Why I believe the real intent is to bust the union
By Raïssa Robles
Manuel H. Osmeña
Billionaire Lucio Tan has sacked 2,600 Philippine Airline (PAL) employees so most of them can be rehired by two companies formed by Manuel H. Osmeña, a long-time business partner of his family.
Over a decade ago, the same long-time business partner formed an in-flight catering company which the Lucio Tan Group then acquired.
When PAL workers struck in June 1998 to protest the layoff of 5,000 workers, this catering company took over catering for PAL and PAL’s foreign airline customers.
The same thing can happen again: The workers will end up working in a Lucio Tan company but with cheaper wages.
First some deep background
I was intrigued when PAL president Jaime Bautista told reporters November last year that after today’s 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 ground-handling employees could get their old jobs back by applying with SkyKitchen and SkyLogistics, respectively.
Bautista had 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 stressed, that SkyKitchen and SkyLogistics are owned by Manny Osmeña, who owns Hilton Cebu and Cebu Pacific Catering.
Based on PAL’s pronouncements, the presidential palace and Labor Secretary Rosalinda Baldoz ruled that PAL has the right to fire 2,600 employees in order to keep the company afloat. Baldoz told a congressional probe last year 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.
Now, notice she said the word “INDEPENDENT” contractors.
Are these two companies really “independent”?
How can they be “independent” when they were formed by a long-time business partner of Lucio Tan and his family?
SkyLogistics Philippines Inc. and SkyKitchen Philippines Inc. were formed only in 2009. To this day, neither has submitted any financial statements to the Securities and Exchange Commission. Check for yourself.
Each was formed with a paid-up capital of P6 million each – invested by a third company called Manny O Asia Corporation.
At that time Manny O Asia Corporation formed both SkyKitchen and SkyLogistics, it had a mere P62,500 in cash.
So how was Manny O Asia Corporation – with only P62,500 in cash – able to form two companies with a total paid-up capital of P12 million in all?
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 when it formed SkyKitchen and SkyLogistics:
Manny O Asia Corporation has only P62,500 in paid-up capital - source SEC records
Where did the millions really come from?
Did it come from Allied Bank – the two companies’ depository bank – which is owned by Lucio Tan?
Here is SkyKitchen’s P6 million paid-up capital in Allied Bank:
SkyKitchen has P6 million paid-up capital in Allied Bank. In contrast, its majority corporate owner had only P62,500 in cash - source: SEC records
And here is SkyLogistics’ P6 million paid-up capital in Allied Bank:
SkyLogistics has P6 million paid-up capital in the bank but its main corporate owner only haqd P62,500 cash to its name - source SEC records
Again, how could Manny O Asia Corporation, a company with only P62,500 cash in the bank, finance the formation of two new firms by infusing P12.49 million in cash to represent their paid-up capital?
This is like a mouse giving birth to two elephants.
You could argue that Manuel H. Osmeña, who owns Cebu Hilton, can well afford this kind of investment. In this case, however, it’s not his money that he has put in.
Let me show you why
Manuel H. Osmeña – he seemed a nice guy when he guested on Sharon Cuneta’s TV cooking show. He offered to supply her with his Manny Osmeña wine.
He is a long-time business partner of Lucio Tan and his family.
Osmeña first went into the in-flight catering business in 1994 when he took over MATS Catering Inc., changed its name to Cebu Pacific Catering Services Inc and recapitalized it.
When PAL president Jaime Bautista recently announced that the sacked employees could be rehired by SkyKitchen – PAL’s future sub-contractor for catering – 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 similar names.
But when I asked a knowledgeable source in the Gokongwei group, 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.
This is very confusing. To be told that Manny Osmeña owns Cebu Pacific Catering which is related to PAL. So why doesn’t Cebu Pacific Catering merely absorb the sacked PAL employees?
Because if that was done, the condition imposed by Labor Secretary Baldoz for the outsourcing would no longer hold true. Recall that she told the House of Representatives last year she was allowing PAL to outsource in-flight catering and ground-handling provided INDEPENDENT CONTRACTORS were used. Those were her words.
Because of this, Manny Osmeña’s Cebu Pacific Catering could not be used since it is now absorbed under MacroAsia Corporation of the Lucio Tan Group of Companies.
