PAL Inc. v PALEA (PAL EEs Association) 571 Phil.

548; 12 March 2008; Chico-Nazario, J; Digest by Paola Vargas FACTS: PAL and PALEA (entered into a CBA covering the period of 1986-1989. Sec 3 of their CBA provides that All terms and conditions of employment of EEs within the bargaining unit are embodied in this Agreement, and the same shall govern the relationship between the Company and EEs all benefits and/or privileges not expressly provided for in this Agreement but which are now being accorded in accordance with the PAL Personnel Policies shall be deemed also part and parcel of the terms and conditions. Sec 4 of the CBA titled 13th Month pay (Mid-Year Bonus) [1 month basic pay consistent with existing practice; to be paid in May] and Sec 5 Christmas Bonus [1 month basic pay; to be said in December], states that PAL is required to pay such to the rank and file EEs. April 1988: Prior to payment of the 13th month pay, PAL released a guideline which stated that ground EEs who are regular as of April 30, 1988 are eligible to receive the 13th month pay (1 month basic to be paid May following the CBA) while those who are not regular as of April 30 shall receive their 13th month pay on or before Dec 24, 1988 (to be paid 1/12 of their basic salary for every month of service within calendar year) PALEA assailed the guidelines stating that EEs, regardless of whether they are regular or non-regular must be paid their 13th month pay. In a letter sent to PAL, they asked PAL to pay 5 EEs who have not been paid their 13th month pay. PAL replied to the letter stating that said EEs were not paid their 13th month pay on May because they were not qualified regular EEs. But they will be receiving theirs on or before December 24, 1988. PAL stated that it anchored the guidelines it issued with the Companys compliance with PD 851 (13th month pay law) which states that Sec 3: ERs already paying their EEs 13th month pay or its equivalent and its equivalent includes Christmas Bonus, mid-year bonus, profit sharing but not less than 1/12th of the basic salary *PAL basically is saying that in compliance with PD 851, the non-regular EEs would be paid their 13th month in the form of Christmas bonus] PALEA, still disagreeing filed a labor complaint for ULP against PAL with the NLRC argues that law does not distinguish the status of employment; law covers all EEs. PAL: EEs not regular are not denied their 13th month pay because they will still be paid; Christmas Bonus is deemed a compliance with PD 851; and Christmas bonus has been a practice of PAL adopted in previous CBAs as early as 1970. LA: ruled for PAL bonus was merely an additional practice made in past. Such being the case, it violated no agreement or existing practice or committed ULP. NLRC: reversed the LA. 13th month or mid-year bonus is distinct from the Christmas Bonus. PAL must pay both PAL: affirmed the NLRC.
[Slight procedural fact: June 2007 SC suspended the proceedings because of PALs SEC mandated on-going rehabilitation; Sept 27 2007 PAL requested and was granted an exit from the rehabilitation.]

ISSUES: WON the provisions of the CBA applies to non-regular EEs YES. WON the 13th month pay in the CBA is the same as the Christmas Bonus NO.

RATIO: 1. CBA applies to all EEs, regular or non-regular PAL argues that the CBA provisions does not apply to non-regular EEs and that it has been PALs practice not to give EEs who are not regular as of May, a mid-year bonus. PALEA on the other hand argues that all EEs in PAL are entitled to the same benefit since they are within the same collective bargaining unit and entitlement to such benefits spills over even to non-union members. SC: PALEA is correct. A cursory reading of the CBA will reveal that SEC 3 provides that provisions of the CBA are applicable to ALL EEs, and it did not distinguish between regular and non-regular EEs. To be entitled to the benefits under the CBA, EEs must be members of the bargaining unit, but not necessarily of the labor organization designated as the SEBA. To exclude them would be a clear case of discrimination. A bargaining unit has been defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicates to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. PAL was not able to show that non-regular status of the EEs as of the cut-off date (April 30, 1988) sufficiently distinguishes their interests from those who are regularized prior to that date to exclude them from the bargaining unit. 2. 13th month bonus is not the same as the Christmas bonus PAL is claiming an exemption from paying the 13th month pay or mid-year bonus provided in the CBA under the guise of paying a Christmas bonus which it claims is equivalent to the 13th month pay under PD 851. PD 851 does admit of certain exemptions and one is when ERs are already paying a 13th month pay or equivalent at the time of PDs issuance. (Technically, PAL is exempted from paying 13th month pay because it can substitute the Christmas bonus its been paying the EEs,) However, PAL cannot escape liability in this case by virtue of said exemption because under the CBA, pay agreed to pay 13th month pay or mid-year bonus (under sec 4) AND the Christmas Bonus (under sec 5). The 13th month pay guaranteed by PD 851 is covered by the mid-year bonus (sec 4) but the Christmas Bonus (under sec 5) is evidently and distinctly a separate benefit. PAL may not arbitrarily brush off the distinction by saying that for non-regular EEs their Christmas bonus is their 13th month pay. Although the Christmas bonus is a bonus which is in nature of an amount granted and paid to an EE as an act of generosity of the ER (for an EEs industry or loyalty; or to spur an EE to greater efforts) by virtue of its incorporation into the CBA, it has become more than just an act of generosity on part of PAL, but a contractual obligation undertaken. Under the CBA, the Christmas bonus to be paid in December is distinct from the 13th month to be paid in May which is the mid-year bonus. Said provisions were incorporated in the CBA without any condition. Under such case the logical inference is that PAL intended to give members of the bargaining unit a Christmas bonus over and above its legally mandated obligation to pay 13th month pay. A CBA is a negotiated contract between the ER and the legitimate labor organization regarding the wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in other contracts, parties to a CBA may establish stipulations, clauses, terms and conditions as they may deem convenient provided its not contrary to law, moral, good customs, public order or public policy. Where CBA is clear and unambiguous, it becomes the law between the parties and must be complied with.