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Philippine Airlines v. National Labor Relations Commission

Philippine Airlines, Inc. v. National Labor Relations Commission and Airline Pilots Association of the Philippines (ALPAP), G.R. No. 114280; Airline Pilots Association of the Philippines (ALPAP) v. National Labor Relations Commission and Philippine Airlines, Inc. (PAL), G.R. No. 115224, July 26, 1996

G.R. No. 114280July 26, 1996
  • Labor Law
  • P.D. 851
  • thirteenth month pay
  • unfair labor practice
  • ALPAP pilots
  • year-end bonus
  • double burden
  • grave abuse of discretion
  • moral and exemplary damages
  • legal interest on wages
  • attorney's fees

Read the full decision

I. Facts of the Case

ALPAP filed an unfair labor practice complaint against Philippine Airlines (PAL) for alleged non-payment of the pilots’ 13th month pay from 1988 to 1990, claiming PAL violated P.D. 851, its implementing rules, and Memorandum Order No. 28, and prayed for moral and exemplary damages plus attorney’s fees. PAL defended that its pilots were excluded from coverage and, alternatively, that PAL had already paid an equivalent of 13th month pay through a year-end/Christmas bonus. The Labor Arbiter found PAL guilty and ordered payment of 13th month pay, damages, and attorney’s fees, while NLRC affirmed with modifications, including adding coverage for 1986–1987 but dismissing moral and exemplary damages and adjusting legal interest and attorney’s fees. The case’s peculiarity is PAL’s claim of “equivalent” year-end bonus/double burden, contrasted with the fact that PAL granted both the 13th month pay and year-end bonus to other PAL rank-and-file unions while excluding ALPAP pilots, prompting the Court to scrutinize the true purpose of PAL’s bonus and PAL’s late attempt to raise the pilots’ “supervisory” status on appeal.

  1. September 1991: ALPAP filed an unfair labor practice complaint (NLRC Case No. 00-09-005598-91) against PAL, alleging violation of P.D. 851, its implementing rules, and Memorandum Order No. 28 for PAL’s refusal/failure to pay pilots their 13th month pay from 1988 to 1990, and praying for moral and exemplary damages and attorney’s fees.

  2. ALPAP expanded its claim to include 1986 to 1990 upon filing its position paper; PAL denied liability and asserted that it was already paying an equivalent of 13th month pay via a year-end bonus and that pilots were not covered.

  3. May 29, 1992

    The Labor Arbiter rendered judgment in favor of ALPAP, ruling PAL guilty of non-payment of 13th month pay and ordering PAL to pay 13th month pay for 1988–1990, moral and exemplary damages, and attorney’s fees, while denying other claims.

  4. November 23, 1993

    NLRC affirmed the Labor Arbiter’s decision with modifications: PAL was ordered to include 13th month pay for 1986 and 1987, the awards of moral and exemplary damages were deleted, and PAL was directed to pay legal interest from the dates the 13th month pay accrued up to actual payment; attorney’s fees were fixed at 10% of the total award.

  5. February 28, 1994

    NLRC denied the parties’ motions for reconsideration, reducing attorney’s fees to 5% and deleting legal interest for lack of basis.

  6. PAL and ALPAP separately filed petitions for certiorari in the Supreme Court assailing NLRC’s resolutions dated November 23, 1993 and February 28, 1994; upon ALPAP’s motion, the Supreme Court consolidated the petitions.

  7. July 26, 1996

    The Supreme Court denied both petitions and affirmed NLRC’s resolutions.

II. Issues

1
Labor Law

Whether or not the NLRC committed grave abuse of discretion in holding PAL liable to the members of ALPAP for non-payment of their thirteenth month pay from 1988 to 1990, notwithstanding PAL's claim that there is no legal basis for the finding.

2
Labor Law

Whether or not the deletion of the award of moral and exemplary damages in favor of ALPAP and the non-imposition of legal interest on the awards, as well as the award of attorney's fees, should be disturbed by the Supreme Court.

III. Ruling

Issue 1Labor Law

Whether or not the NLRC committed grave abuse of discretion in holding PAL liable to the members of ALPAP for non-payment of their thirteenth month pay from 1988 to 1990, notwithstanding PAL's claim that there is no legal basis for the finding.

