THIRD DIVISION

PHILIPPINE AIRLINES, G. R. No. 142399

INCORPORATED,
Petitioner, Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION Promulgated:
(PALEA),
Respondent. March 12, 2008
x--------------------------------------------------x

DECISION

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of

Court, as amended, seeks to set aside the 30 April 1999 Decision1[1] and 10
March 2000 Resolution2[2] 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 appellate court dismissed the petition filed by petitioner

1 [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 [2]
Annex “L” of the Petition; id. at 121.
Philippine Airlines, Inc. (PAL) and affirmed the 28 January 1998
Decision3[3] and 23 June 1998 Resolution,4[4] both of the First Division of the
National Labor Relations Commission (NLRC) wherein the said
Commission reversed and set aside the 12 March 1990 Decision5[5] of the
Labor Arbiter in NLRC NCR No. 00-03-01134-89 dismissing the labor
complaint filed by Philippine Airlines Employees Association (PALEA), the
collective bargaining agent of the rank and file employees of petitioner PAL.

The present petition arose from a labor complaint, 6[6] filed by

respondent PALEA against petitioners PAL and one Mary Anne del Rosario,
Director of Personnel of petitioner PAL, on 1 March 1989. The labor
complaint charged both petitioners with unfair labor practice for the alleged
non-payment of the 13th month pay of petitioner PAL’s employees who had
not been regularized as of the 30 of April 1988, allegedly in contravention of
the Collective Bargaining Agreement (CBA) entered into by petitioner PAL
and respondent PALEA.

The facts are undisputed.

On 6 February 1987, petitioner PAL and respondent PALEA entered

into a CBA7[7] covering the period of 1986-1989, to be applied, thus:

Section 3 – Application
3 [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 [4]
Annex “I” of the Petition; id. at 96 – 97.
5 [5]
Annex “E” of the Petition; id. at 59 – 62.
6 [6]
Annex “B” of the Petition; id. at 27.
7 [7]
Exhibit “A” for respondent PALEA and Exhibit “2” for petitioner PAL, both in NLRC-
NCR Case No. 00-03-01134-89; records, p. 145.
 All the terms and conditions of employment of employees within
the bargaining unit are embodied in this Agreement, and the same shall
govern the relationship between the Company and such employees. On the
other hand, all such benefits and/or privileges as are not expressly
provided for in this Agreement but which are now being accorded in
accordance with the PAL Personnel Policies and Procedures Manual, shall
be deemed also part and parcel of the terms and conditions of
employment, or of this Agreement.8[8]

Part of said agreement required petitioner 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 current 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.9[9]

On 22 April 1988, prior to the payment of the 13 th month pay (mid-

year bonus), petitioner PAL released a guideline 10[10] implementing the
aforequoted provision, to wit:

1) Eligibility

a) Ground employees in the general payroll who are

regular as of April 30, 1988;

8 [8]
1986-1989 Agreement between Philippine Airlines and Philippine Airlines Employees’
Association (PALEA), Art. I, Sec. 3 – Scope of the Agreement, CBA, p. 2; id.
9 [9]
Id., Art. V, Secs. 4 and 5 – Pay Scale, CBA, p. 19.
10 [10]
In the form of a Memorandum dated 22 April 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.11[11]

Respondent PALEA assailed the implementation of the foregoing

guideline on the ground that all employees of PAL, regular or non-regular,
must be paid their 13th month pay. In fact, in a letter dated 16 December
1988, respondent PALEA, through Herbert C. Baldovino, 12[12] informed
petitioner PAL that the following regular employees failed to receive their
13th Month Pay as of the date of the correspondence. Said letter reads in
part:

16 December 1988

To : Ms. Marie Anne E. Del Rosario

Director-Personnel Services
From : PALEA Board Member-Engineering
Subject : 13th Month Pay

Please be informed that the following regular employees have not

received their 13th month pay as of today.

