September 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Employee; probationary employee.  Employment on probationary status of teaching personnel is not only governed by the Labor Code but also by the Manual of Regulations for Private Schools.  Section 91 of the Manual of Regulations for Private Schools, states that: “Every contract of employment shall specify the designation, qualification, salary rate, the period and nature of service and its date of effectivity, and such other terms and condition of employment as may be consistent with laws and rules, regulations and standards of the school.”  Thus, it is important that the contract of probationary employment specify the period or term of its effectivity.  In this case, therefore, the letters sent by petitioner College Dean Sr. Racadio, which were devoid of specifics, cannot be considered as contracts.  The closest they can resemble to are that of informal correspondence among the said individuals.  As such, petitioner school has the right not to renew the contracts of the respondents, the old ones having expired at the end of their terms. Assuming, arguendo, that the employment contracts between the petitioner school and the respondent spouses were renewed, the SC found that there was a valid and just cause for their dismissal since petitioners have repeatedly violated several departmental and instructional policies, such as the late submission of final grades, failure to submit final test questions to the Program Coordinator, the giving of tests in essay form instead of the multiple choice format as mandated by the school and the high number of students with failing grades in the classes that he handled. St. Paul College Quezon City, et al. vs. Remigio Michael A. Ancheta II and Cynthia A. Ancheta, G.R. No. 169905. September 7, 2011.

Employee; existence of employer-employee relationship.  To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test.  Respondents argue that the element of control is lacking in this case, making petitioner-referee an independent contractor and not an employee of respondents.  The Supreme Court agreed as it found that there was no control over the means and methods by which petitioner performs his work as a referee officiating a PBA basketball game. The contractual stipulations in the retainer contracts do not pertain to, much less dictate, how and when petitioner will blow the whistle and make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of the professional basketball league.  Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees are required to report for work only when PBA games are scheduled, which is three times a week spread over an average of only 105 playing days a year, and they officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the referees are withholding taxes. There are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees’ salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an employee of respondents.  Jose Mel Bernante vs. Philippine Basketball Association, et al., G.R. No. 192084. September 14, 2011.

Employee benefits; principle against diminution of benefits.  The issue in this case was whether or not the change in the scheme of distribution of the incremental proceeds from tuition fee increase is a diminution of benefit.  The Court held that it was not.  Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer.  The principle against diminution of benefits, however, is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long period of time which is consistent and deliberate.  In other words, the benefit must be characterized by regularity and the voluntary and deliberate intent of the employer to grant the benefits over a significant period of time.  In the case at bench, contrary to UEEA’s claim, the distribution of the 70% incremental proceeds based on equal sharing scheme cannot be held to have ripened into a company practice since the practice has not been for a long period of time.  The same could not also have ripened into a vested right because such grant was not a deliberate and voluntary act on the part of the petitioner. The Supreme Court held that the grant by an employer of benefits through an erroneous application of the law due to the absence of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally discontinued.  University of the East vs. University of the East Employees’ Association, G.R. No. 179593. September 14, 2011.

Employment benefits; entitlement to vacation and sick leave.  BPI contends that at the time of Uy’s dismissal, she was no longer functioning as a teller of the bank but as a low-counter staff and as such, Uy is not anymore entitled to the teller’s functional allowance pursuant to company policy.  BPI further argues that Uy is neither entitled to the monetary conversion of vacation and sick leaves for failure to prove that she is entitled to these benefits at the time of her dismissal.        The Supreme Court ruled that Uy is entitled to the teller’s functional allowance but not to the monetary conversion of vacation and sick leaves.  Uy’s function as a teller at the time of her dismissal was factually established and was never impugned by the parties during the proceedings held in the main case.  Besides, BPI did not present any evidence to substantiate its allegation that Uy was assigned as a low-counter staff at the time of her dismissal.  It is a hornbook rule that he who alleges must prove.  As to the vacation and sick leave cash conversion benefit, the Supreme Court held that entitlement to the same should be necessarily proved since this privilege is not statutory or mandatory in character but only voluntarily granted.  As such, the existence of this benefit as well as the employee’s entitlement thereto cannot be presumed but should be proved by the employee.  In this case, however, the records failed to prove that Uy was receiving this benefit at the time of her dismissal on December 14, 1995.  BPI Employees Union-Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of the Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos. 178699/178735. September 21, 2011.

