Case Digest: Philippine Airlines v. NLRC, G.R. No. 85985, August 13, 1993

 Labor Law | Policy

• Philippine Airlines, Inc. (PAL) revised its 1966 Code of Discipline in 1985, leading to a complaint by the Philippine Airlines Employees Association (PALEA) before the National Labor Relations Commission (NLRC) for unfair labor practice.
• PALEA argued that PAL's unilateral implementation of the Code without prior discussion with the union constituted unfair labor practice.
• Labor Arbiter: Ruled in favor of PALEA, ordering PAL to furnish all employees with the new Code of Discipline, reconsider cases of employees penalized under the new Code, and discuss objectionable provisions with PALEA.
• NLRC: Affirmed the dismissal of PALEA's charge but emphasized the need for cooperation and participation of the union in formulating rules affecting employees' rights.
• PAL filed a petition for certiorari, challenging the directive to share its management prerogative of formulating the Code of Discipline with the union.

WoN the management may be compelled to share with the union or its employees its prerogative of formulating a code of discipline. YES

PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of responsibility therefor between employer and employee.

Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the Labor Code, that the law explicitly considered it a State policy" (t)o ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare." However, even in the absence of said clear provision of law, the exercise of management prerogatives was never considered boundless. Thus, in Cruz v. Medina (177 SCRA 565 [1989]), it was held that management’s prerogatives must be without abuse of discretion.

In San Miguel Brewery Sales Force Union (PTGWO) v. Ople (170 SCRA 25 [1989], we upheld the company’s right to implement a new system of distributing its products, but gave the following caveat:

So long as a company’s management prerogatives are exercised in good faith for the advancement of the employer’s 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 them. (at p. 28.)

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories (Phil.), Inc. v. NLRC (154 SCRA 713 [1987]), it must be duly established that the prerogative being invoked is clearly a managerial one.

A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business-oriented nor do they concern the management aspect of the business of the company as in the San Miguel case. The provisions of the Code clearly have repercusions on the employees’ right to security of tenure. The implementation of the provisions may result in the deprivation of an employee’s means of livelihood which, as correctly pointed out by the NLRC, is a property right (Callanta v. Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case which border on infringement of constitutional rights, we must uphold the constitutional requirements for the protection of labor and the promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker" (Employees association of the Philippine American Life Insurance Company v. NLRC, 199 SCRA 628 [1991] 635).

Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes of action. PAL asserts that all its employees have been furnished copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to great respect.

PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, PALEA in effect recognized PAL’s "exclusive right to make and enforce company rules and regulations to carry out the functions of management without having to discuss the same with PALEA and must less, obtain the conformity thereto" (pp. 11-12, Petitioner’s Memorandum; pp. 180-181, Rollo.) Petitioners view is based on the following provision of the agreement:

The Association recognizes the right of the Company to determine matters of management policy and Company operations and to direct its manpower. Management of the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one department to another, to promote demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the functions of management.

The exercise by management of its prerogative shall be done in a just, reasonable, humane and/or lawful manner.

Such provision in the collective bargaining agreement may not be interpreted as cession of employees’ rights to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto. And one such matter is the formulation of a code of discipline.

Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. Thus, even before Article 211 of the Labor Code (P.D. 442) was amended by Republic Act No. 6715, it was already declared a policy of the State:" (d) To promote the enlightenment of workers concerning their rights and obligations . . .as employees." This was, of course, amplified by Republic Act No. 6715 when it decreed the "participation of workers in decision and policy making processes affecting their rights, duties and welfare." PAL’s position that it cannot be saddled with the "obligation" of sharing management prerogatives as during the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner’s Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was formulated, the attainment of a harmonious labor-management relationship and the then already existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees’ rights.

Petitioner’s assertion that it needed the implementation of a new Code of Discipline considering the nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly implemented in the absence of full cooperation of the employees. Such cooperation cannot be attained if the employees are restive on account of their being left out in the determination of cardinal and fundamental matters affecting their employment.

WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special pronouncement is made as to costs.