August 2012 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are select rulings of the Philippine Supreme Court on labor law and procedure:

Disability benefits; entitlement. Entitlement of seafarers to disability benefits is governed not only by medical findings but also by contract and by law. By contract, Department Order No. 4, series of 2000, of the Department of Labor and Employment and the parties’ Collective Bargaining Agreement bind the seafarer and the employer. By law, the Labor Code provisions on disability apply with equal force to seafarers. The seafarer, upon sign-off from his vessel, must report to the company-designated physician within three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical condition.

From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to the care and treatment of the company-designated physician. When the company-designated physician made a declaration on July 25, 2003 that Tomacruz was already fit to work, 249 days had already lapsed from the time he was repatriated. As such, his temporary total disability should be deemed total and permanent, pursuant to Article 192 (c)(1) of the Labor Code and its implementing rule. Philasia Shipping Agency Corporation, et al. vs. Andres G. Tomacruz. G.R. No. 181180, August 15, 2012.

Employee dismissal; due process requirements. The following standards of due process shall be substantially observed for termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

Petitioners’ evidence fails to prove their contention that they afforded Atencio with due process. The June 21, 1999 letter, which allegedly proves Atencio’s knowledge of the charges against him, and which allegedly constitutes Atencio’s explanation, clearly discusses an entirely different topic – which is the removal of his construction company from the Caltex project. As for the May 24, 1999 letter, which allegedly constitutes the notice of termination of Atencio’s employment as JARL’s chief operating manager, the said letter involves the termination of the subcontracting agreement between JARL and Atencio’s company, and not the termination of Atencio’s employment. For petitioners’ failure to observe the two-notice rule under Article 277(b) of the Labor Code, respondent is entitled to nominal damages. Jarl Construction and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.

Judgment; law of the case.The law of the case has been defined as the opinion delivered on a former appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.

Both G.R. No. 168477 and this petition are offshoots of petitioner’s purported temporary measures to preserve its neutrality with regard to the perceived void in the union leadership. While these two cases arose out of different notices to strike, it is undeniable that the facts cited and the arguments raised by petitioner are almost identical. Inevitably, G.R. No. 168477 and this petition seek only one relief, that is, to absolve petitioner from respondent’s charge of committing an unfair labor practice. For this reason, we are constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005 and September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the Court of Appeals’ finding – that petitioner erred in suspending collective bargaining negotiations with the union and in placing the union funds in escrow considering the intra-union dispute between the Aliazas and Bañez factions was not a justification therefor — is binding in the present case. De la Salle University vs. De la Salle University Employees Association. G.R. No. 169254. August 23, 2012.

Lien; unpaid wages. Under Republic Act No. 10142, otherwise known as the Financial Rehabilitation and Insolvency Act of 2010, the right of a secured creditor to enforce his lien during liquidation proceedings is retained. On the right of first preference as regards unpaid wages, a distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent’s assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. Consequently, the right of first preference for unpaid wages may not be invoked in this case to nullify the foreclosure sales conducted pursuant to PNB’s right as a secured creditor to enforce its lien on specific properties of its debtor, ARCAM. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co., Inc.)  vs. Philippine National Bank. G.R. No. 171132, August 15, 2012.

NLRC; jurisdiction. Although Republic Act No. 8042, through its Section 10, transferred the original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and decide all disciplinary action cases and other special cases administrative in character involving such workers. The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters affecting and involving such workers. The NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers.

Although, as a rule, all laws are prospective in application unless the contrary is expressly provided, or unless the law is procedural or curative in nature, there is no serious question about the retroactive applicability of Republic Act No. 8042 to the appeal of the POEA’s decision on petitioners’ disciplinary action against respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting guidelines on appeal. Republic Act No. 8042 applies to petitioners’ complaint by virtue of the case being then still pending or undetermined at the time of the law’s passage, there being no vested rights in rules of procedure. They could not validly insist that the reckoning period to ascertain which law or rule should apply was the time when the disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic Act No. 8042 and its implementing rules and regulations were already in effect when petitioners took their appeal.  When Republic Act No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate jurisdiction was vested in the Secretary of Labor in accordance with his power of supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987. Eastern Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012.

Petition for review; question of fact. While generally, only questions of law can be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. The illegality of petitioner’s dismissal was an issue that was squarely raised before the NLRC. When the NLRC decision was reversed by the Court of Appeals, there was a situation where “the findings of facts are conflicting”. The petition for review filed by the Petitioner comes within the purview of exception (5) and by analogy, exception (7). Mylene Carvajal vs.  Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.

