March 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are selected March 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Abandonment; elements. Respondent employee was dismissed by petitioners on the ground of alleged habitual absenteeism and abandonment of work. Jurisprudence provides for two essential requirements for abandonment of work to exist: (1) the failure to report for work or absence without valid or justifiable reason, and (2) clear intention to sever the employer-employee relationship manifested by some overt acts should both concur.  Further, the employee’s deliberate and unjustified refusal to resume his employment without any intention of returning should be established and proven by the employer. The Court held that petitioners failed to prove that it was respondent employee who voluntarily refused to report back for work by his defiance and refusal to accept the memoranda and the notices of absences sent to him.  Petitioners failed to present evidence that they sent these notices to respondent employee’s last known address for the purpose of warning him that his continued failure to report would be construed as abandonment of work.  Moreover, the fact that respondent employee never prayed for reinstatement and has sought employment in another company which is a competitor of petitioners cannot be construed as his overt acts of abandoning employment.  Neither can the delay of four months be taken as an indication that the respondent employee’s filing of a complaint for illegal dismissal is a mere afterthought.  Records show that respondent employee attempted to get his separation pay and alleged commissions from the company, but it was only after his requests went unheeded that he resorted to judicial recourse. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.

Corporate officer; solidary liability. Respondent employee filed an illegal dismissal case against the Petitioner Corporation and its President. Though the Court found that Respondent was illegally dismissed, it held that the President of the Petitioner Corporation should not be held solidarily liable with Petitioner Corporation. Obligations incurred by corporate officers, acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent. Thus, they should not be generally held jointly and solidarily liable with the corporation. The general rule is grounded on the theory that a corporation has a legal personality separate and distinct from the persons comprising it. As exceptions to the general rule, solidary liability may be imposed: (1) When directors and trustees or, in appropriate cases, the officers of a corporation –(a)  vote for or assent to [patently] unlawful acts of the corporation; (b)  act in bad faith or with gross negligence in directing the corporate affairs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons;  (2) When the director or officer has consented to the issuance of watered stock or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto;  (3) When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the corporation; (4) When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action. To warrant the piercing of the veil of corporate fiction, the officer’s bad faith or wrongdoing must be established clearly and convincingly as bad faith is never presumed. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.

Labor organization; collateral attack on legal personality. Respondent company questioned the legal personality of the petitioner union in a certification election proceeding. The Court ruled that the legal personality of the petitioner union cannot be collaterally attacked by respondent company. Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, considering that its purpose is to determine if the employees would like to be represented by a union and to select the organization that will represent them in their collective bargaining with the employer. The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even the allegation that some employees participating in a petition for certification election are actually managerial employees will give an employer legal personality to block the certification election. The employer’s only right in the proceeding is to be notified or informed thereof. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011.

Labor organization; membership of supervisory employees. Petitioner union filed a Petition for Certification Election among the regular rank-and-file employees of the respondent company. Respondent contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees. The Court ruled that the inclusion of the supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. After a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011.

Labor organization; registration. Petitioner union filed a Petition for Certification Election among the regular rank-and-file employees of the respondent company. Respondent company filed an Answer with Motion to Dismiss on the ground that petitioner union is not a legitimate labor organization because of its failure to comply with the documentary requirements set by law, i.e. non-verification of the charter certificate. The Court ruled that it was not necessary for the charter certificate to be certified and attested by the local/chapter officers. Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it does not make sense to have the local/chapter’s officers certify or attest to a document which they did not prepare. In accordance with this ruling, petitioner union’s charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate, (2) the names of its officers, their addresses, and its principal office, and (3) its constitution and by-laws— the last two requirements having been executed under oath by the proper union officials. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011.

Reinstatement; accrued backwages. The Labor Arbiter and the NLRC held that petitioner employer illegally dismissed the respondent employee. On appeal, the Court of Appeals reversed the decision and ruled that the dismissal was valid. However, the Court of Appeals ordered petitioner employer to pay respondent employee her salary from the date of the Labor Arbiter’s decision ordering her reinstatement until the Court of Appeals rendered its decision declaring the dismissal valid. Petitioner employer questioned the order and refused to pay. The Court held that even if the order of reinstatement of the Labor Arbiter 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 reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received, more so, if he actually rendered services during the period. The payment of such wages cannot be deemed as unjust enrichment on respondent’s part. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011.

