MANAGEMENT PREROGATIVES

*SOCORU v CCBPI
- Termination due to redundancy caused by an application of a new business
process/scheme to be more cost-effective, so long as due process is observed and terminated
employees are given their benefits prescribed under the law, is a valid exercise of management
prerogative. It does not violate the rught to security and tenure because labor laws
discourage interference employer’s judgment in the conduct of business AS LONG AS IT
WAS EXERCISED IN GOOD FAITH.

*PAL v PALEA

Business operations per se Those which affect rights of the employees

No need to inform Management should see to it that its
employees are at least properly informed of
its decisions or modes of action.
Purely business oriented Ex. Those changes in the Code of Discipline
Management aspect of the business that are punitive in nature

- provisions in the CBA giving the management the exclusive right to make and enforce
company rules and regulations to carry out the functions of management without having to
discuss the same with the union MAY NOT BE INTERPRETED AS GIVING UP OF
EMPLOYEES’ RIGHTS TO PARTICIPATE IN THE DELIBERATION OF MATTERS WHICH
MAY AFFECT YHEIR RIGHTS AND THE FORMULATION OF POLICIES RELATED
THERETO. And one such matter is the formulation of the code of discipline.
- The exercise by management of its prerogative shall be done in a just, reasonable,
humane, and/or lawful manner.

*Philippine Industrial Agency Corp v Aguinaldo

- Managerial prerogative to transfer personnel must not be exercised with grave abuse of
discretion, bearing in mind the basic elements of justice and fair play. Having the right should
not be confused with the manner in which that right is exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of an undesirable worker
- In pursuit of its legitimate business interest, management has the prerogative to transfer
or assign employees from one office to another – PROVIDED THAT THERE IS NO
DEMOTION, DIMINUTION OF SALARY, BENEFITS AND OTHER PRIVILEGES AND
THE ACTION IS NOT MOTIVATED BY BF, OR EEFECTED AS A PUNISHMENT
WITHOUT SUFFICIENT CAUSE.

- Transfer must not be UNREASONABLE, nor INCONVENIENT, nor PREJUDICIAL

to him.
(In this case kasi from Isabela, na-transfer sa Malabon. Ibabalik naman daw sa Isabela
after construction ng new facility kaso INDEFINITE which the SC held to be unfair and
oppressive considering that the employee lives in Isabela w/ his family)

*Mendoza v Rural Bank of Lucba (regulator-driven and policy-driven job rotation)

- “In pursuit of its legitimate business interest, management has the prerogative to
transfer or assign employees from one office to another – PROVIDED THAT THERE IS NO
DEMOTION, DIMINUTION OF SALARY, BENEFITS AND OTHER PRIVILEGES AND
THE ACTION IS NOT MOTIVATED BY BF, OR EEFECTED AS A PUNISHMENT
WITHOUT SUFFICIENT CAUSE.” THIS PRIVILEGE IS INHERENT IN THE RIGHT OF
THE EMPLOYERS TO CONTROL AND MANAGE THEIR ENTERPRISES
EFFECTIVELY. THE RIGHT OF THE EMPLOYEES TO SECURITY OF TENURE
DOES NOT GIVE THEM VESTED RIGHTS TO THEIR POSITIONS TO THE EXTENT
OF DEPRIVING MANAGEMENT OF ITS PREROGATIVE TO CHANGE THEIR
ASSIGNMENTS OR TO TRANSFER THEM TO WHERE THEY WILL BE MOST
USEFUL TO THE COMPANY.
-MP to transfer employees must be exercised without GAD. Employer must be able to
show that transfer is not unreasonable, inconvenient or prejudicial to the employee, - There must
be no diminution of salary, demotion or decrease in privileges and other benefits.
-employees may be transferred -- based on their qualifications, aptitudes and
competencies -- to positions in which they can function with maximum benefit to the company.

