September 2010 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Labor Law

Compensable illness. The CBA provision states: “If a seafarer/officer, due to no fault of his own, suffers permanent disability as a result of an accident while serving on board or while traveling to or from the vessel on Company’s business or due to marine peril, and as a result, his ability to work is permanently reduced, totally or partially, the Company shall pay him a disability compensation.” “Accident” has been defined as: A fortuitous circumstance, event, or happening, an event happening without any human agency, or if happening wholly or partly through human agency, an event which under the circumstances is unusual and unexpected by the person to whom it happens. The Court holds that the snap on the back of respondent was not an accident, but an injury sustained by respondent from carrying the heavy basketful of fire hydrant caps. The injury cannot be said to be the result of an accident or fortuitous event. It resulted from the performance of a duty.  Although the disability of respondent was not caused by an accident, his disability is still compensable under the CBA provision: “A seafarer/officer who is disabled as a result of any injury, and who is assessed as less than 50% permanently disabled, but permanently unfit for further service at sea in any capacity, shall also be entitled to a 100% compensation.” NFD International Manning Agents, Inc./Barber Ship Management Ltd.  vs. Esmeraldo C. Illescas, G.R. No. 183054, September 29, 2010.

Dismissal; due process. SPO2 Roaquin is entitled to reinstatement since he was dismissed from the service without administrative due process. No one ever filed an administrative action against him in connection with the crime of which he was charged in court. At any rate, assuming that someone filed an administrative charge against Roaquin, still the law required the PNP to give him notice of such charge and the right to answer the same. The PNP gave him no chance to show why he should not be discharged nor does the record show that the PNP investigated him or conducted a summary proceeding to determine his liability in connection with the murder of which he was charged in court.  While the PNP may have validly suspended Roaquin from the service pending the adjudication of the criminal case against him, he is entitled, after his acquittal, to reinstatement and payment of the salaries, allowances, and other benefits withheld from him by reason of his discharge from the service. P/Chief Superintendent Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No. 159588, September 15, 2010.

Dismissal; misconduct. Misconduct is a transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by a public officer.  As differentiated from simple misconduct, in grave misconduct the elements of corruption, clear intent to violate the law or flagrant disregard of established rule, must be manifest. As Acting Branch Cashier, petitioner was charged with responsibility of handling the bank’s daily transactions which could run into large amounts.  There is a tremendous difference between the degree of responsibility, care, and trustworthiness expected of an ordinary employee in the bureaucracy and that required of bank managers and other officials directly handling large sums of money and properties. The evidence clearly shows that Echano took light of such responsibility and his misconduct and dishonesty paved the way for the commission of fraud against, and consequent damage to, the City Government of Manila. There is no doubt, based on the evidence that Echano was guilty of grave misconduct. Salvador O. Echano, Jr. vs. Liberty Toledo, G.R. No. 173930,September 15, 2010.

Dismissal; strike. By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly done, that is, the employer dismisses the employee without observing due process, either substantive or procedural. Substantive due process requires the attendance of any of the just or authorized causes for terminating an employee as provided under Articles 278, 283 or 284 of the Labor Code; while procedural due process demands compliance with the twin-notice requirement. In contrast, on the consequences of an illegal strike, Article 264(a) distinguishes between a union officer and a union member participating in an illegal strike. A union officer who knowingly participates in an illegal strike is deemed to have lost his employment status, but a union member who is merely instigated or induced to participate in the illegal strike is more benignly treated. The petitioners were terminated for joining a strike that was later declared to be illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the payment of their separation pay, because they were mere rank-and-file workers whom the Union’s officers had misled into joining the illegal strike. They were not unjustly dismissed from work. Danilo Escario, et al vs. National Labor Relations Commission, G.R. No. 160302, September 27, 2010.

Employee money claim; prescription. The Labor Code provides that money claims arising from employer-employee relations shall be filed within 3 years from the time the cause of action accrues; otherwise they shall be barred. In this case, it is undisputed that the complainant was dismissed on January 1, 2000, and this was the time when the cause of action had accrued. Since the present action was only filed on March 29, 2004, or exactly 4 years and 3 months after his dismissal, the Labor Arbiter was correct in ruling that the action had already prescribed. The fact that the complainant repeatedly followed up on his money claim with PLDT during the years of 2001-2003 does not serve to toll the prescriptive period as provided under Art. 1155 of the Civil Code since the complainant never made any written extrajudicial demand for his claim nor did PLDT make any written acknowledgment of its obligation. Philippine Long Distance Telephone Company (PLDT) vs. Roberto R. Pingol, G.R. No. 182622, September 8, 2010.

