January 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Apprenticeship agreement; validity. The apprenticeship agreements did not indicate the trade or occupation in which the apprentice would be trained; neither was the apprenticeship program approved by the Technical Education and Skills Development Authority (TESDA). These were defective as they were executed in violation of the law and the rules. Moreover, with the expiration of the first agreement and the retention of the employees, the employer, to all intents and purposes, recognized the completion of their training and their acquisition of a regular employee status. To foist upon them the second apprenticeship agreement for a second skill which was not even mentioned in the agreement itself, is a violation of the Labor Code’s implementing rules and is an act manifestly unfair to the employees. Atlanta Industries, Inc. and/or Robert Chan vs.  Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.

Complaint; reinstatement. Petitioners question the order to reinstate respondents to their former positions, considering that the issue of reinstatement was never brought up before the Court of Appeals and respondents never questioned the award of separation pay to them. Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify the relief sought, but may add a general prayer for such further or other reliefs as may be deemed just and equitable. Under this rule, a court can grant the relief warranted by the allegation and the evidence even if it is not specifically sought by the injured party; the inclusion of a general prayer may justify the grant of a remedy different from or in addition to the specific remedy sought, if the facts alleged in the complaint and the evidence introduced so warrant. The prayer in the complaint for other reliefs equitable and just in the premises justifies the grant of a relief not otherwise specifically prayed for. Therefore, the court may grant relief warranted by the allegations and the proof even if no such relief is prayed for. In the instant case, aside from their specific prayer for reinstatement, respondents, in their separate complaints, prayed for such reliefs which are deemed just and equitable. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.

Collection of accrued wages; two-fold test. After the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.  The two-fold test in determining whether an employee is barred from recovering his accrued wages requires that — (1) there must be actual delay or that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission.  If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s Decision. Social Security System vs. Efren Capada, et al., G.R. No. 168501, January 31, 2011.

Disciplinary measures; management prerogative. The policy of suspending drivers pending payment of arrears in their boundary obligations is reasonable. It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline on his employees and to impose penalties, including dismissal, if warranted, upon erring employees. This is a management prerogative. Indeed, the manner in which management conducts its own affairs to achieve its purpose is within the management’s discretion.  The only limitation on the exercise of management prerogative is that the policies, rules, and regulations on work-related activities of the employees must always be fair and reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.

Dismissal; constructive dismissal. Respondent was suspended for one year after being charged with and found liable for AWOL. After serving her suspension, respondent was allowed to return to work. Respondent cannot be considered to have been constructively dismissed by the petitioner during her period of suspension. Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to quit. In this case, there was no cessation of employment relations between the parties. It is unrefuted that respondent promptly resumed teaching at the university right after the expiration of the suspension period. In other words, respondent never quit. Hence, she cannot claim to have been left with no choice but to quit, a crucial element in a finding of constructive dismissal. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011.

Dismissal; due process. Respondent employee reported to the petitioner employer the loss of cash which she placed inside the company locker. Immediately, petitioner ordered that she be strip-searched by the company guards. However, the search on her and her personal belongings yielded nothing. The petitioner also reported the matter to the police and requested the Prosecutor’s Office for an inquest. Respondent was constrained to spend two weeks in jail for failure to immediately post bail. The Court ruled that petitioners failed to accord respondent substantive and procedural due process. Article 277(b) of the Labor Code mandates that subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal, except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the same Code, the employer shall furnish the worker, whose employment is sought to be terminated, a written notice containing a statement  of the causes of termination, and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of a representative if he so desires, in accordance with company rules and regulations pursuant to the guidelines set by the Department of Labor and Employment. The due process requirements under the Labor Code are mandatory and may not be supplanted by police investigation or court proceedings. The criminal aspect of the case is considered independent of the administrative aspect. Thus, employers should not rely solely on the findings of the Prosecutor’s Office. They are mandated to conduct their own separate investigation, and to accord the employee every opportunity to defend himself. Robinsons Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.

Dismissal; neglect of duty. Neglect of duty, to be a ground for dismissal, must be both gross and habitual.  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. Hospital Management Services – Medical Center Manila vs. Hospital Management Services, Inc. – Medical Center Manila Employees Association-AFW., G.R. No. 176287, January 31, 2011.

Dismissal; negligence in patient management. Negligence is defined as the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation.  The Court emphasizes that the nature of the business of a hospital requires a higher degree of caution and exacting standard of diligence in patient management and health care as what is involved are lives of patients who seek urgent medical assistance.  An act or omission that falls short of the required degree of care and diligence amounts to serious misconduct which constitutes a sufficient ground for dismissal. Hospital Management Services – Medical Center Manila vs. Hospital Management Services, Inc. – Medical Center Manila Employees Association-AFW., G.R. No. 176287, January 31, 2011.

