inc. for liquidated
damages in the amount of ₱869,633.09 for Portillo’s alleged
breach of the "Goodwill Clause" in the employment contract
when she became employed with Ed Keller Philippines,
Limited.
The Labor Arbiter granted Portillo’s complaint, ordering Lietz,
Inc. to pay Portillo the amount of Php110,662.16, representing
her salary and commissions, including 13th month pay. On
appeal by respondents Lietz Inc., theNLRC affirmed the ruling
of the Labor Arbiter. The motion for reconsideration was
denied by NLRC. Lietz Inc. filed a petition for certiorari before
the Court of Appeals, alleging grave abuse of discretion in the
labor tribunals’ rulings. The CA initially affirmed the labor
tribunals, but on motion for reconsideration, modified its
previous decision.
While upholding the monetary award in favor of Portillo in the
aggregate sum of ₱110,662.16, the CA allowed legal
compensation or set-off of such award of monetary claims by
her liability to Lietz Inc. for liquidated damages arising from
herviolation of the "Goodwill Clause" in her employment
contract with them. Portillo’s motion for reconsideration was
denied. Hence, this petition for certiorari before the SC.
ISSUE: WON Portillo’s money claims for unpaid salaries may
be offset against Lietz Inc.’s claim for liquidated damages.
HELD: NO.
RATIO: The "Goodwill Clause" or the "Non-Compete Clause"
is a contractual undertaking effective after the cessation of the
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 3
employment relationship between the parties. In accordance
with jurisprudence, breach of the undertaking is a civil law
dispute, not a labor law case. It is clear, therefore, that while
Portillo’s claim for unpaid salaries is a money claim that arises
out of or in connection with an employer- employee
relationship, Lietz Inc.’s claim against Portillo for violation of
the goodwill clause is a money claim based on an act done
after the cessation of the employment relationship. And, while
the jurisdiction over Portillo’s claim is vested in the labor
arbiter, the jurisdiction over Lietz Inc.’s claim rests on the
regular courts.
In the case at bar, the difference in the nature of the credits
that one has against the other, conversely, the nature of the
debt one owes another, which difference in turn results in the
difference of the forum where the different credits can be
enforced, prevents the application of compensation. Simply,
the labor tribunal in an employee’s claim for unpaid wages is
without authority to allow the compensation of such claims
against the post employment claim of the former employer
forbreach of a post employment condition. The labor tribunal
does not have jurisdiction over the civil case of breach of
contract. Indeed, the application of compensation in this case
is effectively barred by Article 113 of the Labor Code which
prohibits wage deductions except in three circumstances:
ART. 113. Wage Deduction. – No employer, in his own behalf or in
behalf of any person, shall make anydeduction from wages of his
employees, except:
(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompensethe employer for the
amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by theemployer or
authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor.
CASE 4: Kiok Loy vs. NLRC
January 22, 1986
G.R. No. L-54334
FACTS: In a certification election held on October 3, 1978, the
Pambansang Kilusang Paggawa, a legitimate late labor
federation, won and was subsequently certified in a resolution
dated November 29, 1978 by the Bureau of Labor Relations as
the sole and exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant. The Company's MR of
the said resolution was denied.
Thereafter, the Union furnished the Company with two copies
of its proposed collective bargaining agreement. At the same
time, it requested the Company for its counter proposals.
Eliciting no response to the aforesaid request, the Union again
wrote the Company reiterating its request for collective
bargaining negotiations and for the Company to furnish them
with its counter proposals. Both requests were ignored and
remained unacted upon by the Company.
Left with no other alternative in its attempt to bring the
Company to the bargaining table, the Union, on February 14,
1979, filed a "Notice of Strike", with the Bureau of Labor
Relations (BLR) on ground of unresolved economic issues in
collective bargaining.
Conciliation proceedings also failed, prompting the Bureau of
Labor Relations to certify the case to the NLRC for compulsory
arbitration pursuant to Presidential Decree No. 823, as
amended. The labor arbiter set the initial hearing for April 29,
1979. For failure of the parties to submit their respective
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 4
position papers as required, the said hearing was cancelled
and reset to another date. Meanwhile, the Union submitted its
position paper. The Company did not, and instead requested
for a resetting which was granted. The Company was directed
anew to submit its financial statements for the years 1976,
1977, and 1978.
The case was further reset to May 11, 1979 due to the
withdrawal of the Company's counsel of record, Atty. Rodolfo
dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban
formally entered his appearance as counsel for the Company
only to request for another postponement allegedly for the
purpose of acquainting himself with the case. Meanwhile, the
Company submitted its position paper on May 28, 1979.
