Philippine Airlines, Inc. v. Philippine Airlines Employees Association
G.R. No. 142399 (Resolution)
Decision Date


G.R. No. 142399. June 19, 2007.




This is a Petition for Review on Certiorari under Rule 45 of the Decision, and 10 March 2000 Resolution of the Court of Appeals, in CA-G.R. SP No. 50161 entitled, "Philippine Airlines, Inc. v. National Labor Relations Commission and Philippine Airlines Employees Association (PALEA)." In the assailed decision, the Court of Appeals dismissed the petition filed by herein petitioner Philippine Airlines, Inc. (PAL); accordingly, the appellate court affirmed the 28 January 1998 Decision and 23 June 1998Resolution, of the First Division of the National Labor Relations Commission (NLRC), reversing and setting aside the 12 March 1990 Decision, of the Labor Arbiter in NLRC NCR No. 00-03-01134-89, and ordering the herein PAL to "pay the 13th month pay or mid-year bonus of the (concerned) members (of PALEA) . . . ."

This case arose from a labor Complaint, filed by herein PALEA against herein PAL and one Mary Anne del Rosario, Director of Personnel, PAL, on 1 March 1989, charging them with unfair labor practice for the non-payment of 13th month pay of employees who had not been regularized as of the 30th of April 1988, as allegedly stipulated in the Collective Bargaining Agreement (CBA) entered into by herein parties.

As culled from the records of the case, the facts are:

On 6 February 1987, herein parties, PAL and PALEA, the collective bargaining agent of the rank and file employees of PAL, entered into a CBA that was to cover the period of 1986-1989. Part of said agreement required PAL to pay its rank and file employees the following bonuses:

Section 4 13th Month Pay (Mid-year Bonus)

A 13th month pay, equivalent to one month's current basic pay, consistent with the existing practice shall be paid in advance in May.

Section 5 Christmas Bonus

The equivalent of one month's basic pay as of November 30, shall be paid in December as a Christmas bonus. Payment may be staggered in two (2) stages. It is distinctly understood that nothing herein contained shall be construed to mean that the Company may not at its sole discretion give an additional amount or increase the Christmas bonus. IDASHa

Prior to the payment of the 13th month pay (mid-year bonus), PAL released an implementing guideline on 22 April 1988. It stated that:

1) Eligibility

a) Ground employees in the general payroll who are regular as of April 30, 1988;

b) Other ground employees in the general payroll, not falling within category a) above shall receive their 13th Month Pay on or before December 24, 1988;

2) Amount

a) For category a) above, one month basic salary as of April 30, 1988;

b) Employees covered under 1 b) above shall be paid not less than 1/12 of their basic salary for every month of service within the calendar year.

3) Payment Date: May 9, 1988 for category 1 a) above.

PALEA assailed the implementation of the foregoing guideline. It is of the view that all employees of PAL, whether regular or non-regular, should be paid their 13th month pay. In response to the above, PAL informed PALEA that rank and file employees who were regularized after 30 April 1988 were not entitled to the 13th month pay as they were already given the Christmas bonus in December of 1988, per the

PALEA, disagreeing with PAL, filed a Complaint for unfair labor practice before the NLRC on 1 March 1989. The union argued that "the cut-off period for regularization should not be used as the parameter for granting the 13th month pay considering that the law does not distinguish the status of employment but (sic) the law covers all employees." aDcHIC

In its Position Paper submitted before the labor arbiter, PAL countered that those rank and file employees who were not regularized by 30 April of a particular year are, in principle, not denied their 13th month pay, considering they receive said mandatory bonus in the form of the Christmas Bonus; that the Christmas Bonus given to all its employees is deemed a compliance with

On 12 March 1990, the Labor Arbiter rendered his decision dismissing the complaint for lack of merit. The dispositive reads:

WHEREFORE, decision is hereby issued ordering the dismissal of the complaint.

The Labor Arbiter ruled that PAL was not guilty of unfair labor practice in withholding the grant of the 13th Month Pay or Mid-Year Bonus, as set out in Section 4 of the CBA, to the concerned employees. The giving of the particular bonus was said to be merely an additional practice made in the past, "such being the case, it violated no agreement or existing practice or committed unfair labor practice, as charged."

On appeal to the NLRC, the assailed decision of the Labor Arbiter was reversed. The fallo of said decision is quoted hereunder:

WHEREFORE, finding the appeal well-impressed with merit, the decision appealed from is REVERSED and SET ASIDE and a new one ENTERED ordering respondent PAL to pay the 13th month pay or mid-year bonus of the members as discussed above.

The subsequent motion for reconsideration filed by PAL was denied in a Resolution dated 23 June 1998.

Undaunted, PAL went to this Court via a Petition for Review on Certiorari. In view of this Court's decision in the petition was referred to the Court of Appeals for proper resolution. The case was docketed as CA-G.R. SP No. 50161. CADacT

On 30 April 1999, the Court of Appeals promulgated its Decision dismissing the petition filed by PAL. It affirmed the 28 January 1998 NLRC Resolution, viz:

WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit.

In said Decision, the Court of Appeals held that "from the . . . provision of the said inter-office memo, employees who are regular as of 30 April 1988 and those regularized thereafter, are entitled for (sic) the payment of the non-regular employees as provided for under letter (c) of the Guidelines issued." It reasoned that "if the intention is not to include employees regularized beyond 30 April 1988, they would not have placed letter (c)." The Court of Appeals further rationalized that "well-settled is the rule that all doubts should be resolved in favor of labor. To rule otherwise is a betrayal of our zealous commitment to uphold the constitutional provision affording protection to labor."

PAL seasonably moved for the reconsideration of the aforequoted Court of Appeals Decision.

On 10 March 2000, the Court of Appeals promulgated its Resolution denying PAL's prayer for reconsideration.

Hence, this Petition for Review on Certiorari filed under Rule 45 of the

We take note, however, that the Securities and Exchange Commission (SEC) had mandated the rehabilitation of PAL. On 17 May 1999, the SEC approved the "Amended and Restated Rehabilitation Plan" of PAL and appointed a "permanent rehabilitation receiver for the latter." To date, PAL is still undergoing rehabilitation.

The pertinent law concerning the suspension of actions for claims against corporations is as amended. Particularly, Section 5 (d) provides:

SECTION 5. In addition to the regulatory adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

xxx xxx xxx

d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the [management of a rehabilitation receiver or] management committee created pursuant to this Decree. TAcCDI

Likewise, Section 6 (c), to wit:

SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following:

xxx xxx xxx

c) To appoint one or more receivers of the property, real or personal, which is the subject of the action pending before the Commission in accordance with the pertinent provisions of theThat upon appointment of a management committee, the rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (Emphasis supplied.)

The term "claim", as contemplated in Sec. 6 (c) of In the case at bar, in the event that the present petition is found to be without merit, PAL will be obliged to satisfy the pecuniary claims of PALEA the payment of the 13th Month Pay for the particular year to all rank and file employees whether or not regularized by 30 April 1988.

The underlying principle behind the suspension of claims pending rehabilitation proceedings was explained in the case of . This Court clarified that:

In light of these powers, the reason for suspending actions for claims against the corporation should not be difficult to discover. It is not really to enable the management committee or the rehabilitation receiver to substitute the defendant in any pending action against it before any court, tribunal, board or body. Obviously, the real justification is to enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation. (Emphasis supplied.)

This Court's adherence to the above-stated rule has been resolute and steadfast as evidenced by its oft-repeated application in a plethora of cases. If truth be told, there have been several PAL cases to which said rule have been applied to. In , PAL questioned, albeit via a Petition for Certiorari under Rule 65 of thesupersedeas bond posted by the employer. The employee maintained that the suspension of proceedings provided in Section 6 (c) of Certiorari initiated by the corporation under receivership. In a Resolution dated 4 September 2000, this Court granted PAL's motion elucidating that:

In Rubberworld (Phils.), Inc. v. NLRC, we held that worker's claims before the NLRC and labor arbiters are included among the actions suspended upon the placing under receivership of the employer-corporations. Although strictly speaking, the ruling in Rubberworld dealt with actions for claims pending before the NLRC and labor arbiters, we find that the rationale for the automatic suspension therein set out would apply to the instant case where the employee's claim was elevated on certiorari before this Court, . . . . DCHaTc

xxx xxx xxx

The Court holds that rendition of judgment while petitioner is under a state of receivership could render violence to the rationale for suspension of payments in Section 6 (c) of . (Emphasis supplied.)

