PART I: STATE POLICIES ON LABOR RELATIONS
Union: Controversy involves a labor dispute and is directly connected or
VOLUNTARY/DEMOCRATIC MODES OF DISPUTE SETTLEMENT
LABOR DISPUTE
1 SAN MIGUEL CORP. EMPLOYEES UNION v. BERSAMIRA
1. SMC entered into contracts for merchandising services with Lipercon
and D’Rite.
a. These companies are independent contractors.
b. It was expressly understood and agreed there was to be no
employer-employee relation between the contractors and/ or its
workers, on the one hand, and SanMig on the other.
2. The Union is the duly authorized representative of the monthly paid
rank-and-file employees of SMC with whom the latter executed a CBA
a. Section 1 of their CBA specifically provides that “temporary,
probationary, or contract employees and workers are excluded
from the bargaining unit and, therefore, outside the scope of this
Agreement.”
3. 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.
a. The Union alleged that this group of employees, while appearing
to be contractual workers of supposedly independent
contractors, have been continuously working from 6 months – 15
yrs. and that they are performing work or necessary or desirable
in the usual business SMC.
b. Thus, it was contended that there exists a “labor-only”
contracting situation. It was then demanded that the
employment status of these workers be regularized.
4. The Union filed a notice of strike for unfair labor practice, CBA
violations, and union busting.
5. Another notice was filed. Several conciliation conferences were held to
settle the dispute before the NCMB.
6. Series of pickets were staged by Lipercon and D'Rite workers in various
SMC plants and offices.
7. SMC filed a complaint for damages and injunction. RTC issued the
injunction.
8. After several hearings, RTC enjoined the Union from representing the
workers. Court said that the absence of ee-er relationship negates the
existence of labor dispute.
9. Union filed Certiorari and Prohibition before the SC.
10. Pending, Union went on strike because some of the subject employees
were laid off.
11. NCMB called the parties for conciliation. Union said that it would lift
strike if the 30 employees of Lipercon and D’Rite were recalled.
12.
interwoven with the cases pending with the NCMB-DOLE, and is thus
beyond the ambit of the public respondent’s jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs
prayed for by the private respondent) are within the competence of labor
tribunals.
13. SMC: Denies the existence of any employer-employee relationship and
consequently of any labor dispute between itself and the Union.
ISSUE: Whether the case at bar involves, or is in connection with, or relates
to a labor dispute. YES.
• A “labor dispute” as defined in Article 212 (1) of the 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” provided the controversy concerns, among others, the terms
and conditions of employment or a “change” or “arrangement” thereof.
Put differently, and as defined by law, the existence of a labor dispute is
not negatived by the fact that the plaintiffs and defendants do not stand
in the proximate relation of employer and employee.
• What the Union seeks is to regularize the status of the employees
contracted by Lipercon and D’Rite and, in effect, that they be absorbed
into the working unit of SMC.
o This matter definitely dwells on the working relationship
between said employees vis-a-vis SMC.
o 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.
• The Union also seeks to represent those workers, who have signed up for
Union membership, for the purpose of collective bargaining. SMC 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. Obvious then is that representation and
association, for the purpose of negotiating the conditions of employment
are also involved.
2 HALAGUENA v. PAL CEDAW is within the jurisdiction of trial courts, a court of general
jurisdiction.
1. Petitioners were female flight attendants of PAL hired before Nov. 22, • Not every controversy or money claim by an employee against the
1996. They are member of FASAP (Flight Attendants and Stewards employer or vice-versa is within the exclusive jurisdiction of the labor
Association), the labor org of PAL. arbiter. Actions between employees and employer where the ee-er
2. PAL and FASAP entered into a CBA. Sec. 144: For the Cabin Attendants relationship is merely incidental and the cause of action precedes from a
hired before 22 November 1996: Compulsory Retirement; Subject to the different source of obligation is within the exclusive jurisdiction of the
grooming standards provisions of this Agreement, compulsory regular court.