NAME Date Employed Date Regularized

1. Renato C. Buenaventura -Nov. 17, 1987 May 17, 1988

2. Rene Zaragoza -Dec. 1, 1987 June 1, 1988
11 [11]
Rollo, pp. 82-83.
12 [12]
Then Board Member of respondent PALEA.
 3. Ronald Lumibao -Dec. 1, 1987 June 1, 1988
4. Ruel Villa-real -Dec. 1, 1987 June 1, 1988
5. Rene Philip Banzon -Dec. 1, 1987 June 1, 1988

We feel that these employees are entitled to the 13 th month pay in

accordance with the guidelines issued by your office last 22 April 1988.
(Copy attached.)

May we request your good office to do the necessary to effect

payment of the 13th month pay to the above listed regular employees in the
next regular payroll.

Praying for usual prompt attention.

(Sgd.) HERBERT C. BALDOVINO13[13]

In response thereto, petitioner PAL informed respondent 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 their Christmas
bonuses on 9 December 1988 per the Implementing Rules of Presidential
Decree No. 851.14[14] Petitioner PAL’s response is hereunder quoted in full –

January 2, 1989

Mr. Herbert C. Baldovino

PALEA Board Member and
Mr. George M. Pulido
PALEA President
2nd Floor, Philbanking Bldg.
Baclaran, Parañaque, M.M.

Dear Messrs. Baldovino and Pulido:

This pertains to your letter which we received on December 19,

1988 requesting for payment of 13th month pay to employees: Renato
Buenaventura, Rene Zaragoza, Ronald Lumibao, Ruel Villareal and Rene
Philip Banzon.

13[13]
Annex B; Records, Vol. 2, p. 20.
14 [14]
Entitled “REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13 TH
MONTH PAY.”
 We would like to clarify the following:

1. The above-mentioned employees and other similarly situated

employees were not paid the 13th month pay on May 9, 1988 because they
were not qualified regular employees as of April 30, 1988. However, the
guidelines provide that they should be granted their 13 th month pay on or
before December 24, 1988.

2. The guideline providing for the payment of the 13 th month pay on

or before December 24, 1988 for those who were not entitled to receive
such in May is anchored on the Company’s compliance with the Rules and
Regulations Implementing PD 851 (pp. 236-237, Labor Code of the
Philippines 1988 Edition), to wit:

“Sec. 3. Employees covered – the Decree shall apply to all

employees except to: x x x

c) Employers already paying their employees 13-month pay or

more in a calendar year or its equivalent at the time of this
issuance; x x x

the term “its equivalent” as used in paragraph (c) hereof shall include
Christmas bonus, mid-year bonus, profit-sharing payments and other cash
bonuses amounting to not less than 1/12 th of the basic salary but shall not
include cash and stock dividends, cost of living allowances and all other
allowances regularly enjoyed by the employee, as well as non-monetary
benefits.”

3. In accordance with 1 and 2, the above-mentioned employees

were paid the equivalent of their 13th month pay in the form of the
Christmas bonus granted by the Company on December 9, 1988. The
same was applied to similarly situated employees in compliance with
pertinent provisions of the 1986-1989 PAL-PALEA CBA and the Labor
Code of the Philippines.

(SGD.) MARIE ANNE E. DEL ROSARIO15[15]

Disagreeing with petitioner PAL, respondent PALEA filed a labor

complaint16[16] for unfair labor practice against petitioner PAL before the
NLRC on 1 March 1989. The complaint interposed that “the cut-off period
for regularization should not be used as the parameter for granting [the] 13 th
15[15]
Annex C; Records, Vol. 2, pp. 21-22.
16 [16]
Rollo, p. 27.
month pay considering that the law does not distinguish the status of
employment but (sic) the law covers all employees.”

In its Position Paper submitted before the Labor Arbiter, petitioner

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 13 th 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 Presidential Decree No. 851 and the latter’s
implementing rules; and that the foregoing has been the practice formally
adopted in previous CBAs’ as early as 1970.

