Here is the opinion you requested. The facts gathered from you are as follows:

Your company decided to change the penalties imposed in your company policy in relation to discipline of employees. However, some of the employees strongly and explicitly refused to affix their signature in the amended company policy.

The issues are:

1. Whether or not the amended company policy is legally binding to the employees despite their refusal to affix their signature.

2. Whether or not it is legally possible to impose only the amended company policy to the employees who have affixed their signature.

As to your first query, in our opinion, the absence of their signature in the amended company policy will not invalidate the same. The change of penalties in the company policy is within the confines of what we called “management prerogative”.

The Supreme Court of the Philippines defined valid management prerogative as one which covers hiring, work assignment, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers. Except as provided for or limited by special laws, employees are free to regulate, according to their own discretion and judgment, all aspects of employment.1 From the definition alone, we may excerpt that the employer has the right to discipline its employees without their approval.

In a long cases decided by the Highest Court, as a rule, the Court will not interfere with an employer’s prerogative to regulate all aspects of employment. Moreover, the rule is well settled that labor laws discourage interference with an employer’s judgment in the conduct of his business.2 The reason behind this

1 Manila Electric Company v. NLRC, G.R. No. 114129, 24 October 1996, 263 SCRA 5382 Castillo vs NLRC 1999

principle is that management prerogative is inherent in the management of business. A company’s policy is a vehicle of its existence. It is design to guarantee the smooth operation of its business. Thus, every employee must obey and uphold the code of conduct laid down by the company and/or to meet its productivity standard.

However, despite the wide discretion provided by law with respect to company’s management prerogative, it has a limitation. In the case of St. Michael Institute v. Santos, 422 Phil. 723, the Court declared that the only limitation on the exercise of management prerogative is that the policies, rules, and regulations on work-related activities of the employees must always be fair and reasonable, and the corresponding penalties, when prescribed, commensurate of the offense involved and to the degree of the infraction.

As to your second query,