January 2013 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are select January 2013 rulings of the Supreme Court of the Philippines on labor law and procedure:

Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of appeal; Joint declaration under oath accompanying the surety bond; Substantial compliance with procedural rules.  There was substantial compliance with the NLRC Rules of Procedure when the respondents PAL Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly, the Joint Declaration Under Oath, which is required when an employer appeals from the Labor Arbiter’s decision granting a monetary award and posts a surety bond.  Under the NLRC rules, the following requisites are required to perfect the employer’s appeal: (1) it must be filed within the reglementary period; (2) it must be under oath, with proof of payment of the required appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied by typewritten or printed copies of the memorandum of appeal, stating the grounds relied upon, the supporting arguments, the reliefs prayed for, and a statement of the date of receipt of the appealed decision, with proof of service on the other party of said appeal.  If the employer posts a surety bond, the NLRC rules further require the submission by the employer, his or her counsel, and the bonding company of a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until the final disposition of the case.

In the case at bar, the respondents posted a surety bond equivalent to the monetary award and filed the notice of appeal and the appeal memorandum within the reglementary period.  When the NLRC subsequently directed the filing of a Joint Declaration Under Oath, the respondents immediately complied with the said order.  There was only a late submission of the Joint Declaration.  Considering that there was substantial compliance with the rules, the same may be liberally construed.  The application of technical rules may be relaxed in labor cases to serve the demands of substantial justice. Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd.  G.R. No. 175209. January 16, 2013.

Completeness of service by registered mail; Exception to the general rule regarding a corporation’s verification and certification of non-forum shopping; Interpretation of school CBA.  A school CBA must be read in conjunction with statutory and administrative regulations governing faculty qualifications.  Such regulations form part of a valid CBA without need for the parties to make express reference to the same.

In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester faculty appointments to the respondents Pepanio and Bueno, since they had not completed postgraduate degrees.  The respondents, however, claimed that the 1994 CBA between UE and the faculty union did not yet require a master’s degree for a teacher to acquire regular status.  Having rendered more than three consecutive years of full-time service to the school, the respondents insisted that UE should have given them permanent appointments.

The Supreme Court observed that the policy requiring college teachers to have postgraduate degrees was provided in the Manual of Regulations issued as early as 1992 by the Department of Education, Culture and Sports (DECS), now the Department of Education.  In promulgating the Manual of Regulations, DECS exercised its power of regulation over educational institutions, which includes prescribing the minimum academic qualifications for teaching personnel.  The legislature subsequently transferred the power to prescribe such qualifications for teachers in institutions of higher learning to the Commission on Higher Education (CHED).  However, the 1992 Manual of Regulations issued by DECS continued to apply to colleges and universities until 2010, when CHED issued a Revised Manual of Regulations.

Thus, the requirement of a master’s degree for college teachers, as originally provided in the 1992 Manual of Regulations, was deemed incorporated in the 1994 CBA between UE and the faculty union.  Furthermore, the subsequent CBA in 2001, which provided for the extension of conditional probationary status to the respondents, subject to their obtaining a master’s degree within the probationary period, clearly showed that UE intended to subject the respondents’ appointments to the standards set by the law.

The requirement of a master’s degree for tertiary education teachers is not unreasonable, considering that the operation of educational institutions involves public interest.  The government has a right to ensure that only qualified persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in such institutions.

The Supreme Court also overruled the respondents’ contention that UE filed its appeal to the NLRC beyond the required ten (10)-day period.  For completeness of service by registered mail, the reckoning period starts either from the date of actual receipt of the mail by the addressee or after five (5) days from the date he or she received the first notice from the postmaster.  In this case, the respondents averred that, on March 17, 2005, the postmaster gave UE’s counsel a notice to claim the mail containing the Labor Arbiter’s decision.  The respondents claimed that UE’s counsel was deemed in receipt of the decision 5 days after the giving of the notice, or on March 22, 2005.  Thus, according to the respondents, when UE filed its appeal to the NLRC on April 14, 2005, the 10-day reglementary period had already lapsed.  The Supreme Court, however, ruled that there must be conclusive proof that the registry notice was received by or at least served on the addressee.  In this case, the records did not show that UE’s counsel in fact received the alleged registry notice requiring him to claim the mail.  On the other hand, UE was able to present a registry return receipt showing that its counsel actually received a copy of the Labor Arbiter’s decision on April 4, 2005.  Reckoned from this date, the 10-day reglementary period had not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005.

