PAL vs NLRC
GR 55159 December 22, 1989
FACTS:
Armando Dolina was admitted to the Philippine Airlines (PAL) Aviation School for training as a
pilot beginning 16 January 1973. The training agreement bound PAL to provide regular and
permanent employment to Dolina upon completion of the training course. On 25 January 1974,
Dolina completed the course, and undertook an equipment qualification course up to 4 October
1974.
On 9 October 1974, the Civil Aeronautics Administration issued him a license as Commercial
Pilot and PAL then extended him a temporary appointment for six (6) months as Limited First
Officer. When his appointment was due to expire on 30 April 1975, Dolina had only logged
eighty four (84) hours and fifty five (55) minutes flying time, short of the minimum 500 flying
hours required for regularization as First Officer.
To enable him to complete the requirement, his employment was extended for another six
months which appointment was described as "permanent." On 31 October 1975, when his
appointment was again due to expire, he was still short of the minimum flying time requirement
such that his appointment was again extended up to 30 April 1976.
During this third extension of his appointment, Dolina completed the 500 flying hours
requirement, and thus on 31 March 1976 he applied for regularization as First Officer. Pending
his physical examination by the chief Flight Surgeon, his appointment was again extended to 31
October 1976. On 17 August 1976, Dolina took a psychological examination wherein his
"Adaptability Rating" was found to be "unacceptable". On 23 September 1976, Dolina was again
subjected to an examination and interview by the Pilot Acceptance Qualifications Board as part
of the regularization process, which examination revealed the following:chanrob1es virtual 1aw
library
x x x
b. Armando Dolina — After thorough evaluation of the candidate’s past records, his
performance and the result of his medical examination as submitted by the Medical Sub-
Department, the Board finds Mr. A. Dolina not qualified for regular employment in the
Company.
x x x
Conformably, the Board recommended the termination of the complainant pursuant to which
PAL filed a clearance application for Dolina’s termination. In the meantime Dolina was placed
under preventive suspension effective 1 October 1976. Dolina countered with a complaint for
illegal dismissal on 6 October 1976. On 26 January 1977 the Officer-in-Charge of the
Department of Labor Regional Office No. IV lifted the preventive suspension, and ordered
petitioner to reinstate Dolina to his former position with full backwages from 1 October 1976 up
to actual reinstatement. The issue of termination and damages was referred to the Executive
Labor Arbiter for compulsory arbitration.
PAL appealed the order lifting Dolina’s suspension to the Secretary of Labor. However, on 2
March 1977, pending the resolution of petitioner’s appeal, the parties signed an agreement before
the Undersecretary of Labor, the terms of which are as follows:chanrob1es virtual 1aw library
AGREEMENT
The undersigned parties hereby agree to the following:chanrob1es virtual 1aw library
1. While pending final resolution of the complaint of Mr. Armando Dolina against the Philippine
Airlines, he shall be considered in the payroll effective 1 October 1976.
2. The order of Regional Director Vicente Leogardo for the reinstatement with backwages of Mr.
Dolina is hereby rendered moot and academic.
3. The parties shall consider this arrangement pending final resolution of the case by arbitration.
x x x
Subsequently, on 30 May 1977, the Acting Secretary of Labor issued an order finding that the
propriety of the suspension had been rendered moot and academic by the above agreement and
referred the case for compulsory arbitration to the Executive Labor Arbiter. On 23 March 1979,
the Labor Arbiter rendered its decision, the dispositive portion of which reads as
follows:chanrob1es virtual 1aw library
IN VIEW OF ALL THE FOREGOING, it is our considered opinion that there is merit on the
application for clearance, and therefore, the same should be as it is hereby GRANTED.
Consequently, the oppositor’s TERMINATION IS IN ORDER.
Since the termination is upheld, perforce the claim for moral damages is denied. Besides
pursuant to P.D. No. 1367 dated May 1, 1978, this office is devoid of jurisdiction to entertain
said claim.
SO ORDERED.
By virtue of the above decision, PAL removed Dolina from its payroll effective 1 April 1979.
Dolina then appealed the Labor Arbiter’s decision to the public respondent NLRC on 29 April
1979 and there filed a motion praying that PAL be ordered to return him to PAL’s payroll,
contending that the Labor Arbiter’s decision was not yet final because of his timely appeal. PAL
opposed the motion claiming that it was no longer obliged to return Dolina to its payroll since
the decision of the Labor Arbiter dated 23 March 1979 in its favor was a final resolution of the
case by arbitration.ry : red
On 8 February 1980, public respondent NLRC rendered its decision containing the assailed
portion to wit:chanrob1es virtual 1aw library
x x x
In fine it is our considered view that the respondent’s application for clearance to dismiss the
complainant has sufficiently surmounted the test of validity.
