This case involves the intended mass dismissal of almost 3,000 regular rank-and-file employees of Philippine Airlines, who are members and officers of the Philippine Airlines Employees’ Association (PALEA), which termination is in violation of the law and of the collective bargaining agreement (CBA) of PAL and PALEA.
Statement of Facts
1. On August 26, 2009, in a Labor Management Cooperation Council (LMCC) meeting between the management and the union, PAL announced its intention to spin-off/outsource - IT/Human Resources Benefits/Legal/Medical/Airport Services/Catering/Reservations/Ticket Offices/Revenue Accounting etc. citing losses incurred by the company. In said meeting, the union requested that the plan be kept a secret to managers and union members.
2. On September 9, 2009, PAL President formalized its communication to the union by way of a letter stating therein the intention of the management to spin-off/outsource the Airport Services Department and Catering Department. The same was to become effective 15 November 2009.
3. On 10 & 11 September 2009, the Union reminded PAL management that the one year extension of CBA suspension is due to expire, PALEA formally notified PAL of its intention to re-negotiate the remaining four years of the collective bargaining agreement (2009-2013).
4. During the LMCC meetings that ensued, PALEA stressed that the CBA negotiation is the most appropriate venue to thresh out unresolved issues on the planned outsourcing.
5. On 22 September 2009, due to the divergent positions of the parties, the union filed with the National Conciliation and Mediation Board (NCMB) a Notice of Preventive Mediation citing union busting as the sole and principal issue which was docketed as NCMB-NCR-PM-09-126-09. Several conciliation meeting were held between 25 September 2009 and 05 October 2009. The parties did not reach any agreement on the issue of outsourcing.
6. Meanwhile, in September 2009, PAL offered Early Retirement Program to its managers and administrative personnel which program was made optional/voluntary to the rank-and-file employees.
7. Without significant progress in the conciliation conferences, the union, on January 28, 2010, withdrew the Notice of Preventive Mediation and filed a Notice of Strike on the ground of union busting, particularly: (1) Intended mass lay-off of union members and officers by April 2010; (2) Illegal outsourcing or regular positions; (3) Direct negotiations with union members for them to avail of the ERP with promise of re-employment; (4) Unresolved issues during preventive mediation/LMCC; (5) Non-compliance with payscale, item II of the wage distortion case; and (6) Others.
8. Meantime, from 17-25 February 2010, union election of officers was held. The new set of officers assumed their official functions on 29 March 2010. The outgoing officers, however, officially turned over the keys of the union only on 20 April 2010.
9. During the intermediate period on 16 April 2010, PAL President issued a letter informing the union of the complete closure of several departments of the company and abolition of all affected regular positions by 31 May 2010. PAL management announced that 2,604 regular employees were sent notices of termination through registered mail. By reason of this notice, the new leadership initiated protest action on 19 & 23 April 2010.
10. On 23 April 2010, then DOLE Secretary Marianito Roque issued Assumption of Jurisdiction Order (AJ) which was received by the union on 26 April 2010 and by the management on 27 April 2010. The management, on 26-27 April 2010 issued Notices of Termination.
11. On April 30, 2010 and May 7, 2010, mediation/conciliation hearings were held. Then Usec. Rosalinda Baldoz chaired/conducted the said hearings. In the latter hearing, the parties agreed that the ASSUMPTION OF JURISDICTION issued by DOLE suspended the effects of the Notice of Termination.
12. The parties submitted their respective position papers, replies, rejoinders and motions on May 17 & 27 May and 7 June 2010.
13. On 15 June 2010, after eight (8) calendar days or four (4) working days from the submission of the Rejoinder, and despite the pendency of the Motion for the Production of Documents filed by the union, the Acting Secretary of Labor Romeo Lagman, rendered a Decision adverse to PALEA. The dispositive portion of the Decision reads:
“WHEREFORE, premises considered, this Office holds that the intended closure of the Philippine Airlines In-Flight Catering operations, Airport Services Operations and Call Center Reservations Operations and the consequent severance from employment of all affected employees as reported to the DOLE Regional Offices, as well as the contracting out of the these operations to the named service providers, are based on lawful ground and all in a valid exercise of managerial prerogative and as such valid and lawful in all respects.
14. On 22 June 2010, around 300 members of PALEA conducted a two-hour protest rally in front of the DOLE office in Intramuros. It condemned the decision of the Acting Secretary as a Midnight Decision.
15. On the next day, 23 June 2010, around 600 PALEA members trooped to the residence of President Benigno Aquino at Times St., Quezon City Union demanded the following:
1. Presidential intervention in the PAL-PALEA dispute
2. Cleansing of corrupt officials in the Department of Labor and Employment
3. Reform of the policy regarding contractual employment.
16. On 28 June 2010, PALEA filed its Motion for Reconsideration. The filing was accompanied by a protest action that was attended by more or less 300 union members. PALEA argued that the retrenchment of almost 3,000 regular rank-and-file employees who are Union members, including Union officers, is invalid and constitutive of Unfair Labor Practice because:
1. It violates the law and the parties’ CBA
a. The termination of the regular employees is not necessitated by the company’s financial situation.
b. PAL violated the CBA provision against Labor Contracting.
c. PAL violated the CBA provision on Job Security.
