Philippine Airlines, Inc. v. NLRC

G.R. No. 114280, 115224 (July 26, 1996)

Facts:

The case arose from a complaint filed by the Airline Pilots Association of the Philippines (ALPAP) against Philippine Airlines, Inc. (PAL) for unfair labor practice due to PAL's refusal to pay its pilots their thirteenth month pay for the years 1988 to 1990. The complaint was lodged in September 1991, alleging violations of Presidential Decree No. 851, its Implementing Rules and Regulations, and Memorandum Order No. 28 issued by then President Corazon C. Aquino. ALPAP initially sought the payment of accumulated thirteenth month pay, along with moral and exemplary damages, and attorney's fees.

In response, PAL denied liability, arguing that it was already providing a year-end bonus equivalent to a thirteenth month pay, thus exempting it from the requirements of P.D. 851. PAL contended that the pilots were not entitled to thirteenth month pay as they were not classified as rank and file employees but rather as supervisory employees. The Labor Arbiter ruled in favor of ALPAP, ordering PAL to pay the thirteenth month pay and damages. Both parties appealed to the National Labor Relations Commission (NLRC), which modified the Labor Arbiter's decision by including the years 1986 and 1987 for thirteenth month pay but denied the claims for moral and exemplary damages.

Dissatisfied with the NLRC's ruling, both PAL and ALPAP filed separate petitions for certiorari with the Supreme Court, challenging the NLRC's decisions.

Legal Issues:

1. Whether PAL is liable for the non-payment of thirteenth month pay to its pilots for the years 1988 to 1990.
2. Whether the pilots are classified as rank and file employees entitled to thirteenth month pay under P.D. 851.
3. Whether the year-end bonus provided by PAL can be considered equivalent to the thirteenth month pay.
4. The validity of the NLRC's decision to deny moral and exemplary damages and the imposition of legal interest on the awarded amounts.

Arguments:

• Philippine Airlines, Inc. (PAL):

  • PAL argued that the thirteenth month pay under P.D. 851 applies only to rank and file employees, and since pilots are supervisory employees, they are not entitled to it.
  • PAL maintained that it was already providing a year-end bonus, which it claimed was equivalent to the thirteenth month pay, thus exempting it from the requirements of P.D. 851.
  • PAL contended that there was no contractual obligation to pay thirteenth month pay as there was no provision in the Collective Bargaining Agreement (CBA) with ALPAP.

• Airline Pilots Association of the Philippines (ALPAP):

  • ALPAP countered that the year-end bonus cannot be equated with the thirteenth month pay, as the latter is a statutory requirement and mandatory in nature.
  • ALPAP argued that the absence of a specific provision in the CBA does not negate the statutory obligation to pay thirteenth month pay.
  • ALPAP highlighted the discriminatory treatment of pilots, who were the only employees not receiving both the thirteenth month pay and the year-end bonus.

Court's Decision and Legal Reasoning:

The Supreme Court upheld the NLRC's decision, affirming that PAL was liable for the non-payment of thirteenth month pay to its pilots. The Court ruled that the pilots were indeed entitled to thirteenth month pay under P.D. 851, as the law mandates payment to all rank and file employees, and the classification of pilots as supervisory employees was not properly raised in the initial proceedings.

The Court emphasized that the year-end bonus provided by PAL could not be considered equivalent to the thirteenth month pay, as the purpose of the thirteenth month pay is to provide additional income uniformly to employees, while bonuses are discretionary and conditional. The Court noted that all other employees of PAL, except the pilots, were receiving both benefits, which constituted discrimination.

Regarding the claims for moral and exemplary damages, the Court upheld the NLRC's decision to deny these claims due to the lack of sufficient evidence. The Court also agreed with the NLRC's decision to impose a reduced attorney's fee and denied the imposition of legal interest on the awarded amounts.

Significant Legal Principles Established:

1. The thirteenth month pay is a statutory benefit that is mandatory for all rank and file employees, regardless of whether it is included in a CBA.
2. Employers cannot equate discretionary bonuses with the mandatory thirteenth month pay, as they serve different purposes.
3. Discrimination in the payment of benefits among employees performing similar roles is impermissible and violates labor laws.