Employee benefits; compensable illness. The degree of proof required under P.D. 626 is merely substantial evidence, which means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.  Accordingly, the claimant must show, at least by substantial evidence that the development of the disease was brought about largely by the conditions present in the nature of the job.  What the law requires is a reasonable work connection, not a direct causal relation. Alexander B. Gatus vs. Social Security System, G.R. No. 174725, January 26, 2011.

Employer-employee relationship; jeepney driver. It is already settled that the relationship between jeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee and not of lessor-lessee. The fact that the drivers do not receive fixed wages but only get the amount in excess of the so-called “boundary” that they pay to the owner/operator is not sufficient to negate the relationship between them as employer and employee. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.

Employer-employee relationship; primary element. Control over the performance of the task of one providing service – both with respect to the means and manner, and the results of the service – is the primary element in determining whether an employment relationship exists. Petitioner asserts that his employer Manulife’s control over him was demonstrated (1) when it set the objectives and sales targets regarding production, recruitment and training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of Conduct to govern his activities. However, the court ruled that all these appear to speak of control by the insurance company over its agents.  There are built-in elements of control specific to an insurance agency, which do not amount to the elements of control that characterize an employment relationship governed by the Labor Code.  They are, however, controls aimed only at specific results in undertaking an insurance agency, and are, in fact, parameters set by law in defining an insurance agency and the attendant duties and responsibilities an insurance agent must observe and undertake. They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes an employment relationship as defined by labor law.  To reiterate, guidelines indicative of labor law “control” do not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the result. Petitioner is an insurance agent not an employee. Gregorio V. Tongko vs. The Manufacturers Life Insurance Co. (Phils.), Inc. and Renato A. Vergel de Dios, G.R. No. 167622, January 25, 2011.

Employer-employee relationship; probationary employment. A probationary employee, like a regular employee, enjoys security of tenure.  However, in cases of probationary employment, aside from just or authorized causes of termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of the engagement.  Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of the following:  (1) a just or (2) an authorized cause; and  (3) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. Robinsons Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.

Employer-employee relationship; regular employment. The respondent employees were already rendering service to the company when they were made to undergo apprenticeship.  The respondent were regular employees because they occupied positions such as machine operator, scaleman and extruder operator – tasks that are usually necessary and desirable in petitioner employer’s usual business or trade as manufacturer of plastic building materials. These tasks and their nature characterized the respondents as regular employees under Article 280 of the Labor Code.  Thus, when they were dismissed without just or authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal under the law. Atlanta Industries, Inc. and/or Robert Chan vs.  Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.

Illegal dismissal; strained relations. Article 279 of the Labor Code provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. However, due to the strained relations of the parties, the payment of separation pay has been considered an acceptable alternative to reinstatement, when the latter option is no longer desirable or viable.  On the one hand, such payment liberates the employee from what could be a highly oppressive work environment.  On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Thus, as an illegally or constructively dismissed employee, respondent is entitled to: (1) either reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively. Robinsons Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.

Illegal recruitment; elements. Recruitment and placement refers to the act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. When a person or entity, in any manner, offers or promises for a fee employment to two or more persons, that person or entity shall be deemed engaged in recruitment and placement. Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by non-licensees or non-holders of authority are deemed illegal and punishable by law. And when the illegal recruitment is committed against three or more persons, individually or as a group, then it is deemed committed in large scale and carries with it stiffer penalties as the same is deemed a form of economic sabotage. But to prove illegal recruitment, it must be shown that the accused, without being duly authorized by law, gave complainants the distinct impression that he had the power or ability to send them abroad for work, such that the latter were convinced to part with their money in order to be employed.  It is important that there must at least be a promise or offer of an employment from the person posing as a recruiter, whether locally or abroad. People of the Philippines vs. Teresita “Tessie” Laogo, G.R. No. 176264, January 10, 2011.

Illegal dismissal; execution of waiver and quitclaim. An employee’s execution of a final settlement and receipt of amounts agreed upon does not foreclose his right to pursue a claim for illegal dismissal.   Thus, an employee illegally retrenched is entitled to reinstatement without loss of seniority rights and privileges, as well as to payment of full backwages from the time of her separation until actual reinstatement, less the amount which he/she received as retrenchment pay. Bernadeth Londonio and Joan Corcoro vs. Bio Research, Inc. and Wilson Y. Ang, G.R. No. 191459, January 17, 2011.

Jurisdiction; labor arbiter. Petitioner was removed from his position as a manager through a Board Resolution. Petitioner filed a complaint for illegal dismissal before the labor arbiter. Respondents claimed that petitioner is both a stockholder and a corporate officer of respondent corporation, hence, his action against respondents is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction.  The Court ruled that this is not an intra-corporate controversy but a labor case cognizable by the labor arbiter. To determine whether a case involves an intra-corporate controversy that is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two tests must be applied: (a) the status or relationship test, and (2) the nature of the controversy test. The first test requires that the controversy arise out of intra-corporate or partnership relations among the stockholders, members or associates of the corporation, partnership or association, between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates; between such corporation, partnership, or association and the public or between such corporation, partnership, or association and the State insofar as it concerns its franchise, license or permit to operate.  The second test requires that the dispute among the parties be intrinsically connected with the regulation of the corporation.  The Court in this case held that petitioner is not a corporate officer because he was not validly appointed by the Board, thus, failing the relationship test, and that this is a case of employment termination which is a labor controversy and not an intra-corporate dispute, thus failing the nature of the controversy test. Renato Real vs. Sangu Philippines, Inc. et al., G.R. No. 168757. January 19, 2011.

