Jurisprudence on Management Prerogative
Supreme Court’s conclusion on
Case
Jenny F. Peckson vs
Robinsons Supermarket
Corporation, et al., G.R. No.
198534, July 3, 2013
Facts/evidence/law
the propriety of the exercise of
management prerogative
As a privilege inherent in the
employer’s right to control and
manage its enterprise
effectively, its freedom to
conduct its business operations
to achieve its purpose cannot be
denied.
Synopsis
supporting the conclusion
 Doctrine of Prerogative
Management
 The LA in its Decision, that job
reassignment or classification is a
strict prerogative of the
employer, and that the petitioner
cannot refuse her transfer from
Category Buyer to Provincial
Coordinator since both positions
commanded the same salary
structure, high degree of
responsibility and impeccable
honesty and integrity. Upholding
the employer’s right not to retain
an employee in a particular
position to prevent losses or to
promote profitability, the LA
found no showing of any illegal
motive on the part of the
respondents in reassigning the
petitioner. The transfer was
dictated by the need for
punctuality, diligence and
attentiveness in the position of
Category Buyer, which the
petitioner clearly lacked.
Moreover, the LA ruled that her
persistent refusal to accept her
new position amounted to
insubordination, entitling the RSC
to dismiss her from employment.
Explain when the exercise of management is proper and
when it is improper (based on the cases)
Under the doctrine of management prerogative,
every employer has the inherent right to regulate,
according to his own discretion and judgment, all
aspects of employment, including hiring, work
assignments, working methods, the time, place and
manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline, dismissal,
and recall of employees. This (management
prerogative) is a function associated with the employer’s
inherent right to control and manage effectively its
enterprise. Even as the law is solicitous of the welfare of
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.
Exercise of Management is proper when employer
communicate clear expectations with its employees,
utilizing the right to use of supplies and equipment to
empower employees do their job well and to take step
ahead of improving morale of the employees
considering their work benefits, work environment and
employee understanding on the rules and regulation
given by employer. Lastly Exercise of management
towards its employees is improper of course base on the
cited cases, when there is grave abuse of discretion by
the employers for instance constructive dismissal of
employees, findings are grounded entirely on
speculations, surmises or conjectures, inference made is
manifestly mistaken, absurd or impossible, judgment is
based on a misapprehension of facts, etc.

Philippine National Bank vs
Jumelito T. Dalmacio, G.R.
No. 202357, July 5, 2007
PNB's redundancy program was
neither unfair nor unreasonable
considering that it was within
the ambit of its management
prerogative.
 Doctrine of Prerogative The exercise of management prerogative is not
Management absolute. By its very nature, encompassing as it could
 PNB was upfront with its be, management prerogative must be exercised in good
employees about its plan to faith and with due regard to the rights of labor.
implement its redundancy
program. The outsourcing of the
service and maintenance of the
Bank's computer hardware and
equipment to Technopaq, Inc.
was devised and/or implemented
after consultation with the
affected employees in the
presence of their union officers.
Respondents were able to show
substantial proof that it
underwent redundancy program
and that complainants herein
voluntarily accepted the Special
Redundancy Package offered by
respondent bank to its
employees. In fact, they were
officially notified of the
management's decision to
terminate their employment as
early as August 15, 2005. PNB's
action is within the ambit of
"management prerogative" to
upgrade and enhance the
computer system of the bank.
PNB was constrained to terminate
herein petitioner who thereafter
posed no objection thereto,
consented to and willingly
received the hefty separation pay
given to him. Moreover, records
have it that PNB faithfully
complied with the legal
procedures provided under Article
 283 of the Labor Code as
evidenced by the individual
notices of termination served and
received by the petitioner as well
as the Establishment Termination
Report filed by PNB with the
Department of Labor

