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THE
Supreme Court (SC) has found the Lucio Tan-owned
Philippine Airlines (PAL) guilty of illegal dismissal
and ordered the country’s flag carrier to reinstate a
total of 1,400 cabin-crew members retrenched in 1998.
In a
32-page decision penned by Associate Justice Consuelo
Ynares-Santiago, the Court’s Third Division granted the
petition for review on certiorari filed by the Flight
Attendants and Stewards Association of the Philippines (Fasap)
seeking the reversal of the Court of Appeals (CA)
decision issued on August 23, 2006. The CA had affirmed
the ruling of the National Labor Relations Commission (NLRC)
upholding the legality of PAL’s retrenchment program.
The NLRC
had reversed the findings of the labor arbiter on July
21, 2000, ordering the reinstatement of the dismissed
employees.
The High
Tribunal held that PAL’s reduction of personnel was
illegal for failing to comply with certain standards set
by law.
It also
directed PAL to pay the dismissed employees their full
backwages, inclusive of allowances and other benefits,
computed from the time of their separation up to the
time of the actual reinstatement.
When
reinstatement is no longer feasible, the Court ordered
PAL to pay the backwages and separation pay equal to
one-month pay for every year of service.
In
granting Fasap’s petition, the SC said PAL failed to
justify that the retrenchment is necessary and likely to
prevent business losses; that the dismissal was done in
good faith; and that it used reasonable criteria in
ascertaining who would be dismissed, and who would be
retained among the employees, such as status,
efficiency, seniority, physical fitness, age and
financial hardship for certain workers.
“In sum,
PAL’s retrenchment program is illegal because it was
based on wrongful premises [Plan 14, which, in reality,
turned out to be Plan 22], resulting in retrenchment of
more cabin attendants than was necessary, and in a set
of criteria or rating variables that is unfair and
unreasonable when implemented. It failed to take into
account each cabin attendant’s respective service
record, thereby disregarding seniority and loyalty in
the evaluation of overall employee performance,” the SC
said.
The
Court noted that PAL was not even aware of its actual
financial position when it implemented its retrenchment
program.
The
airline, according to the SC, initially decided to cut
its fleet size to only 14 or “Plan 14” and, based on
said plan, it retrenched more than 1,400 of its cabin
crew personnel.
The SC
further said PAL changed its mind and decided to retain
22 units of aircraft or “Plan 22” but had already
retrenched more than what was necessary.
Furthermore, the Court stressed that PAL failed to
substantiate its claim of actual and imminent
substantial losses, which would justify the retrenchment
of more than 1,400 of its cabin crew personnel.
“Although the Philippine economy was gravely affected by
the Asian financial crisis, however, it cannot be
assumed that it has likewise brought PAL to the brink of
bankruptcy. Likewise, the fact that PAL underwent
corporate rehabilitation does not automatically justify
the retrenchment of its cabin crew personnel,” the SC
stressed.
The SC
noted that PAL could not have proved that retrenchment
was necessary to prevent losses since a year after, the
airline was already on the road to recovery and
recalling to duty some of the cabin crew it had
previously retrenched.
In March
2000, PAL also declared a net income of P44.2 million
and P419 million in 2001 and P295 million in 2003.
The
Court further said it could not give credence to PAL’s
claim of actual and imminent losses considering that in
December 1998, it submitted a “stand-alone”
rehabilitation plan to the SEC, and on June 4, 1999; or
less than a year after the retrenchment, $200 million
was invested directly into PAL by way of additional
capital infusion for its operations.
“By
submitting a ‘stand-alone’ rehabilitation plan, PAL
acknowledged that it could undertake recovery on its own
and that it possessed enough resources to weather the
financial storm, if any,” the Court added.
Likewise, the SC held that PAL acted in bad faith when
it implemented Plan 22, instead of Plan 14, without
issuing an explanation to its employees.
The
Court branded the move as “capricious and arbitrary,”
considering that more than 1,000 employees who had been
working long with PAL had lost their jobs, only to be
recalled but assigned to lower positions.
“Moreover, the management’s September 4, 1998, offer to
transfer PAL shares of stock in the name of its
employees in exchange for the latter’s commitment to
suspend all existing CBAs (collective bargaining
agreements] for 10 years; the closure of its operations
when the offer was rejected; and the resumption of its
business after the employees relented; all indicate that
PAL had not acted in earnest in regard to relations with
its employees at the time,” the Court explained.
Records
showed that PAL, on June 15, 1998, retrenched 5,000 of
its employees, including more than 1,400 of its cabin
crew personnel, to take effect on July 15, 1998.
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
the period, PAL claimed to have incurred P90 billion in
liabilities, while its assets stood at P85 billion. |