Employee money claim; prescription. In the case of Southeastern Shipping vs. Navarra Jr., the Court held that “Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within which the seafarers may file their money claims, is hereby declared null and void.” The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord with the State’s declared policy to afford full protection to labor.  Therefore, the prescriptive period in the present case is three years from the time the cause of action accrues and not the one-year period prescribed in the Standard Employment Contract for Seafarers. Medline Management, Inc. and Grecomar Shipping Agency vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.

Illegal dismissal. Petitioners are liable for constructive dismissal for placing respondents on shifts of a few days per month and in eventually denying them workplace access, rendering respondents’ employment impossible, unreasonable or unlikely, leaving them no choice but to quit. The petitioners rested their case on the defense of respondents’ abandonment of work. For this cause to prosper, petitioners should have proved (1) that the failure to report for work was without justifiable reason, and (2) respondents’ intention to sever the employer-employee relationship as shown by some overt acts. However, petitioners failed to rebut the respondents’ claim that they were denied entry to their work area and the respondents’ act of filing a case for illegal dismissal belies the intention to abandon work. Pasig Cylinder Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No. 173631, September 8, 2010.

Lay off. Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation to the laid-off employees. Article 283 of the Labor Code applies to MMC. Said provision is emphatic that an employee, who was dismissed due to cessation of business operation, is entitled to the separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. It is jurisprudential that separation pay should also be paid to employees even if the closure or cessation of operations is not due to losses. The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying separation benefits to complainants.  In the first place, MMC did not appeal the decision of the Court of Appeals which affirmed the NLRC’s award of separation pay. In the second place, the non-issuance of a permit forced MMC to permanently cease its business operations. Under Article 283, the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations is bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in the amount corresponding to their length of service. Manila Mining Corp. Employees Association, et al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23, September 29, 2010.

Non-diminution of benefits. Apex Mining Company, Inc. v. NLRC is instructive: “The prohibition against elimination or diminution of benefits set out in Article 100 of the Labor Code is specifically concerned with benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 does not purport to apply to situations arising after the promulgation date of the Labor Code.”  Even assuming arguendo that Article 100 applies to the case at bar, the same does not prohibit a union from offering and agreeing to reduce wages and benefits of the employees. In Rivera v. Espiritu, this Court ruled that the right to free collective bargaining includes the right to suspend it. Insular Hotel Employees Union-NFL vs. Waterfront Insular Hotel Davao, G.R. No. 174040-41, September 22, 2010.

Reinstatement; entitlement to backwages. As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment. That backwages are not granted to employees participating in an illegal strike accords with the reality that they do not render work for the employer during the period of the illegal strike. Under the principle of a fair day’s wage for a fair day’s labor, the petitioners were not entitled to the wages during the period of the strike (even if the strike might be legal), because they performed no work during the strike. Thus, the Court deleted the award of backwages and held that the striking workers were entitled only to reinstatement in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees Union. Danilo Escario, et al vs. National Labor Relations Commission, G.R. No. 160302, September 27, 2010.

Reinstatement; separation pay. The absence from an order of reinstatement of an alternative relief should the employer or a supervening event not within the control of the employee prevent reinstatement negates the very purpose of the order. To safeguard the spirit of social justice that the Court has advocated in favor of the working man, the right to reinstatement is to be considered renounced or waived only when the employee unjustifiably or unreasonably refuses to return to work upon being so ordered or after the employer has offered to reinstate him. However, separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, like: (a) when reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of the situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the workers’ continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee. Here, PINA manifested that the reinstatement of the petitioners would not be feasible because: (a) it would “inflict disruption and oppression upon the employer”; (b) “petitioners [had] stayed away” for more than 15 years; (c) its machines had depreciated and had been replaced with newer, better ones; and (d) it now sold goods through independent distributors, thereby abolishing the positions related to sales and distribution. Under the circumstances, the grant of separation pay in lieu of reinstatement of the petitioners was proper. Danilo Escario, et al vs. National Labor Relations Commission, G.R. No. 160302, September 27, 2010.

Retrenchment; notice requirement. Although there was authorized cause to dismiss respondent from the service, we find that petitioner did not comply with the 30-day notice requirement.  Petitioner maintains that it substantially complied with the requirement of the law in that it submitted two notices or reports with the DOLE. However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second notice, before the intended date of respondent’s dismissal. The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination. Non-compliance with this rule violates the employee’s right to statutory due process.  Consequently, we affirm the NLRC’s award of indemnity to respondent for want of sufficient due notice. Shimizu Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.