Be that as it may, we are not in accord with the discontinuation of the payment of complainant’s
salaries. The agreement of the parties stipulated in no uncertain terms that the complainant
[Dolina] is to be carried in respondent’s payroll until this case is finally resolved. As things
stand, the main issue is still being litigated. The complainant, therefore, must be restored to the
payroll and paid for his salaries from 1 April 1979, the date he was dropped from the
respondent’s payroll.
WHEREFORE, the Decision appealed from should be as it is hereby affirmed in toto. However
the respondent is ordered to restore the complainant to its payroll and to pay his salaries from 1
April 1979 until this case is finally resolved.
SO ORDERED.
ISSUE:
The issue before the Court is whether or not the NLRC committed grave abuse of discretion in
holding that private respondent Dolina was entitled to his salaries from 1 April 1979 "until this
case is finally resolved."cralaw virtua1aw library
DECISION:
It is a basic rule in interpretation of contracts that the circumstances under which an instrument
was made, including the situation of the subject thereof and the parties to it, may be considered
so that the intention of the contracting parties may be judged correctly (Art. 1371, Civil Code of
the Philippines; Section 11, Rule 130, Rules of Court; Lim v. Court of Appeals, G.R. No. L-
40258, September 11, 1980, 99 SCRA 668.)
In its broad sense, arbitration is the reference of a dispute to an impartial third person, chosen by
the parties or appointed by statutory authority to hear and decide the case in controversy [Chan
Linte v. Law Union and Rock, Inc. Co., 42 Phil. 548 (1921)]. When the consent of one of the
parties is enforced by statutory provisions, the proceeding is referred to as compulsory
arbitration. In labor cases, compulsory arbitration is the process of settlement of labor disputes
by a government agency which has the authority to investigate and to make an award which is
binding on all the parties [See Wood v. Seattle, 23 Wash. 1, 62 P 135, 52 LRA 369 (1920);
Amalgamated Association v. Wisconsin Employees’ Relations Board, 340 U.S. 383-410, 95 L.
Ed. 381 (1951)].
Under the Labor Code, it is the Labor Arbiter who is clothed with the authority to conduct
compulsory arbitration on cases involving termination disputes (Article 217, Pres. Decree No.
442, as amended.)
When the Labor Arbiter renders his decision, compulsory arbitration is deemed terminated
because by then the hearing and determination of the controversy has ended. Any appeal raised
by an aggrieved party from the Labor Arbiter’s decision is already beyond the scope of
arbitration since in the appeal stage, the NLRC en banc merely reviews the Labor Arbiter’s
decision for errors of fact or law and no longer duplicates the proceedings before the Labor
Arbiter. Thus, the clause "pending final resolution of the case by arbitration/ should be
understood to be limited only to the proceedings before the Labor Arbiter, such that when the
latter rendered his decision, the case was finally resolved by arbitration.
In view of the finding of valid dismissal, the NLRC had no authority to order the continued
payment of Dolina’s salaries from 1 April 1979 until the case is finally resolved. The NLRC’s
order would result in compensating Dolina for services no longer rendered and when he is no
longer in PAL’s employ. This is contrary to the age-old rule of "a fair day’s wage for a fair day’s
labor" which continues to govern the relation between labor and capital and remains a basic
factor in determining employees’ wages (Durabilt Recapping Plant & Co. v. National Labor
Relations Commission, G.R. No. 76746, July 27, 1987, 152 SCRA 328). So that, if there is no
work performed by the employee there can be no wage or pay unless the laborer was able,
willing and ready to work but was prevented by management or was illegally locked out,
suspended or dismissed. Where the employee’s dismissal was for a just cause, it would neither
be fair nor just to allow the employee to recover something he has not earned and could not have
earned (Santos v. National Labor Relations Commission, G.R. No. 76721, September 21, 1987,
154 SCRA 166.)
WHEREFORE, that part of the dispositive portion of the decision of the National Labor
Relations Commission in NLRC CASE NO. RB-IV-9319-77 requiring PAL to restore Dolina to
its payroll and ordering the payment of his salaries from 1 April 1979 until the case is finally
resolved is hereby declared NULL and VOID and SET ASIDE.