*Deles Jr v NLRC
- The right of an employer to regulate all aspects of employment, aptly called
management prerogative, gives employers the freedom to regulate, according to their discretion
and best judgment, all aspects of employment, including work assignment, working methods,
processes to be followed, working regulations, transfer of employees, work supervision, lay-off
of workers and the discipline, dismissal and recall of workers.
An employee holds a position of trust and confidence where he is entrusted with responsibility
involving delicate matters, such as the custody, handling, or care and protection of employer’s
property, and in the case of company personnel occupying such positions of responsibility, loss
of trust and confidence justifies termination.
Mere existence of a basis for believing that a managerial employee has breached the trust of his
employer would suffice for his dismissal.

*PhilAmLife v Gramaje
- inadequacy of experience of employee (depending on the circumstance) in the position
he/she was transferred to is considered unreasonable, inconvenient and prejudicial.
-dito kasi yung non-lawyer trinansfer as head ng Legal Dept. to head lawyers in
LITIGATION cases ng company. Sabi ni SC it is a “poor business decision and it is unlikely
that the officers of petitioner would have made such a decision, except to inconvenience or
prejudice respondent.”

*PAL v NLRC
-SC recognizes the right of the emplpyer to regulate all aspects of employment.
Management Prerogative gives the employers freedom to regulate, according to their discretion
and best judgment, all aspects of employment, including work assignment, working methods,
processes to be followed, working regulations transfer of employees, work suspension, lay-off of
workers and the discipline, dismissal and recall of workers. In general, management has the
prerogative to discipline its employees and to impose appropriate penalties on erring workers
pursuant to company rules and regulations.

*Siime Darby Pilipinas v NLRC (sked change)

- management retains the prerogative, whenever exigencies of the service so require, to
change the working hours of its employees. So long as such prerogative is exercised in GF for
the advancement of the employers interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid agreements, this Court will uphold
such exercise.
- Management also has a right which, as such, are entitled to respect and enforcement in
the interest of fair play.
-The right to fix the work schedules of the employees rests principally on their
employer.

*Sentinel Security Agency v NLRC

 - The transfer of an employee involves a lateral movement within the business or
operation of the employer, without demotion in rank, diminution of benefits or, worse,
suspension of employment even if temporary. The recall and transfer of security guards
require reassignment to another post and are not equivalent to their placement on floating status.
Off-detailing security guards for a reasonable period of six months is justified only in bona fide
cases of suspension of operation, business or undertaking.

-sabi ng SC no vslid off-detailing kasi wala naman surplus of employees (SG), kung
merin man – it was because they hired new employees to replace those who were “off-detailed”
there was no suspension of operation, business or undertaking, bona fide or not, that would have
justified placing the complainants off- detail and making them wait for a period of six months.

*Globe Telecom v Florendo-Flores

- The SC held that the managerial prerogative to transfer personnel must be exercised
without grave abuse of discretion. It must always bear in mind the basic elements of justice and
fair play. Having the right should not be confused with the manner that right is exercised. Thus, it
cannot be used as a subterfuge by the employer to rid himself of an undesirable worker.
-reduction in function constitutes demotion in rank, not mere tranfer.

*OSS Security and Allied Services v NLRC (Makati to Taytay Rizal transfer)
- We must bear in mind that, unlike other contracts of service, the availability of
assignment for security guards is primarily at heart subservient to the contracts entered into by
the security agency with its client-third parties. As such, being sidelined temporarily is a standard
stipulation in employment contracts.25 When a security guard is placed "off detail" or on
"floating" status, in security agency parlance, it means "waiting to be posted."26 Private
respondent has not even been "off detail" for a week when she filed her complaint.
-Service-oriented enterprises, such as petitioner's business of providing security services,
generally adhere to the business adage that "the customer or client is always right". To satisfy
the interests, conform to the needs, and cater to the whims and wishes of its clients, along
with its zeal to gain substantial returns on its investments, employers adopt means designed
towards these ends. These are called management prerogatives in which the free will of
management to conduct its own affairs to achieve its purpose, takes from. Accordingly, an
employer can regulate, generally without restraint, according to its own discretion and judgment,
every aspect of business
- An employee has a right to security of tenure, but this does not give her such a
vested right in her position as would deprive petitioner of its prerogative to change her
assignment or transfer her where her service, as security guard, will be most beneficial to
the client

