October 2010 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are selected October 2010 rulings of the Supreme Court of the Philippine on labor law and procedure:

Compensable illness. Respondent is entitled to sickness wages because the shooting pain in his right foot is an injury which he suffered during the course of his employment. This is in consonance with the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels of the Department of Labor and Employment. Applying the said provisions of this standard contract, respondent is entitled to receive sickness wages covering the maximum period of 120 days. Moreover, petitioners violated the contract when it failed to provide continuous treatment for respondent in accordance with the recommendation of their company physician.  Because of this failure, respondent was forced to seek immediate medical attention at his own expense.  Thus, he is also entitled to reimbursement of his medical expenses. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No. 161934, October 6, 2010

Compensable illness. For an injury or illness to be duly compensated under the terms of the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), there must be a showing that the injury or illness and the ensuing disability occurred during the effectivity of the employment contract. Moreover, all of these conditions must be satisfied — 1.) The seafarer’s work must involve the risks described in the POEA-SEC; 2.) The disease was contracted as a result of the seafarer’s exposure to the described risks; 3.) The disease was contracted within a period of exposure and under such other factors necessary to contract it;  and 4.) There was no notorious negligence on the part of the seafarer.  Specifically, with respect to mental diseases, the POEA-SEC requires that it must be due to traumatic injury to the head which did not occur in this case.  In fact, respondent claimed that he became depressed due to the frequent verbal abuse he received from his German superiors. However, he failed to show concrete proof that, if indeed he was subjected to abuse, it directly resulted in his depression.  Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A. Nazam, G.R. No. 190804. October 11, 2010.

Constructive dismissal; transfer. It is management prerogative to transfer or assign employees from one office or area of operation to another. However, the employer must show that the transfer is not unreasonable, inconvenient or prejudicial to the employee, or that it does not involve a demotion in rank or a diminution of his salaries, privileges and other benefits.  Should the employer fail to overcome this burden, the employee’s transfer shall be tantamount to constructive dismissal. In the instant case, Del Villar’s demotion is readily apparent in his new designation as a mere Staff Assistant to the Corporate Purchasing and Materials Control Manager from being Transportation Services Manager. The two posts are not of the same weight in terms of duties and responsibilities. Moreover, while Del Villar’s transfer did not result in the reduction of his salary, there was a diminution in his benefits because as a mere Staff Assistant, he could no longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which he previously enjoyed as Transportation Services Manager. Thus, Del Villar was clearly constructively dismissed. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.

Dismissal; closure of business. Petitioner terminated the employment of respondents on the ground of closure or cessation of operation of the establishment which is an authorized cause for termination under Article 283 of the Labor Code. While it is true that a change of ownership in a business concern is not proscribed by law, the sale or disposition must be motivated by good faith as a condition for exemption from liability. In the instant case, however, there was, in fact, no change of ownership. Petitioner did not present any documentary evidence to support its claim that it sold the same to ALPS Transportation.  On the contrary, it continuously operates under the same name, franchises and routes and under the same circumstances as before the alleged sale. Thus, no actual sale transpired and, as such, there is no closure or cessation of business that can serve as an authorized cause for the dismissal of respondents. Peñafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang, G.R. No. 178397, October 20, 2010.

Dismissal; constructive dismissal. There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his employment.  It also exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, such as when an offer involves a demotion in rank and a diminution in pay.  In the present case,   what made it impossible, unreasonable or unlikely for respondent to continue working for SHS was the unlawful withholding of his salary. He then lost no time in submitting his resignation letter and eventually filing a complaint for illegal dismissal just a few days after his salary was withheld.  These circumstances are inconsistent with voluntary resignation and bolster the finding of constructive dismissal. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Dismissal; corporate officer. It is not the nature of the services performed, but on the manner of creation of the office that distinguishes corporate officers who may be ousted from office at will and ordinary corporate employees who may only be terminated for just cause.  Under Section 25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation of an office pursuant to a By-Law provision giving a president the power to create an office does not qualify as a By-Law position. In the present case, the position of Vice President for Finance and Administration which respondent held was merely created by Matling’s President pursuant to the company’s By-Laws.  It is not a corporate office or By-Law position, and therefore, respondent was not a corporate officer who could be ousted from office at will. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, October 13, 2010.

