December 2010 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are selected December 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; due process;  trial-type hearing is not essential. The essence of due process is an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain one’s side. Records show that Aboc was duly notified through a letter asking him to explain why his services should not be terminated. In fact, he replied to the same by submitting a written explanation. He was likewise duly afforded ample opportunity to defend himself during a conference conducted.  Aboc’s contention that the conference he attended cannot substitute the hearing mandated by the Labor Code is bereft of merit. A formal trial-type hearing is not at all times and in all instances essential to due process. It is enough that the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present supporting evidence on which a fair decision can be based. Antonio A. Aboc  vs. Metropolitan Bank And Trust Company /  Metropolitan Bank And Trust Company  vs.  Antonio A. Aboc, G.R. Nos.  170542-43  and G.R. No. 176460, December 13, 2010.

Dismissal; due process; trial-type hearing is not essential. In dismissal cases, the essence of due process is a fair and reasonable opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side. A formal or trial type hearing is not at all times and in all instances essential. Neither is it necessary that the witnesses be cross-examined. In the instant case, there was a proceeding where the respondent was apprised of the charges against him as well as of his rights. Thereafter, he was notified of the formal charges against him and was required to explain in writing why he should not be dismissed for serious misconduct.  A formal hearing was conducted and subsequently, respondent received a Notice of Termination informing him that after a careful evaluation, he was found liable as charged and dismissed from the service due to gross misconduct. Clearly, respondent was afforded ample opportunity to air his side and defend himself.  Hence, there was due process.  Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366, December 8, 2010.

Dismissal; due process. Respondent harps on the fact that his dismissal was preconceived because there was already a decision to terminate him even before he was given the show cause memorandum. Contrary to respondent’s allegations, he was given more than enough opportunity to defend himself.  The audit committee’s conclusion to dismiss respondent from the service was merely recommendatory.  It was not conclusive upon the petitioner company.  This is precisely the reason why the petitioner still conducted further investigations.  To reiterate, respondent was properly informed of the charges and had every opportunity to rebut the accusations and present his version.  Respondent was not denied due process of law for he was adequately heard as the very essence of due process is the opportunity to be heard. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

Dismissal; loss of confidence; guidelines for application. The Court has set the guidelines for the application of the doctrine of loss of confidence as follows: (a) Loss of confidence should not be simulated; (b) It should not be used as a subterfuge for causes which are improper, illegal or unjustified; (c) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (d) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith. In the case at bar, no mention was made regarding petitioner’s alleged loss of trust and confidence in respondent.  Neither was there any explanation nor discussion of the alleged sensitive and delicate position of respondent requiring the utmost trust of petitioner.  Because of its subjective nature, the Court has been very scrutinizing in cases of dismissal based on loss of trust and confidence. Thus, when the breach of trust or loss of confidence is not clearly established by facts, as in the instant case, such dismissal on the ground of loss and confidence cannot be countenanced. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No.  149433, December 15, 2010.

Dismissal; serious misconduct; wrongful intent required. For misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer.  In the present case, the alleged infractions of respondent could hardly be considered serious misconduct.  In order to constitute serious misconduct which will warrant the dismissal of an employee, it is not sufficient that the act or conduct complained of has violated some established rules or policies.  It is equally important and required that the act or conduct must have been done with wrongful intent.  Such is, however, lacking in the instant case.  The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No.  149433, December 15, 2010.

Dismissal; substantial evidence. The quantum of proof required in determining the legality of an employee’s dismissal is only substantial evidence. In a similar case, the Court held that the standard of substantial evidence is met where the employer, as in this case, has reasonable ground to believe that the employee is responsible for the misconduct and his participation in such misconduct makes him unworthy of the trust and confidence demanded by his position. In the present case, petitioner has sufficiently established that respondent solicited, collected and received the P1,500.00 down payment illegally from the spouses Mueda.  Taken together, the petitioner has discharged its burden of establishing the serious misconduct committed by respondent.  Such misconduct makes him unworthy of the trust and confidence demanded by his position.  Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366, December 8, 2010.

Dismissal; substantial evidence. The burden of proof rests on the employer to show that the dismissal was for a just cause or authorized cause. Dismissal due to serious misconduct and loss of trust and confidence must be supported by substantial evidence which is that amount of relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.  In the present case, evidence clearly shows that the acts of Aboc in helping organize the credit unions and in the operations thereof constituted serious misconduct or breach of trust and confidence. His participation in the credit unions is highly irregular and clearly in conflict with Metrobank’s business. Aboc claimed that he was only an “unwilling participant” doing a ministerial job. The investigation, however, showed otherwise. Antonio A. Aboc vs. Metropolitan Bank And Trust Company /  Metropolitan Bank And Trust Company  vs.  Antonio A. Aboc, G.R. Nos.  170542-43 and G.R. No. 176460, December 13, 2010.