*Westin Philippine Plaza v NLRC (transfer from customer interfacing to non-interfacing

role)
- The transfer order was issued in the exercise of petitioner’s management prerogative in
view of the several negative reports vis-à-vis the performance of private respondent as doorman.
It was a lateral movement as the positions of doorman and linen room attendant are
equivalent in rank and compensation. It was a reasonable relocation from a guest contact area
to a non-guest contact area. Thus, public respondent’s observation that private respondent was
demoted because the position of doorman is "more glamorous" than that of a linen room
attendant is pure conjecture.
-To sanction the disregard or disobedience by employees of a reasonable rule or order
laid down by management would be disastrous to the discipline and order within the enterprise.
Deliberate disregard of company rules or defiance of management prerogative cannot be
countenanced.

*Yuco Chemical Industries v Ministry of Labor and Employment

- The reassignment of Halili and Magno to Manila is legally indefensible on several
grounds. Firstly, it was grossly inconvenient to private respondents. They are working
students. When they received the transfer memorandum directing their relocation to Manila
within seven days from notice, classes had already started. The move from Tarlac to Manila at
such time would mean a disruption of their studies. Secondly, there appears to be no genuine
business urgency that necessitated their transfer. As well pointed out by private respondents'
counsel, the fabrication of aluminum handles for ice boxes does not require special dexterity.
Many workers could be contracted right in Manila to perform that particular line of work.

*Abbott Laboratories v NLRC

- Bobadilla had no valid reason to disobey the order of transfer. He had tacitly given his
consent thereto when he acceded to the petitioners’ policy of hiring sales staff who are willing to
be assigned anywhere in the Philippines which is demanded by the petitioners’ business.
-Complainant was precisely hired because he manifested at the outset as a job applicant
his willingness to follow the conditions of his employment.
-by the very nature of the employment as a MedRep, the employee is expected to travel.
Reassignment is anticipated.
*Allied Banking Corp v CA
- Refusal to obey a transfer order cannot be considered insubordination where employee
cited reason for said refusal, such as that of being away from the family (MISQUOTED from
Dosch v NLRC)
- The constant transfer of bank officers and personnel with accounting responsibilities
from one branch to another is a standard practice of Allied Bank, which has more than a hundred
branches throughout the country. Allied Bank does this primarily for internal control. It also
enables bank employees to gain the necessary experience for eventual promotion. The
Bangko Sentral ng Pilipinas, in its Manual of Regulations for Banks and Other Financial
Intermediaries, requires the rotation of these personnel. The Manual directs that the "duties of
personnel handling cash, securities and bookkeeping records should be rotated" and that such
rotation "should be irregular, unannounced and long enough to permit disclosure of any
irregularities or manipulations."
-Employee was well aware of Allied Bank’s policy of periodically transferring personnel
to different branches
*Dosch v NLRC (transfer with promotion – can be refused)
Transfer Promotion
A transfer is a movement from one position to Promotion, on the other hand, is the
another of equivalent rank, level or salary, advancement from one position to another
without break in the service with an increase in duties and responsibilities
as authorized by law, and usually
accompanied by an increase in salary
transfer refers to lateral movement from one promotion denotes a scalar ascent of a senior
position to another, of equivalent rank, level officer or employee to another position,
or salary higher either in rank or salary
-JBL REYES in the case of Millares
- There is no law that compels an employee to accept a promotion, as a promotion is in
the nature of a gift or a reward, which a person has a right to refuse. When petitioner refused to
accept his promotion to Director of International Sales, he was exercising a right and he cannot
be punished for it as qui jure suo utitur neminem laedit. He who uses his own legal right injures
no one.

*Duncan Association v Galaxo Wellcome (ex-jowa, became spouses, competing roles)

-Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies
and other confidential programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.
 The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees is reasonable under the circumstances because relationships
of that nature might compromise the interests of the company. In laying down the assailed
company policy, Glaxo only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
-Employers has the right to protect its economic interest and it cannot be denied.
-It is a legitimate business practice to guard business confidentiality and protect a
competitive position by even-handedly disqualifying from jobs and female applicants or
employees who are married to a competitor. (MUST BE APPLIED EQUALLY TO BE
VALID, OTHERWISE, DISCRIMINATORY and VIOLATIVE OF EQUAL
PROTECTION CLAUSE?)