Dismissal; gross and habitual neglect. Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross and habitual neglect of duties.  Gross negligence connotes want of care in the performance of one’s duties.  Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances.  A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.  Assuming arguendo that respondent was negligent, although the Court found otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be categorized as habitual and, hence, not a just cause for his dismissal. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

Dismissal; loss of confidence. Loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of trust and confidence.  This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer’s property.  However, in order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer. In the instant case, the Resolution of the PAL Board of Directors, underscored respondent’s acts of mismanagement and gross incompetence which resulted in huge financial losses for petitioner.  As a general rule, employers are allowed wider latitude of discretion in terminating the employment of managerial personnel or those who, while not of similar rank, perform functions which by their nature require the employer’s full trust and confidence.  This must be distinguished from the case of ordinary rank and file employees, whose termination on the basis of these same grounds requires a higher proof of involvement in the events in question. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010

Dismissal;  probationary employee. Although respondent was a probationary employee, he is nonetheless entitled to security of tenure.  Section 3 (2) Article 13 of the Constitution guarantees that right. In using the expression “all workers,” the Constitution puts no distinction between a probationary and a permanent or regular employee. This means that probationary employees cannot be dismissed except for cause or for failure to qualify as regular employees (i.e., to meet the performance standards set by the company to be eligible for regular employment). SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Dismissal; requirement. In dismissing an employee, the employer must furnish him with two written notices: the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, and the second is a subsequent notice, which informs the employee of the employer’s decision to dismiss him. An administrative hearing must likewise be held in order to give the employee a further opportunity to be heard. Petitioner hospital failed to comply with the rule on twin notice and hearing as it merely required respondent to give his written explanation and, thereafter, ordered his dismissal.  St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

Dismissal; serious misconduct. Serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper or wrongful conduct.  It is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment.  To be serious, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. Moreover, it must be related to the performance of the employee’s duties such as would show him to be unfit to continue working for the employer. On the other hand, moral turpitude has been defined as “everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties which a man owes his fellowmen, or to society in general, contrary to justice, honesty, modesty, or good morals. In the case at bar, the transgressions imputed to private respondent have never been firmly established as deliberate and willful acts.  At the very most, they can only be characterized as unintentional, albeit major, lapses in professional judgment.  Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.

Employer-employee relationship. That complainants were employees of SIP is clear from the fact that SIP paid their salary.  When complainants charged SIP of underpayment, SIP even interposed the defense of free board and lodging given to complainants. Furthermore, the IDs issued to complainants bear the signature of Alejandro C. Pablo, proprietor of SIP. Likewise, the memoranda issued to complainants regarding their absences without leave were signed by Pablo.  All these clearly show that SIP is the employer of complainants. Although GMPC engaged the services of SIP to operate a canteen, SIP and its proprietors could not be considered as labor-only contractors or mere agents of GMPC because they exercised the essential elements of an employment relationship with the complainants such as hiring, payment of wages and the power of control. S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No. 192473, October 11, 2010.

Employer-employee relationship; test. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct. The most important of these elements is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. It should be remembered that the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof. Based on this four-fold test, Manila Water emerges as the employer of respondent collectors. Respondent bill collectors were individually hired by the contractor, but were under the direct control and supervision of Manila Water. This control is manifested in the fact that respondent bill collectors reported daily to the branch offices of Manila Water to remit their collections with the specified monthly targets and comply with the collection reporting procedures prescribed by the latter. Accordingly, respondent bill collectors are employees of petitioner Manila Water. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.

