PAL V.

NLRC | WORKERS’
PARTICIPATION IN
DECISION MAKING
July 4, 2019

G.R. No. 85985, August 13, 1993

Petitioner: PHILIPPINE AIRLINES, INC. (PAL)

Respondents: NATIONAL LABOR RELATIONS COMMISSION (NLRC), LABOR
ARBITER ISABEL P. ORTIGUERA, and PHILIPPINE AIRLINES EMPLOYEES
ASSOCIATION (PALEA)
DOCTRINE:  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 was amended by RA 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 RA 6715 when it decreed the “participation of
workers in decision and policy making processes affecting their rights, duties and welfare.”

MELO,J.:
FACTS:
 On March 1985, PAL completely revised its 1966 Code of Discipline. The Code was
circulated among the employees and wasimmediately implemented, and some
employees were forthwith subjected to the disciplinary measures embodied therein.
 Thus, on August 1985, PALEA filed a complaint before the NLRC for unfair labor
practicewith the following remarks:
“ULP with arbitrary implementation of PAL’s Code of Discipline without notice and prior
discussion with Union by Management.”
 PALEA contended that PAL, by its unilateral implementation of the Code, was guilty of
unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of
the Labor Code;
 copies of the Code had been circulated in limited numbers;
 that being penal in naturethe Code must conform with the requirements of sufficient
publication, and that the Code was arbitrary, oppressive, and prejudicial to the rights of
the employees.
 It prayed that implementation of the Code be held in abeyance;
 PAL should discuss the substance of the Code with PALEA ;
 that employees dismissed under the Code be reinstated and their cases subjected to
further hearing; and
 that PAL be declared guilty of unfair labor practice and be ordered to pay damages.
  PAL filed a motion to dismissthe complaint:
 It has a management prerogativeto prescribe rules and regulations regarding
employees’ conduct in carrying out their duties and functions, and alleging that by
implementing the Code, it had not violated CBA or any provision of the Labor Code;
 The complaint as unsupported by evidence, PAL maintained that Article 253 of the
Labor Code cited by PALEA referred to the requirements for negotiating a CBA
which was inapplicable as indeed the current CBA had been negotiated.
 LA Isabel P. Ortiguerra handling the case called the parties to a conference but they
failed to appear at the scheduled date. Interpreting such failure as a waiver of the
parties’ right to present evidence, LA considered the case submitted for decision.
 

RULING OF THE LOWER COURTS:

LA: NO unfair labor practice. BUT:
 PAL is not totally fault free. While the issuance of the Code of Discipline is a
legitime management prerogative, such rules must meet the test of “reasonableness,
propriety and fairness”
 Section 1 of the Code of Discipline is “an all embracing and all-
encompassing provision that makes punishable any offense one can think of
in the company”; while Section 7, is “objectionable for it violates the rule
against double jeopardy thereby ushering in two or more punishment for the
same misdemeanor.”
 PAL “failed to prove that the new Code was amply circulated.”
 PAL’s assertion that it had furnished all its employees copies of the Code
is unsupported by documentary evidence. Such “failure” on the part of PAL
resulted in the imposition of penalties on employees who thought all the
while that the 1966 Code was still being followed.
 ORDERS to(1) furnish all employees with the new Code, (2) remand the cases of
employees meted with penalties, and (3) discuss with PALEA the objectionable
provisions
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
 The failure of management to discuss the provisions of a contemplated code of discipline
would result in the erosion and deterioration of an otherwise harmonious and smooth
relationship between them as did happen in the instant case.
 In the Philippine scene, at no time in our contemporary history is the need for a
cooperative, supportive and smooth relationship between labor and management more
keenly felt if we are to survive economically. Management can no longer exclude labor
in the deliberation and adoption of rules and regulations that will affect them… In fact,
our Constitution has recognized the principle of “shared responsibility” between
employers and workers and has likewise recognized the right of workers to participate
in “policy and decision-making process affecting their rights…” The latter provision
was interpreted by the Constitutional Commissioners to mean participation in
“management.”
 
 CONTENTIONSOF PAL:
 PAL then filed the instant petition for certiorari charging public respondents with grave
abuse of discretionin: (a) directing PAL “to share its management prerogative of
formulating a Code of Discipline”; (b) engaging in quasi- judicial legislation in
ordering PAL to share said prerogative with the union; (c) deciding beyond the issue of
unfair labor practice, and (d) requiring PAL to reconsider pending cases still in the
arbitral level
 There is no law that mandates the sharing of responsibilitybetween employer and
employee.
 because the case was filed in 1985, neither of the 1987 constitution and RA
6715 have not been ratified/implemented
 RA 6715 was the amending law of the Labor Code regarding, among others,
State policy in ensuring employee’s participation in decision and policy
making of the management.
 
