June 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Appeal; decision of DOLE Secretary. For petitioner’s refusal to comply with his deployment assignment, respondent manning agency filed a complaint against him for breach of contract before the Philippine Overseas Employment Administration (POEA).  The POEA penalized petitioner with one year suspension from overseas deployment. The suspension was reduced to six months by the Secretary of Labor. Petitioner appealed the latter’s decision with the Office of the President (OP). The Supreme Court ruled that petitioner’s appeal was erroneous. The proper remedy to question the decisions or orders of the Secretary of Labor is via Petition for Certiorari under Rule 65.   Appeals to the OP in labor cases have been eliminated, except those involving national interest over which the President may assume jurisdiction. The present case does not affect national interest. Hence, petitioner’s appeal to the OP did not toll the running of the period and the assailed decision of the Secretary of Labor is deemed to have attained finality. Miguel Dela Pena Barairo vs. Office of the President and MST Marine Services (Phils.) Inc., G.R. No. 189314. June 15, 2011

Appeal from decisions of labor arbiter; bond requirement for perfection of appeal may be relaxed in meritorious cases. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter.  However, under Section 6, Rule VI of the NLRC’s Revised Rules of Procedure, the bond may be reduced albeit only (1) on meritorious grounds and (2) upon posting of a partial bond in a reasonable amount in relation to the monetary award. For this purpose, the NLRC is not precluded from conducting a preliminary determination of the employer’s financial capability to post the required bond, without necessarily passing upon the merits.  In the present case, the NLRC gravely abused its discretion in denying petitioner’s motion to reduce bond peremptorily without considering the evidence presented by petitioner showing that it was under a state of receivership. Such circumstance constitutes meritorious grounds to reduce the bond. Moreover, the petitioner exhibited its good faith by posting a partial cash bond during the reglementary period. University Plans, Inc. vs. Belinda P. Solano, et al., G.R. No. 170416, June 22, 2011 

Certiorari; substantial compliance. The three material dates which should be stated in the petition for certiorari under Rule 65 are the dates when the notice of judgment was received, when a motion for reconsideration was filed and when the notice of the denial of the motion for reconsideration was received. These dates should be reflected in the petition to enable the reviewing court to determine if the petition was filed on time. In the present case, the petition filed with the Court of Appeals failed to state when petitioner received the assailed NLRC Decision and when he filed his partial motion for reconsideration.  However, this omission is not at all fatal because these material dates are reflected in petitioner’s Partial Motion for Reconsideration attached to the petition.  The failure to state these two dates in the petition may be excused if the same are evident from the records of the case.  The Court further stated that the more important material date which must be duly alleged in the petition is the date of receipt of the resolution of denial of the motion for reconsideration. Since petitioner has duly complied with this rule, there was substantial compliance with the requisite formalities. William Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June 27, 2011

Collective bargaining agreement; duty of parties to maintain status quo pending renegotiation. Article 253 of the Labor Code mandates the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Likewise, the law does not distinguish between a CBA duly agreed upon by the parties and an imposed CBA like the one in the present case. Hence, considering that no new CBA had been, in the meantime, agreed upon by respondent GMC and the Union, the provisions of the imposed CBA continues to have full force and effect until a new CBA is entered into by the parties. General Milling Corporation-Independent Labor Union [GMC-ILU] vs. General Milling Corporation/General Milling Corporation vs.General Milling Corporation-Independent Labor Union [GMC-ILU], et al., G.R. Nos. 183122/183889, June 15, 2011.

Damages; fraud or bad faith for the award of moral damages. Moral and exemplary damages are recoverable where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or were done in a manner contrary to morals, good customs or public policy. In the present case, P&G dismissed its employees in a manner oppressive to labor. The sudden and peremptory barring of petitioners from work, and from admission to the work place, after just a one-day verbal notice, and for no valid cause, constitutes oppression and utter disregard of the right to due process of the concerned petitioners.  Hence, the Supreme Court held that an award of moral damages is called for under the circumstances. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.