Dismissal; two-notice rule. The requirements of procedural due process were complied with when petitioner sent a memo to respondent informing him of the specific charges and giving him opportunity to air his side.  Subsequently, in a letter, respondent was informed that on the basis of the results of the investigation conducted, his written explanation, the written explanation of other employees as well as the audit report, the management has decided to terminate him.  The two-notice requirement, which includes a written notice of the cause of dismissal to afford the employee ample opportunity to be heard and defend himself, and written notice of the decision to terminate him which states the reasons therefor, was thus complied with. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

Dismissal; willful disobedience. To justify willful disobedience or insubordination as a valid ground for termination, the employee’s assailed conduct must have been willful or characterized by a wrongful or perverse attitude and the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. In the case at bar, while petitioner’s manual of procedures does not absolutely prohibit the negotiation or acceptance of second-endorsed checks for deposits, it expressly disallows the acceptance of checks endorsed by corporations, societies, firms, etc. and checks with unusual endorsements. As shown by the records, this explicit policy was transgressed by respondent intentionally and willfully.  Respondent was instructed by management to stop the transgression but he did not stop.  Respondent admittedly disobeyed not only his superiors’ directives but also simple bank rules. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

Dismissal; willful breach of trust. Willful breach of trust requires that the loss of confidence must not be simulated; it should not be used as a subterfuge for causes which are illegal, improper or unjustified; it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; it must be genuine, not a mere afterthought to justify earlier action taken in bad faith; and, the employee involved holds a position of trust and confidence.  Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with to serve the best interest of the bank as he holds a position of trust and confidence.  Any negligence in the exercise of his responsibilities can be sufficient ground for loss of trust and confidence.  As held in one case, the mere existence of a basis for believing that a managerial employee has breached the trust of his employer would suffice for his dismissal.  Proof beyond reasonable doubt is not required. In the case at bar, respondent’s wanton violation of bank policies equates to abuse of authority and, therefore, abuse of the trust reposed in him.  Such is enough for his dismissal from service. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

Illegal dismissal; reinstatement and backwages. Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Respondent is entitled to such award. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No.  149433, December 15, 2010.

Job contracting; conditions. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out to the contractor the performance of a specific work, or service within a predetermined period, regardless of whether such work, or service is to be performed within or outside the premises of the principal. Thus, the following conditions must concur: (a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his principal in all matters connected with the performance of his work except as to the results thereof;  (b) The contractor has substantial capital or investment; and (c) The agreement between the principal and the contractor assures the contractual employees’ entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. In the case at bar, BMSI is engaged in labor-only contracting for LSC. First, petitioners worked at LSC’s premises, and nowhere else. There was no evidence that BMSI exercised control over them. Second, there is no proof that BMSI had substantial capital. The equipment used by BMSI was merely rented from LSC.  Third, petitioners performed activities which were directly related to the main business of LSC. Lastly, BMSI had no other client except for LSC. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Jurisdiction of Supreme Court; errors of fact; exceptions. The Court has stressed that its jurisdiction in a petition for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not of fact, unless the findings of fact complained of are devoid of support by the evidence on record, or the assailed judgment is based on the misapprehension of facts. In previous rulings, the Court has declared that when there is enough basis on which a proper evaluation of the merits can be made, it may dispense with the time-consuming procedure in order to prevent further delays in the disposition of the case. However, in the case at bar, based on the nature of the two remaining issues which involve factual issues, and given the inadequacy of the records, pleadings, and other evidence available before the Court to properly resolve those questions, it is constrained to refrain from passing upon them. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No.  173326, December 15, 2010.

Labor-only contracting and job contracting; how determined. The character of a business, that is, whether as labor-only contractor or as job contractor, should be determined in terms of the criteria set by statute. In one case the Court has explained that despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so.  The language of a contract is neither determinative nor conclusive of the relationship between the parties. The parties cannot dictate, by a declaration in a contract, the character of a business. Thus, in distinguishing between the prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Labor-only contracting; elements. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal.  In labor-only contracting, the following elements are present:  (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility;  and (b) the employees recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Labor-only contracting; workers are regular employees of principal. Indubitably, BMSI can only be classified as a labor-only contractor.   Consequently, the workers that BMSI supplied to its principal LSC became regular employees of the latter. Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process. The termination of LSC’s Agreement with BMSI cannot be considered a just or an  authorized cause for petitioners’ dismissal. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Payroll reinstatement; effect of reversal on appeal. Since Metrobank chose payroll reinstatement for Aboc, he then became a reinstated regular employee.  This means that he was restored to his previous position as a regular employee without loss of seniority rights and other privileges appurtenant thereto. His payroll reinstatement put him on equal footing with the other regular employees insofar as entitlement to the benefits given under the Collective Bargaining Agreement is concerned.  The fact that the decision of the LA was reversed on appeal has no controlling significance. The rule is that even if the order of reinstatement of the LA is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until final reversal by the higher court. Antonio A. Aboc  vs. Metropolitan Bank And Trust Company /  Metropolitan Bank And Trust Company  vs.  Antonio A. Aboc, G.R. Nos.  170542-43  and G.R. No. 176460, December 13, 2010.