Probationary employee; security of tenure. 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.

Punctuality is a reasonable standard imposed on every employee, whether in government or private sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or habitual neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was not apprised of the standards concomitant to her job, it is but common sense that she must abide by the work hours imposed by the bank. Satisfactory performance is and should be one of the basic standards for regularization. Naturally, before an employer hires an employee, the former can require the employee, upon his engagement, to undergo a trial period during which the employer determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement.

It is evident that the primary cause of respondent’s dismissal from her probationary employment was her “chronic tardiness.” At the very start of her employment, petitioner already exhibited poor working habits. Even during her first month on the job, she already incurred eight (8) tardiness. Respondent also cited other infractions such as unauthorized leaves of absence, mistake in clearing of a check, and underperformance. All of these infractions were not refuted by petitioner. Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.

Salaries; burden of proof of payment. When there is an allegation of nonpayment of salaries and other monetary benefits, it is the employer’s burden to prove its payment to its employee. The employer’s evidence must show, with a reasonable degree of certainty, that it paid and that the workers actually received the payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents are not in the possession of the worker but are in the custody and absolute control of the employer. In the case at bar, the two official receipts issued by Safemark, and offered as JARL’s evidence, only prove that JARL made a total partial payment of P1,891,509.50 to the said company for its “professional services.” Since JARL admits that the said company actually rendered services for JARL on its Caltex project, the payment can only be assumed as covering for the said services. There is nothing on the face of the receipts to support the conclusion that Atencio (and not his company) received it as payment for his service as a JARL employee. Jarl Construction and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.

Seafarers; contract. The employment of seafarers, and its incidents, including claims for death benefits, is governed by the contracts they sign every time they are hired or rehired. Such contracts have the force of law between the parties as long as their stipulations are not contrary to law, morals, public order or public policy. While the seafarers and their employers are governed by their mutual agreements, the POEA rules and regulations require that the POEA Standard Employment Contract, which contains the standard terms and conditions of the seafarers’ employment in foreign ocean-going vessels, be integrated in every seafarer’s contract. The pertinent provision of the 1996 POEA SEC, which was in effect at the time of Tanawan’s employment, was Section 20(B) – Compensation and Benefits. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012.

Seafarers; disability benefits. The one tasked to determine whether the seafarer suffers from any disability or is fit to work is the company-designated physician. As such, the seafarer must submit himself to the company-designated physician for a post-employment medical examination within three days from his repatriation. But the assessment of the company-designated physician is not final, binding or conclusive on the seafarer, the labor tribunals, or the courts. The seafarer may request a second opinion and consult a physician of his choice regarding his ailment or injury, and the medical report issued by the physician of his choice shall also be evaluated on its inherent merit by the labor tribunal and the court.

Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical examination within the 3-day reglementary period from his repatriation. The medical examination conducted focused on Tanawan’s foot injury, the cause of his repatriation. Dr. Lim treated Tanawan for the foot injury from December 1, 1997 until May 21, 1998, when Dr. Lim declared him fit to work. Within that period that lasted 172 days, Tanawan was unable to perform his job, an indication of a permanent disability. Under the law, there is permanent disability if a worker is unable to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. Disability should be understood more on the loss of earning capacity rather than on the medical significance of the disability. Even in the absence of an official finding by the company-designated physician to the effect that the seafarer suffers a disability and is unfit for sea duty, the seafarer may still be declared to be suffering from a permanent disability if he is unable to work for more than 120 days. On the other hand, Tanawan’s claim for disability benefits due to the eye injury was already barred by his failure to report the injury and to have his eye examined by a company-designated physician. The rationale for the rule is that reporting the illness or injury within three days from repatriation fairly makes it easier for a physician to determine the cause of the illness or injury.

Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained during the term of the contract. The Court has declared that the unqualified phrase “during the term” found in Section 20(B) thereof covered all injuries or illnesses occurring during the lifetime of the contract. Whoever claims entitlement to the benefits provided by law should establish his right to the benefits by substantial evidence. Tanawan did not present any proof of having sustained the eye injury during the term of his contract. All that he submitted was his bare allegation that his eye had been splashed with some thinner while he was on board the vessel. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012.

(Leslie thanks Leanne Herschel C. Que for her assisting is the preparation of this post.)