Evidentiary doubts construed in favor of labor. Although it cannot be determined with certainty whether respondent worked for the entire period from November 16 to November 30, 2005, the consistent rule is that if doubt exists between the evidence presented by the employer and that by the employee, the scales of justice must be tilted in favor of the latter in line with the policy mandated by Articles 2 and 3 of the Labor Code to afford protection to labor and construe doubts in favor of labor.  In view of petitioners’ failure to satisfy their burden of proof, respondent is presumed to have worked during the period in question and is, accordingly, entitled to his salary. Therefore, the withholding of respondent’s salary by petitioners is contrary to Article 116 of the Labor Code and, thus, unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Illegal dismissal; full backwages and reinstatement. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. If reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.

Illegal dismissal; moral and exemplary damages. Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer. Moral damages may be awarded to compensate one for injuries such as mental anguish, besmirched reputation, wounded feelings, and social humiliation occasioned by the employer’s unreasonable dismissal of the employee. The award of such damages is based not on the Labor Code but on the Civil Code.  These damages, however, are not intended to enrich the illegally dismissed employee.  Thus, the Court found it proper to reduce the award of moral damages from P500,000 to P100,000.00 and exemplary damages  from P500,000 to P50,000.00. The reduced amounts are deemed sufficient to assuage the sufferings experienced by Del Villar and to set an example for the public good. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.

Illegal dismissal; reinstatement and full backwages. Probationary employees who are unjustly dismissed during the probationary period are entitled to reinstatement and payment of full backwages and other benefits and privileges from the time they were dismissed up to their actual reinstatement.  Respondent is, thus, entitled to reinstatement without loss of seniority rights and other privileges as well as to full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of actual reinstatement. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Illegal dismissal; reinstatement and payment of backwages. Petitioners’ lack of just cause and non-compliance with the procedural requisites in terminating respondent’s employment renders them guilty of illegal dismissal.  Consequently, under Article 279 of the Labor Code, as amended, respondent is entitled to reinstatement to his former position without loss of seniority rights and payment of backwages inclusive of allowances and other benefits, or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement.   St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

Illegal dismissal; separation pay in lieu of reinstatement. If reinstatement proves impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time since the employee’s dismissal, or if the employee decides not to be reinstated, respondent should be awarded separation pay in lieu of reinstatement.  In the present case, since reinstatement is no longer feasible due to the long passage of time, petitioners are required to pay respondent his separation pay equivalent to one (1) month’s pay for every year of service.  Petitioners are thus ordered to pay respondent his backwages and separation pay.  The awards of separation pay and backwages are not mutually exclusive and both may be given to respondent. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

Job contracting; conditions. Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and 2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business. “Substantial capital or investment” refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries, and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work, or service contracted out. The “right to control” refers to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.

Jurisdiction; dismissal. Pursuant to Article 217 (a) 2 of the Labor Code, as amended, the illegal dismissal of an officer or other employee of a private employer is properly cognizable by the labor arbiter. However, where the complaint for illegal dismissal concerns a corporate officer, the controversy is considered an intra-corporate dispute and falls under the jurisdiction of the Securities and Exchange Commission (SEC). This jurisdiction of the SEC, however, was transferred to the RTC, pursuant to RA No. 8799 which became effective on August 8, 2000. Considering that the respondent’s complaint for illegal dismissal was commenced on August 10, 2000, the appropriate jurisdiction lie with the RTC should it turn out that the respondent was a corporate, not a regular, officer of Matling. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, October 13, 2010.

Jurisdiction; labor dispute vs. intra-corporate dispute. Given Locsin’s status as a corporate officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with Nissan.  In a number of cases it has been held that a corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy so that the RTC should exercise jurisdiction.  Locsin was undeniably Chairman and President, and was elected to these positions by the Nissan board pursuant to its By-laws. As such, he was a corporate officer, not an employee.  Even as Executive Vice-President/Treasurer, Locsin already acted as a corporate officer because the position of Executive Vice-President/Treasurer is provided for in Nissan’s By-Laws.   Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.

Labor-only contracting; elements. The Labor Code expressly prohibits “labor-only” contracting which refers to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal, and any of the following elements are present: (i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) the contractor does not exercise the right to control the performance of the work of the contractual employee. Using the above criteria, it is clear that FCCSI is a labor-only contractor while the principal Manila Water is the real employer. FCCSI does not have substantial capital or investment to qualify as an independent contractor as shown by the fact that although it has an authorized capital stock of P400,000.00, only P100,000.00 of which is actually paid-up. Also, it was Manila Water that provided the equipment and service vehicles needed in the performance of the contracted service. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.

