MANILA (UPDATE 1) - The Court of Appeals (CA) has declared as legal and valid the outsourcing of flag carrier Philippine Airlines' (PAL) in-flight catering, airport services, and call center operations by upholding two resolutions of the Office of the President (OP) in favor of the action of the Department of Labor and Employment (DOLE) for the contracting out of these services.
In an 87-page decision by the Special 8th Division penned by Associate Justice Priscilla Baltazar-Padilla, the appellate court ruled that there was no grave abuse of discretion on the part of the OP in issuing the assailed resolutions dated Mar. 25, 2011 and Aug. 11, 2011.
"We see no apparent indication that the decree upholding the validity of PAL's plan to outsource its non-core operations was attended with whim, caprice and arbitrariness. In fact, the reasons for such conclusion... have sufficient bases in law and jurisprudence," the decision read.
As early as August 2009, PAL first announced its plan to close down its operational services citing its "deteriorating financial condition."
PAL formally informed the DOLE of the permanent reduction of its workforce effective May 31, 2010 involving at least 2,600 employees.
The PAL Employees Association (PALEA) elevated their opposition to the move before the OP; the OP, however, sustained the outsourcing.
In elevating the case to the appellate court, PALEA argued that "[t]he consequent retrenchment of the regular employees and union member is invalid," and that "PAL's mass termination of more than 2,600 employees is neither necessitated nor justified by the company's financial situation."
In its ruling, the appellate court stated that what is clear in the Collective Bargaining Agreement (CBA) between PALEA and PAL is that temporary contracting out of jobs or departments is not allowed. Permanent measures, such as the issue at hand, however, is allowed as the PAL management deems it necessary to make its operations viable.
"Thus, PAL's recourse to other means like permanent outsourcing is valid," the decision read.
The appellate court's action does not cover some 1,406 of the retrenched employees who have entered into a compromise deal with PAL and received their transition benefits plus additional gratuity.