Intrigued By PAL and Lucio Tan's Lies

By Raïssa Robles

Billionaire Lucio Tan wants to sack 2,600 Philippine Airline (PAL) employees so most of them can be rehired by two highly dubious companies, which may likely end up being part of the Lucio Tan group of companies.

First some background

I was intrigued when PAL president Jaime Bautista told reporters a month ago that after the mass layoff, PAL would "outsource" the jobs of inflight catering, aircraft maintenance and ticketing services to three alleged third party service providers: SkyLogistics Philippines Inc., SkyKitchen Philippines Inc. and ePLDT Ventus.

Bautista hinted that the sacked PAL catering and airport services employees could get their old jobs back by applying with SkyKitchen and SkyLogistics, respectively.

Bautista stressed to reporters that neither PAL chairman Lucio Tan nor any member of his family has any financial interest in these three firms. In fact, he said, SkyKitchen and SkyLogistics are owned by Manny Osmeña, who owns Hilton Cebu and Cebu Pacific Catering.

Based on PAL’s pronouncements, Labor Secretary Rosalinda Baldoz said PAL has the right to fire 2,600 employees in order to keep the company afloat. She told a congressional probe that the Labor Code allows PAL to "outsource...non-core services" like aircraft maintenance, in-flight catering and ticketing as long as the outsourcing involves "independent" contractors.

But not all is as it seems to be

Are these two companies really "independent"?

SkyLogistics Philippines Inc. and SkyKitchen Philippines Inc. were formed only last year with a paid-up capital of P6 million each, invested by a third company - Manny O Asia Corporation - which had a mere P62,500 as show money in the bank, representing its total paid-up capital, at the time it formed SkyLogistics and SkyKitchen.

Below is the disclosure of Manny O Asia Corporation to SEC on its paid-up capital in 2006, which remained the same up to 2009:


Let me show you why

Manuel H. Osmeña is a long-time business partner of Lucio Tan’s family.

Osmeña first went into in-flight catering in 1994 when he took over MATS Catering Inc., changed its name to Cebu Pacific Catering Services Inc and had it recapitalized.

When PAL president Jaime Bautista recently announced that PAL’s sub-contractor for catering would be SkyKitchen, he identified the owner as Manuel Osmeña whom he said also owns Cebu Pacific Catering Services.

I mistakenly assumed that Cebu Pacific Catering was owned by PAL’s rival airline Cebu Pacific because of the similarity in their names.

Still, I decided to check this out with my source in the Gokongwei group and I was surprised to be told:

Cebu Pacific Catering is related to PAL. Totally hindi sa (it’s not at all owned by) Cebu Pacific Airline.

And so I did more digging

It turned out that Cebu Pacific Catering was formerly MATS Catering and was initially formed by Manuel H. Osmeña in June 14,1994 at the Mactan Export Processing Zone. Later, he changed its by-laws and increased its capital stock. Cebu Pacific Catering then acquired a majority partner - MacroAsia Corporation. And then Manuel H. Osmeña became a minority owner.

In the year 2000, MacroAsia’s president and CEO was Lucio K. Tan Jr. and according to its SEC disclosure then, MacroAsia owned 40% of Cebu Pacific Catering. Here is MacroAsia’s table of companies in the year 2000:


PALEA expects to get majority from strike vote
By Ira Pedrasa, abs-cbnNEWS.com
Posted at 12/06/2010 4:38 PM Updated as of 12/06/2010 4:38 PM

Management readying legal measures to nullify union’s action

MANILA, Philippines - The Philippine Airlines Employees Association (PALEA) will hold a strike vote on Tuesday, saying a protest action is already warranted due to the management’s unfair labor practices.

In a statement, PALEA President Gerry Rivera said he expects to get a majority of the 3,700-member union in order to finally launch a work stoppage.

The Labor Code provides that a simple majority, 50% plus 1, is needed to make a strike legal.

PALEA leaders filed the notice to National Conciliation and Mediation Board (NCMB) Executive Director Reynaldo Ubaldo at 8:30 a.m. Monday. Labor Secretary Rosalinda Baldoz was also furnished a copy.

The strike vote will be held despite an earlier move to have President Benigno "Noynoy" Aquino III intervene and resolve their worsening labor dispute.

Rivera explained that the strike vote is, nonetheless, within legal bounds

"We are not blackmailing Malacañang to favor our position, but we are warning management for its illegal acts. It was PALEA that asked for the intervention of President Benigno Aquino III into the PAL-PALEA dispute, and so it is illogical that we will sabotage it. The issue pending at the OP [Office of the President] is separate though related to the case from which proceeds the strike vote," he said.

Coercion, individual bargaining

The management of the flag carrier claimed the notice of strike is illegal since the issues being raised are already pending before Malacañang.

No less than PALEA itself had filed the petition for intervention, PAL spokesperson Cielo Villaluna said in an interview with ANC.

Rivera stressed, however, that the issues are different, albeit connected.

The latest development stemmed from the October 29 decision of Baldoz that affirmed an earlier one allowing the retrenchment of almost 3,000 ground employees.

In her ruling, Baldoz said "inflight catering operations, airport services operations, and call center operations and the consequent severance from employment of all affected employees...as well as the contracting out of these operations to the named service providers, are based on lawful ground."

After several failed mediation proceedings, the union finally asked Aquino to intervene in the case.

Over the weekend, Aquino ordered that all documents related to the case be forwarded to his office.

Despite all these, PALEA accused the management of bargaining with individual members of the benefits of a spin-off company that will replace the previous system.

"If management does not desist from harassing PALEA members to avail of the separation offer, which is tantamount to individual bargaining and therefore illegal, then we will be forced to actually hold the strike," Rivera said.

PAL denies accusations

Villaluna, however, denied accusations of coercion.

She said the management has already talked to the individuals being accused of bargaining with members of PALEA.

She noted the individuals had merely explained the packages attached to the creation of the spin-off firm.

"All the key issues are already pending before Malacañang. Over the weekend, Malacañang has made it clear to wait for President Aquino’s review. We appeal to PALEA not to push through with the planned action," she said.

Should the union proceed, however, PAL’s legal department is already on standby, she added.

"We really doubt if DOLE [Department of Labor and Employment] will give its blessing to this strike vote. After all, we all agreed to a status quo pending outcome of the president’s decision. Should it push through, there is still a 7-day waiting period," Villaluna said.

She was referring to the 7-day cool off period after a strike vote is done. She said this will allow the management to plan its next legal action.

All flights will remain normal

In a separate statement, Villaluna said all flights remain normal despite warnings from the union.

"A work stoppage does not happen overnight. PAL will exhaust all legal means to prevent any disruption that could hurt the economy and cause inconvenience to the riding public," she said.

She said various employee groups have assured PAL they will not be joining any strike.

She also stressed that contingency measures are already in place to ensure continuous operations.

"PAL has made arrangements with sister airline Airphilexpress and other local carriers to help carry domestic passengers, while PAL’s 134 interline partners are also ready to lend a hand in our international routes. To ensure the steady supply of food and other amenities, PAL also made arrangements with several catering firms to supply meals," she said.

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