Termination; constructive dismissal.  The concept of constructive dismissal is inapplicable to respondents in this case. 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.  That the respondents were indeed not constructively dismissed was found by the Supreme Court to be supported by substantial evidence.  First, respondents Domingo and Remigio, even while their petition for certiorari was pending before the CA, remained employed at UNILAB. In those instances, there was actually no dismissal to speak of.  Second, the respondents’ positions were not abolished, unlike its provincial depots where the employees therein were considered redundant employees.  In this case, their accounting functions were merely consolidated under the Finance Division of Unilab pursuant to its Shared Services Policy (SSP).  Respondents, who are accounting employees, cannot refuse their assignment to the Finance Division.  The Supreme Court noted that it cannot accept the proposition that when an employee opposes his employer’s decision to transfer him to another work place, there being no bad faith or underhanded motives on the part of either party, that the employee’s wishes should be made to prevail.  United Laboratories, Inc. vs. Jaime Domingo Substituted by his spouse Carmencita Punzalan Domingo, et al., G.R. No. 186209, September 21, 2011

Termination; loss of trust and confidence.  Loss of confidence should ideally apply only to: (1) cases involving employees occupying positions of trust and confidence, or (2) situations where the employee is routinely charged with the care and custody of the employer’s money or property.  As branch manager of the bank, Lopez occupied a “position of trust.” His hold on his position and his stay in the service depend on the employer’s trust and confidence in him and on his managerial services.  In this case, the Supreme Court found that Lopez’s dismissal was justified.  He betrayed the trust and confidence of the employer-bank when he issued the subject purchase orders without authority and despite the express directive of the bank to put the client’s application on hold.  The bank had a genuine concern over the granted loan applications as it found through its credit committee that Hertz was a credit risk. Whether the credit committee was correct or not is immaterial as the bank’s direct order left Lopez without any authority to clear the loan application on his own.  Elmer Lopez vs. Keppel Bank Philippines, Inc. et al., G.R. No. 176800. September 5, 2011.

Termination; loss of trust and confidence.  Jumuad was found to have willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer. First, Jumuad was a managerial employee; she executed management policies and had the power to discipline the employees of KFC branches in her area.  She recommended actions on employees to the head office.  According to the Supreme Court, based on established facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioner’s dismissal.  In the present case, the CER’s reports of Hi-Flyer show that there were anomalies committed in the KFC branches managed by Jumuad. On the principle of respondeat superior or command responsibility alone, Jumuad may be held liable for negligence in the performance of her managerial duties. She may not have been directly involved in causing the cash shortages in KFC-Bohol, but her involvement in not performing her duty monitoring and supporting the day to day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, could have prevented the whole debacle from occurring.  Pamela Florentina P. Jumuad vs. Hi-Flyer Food, Inc. and/or Jesus R. Montemayor, G.R. No. 187887. September 7, 2011.

Termination; illegal dismissal.  In the case at bar, respondent security guards were relieved from their posts because they filed with the Labor Arbiter a complaint against their employer for money claims due to underpayment of wages.  The Supreme Court found that this was not a valid cause for dismissal.  The Labor Code enumerates several just and authorized causes for a valid termination of employment. An employee asserting his right and asking for minimum wage is not among those causes.  Alert Security and Investigation Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.

Termination; abandonment of work.  Petitioners aver that respondents were merely transferred to a new post wherein the wages are adjusted to the current minimum wage standards.  They maintain that the respondents voluntarily abandoned their jobs when they failed to report for duty in the new location.  Assuming that this contention was true, the Supreme Court held that there was no abandonment of work. For there to be abandonment: first, there should be a failure of the employee to report for work without a valid or justifiable reason, and second, there should be a showing that the employee intended to sever the employer-employee relationship. The fact that petitioners filed a complaint for illegal dismissal is indicative of their intention to remain employed with private respondent. On the first element of failure to report for work, in this case, there was no showing that respondents were notified of their new assignments. Granting that the “Duty Detail Orders” were indeed issued, they served no purpose unless the intended recipients of the orders are informed of such.  Therefore, the Court held that there was no abandonment of work in this case. Alert Security and Investigation Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.

Termination; gross and habitual neglect.  Neglect of duty, to be a ground for dismissal, must be both gross and habitual.  In this case, Respondent’s repeated failure to turn over his task of preparing the payroll of the petitioner’s employees to someone capable of performing the vital tasks which he could not effectively perform or undertake because of his heart ailment or condition constitutes gross neglect.  However, although the dismissal was legal, respondent was still held to be entitled to a separation pay as a measure of compassionate justice, considering his length of service and his poor physical condition which was one of the reasons he filed a leave of absence.  As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to separation pay.  By way of exception, however, the grant of separation pay or some other financial assistance may be allowed to an employee dismissed for just causes on the basis of equity.  Nissan Motors Phils., Inc. vs. Victorino Angelo, G.R. No. 164181. September 14, 2011.

Termination; award of backwages.  The base figure in computing the award of back wages to an illegally dismissed employee is the employee’s basic salary plus regular allowances and benefits received at the time of dismissal, unqualified by any wage and benefit increases granted in the interim. The full backwages, as referred to in the body of the March 31, 2005 Supreme Court decision pertains to “backwages” as defined in Republic Act No. 6715.  Under said law, and as provided in jurisprudence, “full backwages” means backwages without any deduction or qualification, including benefits or their monetary equivalent the employee is enjoying at the time of his dismissal.  Consequently, any benefit or allowance over and above that allowed and provided by said law is deemed excluded under the said Supreme Court Decision.  BPI Employees Union-Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of the Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos. 178699/178735. September 21, 2011

(Leslie thanks Charmaine Rose K. Haw for assisting in the preparation of this post.)