Philippine Airlines, Inc. v. National Labor Relations Commission
REITERATIONFacts
1. The Antecedents: The Airline Pilots Association of the Philippines (ALPAP) filed a complaint against Philippine Airlines, Inc. (PAL) for unfair labor practice, alleging PAL's refusal to pay its pilots their mandated thirteenth (13th) month pay from 1988 to 1990, in violation of Presidential Decree No. 851 and its implementing rules. PAL contended that it was exempt from this obligation because it already provided a year-end bonus equivalent to the thirteenth month pay, and that pilots, being supervisory employees, were not covered by the decree. ALPAP countered that the year-end bonus was conditional and not equivalent to the mandatory thirteenth month pay, and that PAL's pilots were being unfairly discriminated against as other PAL employees received both benefits. 2. Procedural History: The Labor Arbiter ruled in favor of ALPAP, ordering PAL to pay the thirteenth month pay for 1988-1990, along with moral and exemplary damages and attorney's fees. Both parties appealed to the National Labor Relations Commission (NLRC). The NLRC affirmed the Labor Arbiter's decision with modifications, ordering PAL to also pay the thirteenth month pay for 1986 and 1987, but deleting the award for moral and exemplary damages, while affirming legal interest on the unpaid amounts and attorney's fees. Both parties sought reconsideration, which the NLRC denied, further reducing attorney's fees and deleting the legal interest. These NLRC resolutions led to the consolidated petitions before the Supreme Court. 3. The Petition: In G.R. No. 114280, PAL petitions for certiorari, challenging the NLRC's finding of liability for non-payment of the thirteenth month pay. In G.R. No. 115224, ALPAP petitions for certiorari, disputing the deletion of moral and exemplary damages and the non-imposition of legal interest. PAL argues that pilots are not rank-and-file employees covered by PD 851 and that their year-end bonus is equivalent to the thirteenth month pay. ALPAP maintains that the thirteenth month pay is a statutory mandate, that the year-end bonus is not equivalent, and that PAL's differential treatment of its pilots constitutes discrimination.
Issue(s)
Whether PAL committed grave abuse of discretion in holding PAL liable for non-payment of 13th month pay to its pilots. Whether pilots are excluded from the coverage of PD 851 as they are not rank and file employees; and whether the year-end bonus paid by PAL is equivalent to the 13th month pay, exempting PAL from further payment. Whether the NLRC gravely abused its discretion in deleting the award of moral and exemplary damages. Whether the NLRC gravely abused its discretion in deleting the imposition of legal interest on the awards. Whether the NLRC gravely abused its discretion in the award of attorney's fees.
Ruling
The petitions are denied. The Resolutions of the NLRC dated November 23, 1993, and February 28, 1994, are affirmed.
Ratio Decidendi
On PAL's liability for 13th month pay: The Court affirmed the NLRC's finding that PAL is liable for the 13th month pay. Presidential Decree No. 851 mandates that all employers pay their rank and file employees a 13th month pay. The law is mandatory and is deemed incorporated into any contract, including a Collective Bargaining Agreement (CBA), even if not expressly stated. PAL's argument that pilots are not rank and file employees was deemed a new issue raised belatedly on appeal and thus could not be considered, as it violated the rule against presenting new issues on appeal. The Court reiterated that points of law not adequately brought to the attention of the trial court cannot be raised for the first time on appeal. Therefore, PAL is barred from claiming that its pilots are not rank and file employees. On the exclusion of pilots as rank and file employees and the equivalence of year-end bonus and 13th month pay: The Court found no merit in PAL's contention that its year-end bonus is equivalent to the 13th month pay, thereby exempting it from compliance with PD 851. While the law provides an exception for employers already paying the equivalent of a 13th month pay, the Court scrutinized the circumstances. The fact that PAL's other employees (members of FASAP and PALEA) received both the 13th month pay and the year-end bonus, while ALPAP members did not, indicated a discriminatory practice. Furthermore, the inclusion of a provision for the year-end bonus in the 1988-1991 CBA between PAL and ALPAP, after the issuance of Memorandum Order No. 28, suggested that PAL intended to grant the bonus in addition to its legal obligation to pay the 13th month pay. The Court concluded that there was no rational basis for withholding the year-end bonus from ALPAP members while granting it to other employees, making PAL's failure to extend the same benefits to its pilots an act of discrimination. On the award of moral and exemplary damages: The Court found no cogent reason to reverse the NLRC's deletion of the award for moral and exemplary damages. The award of such damages is subject to the sound discretion of the court, and for moral damages, the claimant must satisfactorily prove the factual basis and causal connection to the adverse party's acts. For exemplary damages, it must be shown that the party acted in a wanton, oppressive, or malevolent manner. In this case, the Court found that the claim for these damages was not properly substantiated with clear and convincing evidence during the trial. On the imposition of legal interest: The Court affirmed the NLRC's deletion of the imposition of legal interest for lack of basis. The NLRC's discretion in awarding such interest, when properly exercised, will not be disturbed on appeal. The Court did not find a compelling reason to overturn the NLRC's conclusion on this matter. On the award of attorney's fees: The Court affirmed the NLRC's award of attorney's fees at five percent (5%) of the total monetary award. This award was deemed reasonable based on the provisions of Article III of the Labor Code and Rule VIII, Section 11, Book III of the Omnibus Rules Implementing the Labor Code, which allow for attorney's fees not exceeding ten percent (10%) of the amount awarded, to be deducted from the total amount due the winning party.
Main Doctrine
The payment of a year-end bonus, even if substantial, cannot be automatically equated with the 13th month pay mandated by Presidential Decree No. 851 unless it is expressly stated or clearly intended to be its equivalent. Furthermore, withholding benefits granted to other employees from a specific group without rational basis constitutes unlawful discrimination.