ISSUE: Whether the management may be compelled to share with the union or its prerogative of
formulating a code of discipline. – YES.
 

RULING + RATIO:
MANAGEMENT PREROGATIVE HAS NEVER BEEN ABSOLUTE
 Indeed, it was only on 1989, with the approval of RA 6715, amending Article 211 of the
Labor Code, that the law explicitly considered it a State policy “to 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 vs. Medinait was held that management’s prerogatives must be without
abuse of discretion.
 In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, we upheld
the company’s right to implement a new systemof 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 interestand 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.”
 All this points to the conclusion that the exercise of managerial prerogatives is not
unlimited. It is circumscribed by limitations found in law, CBA, or the general
principles of fair play and justice.
 Moreover, as enunciated in Abbott Laboratories (Phil.), Inc. vs. NLRC, it must be duly
established that the prerogativebeing invoked must clearly a managerial one.
 

ASSAILED PROVISIONS OF THE NEW CODE ARE NOT PURELY

MANAGEMENT/BUSINESS-ORIENTED
 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. The provisions of the Code clearly have repercussions 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.
 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 SHOULD BE INFORMED OF THE MANAGEMENT’S

DECISIONS/ACTIONS
 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.
 

CBA ON PAL’S EXCLUSIVE RIGHT TO MAKE RULES AND REGULATIONS

REGARDING MANAGEMENT COULD NOT BE CONSIDERED AS PALEA’S
CESSION OF THEIR RIGHT TO PARTICIPATE
 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 CBA, 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 much less, obtain the latter’s conformity thereto”
 Such provisionin 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.
 

PAL HAS THE OBLIGIGATION TO SHARE ITS MANAGEMENT PREROGATIVE

WITH PALEA IN THE ADOPTION OF THE NEW CODE OF DISCIPLINE EVEN
PRIOR TO THE ENACTMENT RA 6715
 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 was amended by RA 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 RA 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, RA 6715 had not yet been
enacted, 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.
 
DISPOSITION: WHEREFORE, the petition is DISMISSED and the questioned decision
AFFIRMED. No special pronouncement is made as to costs.

Case Digest: Halagueña, et al. vs PAL GR No. 172013

By ResIpsaLoquitor - April 10, 2014

Halagueña, et al. vs PAL 

GR No. 172013                                                                 October 2, 2009

Facts:

Petitioners were employed as flight attendants of respondent on different dates prior to

November 1996. They are members of FASAP union exclusive bargaining organization of
the flightattendants, flight stewards and pursers. On July 2001, respondent and FASAP
entered into a CBA incorporating the terms and conditions of their agreement for the years
2000 to 2005 (compulsory retirement of 55 for female and 60 for males).

In July 2003, petitioner and several female cabin crews, in a letter, manifested that the
provision in CBA on compulsory retirement is discriminatory. On July 2004, petitioners filed
a Special Civil Action for Declaratory Relief with issuanceof TRO with the RTC Makati. The
RTC issued a TRO. After the denial of the respondent on itsmotion for reconsideration for
the TRO, it filed a Petition with the CA. CA granted respondent’s petition and ordered lower
court to dismiss the case. Hence, this petition.

Issue:

Whether or not the regular courts has jurisdiction over the case.

Ruling:

Yes. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable by

the RTC. Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.

Not every controversy or money claim by an employee against the employer or vice-versa is
within the exclusive jurisdiction of the labor arbiter. Actions between employees and
employer where the employer-employee relationship is merely incidental and the cause of
action precedes from a different source of obligation is within the exclusive jurisdiction of
the regular court. 

Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.The said
issue cannot be resolved solely by applying the Labor Code. Rather, it requires the
application of the Constitution, labor statutes, law on contracts and the Convention on the
Elimination of All Forms of Discrimination Against Women, and the power to apply and
interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of
general jurisdiction. In GeorgGrotjahn GMBH & Co. v. Isnani, this Court held that not every
dispute between an employer and employee involves matters that only labor arbiters and
the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The
jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to
dispute arising from an employer-employee relationship which can only be resolved by
reference to the Labor Code other labor statutes, or their collective bargaining agreement.
“Before the Court is an appeal from the Decision of RTC Branch 166 of Pasig where the petitioners’ plea is that the Writ
of Preliminary Injunction was issued without or in excess of jurisdiction and with grave abuse of discretion, a labor
dispute being involved”

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES,
MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN
MIGUEL CORPORATION, respondents.

