October 2009 Philippine Supreme Court Decisions on Labor Law

Here are selected October 2009 Supreme Court decisions on labor law:

Dismissal; abandonment. To constitute abandonment, there must be a clear and deliberate intent to discontinue one’s employment without any intention of returning. Two elements must concur: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning.

In the instant case, petitioners failed to prove that it was Bolanos who refused to report for work despite being asked to return to work. Petitioners merely presented the affidavits of the officers of Henlin Panay narrating their version of the facts. These affidavits, however, are not only insufficient but also undeserving of credit as they are self-serving. Petitioners failed to present memoranda or show-cause letters served on Bolanos at her last known address requiring her to report for work or to explain her absence, with a warning that her failure to report would be construed as abandonment of work. Also, if indeed Bolanos abandoned her work, petitioners should have served her a notice of termination as required by law. Petitioners’ failure to comply with said requirement bolsters Bolanos’s claim that she did not abandon her work but was dismissed.

Moreover, if Bolanos had indeed forsaken her job, she would not have bothered to file a complaint for illegal dismissal. It is well settled that the filing by an employee of a complaint for illegal dismissal is proof of her desire to return to work, thus negating the employer’s charge of abandonment.  Henlin Panay Company and/or Edwin Francisco/Angel Lazaro III vs. National Labor Relations Commission and Nory A. Bolanos, G.R. No. 180718, October 23, 2009.

Dismissal; attorney’s fees. It is settled that in actions for recovery of wages or when the employee is illegally dismissed in bad faith or where an employee was forced to litigate and incur expenses to protect his rights and interests by reason of the unjustified acts of his employer, he is entitled to an award of attorney’s fees. This award is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 2208 of the Civil Code.

Moreover, in cases for recovery of wages, the award of attorney’s fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly.  Baron Republic Theatrical Major Cinema, et al. vs. Normita P. Peralta and Edilberto H. Aguilar, G.R. No. 170525, October 2, 2009.

Dismissal; burden of proof. It is a basic principle that in illegal dismissal cases, the burden of proof rests upon the employer to show that the dismissal of the employee is for a just cause and failure to do so would necessarily mean that the dismissal is not justified. In addition, in claims of abandonment by an employee, the settled rule is that the employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment without any intention of returning. Moreover, in evaluating a charge of abandonment, the jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the employer-employee relationship.

In the present case, petitioner Pascual consistently denies that Aguilar was terminated from his employment and that, instead, he abandoned his work and never returned after his request for salary increase was rejected. However, denial, in this case, does not suffice; it should be coupled with evidence to support it. In the instant case, the Court finds no error in the ruling of the CA that petitioners failed to adduce evidence to prove abandonment and rebut Aguilar’s claim of dismissal.

Contrary to petitioners’ asseveration that Aguilar is guilty of abandoning his job, the Court finds no error in the finding of the Labor Arbiter, as affirmed by the CA, that there was no clear intention on Aguilar’s part to sever the employer-employee relationship. Considering that “intention” is a mental state, petitioners must show that respondent Aguilar’s overt acts point unerringly to his intent not to work anymore. In this regard, petitioners failed. Baron Republic Theatrical Major Cinema, et al. vs. Normita P. Peralta and Edilberto H. Aguilar, G.R. No. 170525, October 2, 2009.

Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause and failure to do so would necessarily mean that the dismissal was illegal. 

Following this principle, it is incumbent upon the respondents to prove by substantial evidence that petitioner abandoned her job. For abandonment to exist, it must be shown that (1) the employee has failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-employee relationship as manifested by some overt acts.

Respondents failed to discharge this burden. Mere absence of petitioner is not sufficient to establish the allegation of abandonment. The prolonged absence of petitioner was not without justifiable reason because it was established that her failure to report for work was due to the injury she suffered in the course of her employment and with sufficient notice to respondents. Petitioner also presented herself for work on the date stated in the medical certificate which stated that she is fit to resume work.