On 12 March 1990, the Labor Arbiter rendered a Decision dismissing

the respondent PALEA’s complaint for lack of merit. The Labor Arbiter
ruled that petitioner PAL was not guilty of unfair labor practice in
withholding the grant of the 13 th Month Pay or Mid Year Bonus 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.”17[17] The decretal part of said ruling reads:

WHEREFORE, decision is hereby issued ordering the dismissal of

the complaint.18[18]

17 [17]
Id. at 60.
18 [18]
Id. at 62.
 Respondent PALEA appealed to the NLRC. In a Decision dated 28
January 1998, the Commission reversed the Decision of the Arbiter. 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 [herein petitioner] PAL to pay the 13 th month pay or
mid-year bonus of the members as discussed above.19[19]

The NLRC held that after going through the documents submitted by
respondent PALEA in support of its contention, the Commission is
convinced that the 13th month pay or mid-year bonus is distinct from the
Christmas Bonus, and although petitioner PAL already paid its employees
the latter, it must likewise pay them the former. Petitioner PAL moved for
reconsideration of the NLRC Decision but this was denied in a Resolution
dated 23 June 1998.

Undaunted, petitioner PAL went directly to this Court via a Petition

for Review on Certiorari. In view of this Court’s decision in St. Martin
Funeral Homes v. National Labor Relations Commission,20[20] however, the
Petition was referred to the Court of Appeals for proper disposition. The
case was docketed therein as CA-G.R. SP No. 50161.

On 30 April 1999, the Court of Appeals promulgated its Decision

dismissing the Petition filed by petitioner PAL, hence, affirming the 28
January 1998 Decision of the NLRC. The dismissal reads –

19 [19]
Id. at 89.
20 [20]
G.R. No. 142351, 22 November 2006, 507 SCRA 500, 504.
 WHEREFORE, premises considered, the instant petition is hereby
DISMISSED for lack of merit.21[21]

The Court of Appeals held that “from the x x x 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.” 22[22] It
reasoned that “if the intention is not to include employees regularized
beyond 30 April 1988, they would not have placed letter (c).” 23[23] 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.”24[24]

Petitioner PAL seasonably moved for the reconsideration of the

aforequoted Court of Appeals Decision, but was also denied in a Resolution
dated 10 March 2000.

21 [21]
Rollo, p. 24.
22 [22]
Id.; the guideline of 1987 states:
1) Eligibility: a) Ground staff employees, including all supervisory personnel in the general
payroll who are regular as of April 30, 1987; b) Part-time employees who are regular as of April
30, 1987; c) Other ground staff employees in the general payroll not falling within categories a)
and b) above, shall received their 13th Month Pay on or before December 24, 1987.
2) Amount: a) For category a) above, one month basic salary as of April 30, 1987; b) The
equivalent monthly salary for part-time employees shall be computed as follows:
Monthly Salary = AHR x 4 yrs./day
x 314 days/yrs.
12 months/year
c) Employees covered under c) above shall be paid not less than 1/12 of their basic salary
within the calendar year.
3) Payment Date: May 8, 1987 for categories 1 a) and 1 b) above.
23 [23]
Id.
24 [24]
Id.
 Hence, the instant Petition for Review on Certiorari under Rule 45 of
the Rules of Court, as amended.

In a Resolution25[25] dated 19 June 2007, We resolved to suspend the

proceedings of the case at bar in view of the on-going rehabilitation of
petitioner PAL as mandated by the Securities and Exchange Commission.
On 28 September 2007, however, the SEC issued an Order 26[26] granting
petitioner PAL’s request to exit from rehabilitation after successfully
stabilizing its financial operations. Hence, the suspension earlier issued by
this Court is hereby lifted, making the present Petition ripe for resolution.

In refusing payment of the mid-year bonus, petitioner PAL argues that

1) the CBA does not apply to non-regular employees such that any benefits
arising from said agreement cannot be made to apply to them, including the
mid-year bonus; and 2) it has always been the company practice not to
extend the mid-year bonus to those employees who have not attained regular
status prior to the month of May, when payment of the particular bonus
accrues.

Respondent PALEA, however, disputes petitioner PAL’s allegations

and maintains that “the benefits to all employees in the collective bargaining
unit, including those who do not belong to the chosen bargaining labor
organization, applies.”27[27] Put in another way, “[a]ll employees in PAL are
entitled to the same benefit as they are within the same collective bargaining
unit and the entitlement to such benefit spills over to even non-union
25 [25]
Id. at 210-221.
26 [26]
Id. at 229-234.
27 [27]
Id. at 200.
members.”28[28] Anent the supposed company practice of petitioner PAL not
to extend the payment of the 13th month pay or mid-year bonus to non-
regular employees, respondent PALEA contends that non-payment of said
benefit is considered a diminution of privileges or benefits proscribed by
Presidential Decree No. 851; that petitioner PAL misrepresented that the 13 th
month pay or mid-year bonus is the same as the Christmas bonus when, in
actuality, the latter is entirely different as it is a benefit paid under the
provisions of the CBA, while the former is one mandated by law,
Presidential Decree No. 851, in particular.