Loss of confidence; distinction between managerial personnel and rank and employees . As a general rule, employers are allowed wider latitude of discretion in terminating the employment of managerial personnel or those who, while not of similar rank, perform functions which by their nature require the employer’s full trust and confidence.  This must be distinguished from the case of ordinary rank and file employees, whose termination on the basis of these same grounds requires a higher proof of involvement in the events in question; mere uncorroborated assertions and accusations by the employer will not suffice. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.

Motion to dismiss; appeal. Petitioner Locsin’s submission that the NCLPI improperly elevated the Labor Arbiter’s denial of the Motion to Dismiss to the CA is correct.  A denial of a motion to dismiss is an interlocutory order and hence, cannot be appealed until a final judgment on the merits of the case is rendered. As a general rule, an aggrieved party’s proper recourse to the denial is to file his position paper, interpose the grounds relied upon in the motion to dismiss – such as lack of jurisdiction in the present case – before the labor arbiter, and actively participate in the proceedings. Thereafter, the labor arbiter’s decision can be appealed to the NLRC, not to the CA.   This NLRC rule is similar to the general rule observed in civil procedure. Under the Rules of Court, the only other recourse of the aggrieved party is to file an appropriate special civil action under Rule 65 but only when there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. In the labor law setting, a plain, speedy and adequate remedy in the form of the corrective power of the NLRC is still open to the aggrieved party when a labor arbiter denies a motion to dismiss. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.

Petition; failure to attach documents. Failure to attach all pleadings and documents, by itself, is not a sufficient ground to dismiss a petition.  The courts may liberally construe procedural rules in order to meet and advance the cause of substantial justice.  Procedural lapses will be overlooked when they do not involve public policy, when they arose from an honest mistake or unforeseen accident, and when they have not prejudiced the adverse party or deprived the court of its authority. These conditions are present in the instant case.  Furthermore, after petitioner’s receipt of the Court of Appeals Resolution dismissing his petition for failure to attach documents, he filed a Motion for Reconsideration along with the documents deemed by the Court of Appeals as lacking in his original petition. Such subsequent submission should be deemed substantial compliance as supported by jurisprudence. In these cases, the reasons behind the failure of the petitioners to comply with the required attachments were no longer scrutinized.  Clearly, the Court of Appeals erred in dismissing petitioner’s special civil action for certiorari despite subsequent substantial compliance with the rules on procedure. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.

Private recruitment agencies; solidary liability. Republic Act No. 8042 provides for the joint and solidary liability of private recruitment agencies with their foreign principals in any and all money claims against them. Such provision is automatically incorporated by law in the contract for overseas employment and is a condition precedent for its approval. This is to afford the OFWs immediate and sufficient payment of what is due them.  Moreover, such obligation is not coterminous with the agreement between the local agent and its foreign principal so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Thus, to allow petitioners to simply invoke the immunity from suit of its foreign principal or to wait for the judicial determination of the foreign principal’s liability before petitioner can be held liable renders the law on joint and solidary liability inutile. ATCI Overseas Corporation, et al.  vs. Ma. Josefa Echin, G.R. No. 178551. October 11, 2010

Redundancy. Redundancy is one of the authorized causes for the dismissal of an employee under Article 283 of the Labor Code. Redundancy, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise.  Such superfluity may be due to overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The determination of redundancy is an exercise of business judgment of the employer the soundness of which is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act.  Thus, a company must not merely declare that it has become overmanned, it must also produce adequate proof of such redundancy. Coca-Cola failed to overcome this burden in the instant case.  Instead, it offered proof of Del Villar’s poor performance which is irrelevant in relation to the issue on redundancy.  Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.