G.R. No. 87700 | June 13, 1990 | 186 SCRA 496 | Second Division | Justice Melencio-Herrera
Labor Law and Social Legislation | Labor Relations | Jurisdiction
FACTS:

San Miguel Corporation entered into contracts for merchandising services with Lipercon and D’Rite companies, both
independent contractors duly licensed by DOLE, to maintain its competitive position, and in keeping with the
imperatives of efficiency, business expansion and diversity of operation. In the contracts, it was expressly agreed that
the workers employed by the contractors were not to be deemed employees or agents of San Miguel. Thus, no
employer-employee relationship.

Later on, San Miguel executed a CBA which specifically provides that “temporary, probationary, or contract employees
and workers are excluded from the bargaining unit and therefore, outside the scope of this Agreement.

The Union, petitioner, advised San Miguel that some of the workers of Lipercon and D’Rite had signed up for union
membership and sought regularization. The Union alleged that some the workers have been continuously working for
San Miguel for a period ranging from 6 months to 15 years, and that the nature of their work is neither casual nor
seasonal.

Strikes were held and a series of pickets were held for the reason that the Union failed to receive any favourable
response from San Miguel. Thereafter, San Miguel filed a complaint for Injunction and Damages before the RTC of
Pasig to enjoin the Union to prevent the peaceful and normal operations of the former. The Union filed a Motion to
Dismiss but was subsequently denied by the RTC reasoning that the absence of employer-employee relationship
negates the existence of labor dispute. Thus, the RTC issued Orders enjoining the Union from commiting acts that
disrupt the operations of San Miguel.

ISSUE:

Whether or not there is a labor dispute between San Miguel and the Union?

RULING:

The decision of the RTC is SET ASIDE.

A labor dispute includes any controvery or matter concerning terms and conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions or
employment, regardless of whether the disputants stand in the proximate relation of employer and employee.

What the Union seeks is to regularize the status of the employees contracted by Liparcon and D’Rite and that they be
absorbed into the working unit of San Miguel. In this wise, the matter dwells on the working relationship between the
said employees and San Miguel. Terms, tenure and conditions of their employment and the arrangement of those
terms are thus involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to
represent the workers, who have signed for union membership, for the purpose of collecting bargaining. Obvious
then is that representation and association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by San Miguel was precisely also to prevent such representation. Again, the
matter of representation falls squarely within the ambit of a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to labor tribunals.

WHEREFORE, the Writ of Certiorari is GRANTED. The Orders of the Regional Trial Court of Pasig is SET ASIDE.

PAFLU vs. SALAS

G.R. No. L-39084 February 23, 1988

FACTS:

Gan Hun’s personal properties in his residential apartment unit were levied, pursuant
to a Writ of Execution, issued by the CIR, as a result of a decision rendered in favor ofPAFLU, to a complaint for unfair labor
practice against Gan Hun and NorthwestManufacturing Corp..However, private respondent Wong King Yuen filed a complaint
with the CFI fordamages against the sheriff, claiming that Gan Hun is his boarder and that the properties inside the apartment unit
levied belonged to him.

Judge Salas, of the CFI,issued an Injunctive Writ, restraining the sheriff from proceeding with the sale of the properties in
question.PAFLU sought to dismiss the complaint on the ground that CFI had no jurisdictionover the case, and argued that the
case relates to an existing labor dispute cognizable by the industrial court.

Wong contends that the case is not a labor dispute recognizable by the industrialcourt, but an ordinary civil action for damages
against the sheriff, directed against the latter’s bond; and, that it is an entirely separate proceeding distinct from the labor
casefiled with the CIR.CFI denied the Motion to Dismiss and the Motion for Reconsideration, thus this petition for certiorari
under Rule 65.

ISSUE:Whether or not the CFI has the jurisdiction to issue the injunctive relief questioned bythe petitioner

RULING:

Yes. The case filed by Wong is an ordinary civil action for damages, not a labordispute.Even if the act complained of by Wong
arose from a labor dispute between PAFLUand another party, there is no labor dispute between PAFLU and Wong. The civil
caseremains distinct from the labor dispute pending with the CIR.Under Commonwealth Act No. 103, the jurisdiction of the
Court of IndustrialRelations is limited to labor disputes, i.e., problems and controversies pertaining toemployer-employee
relationship.