Wednesday, July 23, 2008 SC orders reinstatement of dismissed PAL workers
THE Supreme Court (SC) on Tuesday ordered the flag carrier Philippine Airlines (PAL) to reinstate about 1,400 cabin crew personnel who were illegally retrenched in 1998 at the height of its financial and labor woes that prompted the Lucio Tan-led company to temporarily shut down.
In a decision penned by Associate Justice Consuelo Ynares-Santiago, the SC Third Division granted the petition filed by the Flight Attendants and Stewards Association of the Philippines (Fasap) seeking a reversal of the Court of Appeals (CA) decision upholding PAL's retrenchment program.
The SC sustained the findings of the labor arbiter that found PAL guilty of illegal dismissal and ordered the reinstatement of the dismissed employees, saying the airline failed to comply with certain standards established under the law.
The high court 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.
According to the SC, PAL initially decided to cut its fleet size to only 14 or "Plan 14," based on which plan, it retrenched more than 1,400 of its cabin crew personnel. However, PAL changed its mind and decided to retain 22 units of aircraft or "Plan 22" but has already retrenched more than what was necessary.
Such move, the court said, is "capricious and arbitrary" and in bad faith considering that more than 1,000 employees who had been working long with PAL lost their jobs, only to be recalled but assigned to lower positions.
"PAL's retrenchment program is illegal because 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 court ruled.
The tribunal also noted that PAL was not even aware of its actual financial position when it implemented its retrenchment program.
PAL also failed to substantiate its claim of actual and imminent substantial losses in the wake of the financial crisis that plagued most Asian economies, including that of the Philippines, to justify the retrenchment of its cabin crew personnel.
The court said that although the Philippine economy was gravely affected by the Asian financial crisis, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy.
"The fact that PAL underwent corporate rehabilitation does not automatically justify the retrenchment of its cabin crew personnel," the SC said.
The airline could not have proved that retrenchment was necessary to prevent losses since a year after, it was already on the road to recovery and recalling to duty cabin crew it had previously retrenched, it said.
The SC further said it cannot give credence to PAL claim of actual and imminent losses considering that in December 1998, it submitted a "stand-alone" rehabilitation plan to the Securities and Exchange Commission; and on June 4, 1999, or less than a year after the retrenchment, the amount of US$200 million was invested directly in PAL by way of additional capital infusion for its operations.
It noted that in March 2000, PAL also declared a net income of P44.2 million and P419 million in 2001 and P295 million in 2003.
"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 SC said.
In the decision, the SC 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, in lieu of the reinstatement, and separation pay equal to one month's pay for every year of service.
Court records showed that PAL retrenched about 5,000 of its employees, including more than 1,400 of its cabin crew personnel, on July 15, 1998, supposedly 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 said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion.
In its petition, Fasap claimed that PAL failed to adopt less drastic cost-cutting measures before resorting to retrenchment; arbitrarily and capriciously singled out the year 1997 as reference in its alleged assessment of employee efficiency; disregarded seniority in the selection of employees to be retrenched; maliciously represented that it could only operate Plan 14 to justify the retrenchment scheme; and did not use fair and reasonable criteria in effecting retrenchment.
The assailed CA decision issued on August 23, 2006 affirmed the ruling of the National Labor Relations Commission (NLRC) upholding the legality of PAL's retrenchment program. The NLRC reversed the findings of the labor arbiter issued on July 21, 2000 ordering the reinstatement of the dismissed employees. (ECV/Sunnex)