2. It violates Article 248 of the Labor Code, and Department Order No. 18-02. Despite PAL’s insistence, what it planned to do was not a “spin-off” but an “outsourcing” which is equivalent to contracting-out of services.
17. PALEA maintains that the real intention of PAL in pursuing its planned mass lay-off is to contractualize the regular positions now existing in the company with the ultimate motive of BUSTING THE UNION. Coordination meetings are now being undertaken with local as well as foreign alliances in the labor movement with the intention to call for a Labor Solidarity in the fight against Contractual employment.
18. Meantime, the Union , embarked on massive lobbying. Institutions such as the clergy, academe and Congress were involved. International alliances like the International Transports Workers Federation (ITF) also helped in the campaign.
19. The most remarkable of the above lobbying was the Privilege Speech delivered by TUCP Party-list Representative Raymond Mendoza last August 9, 2010. That, to the analysis of the Union , triggered interest in the House of Representatives. In the next day, PALEA was invited to a mini hearing by the House Committee on Labor. No less, it was attended by fourteen (14) congressmen.
20. On August 20, 2010, a conciliation conference was called by new DOLE Sec. Rosalinda Baldoz. In said hearing, the management manifested that “it shall await the resolution of the Motion for Reconsideration” filed by the Union . PALEA, on the other hand, manifested that it prefers that conciliation meetings be held further. The Union , however, manifested that management should first scrap its plan to terminate the 2,604 employees.
21. Last September 2, the Union , through the Legal Counsels, received the documents previously demanded, by way of Motion to Produce Documents, but completely denied by then Sec. Romeo Lagman. These were PAL’s financial statement for 2009-10, the contracts signed by the Company with Sky Kitchen and ePLDT Ventus ( the Service Providers). It must be noted, though, that the contract between PAL an Sky Logistics, the service provider of the ground handling was not presented by PAL.
22. On 14 September 2010, PALEA submitted its comment to the documents above-mentioned. Notably, the financial statement provided by the Company show that PAL is no longer on the red. It has financially recovered and in fact already registered income.
23. Thus, it is the prayer of the Union that the Secretary of the Department of Labor and Employment reverse the decision dated 15 June 2010 by then Acting Secretary Romeo Lagman and issue a new decision:
1. Declaring the intended retrenchment/closure of the various department of PAL as illegal;
2. Declaring PAL guilty of unfair labor practice.
24. On 29 October 2010, The Secretary of the Department of Labor and Employment (DOLE), Sec. Rosalinda Dimapilis-Baldoz, rendered her decision affirming the decision of the then Acting Secretary Romeo Lagman. The Notice of Order reads, in part:
Wherefore, the Motion for Reconsideration filed by PALEA is hereby DENIED and the Decision of the Acting Secretary of Labor and Employment dated 15 June 2010 is hereby AFFIRMED, with MODIFICATION that the following components of the Transition Benefits
Package shall be given to all affeceted employees:
a) All employees affected by outsourcing of In-Flight Catering, Airport Services, and Call Center Reservations Operations shall be absorbed by the respective service providers and PAL shall be bound and held liable by way of guarantee in favor of all affected employees, for payment for one year, of whatever salary is granted respectively by the service providers upon their admission to employment with said service providers;
b) Increase in separation pay in the amount of 1.25% per year of service;
c) Additional gratuity of fifty thousand pesos (P50,000.00) per affected employee;
d) Vacation Leave balance that is 100% commutable to cash regardless of years of service;
e) Sick Leave balance that is 100% commutable to cash regardless of years of service;
f) Trip pass benefits in accordance with Article XX of the CBA and the PAL Personnel Policies and Procedures Manual, graduated under the following terms:
15 years in service and more Lifetime
10-15 years 8 sets
5-10 years 5 sets
Less than 5 years 2 sets
g) Extension of one (1) year of the medical and hospitalization package based on Articles XIII to XV of the CBA and consistent with the (1) year period that PAL guarantees payment of the affected workers’ salaries, as provided in item (a).
The official copy of the above-mentioned decision was received by the legal counsels of the Union on 02 November 2010.
25. A few days after the Notice of Order was issued, Philippine Airlines management started convincing union members to adhere to the decision. Thus, PALEA filed a Notice of Strike (NOS) with the DOLE based on the following grounds:
1. Unfair Labor Practices:
A) Individual bargaining with union members tantamount to interference with, restraint, and coercion of employees in their exercise of their rights to self-organization;
B) Mass termination of Union officers amounting to Union Busting.
26. As an offshoot of the Notice of Strike filed by the Union, series of conciliation conferences were held under the auspices of the Department of Labor and Employment.
27. On November 8, 2010, a broad-labor press conference was attended by big labor organizations expressing support to the cause of PALEA.