No

The NLRC did not commit grave abuse of discretion in holding PAL liable for the pilots’ unpaid 13th month pay notwithstanding PAL’s defenses based on “equivalent” year-end bonus and PAL’s attempt to raise new issues on appeal.

How the Court reasoned

  1. PAL’s late argument on appeal that the pilots were supervisory employees excluded from P.D. 851 was treated as barred because it was raised for the first time on appeal.
  2. While the general “double burden” doctrine may apply when an employer already pays an equivalent of 13th month pay, the Court examined the actual attendant facts to determine the real purpose of PAL’s year-end bonus.
  3. The Court noted a discriminatory factual pattern: except for ALPAP pilots, other PAL employees belonging to other unions were enjoying both a 13th month pay and a year-end bonus.
  4. The continued inclusion of an unqualified year-end bonus provision in the 1988–1991 CBA of ALPAP and PAL, despite PAL’s knowledge that Memorandum Order No. 28 had already made 13th month pay mandatory for all rank-and-file employees, showed the year-end bonus was intended as additional to the legal 13th month pay rather than a substitute.
  5. The Court rejected PAL’s “equivalent” explanation because the CBA provision and the disparate benefit given to other PAL unions belied PAL’s claim of compliance through the year-end bonus.
  6. Given the discriminatory withholding from ALPAP pilots and the Court’s policy concerns for pilots’ welfare and responsibilities, the NLRC’s finding of liability stood.
“Thus, PAL is now barred from claiming that their pilots are not rank and file employees.”

Rule applied

Presidential Decree No. 851 and its implementing rules, as amended by Memorandum Order No. 28 (including coverage of all rank-and-file employees); procedural rule barring new issues raised for the first time on appeal in certiorari proceedings

Issue 2Labor Law

Whether or not the deletion of the award of moral and exemplary damages in favor of ALPAP and the non-imposition of legal interest on the awards, as well as the award of attorney's fees, should be disturbed by the Supreme Court.

No

The Supreme Court found no reversible error in NLRC’s handling of moral and exemplary damages, legal interest, and attorney’s fees, and therefore left NLRC’s modified monetary awards undisturbed.

How the Court reasoned

  1. The Court held that awards for moral/exemplary damages and related items are generally matters of judicial discretion, and absent sound reason, appellate interference is not warranted.
  2. The Court sustained the dismissal/deletion of moral and exemplary damages for lack of the required clear and convincing evidence; moral damages require proof of the factual basis and its causal connection to the adverse party’s acts.
  3. Exemplary damages require proof that the party acted in a wanton, oppressive, or malevolent manner.
  4. As to attorney’s fees, the Court considered the statutory framework (unlawful withholding of wages) and found the rate reasonable under the Labor Code rules.
  5. The Court found no cogent reason to reverse NLRC’s conclusions on legal interest and attorney’s fees, considering the evidence and the discretionary nature of these determinations.
  6. Accordingly, NLRC’s modified disposition on these items was affirmed.
“With respect however to the deletion of the award of moral and exemplary damages, the non-imposition of legal interest on the awards, and the award of attorney's fees, we find no cogent reason to reverse the conclusion reached by respondent NLRC, bearing in mind that the award of these items are subject to sound the discretion of the court, which if properly exercised will not be disturbed on appeal.”

Rule applied

Labor Code provisions on attorney’s fees (Art. III, and Sec. 11, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code); standards for moral and exemplary damages requiring factual basis and clear and convincing evidence

Doctrines

1

In petitions questioning an NLRC ruling on unpaid 13th month pay under P.D. 851, an employer is barred from raising new defenses/issues for the first time on appeal.

2

Although employers who already pay an amount equivalent to 13th month pay may generally invoke the rule against imposing a double burden, the Court may examine the attendant facts to determine the true purpose of the employer’s year-end bonus; discriminatory or unqualified payment patterns inconsistent with the legal intent of P.D. 851 may justify liability for the statutory 13th month pay.

Final Disposition

WHEREFORE, finding no merit in the petitions, the same are hereby DENIED and the Resolutions of public respondent NLRC promulgated on November 23, 1993 and February 28, 1994 are hereby AFFIRMED. SO ORDERED

Notes

The Court also noted that the petitions were consolidated upon motion of ALPAP’s counsel and that the pivotal issue concerned alleged grave abuse of discretion in holding PAL liable despite PAL’s claimed lack of legal basis.