Reinstatement; immediately executory order. The Labor Arbiter held that petitioner employer illegally dismissed the respondent employee. Pending its appeal, petitioner employer failed to immediately admit respondent employee back to work despite of an order of reinstatement. The Court held that that the provision of Article 223 is clear that an award by the Labor Arbiter for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray the executory nature of a reinstatement order or award. In the case at bar, petitioner employer did not immediately admit respondent employee back to work which, according to the law, should have been done as soon as an order or award of reinstatement is handed down by the Labor Arbiter without need for the issuance of a writ of execution. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011.

Reinstatement; terms and conditions. Due to the order of reinstatement issued by the Labor Arbiter, petitioner employer sent a letter to the respondent employee to report back to work and assigned her to a new location. The Court held that such is not a bona fide reinstatement. Under Article 223 of the Labor Code, an employee entitled to reinstatement 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.  It is established in jurisprudence that reinstatement means restoration to a state or condition from which one had been removed or separated.  The person reinstated assumes the position he had occupied prior to his dismissal.  Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the employee. Applying the foregoing principle, it cannot be said that petitioner employer has a clear intent to reinstate respondent employee to her former position under the same terms and conditions nor to a substantially equivalent position.  To begin with, the return-to-work order petitioner sent to respondent employee is silent with regard to the position it wanted the respondent employee to assume. Moreover, a transfer of work assignment without any justification therefor, even if respondent employee would be presumably doing the same job with the same pay, cannot be deemed as faithful compliance with the reinstatement order. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011.

Termination by employer; willful disobedience. Petitioner employer ordered the respondent employee to prepare checks for payment of petitioner’s obligations. Respondent did not immediately comply with the instruction since petitioner employer has no sufficient funds to cover the checks. Petitioner employer dismissed respondent employee for willful disobedience. The Court held that respondent employee was illegally dismissed. The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employee’s assailed conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) 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. Though there is nothing unlawful in the directive of petitioner employer to prepare checks in payment of petitioner’s obligations, respondent employee’s initial reluctance to prepare the checks, although seemingly disrespectful and defiant, was for honest and well intentioned reasons. Protecting the petitioner employer from liability under the Bouncing Checks Law was foremost in her mind.  It was not wrongful or willful. Neither can it be considered an obstinate defiance of company authority.  The Court takes into consideration that respondent employee, despite her initial reluctance, eventually did prepare the checks on the same day she was tasked to do it. Lores Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia, G.R. No. 171189, March 9, 2011.

Wages; facilities and supplements. Respondent employees alleged underpayment of their wages. Petitioner employer claimed that the cost of food and lodging provided by petitioner to the respondent employees should be included in the computation of the wages received by respondents. The Court makes a distinction between “facilities” and “supplements.”  Supplements constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers’ basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given.  In the case at bench, the items provided were given freely by petitioner employer for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects. Thus, the Court is of the view that the food and lodging, or the electricity and water allegedly consumed by respondents in this case were not facilities but supplements which should not be included in the computation of wages received by respondent employees. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011.

Wages; proof of payment. In an illegal dismissal case against the petitioner employer, respondent employees alleged that they were underpaid. In their defense, petitioner employer alleged that respondent employees actually received wages higher than the prescribed minimum. The Court held that as a general rule, a party who alleged payment of wages as a defense has the burden of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents — which will show that overtime, differentials, service incentive leave and other claims of workers have been paid — are not in the possession of the worker but in the custody and absolute control of the employer. In this case, petitioner employer, aside from bare allegations that respondent employees received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of payment.  Thus, petitioner employer utterly failed to discharge the onus probandi. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011.

Wages; value of facilities. Petitioner employer alleged that the cost of facilities must be included in the computation of wages paid. The Court held that before the value of facilities can be deducted from the employees’ wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value. Mere availment is not sufficient to allow deductions from employees’ wages. These requirements, however, have not been met in this case. Petitioner employer failed to present any company policy or guideline showing that provisions for meals and lodging were part of the employee’s salaries. It also failed to provide proof of the employees’ written authorization, much less show how they arrived at their valuations.  At any rate, it is not even clear whether respondent employees actually enjoyed said facilities. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011.

(Leslie thanks Rachel T. Uy for assisting in the preparation of this post.   This post will be updated to include additional March 2011 cases.

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