Anent UE’s failure to comply with the general rule that the Board of Directors or Board of Trustees of a corporation must authorize the person who shall sign the verification and certification of non-forum shopping accompanying a petition, the Supreme Court held that such authorization is not necessary when it is self-evident that the signatory is in a position to verify the truthfulness and correctness of the allegations in the petition.  The Supreme Court declared that Dean Eleanor Javier, who signed UE’s verification and certification, was in such a position, since she knew the factual antecedents of the case and she actually communicated with the respondents regarding the required postgraduate qualification.  University of the East, et al. vs. Analiza F. Pepanio and Mariti D. Bueno.  G.R. No. 193897. January 23, 2013.

Disease as a ground for termination; Retirement under the Labor Code; Age and tenure requirements for retirement; Financial assistance. Under the Labor Code provision on disease as a ground for termination (formerly, Article 284, but now renumbered pursuant to Republic Act No. 10151), it must be the employer who initiates the termination of the employee’s services.  The aforementioned provision cannot be applied in this case, considering that it was the late petitioner Padillo, and not the Rural Bank of Nabunturan, Inc. (Bank), who severed the employment relations.  With his memory impaired after suffering a mild stroke due to hypertension, Padillo wrote a letter to the Bank, expressing his intention to avail of an early retirement package.  The clear import of Padillo’s letter and the fact that he had stopped reporting for work even before sending the said letter shows that he voluntarily retired.  Given the inapplicability of the Labor Code provision on disease as a ground for termination, it necessarily follows that Padillo’s claim for separation pay must be denied.

As regards Padillo’s claim for retirement benefits, the provision of the Labor Code on retirement (formerly, Art. 287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence of any applicable agreement, an employee who has served at least five (5) years in the company may retire upon reaching the age of sixty (60) years, but not beyond sixty-five (65) years, to be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year.  Notably, the aforementioned age and tenure requirements are cumulative, and non-compliance with either negates the employee’s entitlement to the retirement pay under the Labor Code.  In this case, the Bank did not have a retirement plan or any other contract with its employees, setting the terms and conditions for retirement.  Padillo also served the Bank for twenty-nine (29) years, far more than the 5-year tenure requirement.  Padillo, however, did not meet the age requirement, considering that he was only fifty-five (55) years old, or less than 60 years of age, when he retired.  Thus, Padillo’s claim for retirement pay must also be denied.

Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000, considering the length of time which had supervened before the disposition of this case and Padillo’s unblemished record of 29 years of service to the Bank.  The award was in addition to the P100,000 benefit receivable under the Philam Life Plan that the Bank had procured in favor of Padillo.  Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc., et al.  G.R. No. 199338. January 21, 2013.

Redundancy as an authorized cause for termination; Difference between retirement and termination due to redundancy; General rule regarding the factual findings of the NLRC and the exceptions thereto.  Under the Labor Code, redundancy is one of the authorized causes for termination of employment.  The following are the requisites for the valid implementation of a redundancy program:  (a) the employer must serve a written notice to the affected employees and to the Department of Labor and Employment (DOLE) at least one month before the intended date of termination; (b) the employer must pay the employees separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria in ascertaining which positions are redundant and may be abolished.  The Supreme Court has also held that a company cannot simply declare redundancy without basis.  To exhibit its good faith and to show that there were fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over manned must produce adequate proof of the same.