Retrenchment; validity. As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence: (1) The retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) The employer served written notice both to the employees and to the DOLE at least one month prior to the intended date of retrenchment; (3) The employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher; (4) The employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and (5) The employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers. Petitioner implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs: withdrawing privileges of its executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. Petitioner was able to prove that it incurred substantial business losses, it offered to pay respondent his separation pay, the retrenchment scheme was arrived at in good faith, and lastly, the criteria or standard used in selecting the employees to be retrenched was work efficiency which passed the test of fairness and reasonableness. Shimizu Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.

Security of tenure. DECS Memorandum No. 10 provides that all incumbent teachers have until September 19, 2000 to pass the Licensure Examination for Teachers (LET), otherwise they cannot continue teaching in public or private schools unless they obtain a temporary permit to teach as para-teachers. The complainants in this case were dismissed from the school on March 31, 2000 after they failed to pass the LET. The Supreme Court held that their dismissal was illegal and premature. The law has provided a specific timeframe within which the teachers could comply with the requirement of passing the LET hence, the school cannot deny them this privilege, which the law has accorded to them, without violating their right to security of tenure. St. Mary’s Academy of Dipolog City vs. Teresita Palacio, et al., G.R. No. 164913, September 8, 2010.

Separation pay. While it is true that generally the grant of separation pay is not available to employees who are validly dismissed, there are certain circumstances that warrant the grant of some relief in favor of the terminated Union members based on equity.  Bitter labor disputes, especially strikes, always generate abhorrence that result in unpleasant consequences. Considering this, the striking employees’ breach of restrictions imposed on their concerted actions cannot be regarded as so inherently wicked that the employer can totally disregard their long years of service prior to such breach. The records fail to disclose any past infractions committed by the dismissed Union members. Taking these circumstances in consideration, the Court regards the award of financial assistance to these Union members in the form of one-half month salary for every year of service to the company up to the date of their termination as equitable and reasonable. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.

Strike; termination of participants in illegal strike. Since the Union’s strike has been declared illegal, the Union officers can be terminated from employment for their actions.  This includes the shop stewards who cannot be shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such and placed them in positions of leadership and power over the men in their work units. As regards the rank and file Union members, Article 264 provides that termination from employment is not warranted by the mere fact that a union member has taken part in an illegal strike.  It must be shown that such union member, clearly identified, performed an illegal act or acts during the strike. The striking Union members allegedly committed the following prohibited acts: a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers; b. They obstructed the free ingress to and egress from the company premises; and c. They resisted and defied the implementation of the writ of preliminary injunction issued against the strikers. The mere fact that the criminal complaints against them were subsequently dismissed does not extinguish their liability under the Labor Code.  Nor does such dismissal bar the admission of the affidavits, documents, and photos presented to establish their identity and guilt during the hearing of the petition to declare the strike illegal.  C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.

Strike; validity. A strike may be regarded as invalid although the labor union has complied with the strict requirements for staging one as provided in Article 263 of the Labor Code when the same is held contrary to an existing agreement, such as a no strike clause or conclusive arbitration clause. Here, the CBA between the parties contained a “no strike, no lockout” provision that enjoined both the Union and the Company from resorting to the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration in settling their disputes.  No law or public policy prohibits the Union and the Company from mutually waiving their respective right to strike and lockout, which are otherwise available to them under the law, in favor of voluntary arbitration. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.

Unfair labor practice. Unfair labor practice cannot be imputed to MMC since the call of MMC for a suspension of the CBA negotiations cannot be equated to “refusal to bargain.”  Article 252 of the Labor Code defines the phrase “duty to bargain collectively.”  For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith or fraud, or was oppressive to labor.  The employer must have acted in a manner contrary to morals, good customs, or public policy causing social humiliation, wounded feelings or grave anxiety.  It cannot be said that MMC deliberately avoided the negotiation.  It merely sought a suspension and even expressed its willingness to negotiate once the mining operations resume.  There was valid reliance on the suspension of mining operations for the suspension of the CBA negotiation. The Union failed to prove bad faith.  Manila Mining Corp. Employees Association, et al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23, September 29, 2010.

LABOR PROCEDURE

Appeal; questions of fact. An issue of fact exists when what is in question is the truth or falsity of the alleged facts, whereas an issue of law exists when what is in question is what the law is on a certain state of facts.  The test, therefore, for determining whether an issue is one of law or of fact, is whether the CA could adjudicate it without reviewing or evaluating the evidence, in which case, it is an issue of law; otherwise, it is an issue of fact. Here the CA needed only to review the records to determine what law should be applied.  Such question does not call for an examination of the probative value of the evidence of the parties. Since petitioners’ appeal involves only questions of law, they erred in taking recourse to the CA by Notice of Appeal. P/Chief Superintendent Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No. 159588, September 15, 2010.