*HSBC v NLRC
-The Court, in a number of cases, has recognized and affirmed the prerogative of
management to implement a job evaluation program or a reorganization for as long as it is
not contrary to law, morals or public policy.

In the case at bar, private respondent union has miserably failed to convince this Court that the
petitioner acted in bad faith in implementing the JE Program. There is no showing that the JE
Program was intended to circumvent the law and deprive the members of respondent union of
the benefits they used to receive.
*Arrieta v NLRC
- Her alleged demotion from the rank of 9-B (actually 9-1) to rank 6-5 is only a demotion
in numbers or nomenclature. Petitioner may not compare the two different ranks with each other
as they belong to two different plantillas which have different sets of salary allocations for each
itemized positions. Hence, a lower grade or rank in the 1991 plantilla, as compared to the 1987
plantilla, may not necessarily mean a demotion, in the same manner that a designation of a
higher number, say 11, will not operate as a promotion with respect to an employee assigned to
such grade or rank.

*PT&T v CA
- An employee cannot be promoted, even if merely as a result of a transfer,
without his consent. A transfer that results in promotion or demotion, advancement or
reduction or a transfer that aims to ‘lure the employee away from his permanent position
cannot be done without the employees’ consent.
There is no law that compels an employee to accept a promotion for the reason that a
promotion is in the nature of a gift or reward, which a person has a right to refuse. Hence,
the exercise by the private respondents of their right cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer. As such, there
was no valid cause for the private respondents’ dismissal.
-Increase in the responsibility can be ascertained from the scalar ascent of the job
grades. With or without a corresponding increase in salary, the respective transfers with
increase in the responsibility is in fact a promotion.

*Petrophil Corporation v NLRC

-Demotion and transfer is a valid exercise of management prerogative if it was done
to protect the business’ economic interest provided that it is not tainted with unfair labor
practice.

*LEONARDO v NLRC (Stripped of his allowance because of failure to achieve

quota)
-right to demote an employee also falls within the category of management
prerogative.
- an employer is entitled to impose productivity standards for its workers, and in fact,
non-compliance may be visited with a penalty even more severe than demotion.
- Failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by failing to complete
the same within the allotted reasonable period, or by producing unsatisfactory results. This
management prerogative of requiring standards may be availed of so long as they are
exercised in good faith for the advancement of the employer’s interest.
-due process is also applicable to demotions as demotions likewise affect the
employment of a worker whose right to continued employment, under the same terms and
conditions, is also protected by law. (because it is punitive)

* Philippine Span Asia v Pelayo (not every inconvenience is considered constructive

dismissal)

- An employer has the prerogative to prescribe reasonable rules and regulations necessary for the
proper conduct of its business, to provide certain disciplinary measures in order to implement
said rules and to assure that the same would be complied with. It is axiomatic that appropriate
disciplinary sanction is within the purview of management imposition. Disciplining employees does not
only entail the demarcation of permissible and impermissible conduct through company rules and
regulations, and the imposition of appropriate sanctions. It also involves intervening mechanisms "to
assure that [employers' rules] would be complied with."
 -The standards for ascertaining constructive dismissal are settled: There is constructive dismissal
when an employer's act of clear discrimination, insensibility or disdain becomes so unbearable on the part
of the employee so as to foreclose any choice on his part except to resign from such employment. It exists
where there is involuntary resignation because of the harsh, hostile and unfavorable
conditions set by the employer.

- the standard for constructive dismissal is "whether a reasonable person in the employee's position would
have felt compelled to give up his employment under the circumstances."

*Laya v CA (employer who retires an employee prematurely is guilty of illegal dismissal)

- Retirement should be the result of the bilateral act of both the employer and the
employee based on their voluntary agreement that the employee agrees to sever his employment upon
reaching a certain age.

-Acceptance by the employees of an early retirement age option must be explicit,

voluntary, free, and uncompelled. While employer may unilaterally retire an employee earlier than the
legal permissible ages under Labor Code, this prerogative must be exercised pursuant to a mutually
instituted early retirement plan.

