January 2010 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Labor Law

CBA; coverage.  As regular employees, petitioners fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract.  Under the terms of the CBA, petitioners are members of the appropriate bargaining unit because they are regular rank-and-file employees and do not belong to any of the excluded categories. Most importantly, the labor arbiter’s decision of January 17, 2002 – affirmed all the way to the CA – ruled against the company’s submission that they are independent contractors. Thus, as regular rank-and-file employees, they fall within the CBA coverage. And, under the CBA’s express terms, they are entitled to its benefits.

CBA coverage is not only a question of fact, but of law and contract.  The factual issue is whether the petitioners are regular rank-and-file employees of the company.  The tribunals below uniformly answered this question in the affirmative. From this factual finding flows legal effects touching on the terms and conditions of the petitioners’ regular employment.  Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Employee benefits; permanent disability benefits.  In accordance with the avowed policy of the State to give maximum aid and full protection to labor, the Court applied the Labor Code concept of permanent total disability to Filipino seafarers. The Court held that the notion of disability is intimately related to the worker’s capacity to earn. What is compensated is not the employee’s injury or illness but his inability to work resulting in the impairment of his earning capacity; hence, disability should be understood less on its medical significance but more on the loss of earning capacity.

In the present case, petitioner was able to secure a “fit to work” certification from a doctor only after more than five months from the time he was medically repatriated due to a finding that his disability is considered permanent and total.  Significantly, petitioner remained unemployed even after he filed on February 26, 2002 his complaint to recover permanent total disability compensation and despite the August 31, 2005 Decision of the NLRC which was affirmed by the Court of Appeals, ordering respondents to “allow complainant to resume sea duty.”

That petitioner was not likely to fully recover from his disability is mirrored by the Labor Arbiter’s finding that his illness would possibly recur once he resumes his sea duties.  This could very well be the reason why petitioner was not re-deployed by respondents.  Petitioner’s disability being then permanent and total, he is “entitled to 100% compensation, i.e., US$80,000 for officers,” as stipulated in par. 20.1.7 of the parties’ CBA.  Rizaldy M. Quitoriano vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management A/S, G.R. No. 179868, January 21, 2010.


Labor Code; interpretation. Another basic principle is that expressed in Article 4 of the Labor Code – that all doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the workingman.  This principle has been extended by jurisprudence to cover doubts in the evidence presented by the employer and the employee.  The petitioner has, at very least, shown serious doubts about the merits of the company’s case, particularly in the appreciation of the clinching evidence on which the NLRC and CA decisions were based.  In such contest of evidence, the Court applied Article 4 as basis to rule in favor of the employee.  In this case, the Court held that petitioner was constructively dismissed given the hostile and discriminatory working environment he found himself in, particularly evidenced by the escalating acts of unfairness against him that culminated in the appointment of another HRD manager without any prior notice to him.  Where no less than the company’s chief corporate officer was against him, petitioner had no alternative but to resign from his employment.

The Court also gave significance to the fact that petitioner sought almost immediate official recourse to contest his separation from service through a complaint for illegal dismissal, and held that this is not the act of one who voluntarily resigned; his immediate filing of a complaint characterizes him as one who deeply felt that he had been wronged. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.


Labor Procedure

Appeal; illegal dismissal. In the present case, the company terminated the services of four drivers who were declared by the labor arbiter to be regular employees of the company in an initial complaint filed by said drivers for regularization. Pending the company’s appeal of the labor arbiter’s decision, the company terminated the employment of said drivers on the ground of redundancy, which action, the Court viewed as an implied admission of the regular employment status of the drivers. The Court held that by implementing the dismissal action at the time the labor arbiter’s ruling was under review, the company unilaterally negated the effects of the labor arbiter’s ruling while at the same time appealing the same ruling to the NLRC.  This unilateral move is a direct affront to the NLRC’s authority and an abuse of the appeal process.  All these go to show that company acted with patent bad faith.  Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Appeal; questions of fact.  The rule that a Rule 45 petition deals only with legal issues is not an absolute rule; it admits of exceptions.  In the labor law setting, the Court may look into factual issues when there is a conflict in the factual findings of the labor arbiter, the NLRC, and the CA as in the present case where the labor arbiter found facts supporting the conclusion that there had been constructive dismissal, while the NLRC’s and the CA’s factual findings contradicted the labor arbiter’s findings.  The conflicting factual findings are not binding on the Court. The Court held that it retains the authority to pass upon the evidence presented and draw conclusions therefrom.  Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.

Appeal under Rule 45; questions of law vs. questions of fact. Petitioners in the present case do not question the findings of facts in the assailed decisions.  They question the misapplication of the law and jurisprudence on the facts recognized by the decisions.  For example, they question as contrary to law their exclusion from the CBA after they were recognized as regular rank-and-file employees of the company.  They also question the basis in law for the dismissal of four drivers and the legal propriety of the redundancy action taken against them.

The Court reiterated the established distinctions between questions of law and questions of fact by quoting its rulings in New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan [G.R. No. 161818, August 20, 2008, 562 SCRA 503]: “A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of the facts being admitted. A question of fact exists when a doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.”  Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Dismissal; burden of proof.  It is a settled rule that in employee termination disputes, the employer bears the burden of proving that the employee’s dismissal was for just and valid cause.  That petitioner did indeed file a letter of resignation does not help the company’s case as, other than the fact of resignation, the company must still prove that the employee voluntarily resigned.  There can be no valid resignation where the act was made under compulsion or under circumstances approximating compulsion, such as when an employee’s act of handing in his resignation was a reaction to circumstances leaving him no alternative but to resign.  In this case, the Court held that petitioner had been constructively dismissed as his resignation was a response to the unacceptable appointment of another person to a position he still occupied.  In sum, the evidence does not support the existence of voluntariness in petitioner’s resignation.  Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.

(Leslie thanks Joyce Melcar Tan for assisting in the preparation of this post.)