May 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Section 10, Republic Act No. 8042; unconstitutional.  Petitioner Yap was employed as an electrician for respondent’s vessel under a 12-month contract. He was found to be illegally terminated with nine months remaining on his contract term. The Court of Appeals (CA) awarded petitioner salaries for three months as provided under Section 10 of Republic Act No. 8042. On certiorari, the Supreme Court reversed the CA and declared that petitioner was entitled to his salaries for the full unexpired portion of his contract. The Court has previously declared in Serrano v. Gallant Maritime Services, Inc. (2009) that the clause “or for three months for every year of the unexpired term, whichever is less” provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. The subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. Moreover, the subject clause does not state or imply any definitive governmental purpose; hence, the same violates not just petitioner’s right to equal protection, but also his right to substantive due process under Section 1, Article III of the Constitution.  Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011

Doctrine of Operative Fact; applied as a matter of equity and fair play. Petitioner Yap was employed on respondent’s vessel under a 12-month contract. Upon finding that he was illegally terminated, the Court of Appeals (CA) awarded petitioner salaries for three months as provided under Section 10 of Republic Act No. 8042 (RA 8042). While the case was pending in the Supreme Court, Section 10 of RA 8042 was declared unconstitutional. In deciding to award petitioner his salaries for the entire unexpired portion of his contract, the Supreme Court rejected the application of the operative fact doctrine.  As an exception to the general rule, the doctrine applies only as a matter of equity and fair play. It recognizes that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. This case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFW’s security of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law. Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011.

Migrant workers; computation of salary award. Petitioner Yap was employed as an electrician for respondent’s vessel under a 12-month contract. He was found to be illegally terminated with nine months remaining on his contract term, and was declared to be entitled to his salaries for the balance of his contract. Respondents claim that the tanker allowance should be excluded from the definition of the term “salary.” The Supreme Court, after examining the relevant clauses of the contract, rejected respondent’s claim. The word salaries in Section 10 (5) does not include overtime and leave pay. For seafarers, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses. A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. If respondents intended it differently, the contract per se should have indicated that said allowance does not form part of the basic salary or, simply, the contract should have separated it from the basic salary clause. Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc. G.R. No. 179532, May 30, 2011.

Termination for Just Cause; separation pay by way of financial assistance. Petitioner Juliet Apacible was employed as Assistant Area Sales Manager for respondent’s Cebu operations. She was informed that she would be transferred to the Pasig office on account of the ongoing reorganization. Petitioner’s repeated refusal to comply with the transfer order was treated by respondent as insubordination and grounds for her dismissal. The Labor Arbiter, the NLRC and the Court of Appeals all found that petitioner was justly dismissed from employment.  The NLRC awarded separation pay as financial assistance, however, noting that petitioner’s obstinacy was upon the advice of her counsel and, therefore, there was a modicum of good faith on her part. On appeal, the Court of Appeals (CA) deleted the award of separation pay. The Supreme Court upheld the CA and declared that the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character.  When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion.  In this case, petitioner’s adamant refusal to transfer, coupled with her failure to heed the order for her to return the company vehicle assigned to her and, more importantly, allowing her counsel to write letters couched in harsh language to her superiors unquestionably show that she was guilty of insubordination, hence, not entitled to the award of separation pay. Juliet G. Apacible vs. Multimed Industries, et al., G.R. No. 178903, May 30, 2011.

Appeal; posting of Appeal Bond; Government’s exemption from the same. Respondents are supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw Broadcasting Corporation (BBC). Respondents filed a complaint for illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision ordering petitioner BBC to pay the money claims. On appeal to the NLRC, petitioner BBC averred that since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond. The NLRC dismissed the appeal of BBC for non-perfection.  The Court of Appeals affirmed the NLRC. The Supreme Court, in sustaining the CA, held that as a general rule, the government and all the attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds. The rationale is to protect the presumptive judgment creditor against the insolvency of the presumptive judgment debtor.  When the State litigates, it is not required to put up an appeal bond because it is presumed to be always solvent. This exemption, however, does not, as a general rule, apply to government-owned and controlled corporations (GOCCs) for the reason that the latter has a personality distinct from its shareholders. In this case, BBC, though owned by the government, is a corporation with a personality distinct from the Republic or any of its agencies or instrumentalities, and therefore do not partake in the latter’s exemption from the posting of appeal bonds. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.

Appeal; posting of appeal bond within the 10-day period is mandatory and jurisdictional. Respondents filed a complaint for illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision in favor of respondents and ordered petitioner BBC to pay the money claims. Petitioner appealed to the NLRC, and without posting the appeal bond, filed a Motion for the Re-computation of the Monetary Award in order that the appeal bond may be reduced. The NLRC denied the motion and dismissed the appeal of BBC for non-perfection. The Court of Appeals and the Supreme Court both sustained the dismissal by the NLRC.  The Motion for the Re-computation of the Monetary Award filed by BBC was tantamount to a motion for extension to perfect the appeal, which is prohibited by the rules. The payment of the appeal bond within the period provided by law is an indispensable and jurisdictional requisite and not a mere technicality of law or procedure. Hence, the failure on the part of BBC to perfect the appeal had the effect of rendering the judgment final and executory. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.

Voluntary Resignation; financial assistance may be awarded on equity considerations. Petitioner filed a complaint for illegal dismissal against respondent. Finding instead that petitioner had voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered the latter to pay P18,000.00 by way of financial assistance.  On appeal, the NLRC found petitioner to be illegally dismissed. The Court of Appeals reaffirmed the findings of the LA but deleted the award of financial assistance, ruling that the same may not be awarded in cases of voluntary resignation. The Supreme Court, in upholding the award of financial assistance, stated that while the rule is that financial assistance is allowed only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character, there are instances when financial assistance may be allowed as a measure of social justice and as an equitable concession. In this case, petitioner, who has served respondent for more than eight years without committing any infraction, may be granted such financial assistance on equity considerations. Rodolfo Luna vs. Allado Construction Company, Inc. and/or Ramon Allado, G.R. No. 175251, May 30, 2011.

National Labor Relations Commission; authority to review is limited to issues specifically brought before it on appeal. Petitioner filed a complaint for illegal dismissal against respondent. Finding that petitioner had voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered the latter to pay P18,000.00 by way of financial assistance.  Respondents interposed an appeal with the National Labor Relations Commission (NLRC), purely for the purpose of questioning the validity of the grant of financial assistance made by the Labor Arbiter. Instead, the NLRC ruled that petitioner was illegally dismissed and was entitled to separation pay. The Court of Appeals (CA) held that it was grave abuse of discretion for the NLRC to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the propriety of the award of financial assistance. The Supreme Court sustained the view of the CA, reasoning that Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC expressly provides that, on appeal, the NLRC shall limit itself only to the specific issues that were elevated for review. In the case at bar, the NLRC evidently went against its own rules of procedure when it passed upon the issue of illegal dismissal although this question was not raised by respondents in their appeal. Rodolfo Luna vs. Allado Construction Company, Inc. and/or Ramon Allado, G.R. No. 175251, May 30, 2011.

(Note: as of the date of this post, the Supreme Court website has not yet published the May 2011 cases except for May 30 and May 31 cases.  This post will be updated after the other May 2011 cases become available.)

(Leslie thanks Katrina Chua for assisting in the preparation of this post.)

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