Above all, the intention to sever the employer-employee relationship was not duly established by respondents. The prior submission of a medical certificate that petitioner is fit to resume work negates the claim of respondents that the former demanded for separation pay on account of her failing health. Certainly, petitioner cannot demand for separation benefits on the ground of illness while at the same time presenting a certification that she is fit to work. Respondents could have denied petitioner’s demand at that instance and ordered her to return to work had it not been their intention to sever petitioner from their employ. Hence, we find the allegation that petitioner presented herself for work but was refused by respondents more credible. Concepcion Faeldonia vs. Tong Yak Groceries, et al., G.R. No. 182499, October 2, 2009.

Dismissal; burden of proof. In an unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the dismissal of the employee. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. Apart from its self-serving allegations, Metro failed to prove that it sustained serious business losses. To justify retrenchment, the employer must prove serious business losses, and not just any kind or amount of loss. Metro should have produced its books of accounts, profit and loss statements, and even its accountant to competently amplify its financial position. Metro Construction, Inc. and Dr. John Lai vs. Rogelio Aman, G.R. No. 168324, October 12, 2009.

Dismissal; loss of confidence. Espadero’s position as a cashier is one that requires a high degree of trust and confidence, and that her infraction reasonably taints such trust and confidence reposed upon her by her employer.

A position of trust and confidence has been defined as one where a person is entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer’s property and/or funds. One such position is that of a cashier. A cashier is a highly sensitive position which requires absolute trust and honesty on the part of the employee. It is for this reason that the Court has sustained the dismissal of cashiers who have been found to have breached the trust and confidence of their employers. In one case, the Court upheld the validity of the dismissal of a school cashier despite her 19 years of service after evidence showed that there was a discrepancy in the amount she was entrusted to deposit with a bank.

The rule, therefore, is that if there is sufficient evidence to show that the employee occupying a position of trust and confidence is guilty of a breach of trust, or that his employer has ample reason to distrust him, the labor tribunal cannot justly deny the employer the authority to dismiss such employee.

In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an employee occupying a job which requires utmost fidelity to her employers, she failed to report to her immediate supervisor the tampering of her time card. Whether her failure was deliberate or due to sheer negligence, and whether Espadero was or was not in cahoots with a co-worker, the fact remains that the tampering was not promptly reported and could, very likely, not have been known by petitioners, or, at least, could have been discovered at a much later period, if it had not been reported by Espadero’s supervisor to the personnel manager. Petitioners, therefore, cannot be blamed for losing their trust in Espadero. Eats-Cetera Food Services Outlet and/or Serafin Remirez vs. Myrna B. Letran, et al., G.R. No. 179507, October 2, 2009.

Dismisssal;  nominal damages. Where an employee was terminated for cause, but the employer failed to comply with the notice requirement, the employee is entitled to the payment of nominal damages pursuant to our ruling in Agabon v. National Labor Relations Commission and Jaka Food Processing Corporation v. Pacot. 
In Agabon, we found the dismissal of the employees therein to be valid and for a just cause, since abandonment was duly established. However, we held the employer liable, because procedural due process was not observed. We ordered the employer to pay, in lieu of backwages, indemnity in the form of nominal damage. The Agabon ruling was qualified in Jaka which declared the dismissal of the employees valid as it was due to an authorized cause under Article 283 of the Labor Code, i.e., retrenchment, as it was proven that Jaka was suffering from serious business losses at the time it terminated respondents’ employment. However, Jaka failed to comply with the notice requirement under the same rule.

Nominal damages are adjudicated in order that a right of the plaintiff that has been violated or invaded by the defendant may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Considering the circumstances in this case, we find no error committed by the CA in fixing the award of nominal damages in the amount of P50,000.00 for each respondent as indemnity for the violation of the latter’s statutory rights.

