Professional Documents
Culture Documents
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS
First Regular Session
RESOLUTION
DIRECTING THE COMMITTEE ON LABOR AND EMPLOYMENT TO CONDUCT
AN INVESTIGATION, IN AID OF LEGISLATION, ON THE OUTSOURCING AND
CONTRACTUALIZATION SCHEME BEING IMPLEMENTED BY PHILIPPINE
AIRLINES WITH THE END IN VIEW OF PROTECTING AND STRENGTHENING
THE EMPLOYEES RIGHT TO ORGANIZATION AND SECURITY OF TENURE
WHEREAS, on August 2009, the Philippine Airlines (PAL) management informed the 3,900-strong
PAL Employees’ Association (PALEA) of its spin-off or outsourcing plans citing losses incurred by
the company;
WHEREAS, it was reported that of the 7,400 regular ground employees, 2,600 will initially be
retrenched. The departments initially set for outsourcing are airport services (1,930 employees),
catering (399) and ticket reservation (240). The remaining departments such as the medical, human
resource and accounting departments are also said to be set for spin-off;
WHEREAS, PALEA wants the planned spin-off to be discussed as part of the renewal of their
collective bargaining agreement (CBA) which has been on a moratorium for more than 10 years.
However, no CBA negotiation was held. Even with the mediation of the National Conciliation and
Mediation Board, the spin-off issue was not resolved;
WHEREAS, based on the management’s plans, 13 out of 21 union officers would be laid-off. With
the retrenchment of an overwhelming majority of union members and officers, it is feared the union
will completely be dissolved after the spin-off of the remaining departments. On January 28, 2010,
PALEA withdrew its Notice of Preventive Mediation and filed a Notice of Strike on grounds of
union busting and illegal outsourcing of regular employees;
WHEREAS, while PAL has promised separation pay and re-employment through its new service
providers, all of those retrenched will become contractual workers. Even regular employees of PAL
who have been with the company for decades will need to undergo application and probationary
status. There is no assurance that they will be hired or will be retained after their contract expires.
Instead of being rewarded for their loyalty and seniority, they are in essence retrenched to perform the
same work for lesser pay and benefits and without security of tenure;
WHEREAS, Section 3, Article XIII of the 1987 Philippine Constitution states that workers are
entitled to “security of tenure, humane conditions of work, and a living wage.” In fact, Section 4,
Article XXIV of the existing CBA of PALEA clearly stipulates that the company cannot contract out
“existing positions, jobs, divisions, and departments presently occupied by present or future regular
employees within the collective bargaining unit.” However, the said provision was not upheld by PAL
and the Department of Labor and Employment;
WHEREAS, in policy, the State leans towards regularization and not contractualization of
employees. Article 280, Book Six of the Labor Code of the Philippines stipulates that employees who
perform necessary activities in the company are considered regular employees and casuals who have
rendered at least one year of service will be considered regular as long as “such activity exists;”
WHEREAS, Article 283 of the same book allows the retrenchment of employees but only “to
prevent losses or the closing or cessation of operation of the establishment or undertaking.”
According to PALEA, PAL failed to prove “existence of substantial, serious, actual and real, or
reasonably imminent, business losses, and, further, that retrenchment is reasonably necessary and
likely to prevent such losses.” In fact, PALEA said PAL projects a “significantly improved future for
its operations;”
WHEREAS, according to PAL itself, they are still the country’s top airline based on Official Airline
Guide (OAG), the global aviation industry’s main data keeper. According to OAG, PAL has a
market-leading share of 35% of flights and 38% of seats per week, showing an increase from the
previous years;
WHEREAS, PAL claims it cannot afford to pay its workers but can give away 70,000 seats as
promotion of its 70th anniversary in 2011. PAL also reportedly acquired two new Boeing 777-300ER
jets recently. Lucio Tan, PAL chairman and chief executive officer, also consistently improved his net
worth from $1.5 billion in 2008, $1.7 billion in 2009 and to $2.1 billion in 2010, maintaining his
position as the 2nd richest Filipino in the country;
Adopted,