G.R. No. 85985 August 13, 1993


In 1985, PAL completely revised its 1966 Code of Discipline. The Code was circulated among the employees and was immediately implemented, and some employees were forthwith subjected to the disciplinary measures embodied therein.

PALEA filed a complaint before the NLRC for unfair labor practice due to arbitrary implementation of PAL’s Code of Discipline without notice and prior discussion with Union by Management under Article 249 and Article 253 of the Labor Code.  The Union also alleged that the copies of the Code did not conform with the requirements of sufficient publication and was circulated in limited numbers. It argues that PAL should discuss the substance of the Code with PALEA and that employees dismissed under the Code be reinstated and their cases subjected to further hearing.

PAL filed a motion to dismiss the complaint and asserts that it has a (a) management prerogative to prescribe rules and regulations regarding employees’ conduct in carrying out their duties and functions as negotiated in the CBA and (b) there was no law which mandated the sharing of responsibility therefor between employer and employee.

The LA found the issuance of rules and regulations governing the conduct of employees is a “legitimate management prerogative” such rules and regulations must meet the test of “reasonableness, propriety and fairness. It “failed to prove that the new Code was amply circulated.”

NLRC (appealed by PAL): AFFIRMED (no unfair labor practice: Management prerogative) HOWEVER: the New Code of Discipline should be reviewed and discussed with complainant union, particularly the disputed provisions.


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


YES. 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.

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 action.

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.

The 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 mater is the formulation of a code of discipline.

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