WHEREAS, on April 19, flag carrier Philippine Airlines (PAL) announced that it will

spin off its Call Center Reservations, In-flight Catering, and Airport Services units
to supposedly cushion the impact of the global crisis which allegedly cost the
company some P15 billion in losses during the past two fiscal years and, at the
most, to supposedly avoid bankruptcy and closure;

WHEREAS, more than 2,600 PAL employees belonging to the aforementioned units,
or more than half of the membership of the local union PAL Employees’ Association
(PALEA), will be affected by the company’s spin-off plan – which, employees allege
as tantamount to union-busting;

WHEREAS, Forbes Asia Magazine lists PAL Chairman and Chief Executive Officer
Lucio Tan as the second richest Filipino whose net worth jumped from $1.5 billion
in 2008 to $1.7 billion in 2009 – an increase in wealth which contrasts his airlines
company’s claim of near-bankruptcy status;

WHEREAS, labor group Kilusang Mayo Uno (KMU) have criticized the flag carrier’s
plan to retrench more than 2,600 employees on the basis of huge losses, pointing
out that the company even purchased two new Boeing 777-300ER jets, one on Nov.
18, 2009 and another last January 21, 2010; and scored the company for allegedly
faking its financial health;

WHEREAS, KMU also cited PAL’s series of promotional events, where up to 70,000
free seats will be given away throughout the year, as proof that the company is not
on the brink of bankruptcy;
WHEREAS, on April 16, 2010, PAL advised PALEA that it will spin-off the
aforementioned units. Three days later, the airlines company informed the
Department of Labor and Employment (DOLE) of its spin-off plan through a letter;

WHEREAS, on April 23, 2010, former labor secretary Marianito Roque issued an
Assumption of Jurisdiction (AJ) order over the labor dispute in PAL, saying that he
had to intervene “to preserve the status quo as the dispute is likely to cause a
strike or lockout in an industry indispensable to national interest such as the
airline industry;”

WHEREAS, on April 27, 2010, PAL sent individual Notices of Termination to

affected employees through registered mail even as the AJ order sought to preserve
the status quo and declared its intention of doing so;

WHEREAS, on May 17, 2010, PAL submitted to the labor department its position
paper, arguing that the “spin-off of non-core operations is a valid exercise of a
management prerogative.”

WHEREAS, the labor department upheld on June 15, 2010 PAL’s arguments,
saying the spin-off of its three units is a “valid exercise of managerial prerogative”
even without hearing the local union’s petition to scrutinize PAL’s financial
statement to once and for all clarify whether PAL’s dubious claim of going bankrupt
is true or false;

WHEREAS, the global aviation industry’s main data keeper Official Airline Guide
(OAG) reported on June 21, 2010 that PAL is the country’s top carrier in terms of
flights and seat capacity for the last two years, posting a leading share of 35
percent of the 1,859 flights per week and 38 percent of the total 309,616 seats per
week flown; this clearly, seriously and again puts PAL’s claim of near-bankruptcy
in question;

WHEREAS, it is but proper and necessary to ensure that workers be protected

from illegal retrenchments which are based merely on highly questionable claims of
bankruptcy;

NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that the

House Committee on Labor and Employment conduct an inquiry, in aid of
legislation, on the national flag carrier Philippine Airlines’ looming retrenchment of
more than 2,600 employees as a result of its planned spin-off of its call center
reservations, in-flight catering and airport service units.

Adopted,