Jurisdiction; labor dispute. Article 217 of the Labor Code states that unfair labor practices and termination disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an exception, under Article 262 the Voluntary Arbitrator, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. For the exception to apply, there must be agreement between the parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a collective bargaining agreement. However, in the absence of a collective bargaining agreement, it is enough that there is evidence on record showing the parties have agreed to resort to voluntary arbitration. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011.

NLRC; factual findings. Factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. But these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.  The CA can grant the petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, made a factual finding not supported by substantial evidence. Thus, it is within the jurisdiction of the CA to review the findings of the NLRC. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.

Petition; certificate of non-forum shopping. While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a case and the signature of only one of them is insufficient, the Court has stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. Strict compliance with the provision regarding the certificate of non-forum shopping underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. It does not, however, prohibit substantial compliance therewith under justifiable circumstances, considering especially that although it is obligatory, it is not jurisdictional. In a number of cases, the Court has consistently held that when all the petitioners share a common interest and invoke a common cause of action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the rules. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.

Petition; failure to attach documents. The respondent workers sought that the petition be dismissed outright for the petitioners’ failure to attach to the petition a copy of the Production and Work Schedule and a copy of the compromise agreement allegedly entered into — material portions of the record that should accompany and support the petition, pursuant to Section 4, Rule 45 of the Rules of Court. In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena the Court held that the phrase “of the pleadings and other material portions of the record xxx as would support the allegation of the petition clearly contemplates the exercise of discretion on the part of the petitioner in the selection of documents that are deemed to be relevant to the petition. The crucial issue to consider then is whether or not the documents accompanying the petition sufficiently supported the allegations therein.”  The failure to attach copy of the subject documents is not fatal as the challenged CA decision clearly summarized the labor tribunal’s rulings. Atlanta Industries, Inc. and/or Robert Chan vs.  Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.

Petition; verification. The verification requirement is deemed substantially complied with when some of the parties who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the petition had signed the same. Such verification is deemed a sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, and not merely speculative. In any case, the settled rule is that a pleading which is required by the Rules of Court to be verified, may be given due course even without a verification if the circumstances warrant the suspension of the rules in the interest of justice. Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does not of itself justify a court in refusing to allow and act on a case. Hence, the failure of some of the respondents to sign the verification attached to their Memorandum of Appeal filed with the NLRC is not fatal to their cause of action. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.

Regional director; review of decision. Petitioner appealed an adverse decision to the BLR. BLR Director inhibited himself from the case because he had been a former counsel of respondent. In view of the inhibition, DOLE Secretary took cognizance of the appeal. Jurisdiction to review the decision of the Regional Director lies with the BLR. Once jurisdiction is acquired by the court, it remains with it until the full termination of the case. Thus, jurisdiction remained with the BLR despite the BLR Director’s inhibition. When the DOLE Secretary resolved the appeal, she merely stepped into the shoes of the BLR Director and performed a function that the latter could not himself perform. She did so pursuant to her power of supervision and control over the BLR. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.

Union registration; cancellation. The amendment introduced by RA 9481 sought to strengthen the workers’ right to self-organization and enhance the Philippines’ compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87, pertaining to the non-dissolution of workers’ organizations by administrative authority. ILO Convention No. 87 provides that “workers’ and employers’ organizations shall not be liable to be dissolved or suspended by administrative authority.” The ILO has expressed the opinion that the cancellation of union registration by the registrar of labor unions, which in our case is the BLR, is tantamount to dissolution of the organization by administrative authority when such measure would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities, which is true in our jurisdiction. Although the ILO has allowed such measure to be taken, provided that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has nonetheless reminded its members that dissolution of a union, and cancellation of registration for that matter, involve serious consequences for occupational representation. It has, therefore, deemed it preferable if such actions were to be taken only as a last resort and after exhausting other possibilities with less serious effects on the organization. It is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. At any rate, the Court in this case took note of the fact that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.

Wages; payment pending reinstatement. Employees are entitled to their accrued salaries during the period between the Labor Arbiter’s order of reinstatement pending appeal and the resolution of the National Labor Relations Commission (NLRC) overturning that of the Labor Arbiter.  Otherwise stated, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, the employer is still obliged to reinstate and pay the wages of the employee during the period of appeal until reversal by a higher court or tribunal. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. Social Security System vs. Efren Capada, et al., G.R. No. 168501, January 31, 2011.

(Leslie thanks Rachel T. Uy for assisting in the preparation of this post.)