Labor clouds PAL future


July 24, 2010

Philippine Airlines, the national flag carrier, is undoubtedly the most overstaffed airline in the world.

With only 39 aircraft for domestic and international operations, it has 7,500 people in its payroll. That averages 192 employees per airplane. Worldwide, the average is 100 to 120.

As if the large number were not bad enough, PAL’s labor force is probably the most strident in the airline industry all over the world.

In 1998, PAL retrenched thousands of employees including 1,400 cabin crew personnel. They accepted the retirement pay in amounts somewhat more than what the law requires.

They signed quit claims which by any stretch of the imagination leaves PAL in peace.

The quit claim provides in very clear terms that the furloughed employee "hereby voluntarily, irrevocably, and unconditionally release and forever discharge PAL and PAL owners, partners, stockholders, predecessors, successors, assigns, agents, insurers, directors, officers, employees, representatives, subsidiaries affiliates and all persons … from any and all complaints, claims, demands, liabilities or rights…"

Unmindful of their commitments, the members of the Flight Attendants and Stewards Association of the Philippines (FASAP) went to court asking for reinstatement.

The National Labor Relations Council ruled in favor of PAL. FASAP appealed to the Court of Appeals. The CA affirmed the ruling of the NLRC.

The case went up to the Supreme Court on appeal.

On July 22, 2008, the Supreme Court reversed the decisions of the NLRC and the CA. It found PAL guilty of illegal dismissal. PAL filed a motion for reconsideration. The motion was denied.

A second motion for reconsideration is now pending resolution in the Supreme Court.

While the case is pending resolution, a labor arbiter made the illegal conclusion that the ruling of the SC has become final. Forthwith, he issued a writ of execution ordering the NLRC sheriffs to reinstate 582 cabin crew personnel to their former positions.

The arbiter took the move in spite of the objection of PAL for NLRC to issue a writ of execution.

On July 5, 2010, the NLRC sheriffs, complying with the writ of execution, went to PAL’s ticket office in Cubao and other ticket offices, posted a sheriff’s notice of levy/sale on execution of personal property.

The sheriff also served notices of garnishment on the depositary banks of the airline.

PAL filed a motion for a restraining order with the NLRC which was granted on July 12, 2010. The TRO is valid for 20 days from date of issue or receipt by the parties.

While all these were happening PAL president Jaime Bautista announced to media that the airline was seeking foreign partners to bolster its capital stock. The plan is to increase paid capital expected to be subscribed and paid by foreign partners, with Lucio Tan who now owns about 90 per cent of the airline retaining majority of the shares.

Some leaders of the business community who requested not to be named saying they have nothing to do with the problems of PAL, nevertheless expressed alarm over what they thought is the denial by the courts of the rights of owners of enterprise to plot the future of their companies toward the path of growth.

They also said that the decision of the Supreme Court declaring PAL guilty of illegal dismissal will definitely discourage local or foreign investors from putting in money in the national flag carrier.

The employees signed a quit claim. They abandoned their right to strike, the business leaders said.

They explained that large companies such as Standard Electric and Novelty Philippines closed shop and went to China after their operations were paralyzed by a strike.

More than 3,000 jobs were lost in the two companies. They also pointed out that strident labor is one of the major reasons the country has not attracted enough local and foreign investments.

The owners of large manufacturing companies have decided to go into trading precisely to avoid labor troubles. The result, the business leaders claimed, is a slowdown in the creation of jobs.

The Supreme Court ruling states that PAL failed to substantiate its claim of actual and imminent substantial losses. The decision also states that the quit claims was clouded by fraud or mistake.

Strangely, FASAP itself is known to have admitted that the airline incurred financial losses. These losses were confirmed by the Securities and Exchange Commission, the labor arbiter, the NLRC and the Court of Appeals.

1 comment:

  1. Lucio Tan himself made the airline lose money so that he can close it and get back the emloyees without benefits. imagine PAL buys a bottle of Absolute water from Asia brewery which he also owns at a higher price than one common person can buy it at a grocery. He milks the airline for his other businesses.Thats just one example. He is a very shrewd businessman.