FASAP VS.

PAL ET AL DIGEST
DECEMBER 19, 2016 ~ VBDIAZ

FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE

PHILIPPINES (FASAP) v. PHILIPPINE AIRLINES, INC., PATRIA CHIONG
and COURT OF APPEALS

October 2, 2009/ G.R. No. 178083

YNARES-SANTIAGO, J.:

ISSUE: Cabin crew personnel were covered by the retrenchment and demotion
scheme of PAL due to financial distress which is evidenced by proof of its claimed
losses in a petition for suspension of payments, as well as the Order of the Securities
and Exchange Commission (SEC) approving the said petition for suspension of
payments, together with proof of summary of its debts and other liabilities.
Exercising its management prerogative and sound business judgment, it decided to cut
its fleet of aircraft in order to minimize its operating losses and rescue itself from
“total downfall;” which meant that a corresponding company-wide reduction in
manpower necessarily had to be made. As a result, 5,000 PAL employees (including
the herein 1,400 cabin attendants) were retrenched.
PAL, however, gave a whole different reason for retrenchment when the pilots went
on strike. Accordingly, what really brought about “the really perilous situation of
closure was that on June 5, 1998, the pilots went on strike, ninety (90%) per cent of
the pilots went on strike, approximately six hundred (600).” These pilots’ strike was
so devastating x x x. Without any pilots no plane can fly, your Honor, that is the stark
reality of the situation, and without airplanes flying, there would be no place for
employment of cabin attendants.
ISSUE: Whether or not the strike, which PAL used as basis to undertake the massive
retrenchment under scrutiny, is an authorized cause.
RULING: The strike was a temporary occurrence that did not necessitate the
immediate and sweeping retrenchment of 1,400 cabin or flight attendants.
There was no reason to drastically implement a permanent retrenchment scheme in
response to a temporary strike, which could have ended at any time, or remedied
promptly, if management acted with alacrity. Juxtaposed with its failure to implement
the required cost-cutting measures, the retrenchment scheme was a knee-jerk solution
to a temporary problem that beset PAL at the time.
PAL must still prove that it implemented cost-cutting measures to obviate
retrenchment, which under the law should be the last resort. By PAL’s own
admission, however, the cabin personnel retrenchment scheme was one of the first
remedies it resorted to, even before it could complete the proposed downsizing of its
aircraft fleet.
The following elements under Article 283 of the Labor Code must concur or be
present, to wit:
(1) That retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent as perceived objectively
and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to
one (1) month pay or at least one-half (½) month pay for every year of service,
whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the
employees’ right to security of tenure; and,
(5) That the employer uses fair and reasonable criteria in ascertaining who would
be dismissed and who would be retained among the employees, such as status,
efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
In the absence of one element, the retrenchment scheme becomes an irregular exercise
of management prerogative.
The retrenchment scheme under scrutiny was not triggered directly by any
financial difficulty PAL was experiencing at the time, nor borne of an actual
implementation of its proposed downsizing of aircraft.