28. A Congressional Inquiry ensued on 10 November 2010. The issues were focused on the validity of the termination of the more or less 2,600 employees in the guise of management prerogative of outsourcing.
29. On 12 November 2010, PALEA filed a PETITION FOR PRESIDENTIAL INTERVENTION IN THE LABOR DISPUTE AT PHILIPPINE AIRLINES, INC. “ The President of the Republic of the Philippines has the (1) power to intervene and assume direct jurisdiction over any labor dispute involving industries that, in his opinion, are indispensable to the national interest; and (2) power to determine such industries.
In the said Petition for Presidential Intervention, the Union raised the issue that “the Secretary of Labor and Employment” committed grave error in her findings of facts and in the application of law and jurisprudence in denying the motion for reconsideration of PALEA.
The Union further prayed, “ Wherefore, it is respectfully prayed that the Honorable Office of the President directly intervene and assume jurisdiction over the labor dispute in Philippine Airlines, Inc. relating to the mass termination of more than 2,600 regular employees, and issue an Order:
1. Directing PAL to stop from prematurely implementing the 29 October 2010 Order of the Secretary of Labor and Employment, and from committing other acts that will exacerbate the dispute;
2. Reversing the 29 October 2010 Order of the Secretary of Labor and Employment; and
3. Declaring PAL guilty of unfair labor practice for the implementation of the mass termination of more than 2,600 regular employees.
Other just and equitable reliefs are likewise prayed for.
30. Subsequently, on 15 November 2010, the Union and the legal counsels had a meeting with the Executive Secretary (ES) of the President. The meeting was more exploratory in nature. The Secretary floated possible settlements between the parties. The Union, however, stood firm on its position that the “outsourcing “ has no legal basis.
31. As a sign of unity with the cause of PALEA, big labor groups stage a National Day of Action for the Protection of Regular Jobs and against Contractual Employment on 25 November 2010 at the Industrial District of Ayala, Makati City.
32. In the intermediate period, PAL management continued to convince members to avail of the decision of the DOLE in relation to outsourcing. Thus on 06 December 2010, PALEA notified the NCMB/OS that the “STRIKE VOTE” will be conducted in compliance with the legal requirement for the holding of a valid strike. Strike vote was conducted on 07 December 2010. And, as per result, 86% of the votes cast affirmed the holding of the strike.
33. However, pending the actual reporting of the result of the Strike Vote to the DOLE, the Office of the President issued an Assumption of Jurisdiction Order mandating Philippine Airlines management and the Union to desist from undertaking any action that may aggravate the situation. Thereby, the decision of the DOLE dated June 15, 2010 and October 29, 2010 were ordered put on hold. Further, the management of PAL was ordered to comment on the petition (Petition for Presidential Intervention) of the Union within ten (10) days from receipt of the order.
34. By Order dated 03 February 2011 by the Office of the President, PAL and PALEA appeared in a Conciliation Meeting mediated by Sec. Ronald Llamas, ASec. Rolando Geron and ASec. Jose Amorado. In said meeting, PAL admitted for the first time that the financial condition of the Company is not the main reason but just one of the reasons for the outsourcing program. The management also raised the issue of Global Trend in the Airline Industry and that the program is within the scope of their Management Prerogative.
35. On the other hand, PALEA interposed that the issues may be discussed in the Collective Bargaining Negotiations. It gave the reminder that the CBA has not been renegotiated for almost thirteen (13) years. And, that PALEA already submitted the CBA proposals way back on 8 October 2010. It also mentioned that last January 27, 2011, after the Labor Management Coordination Council (LMCC) meeting between the management and the Union, no less than Mr. Jaime J. Bautista, PAL President and COO, advised the Union Officers for PAL and PALEA to start the CBA negotiations. Accordingly, on January 31, 2011, PALEA President, Bro. Gerardo F. Rivera, wrote the management and furnished therein the Union’s negotiation panel. A follow-up letter was sent to the management on February 4, 2011. However, there was no reply from the Management.
36. That, in the conciliation conference, the PAL President informed those present that they will negotiate the CBA only after the outsourcing program has been implemented. The Union opposed and asserted that the CBA negotiations should immediately commence.
37. Also, in the said conciliation meeting, the management agreed and promised to furnish the Office of the President and the Union PAL’s unaudited quarterly financial report for the 1st and 2nd quarters of fiscal year 2010-2011. On 14 February 2011, the Union’s legal counsels received the copy of the promised financial reports. As agreed, the Union has ten (10) calendar days from receipt of the financial report within which to file their comment together with the comment on the comment of the management on the petition for presidential intervention. It should be noted that PAL release a press release that it posted a comprehensive income of US$31.6M for the 1st quarter and US$28.2M for the 2nd quarter. Sometime June, 2010, PAL also was able to pay it maturing financial obligation to its creditors in the amount of USD$46.5M.
38. To date, the PAL-PALEA labor dispute is still pending before the Office of the President of the Philippines.
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