My proof that Lucio Tan’s MacroAsia owns Manny Osmeña’s Cebu Pacific Catering and therefore Manny Osmeña is part of the Lucio Tan Group of Companies
I dug into Securities and Exchange Records and found the following.
On June 14,1994, Manuel H. Osmeña formed MATS Catering at Mactan Export Processing Zone. Then Osmeña changed its by-laws, increased its capital stock and renamed it Cebu Pacific Catering. The company also acquired a majority partner – MacroAsia Corporation. This turned Manuel H. Osmeña into a minority owner.
When dealing with a Lucio Tan company, it is difficult to get the entire picture because their financial reporting is very spotty.
But I know MacroAsia acquired majority shares of Cebu Pacific Catering because Macrosia’s SEC disclosure in the year 2000 stated it owned 40% of Cebu Pacific Catering. Even at that time, MacroAsia’s president and CEO was Lucio K. Tan Jr.
UPDATE: A commenter named GabbyD pointed to the above statement I made:
“But I know MacroAsia acquired majority shares of Cebu Pacific Catering because Macrosia’s SEC disclosure in the year 2000 stated it owned 40% of Cebu Pacific Catering. ”
And so he rightly asked –
how is 40% the MAJORITY SHARES?
I missed a paragraph to explain how MacroAsia, with 40%, now controls Cebu Pacific Catering.
Better than explaining this in my own words, I’m providing below a snapshot taken from MacroAsia’s current website, explaining that Cebu Pacific Catering is its joint venture with Cathay Pacific Cetering Services of Hong Kong.
I know, though, that Manuel H. Osmeña still owns shares in Cebu Pacific Catering because I took a peek at its SEC financial statements. Besides, you remember, PAL President Jaime Bautista himself said last year that Manny Osmeña owns Cebu Pacific Catering.
Here is MacroAsia’s disclosure about Cebu Pacific Catering:
Here is MacroAsia’s table of companies for the year 2000:
MACROASIA diagram in the year 2000 shows 40% ownership of Cebu Pacific Catering initially formed by Manuel H. Osmeña - SEC records
MacroAsia today owns Cebu Pacific Catering and Manuel H. Osmeña has a small stake in the latter. [By the way, he is not in any way related to the Osmeña political clan. I checked.]
Today, MacroAsia’s corporate website makes the following disclosure about Cebu Pacific Catering:
Cebu Pacific Catering Services is part of MacroAsia - screen capture from MacroAsia website
To see for yourself, click on this link which will bring you to the MacroAsia website.
So if the sacked PAL employees were to be hired by Cebu Pacific Catering, that would be like playing musical chairs with them inside the same conglomerate.
That would give lie to what Labor Secretary Baldoz and PAL president Bautista said last year.
Why I believe PAL President Bautista is in on it
Ask PAL president Bautista to confirm that Manuel H. Osmeña, who formed the two new outsourcing companies, is part of MacroAsia and therefore part of the Lucio Tan Group. He should know because Bautista himself is listed as a minority shareholder of MacroAsia.
He is the “J.J. Bautista listed as treasurer of MacroAsia.
This brings us to the question why Manuel H. Osmeña had to form SkyLogistics and SkyKitchen merely to absorb the sacked PAL employees when that would compete with MacroAsia’s business.
I would venture to say that Manuel H. Osmeña may be the registered owner of SkyKitchen and SkyLogistics for now. But give it a few years or maybe one year and the ownership could easily change hands, in the same way his Cebu Pacific Catering ended up being co-owned by MacroAsia.
And surely, PAL president Jaime J. Bautista knows all about this kind of switcheroo since he is a stockholder and the current treasurer of the board of MacroAsia as well as a board director and the president of PAL Holdings, Inc.
I therefore sadly conclude that this “OUTSOURCING” arrangement between PAL on one hand and SkyKitchen and SkyLogistics on the other becomes understandable if PAL’s real intent is to bust the union PALEA.
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Mel says
Its just a matter of time that Lucio Tan and companies, with the complicit of feeble filipinos, would tap into cheaper labor skills in thailand, cambodia and vietnam.
These globalized filipino entrepreneurs are not making Philippines a Fun country to visit.
Lucio Tan, people don’t live forever.
You should check your erstwhile once friend that you took advantage too – Ferdinand Marcos Sr.
