G.R. No. 183374 - Marsman Drysdale Land, Inc. vs. Philippine Geoanalytics, Inc.

The case involves the Flight Attendants and Stewards Association of the Philippines (FASAP) as petitioner and Philippine Airlines, Inc. (PAL), along with other respondents, as the defendants.
The dispute centers on the retrenchment of over 1,400 cabin crew personnel implemented by PAL during its period of financial distress.

PAL initiated a retrenchment/dismissal scheme on June 15, 1998 as part of its drastic cost-cutting measures amid severe financial losses.
Initially, PAL’s plan (Plan 14) envisaged a reduction corresponding to a downsized fleet of 14 aircraft; later, upon supervening events and revised business projections, PAL implemented Plan 22, increasing its fleet to 22 planes.
The retrenchment program was executed without exhausting alternative cost-cutting measures and prior negotiations between PAL and the union, FASAP, which had explored other options such as work rotations, forced vacation leaves, and other cost-saving measures.

PAL claimed that the retrenchment was necessitated by its dire financial situation, as evidenced by its audited financial statements and SEC findings.
Key extenuating circumstances included:

A severe economic crisis in 1997-1998.
A series of strikes by pilots (beginning June 5, 1998) and other employees, affecting operations and cash flow.
The downsizing of its flight fleet to prevent collapse and avert a total shutdown of operations.

PAL argued that these events compelled it to reduce its workforce, linking the number of operating aircraft to the required manpower.

PAL based the selection criteria for retrenchment on its Collective Bargaining Agreement (CBA) with FASAP, emphasizing efficiency ratings (using only the performance data for 1997), seniority considerations, and other related factors (appearance, grooming, and performance).
The retrenchment scheme resulted in:

Some of the retrenched employees being later recalled or reinstated without loss of seniority rights.
Others being rehired as new employees after receiving separation pay, while a significant number were left without further employment as their services were no longer required.

FASAP contended that the retrenchment was carried out in a discriminatory, capricious, and non-last-resort manner, contrary to both the procedural requirements set forth in the Labor Code and the provisions of the existing CBA.

PAL maintained that its decision was based on sound business judgment and management prerogative in the face of imminent business collapse.
It presented evidence of its financial condition, including multiple sets of audited financial statements and SEC orders, to justify that the retrenchment and subsequent operational adjustments were necessary.
During oral arguments, PAL attributed the retrenchment primarily to the extraordinary impact of the June 5, 1998 pilots’ strike, which dramatically altered its operating capabilities by reducing the number of available pilots, thereby necessitating a corresponding workforce reduction among the cabin crew.

Whether the retrenchment of over 1,400 cabin crew personnel by PAL was carried out in accordance with the legal requirements and as a measure of last resort under the Labor Code.
Whether PAL provided sufficient notice and applied fair and reasonable criteria in selecting which employees to retrench.

The appropriateness of using a single efficiency rating (from the year 1997) as the sole basis for evaluating the employees’ performance for retrenchment purposes.
Whether the combination of efficiency ratings, seniority, and other factors met the standards set forth in the PAL-FASAP CBA and applicable labor jurisprudence.

Whether PAL’s subsequent recall or rehire process, including offering separation pay to certain employees, negates the allegations of bad faith in the implementation of the retrenchment scheme.
Whether the decision to retrench was merely a business judgment exercised in good faith, or a capricious and wrongful method of reducing labor in times of financial difficulty.

Whether the impact of the pilots’ strike and the various supervening financial and operational challenges justified an immediate retrenchment rather than exploring alternative cost-cutting measures.
Whether PAL’s shifting explanations—from fleet downsizing to the impact of the pilots’ strike—affect the legality and fairness of the retrenchment process.

Whether awarding attorney’s fees equivalent to 10% of the total monetary award was appropriate in light of the extended litigation and the individualized circumstances of the affected employees.