THE Supreme Court (SC), voting 7-2, affirmed the decision issued by the Court of Appeals in 2006, which held that the retrenchment in 1998 of 1,400 flight attendants and stewards of Lucio Tan-owned Philippine Airlines (PAL) was legal.
In a 55-page decision penned by Associate Justice Lucas Bersamin, the court en banc abandoned its decision issued on October 2, 2009, which affirmed with finality its July 22, 2008, ruling declaring as illegal the dismissal of the members of the Flight Attendants and Stewards Association of the Philippines (Fasap).
The court held that PAL was able to establish serious financial losses amounting to P90.6 billion that justified the implementation of its retrenchment program.
It also held that, contrary to the 2008 and 2009 ruling of the SC’s Third Division, the retrenchment of the Fasap members was done in good faith and that PAL used fair and reasonable criteria in selecting the employees to be retrenched pursuant to the their collective bargaining agreement.
The SC said the retrenched employees signed valid quitclaims.
“PAL could not have been motivated by ill will or bad faith when it decided to terminate Fasap’s affected members. On the contrary, good faith could be justly inferred from PAL’s conduct before, during and after the implementation of the retrenchment plan,” the SC said in a ruling dated March 13.
It noted that the parties met on several occasions to explore cost-cutting measures, including the implementation of the retrenchment program.
“Given PAL’s dire financial predicament, it becomes understandable that PAL was constrained to finally implement the retrenchment program when the Alpap [Association of Airline Pilots of the Philippines] pilots’ strike crippled a major part of PAL’s operations,” the SC said.
“As between maintaining the number of its flight crew and PAL’s survival, it was reasonable for PAL to choose the latter alternative. This Court cannot legitimately force PAL as a distressed employer to maintain its manpower despite of its dire financial condition,” it added.
In its resolution issued on October 2, 2009, the SC’s Third Division, through now retired Associate Justice Consuelo Ynares-Santiago, affirmed with finality its ruling issued on July 22, 2008, declaring as illegal the retrenchment of the Fasap members.
The court denied for lack of merit the motion for reconsideration filed by PAL seeking the reversal of the ruling. The court did not give credence to the claim of PAL that it was suffering from financial distress caused by the pilots’ strike on June 5, 1998, that justified the retrenchment of the flight attendants.
“We find this argument untenable. The strike was a temporary occurrence that did not necessitate the immediate and sweeping retrenchment of 1,400 cabin or flight attendants,” the Court declared.
However, the High Tribunal modified part of the ruling that, instead of ordering PAL to immediately reinstate the cabin crew or pay back wages and separation pay of those whose reinstatement is no longer feasible, it remanded the case to the labor arbiter “solely for the purpose of computing the exact amount of the award” to be given to the dismissed employees.
The Court took note of PAL’s claim that the monetary award it stood to pay to the affected flight attendants would reach a whopping P2.3 billion, which could paralyze its operations and even lead to its untimely closure.
But the SC stressed that the amount would be greatly reduced since, based on its review of the records of the case, several of the crew members did not need to be paid full back wages or separation pay.
A substantial fraction of the 1,400 flight attendants was already recalled, reinstated or relieved from the service, while others have already reached the mandatory retirement age or even died.