When the case was called for hearing on June 4, 1979 as
scheduled, the Company's representative, Mr. Ching, who was
supposed to be examined, failed to appear. Atty. Panganiban
then requested for another postponement which the labor
arbiter denied. He also ruled that the Company has waived its
right to present further evidence and, therefore, considered the
case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its
report to the National Labor Relations Commission. On July
20, 1979, the National Labor Relations Commission rendered
the respondent Sweden Ice Cream guilty of unjustified refusal
to bargain, in violation of Section (g) Article 248 (now Article
249), of P.D. 442, as amended.
ISSUE: WON the Company is guilty of unfair labor practice for
refusal to bargain
HELD: YES
RATIO: Collective bargaining is one of the democratic
frameworks under the New Labor Code, designed to stabilize
the relation between labor and management and to create
a climate of sound and stable industrial peace. It is a
mutual responsibility of the employer and the Union and is
characterized as a legal obligation.
Article 249, par. (g) of the Labor Code makes it an unfair
labor practice for an employer to refuse "to meet and
convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to wages,
hours of work, and all other terms and conditions of
employment including proposals for adjusting any grievance or
question arising under such an agreement and executing a
contract incorporating such agreement, if requested by either
party.
The mechanics of collective bargaining are set in motion only
when the following jurisdictional preconditions are present,
namely, (1) possession of the status of majority representation
of the employees' representative in accordance with any of the
means of selection or designation provided for by the Labor
Code; (2) proof of majority representation; and (3) a demand
to bargain under Article 251, par. (a) of the New Labor Code.
A Company's refusal to make counter proposal if considered
in relation to the entire bargaining process, may indicate bad
faith since the Union's request for a counter proposal is left
unanswered. Besides, petitioner Company's approach and
attitude-stalling the negotiation by a series of postponements,
non-appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other conclusion
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 5
except that it is unwilling to negotiate and reach an agreement
with the Union.
More so, as in the instant case, where the intervention of the
National Labor Relations Commission was properly sought for
after conciliation efforts undertaken by the BLR failed. The
instant case being a certified one, it must be resolved by the
NLRC pursuant to the mandate of P.D. 873, as amended,
which authorizes the said body to determine the
reasonableness of the terms and conditions of employment
embodied in any Collective Bargaining Agreement. To that
extent, utmost deference to its findings of reasonableness of
any Collective Bargaining Agreement as the governing
agreement by the employees and management must be
accorded due respect by this Court.
CASE 5: Albano Memorial College vs. Hon. Noriel and
Federation of Free Workers
85 SCRA 494
1978
FACTS: The controversy began with the filing of a petition for
certification election on September 22, 1977 by the Scout
Ramon V. Albano Memorial College Chapter of private
respondent labor union.
It alleged that the written consent of 67 employees out of an
alleged total working force of 200, more or less, had been
secured.
On October 21, 1977, a motion to dismiss the petition was filed
by the employer, the present petitioner. It was based on the
lack of the 30% consent requirement, as there were 250
employees, the required thirty percent of the said work force
being 75. With the figure of the actual number of employees in
the school establishment thus supplied, private respondent
submitted on October 26, 1977 the additional signatures of 22
employees in support of its plea for a certification election.
There was an opposition on the part of the present petitioner.
It was filed on November 2, 1977. Then came, fifteen days
later, an order from the Med-Arbiter assigned to the case
dismissing the petition for certification on the ground that the
compliance with the 30% requirement must be shown as of the
time of its filing. Private respondent appealed to the Bureau of
Labor Relations such order of the Med-Arbiter dismissing its
petition.
Respondent Noriel on February 8, 1978 sustained the appeal,
ordering a certification election at the Scout Ramon V. Albano
Memorial College within twenty (20) days from receipt thereof,
with the following as contending unions: 1. FFW (Scout
Ramon V. Albano Memorial College Chapter): 2. No Union,
Petitioner moved for its reconsideration, but it did not succeed.
An appeal to the Secretary of Labor was likewise of no avail.
Hence this petition.
ISSUE: WON Hon. Noriel erred in sustaining the appeal
ordering a certification election
HELD: NO.
RATIO: This Court, in the aforesaid Philippine Association of
Free Labor Unions decision, recognized that the Bureau of
Labor Relations, in the exercise of sound discretion, may order
a certification election notwithstanding the failure to meet the
30% requirement. Once that requisite is complied with,
however, the Code makes, clear that "it shall be mandatory for
the Bureau to conduct a Identification election for the purpose
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 6
of determining the representative of the employees in the
appropriate bargaining unit and certify the winner as the
exclusive collective bargaining representative of all the
employees in the unit."
Sound policy dictates that as much as possible, management
is to maintain a strictly hands-off policy. For if it does not, it
may lend itself to the legitimate suspicion that it is partial to
one of the contending unions. That is repugnant to the concept
of collective bargaining. That is against the letter and spirit of
welfare legislation intended to protect labor and to promote
social justice. The judiciary then should be the last to look with
tolerance at such efforts of an employer to take part in the
process leading to the free and untrammeled choice of the
exclusive bargaining representative of the workers.
CASE 6: Philippine Airlines, Inc. v. NLRC (DON)
225 SCRA 301
(1993)
FACTS: Philippine Airlines, Inc. (PAL) completely revised its
1966 Code of Discipline. The Code was circulated among the
employees and was immediately implemented, and some
employees were forthwith subjected to the disciplinary
measures embodied therein. The Philippine Airlines
Employees Association (PALEA) filed a complaint before the
NLRC for unfair labor practice. PALEA contended that PAL, by
its unilateral implementation of the Code, was guilty of unfair
labor practice, specifically Paragraphs E and G of Article 249
and Article 253 of the Labor Code. PALEA alleged that copies
of the Code had been circulated in limited numbers; that being
penal in nature the Code must conform with the requirements
of sufficient publication, and that the Code was arbitrary,
oppressive, and prejudicial to the rights of the employees. It
prayed that implementation of the Code be held in abeyance;
that PAL should discuss the substance of the Code with
PALEA; that the employees dismissed under the Code be
reinstated and their cases subjected to further hearing; and
that PAL be declared guilty of unfair labor practice and be
ordered to pay damages.
Labor Arbiter: Labor Arbiter Isabel P. Ortiguerra handling the
case called the parties to a conference but they failed to
appear at the scheduled date. Interpreting such failure as a
waiver of the parties’ right to present evidence, the labor
arbiter considered the case submitted for decision. A decision
was rendered finding no bad faith on the part of PAL in
adopting the Code and ruling that no unfair labor practice had
been committed. However, the arbiter held that PAL was “not
totally fault free” considering that while the issuance of rules
and regulations governing the conduct of employees is a
“legitimate management prerogative” such rules and
regulations must meet the test of “reasonableness, propriety
and fairness.” The labor arbiter also found that PAL “failed to
prove that the new Code was amply circulated.” Noting that
PAL’s assertion that it had furnished all its employees copies
of the Code is unsupported by documentary evidence, she
stated that such “failure” on the part of PAL resulted in the
imposition of penalties on employees who thought all the while
that the 1966 Code was still being followed. Thus, the arbiter
concluded that “(t)he phrase ignorance of the law excuses no
one from compliance . . . finds application only after it has
been conclusively shown that the law was circulated to all the
parties concerned and efforts to disseminate information
regarding the new law have been exerted.”
PAL appealed to the NLRC, through Commissioner
Encarnacion, with Presiding Commissioner Bonto-Perez and
Commissioner Maglaya concurring, found no evidence of
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 7
unfair labor practice committed by PAL and affirmed the
dismissal of PALEA’s charge.
NLRC: Failure of management to discuss the provisions of a
contemplated code of discipline which shall govern the
conduct of its employees would result in the erosion and
deterioration of an otherwise harmonious and smooth
relationship between them as did happen in the instant case.
Management can no longer exclude labor in the deliberation
and adoption of rules and regulations that will affect them. The
Code of Discipline involves security of tenure and loss of
employment, a property right. Our Constitution has recognized
the principle of shared responsibility between employers and
workers and has likewise recognized the right of workers to
participate in policy and decision-making process affecting
their rights. In a sense, participation by the union in the
adoption of the code of conduct could have accelerated and
enhanced their feelings of belonging and would have resulted
in cooperation rather than resistance to the Code. In fact,
labor-management cooperation is now “the thing.”
ISSUE: WON management may be compelled to share with
the union or its employees its prerogative of formulating a
code of discipline
RATIO: YES. PAL is compelled to share with the PALEA to
formulate a code of discipline.
“As to worker participation in decision and policy making
processes affecting rights, duties, and welfare” -
Employee’s right to participate in policymaking upheld.