Reinstatement; doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable.  Payment liberates the employee from what could be a highly oppressive work environment, and at the same time releases the employer from the obligation of keeping in its employ a worker it no longer trusts.  In the instant case, respondent’s reinstatement is no longer feasible as antagonism has caused a severe strain in his working relationship with petitioners. Therefore, a more equitable disposition would be an award of separation pay equivalent to at least one month pay, in addition to his full backwages, allowances and other benefits. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Release and quitclaim; validity. Quitclaims executed by the employees are commonly frowned upon as contrary to public policy.  Thus, for quitclaims to be valid the following requisites must be complied with: (a) that there was no fraud or deceit on the part of any of the parties; (b) that the consideration of the quitclaim is credible and reasonable; and (c) that the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No. 161934, October 6, 2010

Retirement; compulsory. Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for compulsory retirement at 65 years, while the minimum age for optional retirement is set at 60 years. An employer is, however, free to impose a retirement age earlier than the foregoing mandates provided that the prerogative is exercised pursuant to a mutually instituted early retirement plan. In the present case, not even an iota of voluntary acquiescence to UNIPROM’s early retirement age option is attributable to petitioner. UNIPROM’s Employees’ Non-Contributory Retirement Plan was unilaterally and compulsorily imposed on them. Petitioner was forced to participate in the plan, and the only way she could have rejected the same was to resign or lose her job. Such passive acquiescence on the part of employees cannot equate to voluntary acceptance which must be explicit, voluntary, free, and uncompelled. Having terminated petitioner merely on the basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is guilty of illegal dismissal. Lourdes A. Cercado vs. Uniprom, Inc., G.R. No. 188154. October 13, 2010.

Rule on appeal from denial of motion to dismiss; exception. As a general rule, a Labor Arbiter’s denial of the Motion to Dismiss on the ground of lack of jurisdiction is appealable to the NLRC and not to the CA by way of Rule 65. However, we take exception to this general rule in the present case because a strict implementation of these rules would cause substantial injustice to NCLPI.  After all, the parties have sufficiently ventilated their positions on the disputed employer-employee relationship and have, in fact, submitted the matter for the CA’s consideration.  Moreover, the CA correctly ruled that Locsin was a corporate officer, not an employee and therefore jurisdiction lies with the RTC and not the Labor Arbiter. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.

Seaman as a contractual employee; disability claims. A seaman is a contractual and not a regular employee. Thus, in claims of seamen for compensation and disability benefits, the Court cannot just disregard the provisions of the POEA Standard Employment Contract (POEA SEC).  In order to claim disability benefits under the POEA SEC, it is the ‘company-designated’ physician who must proclaim that the seaman suffered a permanent disability, due to either injury or illness, during the term of the latter’s employment. In this case, the findings of respondents’ designated physician that petitioner has been suffering from brief psychotic disorder and that it is not work-related must be respected. While it is true that labor contracts are impressed with public interest and the provisions of the POEA SEC must be construed logically and liberally in favor of Filipino seamen in the pursuit of their employment on board ocean-going vessels, the rule is that justice is, in every case, only for the deserving; it is to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence. Edgardo M. Panganiban vs. Tara Trading Ship Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18, 2010

Separation pay; equity. In exceptional cases, this Court has granted separation pay to a legally dismissed employee as an act of “social justice” or based on “equity.”  In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee or would involve moral turpitude.  There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.

Termination; loss of confidence. Loss of confidence as a just cause for termination of employment applies when the employee concerned holds a position of trust and confidence.  However, in order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer. Petitioner, who, as Branch Manager of the respondent bank undoubtedly held a position of trust and confidence, admitted that he personally processed the two Certificates of Time Deposit (CTDs) at issue, despite his knowledge that they were unfunded.  By doing so, he exposed his employer to great risk.  Moreover, by issuing those CTDs, he was in effect certifying the existence of time deposits in his branch that were actually fictitious.  Thus, it can be said that his obvious laxity or negligence in the issuance of the said CTDs was even tainted with dishonesty.  Respondent bank was thus justified in terminating petitioner’s employment on the ground of loss of trust and confidence. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.

Termination; procedural due process. Notice and hearing constitute the essential elements of due process in the dismissal of employees.  The employer must furnish the employee with two written notices before termination of employment can be legally effected.  With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard; an actual trial-type hearing is not indispensable. In this case, respondent acted in accordance with procedural due process when it gave petitioner considerable leeway with regard to the submission of his written explanation by allowing multiple extensions of time to submit the same and by furnishing him the documents used in respondent’s investigation. Even assuming that petitioner was not fully heard during the employer’s investigation, it was his fault because of his misguided insistence on having a trial-type hearing.  Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.

Termination; solidary liability of corporate directors and officers. Corporate directors and officers are only solidarily liable with the corporation for termination of employment of corporate employees if such is effected with malice or in bad faith.  Bad faith does not connote bad judgment or negligence; it imports dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of known duty through some motive or interest or ill will; it partakes of the nature of fraud.  To sustain such a finding, there should be evidence on record that an officer or director acted maliciously or in bad faith in terminating the employee. In the instant case, petitioners withheld respondent’s salary in the sincere belief that respondent did not work for the period in question. Thus, although they unlawfully withheld respondent’s salary, it cannot be concluded that such was made in bad faith.  Accordingly, corporate officers, Hartmannshenn and Schumacher, cannot be held personally liable for the corporate obligations of SHS. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Wages; deduction by employer. The free board and lodging SIP furnished the employees cannot operate as a set-off for the underpayment of their wages.  It was held in Mabeza v. National Labor Relations Commission that the employer cannot simply deduct from the employee’s wages the value of the board and lodging without satisfying the following requirements:  (1) proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities; and  (3) proof of the fair and reasonable value of the facilities charged. It is clear from the records that SIP failed to comply with these requirements. S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No. 192473, October 11, 2010.

Wages, withholding. Management prerogative does not include the right to temporarily withhold wages without the consent of the employee. Such an interpretation would be contrary to Article 116 of the Labor Code, which provides that it shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means without the worker’s consent. Withholding of wages is allowed only in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code such as:   (a)  In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b)  For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c)   In cases where the employer is authorized by law or regulations issued by the Secretary of Labor. In the present case, the withholding of complainant’s wages does not fall under the exceptions provided in Article 113 and is thus unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Work-related illness; substantial evidence. Working conditions cannot be accepted to have caused or at least increased the risk of contracting the disease – in this case, brief psychotic disorder- in the absence of substantial evidence. The evidence must be real and substantial, and not merely apparent.  In sum, petitioner failed to establish by substantial evidence that his brief psychotic disorder was caused by the nature of his work as oiler of the company-owned vessel. In fact, he failed to elaborate on the nature of his job as oiler of respondent company. The Court, therefore, has difficulty in finding any link between his position as oiler and his illness. Petitioner points out that his “brief psychotic disorder” which was caused by a family problem is work-related simply because had it been a land-based employment, petitioner would have easily gone home and attended to the needs of his family. This is not the “work-related” instance contemplated by the provisions of the employment contract in order to be entitled to the benefits. Otherwise, every seaman would automatically be entitled to compensation because the nature of his work is not land-based. Edgardo M. Panganiban vs. Tara Trading Ship Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18, 2010.

Writ of habeas data; labor disputes. Respondent questions her transfer and, through the extraordinary remedy of habeas data, seeks the disclosure of the reasons behind it. However, since her real objective is to be spared from complying with MERALCO’s Memorandum directing her reassignment, respondent should instead lodge her complaint with the NLRC and the Labor Arbiters which have jurisdiction over such concerns. The writ of habeas data is a remedy available only to a person whose right to privacy in life, liberty or security is violated or threatened by an unlawful act or omission of a public official or employee or of a private individual or entity engaged in the gathering, collecting or storing of data or information regarding the person, family, home and correspondence of the aggrieved party. Petitioners’ refusal to disclose the contents of reports which form the basis of respondent’s transfer does not amount to a violation of her right to privacy. Manila Electric Company, Alexander S. Deyto and Ruben A. Sapitula vs. Rosario Gopez Lim, G.R. No. 184769, October 5, 2010.

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

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