In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written notice informing her of the termination of her services on the ground of redundancy.  GMC also submitted to the DOLE an Establishment Termination Report, regarding the employees, including Viajar, whose positions were deemed redundant.  Viajar and the DOLE received the respective notices one month before the effective date of the employees’ termination.  Furthermore, GMC issued to Viajar two checks amounting to P440,253.02 and P21,211.35, representing her separation pay.  However, the Supreme Court held that, notwithstanding compliance with the requirements on notice and the payment of separation pay, GMC is still considered to have illegally dismissed Viajar because the company failed to present substantial proof to support its general allegations of redundancy.  GMC could have presented evidence to substantiate redundancy, such as a new staffing pattern or feasibility studies or proposals on the viability of newly created positions, job descriptions and the approval by management of the restructuring program, or the company’s audited financial reports.  However, no such evidence was submitted by GMC.

On the other hand, Viajar presented proof negating GMC’s claim of redundancy and clearly showing GMC’s bad faith in implementing the redundancy program: (1) GMC had hired new employees before it terminated Viajar’s employment; (2) Vaijar was barred from entering the company premises even before the effectivity of her separation; and (3) Viajar was also forced to sign an “Application for Retirement and Benefits” so that she could avail of her separation pay.  The last circumstance is significant, considering that there is a difference between voluntary retirement and forced termination of an employee.  Retirement from service is contractual or based on a bilateral agreement of the employer and the employee, while termination of employment is statutory or governed by the Labor Code and other related laws.  Voluntary retirement cuts employment ties, leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer liable for termination without cause.  GMC’s demand that Viajar sign an Application for Retirement and Benefits, when she had already been informed of the termination of her services due to redundancy, shows that this case involves not a voluntary retirement, but an illegal termination.

While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general rule that the factual findings of the NLRC must be accorded respect and finality is not applicable in this case.  One of the exceptions to the said rule covers instances when the findings of fact of the trial court, or of the quasi-judicial agencies concerned, are conflicting or contradictory with those of the Court of Appeals, as in the present case.  Another exception to the general rule is when the said findings are not supported by substantial evidence or the inference or conclusion arrived at is manifestly erroneous.  In the case at bar, the Supreme Court agreed with the Court of Appeals that the NLRC’s conclusion that Viajar was legally dismissed is manifestly erroneous.  General Milling Corporation vs. Violeta L. Viajar.  G.R. No. 181738. January 30, 2013.

Reinstatement; Backwages.  It is basic in jurisprudence that illegally dismissed workers are entitled to reinstatement with backwages plus interest at the legal rate.

This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER) and the Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each other for violating labor laws.  AER filed a complaint against the Union and eighteen (18) of its members for conducting an illegal strike.  On the other hand, thirty-two (32) employees filed a complaint against AER for unfair labor practices, illegal dismissal, illegal suspension, and run-away shop.  In a previous decision (G.R. No. 160138, July 13, 2011), the Supreme Court had held that both parties were at fault or in pari delicto; hence, the complaining employees should be reinstated but without backwages.  The Motion for Partial Reconsideration filed by the Union is resolved in the present case.

The Supreme Court found that, of the 32 employees who filed the complaint against AER, only 18 had been charged by AER with illegal strike, leaving 14 excluded from the employer’s complaint.  As no charges had been filed against the 14 workers, they cannot be found guilty of illegal strike.  Neither can they be considered in pari delicto.  However, of the 14 employees, five failed to write their names and affix their signatures in the Membership Resolution attached to their petition before the Court of Appeals, authorizing the union president to represent them.  Thus, while these five employees will also be reinstated, they cannot be granted backwages.  On the other hand, the nine workers who signed their names in the aforementioned Membership Resolution will be reinstated with backwages plus interest at the legal rate.  Automotive Engine Rebuilders, Inc. (AER), et al. vs. Progresibong Unyon ng mga Manggagawa sa AER, et al. / Progresibong Unyon ng mga Manggagawa sa AER, et al. vs. Automotive Engine Rebuilders, Inc., et al.  G.R. Nos. 160138 and 160192. January 16, 2013.

