October 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Labor Law

Dismissal; constructive dismissal.  For a transfer not to be considered a constructive dismissal, the employer must be able to show that the transfer is for a valid reason, entails no diminution in the terms and conditions of employment, and must not be unreasonably inconvenient or prejudicial to the employee.  If the employer fails to meet these standards, the employee’s transfer shall amount, at the very least, to constructive dismissal.  In this case, the Supreme Court found that the real reason Menese was transferred from being the agency’s payroll and billing clerk of the PGH detachment to being a lady guard in the agency’s main office, was because of the request of Dapula, the new chief of the UP-PGH Security Division.  The latter’s request was based on the fact that she had committed the previous position of Menese to a certain Amy Claro, a protégée of Dapula.  Thus, the Supreme Court found justification for Menese’s refusal to be transferred.  Not only was the transfer arbitrary and done in bad faith, it would also result in a demotion in rank and a diminution in pay:  (1) she would hold the position of lady guard and (2) she would be paid in accordance with the statutory minimum wage, or from P11,720.00 to P7,500.00.  Clearly, there was a demotion in rank and salary undertaken in bad faith amounting to constructive dismissal.  Emirate Security and Maintenance Systems, Inc. and Roberto Yan vs. Glenda M. Menese, G.R. No. 182848. October 5, 2011.

Dismissal; illegal.  Resignation is defined as “the voluntary act of employees who are compelled by personal reasons to disassociate themselves from their employment.  It must be done with the intention of relinquishing an office, accompanied by the act of abandonment.”  In this case, the evidence on record suggested that petitioner did not resign; he was orally dismissed by Sy.  The crucial factor is the verbal order directly given by Sy, the company president, for petitioner to immediately turn over his accountabilities.  It is this lack of clear, valid and legal cause, not to mention due process that made his dismissal illegal, warranting reinstatement and the award of backwages.  Moreover, the filing of a complaint for illegal dismissal just three weeks later is difficult to reconcile with voluntary resignation.  Had petitioner intended to voluntarily relinquish his employment after being unceremoniously dismissed by no less than the company president, he would not have sought redress from the NLRC and vigorously pursued this case against the respondents.  Jhorizaldy Uy vs. Centro Ceramica Corporation, et al., G.R. No. 174631. October 19, 2011. 

Employee; death benefits.  The death of a seaman during the term of employment makes the employer liable to his heirs for death compensation benefits.  This rule, however, is not absolute. The employer may be exempt from liability if he can successfully prove that the seaman’s death was caused by an injury directly attributable to his deliberate or willful act. The Supreme Court agreed that Danilo died of Asphyxia by strangulation as proved by the NBI post-mortem findings and certification issued by the medico-legal officer, Dr. Reyes. The photocopy of the fax transmission of the purported English translation of Dr. Hameed’s medical report to prove that Danilo committed suicide should not be considered since the medical report’s genuineness and due execution were unverifiable: (1) the existence of the original medical report, which was written in the arabic language, was not even attached to the records and has not been proved; (2) the identity of the person who made the translation and whether the translator has the recognized competence in both English and the language the medical report was originally written were not established; (3) the alleged translated medical report was not even signed by Dr. Hameed which creates doubt as to its authenticity.  The unsigned translated medical report is nothing but a self-serving document which ought to be treated as a mere scrap of paper devoid of any evidentiary value even in administrative proceedings.  Maritime Factors Inc. vs. Bienvenido R. Hindang, G.R. No. 151993. October 19, 2011

Employee benefits; entitlement to retirement benefits.  A separation pay at the time of the reorganization of the National Power Corporation and retirement benefits at the appropriate future time are two separate and distinct entitlements.  Stated otherwise, a retirement plan is a different program from a separation package.  In R.A. No. 1616, the retirees are entitled to gratuity benefits to be paid by the last employer and refund of premiums to be paid by the GSIS.  On the other hand, retirement benefits under C.A. No. 186, as amended by R.A. No. 8291, are to be paid by the GSIS.  In view of the fact that separation pay and retirement benefits are different entitlements, as they have different legal bases, different sources of funds, and different intents, the “exclusiveness of benefits” rule provided under R.A. No. 8291 is not applicable.  (Section 55 of R.A. No. 8291 states: “Whenever other laws provide similar benefits for the same contingencies covered by this Act, the member who qualifies to the benefits shall have the option to choose which benefits will be paid to him.”)  Enrique U. Betoy vs. The Board of Directors, National Power Corporation, G.R. Nos. 156556-57. October 4, 2011

Employee; overtime pay.  A claim for overtime pay will not be granted in the absence of any factual and legal basis.  In this respect, the records indicated that the labor arbiter granted Menese’s claim for holiday pay, rest day and premium pay on the basis of payrolls.  There is no such proof in support of Menese’s claim for overtime pay other than her contention that she worked from 8:00 a.m. up to 5:00 p.m.  She presented no evidence to show that she was working during the entire one hour meal break.  The Supreme Court thus found the NLRC’s deletion of the overtime pay award in order.  Emirate Security and Maintenance Systems, Inc. and Roberto Yan vs. Glenda M. Menese, G.R. No. 182848. October 5, 2011.