Dismissal; constructive dismissal. Petitioner was employed as an instructor of Data Center College located in Ilocos Norte. When the college proposed to transfer him to Abra, he filed a complaint alleging constructive dismissal since his re-assignment will entail an indirect reduction of his salary or diminution of pay considering that no additional allowance will be given to cover for board and lodging expenses.  He claims that such additional allowance was given in the past and therefore cannot be discontinued and withdrawn without violating the prohibition against non-diminution of benefits. The Supreme Court affirmed the findings of the lower bodies and declared that petitioner’s re-assignment did not amount to constructive dismissal.  Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or unlikely, or because of a demotion in rank or a diminution of pay.  It exists when there is a clear act of discrimination, insensibility or disdain by an employer which becomes unbearable for the employee to continue his employment. In the present case, the college’s right to transfer petitioner is based on contractual stipulation, particularly the condition laid down in petitioner’s employment contract that respondents have the prerogative to assign petitioner in any of its branches or tie-up schools as the necessity demands.  In any event, it is management prerogative for employers to transfer employees on just and valid grounds such as genuine business necessity. Since respondents have shown that it was experiencing some financial constraints at the time, the re-assignment was not tainted with bad faith. Furthermore, petitioner failed to present evidence that respondents committed to provide the additional allowance or that they were consistently granting such benefit as to have ripened into a practice which cannot be peremptorily withdrawn. Hence, there is no violation of the rule against diminution of pay. William Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June 27, 2011.

Dismissal; elements for loss of trust or confidence. Petitioners were employees of Promm-Gem, a legitimate independent contractor, and were hired to work as merchandisers for respondent P&G. When petitioners filed a claim against P&G for regularization and other benefits, it likewise attacked Promm-Gem as being merely a labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and petitioners were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared such termination illegal for being without valid cause. Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence.  As such, he must be invested with confidence on delicate matters, such as custody, handling or care and protection of the property and assets of the employer.  Moreover, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer. In the instant case, the petitioners have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.

Dismissal; elements for serious misconduct. Petitioners were employees of Promm-Gem, a legitimate independent contractor. After several years of working as merchandisers for respondent P&G, petitioners filed a claim against P&G for regularization and other benefits, and asserted incidentally that Promm-Gem was merely a labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and petitioners were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared such termination illegal for lack of a valid clause. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. In other words, in order to constitute serious misconduct under Article 282 (a) of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies.  It is equally important and required that the act or conduct must have been performed with wrongful intent. In the instant case, petitioners may have committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so.  As such, the court found them guilty of simple misconduct only which does not warrant a dismissal. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.

Dismissal; financial assistance based on equity . The award of separation pay is authorized under Article 283 and 284 of the Labor Code, and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, the courts have allowed grants of separation pay to stand as “a measure of social justice” where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or collective bargaining agreement (CBA), or it is sanctioned by established employer practice or policy. In the present case, neither the abovementioned provisions of the Labor Code nor the exceptions apply because petitioner was not dismissed from his employment nor is there any evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of his employer. Nevertheless, the Court noted that petitioner never had  any derogatory record during his long years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Hence, as a measure of social and compassionate justice and as an equitable concession, the Court granted separation pay to petitioner by way of financial assistance. Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011.

Dismissal; separation pay due to disease. Petitioner was employed as a machine operator until he stopped working when he suffered from an illness. After his recovery, petitioner was directed to report for work but he refused. Instead, he filed a case with the NLRC demanding his separation pay.  The NLRC awarded him separation benefits under Article 284 of the Labor Code. However, the Court of Appeals (CA) deleted such award. On appeal, the Supreme Court stated that Article 284 presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. In the present case, petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, and therefore he is not entitled to separation pay under Article 284 of the Labor Code. Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011.