Appeal; timeliness. Under the Rules of Procedure of the NLRC, service of notices and resolutions by registered mail is completed “upon receipt by the addressee or his agent.“ In this case, the receipt of the Labor Arbiter’s decision by the security guard manning the compound where several businesses operated, including that of the petitioner, does not constitute receipt by the agent of the addressee. It is clear that the security guard was not employed by the petitioners. For remedial law purposes, the guard’s receipt of any processes intended for the petitioners was receipt by a stranger, without legal significance to the petitioners. Hence, the 10-day period for filing the appeal should be counted from the day after notice was forwarded to the petitioner’s office. Pasig Cylinder Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No. 173631, September 8, 2010.

Certiorari; NLRC. The power of the CA to review a decision of the NLRC in a petition for certiorari under Rule 65 of the Rules of Court does not normally include an inquiry into the correctness of the NLRC’s evaluation of the evidence. However, under certain circumstances, the CA is allowed to review the factual findings or the legal conclusions of the NLRC in order to determine whether these findings are supported by the evidence presented and the conclusions derived therefrom are accurately ascertained. It is within the jurisdiction of the CA to review the findings of the NLRC. Consequently, the CA cannot be faulted in re-evaluating the NLRC’s findings as it can affirm, modify or reverse the same if the evidence so warrants.  Shimizu Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.

Certiorari; regional director and BLR director. Relief in a special civil action for certiorari is available only when the following essential requisites concur:  (a) the petition must be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (b) the tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction; and  (c) there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law. There is no concurrence of these requisites in C.A.-G.R. SP No. 69889. Firstly, the petition for the plebiscite to amend PALEA’s Constitution and By-Laws was merely incidental to the conduct of the general election pursuant to the final and executory decision of the BLR. As such, the recourse open to PALEA was not to file the petition for certiorari to assail such denial, but to first await the final election results. Secondly, the Regional Director and the BLR Director were not exercising judicial or quasi-judicial functions in issuing the order and the letter. Instead, they were performing the purely ministerial act of enforcing the final and executory BLR resolution directing the conduct of the general election. Philippine Airlines Employees Association (PALEA) vs. Hon. Hans Leo J. Cacdac, G.R. No. 155097, September 27, 2010.

Failure to comply with condition precedent. The records show that the respondents failed to comply with a condition precedent when they did not first bring their claim before the Grievance Machinery as required under the employment contract. Despite this, the CA did not err in dismissing the petitioners’ motion to dismiss because Section 4, Rule III of the NLRC Rules of Procedure is clear that a motion to dismiss on the ground of failure to comply with a condition precedent is a prohibited pleading. Medline Management, Inc. and Grecomar Shipping Agency vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.

Labor arbiter; jurisdiction. As heirs of the deceased seaman, the respondents can file a case before the Labor Arbiter for payment of death benefits as provided under Section 28 of the POEA Standard Employment Contract.  It is clearly provided therein that the NLRC shall have original and exclusive jurisdiction over any and all disputes or controversies arising out of or by virtue of the seaman’s contract. Medline Management, Inc. and Grecomar Shipping Agency vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.

Mediation. Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation with the NCMB. It is only after this step that a submission agreement may be entered into by the parties.  Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive mediation—only a certified or duly recognized bargaining agent. Cullo admitted that the case was filed not by the Union but by individual members thereof.  Clearly, the NCMB had no jurisdiction to entertain the notice filed before it. Insular Hotel Employees Union-NFL vs. Waterfront Insular Hotel Davao, G.R. No. 174040-41, September 22, 2010.

NLRC; acquisition of jurisdiction. The NLRC acquires jurisdiction over parties in cases before it either by summons served on them or by their voluntary appearance before its Labor Arbiter.  The Return of Service of Summons indicated that 74 out of the 81 impleaded Union members were served with summons.  But they refused either to accept the summons or to acknowledge receipt of the same.  Such refusal cannot frustrate the NLRC’s acquisition of jurisdiction over them.  Besides, the affected Union members voluntarily entered their appearance in the case when they sought affirmative relief in the course of the proceedings like an award of damages in their favor. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.

(Leslie thanks Barbara Anne A. Gandionco and Benjamin C. Yan for assisting in the preparation of this post.)

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