Employee; permanent disability benefits.  Permanent disability refers to the inability of a worker to perform his job for more than 120 days, regardless of whether he loses the use of any part of his body.  What determines petitioner’s entitlement to permanent disability benefits is his inability to work for more than 120 days.  The certification by the company-designated physician that petitioner is fit to work was issued after 199 days or more than 120 days from the time he was medically repatriated to the Philippines.  Petitioner herein was medically repatriated to the Philippines on October 8, 2001.  However, it was only on April 25, 2002 or after a lapse of 199 days that Dr. Cruz issued a certification declaring him fit to work. Thus, the Supreme Court found that petitioner’s disability is considered permanent and total because the “fit to work” certification was issued by Dr. Cruz only on April 25, 2002, or more than 120 days after he was medically repatriated on October 8, 2001.  Furthermore, the company-designated physician’s certification that petitioner is fit to work does not make him ineligible for permanent total disability benefits.  It does not matter that the company-designated physician assessed petitioner as fit to work.  It is undisputed that from the time petitioner was repatriated on October 8, 2001, he was unable to work for more than 120 days as he was only certified fit to work on April 25, 2002.  Consequently, petitioner’s disability is considered permanent and total.  Carmelito N. Valenzona vs. Fair Shipping Corporation, et al., G.R. No. 176884. October 19, 2011.

GSIS; retirement plan.  Section 41(n) of Republic Act No. 8291 contemplates a situation wherein GSIS, due to a reorganization, a streamlining of its organization, or some other circumstance, which calls for the termination of some of its employees, must design a plan to encourage, induce, or motivate these employees, who are not yet qualified for either optional or compulsory retirement under our laws, to instead voluntarily retire.  Such is not the case with the GSIS RFP.  Its very objective, “to motivate and reward employees for meritorious, faithful, and satisfactory service,” contradicts the nature of an early retirement incentive plan, or a financial assistance plan, which involves a substantial amount that is given to motivate employees to retire early.  Instead, it falls exactly within the purpose of a retirement benefit, which is a form of reward for an employee’s loyalty and lengthy service, in order to help him or her enjoy the remaining years of his life.  Without a doubt, the GSIS RFP is a supplementary retirement plan, which is prohibited by the Teves Retirement Law.  Government Service Insurance System (GSIS), et al. vs. Commission on Audit, et al., G.R. No. 162372. October 19, 2011.

Strike; illegal strike.  There is no question that the May 6, 2002 strike was illegal, first, because when Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative (KMLMS) filed the notice of strike on March 5 or 14, 2002, it had not yet acquired legal personality and, thus, could not legally represent the eventual union and its members.  And second, similarly, when KMLMS conducted the strike-vote on April 8, 2002, there was still no union to speak of, since KMLMS only acquired legal personality as an independent legitimate labor organization only on April 9, 2002 or the day after it conducted the strike-vote.  Consequently, the mandatory notice of strike and the conduct of the strike-vote report were ineffective for having been filed and conducted before KMLMS acquired legal personality as a legitimate labor organization, violating Art. 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code.  It is, thus, clear that KMLMS did not comply with the mandatory requirement of law and implementing rules on possession of a legal personality as a legitimate labor organization.  Magdala Multipurpose & Livelihood, et al. vs. KMLMS, et al., G.R. No. 191138-39. October 19, 2011.

Union shop; new employees.  May a corporation invoke its merger with another corporation as a valid ground to exempt its “absorbed employees” from the coverage of a union shop clause contained in its existing Collective Bargaining Agreement (CBA) with its own certified labor union?  The Supreme Court ruled in the negative.  The former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner BPI.  This fact would not remove them from the scope of the phrase “new employees” as contemplated in the Union Shop Clause of the CBA.  The Union Shop Clause in the CBA simply states that “new employees” who during the effectivity of the CBA “may be regularly employed” by the Bank must join the union within thirty (30) days from their regularization.  The plain language of the CBA provision notwithstanding, the SC held that there is nothing in the said clause that limits its application to only new employees who possess non-regular status, meaning probationary status, at the start of their employment.  What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner’s new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment. Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301. October 19, 2011.

Procedural Law

NLRC; Certiorari.  A writ of certiorari is a remedy to correct errors of jurisdiction, for which reason it must clearly show that the public respondent has no jurisdiction to issue an order or to render a decision.  Rule 65 of the Rules of Court has instituted the petition for certiorari to correct acts of any tribunal, board or officer exercising judicial or quasi-judicial functions with grave abuse of discretion amounting to lack or excess of jurisdiction.  This remedy serves as a check on acts, either of excess or passivity, that constitute grave abuse of discretion of a judicial or quasi-judicial function.  In this case, the SC found that the CA proceeded to review the records and to rule on issues that were no longer disputed during the appeal to the NLRC, such as the existence of an employer-employee relationship.  The pivotal issue before the NLRC was whether petitioner’s telling respondent to take a rest, or to have a break, was already a positive act of dismissing him.  This issue was not discussed by the CA. The SC reviewed the NLRC Resolution that reversed the LA Decision and found nothing in it that was whimsical, unreasonable or patently violative of the law.  It was the CA which erred in finding faults that were inexistent in the NLRC Resolution.  AGG Trucking and/or Alex Ang Gaeid vs. Melanio B. Yuag, G.R. No. 195033. October 12, 2011.

NLRC; motion for reconsideration.  On the issue of the propriety of entertaining the Petition for Certiorari despite the prescribed Motion for Reconsideration with the NLRC, the SC found that the CA committed error when it entertained the petition for certiorari and explained that when respondent failed to file a Motion for Reconsideration of the NLRC’s 30 November 2006 Resolution within the reglementary period, the Resolution attained finality and could no longer be modified by the Court of Appeals.   Untimeliness in filing motions or petitions is not a mere technical or procedural defect, as leniency regarding this requirement will impinge on the right of the winning litigant to peace of mind resulting from the laying to rest of the controversy.  AGG Trucking and/or Alex Ang Gaeid vs. Melanio B. Yuag, G.R. No. 195033. October 12, 2011.

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