Petition for certiorari; period for filing; retroactive application of amendments. By virtue of the latest amendment of Section 4, Rule 65 of the 1997 Rules of Civil Procedure introduced by Circular No. 56-2000, the 60-day period to file a petition for certiorari should be reckoned from the date of receipt of the notice of the denial of the motion for reconsideration or new trial, if one was filed. Being a curative statute, Circular No. 56-2000 has been applied by Court retroactively in a number of cases.  Given the above, respondent had a fresh 60-day period from the date she received a copy of the NLRC Resolution denying her motion for reconsideration within which to file the petition for certiorari.  Thus, the Court ruled that respondent seasonably filed the petition within the reglementary period provided. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No.  149433, December 15, 2010.

Registration as independent contractor; effect of. The CA erred in considering BMSI’s Certificate of Registration as sufficient proof that it is an independent contractor.  In the case of San Miguel Corporation v. Vicente B. Semillano, et. al., the Court has held that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Reinstatement; immediately executory pending appeal. Under Article 223 of the Labor Code, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall be immediately executory pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. In the case at bench, it cannot be denied that Metrobank opted to reinstate Aboc in its payroll. Antonio A. Aboc  vs. Metropolitan Bank And Trust Company /  Metropolitan Bank And Trust Company  vs.  Antonio A. Aboc, G.R. Nos.  170542-43  and G.R. No. 176460, December 13, 2010.

Separation pay as a measure of social justice; when awarded. In several instances the Court has awarded separation pay as a measure of social justice.  However, the matter has been clarified in PLDT Co. v. NLRC where the Court categorically declared that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for cause other than serious misconduct.  In another case, the Court ruled that in addition to serious misconduct, separation pay should not be conceded to an employee who was dismissed based on willful disobedience. In the case at bar, it was established that the infractions committed by the respondent constituted serious misconduct or willful disobedience resulting to loss of trust and confidence.  Clearly therefore, even based on equity and social justice, respondent does not deserve the award of separation pay. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

Termination; grounds. Under the requirement of substantial due process, the grounds for termination of employment must be based on just or authorized causes.  Article 282 of the Labor Code enumerates the just causes for the termination of employment, thus: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;  (b) Gross and habitual neglect by the employee of his duties;  (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;  (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and  (e) Other causes analogous to the foregoing. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No.  149433, December 15, 2010.

Verification and certification; effect of failure to sign. A petition satisfies the formal requirements only with regard to those who signed the petition, but not the co-petitioners who did not sign nor authorize the other petitioners to sign it on their behalf.  In the case at bar, only seven (7) of the nine petitioners signed the verification and certification against forum shopping. Thus, the other petitioners who did not sign cannot be recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright with respect to such non-conforming petitioners. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Verification and certification; “substantial compliance” rule. The requirement of the certification of non-forum shopping is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in different fora.  However, the Court has relaxed the rule under justifiable circumstances, considering that, although it is obligatory, it is not jurisdictional.  Not being jurisdictional, it can be relaxed under the rule of substantial compliance.  In the case at bar, the Court holds that there has been substantial compliance on the petitioners’ part in consonance with our ruling in one case that the President of a petitioner-corporation is in a position to verify the truthfulness and correctness of the allegations in the petition.  Petitioner Benzonan clearly satisfies the aforementioned jurisprudential requirement because he is the President of petitioner-corporation. Moreover, he is also named as co-respondent of petitioner-corporation in the labor case which is the subject matter of the special civil action.    South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No.  173326, December 15, 2010.

Verification and certification; who can sign for the company without need of board resolution. In previous cases, the Court has held that the following can sign the verification and certification against forum shopping without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case. While the above cases do not provide a complete listing of authorized signatories, the determination of the sufficiency of the authority was done on a case to case basis. In the foregoing cases the authority of said corporate representatives to sign the verification or certificate is justified in their being in a position to verify the truthfulness and correctness of the allegations in the petition. However, the better procedure is still to append a board resolution to the complaint or petition to obviate questions regarding the authority of the signatory of the verification and certification. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No.  173326, December 15, 2010.

(Leslie thanks Junefe G. Payot for assisting in the preparation of this post.)

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