MANILA JOCKEY CLUB EMPLOYEES LABOR UNION- PTGWO, PETITIONER, VS. MANILA JOCKEY CLUB, INC., RESPONDENT.

Manila Jockey Club Employees Labor Union versus Manila Jockey Club

The Case

This is a labor case in which the Manila Jockey Club Employees Labor Union, a federation of transport and general workers, challenged before the Supreme Court the decision of the Court of Appeals which upheld the ruling of a panel of voluntary arbitrators. The union had questioned an inter-office memorandum of the Manila Jockey Club, Incorporated that changed the work schedule of its regular monthly-paid employees from nine in the morning to five in the afternoon to one in the afternoon to eight in the evening on race days. The union claimed that the change violated the work schedule fixed in the Collective Bargaining Agreement and the prohibition against the diminution of benefits. The case matters because it draws the line between a management prerogative that is expressly reserved in a Collective Bargaining Agreement and a benefit that the law protects from elimination or diminution.

Procedural History

The dispute was first brought by the union before a panel of voluntary arbitrators of the National Conciliation and Mediation Board. In a decision dated October 18, 2001, the panel upheld the prerogative of the Manila Jockey Club to change the work schedule of its regular monthly-paid employees under Section 2 of Article XI of the Collective Bargaining Agreement. The union moved for reconsideration, but the panel denied the motion.

Dissatisfied, the union appealed to the Court of Appeals. In its decision dated December 17, 2004, the Court of Appeals upheld the ruling of the panel, and it denied the union's motion for reconsideration in its resolution of April 4, 2005. The union then came to the Supreme Court through a petition for review under Rule 45 of the Rules of Court, and the Court denied the petition.

Facts

The Manila Jockey Club, Incorporated is a corporation with a legislative franchise to conduct, operate, and maintain horse races. It entered into a Collective Bargaining Agreement with the Manila Jockey Club Employees Labor Union effective January 1, 1996 to December 31, 2000, covering the economic rights and obligations of its regular monthly-paid rank-and-file employees. Under Section 1 of Article IV of that agreement, the parties agreed to observe a seven-hour work schedule from nine in the morning to twelve noon and from one in the afternoon to five in the afternoon, on a work week of Monday to Saturday. All work performed in excess of the seven-hour schedule and on days not included within the work week was to be considered overtime and paid as such. The same agreement, under Section 2 of Article XI, reserved to the company certain management prerogatives, including the right to change existing methods or facilities and to change the schedules of work.

On April 3, 1999, the Manila Jockey Club issued an inter-office memorandum declaring that, effective April 20, 1999, the hours of work of regular monthly-paid employees would be from one in the afternoon to eight in the evening when horse races are held, that is, every Tuesday and Thursday. The memorandum maintained the nine in the morning to five in the afternoon schedule for non-race days. On October 12, 1999, the union and the company entered into an Amended and Supplemental Collective Bargaining Agreement retaining Section 1 of Article IV and Section 2 of Article XI, and clarifying that any conflict arising from them shall be referred to a voluntary arbitrator for resolution.

The union then questioned the memorandum before the panel of voluntary arbitrators, claiming that it violated the prohibition against the non-diminution of wages and benefits, because the employees were thereby precluded from rendering their usual overtime work from five in the evening to nine in the evening. The company explained that when the agreement was signed the horse races started at ten in the morning, and when the races were moved to two in the afternoon, management had no choice but to change the work schedule because there was no work to be done in the morning.

Issues

• Whether or not the Court of Appeals erred in holding that the Manila Jockey Club did not relinquish part of its management prerogative when it stipulated a work schedule in the Collective Bargaining Agreement.
• Whether or not the Court of Appeals erred in holding that the Manila Jockey Club did not violate the non-diminution provision contained in Article 100 of the Labor Code.

Applicable Provisions

Section 1 of Article IV of the Collective Bargaining Agreement provides:

Both parties to this Agreement agree to observe the seven-hour work schedule herewith scheduled to be from 9:00 a.m. to 12:00 noon and 1:00 p.m. to 5 p.m. on work week of Monday to Saturday. All work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such.

