MANILA PAVILION v DELADA

SERENO JANUARY 25, 2012 GR No. 189947

Doctrine An order from the management is a valid exercise of management prerogative if done in the interest of the
efficient and economic operations, and it can be shown that there was no malice, bad faith, or improper
motive attendant upon the order. Unless the order is rendered invalid, there is a presumption of the validity.
Summary Delada was transferred by MPH to another restaurant within the same hotel. He refused, and submitted the
case to the grievance machinery. The case eventually reached the PVA which ruled that the transfer order
was a valid exercise of management prerogative; however, MPH had no right to continue with its
administrative proceedings against Delada as the PVA had assumed jurisdiction over all issues. The SC
upheld the former decision, but modified the latter stating the MPH still had the right to rule over Deladas
insubordination, the PVA having failed to assume jurisdiction, and rule over the issue.

Facts Henry Delada (Union President of the Manila Pavilion Supervisors Association) was originally the Head
Waiter of Rotiserrie (fine-dining restaurant of MPH).
o Due to a supervisory personnel reorganization program, MPH reassigned him as Head Waiter of
Seasons Coffee Shop, another MPH restaurant in the same hotel.
o He declined, and asked for a grievance meeting pursuant to their CBA. He also requested to remain
as Head Waiter of Rotisserie while the procedure was ongoing.
MPH told Delada to report to his new assignment, without prejudice to the grievance proceedings
resolution. He refused, and continued to report at Rotisserie. MPH then sent him several memoranda,
requiring him to explain why he should not be penalized for: serious misconduct; willful disobedience of
the lawful orders of the employer; gross insubordination; gross and habitual neglect of duties; and willful
breach of trust.
Despite the notices, Delada refused. According to him, since the grievance machinery was already
initiated, his transfer must be held in abeyance. On 9 May 2007, MPH initiated administrative
proceedings against him.
The parties failed to settle in the grievance meeting. Delada then elevated his grievance to the Peers
Resources Development Director (no settlement). He then appealed to the Grievance Committee level,
who recommended that he proceed to the next level of the grievance procedure, as it was unable to
reach a decision. Delada then lodged a Complaint before the National Conciliation and Mediation Board.
While Deladas complaint regarding his transfer was pending before the Panel of Voluntary Arbitrators
(PVA), MPH continued with the disciplinary action against him for his refusal to report to his new post.
Citing security and safety reasons, it also placed him on a 30-day preventive suspension.
MPH then found him guilty of insubordination, and imposed a 90-day suspension. Delada opposed,
arguing that MPH had lost its authority to proceed with the disciplinary action, since the matter was
included in the VA.
PVA then ruled that Deladas transfer was a valid exercise of management prerogative. The transfer
order was done in the interest of the efficient and economic operations of MPH, and that there was no
malice, bad faith, or improper motive attendant upon the transfer.
o The mere fact that he was the Union President did not put color or ill motive and purpose to his
transfer.
o The real reason he refused to obey was that he asked for additional monetary benefits as a
condition for his transfer.
o His transfer did not prejudice or inconvenience him. Neither did it result in diminution of salaries or
demotion in rank.
o Delada had no valid and justifiable reason to refuse or even to delay compliance with the
managements directive.
PVA also ruled that there was no legal and factual basis to support MPHs preventive suspension on
Delada.
o The mere assertion that it is not far-fetched for Delada to sabotage the food prepared and served
because of the hostile relationship then existing was more imagined than real.
o MPH went beyond the 30-day period of preventive suspension prescribed by the Implementing
Rules of the Labor Code when it proceeded to impose a separate penalty of 90-day suspension on
him.
o MPH lost its authority to continue with the administrative proceedings, as PVA had acquired
exclusive jurisdiction over the issue when issue was submitted to it..The joint submission of the
issue on the validity of the transfer order encompassed, by necessary implication, the issue of
respondents insubordination and willful disobedience of the transfer order. Thus, MPH effectively
relinquished its power to impose disciplinary action on Delada.
 The CA affirmed the Decision of the PVA and denied petitioners Motion for Reconsideration
Ratio/Issues
(Issue II is I. Whether MPH retained the authority to continue with the administrative case against
more Delada for insubordination and willful disobedience of the transfer order. (YES)
related to
the topic the MPH argues that it did not lose its authority to discipline despite the joint submission to the PVA of
case falls the transfer issue as the issue of whether Delada could be held liable for his refusal was not raised
under) before the PVA. It added that PVA was limited to ruling on the validity of the transfer order.
Ludo & Luym Corporation v. Saornido: voluntary arbitrators are generally expected to decide only
those questions expressly delineated by the submission agreement; but can assume that they have
the necessary power to make a final settlement on related issues since arbitration is the final resort
for the adjudication of disputes.
o Even if the specific issue merely mentioned the question of whether an employee was
discharged for just cause, the arbitrators could reasonably assume that their powers extended
to include the power to reinstate the employee, or to grant back wages.
o Thus, PVA was authorized to assume jurisdiction over the issue of insubordination and willful
disobedience of the transfer order, as it was related to the issue submitted to it.
However, in Ludo and in similar cases, the VAs assumed jurisdiction, and ruled on the related
issues. Here, the PVA did not make a ruling on insubordination and willful disobedience.
o It merely said that it did not agree with the 90-day penalty of suspension because the penalty
went beyond the 30-day limit for preventive suspension.
o Because the PVA did not assume jurisdiction over ruling on Deladas insubordination, MPH did
not lose its authority to discipline respondent for his continued refusal to report to his new
assignment.
The Court clarified that the basis of the 30-day preventive suspension on Delada was different from
that of a 90-day penalty of suspension.
o The 30-day preventive suspension was imposed as Delada might sabotage hotel operations.
Preventive suspension is a disciplinary measure resorted to by the employer pending
investigation of an alleged malfeasance or misfeasance committed by an employee.
The employer temporarily bars the employee from working if his continued employment
poses a serious and imminent threat to the life or property of the employer or of his co-
workers.
o The 90-day suspension was a form of disciplinary action, and was the outcome of the
administrative proceedings against Delada.
The penalty of suspension refers to the disciplinary action imposed on the employee after
an official investigation or administrative hearing is conducted.
The employer exercises its right to discipline erring employees pursuant to company rules
and regulations.
A finding of validity of the penalty of 90-day suspension will not embrace the issue of the
validity of the 30-day preventive suspension.

II. Whether MPH is liable for backwages. (NO)

Allied Banking Corporation v. CA: the refusal to obey a valid transfer order constitutes willful
disobedience of a lawful order of an employer. Employees may object to, negotiate and seek
redress against employers for rules or orders that they regard as unjust or illegal. However, until
and unless these rules or orders are declared illegal or improper by competent authority, the
employees ignore or disobey them at their peril.
The PVA had noted that Delada cannot hide behind the CBAs grievance machinery, or the VA to
disobey a valid order. While Deladas transfer is the subject of grievance, he is expected to comply
first with the lawful order while awaiting the results.
Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a presumption of
the validity. Since the PVA eventually ruled that the transfer order was a valid exercise of
management prerogative, MPH had the authority to continue with the administrative proceedings for
insubordination and willful disobedience against Delada and to impose the penalty of suspension.
As a consequence, petitioner is not liable to pay back wages and other benefits for the period
corresponding to the penalty of 90-day suspension.
Held Judgment of CA modified

Prepared by: Elena Escober