The Court has put emphasis on  Doctrine of Prerogative

the right of an employer to Management
Central Azucarera de Bais exercise its management  Article 297 of the Labor Code
and Antonio Steven L. Chan prerogative in dealing with its provides that an employer may
vs Heirs of Zuelo Apostol company Is affairs, including the terminate the services of an
G.R. No. 215314, March 14, right to dismiss erring employee for fraud or willful
2018 employees. breach of the trust reposed in
him.
 The respondent, as CAB's motor
pool over-all repairs supervisor, is
in a position of trust and
confidence. He was in charge of
repairing company vehicles, and
was designated with the
responsibility of assigning the
personnel and equipment for
each and every repair job, and
taking custody of all repair
equipment and materials owned
by CAB. The respondent herein
occupies a position of
responsibility, where he is
entrusted with confidence on
delicate matters, such as the
custody, handling, or care and
protection of CAB's properties.
Respondent violated CAB's rules
and regulations relating to the use
of company property for personal
purposes.
 Our labor laws respect the
Ernesto Galang And Ma. employer's inherent right to
Olga Jasmin Chan Vs. Boie control and manage effectively
Takeda Chemicals, Inc. its enterprise and do not
And/Or Kazuhiko Nomura, normally allow interference
G.R. No. 183934, July 20, with the employer's judgment in
2016 the conduct of his business.
Management has exclusive
prerogatives to determine the
qualifications and fitness of
workers for hiring and firing,
promotion or reassignment.
 Doctrine of Prerogative
Management
 The reluctance to interfere with
management's prerogative in
determining who to promote all
the more applies when we
consider that the position of
National Sales Director is a
managerial position. Managerial
positions are offices which can
only be held by persons who have
the trust of the corporation and
its officers. Petitioners were
neither demoted nor did they
receive a diminution in pay and
benefits. Petitioners also failed to
show that employment is
rendered impossible,
unreasonable or unlikely. The
promotion of employees to
managerial or executive positions
rests upon the discretion of
management. Petitioners did not
present any evidence showing
BTCI's adopted rules and policies
laying out the standards of
promotion of an employee to
National Sales Director. They did
not present the qualification
standards needed for the
position. Petitioners merely
assumed that one of them was
better for the job compared to
Villanueva. Mere allegations
without proof cannot sustain
petitioners' claim.
 Constructive dismissal is a
Diwa Asia Publishing, Inc. cessation of work because
and Saturnino Belen vs continued employment is
Mary Grace U. De Leon, rendered impossible,
G.R. No. 203587, August unreasonable or unlikely; when
13, 2018 there is a demotion in rank or
diminution in pay or both; or
when a clear discrimination,
insensibility, or disdain by an
employer becomes unbearable
to the employee.
 Respondent
 Under Article 279105 of the Labor
Code, an employee who is
unjustly dismissed from work
shall be entitled to reinstatement
without loss of seniority rights
and other privileges and to his full
backwages, inclusive of
allowances, and to his other
benefits or their monetary
equivalent computed from the
time his compensation was
withheld from him up to the time
of his actual reinstatement.
Furthermore, inasmuch as
reinstatement is no longer
feasible given the strained
relations between petitioners and
respondent, the award of
separation pay equivalent to one
(1) month's salary for every year
of service was just and reasonable
as an alternative to
reinstatement.
has likewise
submitted evidence in the form of
e-mails from Asuncion showing
that although her job designation
remained the same, she was
relegated to performing mundane
or clerical tasks such as preparing
drafts of termination notices
based on a standard format and
ensuring that the last pay of
employees was released and that
termination notices were received
by the Department of Labor and
 Employment. There is
constructive dismissal when an
employee's functions, which were
originally supervisory in nature,
were reduced; and such reduction
is not grounded on valid grounds
such as genuine business
necessity. The reduction in
respondent's duties and
responsibilities as HR Manager
amounted to a demotion that was
tantamount to constructive
dismissal.

SUBMITTED BY:

VILLAFUERTE, VERNON P.
SANCHEZ, LENIER
DACUYAN, KIM PHILIP