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Appeals court junks PAL workers’ bid vs outsourcing


MANILA, Philippines—The Court of Appeals has upheld Malacañang in its decision to allow Philippine Airlines to axe 2,600 employees in 2010, saying this was a valid management move to revive the money-losing airline.

In an 87-page decision dated March 13, the appellate court’s Special 8th Division, Division through Association Justice Priscilla Baltazar-Padilla, junked a motion for reconsideration filed by labor union PAL Employees Association (Palea), which accused PAL of “unfair labor practices.”

Representatives from Palea said the union would appeal the decision.


Palea had earlier filed a motion asking the intermediate court to overturn decisions by the Department of Labor and Employment, and, subsequently, the Office of the President, which both sided with PAL management.

The court said it agreed with the secretary of labor that “the permanent outsourcing of non-core operations of PAL is part of the company’s exercise of its right to reorganize its business structure to enable it to thrive and grow in a highly competitive airline industry.”

The court said PAL’s move was done “in good faith” and “for the advancement of the company’s interest” and not for the purpose of defeating or circumventing the rights of employees.

The issue involves the dissolution of three major, but non-core, departments within PAL, namely its call center reservations, airport services, and in-flight catering.

Third-party contractors were hired to replace the closed down departments. About 2,600 workers lost their jobs, but most have accepted jobs offered them by the new contractors. The decision listed 1,406 former Palea members that accepted retirement packages offered them by PAL when the outsourcing was done in 2010.

In its decision, the court said outsourcing of services was a “growing global trend” that the industry should accept, if not embrace.

The court cited a press release by Labor Secretary Rosalinda Baldoz that said “outsourcing is already with us,” defending her decision to allow PAL’s spin-off.

PAL justified the spin-off of services, citing a P690-million net loss for the fiscal year ending March 2010.


“While we commiserate with the plight of all employees affected by PAL’s outsourcing, we cannot, however, blindly uphold with absoluteness their plea to reject the outsourcing … especially when we find nothing capricious and arbitrary on the part of the OP when it affirmed the ruling of DOLE,” the CA said.

PAL’s spin-off/outsourcing program was first recognized as legal and valid by acting Labor Secretary Romeo Lagman on June 15, 2010, and was affirmed by Labor Secretary Rosalinda Baldoz on Oct. 29, 2010. Baldoz’ ruling was affirmed by the Office of the President prompting Palea to file an appeal with the Court of Appeals.

“It is readily apparent that PAL has a fluctuating financial condition and it is understandable if it continues to explore cost-saving measures to attain full financial stability. Hence, we decline to interfere with PAL’s judgment in the conduct of its business by making a legitimate business decision to outsource certain services to maintain a healthy and viable financial standing,” the appeals court said.—With Tetch Torres-Tupas,

Originally posted at 05:53 pm | Wednesday, March 20, 2013

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TAGS: Air Transport, Airline, aviation industry, Labor, labor dispute, nation, News, Outsourcing, PALEA, Philippine Airlines, Philippine Airlines (PAL)
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