The sole issue for resolution of this Court is whether or not the Court
of Appeals committed reversible error in affirming the order of the NLRC
for the payment of the 13th month pay or mid-year bonus to its employees
regularized after 30 April 1988. We rule in the negative.

Petitioner PAL maintains that in extending the grant of the 13 th month

pay or mid-year bonus to employees who are not covered by the CBA, the
Court of Appeals, in effect, “modified or altered the terms of said agreement
and expanded its coverage to non-regular employees who are not covered by
the bargaining unit.”29[29] The issue on modification or alteration of the
CBA, however, was raised by petitioner PAL rather belatedly and invoked
for the first time on appeal. This being the case, We are barred from taking
cognizance of and resolving the issue for it would be violative of the
proscription against the presentation of new issues on appeal. To do

28 [28]
Id.
29 [29]
Id. at 171.
otherwise would be offensive to the basic rules of fair play, justice and due
process.30[30]

Be that as it may, a cursory reading of the 1986-1989 CBA of the

parties herein will instantly reveal that Art. I, Sec. 3 of said agreement made
its provision applicable to all employees in the bargaining unit. The
particular section specifically defined the scope of application of the CBA,
thus:

Section 3 – Application. All the terms and conditions of

employment of employees within the bargaining unit are embodied in this
Agreement, and the same shall govern the relationship between the
Company and such employees. On the other hand, all such benefits and/or
privileges as are not expressly provided for in this Agreement but which
are now being accorded in accordance with the PAL Personnel Policies
and Procedures Manual, shall be deemed also part and parcel of the terms
and conditions of employment, or of this Agreement.

without distinguishing between regular and non-regular employees. As

succinctly put by respondent PALEA in its Memorandum:

All employees in (sic) PAL are entitled to the same benefit as they are
within the same collective bargaining unit and the entitlement to such
benefit spills over to even non-union members.31[31]

It is a well-settled doctrine that the benefits of a CBA extend to the

laborers and employees in the collective bargaining unit, including those
who do not belong to the chosen bargaining labor organization. 32[32]
Otherwise, it would be a clear case of discrimination.
30 [30]
Cruz v. Court of Appeals, G.R. No. 108738, 17 June 1994, 233 SCRA 301, 309.
31[31]
Rollo, p. 200.
32 [32]
Rivera v. San Miguel Brewery Corporation, Inc., 133 Phil. 89, 94 (1968), citing Leyte
Land Transportation, Co. v. Leyte Farmer’s and Laborer’s Union, 80 Phil. 842, 847-848 (1948).
 Hence, to be entitled to the benefits under the CBA, the employees
must be members of the bargaining unit, but not necessarily of the labor
organization designated as the bargaining agent. 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. 33[33] At this point, the
allegation of petitioner PAL that the non-regular employees do not belong to
the collective bargaining unit and are thus not covered by the CBA is
unjustified and unsubstantiated. It is apparent to us that petitioner PAL
excludes certain employees from the benefits of the CBA only because they
have not yet achieved regular status by the cut-off date, 30 April 1988.
There is no showing that the non-regular status of the concerned employees
by said cut-off date sufficiently distinguishes their interests from those of the
regular employees so as to exclude them from the collective bargaining unit
and the benefits of the CBA.

Having ruled that the benefits provided by the subject CBA are
applicable even to non-regular employees who belong to the bargaining unit
concerned, the next and crucial query to be addressed is whether the 13 th
month pay or mid-year bonus can be equated to the Christmas bonus.