retirement shall be fifty-five (55) for females and sixty (60) for males. • This Court holds that the grievance machinery and voluntary arbitrators
3. Halaguena et al sent a letter to PAL saying that the provision is do not have the power to determine and settle the issues at hand. They
discriminatory and demanded equal treatment. have no jurisdiction and competence to decide constitutional issues
4. Reiterated in another letter demanding that the provision be removed in relative to the questioned compulsory retirement age. Their exercise of
the CBA. jurisdiction is futile, as it is like vesting power to someone who cannot
5. President of FASAP said that it was willing to commence the CB wield it.
negotiations between PAL and FASAP. • The dispute in the case at bar is not between FASAP and PAL, who have
6. Halaguena et al filed a SCA for DR with the RTC against PAL for the both previously agreed upon the provision on the compulsory retirement
invalidity of Sec. 144 of the CBA. of female flight attendants as embodied in the CBA. The dispute is
7. RTC: Upheld its jurisdiction. The allegations in the petition do not make between PAL and several female flight attendants who questioned the
out a labor dispute arising from ee-er relationship as none is shown to provision on compulsory retirement of female flight attendants.
exist. It seeks a declaration of nullity of the questioned provision of the
CBA which is within its competence.
8. RTC issued a TRo enjoining PAL from implementing Sec. 144.
9. PAL, MR, denied.
10. PAL, CA through a PetCer and Prohibition: Declared that RTC had no
jurisdiction over the case.
11. Halaguena, MR, denied. Hence, Pet for Review on Certiorari.
12. Halaguena: Issue is constitutionality of provision, this, NLRC will have
no jurisdiction.
13. PAL: Case partakes of a labor dispute because it concerns the terms and
conditions of employment in PAL. Voluntary Arbitrator should have
jurisdiction to hear unresolved grievances arising from CBA.

ISSUE: Whether the RTC has jurisdiction over the action challenging the
legality/constitutionality of the provision contained in a CBA. YES.

• 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.
• Issue raised is whether Section 144, Part A of the PAL-FASAP CBA is
unlawful and unconstitutional. Here, the petitioners’ primary relief is the
annulment of Section 144. The subject of litigation is incapable of
pecuniary estimation, exclusively cognizable by the RTC, pursuant to BP
129. Being an ordinary civil action, the same is beyond the jurisdiction of
labor tribunals.
• 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 CEDAW and the power to apply the constitution and
3 PORTILLO v. LIETZ, INC.
1. In 2002, Portillo was promoted to Sales Representative of Lietz Inc.
a. She signed an agreement containing a Goodwill Clause that when
his employment is terminated, he cannot engage into a
competitive business for the next three years. Otherwise, she will
be liable for damages equivalent to her 12-month gross
compensation.
2. After three years, Portillo resigned from Lietz. She declared that she
intended to engage in a rice dealership business.
3. Lietz reminded her of the Goodwill Clause but Portillo argued that the
latest contract she signed in 2004 did not contain any Goodwill Clause.
a. Howeber, this has been considered moot since Portillo’s intent to
go into the rice business will not compete with Lietz’s.
4. Lietz, however, learned that Portillo had been hired by Ed Keller Ltd
(direct competitor of Lietz) as its Pharma Raw Material Head.
5. Portillo demanded for her remaining salaries and commission. Lietz said
it was still being computed.
6. Portillo filed a complaint with the NLRC for non-payment of salary,
sommission, 13th month pay plus damages.
7. Lietz admitted liability for her money claims but raised that such should
be offset against her liability to Lietz for liquidated damages for the
breach of the Goodwill Clause.
8. LA: Ordered Lietz to pay Portillo. NLRC: Affirmed. CA: Allowed set-off of
monetary award of Portillo and the liquidated damages from the
violation of the contract.
a. CA is convinced that the claim for liquidated damages emanates
from the Goodwill Clause of the employment contract and,
therefore, is a claim for damages arising from the employer-
employee relations.
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
• Not all disputes between an employer and his employee(s) fall within the
jurisdiction of the labor tribunals. We differentiated between
abandonment per se and the manner and consequent effects of such
abandonment and ruled that the first, is a labor case, while the second, is
a civil law case.
• The primary relief sought is for liquidated damages for breach of a
contractual obligation. The other items demanded are not labor benefits
demanded by workers generally taken cognizance of in labor disputes,
such as payment of wages, overtime compensation or separation pay. The
items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute.
• The money claims of workers referred to in paragraph 3 of Article 217
embraces money claims which arise out of or in connection with the
employer-employee relationship, or some aspect or incident of such
relationship. Money claims of workers which now fall within the original
and exclusive jurisdiction of Labor Arbiters are those money claims
which have some reasonable causal connection with the employer-
employee relationship.
o The reasonable causal connection with the employer-employee
relationship is a requirement not only in employees’ money
claims against the employer but is, likewise, a condition when the
claimant is the employer.