Indeed, industrial peace cannot be achieved if the employees
are denied their just participation in the discussion of matters
affecting their rights. Thus, even before Article 211 of the
Labor Code (P.D. 442) was amended by Republic Act No.
6715, it was already declared a policy of the State: “(d) To
promote the enlightenment of workers concerning their rights
and obligations xxx as employees.” This was, of course,
amplified by Republic Act No. 6715 when it decreed the
“participation of workers in decision and policy making
processes affecting their rights, duties and welfare.” PAL’s
position that it cannot be saddled with the “obligation” of
sharing management prerogatives as during the formulation of
the Code, Republic Act No. 6715 had not yet been enacted
cannot thus be sustained. While such “obligation” was not yet
founded in law when the Code was formulated, the attainment
of a harmonious labor-management relationship and the then
already existing state policy of enlightening workers
concerning their rights as employees demand no less than the
observance of transparency in managerial moves affecting
employees’ rights.
CASE 7: Chu v. NLRC (TORRES)
232 SCRA 764
(1994)
FACTS: The petitioner, Agustin Chu, retired from the service
of the private respondent, Victoria’s Milling Co., upon reaching
the age of sixty. He was granted an extension of service under
a “Special Contract of Employment”. The term was for one
year, and the petitioner was employed as Head of the
Warehousing, Sugar, Shipping and Marine Dept. He received
a basic salary of P 6,941.00/month. Private respondent then
issued two memorandums providing for the rotation of its
personnel and other organizational changes. Among those
who were transferred was the petitioner, and he was
transferred to the Sugar Sales Dept.
The petitioner protested the transfer and requested a
reconsideration, but such was denied. He then filed a
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 8
complaint for illegal dismissal, alleging that he was
constructively dismissed from his employment. The Labor
Arbiter, in his decision, said that there was no constructive
dismissal. The petitioner failed to show that he was prejudiced
by the transfer, and at the same time, the transfer was without
change in his rank or salary, such department he was
transferred to was still under the Sugar Sales Area, and his
designation in either department was the same. There was no
bad faith in the transfer of the petitioner.
The petitioner appealed to the NLRC, but the decision of the
Labor Arbiter was affirmed. His motion for reconsideration was
denied as well.
ISSUE: WON there was a valid exercise of management
prerogative by the respondent given that the petitioner was
under a Special Contract of Employment.
HELD: YES. There was a valid exercise of management
prerogative.
RATIO: Management prerogatives are rights inherent to the
management of a business enterprise, in order for one
directing a business to be able to control the variables so as to
enhance the chances of making a profit. One of the
prerogatives of management is the right to transfer employees
in their work station, but such right is subject to limitations, and
those which are unreasonable and cause inconvenience or
prejudice to employees are proscribed by jurisprudence.
Nothing in the “Special Contract of Employment” indicates that
the respondent waived its right to transfer the position to any
other position in the company. Such stipulation must be clearly
stated, and mere specification of the position to be held by the
employee is not such stipulation.
CASE 8: San Miguel Brewery Sales Force Union v. Ople
170 SCRA 25
(1989)
FACTS: A collective bargaining agreement (CBA) was entered
into between petitioner and private respondent (San Miguel).
Art IV, Sec 1 of the said CBA provided that “employees within
the appropriate bargaining unit shall be entitled to a basic
monthly compensation plus commission based on their
respective sales.” A year after, San Miguel introduced a new
marketing system called the Complementary Distribution
System (CDS) which allowed wholesalers of beer to purchase
the same directly from San Miguel’s sales offices, instead of
from the salesmen. Arguing that the new marketing scheme
effectively reduced the take-home pay of the salesmen and
truck-helpers of San Miguel, thereby violating the above-
mentioned provision in the CBA, petitioner filed a complaint for
unfair labor practices against San Miguel with the MOLE. The
MOLE dismissed the complaint filed by petitioner, ruling that
the implementation of the CDS was part of San Miguel’s
overall plan to improve efficiency and economy and at the
same time gain profit to the highest, a right well within the
management prerogative of the company.
ISSUE: WON the implementation of the CDS violates the CBA
entered into by both parties?
HELD: No, its implementation is well within San Miguel’s
management prerogative.
RATIO: Except as limited by special laws, an employer is free
to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments,
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 9
working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision,
lay-off of workers and the discipline, dismissal and recall of
work.
Even as the law is solicitous of the welfare of the employees, it
must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its
purpose cannot be denied.