DOLE assumption of jurisdiction; effects.  A strike conducted after the Secretary of Labor has assumed jurisdiction over a labor dispute is illegal and any union officer who knowingly participates in the strike may be declared as having lost his employment. The present case involved a slowdown strike.  Unlike other forms of strike, the employees involved in a slowdown do not walk out of their jobs to hurt the company.  They need only to stop work or reduce the rate of their work while generally remaining in their assigned post.  The Supreme Court upheld the finding that the union officers committed illegal acts that warranted their dismissal from work when they refused to work or abandoned their work to join union assemblies after the Labor Secretary assumed jurisdiction over the labor dispute. Yolito Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011.

Independent job contracting; required substantial capital. Petitioners assert that they are employees of P&G and that Promm-Gem and SAPS are merely labor-only contractors providing manpower services to P&G. There is “labor-only” contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer.  In the instant case, the Supreme Court found that Promm-Gem has substantial investment which relates to the work to be performed.  The financial statementsshow that it has authorized capital stock of P1 million and a substantial amount of paid-in capital and other assets to support its operations. Under the circumstances, Promm-Gem cannot be considered a labor-only contractor; it is in fact a legitimate independent contractor.  On the other hand, the financial records of SAPS show that it has a paid-in capital of only P31,250.00.  There is no other evidence presented to show how much its working capital and assets are.  Furthermore, there is no showing of substantial investment in tools, equipment or other assets. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, SAPS is considered to be engaged in “labor-only contracting”. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.

Labor law; labor-only contracting v. independent job contracting.  The law allows contracting arrangements for the performance of specific jobs, works or services, regardless of whether such activity is peripheral or core in nature.  However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principaland 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 of control on the performance of the work of the contractual employee.  Where ‘labor-only’ contracting exists, the law establishes an employer-employee relationship between the employer and the employees of the ‘labor-only’ contractor. The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws.  The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.  In the present case, petitioners, who were recruited by Promm-Gem and SAPS to work as merchandisers of respondent P&G, filed a complaint against the latter for regularization, service incentive leave pay and other benefits on the ground that they were employees of P&G.  With respect to the contractor Promm-Gem, it was found to be a legitimate independent job contractor; hence, there was no employer-employee relationship between its workers and P&G. On the other hand, SAPS was found to be engaged in labor-only contracting. Consequently, the petitioners who have been recruited and supplied by SAPSare considered to be the employees of P&G.  Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.

Labor strikes; liability of union officers and participating workers. A distinction exists between the ordinary workers’ liability for illegal strike and that of the union officers who participated in it.  The ordinary worker cannot be terminated for merely participating in the strike.  There must be proof that he committed illegal acts during its conduct.  On the other hand, a union officer can be terminated upon mere proof that he knowingly participated in the illegal strike. Moreover, the participating union officers have to be properly identified. In the present case, with respect to those union officers whose identity and participation in the strike having been properly established, the termination was legal. Yolito Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011.

Secretary of Labor; power to give arbitral awards. The Secretary of Labor is empowered to give arbitral awards in the exercise of his authority to assume jurisdiction over labor disputes under Art. 263 (g) of the Labor Code. In the present case, the Supreme Court upheld the authority of the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon in the Memorandum of Agreement (MOA) between the parties. The Court further stated that while an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the award can be considered as an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties.  Hence, it has the force and effect of a valid contract obligation between the parties. Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011.

Termination of employment; resignation v. dismissal. Petitioner claims he was dismissed on the ground of illness and was therefore entitled to separation benefits under Article 284 of the Labor Code. The Supreme Court (SC) disagreed and instead found that petitioner was the one who initiated the severance of his employment relations on the ground that his health was failing. In fact, he rejected respondent’s offer for him to return to work. The SC declared that this is tantamount to resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment.   Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011.

Unions; disaffiliation. A local union may disaffiliate at any time from its mother federation, absent any showing that the same is prohibited under its constitution or rules.  Such disaffiliation, however, does not result in it losing its legal personality. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency where the former acts in representation of the latter. In the present case, whether the FFW went against the will of its principal (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent employer to determine, but for the Union and FFW to resolve on their own pursuant to their principal-agent relationship. Moreover, the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in an action at the instance of either or both the FFW and the union or a rival labor organization, but not the employer as in this case.  Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011.

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


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