ISSUE: Whether a labor dispute exists. NO.

• The “Goodwill Clause” or the “Non-Compete Clause” is a contractual

undertaking effective after the cessation of the employment relationship
between the parties.
o Breach of the undertaking is a civil law dispute, not a labor law
case.
• The “Goodwill Clause” referred to in the present case, with a stipulation
that a violation thereof makes the employee liable to his former employer
for liquidated damages, refers to post-employment relations of the
parties.
• 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.
4 KIOK LOY v. NLRC (1986)
1. In a certification election, Pambansang Kilusang Paggawa (union) won
and was subsequently certified as the sole and exclusive bargaining agent
of rank and file employees of Sweden Ice Cream Plant (company).
2. The union furnished the company with 2 copies of its proposed CBA, and
requested the company for its counter proposals.
a. Eliciting no response to such, the union again wrote the company
for collective bargaining negotiations and for the company to
furnish them with its counter proposals.
b. Both requests were ignored and remained unacted upon by the
company.
3. The union thus filed a notice of strike with the Bureau of Legal Relations
on the ground of unresolved economic issues in collective bargaining.
4. Conciliation proceedings then followed during the 30­day statutory
cooling­off period. But all attempts towards an amicable settlement
failed, prompting the BLR to certify the case to the NLRC for compulsory
arbitration
5. NLRC: company is guilty of unjustified refusal to bargain; draft proposal
for CBA, having been found reasonable, is declared to be the agreement
governing the relationship of the parties therein.
6. SC: NLRC did not commit GADLEJ; reconsidered and then gave due
course to petition.
ISSUE: WON the NLRC erred in finding petitioner guilty of unjustified
refusal to bargain- NO.
c. A demand to bargain under Article 251 (a) of the LC.
5. All of the above preconditions are undisputedly present in this case.
Company is guilty of unfair labor practice.
6. Jurisprudence provides that while the law does not compel the parties to
reach an agreement, it does contemplate that both parties will approach
the negotiation with an open mind and make a reasonable effort to reach
a common ground of agreement.
7. From the over­all conduct of the company in relation to the task of
negotiation, there can be no doubt that the union has a valid cause to
complain against its attitude, the totality of which is indicative of the
latter's disregard of, and failure to, bargain in good faith.
a. A company's refusal to make counter proposal may indicate bad
faith especially where the union's request for a counter proposal
is left unanswered.
b. Even during the period of compulsory arbitration, the company's
acts of stalling the negotiation by a series of postponements,
non­appearance at the hearing conducted, and undue delay in
submitting its financial statements, show its unwillingness to
negotiate and reach an agreement with the union.
8. The instant case being a certified one, it must be resolved by the NLRC
pursuant to the mandate of PD 873, which authorizes the said body to
determine the reasonableness of the terms and conditions of employment
embodied in any CBA. To that extent, utmost deference to its findings of
reasonableness of any CBA as the governing agreement by the employees
and management must be accorded due respect by this Court.

1. Collective bargaining, defined as negotiations towards a collective

agreement, is 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.
2. Article 249 (g) of the LC 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.”
3. While it is a mutual obligation of the parties to bargain, the employer,
however, is not under any legal duty to initiate contract negotiation.
4. The mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present:
a. 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 LC;
b. Proof of majority representation; and
5 SCOUT RAMON V. ALBANO MEMORIAL COLLEGE v. HON. order a certification election notwithstanding the failure to
NORIEL and FEDERATION OF FREE WORKERS (1978) meet the 30% requirement.

1. The Scout Ramon V. Albano Memorial College Chapter of the respondent
labor union, Federation of Free Workers (FFW), filed a petition for
certification election and alleged that the written consent of 67 out of an
alleged total of 200 EEs, had been secured.
2. The ER, the petitioner College, filed a MTD based on the lack of the 30%
consent requirement as there were 250 EEs, the required 30% of the said
work force being 75.
3. 5 days from such motion, FFW submitted the additional signatures of 22
EEs. There was an opposition on the part of the ER College.
4. Med-Arbiter: DISMISSED the petition for certification on the ground
that the compliance with the 30% requirement must be shown as of the
time of its filing.
5. Director of Labor Relations Noriel: REVERSED and ordered a
certification election at the College within 20 days from receipt, with the
following as contending unions: (1) FFW; (2) No Union.