33 [33]
University of the Philippines v. Ferrer-Calleja, G.R. No. 96189, 14 July 1992, 211 SCRA
451, 464-465.
 Petitioner PAL equates the 13th month pay, also referred to as the mid-
year bonus in the CBA, to the Christmas bonus. It insists that “[u]nder the
13th Month Pay Law (P.D. 851, as amended), the 13 th Month Pay is due on or
before December 24th of the year. Therefore, non-regular employees are
entitled to their 13th Month Pay, not in the month of May, but in the month
of December when the Christmas Bonus becomes due. The Christmas
bonus becomes their 13th Month Pay, by express provision of Section 2,
Presidential Decree 851.”34[34] Simply put, as far as non-regular employees
are concerned, petitioner PAL alleges that their 13 th month pay shall be the
same as their Christmas bonus and will be paid according to the terms
governing the latter.

We do not agree. From the facts of the present Petition, it is crystal

clear that petitioner PAL is claiming an exemption from payment of the 13 th
month pay or mid-year bonus provided in the CBA under the guise of
paying the Christmas bonus which it claims to be the equivalent of the 13 th
month pay under Presidential Decree No. 851.

Presidential Decree No. 851 mandates that all employers must pay all
their employees receiving a basic salary of not more than P1,000.00 a
month, regardless of the nature of the employment, a 13 th month pay not
later than 24 December of every year. Memorandum Order No. 28, 35[35]
dated 13 August 1986, removed the salary ceiling, generally making all
employees entitled to the 13th month pay regardless of the amount of their

34 [34]
Rollo, p. 176.
35 [35]
Memorandum Order No. 28 provided that: “Section 1 of Presidential Decree No. 851 is
hereby modified to the extent that all employers are hereby required to pay all their rank-and-file
employees a 13th month pay not later than December 24 of every year.”
basic salary, designation or employment status, and irrespective of the
method by which their wages are paid, provided that they have worked for at
least one (1) month during a calendar year.36[36] Presidential Decree No. 851,
as amended, does admit of certain exceptions or exclusions from its
coverage, among which is:

Sec. 3(c). Employers already paying their employees 13-month pay

or more in a calendar year or its equivalent at the time of this issuance.

While employers already paying their employees a 13 th month pay or more

in a calendar year or its equivalent at the time of the issuance of Presidential
Decree No. 851 are already exempted from the mandatory coverage of said
law, petitioner PAL cannot escape liability in this case by virtue thereof.

It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed

to pay its employees 1) the 13 th month pay or the mid-year bonus, and 2) the
Christmas bonus. The 13th month pay, guaranteed by Presidential Decree
No. 851, is explicitly covered or provided for as the mid-year bonus in the
CBA, while the Christmas bonus is evidently and distinctly a separate
benefit. Petitioner PAL may not be allowed to brush off said distinction,
and unilaterally and arbitrarily declare that for non-regular employees, their
Christmas bonus is the same as or equivalent to the 13th month pay.

Presidential Decree No. 851 mandates the payment of the 13 th month

pay to uniformly provide the low-paid employees with additional income. It
but sets a minimum requirement that employers must comply with. It does

36 [36]
See the Revised Guidelines on the Implementation of the 13 th Month Pay Law, issued by
then Secretary of Labor Franklin M. Drilon, on 16 November 1987.
not intend, however, to preclude the employers from voluntarily granting
additional bonuses that will benefit their employees. A bonus is an amount
granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer's business and made possible the
realization of profits. It is an act of generosity of the employer for which the
employee ought to be thankful and grateful. It is also granted by an
enlightened employer to spur the employee to greater efforts for the success
of the business and realization of bigger profits. 37[37] We deem that the
Christmas bonus in this case is of this nature, although, by virtue of its
incorporation into the CBA, it has become more than just an act of
generosity on the part of petitioner PAL, but a contractual obligation it has
undertaken.

The inclusion of a provision for the continued payment of the

Christmas bonus in the 1986-1989 CBA between respondent PALEA and
petitioner PAL contradicts the company’s claim that the grant of such
benefit was intended to be credited as compliance with the statutory mandate
to give the 13th month pay. Memorandum Order No. 28, extending
Presidential Decree No. 851 to all employees regardless of the amount of
their monthly salaries, was issued on 13 August 1986. As early as said date,
therefore, petitioner PAL was already fully aware that it was lawfully
compelled to accord all its employees a 13 th month pay. Accordingly, if
petitioner PAL truly intended that the Christmas bonus be treated as the
“equivalent” of the 13th month pay required by law, then said intention
should have been expressly declared in their 1986-1989 CBA, or the

