Banks Told to Hold Pilot's Retirement Benefits

Business World

Monday, December 21, 1998

Ma. Salve I. Duplito

The Philippine Commercial International (PCI) Bank and the Metropolitan Banking & Trust Corp. (Metrobank) are caught in a legal tussle between the Airline Pilots Association of the Philippines (ALPAP) and the Philippine Airlines, Inc. (PAL).

As co-trustees of probably the biggest retirement fund in the country, these two banks are being pressured to cough up the retirement pay of several pilots who have reportedly retired earlier this year.

PAL, however, in whose name the account was made, is enjoining the two banks to hold on to the fund until the two cases filed by ALPAP against PAL in June are resolved.

In a letter to PCI Bank dated September 18, PAL asked the bank to suspend the payment of retirement benefits to the pilots “pending the outcome of the two cases ALPAP has filed against PAL.” The letter was signed by PAL officer-in-charge for operations Rogelio Narcisso.

“The trust agreement is between PAL and the bank so we advised them sometime in September that we have a request for payment. (But PAL sent us this letter). That’s why we cannot release the funds,” PCI Bank first vice-president Josephine Sulit told Businessworld.

Ms. Sulit explained that since it was PAL that opened the account with PCI Bank, as far as the bank is concerned, PAL is financing the retirement fund.

She said applications for retirement benefits are normally computed by the ALPAP board and sent to PCI Bank. The bank then sends this to PAL for confirmation, and if approved, the bank will release the retirement benefits.

“We did not know what to do. If we paid them we will be charged by PAL, if we don’t the other side will go after us,” she explained.

Ms. Sulit said the bank has filed an “interpleader” with the Makati Trial Court which will protect the bank from court case should any of the two parties decide to sue the bank.

PCI Bank’s interpleader case, Ms. Sulit says, shows the bank should wait until ALPAP and PAL resolved the conflict between themselves before paying any retirement benefit.

The pilots’ retirement fund was opened by PAL initially with the Bank of the Philippine Islands in 1994, another representative of PCI Bank explained. It was a provident type of fund “where PAL contributes a certain percentage for each employee,” she said. Before the pilots went on strike on June, PAL had around 670 pilots covered by the fund. “The contributions were made by PAL for the benefit of the pilots but it also contains certain criteria where they can actually withdraw,” the bank official added.

She said in most cases, fired employees forfeit their retirement benefit, and this is one of the issues bounding the pilots who want to get their retirement benefits.