MANILA - The Supreme Court has reversed its earlier ruling that Philippine Airlines (PAL) illegally retrenched over 1,400 flight attendants and stewards in 1998.

In a decision dated March 13 penned by Associate Justice Lucas Bersamin, the high court granted PAL's motion for reconsideration and overturned its July 22, 2008 decision, which found PAL guilty of unlawful retrenchment and ordered the reinstatement of the retrenched cabin crew.

The case stems from PAL's mass layoff and demotion of hundreds of employees in 1998 after the flag carrier suffered severe losses during the Asian financial crisis.

• Retrenching workers? Don’t repeat PAL’s mistake

In its recent ruling, the high court said that it was "convinced that PAL had met all the standards in effecting a valid retrenchment."

"At the outset, it must be pointed out that complainant was never opposed to the retrenchment program itself, as it understands respondent PAL' s financial troubles. In fact, complainant religiously cooperated with respondents in their quest for a workable solution to the company-threatening problem," the high court said.

The high court cited the Flight Attendants and Stewards Association of the Philippines' (FASAP) pleading, which pointed out that "it was not opposed to the retrenchment program because it understood PAL's financial troubles; and that it was only questioning the manner and lack of standard in carrying out the retrenchment."

FASAP claimed PAL violated the terms of their Collective Bargaining Agreement (CBA). The labor group also questioned why PAL did not submit its financial statements to the high court.

However, the high court said it took note of the airline's financial losses as PAL underwent corporate rehabilitation then.

"Indeed, that a company undergoes rehabilitation sufficiently indicates its fragile financial condition. We emphasize, too, that the presentation of the audited financial statements should not be the sole means by which to establish the employer's serious financial losses," the decision read.

In 2012, lawmakers used the PAL labor case in the impeachment proceedings against then-Chief Justice Renato Corona.

Impeachment prosecutors said the SC, under Corona’s leadership, reversed a supposedly final decision declaring PAL’s retrenchment of thousands of flight crew as illegal, after entertaining a mere letter from PAL’s lawyer, Estelito Mendoza.