37[37]
Philippine Education Co., Inc. (PECO) v. Court of Industrial Relations, 92 Phil. 381, 385 (1952).
separate provision therein on the Christmas bonus should have been
removed because it would only be superfluous.38[38]

In United CMC Textile Workers Union v. The Labor Arbiter, 39[39] one
of the issues passed upon by the Court was whether or not an employer who
was already paying Christmas bonus pursuant to a CBA, was still bound to
pay the 13th month pay pursuant to Presidential Decree No. 851. Finding
that the intention of the parties to the CBA was that the Christmas bonus was
meant to be on top of the 13 th month pay, the Court ordered the employer to
pay the employees both. The Court ratiocinated:

If the Christmas bonus was included in the 13 th month pay, then

there would be no need for having a specific provision on Christmas bonus
in the CBA. But is did provide for a bonus in graduated amounts
depending on the length of service of the employee. The intention is clear
therefore that the bonus provided in the CBA was meant to be in addition
to the legal requirement. x x x A bonus under the CBA is an obligation
created by the contract between the management and workers while the
13th month pay is mandated by the law (P.D. 851).

In the case under consideration, the provision for the payment of the
Christmas bonus, apart from the 13th month pay, was incorporated into the
1986-1989 CBA between respondent PALEA and petitioner PAL without
any condition. The Christmas bonus, payable in December of every year, is
distinguished from the 13th month pay, due yearly in May, for which reason
it was denominated as the mid-year bonus. Such being the case, the only
logical inference that could be derived therefrom is that petitioner PAL
intended to give the members of the bargaining unit, represented by

38 [38]
Philippine Airlines v. National Labor Relations Commission, 328 Phil. 814, 829 (1996).
39 [39]
G.R. No. L-70763, 30 April 1987, 149 SCRA 424, 431.
respondent PALEA, a Christmas bonus over and above its legally mandated
obligation to grant the 13th month pay.

The non-regular rank and file employees of petitioner PAL as of 30

April 1988, are not actually seeking more benefits than what the other
member-employees of the same bargaining unit are already enjoying. They
are only requesting that all members of the bargaining unit be treated equally
and afforded the same privileges and benefits as agreed upon between
respondent PALEA and petitioner PAL in the CBA. Petitioner PAL is
committing a patent act of inequity that is grossly prejudicial to the non-
regular rank and file employees there being no rational basis for withholding
from the latter the benefit of a Christmas bonus besides the 13 th month pay
or mid-year bonus, while the same is being granted to the other rank and file
employees of petitioner PAL who have been regularized as of 30 April 1988,
although both types of employees are members of the same bargaining unit.
As it had willfully and intentionally agreed to under the terms of the CBA,
petitioner PAL must pay its regular and non-regular employees who are
members of the bargaining unit represented by respondent PALEA their 13 th
month pay or mid-year bonus separately from and in addition to their
Christmas bonus.

A collective bargaining agreement refers to a negotiated contract

between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a
bargaining unit.40[40] As in all other contracts, the parties to a CBA may

40 [40]
University of the Immaculate Concepcion, Inc. v. Secretary of Labor and Employment,
425 Phil. 311, 324 (2002).
establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided these are not contrary to law, morals, good customs,
public order or public policy.41[41] Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties, and compliance
therewith is mandated by the express policy of the law.42[42]

WHEREFORE, premises considered, the petition is hereby

DENIED. The Decision of the Court of Appeals promulgated on 30 April
1999, and its Resolution dated 10 March 2000, are hereby AFFIRMED.
Costs against petitioner Philippine Airlines, Inc.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

41 [41]
Article 1306 of the Civil Code; Manila Fashions, Inc. v. National Labor Relations
Commission, 332 Phil. 121, 125-126 (1996).
42 [42]
Vivero v. Court of Appeals, 398 Phil. 158, 164 (2000), citing E. Razon, Inc. v. Secretary
of Labor and Employment, G.R. No. 85867, 13 May 1993, 222 SCRA 1, 8.
MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in

consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
 CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the

Division Chairperson’s Attestation, it is hereby certified that the conclusions
in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice