PART I: STATE POLICIES ON LABOR RELATIONS
VOLUNTARY/DEMOCRATIC MODES OF DISPUTE SETTLEMENT
LABOR DISPUTE
Article 219. Definitions.
(l) “Labor dispute” includes any controversy or matter concerning terms or 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.
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. Union: Controversy involves a labor dispute and is directly connected or
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  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
1. Petitioners were female flight attendants of PAL hired before Nov. 22, 1996. They CEDAW and the power to apply the constitution and CEDAW is within the
are member of FASAP (Flight Attendants and Stewards Association), the labor jurisdiction of trial courts, a court of general jurisdiction.
org of PAL.  Not every controversy or money claim by an employee against the employer or
2. PAL and FASAP entered into a CBA. Sec. 144: For the Cabin Attendants hired vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions
before 22 November 1996: Compulsory Retirement; Subject to the grooming between employees and employer where the ee-er relationship is merely
standards provisions of this Agreement, compulsory retirement shall be fifty-five incidental and the cause of action precedes from a different source of obligation
(55) for females and sixty (60) for males. is within the exclusive jurisdiction of the regular court.
3. Halaguena et al sent a letter to PAL saying that the provision is discriminatory  This Court holds that the grievance machinery and voluntary arbitrators do not
and demanded equal treatment. have the power to determine and settle the issues at hand. They have no
4. Reiterated in another letter demanding that the provision be removed in the jurisdiction and competence to decide constitutional issues relative to the
CBA. questioned compulsory retirement age. Their exercise of jurisdiction is futile, as
5. President of FASAP said that it was willing to commence the CB negotiations it is like vesting power to someone who cannot wield it.
between PAL and FASAP.  The dispute in the case at bar is not between FASAP and PAL, who have both
6. Halaguena et al filed a SCA for DR with the RTC against PAL for the invalidity of previously agreed upon the provision on the compulsory retirement of female
Sec. 144 of the CBA. flight attendants as embodied in the CBA. The dispute is between PAL and
7. RTC: Upheld its jurisdiction. The allegations in the petition do not make out a several female flight attendants who questioned the provision on compulsory
labor dispute arising from ee-er relationship as none is shown to exist. It seeks a retirement of female flight attendants.
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.
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.
 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. 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
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 30-day statutory cooling-off
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 over-all 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,
non-appearance 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. NORIEL and discretion, MAY order a certification election notwithstanding the failure to
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
PREFERRED MODES OF DISPUTE SETTLEMENT
CONST., Art. XIII, Sec. 3., par. 3
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.
Article 218. Declaration of policy.
A. It is the policy of the State:
a) To promote and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and conciliation, as
modes of setting labor or industrial disputes;
b) To promote free trade unionism as an instrument for the enhancement of
democracy and the promotion of social justice and development;
c) To foster the free and voluntary organization of a strong and united labor
movement;
d) To promote the enlightenment of workers concerning their rights and
obligations as union members and as employees;
e) To provide an adequate administrative machinery for the expeditious
settlement of labor or industrial disputes;
f) To ensure a stable but dynamic and just industrial peace; and
g) To ensure the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare.
B. To encourage a truly democratic method of regulating the relations between the
employers and employees by means of agreements freely entered into through
collective bargaining, no court or administrative agency or official shall have the
power to set or fix wages, rates of pay, hours of work or other terms and
conditions of employment, except as otherwise provided under this Code.
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. 8 SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO) vs BLAS OPLE, SMC

1. Chu retired from Victorias Milling upon reaching 60 years old, under its regular 1. A CBA was entered into by SMC and he Union, which provides that all employees
retirement program. within the bargaining unit is entitled to a basic salary plus commission based on
a. However, he was granted by the Board a 1 year extension and that he their respective sales
assigned as Head of Warehousing, Sugar, Shipping, and Marine Department 2. SMC introduced a new marketing scheme which sells its beer products directly
(6,941k/month) under a Special Contract of Employement to wholesalers through its sales offices. (Complementary Distribution System
2. In a memorandum issued by the Company, there was a rotation of personnel to “CDS”)
other departments. Thus, Chu was transferred to the Sugar Sales Dept. Chu 3. The union filed a complaint for unfair labor practice with a notice of strike;
protested his transfer. Chu filed a complaint for illegal dismissal alleging because such new marking scheme would reduce the take home pay of salesmen
constructive dismissal and truck helpers
3. LA- no constructive dismissal; the transfer was without change in rank or salary; 4. Ministry of Labor- no unfair labor practice; its implemented to improve efficiency
no bad faith NLRC- affirmed and economy

ISSUE: Whether there was illegal dismissal. NO. ISSUE: Whether such constitutes unfair labor practice. NO.

1. An owner of a business enterprise is given considerable leeway in managing his 1. The CDS is a valid exercise of management prerogatives
business because it is deemed important to society as a whole that he should a. Except as limited by special laws, an employer is free to regulate, according
succeed. to his own discretion and judgment, all aspects of employment, including
a. The law recognizes inherent management of businesses (“management hiring, work assignments, working methods, time, place and manner of
prerogatives”) acts by which the one directing a business is able to control work, tools to be used, processes to be followed, supervision of workers,
variables thereof so as to enhance the chances of making a profit. working regulations, transfer of employees, work supervision, lay-off of
2. One of management prerogatives is the right to transfer employees in their work workers and the discipline, dismissal and recall of work.
station 2. The company is entitled to device means designed to increase its profits
a. Based on employees’ qualifications, aptitude and competence in various 3. As long as these prerogatives are exercised in good faith for the advancement of
business operations employer’s interest and not for the purpose of circumventing the rights of
b. Security of tenure does not give the employee vested right in his position employees under the law or valid agreements, the Court will uphold them.
especially when management thinks he will be more useful in another 4. Note that SMC offered to compensate the sales employees adversely affected
assignment. by paying a “back adjustment commission”- proves lack of bad faith
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.
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