Why I believe the real intent is to bust the union
By Raïssa Robles
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:
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:
And here is SkyLogistics’ P6 million paid-up capital in Allied Bank:
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 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:
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.
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.