In another PAL case, specifically, , this Court again resolved to grant PAL's Motion for Suspension of Proceedings by reason of the SEC Orders dated 23 June 1998 and 1 July 1998, appointing an Interim Rehabilitation Receiver and enjoining the suspension of all claims for payment against PAL, respectively. Therein it was declared that this Court is "not prepared to depart from the well-established doctrines" essentially maintaining that all actions for claims against a corporation pending before any court, tribunal or board shall ipso jure be suspended in whatever stage such actions may be found upon the appointment by the SEC of a management committee or a rehabilitation receiver.

And, most recently, is the case of , we held in simple terms that:

Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension what are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the execution stage after the case had become final and executory. (Citation omitted)

The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature.

In actual fact, allowing such actions to proceed would only increase the work-load of the management committee or the rehabilitation receiver, whose precious time and effort would be dissipated and wasted in defending suits against the corporation, instead of being channeled toward restructuring and rehabilitation. SAHEIc

All told, this Court is constrained to suspend the progress, development and other proceedings in the present petition.

IN CONCURRENCE WITH THE ABOVE, NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved that in view of the ongoing rehabilitation of petitioner Philippine Airlines, Inc., herein proceedings are heretofore SUSPENDED until further notice from this Court. Accordingly, petitioner Philippine Airlines, Inc. is hereby ORDERED to quarterly update the Court as to the status of its ongoing rehabilitation within ten (10) days from the beginning of every quarter, with a WARNING that non-compliance therewith will merit disciplinary sanctions. No costs.


Ynares-Santiago, Austria-Martinez and Nachura, JJ., concur.


1. Penned by Court of Appeals Associate Justice Eugenio S. Labitoria with Associate Justices Jesus M. Elbinias and Marina L. Buzon, concurring; Annex "A" of the Petition; rollo, pp. 20-25.

2. Annex "L" of the Petition; id. at 121.

3. Penned by NLRC Commissioner Alberto R. Quimpo with Commissioner Vicente S. E. Veloso concurring; Presiding Commissioner Rogelio I. Rayala was on leave; Annex "G" of the Petition; id. at 81-90.

4. Annex "I" of the Petition; id. at 96-97.

5. Annex "E" of the Petition; id. at 59-62.

6. Id. at 89.

7. Annex "B" of the Petition; id. at 27.

8. Id. at 82.

9. In the form of a Memorandum dated 22 April 1988.

10. Rollo, pp. 82-83.

11. Entitled " SEIacA

12. Rollo, p. 27.

13. Id. at 62.

14. Id. at 60.

15. Rollo, p. 89.

16. G.R. No. 142351, 22 November 2006, 507 SCRA 500, 504.

17. Rollo, p. 24.

18. Id.

19. Id.

20. Id.

21. In the case of , G.R. No. 166996, 6 February 2007, Mr. Renato Z. Francisco was identified as the Permanent Rehabilitation Receiver.


23. On 15 December 2000, the Supreme Court, in

Although the jurisdiction of SEC over rehabilitation and suspension of payments cases was transferred to the Regional Trial Courts pursuant to

24. , G.R. No. 165675, 30 September 2005, 471 SCRA 763, 771.

25. G.R. No. 76879 and G.R. No. 77143, 3 October 1990, 190 SCRA 262.

26. Id. at 269.

27. , G.R. No. 75414, 4 June 1990, 186 SCRA 94; , G.R. No. 76879 and G.R. No. 77143, 3 October 1990, 190 SCRA 262; , G.R. No. 97178, 10 January 1994, 229 SCRA 223; , 365 Phil. 273 (1999); , G.R. No. 123294, 4 September 2000; , 438 Phil. 375 (2002); , G.R. No. 123238, 11 July 2005; , G.R. No. 165675, 30 September 2005, 471 SCRA 763.

28. Promulgated by the Third Division of the Supreme Court, G.R. No. 123294, 4 September 2000. ITDHSE

29. Supreme Court's Second Division Resolution, G.R. No. 123238, 11 July 2005.

30. Supra note 21.