Supreme Court finds PAL guilty of illegal dismissal

The Supreme Court has affirmed with finality its ruling that found the Lucio Tan-owned Philippine Airlines (PAL) guilty of illegal dismissal. The court’s Special Third Division, in a 31-page resolution written by Associate Justice Consuelo Ynares-Santiago, denied with finality the motion for reconsideration filed by the country’s flag carrier seeking a reversal of its assailed July 22, 2008 decision.

“The assailed decision dated July 22, 2008 is affirmed with modification in that the award of attorney’s fees and expenses of litigation is reduced to P2,000,000,” the court said.

In the same ruling, the Supreme Court remanded the case to the labor arbiter “solely for the purpose of computing the exact amount of the award pursuant to the four-point guidelines issued by the court so as not to delay the final resolution of the case.”

Disappointed with ruling

Meanwhile, PAL President Jaime Bautista, in a statement, expressed disappointment over the decision.

“While we have yet to receive a copy of the said decision, PAL is disappointed the High Tribunal did not appreciate our arguments that the termination of PAL employees in 1998 was necessitated by the fact that PAL was under rehabilitation which is equivalent to Chapter 11 bankruptcy,” Bautista said.

He added, “We will wait for the official copy of the Supreme Court decision to study its implications and determine our legal options.”

In its motion for reconsideration, PAL argued that it was suffering from financial distress, which justified the retrenchment of more than 1,400 of its flight attendants belonging to the Flight Attendant and Stewards Association of the Philippines.

It claimed that as a result of the pilots’ three-week strike that began on June 5, 1998, followed by a four-day employee-wide strike on July 22, 1998, PAL’s financial situation went from bad to worse and “it was faced with bankruptcy, requiring it to seek rehabilitation and downsize its labor force by more than one-third.”

As a result, PAL said, it decided to cut its fleet of aircraft to minimize operating losses and rescue itself from “total downfall,” with a corresponding retrenchment of 5,000 employees, including the 1,4000 cabin attendants.

Untenable argument

But the Supreme Court did not give credence to PAL’s claim, saying, “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.”

According to the court, the retrenchment was a knee-jerk solution to a temporary problem that beset PAL at the time.

It said that it could not simply allow PAL to conveniently blame the striking pilots for causing the massive retrenchment of cabin personnel.

“Using them as scapegoats to validate a comprehensive retrenchment scheme of cabin personnel without observing the requirement set by law is both unfair and underhanded,” it stressed. “PAL must still prove that it implemented cost-cutting measures to obviate retrenchment, which under the law should be the last resort.”

The court pointed out that PAL did not abide by all the requirements of law for a retrenchment scheme to be valid.

“Therefore, this court finds no reason to disturb its findings that the retrenchment of the flight attendants was illegally executed. As held in the decision sought to be reconsidered, PAL failed to observe the procedure and requirements for a valid retrenchment,” it said.

Monetary reward

The court also noted PAL’s claim that the monetary award it stands 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, it stressed that the amount would be greatly reduced since based on its review of the records of the case, several of the crew do not need to be paid full back wages or separation pay.

A substantial fraction of the 1,400 flight attendants have been recalled, reinstated or relieved from the service while others have reached the mandatory retirement age or even died.

A significant portion of the retrenched flight attendants has received separation pay and signed quitclaims.

“After finality of this case, the records will have to be remanded to the labor arbiter who decided the case at the first instance. There the actual amount of PAL’s liability to each and every flight attendant will be computed. Both parties will have a chance to submit further proof and argument in support of their respective proposed computations,” the court said.

It reduced to P2 million the award of attorney’s fees and expenses of litigation. In its previous decision, the court directed PAL to pay attorney’s fees equivalent to 10 percent of the total monetary award.

Concurring with the ruling were Associate Justices Minita Chico-Nazario, Antonio Eduardo-Nachura, Diosdado Peralta and Lucas Bersamin. –William B. Depasupil, Reporter, Manila Times