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PHILIPPINE AIRLINES v. NATIONAL LABOR RELATIONS COMMIS­SION

FACTS:

Philippine Airlines, Inc. (PAL) revised its 1966 Code of Discipline on March 15, 1985. This new code was immediately implemented, subjecting certain employees to disciplinary measures. In response, the Philippine Airlines Employees Association (PALEA) filed a complaint for unfair labor practice with the National Labor Relations Commission (NLRC) on August 20, 1985. PALEA alleged that PAL violated the labor code and the collective bargaining agreement by unilaterally implementing the code without prior discussion with the union. The union argued that the code was arbitrarily implemented and prejudicial to the rights of the employees. PALEA sought the suspension of code implementation, the reinstatement of dismissed employees, further hearings for their cases, and damages.

PAL, on the other hand, contended that as the employer, it had the prerogative to establish rules and regulations for its employees. They maintained that the code's implementation did not violate any labor laws or agreements. However, both parties failed to appear before the labor arbiter, leading to the case being considered submitted for decision. The labor arbiter, in her decision, found no unfair labor practice but expressed concerns regarding certain provisions of the code. She noted the broad coverage of punishable offenses and the violation of the rule against double jeopardy. Moreover, the arbiter ruled that PAL failed to prove that the new code was properly circulated among its employees.

Consequently, the arbiter ordered PAL to distribute the new code to all employees, reconsider the cases of penalized employees, and engage in discussions with PALEA regarding objectionable provisions. PAL appealed the decision to the NLRC. The NLRC affirmed the dismissal of PALEA's charge but emphasized the importance of a cooperative relationship between management and labor in adopting rules and regulations.

ISSUES:

  1. Whether management can be compelled to share with the union its prerogative of formulating a code of discipline.

  2. Whether the provisions of the Code of Discipline in question have an impact on the employees' right to security of tenure.

  3. Whether PAL's exclusive right to make and enforce company rules and regulations includes the authority to formulate a code of discipline without the participation of the employees.

  4. Whether PAL's employees have the right to participate in the deliberation of matters affecting their rights and the formulation of policies relative thereto.

RULING:

  1. Yes, management can be compelled to share with the union its prerogative of formulating a code of discipline. The law recognizes the participation of workers in decision and policy-making processes affecting their rights, duties, and welfare. The exercise of management prerogatives is not unlimited and must be without abuse of discretion. It must be established that the prerogative being invoked is clearly a managerial one. In this case, the objectionable provisions of the Code of Discipline have an impact on the employees' right to security of tenure. Therefore, management should have discussed and reviewed the Code with the complainant union.

  2. The provisions of the Code of Discipline in question do have an impact on the employees' right to security of tenure. Implementing these provisions may result in the deprivation of an employee's means of livelihood, which is a property right. Constitutional requirements for the protection of labor and the promotion of social justice require that these factors be considered in favor of the worker when there is doubt. Therefore, the objectionable provisions of the Code must be reviewed and discussed with the union to ensure fairness and protection of the employees' rights.

  3. The provision in the collective bargaining agreement recognizing PAL's right to make and enforce company rules and regulations cannot be interpreted as cession of employees' rights to participate in the formulation of a code of discipline. The exercise of management prerogatives should be done in a just, reasonable, humane, and lawful manner.

  4. The employees have the right to participate in the discussion of matters affecting their rights, including the formulation of a code of discipline. The state policy promotes the enlightenment of workers concerning their rights and obligations as employees, as well as their participation in decision and policy-making processes affecting their rights, duties, and welfare.

PRINCIPLES:

  • The participation of workers in decision and policy-making processes affecting their rights, duties, and welfare is recognized by law.

  • The exercise of management prerogatives must be without abuse of discretion and must be clearly established as a managerial one.

  • The provisions of a code of discipline that have an impact on the employees' right to security of tenure must be reviewed and discussed with the union to ensure fairness and protection of their rights.

  • Constitutional requirements for the protection of labor and the promotion of social justice require that factors favoring the worker be considered when there is doubt.

  • There must be transparency in managerial moves affecting employees' rights.

  • The state policy promotes the enlightenment of workers concerning their rights and obligations as employees.

  • Workers have the right to participate in decision and policy-making processes affecting their rights, duties, and welfare.

  • Management prerogatives should be exercised in a just, reasonable, humane, and lawful manner.