Hence, the Implementation and execution of the option is unilateral, but not the adoption and institution
of the retirement plan containing such option is not.

-must be voluntarily assented by the employees or at least by a majority of them through a

bargaining representative.

-TO STRESS, COMPANY RETIREMENT PLANS MUST NOT ONLY COMPLY WITH THE
STANDARDS SET BY THE PREVAILING LABOR LAWS BUT MUST ALSO BE ACCEPTED BY THE
EMPLOYEES AS COMMENSURATE TO THEIR FAITHFUL SERVICES TO THE EMPLOYER.

- the retirement of the employee whose intent to retire was not clearly established, or whose
retirement was involuntary is to be treated as a discharge.

*Buiser v Leogardo (ex-ante extended probationary employment) (Agreed for a

probationary period of 18 months instead of 6 – stipulated in the original contract)

- Generally, the probationary period of employment is limited to six (6) months. The exception
to this general rule is When the parties to an employment contract may agree otherwise,
such as when the same is established by company policy or when the same is required by the nature of
work to be performed by the employee.

-In the latter case, there is recognition of the exercise of managerial prerogatives in requiring a
longer period of probationary employment, such as in the present case where the probationary period was
set for eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive, especially where the
employee must learn a particular kind of work such as selling, or when the job requires certain
qualifications, skills, experience or training.

- the petitioners’ failure to meet the sales quota assigned to each of them constitute a just cause of
their dismissal, regardless of the permanent or probationary status of their employment. Failure to
observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may
constitute just cause for dismissal.

-Such inefficiency is understood to mean failure to attain work goals or work quotas, either by
failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results.
This management prerogative of requiring standards may be availed of so long as they are exercised in
good faith for the advancement of the employer’s interest
*Mariwasa manufacturing v Leogardo (ex-post extended probationary employment)
(extension was agreed upon at or prior to the expiration of the statutory 6 month period.

- The single difference between Buiser and the present case: that in the former involved an
eighteen-month probationary period stipulated in the original contract of employment, whereas the latter
refers to an extension agreed upon at or prior to the expiration of the statutory six-month period, is hardly
such as to warrant or even suggest a different ruling here.

- In both cases the parties' agreements in fact resulted in extensions of the period prescribed by
law. That in this case the inability of the probationer to make the grade became apparent only at or about
the end of the six-month period, hence an extension could not have been pre-arranged as was done in
Buiser assumes no adverse significance, given the lack, as pointed out by the Solicitor General, of any
indication that the extension to which Dequila gave his agreement was a mere stratagem of petitioners to
avoid the legal consequences of a probationary period satisfactorily completed.

- the extension of Dequila's probation was ex gratia, an act of liberality on the part of his employer
affording him a second chance to make good after having initially failed to prove his worth as an
employee. Such an act cannot now unjustly be turned against said employer's account to compel it to keep
on its payroll one who could not perform according to its work standards. The law, surely, was never
meant to produce such an inequitable result.

-Voluntary agreeing tot the extension of probationary period serves as a waiver of any benefit
attaching to the completion of the period if one still failed to make the grade during the period of
extension.

*Rivera v Solidbank Corporation (post-employment ban)

- Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent.
However, petitioner is not proscribed, by waiver or estoppel, from assailing the post-retirement
competitive employment ban since under Article 1409 of the New Civil Code, those contracts whose cause,
object or purpose is contrary to law, morals, good customs, public order or public policy are inexistent or
void from the beginning. Estoppel cannot give validity to an act that is prohibited by law or one that is
against public policy.

- Post retirement employment ban; post-retirement competitive employment ban is unreasonable

because it has no geographical limits. In effect, the respondent is barred from accepting any kind of
employment in any competitive bank within the proscribed period. Hence, it is contrary to law, morals,
good customs…

-Consideration must be given to the employee’s right to earn a living and to his
ability to determine with certainty the area within which his employment ban is restituted.

-sa tingin ko the only reason that the post-employment ban was not allowed in this
case was because it did not set geographical limits as to the ban. It essentially barred the
retiree from entering any job even if it is completely unrelated to the previous one.