SC en banc to hear PAL labor dispute again

MANILA, Philippines – The Supreme Court en banc ruled that it would hear the petition again concerning its previous ruling that favoured the 1, 400 cabin crew of the Philippine Airlines.

A 30-page resolution dated March 13, 2012 but which was released to the media this Wednesday through Associate Justice Arturo Brion said the petition would be raffled off to either Associate Justices Lucas Bersamin or Diosdado Peralta, who were members of the Special Third Division that originally ruled on the merits of the case.

The high court said that due to the series of inhibitions, retirements of justices and subsequent reorganizations, the case may have fallen in the wrong division.

In the ruling released Wednesday, the high tribunal affirmed its October 2011 decision that “effectively recalled” its Sept. 7, 2011 ruling, which declared as illegal the retrenchment of the 1,400 Philippine Air Lines cabin crew in 1998.

But the high court clarified that the October 2011 decision would not affect the merits of the case when it is deliberated on again, which meant that the original ruling favoring the retrenched PAL cabin crew that was issued in July 2008 by the Supreme Court third division stands.

“To point out the obvious, the recall was not a ruling on the merits and did not constitute the reversal of the substantive issues already decided upon by the Court in the FASAP case in its previously issued decision (of July 22, 2008),” the high court said.

“The…resolution was not meant and was never intended to favor either party but to simply remove any doubt about the validity of the ruling Division’s action on the case,” the high court added.

The case stemmed from a decision by PAL management to retrench 5,000 of its employees, including the 1,400 cabin crew, on June 15, 1998, with the retrenchment to take effect on July 15 of the same year.

PAL adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought about by the Asian financial crisis.  During said period, PAL claimed to have incurred P90 billion in liabilities while its assets stood at P85 billion.

In implementing the retrenchment scheme, PAL adopted its so-called “Plan 14” where PAL’s fleet of aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel. PAL claimed that the scheme resulted in “savings x x x amounting to approximately P24 million per month – savings that would greatly alleviate PAL’s financial crisis.”

Despite consultations with the Flight Attendants’ and Stewards’ Association of the Philippines (FASAP), PAL pushed through with the retrenchment plan.

On Sept. 4, 1998, PAL, through its Chairman and Chief Executive Officer (CEO) Lucio Tan offered to transfer shares of stock to its employees and three seats in its Board of Directors, on the condition that all the existing Collective Bargaining Agreements (CBAs) with its employees would be suspended for 10 years. The proposal was rejected, forcing PAL to shut down its operations effective Sept. 23, 1998.

Through the intervention of then President Joseph Estrada, workers issued counter offers, including rehiring of the retrenched workers. An agreement was reached in October, 1998 and PAL resumed domestic and international operations after.

FASAP filed a complaint against PAL for unfair labor practice, illegal retrenchment with claims for reinstatement and payment of salaries, allowances and backwages of affected FASAP members as well as actual, moral and exemplary damages with the National Labor Relations Commission.

PAL lost the case, which its management elevated to the Supreme Court.