If you are truly a filipino by choice and by heart. You should provide better opportunities for the disadvantaged Filipinos to earn a decent living and excel in opportunities in the country of your choice!
China o ‘pinas pa rin ba?
FuzyLogic says
It’s clear to me that Ladao there has never been part of, or at least stay long in, the “working class”, but instead has been in management (or probably even owner) for majority of his career.
He will never understand that the numerous benefits and goodies the employees received are “masks” to cover the low salaries these people are receiving. I’ll probably get a pilosopo question like: “how can they afford several cars if their salaries are low” …
The point is, someone is taking advantage of someone else. That is why these people are crying “unfair”.
The rich get richer, and the weak are stepped on.
Ladao says
Corporate life is this way, to absorb or be absorbed,
if you think that it will be a pain to see the palea members out of a job, better check what they have earned while in service to PAL, when you think about it, the “in business” 65 years already, just five years after PAL was created or formed as a company, Union can be good and it can also be bad. if you want to think about it, if you join a union you can get lots and lots of benefits. but if you own a company and there is a union, how would you feel when you need to give up lots of things for the enjoyment of others, a union can be a sort of “double edge sword” when the main business you have is service to people not the people in your company!
raissa says
As I said, Lucio Tan KNEW there was a union in PAL when he bought it.
He even disguised himself to buy it.
And when you look at PAL, you should look at the units that were spun off from it, that are now highly profitable, that are now in MacroAsia.
Unions in the Philippines are nearly dead. And in the Philippines, the law has always been skewed for big owners, not the workers.
Ladao says
as highly profitable as it may seem, but at a standpoint, it might be time to give up certain positions. 3 non-core functions offload to another company but coincidentally linked to the main company is a way of stating that they are rehired, but with a lower pay? but when you look at it, the top player is already ready to hand down his post to his successors, its just a way of managing his assets, when you think about it, who are the people behind it, and the greatest forethought about the said matter is simply to avoid feud.
A thing about unions in the Philippines, from my point of view, they always cause troubles!
And when you deal with unions, they are really a pain in the a**.
they want more than what they can render.
Waymay says
What is the basis for concluding that the (Philippine labor) law has been skewed for big owners?
Rolly says
Majority of the legislators are beholden to their milking cows…the big businesses, which in turn have their own lobby groups (some are masqueraded in various forms). They made sure that any proposed or enacted legislation favors them (directly or it consists loopholes that can be easily exploited).
Examples abound everywhere.
GabbyD says
“But I know MacroAsia acquired majority shares of Cebu Pacific Catering because Macrosia’s SEC disclosure in the year 2000 stated it owned 40% of Cebu Pacific Catering. ”
how is 40% the MAJORITY SHARES?
raissa says
I’ve inserted an UPDATE in the story in answer to your question.
Pls. Look. And thanks for raising the point.
Raissa
GabbyD says
i’m afraid i still dont get it. the update merely reiterates what u said. macro has 40%.
raissa says
Cmon, Gabby.
Macro RUNS Cebu Pacific Catering, although Cathay Pacific is is a joint venture partner.
In the corporate world, you don’t need to own and control over 50% to run a company.
For instance, for years, the Lopez family ran Meralco with under 20% (I think) ownership. But they had the vote of the other major investors.
GabbyD says
look, thats what i’m trying to understand: how do you know that Tan runs CPCatering?
Tan is on the board of macro (Vice). Macro owns 40% fo CPCatering.what else is there?
i have a question tho. so the fired employess can/might be hired by CPcatering, right? i heard that it would be on a contractual basis.
if true, my question is: why contractual? is that allowable under the labor code?
raissa says
The sacked PAL employees are not going to be hired by CPC.
They are going to be hired by SkyKitchen owned by Manuel H. Osmena.
Tan’s son is running Macro.
Rolly says
How is 40% the MAJORITY SHARES?…GabbyD asks.
40+39+21= 100 or 40+40+20…thus, 40 is majority.
Controlling Shares could be a different thing.
In business, it’s very crucial to have that control.
Maricris Encarnacion says
Raissa, Hilton Cebu no longer exists. It’s been months. The property which is owned by Manny Osmeña’s group is now Moevenpick.
raissa says
Thanks for updating me, Maricris.
Is he partnered with a European company in Moevenpick or did he just choose that name?
What happened to Hilton Cebu?
Raissa