Philippine Airlines v. NLRC

On March 15, 1985, Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. It circulated and immediately implemented the new Code, and some employees were promptly disciplined under it. The Philippine Airlines Employees Association (PALEA) filed an unfair labor practice complaint. It argued that PAL had implemented the Code without notice to or discussion with the union, that copies had been circulated only in limited numbers, and that some provisions (the non-exclusivity clause, which punished violations of any company rule, and the cumulative-record rule) were arbitrary and oppressive. The Labor Arbiter found no bad faith and no unfair labor practice. However, she held that PAL had failed to prove that the Code was amply circulated, and she ordered PAL to furnish all employees copies, reconsider penalties imposed under the new Code, and discuss the objectionable provisions with PALEA. The NLRC also found no unfair labor practice. It directed PAL to review and discuss the Code with the union, furnish each employee a copy, and reconsider cases still pending at the arbitral level. PAL sought certiorari, arguing that it was being forced to share its management prerogative and that no law required such sharing in 1985.

1. 1Whether management may be compelled to share with the union or its employees its prerogative of formulating a code of discipline.
2. 2Whether the management-rights clause of the CBA waived the employees' right to take part in formulating rules that affect their rights.

PAL must review and discuss the Code with the union. The exercise of management prerogatives is not unlimited. It is circumscribed by law, the CBA, or the general principles of fair play and justice, and the employer must clearly establish that the prerogative it invokes is a managerial one. The disputed provisions were not purely business-oriented. They affected the employees' security of tenure and could deprive them of their livelihood, which is a property right. The Court distinguished prerogatives over business operations per se from those that affect employees' rights. For the latter, management must at least properly inform its employees, and the Court respected the finding that PAL had not furnished all employees copies. The CBA clause recognizing PAL's right to make and enforce company rules could not be read as a surrender of the employees' right to take part in deliberations on matters affecting their rights, such as a code of discipline. The express State policy of worker participation in decision and policy-making came only with R.A. No. 6715 (1989), which amended Art. 211 (now Art. 218) of the Labor Code. Even so, the existing policy of enlightening workers on their rights, together with the goal of harmonious labor-management relations, already demanded "the observance of transparency in managerial moves affecting employees' rights." Discipline cannot be properly implemented without the employees' cooperation, and employees left out of fundamental decisions about their employment will not give it. The petition was dismissed and the NLRC decision affirmed.