This is the provision the union invoked as fixing the work schedule and guaranteeing overtime, and which the Court read as not guaranteeing overtime work to all employees.

Section 2 of Article XI of the Collective Bargaining Agreement provides:

The COMPANY shall have exclusive control in the management of the offices and direction of the employees. This shall include, but shall not be limited to, the right to plan, direct and control office operations, to hire, assign and transfer employees from one job to another or from one department to another; to promote, demote, discipline, suspend, discharge or terminate employees for proper cause and/or in accordance with law, to relieve employees from duty because of lack of work or for other legitimate reasons; or to introduce new or improved methods or facilities; or to change existing methods or facilities to change the schedules of work; and to make and enforce rules and regulations to carry out the functions of management, provided, however, that the COMPANY will not use these rights for the purpose of discrimination against any employee because of his membership in the UNION.

This is the provision the Court relied upon as the express reservation of the prerogative to change the work schedule, which rules out any waiver on the part of the company.

Article 100 of the Labor Code, which the union invoked against the diminution of benefits, is the provision the Court construed when it held that overtime pay does not fall within the definition of benefits protected from elimination or diminution.

Ruling

On the first issue, the Court held that the Manila Jockey Club did not relinquish part of its management prerogative when it stipulated a work schedule in the Collective Bargaining Agreement. While Section 1 of Article IV fixed a seven-hour work schedule from nine in the morning to five in the afternoon from Mondays to Saturdays, Section 2 of Article XI expressly reserved to the company the prerogative to change existing methods or facilities and to change the schedules of work. As the Court of Appeals ruled and the Supreme Court adopted, such exact language lends no other meaning but that while the company may have allowed the initial determination of the work schedule to be done through collective bargaining, it expressly retained the prerogative to change it. Had the intention been to waive that prerogative, Section 2 of Article XI would not have made any reference at all to its retention, and the agreement would have instead expressly prohibited the company from exercising it. The Court also held that the Court will not interfere with the business judgment of an employer in the exercise of its prerogative to devise means to improve its operation, provided that it does not violate the law, the Collective Bargaining Agreements, and the general principles of justice and fair play. The adjustment was justified because the change in the program of horse races left no work to be done in the morning.

On the second issue, the Court held that there was no violation of the non-diminution provision of Article 100 of the Labor Code. Section 1 of Article IV of the agreement does not guarantee overtime work for all the employees but merely provides that all work performed in excess of the seven-hour work schedule and on days not included within the work week shall be considered overtime and paid as such. The company was not obliged to allow all its employees to render overtime work every day for the whole year, but only those employees whose services were needed after their regular working hours and only upon the instructions of management. The overtime pay was not given to each employee consistently, deliberately, and unconditionally, but as compensation for additional services rendered. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on the prohibition against elimination or diminution of benefits. The Court added that while the Constitution is committed to the policy of social justice and the protection of the working class, it should not be presumed that every labor dispute will be automatically decided in favor of labor.

Doctrine

A management prerogative expressly reserved in the Collective Bargaining Agreement is not waived by the mere stipulation of a work schedule in the same agreement. Where the agreement fixes a work schedule in one provision but in another expressly retains to the employer the right to change existing methods or facilities and to change the schedules of work, the employer keeps the prerogative to change the schedule, and the courts will not interfere with the business judgment behind the change absent a violation of law, the agreement, or the general principles of justice and fair play.

Overtime pay is not a benefit within the meaning of Article 100 of the Labor Code where it is not given consistently, deliberately, and unconditionally, but only as compensation for additional services actually rendered upon the instructions of management. The non-diminution rule protects benefits that have been enjoyed consistently and deliberately; it does not guarantee overtime work to all employees.

Disposition

The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals, with costs against the union.

Remember This

The one line to memorize: a work schedule fixed in a Collective Bargaining Agreement does not erase the employer's expressly reserved prerogative to change it, and overtime pay earned only upon management's instruction is not a benefit protected from diminution. Examiners use this case to test the interplay between a stipulated work schedule and a reserved management prerogative, and to test whether a candidate can distinguish overtime pay from a demandable benefit under Article 100 of the Labor Code.