So long as a company's management prerogatives are
exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid
agreements, this Court will uphold them. San Miguel’s offer to
compensate the members of its sales force who will be
adversely affected by the implementation of the CDS by
paying them a so-called "back adjustment commission" to
make up for the commissions they might lose as a result of the
CDS proves the company's good faith and lack of intention to
bust their union.
CASE 9: Philippine Airlines, Inc. v. NLRC (DON)
225 SCRA 301
(1993)
(REPEATED CASE – REFER TO CASE 6 FOR MORE INFO)
RATIO: “As to Management Prerogatives” - PAL asserts
that when it revised its Code there was no law which
mandated the sharing of responsibility therefor between
employer and employee. However, even in the absence of
said clear provision of law, the exercise of management
prerogatives was never considered boundless. Thus, in Cruz
vs. Medina, it was held that management’s prerogatives
must be without abuse of discretion. So long as a
company’s management prerogatives are exercised in good
faith for the advancement of the employer’s interest and not for
the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this
Court will uphold them. As such, the exercise of managerial
prerogatives is not unlimited. It is circumscribed by limitations
found in law, a collective bargaining agreement, or the general
principles of fair play and justice. Moreover, it must be duly
established that the prerogative being invoked is clearly a
managerial one. The provisions of the Code clearly have
repercusions on the employees’ right to security of tenure. The
implementation of the provisions may result in the deprivation
of an employee’s means of livelihood which, as correctly
pointed out by the NLRC, is a property right. In view of these
aspects of the case which border on infringement of
constitutional rights, we must uphold the constitutional
requirements for the protection of labor and the promotion of
social justice. Verily, a line must be drawn between
management prerogatives regarding business operations per
se and those which affect the rights of the employees. In
treating the latter, management should see to it that its
employees are at least properly informed of its decisions or
modes of action. PAL asserts that all its employees have been
furnished copies of the Code. Public respondents found to the
contrary, which finding, to say the least is entitled to great
respect.
CASE 10: Union of the Filipro Employees-Drug v. Nestle
(TORRES)
G.R. No. 158930-31
August 22, 2006
FACTS: The CBA between Nestle and the petitioner was
about to expire. As such, the presidents of the Alabang and
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Cabuyao Division petitioner informed Nestle of their intent to
open the CB Negotiation for 2001-2004. Nestle acknowledged
the receipt of such, and also informed the petitioner of its
counter proposal and proposed ground rules. Included in the
counter proposal by Nestle was that the CBA negotiations will
only be applicable to the Cabuyao Division due to the closure
of the Alabang Plant. Thereafter, dialogue between the
company and the union ensued. Nestle requested the NCMB
to conduct preventive mediation proceedings for the failure to
reach any agreement despite 15 meetings. Conciliation
proceedings proved ineffective. Complaining of a bargaining
deadlock, the union filed a notice of strike. A week later,
another notice of strike was filed, with the union now alleging
Nestle of unfair labor practices as it was bargaining in bad
faith.
Nestle filed with DOLE a Petition for Assumption of Jurisdiction
so that Sec. Sto. Tomas would assume jurisdiction over the
current labor dispute. Sec. Sto. Tomas then issued an order
enjoining any strike or lockout, and at the same time, directing
the parties to cease and desist from committing any act that
might further deteriorate the current labor relations situation.
The union ought reconsideration of the petition, but such was
denied. Despite the order of the Sec of DOLE, the Nestle
Cabuyao Plant went on strike. The secretary issued a return to
work order, but the union continued with their strike. The union
went to the CA via a petition for certiorari, seeking to annul the
orders of the Sec of DOLE. The petition was granted, but both
parties moved for reconsideration, but both were denied but
the CA. Hence, these petitions for review on certiorari
separately filed by the parties.
ISSUE: WON the CA committed reversible error in:
1) finding the Sec of DOLE gravely abused her discretion in
pronouncing that the retirement plan was not a proper subject
to be included in the CBA negotiations;
2) holding that the assumption powers of the Sec of DOLE
should have been limited to grounds alleged in the notice of
strike; and
3) in not ruling that Nestle was guilty of unfair labor practice.
HELD:
1) YES. The retirement plan is still a valid issue for the parties’
collective bargaining negotiations.
2) YES. The CA committed reversible error in limiting the issue
of the ground rules.
3) NO. Nestle is not guilty of any unfair labor practice.
RATIO:
1) Since the retirement plan has been an integral part of the
CBA since 1972, the union’s demand to increase the benefits
due the employees under the said plan is a valid CBA issue.
Employees do have a vested right and demandable right over
existing benefits voluntarily granted to them by their employer.
The latter may not unilaterally withdraw, eliminate or diminish
such benefits.
In the case at bar, the CBA that was about to expire contained
provisions respecting the Retirement Plan. The purpose of
collective bargaining is the acquisition or attainment of the best
possible covenants relating to economic and noneconomic
benefits granted by employers and due the employees.
2) The Sec of DOLE did not commit grave abuse of discretion
for her rulings were within the powers granted to her by
Paragraph (g) of Art 263 of the Labor Code. The secretary’s
assumption of jurisdiction power necessarily includes matters
incidental to the labor dispute, that is, issues that are
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 11
necessarily involved in the dispute itself, not just to those
ascribed in the notice of strike, or, otherwise, submitted to her
for resolution. The authority to assume jurisdiction over a labor
dispute must include and extend to all questions and
controversies arising therefrom.
3) Employers are accorded rights and privileges to assure their
self determination and independence and reasonable return of
capital. Basic is the principle that good faith is presumed and
he who alleges bad faith has the duty to prove the same. As
long as the company’s exercise of the same is in good faith to
advance its interests and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld.
CASE 11: SHS Perforated Materials, Inc. v. Diaz (ESTOMO)
633 SCRA 258
(2010)
FACTS: SHS is a start-up corporation organized under the
laws of the Philippines owned and operated by
Hartmannshenn, a German National. Diaz was hired by SHS
as a marketing manager on a probationary basis. Under Diaz’s
employment contract, he is to receive a monthly salary of
P100K net of all taxes. Hartmannshenn further instructed Diaz
to visit the manufacturing plant of SHS twice a week for him to
see and to know more about the products. During Diaz’s
employment, Hartmannshenn was frequently abroad and
communication between the two was done through e-mail.
Hartmannshenn sent several emails to Diaz, notifying the later
of the former’s disappointment over the work being performed
by Diaz. Hartmannsheen, in preparation for his trip to the
Philippines, sent several more emails to Diaz, instructing the
latter to get in touch with him, but upon his arrival, Diaz did not
appear. Hartmannshenn then instructed his payroll officer to
withheld Diaz’s salary. Diaz inquired to the payroll officer
regarding his salary but he was told that it was being withheld
and that he must get in touch with Hartmannschenn. The next
day, Diaz sent his demand letter for his withheld salary as well
as his letter of resignation, informing SHS that he was
resigning because of the illegal and unfair labor practice of
withholding his salary committed by SHS. Hartmannshenn
accepted his resignation but told him that his salary would only
be released upon explanation of his failure to perform his
duties and return of all company properties that were still in his
possession. Diaz sent another demand letter to SHS,
appealing for the release of his salary. To settle the issue
amicably, SHS informed Diaz that a check for P50k has
already been prepared and he may pick the same up at
anytime. Diaz proceeded to file a complaint for illegal dismissal
against SHS with the LA and the LA ruled that Diaz was
constructively illegally dismissed because of the withholding of
his salary. Upon appeal to the NLRC, the NLRC reversed the
decision of the LA ruling that the withholding of Diaz’s salary
was a valid exercise of management prerogative. Diaz
appealed to the CA and the CA reversed the ruling of the
NLRC, arguing that there is no such thing as a management
prerogative to withhold wages temporarily.
ISSUE: WON the withholding of an employees’ salary is
covered by management prerogative?
HELD: No, it is contrary to Art 166 of the Labor Code.
RATIO: Management prerogative refers to the right of an
employer to regulate all aspects of employment, such as the
freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of
employees, supervision of their work, lay-off and discipline,
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 12
and dismissal and recall of work. Although management
prerogative refers to the right to regulate all aspects of
employment, it cannot be understood to include the right to
temporarily withhold salary/wages without the consent of the
employee.
Art 116: Withholding of wages and kickbacks prohibited. It
shall be unlawful for any person, directly or indirectly, to
withhold any amount from the wages of a worker or induce him
to give up any part of his wages by force, stealth, intimidation,
threat or by any other means whatsoever without the workers
consent.
* SHS tried to counter by saying that Art 116 would only apply
if the employee is indeed entitled to his salary. It is the
contention of SHS that Diaz did not report for work on the days
on which his demand for his salary is hinge. The Court sided
with Diaz and accepted the evidence he presented to establish
the fact that he worked on the days on which his demand for
his salary is hinged.
CASE 12: Supreme Steel Corp. v. Nagkakaisang
Manggagawa Ng Supreme Independent Union (Nms-Ind-
Apl) (DON)
G.R. No. 185556
March 28, 2011
FACTS: Petitioner Supreme Steel Pipe Corporation is a
domestic corporation engaged in the business of
manufacturing steel pipes for domestic and foreign markets.
Respondent Nagkakaisang Manggagawa ng Supreme
Independent Union is the certified bargaining agent of
petitioner’s rank-and-file employees. Respondent filed a notice
of strike with the National Conciliation and Mediation Board
(NCMB) on the ground that petitioner violated certain
provisions of the CBA. The parties failed to settle their dispute.
Consequently, the Secretary of Labor certified the case to the
NLRC for compulsory arbitration pursuant to Article 263(g) of
the Labor Code. Respondent alleged eleven CBA violations,
delineated as follows: (a) denial to 4 employees of the CBA
provided wage increase; (b) contracting out labor; (c) failure to
provide shuttle service; (d) refusal to answer for the medical
expenses incurred by the 3 employees; (e) failure to comply
with the time-off with pay provision; (f) visitor’s free access to
company premises; (g) failure to comply with reporting time off
provision; (h) dismissal of Diosdado Madayag; (i) denial of
paternity leave benefit to 2 employees; (j) discrimination and
harassment; (k) non-implementation of COLA.
NLRC - 8 out of the 11 issues raised by the Union was
favorable to them. But the denial of paternity leave benefit and
discrimination of union members were decided in favor of the
company; while the issue on visitor‘s free access to company
premises was deemed settled during the mandatory
conference.
CA - Dismissed. According to the CA, petitioner failed to show
that the NLRC committed grave abuse of discretion in finding
that it violated certain provisions of the CBA. The NLRC
correctly held that every employee is entitled to the wage
increase under the CBA despite receipt of an anniversary
increase. The CA concluded that, based on the wording of the
CBA, which uses the words “general increase” and “over and
above,” it cannot be said that the parties have intended the
anniversary increase to be given in lieu of the CBA wage
increase.
ISSUE: WON the company can assert management
prerogative as a defense in hiring temporary workers?
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RATIO: No, Management prerogative is not unlimited: it is
subject to limitations found in law, a CBA, or the general
principles of fair play and justice. It stressed that the CBA
provided such limitation on management prerogative to
contract-out labor, and compliance with the CBA is mandated
by the express policy of the law. It is a familiar and
fundamental doctrine in labor law that the CBA is the law
between the parties and compliance therewith is mandated by
the express policy of the law. If the terms of a CBA are clear
and there is no doubt as to the intention of the contracting
parties, the literal meaning of its stipulation shall prevail.
Moreover, the CBA must be construed liberally rather than
narrowly and technically and the Court must place a practical
and realistic construction upon it. Any doubt in the
interpretation of any law or provision affecting labor should be
resolved in favor of labor. Jurisprudence recognizes the right
to exercise management prerogative. Labor laws also
discourage interference with an employer’s judgment in the
conduct of its business. For this reason, the Court often
declines to interfere in legitimate business decisions of
employers. The law must protect not only the welfare of
employees, but also the right of employers. However, the
exercise of management prerogative is not unlimited.
Managerial prerogatives are subject to limitations
provided by law, collective bargaining agreements, and
general principles of fair play and justice.
CASE 13: PLDT v. Paguio (TORRES)
G.R. No. 152689
October 12, 2005
FACTS: The petitioner, PLDT, has 27 Exchanges in its
Greater Metro Manila Network. The respondent, Alfredo
Paguio, was the head of the Garnet Exchange. An
assessment of the performance of the 27 Exchanges were
made. Paguio, in a letter to AVP Rodolfo Santos of the East
Center of GMM where the Garnet Exchange was located,
criticized such ratings for it was unfair since the criteria
depended on manpower. But despite the criticism, the Garnet
Exchange obtained the top rating in the GMM. PLDT then
rebalanced the manpower of the East Center of GMM. Paguio
sought to reconsider the rebalancing for it disallowed the
Garnet Exchange, the oldest plant in GMM, to use contractors
for new installations. Santos denied the request which led to
Paguio elevating the matter to Isabelo Ferido, VP of the GMM
network services.