Petitioner’s reliance on Viernes v. National Labor Relations Commission to support its claim for the reduction of the award of nominal damages is misplaced. The factual circumstances are different. Viernes is an illegal dismissal case, since there was no authorized cause for the dismissal of the employees; and the employer was ordered to pay backwages inclusive of allowances and other benefits, computed from the time the compensation was withheld up to the actual reinstatement. In addition, since the dismissal was done without due process, the nominal damages awarded was only P2,590.00 equivalent to one-month salary of the employee. In this case, the dismissal was valid, as it was due to an authorized cause, but without the observance of procedural due process, and the only award given was nominal damages.  Celebes Japan Foods Corp. (etc.) vs. Susan Yermo, et al., G.R. No. 175855, October 2, 2009.

Dismissal; serious misconduct. An employee who fails to account for and deliver the funds entrusted to him is liable for misappropriating the same and is consequently guilty of serious misconduct. Petitioner therefore validly dismissed respondent. Superlines Transportation Company, Inc. vs. Eduardo Pinera, G.R. No. 188742, October 13, 2009.

Employee benefits;  bereavement leave.  Bereavement leave and other death benefits are granted to an employee to give aid to, and if possible, lessen the grief of, the said employee and his family who suffered the loss of a loved one. It cannot be said that the parents’ grief and sense of loss arising from the death of their unborn child, who, in this case, had a gestational life of 38-39 weeks but died during delivery, is any less than that of parents whose child was born alive but died subsequently. 

Being for the benefit of the employee, CBA provisions on bereavement leave and other death benefits should be interpreted liberally to give life to the intentions thereof. Time and again, the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor. In the same way, the CBA and CBA provisions should be interpreted in favor of labor.  Continental Steel Manufacturing Corporation vs. Hon. Accredited Voluntary Arbitrator Allan S. Montano, et al., G.R. No. 182836, October 13, 2009.

Employee benefits; partial disability benefits. This Court reiterates its order for petitioner to pay respondent permanent partial disability benefits for the maximum period of twenty-five (25) months, computed on the basis of Section 2 of Republic Act No. 8291.  Government Service Insurance System vs. Jaime Ibarra,  G.R. No. 172925, October 30, 2009.

Employee benefits; retirement. The age of retirement is primarily determined by the existing agreement or employment contract. In the absence of such agreement, the retirement age shall be fixed by law. Under the aforecited law, the mandated compulsory retirement age is set at 65 years, while the minimum age for optional retirement is set at 60 years.

Under Paragraph B of the retirement plan, a shipboard employee, upon his written request, may retire from service if he has reached the eligibility age of 60 years. In this case, the option to retire lies with the employee.

Records show that respondent was only 41 years old when he applied for optional retirement, which was 19 years short of the required eligibility age. Thus, he cannot claim optional retirement benefits as a matter of right.  Eastern Shipping Lines, Inc. vs. Ferrer D. Antonio, G.R. No. 171587, October 13, 2009.

Employees; fixed term contracts. Respondent is a regular employee of SMC. Consequently, the employment contract with a fixed period which SMC had respondent execute was meant only to circumvent respondent’s right to security of tenure and is, therefore, invalid.  

While this Court recognizes the validity of fixed-term employment contracts, it has consistently held that this is the exception rather than the general rule. Verily, a fixed-term contract is valid only under certain circumstances. In the oft-cited case of Brent School, Inc. v. Zamora, this Court made it clear that a contract of employment stipulating a fixed term, even if clear as regards the existence of a period, is invalid if it can be shown that the same was executed with the intention of circumventing an employee’s right to security of tenure, and should thus be ignored. Moreover, in that same case, this Court issued a stern admonition that where from the circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy.

Since respondent was already a regular employee months before the execution of the Employment with a Fixed Period contract, its execution was merely a ploy on SMC’s part to deprive respondent of his tenurial security. Hence, no valid fixed-term contract was executed. The employment status of a person is defined and prescribed by law and not by what the parties say it should be. Equally important to consider is that a contract of employment is impressed with public interest such that labor contracts must yield to the common good. Provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.  San Miguel Corporation vs. Eduardo L. Teodosio, G.R. No. 163033, October 2, 2009.