Resignation; Resignation in relation to the subsequent filing of an illegal dismissal case. Petitioner Cervantes’s claim that he did not resign but was terminated from employment is untenable.  Resignation is 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, such that he has no other choice but to disassociate himself from his employment.

In the present case, Cervantes’s employer merely informed him of the numerous complaints against him.  It was Cervantes himself who opted to be relieved from his post and who initiated his repatriation to Manila.  This is clear from the tenor of his telex message, which reads in part:  “ANYHOW TO AVOID REPETITION [ON] MORE HARSH REPORTS TO COME.  BETTER ARRANGE MY RELIEVER [AND] C/O BUSTILLO RELIEVER ALSO.  UPON ARR NEXT USA LOADING PORT FOR THEIR SATISFACTION.”  Cervantes’s message contains an unmistakable demand to be relieved of his assignment.  His employer merely accepted his resignation.  Thus, the rule that the filing of a complaint for illegal dismissal is inconsistent with resignation does not hold true in this case.  The clear tenor of Cervantes’s resignation letter and the filing of this case one year after his alleged termination shows that the complaint for illegal dismissal was a mere afterthought.  Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd.  G.R. No. 175209. January 16, 2013.

Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary arbitrator; Concept and exercise of management prerogative; Limitations on the exercise of management prerogative; Nature of collective bargaining agreements (CBA).  Goya, Inc.’s contention that the Voluntary Arbitrator (VA) exceeded his power in ruling on a matter not covered by the sole issue submitted for voluntary arbitration is untenable.  In a prior case, the Supreme Court has ruled that, in general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement.  However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement.  The VA has plenary jurisdiction and authority to interpret the CBA and to determine the scope of his or her own authority.  Subject to judicial review, this leeway of authority and adequate prerogative is aimed at accomplishing the rationale of the law on voluntary arbitration – speedy labor justice.

In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary arbitration the sole issue of whether or not the company is guilty of an unfair labor practice in engaging the services of PESO, a third party service provider, under existing CBA, laws, and jurisprudence.  The Union claimed that the hiring of contractual workers from PESO violated the CBA provision that prescribes only three categories of workers in the company, namely: the probationary, the regular, and the casual employees.  Instead of hiring contractual workers, Goya, Inc. should have hired probationary or casual employees, who could have become additional Union members, pursuant to the union security clause in the CBA.  The VA ruled that while Goya, Inc. was not guilty of any unfair labor practice, it still committed a violation of the CBA, though such violation was not gross in character.  The Supreme Court held that the VA’s ruling is interrelated and intertwined with the sole issue submitted for arbitration.  The ruling was necessary to make a complete and final adjudication of the dispute between the parties.

Furthermore, Goya, Inc.’s assertion that its hiring of contractual workers was a valid exercise of management prerogative is erroneous.  Declaring that a particular act falls within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise thereof.  While the VA and the Court of Appeals ruled that the act of contracting out or outsourcing work is within the purview of management prerogative, they did not declare such act to be a valid exercise thereof.  As repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the limitations found in the law, CBA, or general principles of fair play and justice.

In this case, the CBA provision prescribing the categories of employees in the company and the union security clause are interconnected and must be given full force and effect.  The parties in a CBA are free to establish such stipulations they may deem convenient, provided that the same are not contrary to law, morals, good customs, public order, or public policy.  Where the CBA is clear and unambiguous, the literal meaning of its stipulations shall control.  The CBA becomes the law between the parties, and compliance therewith is mandated by the express policy of the law.  Goya, Inc. vs. Goya, Inc. Employees Union-FFW.  G.R. No. 170054. January 21, 2013.

(Leslie thanks Carlos Manuel S. Prado for his assistance in the the preparation of this post.)