G.R. No. L-8715, 30 June 1956

FACTS:

Sometime before May 21, 1947, the Philippine Air Lines, Inc. (PAL) purchased and acquired a majority of the shares of the Far Eastern Air Transport, Inc. (FEATI). Those two airlines were, previous to the said purchases, then competing in various air routes through the Philippines, with the result that both companies were losing and it became necessary to maintain only one airline. The purchase gave rise to the problem of what to do with the FEATI employees. After some negotiations between the representatives of the FEATI Employees Association and the PAL, the parties finally reached an agreement on May 21, 1947, whereby the PAL agreed to absorb some 70 per cent of the FEATI employees, and the said employees agreed to work for PAL under the same terms and conditions as they worked for the FEATI until such time as they come to a definite understanding.

On July 9, 1947, the PAL reached a ‘definite understanding’ with the Public Utilities Employees Association aforesaid whereby they entered into an agreement cancelling the agreements of May 21, 1947 and August 1, 1946, and declaring them ‘void and of no further force and effect.’ It also provided for the laying off of all the FEATI employees as of June 15, 1947 and the payment to them of one and a half month’s separation pay which amounted, roughly to P150,000.00.

On November 11, 1952, almost six years from the time they were laid off, the Public Utilities Employees Association aforesaid filed a petition with the Court of Industrial Relations praying that the PAL be ordered to pay them the twelve (12) days vacation leave and twelve (12) days sick leave with pay, from August 1, 1946, which had already accrued at the time they were laid off on June 15, 1947.V The PAL, in its Answer to the Employees’ petition, denied liability, alleging that it was not a party to the Agreement of August 1, 1946. The said employees were absorbed by the PAL only on May 21, 1947 and were laid off on June 15, 1947.

ISSUE:

Is PAL liable for the payment of the accrued vacation and sick leaves of the FEATI employees?

RULING:

It would be unfair now to demand this payment from the PAL after more than five years when the papers and the records of the service of said employees from August 1, 1946 to May or June, 1947, may no longer exist;when the FEATI has long ceased operations and has long ceased to exist and when its officials who were in a position to determine which employees because of their faithful, efficient and continuous service were entitled to leave and for how many days, may no longer be available.

*Case digest by Bryne Angelo M. Brillantes, LLB IV, Andres Bonifacio College – School of Law, SY 2019-2020