Employees; types of regular employees. There there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. Simply stated, regular employees are classified into (1) regular employees – by nature of work and (2) regular employees – by years of service. The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business.

Based on the circumstances surrounding respondent’s employment by SMC, this Court is convinced that he has attained the status of a regular employee long before he executed the employment contract with a fixed period. Although respondent was initially hired by SMC as a casual employee, respondent has attained the status of a regular employee. Respondent was initially hired by SMC on September 5, 1991 until March 1992. He was rehired for the same position in April 1992 which lasted for five to six months. After three weeks, he was again rehired as a forklift operator and he continued to work as such until August 1993. Thus, at the time he signed the Employment with a Fixed Period contract, respondent had already been in the employ of SMC for at least twenty-three (23) months.

The Labor Code provides that a casual employee can be considered as a regular employee if said casual employee has rendered at least one year of service regardless of the fact that such service may be continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and Regulations of the Labor Code clearly defines the term “at least one year of service” to mean service within 12 months, whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays, unless the working days in the establishment, as a matter of practice or policy, or as provided in the employment contract, is less than 12 months, in which case said period shall be considered one year. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business of the employer.  San Miguel Corporation vs. Eduardo L. Teodosio,  G.R. No. 163033, October 2, 2009.

Employees;  regular employees.  To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of the Agreement, petitioners remained at their post securing the premises of respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials proffered by respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest and, presumably, directive of respondent, petitioners continued with their services. Evidently, such are indicia of control that respondent exercised over petitioners. 

Such power of control has been explained as the “right to control not only the end to be achieved but also the means to be used in reaching such end.” With the conclusion that respondent directed petitioners to remain at their posts and continue with their duties, it is clear that respondent exercised the power of control over them; thus, the existence of an employer-employee relationship.   Raul G. Locsin and Eddie B. Tomaquin vs. Philippine Long Distance Telephone Company, G.R. No. 185251, October 2, 2009.Retrenchment;  elements. In order for a retrenchment scheme to be valid, all of the following elements under Article 283 of the Labor Code must concur or be present.

In the absence of one element, the retrenchment scheme becomes an irregular exercise of management prerogative. The employer’s obligation to exhaust all other means to avoid further losses without retrenching its employees is a component of the first element as enumerated above. To impart operational meaning to the constitutional policy of providing full protection to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting. Flight Attendants and Stewards Association of the Philippines (FASAP) vs. Philippine Airlines, Inc., G.R. No. 178083, October 2, 2009.

Union;  registration. The charge that a labor organization committed fraud and misrepresentation in securing its registration is a serious charge and deserves close scrutiny. It is serious because once such charge is proved, the labor union acquires none of the rights accorded to registered organizations. Consequently, charges of this nature should be clearly established by evidence and the surrounding circumstances. 

Here, the discrepancies in the number of union members or employees stated in the various supporting documents that respondent PIGLAS union submitted to labor authorities can be explained. While it appears in the minutes of the December 10, 2003 organizational meeting that only 90 employees responded to the roll call at the beginning, it cannot be assumed that such number could not grow to 128 as reflected on the signature sheet for attendance. The meeting lasted 12 hours from 11:00 a.m. to 11:00 p.m. There is no evidence that the meeting hall was locked up to exclude late attendees. 

There is also nothing essentially mysterious or irregular about the fact that only 127 members ratified the union’s constitution and by-laws when 128 signed the attendance sheet. It cannot be assumed that all those who attended approved of the constitution and by-laws. Any member had the right to hold out and refrain from ratifying those documents or to simply ignore the process. 

At any rate, the Labor Code and its implementing rules do not require that the number of members appearing on the documents in question should completely dovetail. For as long as the documents and signatures are shown to be genuine and regular and the constitution and by-laws democratically ratified, the union is deemed to have complied with registration requirements. The Heritage Hotel Manila (Owned and operated by Grand Plaza Hotel Corp.) vs. Pinag-isang galing and lakas ng mga manggagawa sa Heritage Manila (Piglas-Heritage), G.R. No. 177024, October 30, 2009.


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