6. MR filed by the College was denied. Sec. of Labor: AFFIRMED. Hence,
the instant petition, whereby grave abuse of discretion is imputed to
Director of Labor Relations Noriel.
ISSUE: W/N the Director of LabRel gravely abused his discretion in
ordering a certification election despite failure to comply with the 30%
requirement as of the time of filing the petition. NO.
Once that requisite is complied with, however, the Code makes clear that
“it shall be mandatory for the Bureau to conduct a certification election
for the purpose 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.
3. The Court likewise stated that the employer, being the adversary in the
collective bargaining process, should maintain hands-off policy in
disputes over question of majority union. The institution of collective
bargaining is designed to assure that the other party, labor, is free to
choose its representative. To resolve any doubt on the matter, a
certification election, to repeat, is the most appropriate means of
ascertaining its will. Nevertheless, there may be circumstances where the
interest of the ER calls for its being heard on the matter, like where it
invokes the obstacle interposed by the contract-bar rule.
If management does not maintain a strictly hands-off policy, 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.

1. Concept & Purpose of Certification Election: [The institution of collective

bargaining is, to recall Cox, a prime manifestation of industrial
democracy at work. The two parties to the relationship, labor and
management, make their own rules by coming to terms That is to govern
themselves in matters that really count. As labor, however, is composed
of a number of individuals, it is indispensable that they be represented by
a labor organization of their choice.

A certification election is the fairest and most effective way of

determining which labor organization can truly represent the working
force. It is a fundamental postulate that the will of the majority, if given
expression in an honest election with freedom on the part of the voters to
make their choice, is controlling. No better device can assure the
institution of industrial democracy with the two parties to a business
enterprise, management and labor, establishing a regime of self-rule.]

2. The inability of FFW to come up with the required signatures when the
petition was first filed does NOT set its petition at naught. The Court
cited its decision in Philippine Association of Free Labor Unions v.
Bureau of Labor Relations, wherein it recognized that the Bureau of
Labor Relations, in the exercise of sound discretion, MAY
PREFERRED MODES OF DISPUTE SETTLEMENT
6 PAL v. NLRC, PAL EMPLOYEES ASSOCIATION
1. In 1985 PAL amended its Code of Discipline and several employees were
subjected to disciplinary measures
2. PALEA filed a complaint with the NLRC for unfair labor practice
a. That such Code was arbitrary because it was issued without notice or
prior discussion with the Union; such was unfair oppressive and
prejudicial to the employees; no publication was made; copies were
limited
3. PAL argued such was a valid exercise of management prerogative as an
employer
4. LA- no bad faith on the part of PAL, however, PAL failed to circulate
copies, and sec. 1 of such Code was too broad; sec 7 violates prohibition
against double jeopardy
5. NLRC- no unfair labor practice; must circulate copies; union should have
been given a chance to participate, so that they would have a more
harmonious relationship (shared management prerogative)
ISSUE: Whether management may be compelled to share with the Union its
prerogative of formulating a Code of Discipline. YES.
1. It was only in 1989 (after the Labor Code was amended, Art. 211) that the
law requires the state to ensure the participation of workers in decision
and policy-making processes affecting their rights, duties and welfare
2. PAL is correct is saying that at the time the Code of Discipline was
amended, there was no law requiring labor participation in such
processes
a. HOWEVER, the exercise of management prerogative is not unlimited
b. Even if the law was not yet amended at the time of implementations,
attainment of a harmonious labor-management relationship is
possible with the transparency in managerial moves affecting
employees’ rights
3. In this case, the provisions of the Code of Discipline is not purely
business oriented nor concern purely management aspect
a. The provisions have repercussions on employee’s right to security of
tenure, thus affects employees’ property rights (employment is a
property right)
4. A line must be drawn between management prerogatives regarding
business operations per se and those which affects the rights of
employees
a. As regards those affecting the rights of employees- management
should see to it that its employees are at least properly informed of
its decisions or modes of action
b. As found by the LA and NLRC (which the SC accords due respect),
PAL failed to furnish copies to its employees
5. As PAL contends, the CBA agreement provides that the Company has the
right to enforce rules and regulations to carry out functions of
management
a. Such cannot be interpreted as a waiver of employees’ rights
b. Industrial peace cannot be achieved if the employees are denied their
just participation in the discussion of matters affecting their rights
7 CHU vs. NLRC, VICTORIAS MILLING COMPANY INC.
1. Chu retired from Victorias Milling upon reaching 60 years old, under its
regular retirement program.
a. However, he was granted by the Board a 1 year extension and that he
assigned as Head of Warehousing, Sugar, Shipping, and Marine
Department (6,941k/month) under a Special Contract of
Employement
2. In a memorandum issued by the Company, there was a rotation of
personnel to other departments. Thus, Chu was transferred to the Sugar
Sales Dept. Chu protested his transfer. Chu filed a complaint for illegal
dismissal alleging constructive dismissal
3. LA- no constructive dismissal; the transfer was without change in rank or
salary; no bad faith NLRC- affirmed
ISSUE: Whether there was illegal dismissal. NO.
1. An owner of a business enterprise is given considerable leeway in
managing his business because it is deemed important to society as a
whole that he should succeed.
a. The law recognizes inherent management of businesses
(“management prerogatives”) acts by which the one directing a
business is able to control variables thereof so as to enhance the
chances of making a profit.
2. One of management prerogatives is the right to transfer employees in
their work station
a. Based on employees’ qualifications, aptitude and competence in
various business operations
b. Security of tenure does not give the employee vested right in his
position especially when management thinks he will be more useful
in another assignment.
c. When the transfer is not unreasonable, nor inconvenient nor
prejudicial to him, or it does not involve a diminution of rank,
salaries or benefits or other privileges, the employee cannot complain
that it amounts to constructive dismissal
3. Nothing in the Special Contract of Employment waived the company’s
right to transfer Chu to any position
4. An employee’s right to security of tenure does not give him such a vested
right in his position as would deprive the company of its prerogatives to
change his assignment or transfer him where he will be most useful.
8 SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO) vs
BLAS OPLE, SMC
1. A CBA was entered into by SMC and he Union, which provides that all
employees within the bargaining unit is entitled to a basic salary plus
commission based on their respective sales
2. SMC introduced a new marketing scheme which sells its beer products
directly to wholesalers through its sales offices. (Complementary
Distribution System “CDS”)
3. The union filed a complaint for unfair labor practice with a notice of
strike; because such new marking scheme would reduce the take home
pay of salesmen and truck helpers
4. Ministry of Labor- no unfair labor practice; its implemented to improve
efficiency and economy
ISSUE: Whether such constitutes unfair labor practice. NO.
1. The CDS is a valid exercise of management prerogatives
a. 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, 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.
2. The company is entitled to device means designed to increase its profits
3. As long as these prerogatives are exercised in good faith for the
advancement of employer’s interest and not for the purpose of
circumventing the rights of employees under the law or valid agreements,
the Court will uphold them.
4. Note that SMC offered to compensate the sales employees adversely
affected by paying a “back adjustment commission”- proves lack of bad
faith
9 PAL v. NLRC, PAL EMPLOYEES ASSOCIATION – supra at 6
10 UNION OF FILIPRO EMPLOYEES-DFA-KMU v. NESTLE
PHILIPPINES, INC. (2006)
1. Due to the impending expiration of the existing CBA between Nestle and
the Union, the Presidents of the Union informed Nestle of their intent to
open their new CB Negotiation for 2001-2004 as early as June 2001.
2. Nestle informed the Union that it was also preparing its own counter-
proposal and proposed ground rules that will govern the negotiations.
3. Nestle stressed that unilateral grants, one-time company grants,
company initiated policies (Retirement Plan) are not proper subjects of
CBA negotiations and shall be excluded.
4. Dialogue started and Nestle requested NCMB to conduct preventive
mediation proceedings because despite 15 meetings, no agreement was
reached.
5. Conciliation proceedings were ineffective. Union filed a Notice of Strike.
6. Another Notice was filed predicated on Nestle’s alleged ULP (bargaining
in bad faith, refusing to include Retirement Plan in the negotiations).
7. DOLE: Discuss each party’s proposals before the NCMB. If no settlement,
DOLE shall define the issues and order the filing of position papers.
a. Injunction was issued but the employees still went on strike.
b. The employees were ordered to return to work within 24 hours;
Nestle to accept all returnees; cease and desist order; submit
position papers.
8. Several pleadings after, the acting Secretary of DOLE came out with an
Order ruling, among others, that:
a. The Retirement Plan is a unilateral grant that is not a mandatory
subject for bargaining.
9. Union filed a PetCer before the CA. CA annulled the previous orders and
directed CBA negotiations.
10. Nestle, MR:
a. After an SC Decision, there was obviously an agreement by the
parties that the Retirement Plan shall no longer be a negotiable
item. In its 1998 Negotiation, Parties expressly
recognized Nestle’s prerogative to initiate unilateral
grants which are not negotiable.
b. It was only before the CA and in the 2nd PetCer that the
ULP issue was raised when it should have been raised in
the proper tribunal.
11. Union:
a. Had it been the intention of the parties to consider it not a
proper subject for CB, then they would have indicated it in
categorical terms or deleted such in the CBA.
b. Refusal of Nestle to bargain on a very important CBA
economic provision constitutes ULP
ISSUE: Whether Nestle was guilty of ULP. NO.
1. A determination of the validity of the Nestlé’s proposition involves an
appraisal of the exercise of its management prerogative.
2. Employers are accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital. This
mass of privileges comprises the so-called management prerogatives. In
this connection, the rule is that good faith is always presumed. As long as
the company’s exercise of the same is in good faith to advance its interest
and not for purpose of defeating or circumventing the rights of
employees under the law or a valid agreement, such exercise will be
upheld.
3. Though Nestlé underscored its position that “unilateral grants, onetime
company grants, company- initiated policies and programs, which
include, but are not limited to the Retirement Plan, Incidental Straight
Duty Pay and Calling Pay Premium, are by their very nature not proper
subjects of CBA negotiations and therefore shall be excluded therefrom,”
such attitude is not tantamount to refusal to bargain.
a. This is especially true when it is viewed in the light of the fact
that eight out of nine bargaining units have allegedly agreed to
treat the Retirement Plan as a unilateral grant. Nestlé, therefore,
cannot be faulted for considering the same benefit as unilaterally
granted.
4. By imputing bad faith unto the actuations of Nestlé, it was the Union,
therefore, who had the burden of proof to present substantial evidence to
support the allegation of unfair labor practice.
5. It failed to discharge said onus probandi as there is still a need for the
presentation of evidence other than its bare contention of unfair labor
practice in order to make certain the propriety or impropriety of the
unfair labor practice charge hurled against Nestlé.
6. Nestlé’s inclusion in its Position Paper of its proposals affecting other
matters covered by the CBA contradicts the claim of refusal to bargain or
bargaining in bad faith.
ISSUE: Whether it was Nestle’s prerogative not to include the Retirement
Plan in the negotiations. NO.
• In an SC case involving the same parties, SC already held that the
retirement plan is consensual in nature.
• The characterization unilaterally imposed by Nestlé on the Retirement
Plan cannot operate to divest the employees of their “vested and
demandable right over existing benefits voluntarily granted by their
employer.”
11 SHS PERFORATED MATERIALS INC. (SHS) vs. DIAZ
1. Diaz was a Manager for Business Development on probationary status of
SHS (P100k/mo.)
a. In his contract, he was tasked to report to Mr. Hartmanshenn
(President); and to report to work at least 2 times a week to observe
plant processes
b. Hartmanshenn is often abroad and communicates with Diaz through
calls and e-mails
c. Hartmanshenn expressed dissatisfaction because of Diaz’s poor
performance at work; he only reported for work only 8 times in 4
months
2. Hartmanshenn arrived to the Philippines and tried to contact Diaz, but
the latter did not answer and/or reply. He said he never received those
messages
a. So, Hartmanshenn told the Accounting Department not to release
the salary of Diaz
b. The next day, Diaz sent to SHS a demand letter for his salary and a
resignation letter
3. When they both finally met, Hartmanshenn allegedly expressed his
disappointment at Diaz and the latter failed to give a proper explanation
a. Diaz claims that Hartmanshenn merely insulted him and offered
P25k instead of his salary
4. Diaz filed a complaint for illegal dismissal, non-payment of wages and
13th month pay
5. LA- illegal dismissal, ordered Diaz’s reinstatement + backwages +moral&
exemp damages
a. There was constructive dismissal because of the withholding of Diaz’s
salary; his probationary status was deemed regularized because SHS
failed to conduct an evaluation of his performance and to give notice
2 days before of his termination
b. NLRC reversed. Withholding of salary was a valid exercise of
management prerogative; reasonable because of failure to report to
work; there was voluntary resignation
c. CA- there was illegal dismissal.
ISSUES:
1. WON there was illegal dismissal. YES.
2. WON withholding of salaries is a valid management prerogative. NO.
1. 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, and dismissal and recall of work.
a. LC prohibits withholding of wages without the consent of the
employee (Art.116) the only form of wage withholding is in case of
 wage deductions (insurance with the consent of employee; union
dues; authorized by law)
2. Although there is sufficient proof that Diaz failed to report to work from
Nov 16-30, his duties only include meeting with clients. Thus, his work
does not require close supervision and monitoring by the company
a. Failure to report to work does not automatically signify he did not
work
b. Diaz presented receipts for payment by clients; that he submitted
reports to harmanshenn, and that documents that showed clients
vouched they had meetings with Diaz
c. Although there’s uncertainty as to whether Diaz really worked or not,
the scales of justice must be titled in favor of the employee in line
with the policy that the State must afford protection to labor.
3. As regards the resignation letter- SC believes that Diaz was merely forced
to resign because of the withholding of his salary. It would be absurd for
Diaz to tolerate working despite the unlawful withholding of his salary
a. He even cited in his letter that the cause for resignation is the illegal
and unfair labor practice
4. The reliance of SHS to the Solas case is misplaced. The employer in that
case was allowed by the SC to deduct the employee’s wages for payment
of income taxes (sanctioned by the NLRC) and payment of a debt due to
the employer (Art/ 1706, NCC)
a. In this case, there was no sufficient proof that Diaz in fact did not
really work during said period thus, such amounts to constructive
dismissal.
5. probationary employees who are unjustly dismissed during the
probationary period are entitled to reinstatement and payment of full
backwages and other benefits and privileges from the time they were
dismissed up to their actual reinstatement.
6. Corporate officers are not liable personally, because of the absence of bad
faith on their part.
12 SUPREME STEEL vs SUPREME STEEL UNION
1. The union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB) because Supreme Steel violated provisions of
the CBA
a. Sec. of Labor certified the case for compulsory arbitration
2. The union alleged that Supreme Steel:
a. Denied the CBA mandated wage increase to 4 employees (CBA
requires increase every year: 2003- P14, 2004- P12, 2005- P12)
i. Supreme Steel argues that has been company practice to adjust
wages after reaching one year and once that is done, the CBA
increase is no longer implemented
b. That the CBA prohibits the hiring by the company of
contractual employees except in the warehouse and
packing section, but Supreme Steel still hired employees
i. Supreme Steel said they did hire temporary workers
but only to cope with the seasonal increase of job
orders from abroad
c. That Supreme Steel failed to provide a shuttle service as provided in
the CBA
i. Supreme Steel only said that it is difficult to implement this
provision
d. Failure by company to answer medical expenses of 3 employees
e. Failure to comply with the time-off pay provision- that allows
employees to be excused from work when summoned by the union to
testify or when his presence is necessary
f. Dismissal of Madayag because he has type 2 diabetes
g. Denial of paternity leaves
h. Discrimination and harassment of several union officers (who were
transferred, penalized, inclusion of non-taxable items to their taxable
incomes)
i. Non-implementation of COLA (cost of living allowance) to those who
do not earn minimum wages
i. CBA, Section 2. All salary increase granted by the COMPANY
shall not be credited to any future contractual or legislated wage
increases. Both increases shall be implemented separate and
distinct from the increases stated in this Agreement. It should
be understood by both parties that contractual salary increase
are separate and distinct from legislated wage increases, thus
the increase brought by the latter shall be enjoyed also by all
covered employees.
3. NLRC- all are decided in favor of the Union except for the paternity leave
and discrimination issues. CA affirmed.
ISSUE: Whether hiring of temporary employees is a valid exercise of
management prerogative despite prohibition by the CBA. NO.
1. 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. Must be construed
liberally; doubt resolved in favor of labor.
2. SC affirms CA decision except as regards the COLA issue.
3. As regards the wage increase: it should be interpreted that the increase
should be given to all employees “over and above” the amount they are
receiving even if that amount includes an anniversary increase.
a. Thus, even if Supreme Steel already granted an anniversary increase,
such cannot be credited to the contractual increase provided for by
the CBA
b. Supreme Steel failed to prove that it has been company practice that
the anniversary increases offsets the CBA increase
4. As regards the shuttle services- mere difficulty is not an excuse. CBA is a
contract and thus must be complied with. Company must recondition the
shuttle, otherwise it may be held guilty of unfair labor practice.
5. Medical and First Aid- the injury incurred by an employee during a
company sportsfest must be reimbursed by the company. CBA must be
interpreted liberally and not technically. Thus first aid is not merely
limited to minor injuries as the Company believes
6. Hiring of temporary employees is proscribed by the CBA
a. Company argues it’s a management prerogative
b. Law respects company’s management prerogatives, however, such is
not unlimited. Such is limited by CBAs, the law and principles of fair
play and justice
c. The CBA is clear in providing that temporary employees are not
allowed in the company except in the warehousing and packing
sections.
d. The company is bound by said provision and cannot excuse himself
from such
e. Company’s scheme was to hire employees for five month contracts
and to renew them after the expiration. This scheme is to prevent
employees from acquiring the status of regular employees.
f. The primary standard to determine a regular employment is the
reasonable connection between the particular activity performed by
the employee in relation to the business or trade of the employer. The
test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. If the employee has been
performing the job for at least one year, even if the performance is
not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the
necessity, if not indispensability, of that activity to the business of the
employer.
7. Dismissal of Madayag is illegal. There was no certification by a public
health officer as required by the LC.
8. As regards the COLA. The non-implementation of such to non-minimum
wage earners is not a diminution of benefits. There was no proof that it
had been a voluntary company practice for a long period of time. In fact,
it only lasted for a year.
13 PLDT vs. PAGUIO
1. Paguio was the head of the Garnet Exchange of PLDT
a. He sent a letter to his immediate supervisor criticizing the criteria for
performance by PLDT because such depended on manpower and it
was unfair because they were disallowed to use contractors for new
installations and was not made beneficiary of the cut-over bonus.
2. Paguio was reassigned as head of the special assignment at the East
Center, and was asked to give Go his position.
a. PLDT explained that the reassignment was because Paguio was not a
team player and he cannot accept the decisions of the management
which is short of insubordination
3. Paguio filed a complaint for illegal demotion
a. LA- transfer was valid
b. NLRC- transfer was unlawful because the criticism of Paguio was
done in good faith to help his team
c. CA- affirmed
ISSUE: Whether the transfer was valid. NO.
1. Paguio argues his new position was functionless: no office or staff and he
cannot be promoted
a. PLDT: the reassignment was not a demotion, the position has equal
rank and salary; his reinstatement is not possible because his
position no longer exists due to a company-wide organization
2. GR: an employer is free to regulate, according to his own discretion and
judgment, all aspects of employment, including the transfer of
employees.
a. An employee’s right to security of tenure does not give him such a
vested right in his position as would deprive the company of its
prerogative to change his assignment or transfer him where he will
be most useful
b. HOWEVER, the exercise of management prerogative cannot be
utilized to circumvent the law and public policy on labor and social
justice; must be exercised always with the principles of fair play and
justice
c. the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does
it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. The employer bears the burden of
 proving that the transfer of the employee has complied with the
foregoing test.
3. In this case, there was no credible reason for Paguio’s transfer except his
criticisms of the Company’s performance evaluation methods.
a. Paguio’s rating was outstanding. There was no proof he failed to
comply with management policy. His transfer could not be due to
poor performance
b. The transfer is prejudicial because the new position does not make it
possible for a promotion, he had neither office nor staff.
14 BUSINESSDAY INFORMATION SYSTEMS (BSSI) vs. NLRC
1. BSSI manufactures and sells computer forms. Because of financial losses,
DBP and APT took possession of its assets and manufacturing plant
a. Thus, some plant employees were laid off after notice and with
separation pay of ½ month’s salary
b. BSSI retained some to rehabilitate its business. But after 2 months,
these employees were discharged to cease business operations. Their
separation pay was equivalent to 1 month’s pay.
2. The respondent who were dismissed first, claimed discrimination
because they were only paid ½ months’ worth of salary
a. LA- There was discrimination; NLRC affirmed
ISSUE: Whether there was discrimination. YES.
1. LC allows reduction of personnel due to redundancy, labor saving
devices, retrenchment, closing of the establishment
a. 1 month’s pay per year of service- in case of termination due to labor
saving devices or redundancy
b. ½ month pay per year of service or 1 month pay (whichever is
higher)- in case of retrenchment, closure, or undertaking not due to
serious business losses
2. The company has a right to terminate employees because of
retrenchment or closure of business operations, but payment of
separation benefits unequally is discrimination
a. Note that the Company terminated first those who have worked
longer and retained those who have fewer work years
b. 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
c. Management prerogatives are not absolute prerogatives but are
subject to legal limits, collective bargaining agreements, or general
principles of fair play and justice