Paguio was reassigned as Head for Special Assignment at the
office of the GMM East Center and asked to turn over his
functions as Garnet Exchange Head to Tessie Go. Believing
that his transfer was a disciplinary action, Paguio requested
Ferido for a formal hearing. He also filed a complaint against
Santos for grave abuse of authority and manipulation of the
East Center performance. As no action was taken by Ferido,
Paguio elevated the matter to Enrique D. Perez, Sr. Executive
VP and COO of PLDT. Ferido issued an inter-office memo
stating that Paguio’s reassignment was in order based on the
finding that Paguio was not a team player and cannot accept
decisions of management. Perez also issued an inter-office
memo stating that Paguio’s transfer was not in the nature of a
disciplinary action that required investigation.
Aggrieved, Paguio filed a complaint for illegal dismissal with
prayer for reinstatement and damages, but later amended it to
illegal demotion with prayer for reversion to his old position,
damages and attorney’s fees. The Labor Arbiter upheld the
validity of the transfer and dismissed the complaint. On
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appeal, the NLRC reversed the LA’s decision. The NLRC
found the transfer unlawful since Paguio’s comments were
done in good faith to help his team, and that the transfer
involved a diminution of his salary, benefits and other
privileges. PLDT’s motion for reconsideration was denied.
PLDT filed a petition for certiorari with the CA. The CA affirmed
the NLRC decision but deleted the monetary award
representing 16% monthly salary increase.
ISSUE: WON the CA committed error in affirming the decision
of the NLRC by ruling that the transfer of Paguio was unlawful
and illegal.
HELD: NO. The CA did not commit error in affirming the
decision of the NLRC.
RATIO: There are limits to the management prerogative. The
exercise of management prerogative cannot be utilized to
circumvent the law and public policy on labor and social
justice. The prerogative accorded to management should not
defeat the purpose of labor laws which is to balance the
conflicting interests of labor and management. The employer
must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee, and it does not
involve a demotion in rank or a diminution of his salaries,
privileges and other benefits.
There is no credible reason for Paguio’s transfer except his
criticisms of the company’s performance. The Garnet
Exchange was doing well and excelled in the performance
rating. At the same time, Paguio’s performance was
consistently rated as outstanding. Paguio’s transfer was
prejudicial to him as it left him out for a possible promotion as
he was assigned to a functionless position with neither office
nor staff.
CASE 14: Businessday Information Systems and
Services, Inc. v. NLRC (ESTOMO)
221 SCRA 9
(1993)
FACTS: Businessday was a trading corporation owned by
Raul Locsin. Due to financial setbacks, Businessday
retrenched its employees and 27 individuals were laid-off and
were given ½ month pay for every year of service as their
separation pay. Businessday retained several employees in an
attempt to rehabilitate the company, but barely two and a half
months later, these individuals were also laid-off but they were
given a month’s pay for every year of service as their
separation pay plus bonuses. Aggrieved that they received a
lesser separation pay and no bonuses, the private
respondents filed a complaint with the LA against Businessday
for discrimination in the payment of separation pay. The LA
ruled in favor of the private respondents and upon appeal to
the NLRC, the latter affirmed the LA decision. Hence this
present appeal to the SC. Businessday raised as a defense
that it paid only ½ month salary as separation pay to the first
batch of dismissed employees because of retrenchment, while
the a month’s salary was given to the second and third batch
of employees because it was due to cessation of business and
as Businessday’s way of showing its gratitude to the second
and third batch for staying till the last day of the company.
ISSUE: WON the unequal payment of separation pay was
within Businessday’s management prerogative?
HELD: No, it fosters ill-will and resentment amongst the
dismissed employees.
LABOR LAW 2 | Atty. Añonuevo |BETT Digest Group | 15

RATIO: Clearly, there was impermissible discrimination
against the private respondents in the payment of their
separation benefits. The law requires an employer to extend
equal treatment to its employees. It may not, in the guise of
exercising management prerogatives, grant greater benefits to
some and less to others. Management prerogatives are not
absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and
justice.
closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1)
month pay or at least one half (l /2) month pay for every year
of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year."

*W/N private respondents are entitled to bonuses – it is settled

doctrine that the grant of a bonus is a prerogative, not an
obligation, of the employer. The matter of giving a bonus over
and above the worker's lawful salaries and allowances is
entirely dependent on the financial capability of the employer
to give it. Businessday was no longer profitable; it ceased its
operations.

Governing law on retrenchment - Art. 283. Closure of

establishment and reduction of personnel. — The employer
may also terminate the employment of any employee due to
the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of
operations of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to
the installation of labor saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one
(1) month pay for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of

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