January 2014 Philippine Supreme Court Decisions on Labor Law

Here are select January 2014 rulings of the Supreme Court of the Philippines on labor law:

Backwages; when awarded. As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment. The grant of backwages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature of a command to the employer to make a public reparation for dismissing the employee in violation of the Labor Code.

The Court held that the respondents are not entitled to the payment of backwages. The Court, citing G&S Transport Corporation v. Infante (G. R. No.  160303, September 13, 2007) stated that the principle of a “fair day’s wage for a fair day’s labor” remains as the basic factor in determining the award thereof.  An exception to the rule would be if the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working.  It is, however, required, for this exception to apply, that the strike be legal, a situation which does not obtain in the case at bar. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014

Dismissal; burden of proof on employer. The burden is on the employer to prove that the termination was for valid cause. Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal justifications to dismiss an employee. “The unflinching rule in illegal dismissal cases is that the employer bears the burden of proof.”

One of CCBPI’s policies requires that, on a daily basis, CCBPI Salesmen/Account Specialists must account for their sales/collections and obtain clearance from the company Cashier before they are allowed to leave company premises at the end of their shift and report for work the next day.  If there is a shortage/failure to account, the concerned Salesmen/Account Specialist is not allowed to leave the company premises until he settles the same. In addition, shortages are deducted from the employee’s salaries. If CCBPI expects to proceed with its case against petitioner, it should have negated this policy, for its existence and application are inextricably tied to CCBPI’s accusations against petitioner. In the first place, as petitioner’s employer, upon it lay the burden of proving by convincing evidence that he was dismissed for cause. If petitioner continued to work until June 2004, this meant that he committed no infraction, going by this company policy; it could also mean that any infraction or shortage/non-remittance incurred by petitioner has been duly settled. Respondents’ decision to ignore this issue generates the belief that petitioner is telling the truth, and that the alleged infractions are fabricated, or have been forgiven. Coupled with Macatangay’s statement – which remains equally unrefuted – that the charges against petitioner are a scheme by local CCBPI management to cover up problems in the Naga City Plant, the conclusion is indeed telling that petitioner is being wrongfully made to account. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014.

Embezzlement; failure to remit collections. The irregularity attributed to petitioner with regard to the Asanza account should fail as well. To be sure, Asanza herself confirmed that she did not make any payment in cash or check of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being held to account. This being the case, petitioner could not be charged with embezzlement for failure to remit funds which he has not collected. There was nothing to embezzle or remit because the customer made no payment yet. It may appear from Official Receipt No. 303203 issued to Asanza that the October 15 delivery of products to her has been paid; but as admitted by her, she has not paid for the said delivered products. The reason for petitioner’s issuance of said official receipt to Asanza is the latter’s concurrent promise that she would immediately issue the check covering the said amount, which she failed to do. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014

Grave abuse of discretion; concept of. Having established through substantial evidence that respondent’s injury was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the 1996 POEA-SEC, no grave abuse of discretion can be imputed against the NLRC in upholding LA’s decision to dismiss respondent’s complaint for disability benefits. It is well-settled that an act of a court or tribunal can only be considered to be tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014

Illegal strike and illegal acts during the strike; distinction between union members and union officers in determining when they lose their employment status. The Supreme Court stressed that the law makes a distinction between union members and union officers. A union member who merely participates in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status. In contrast, a union officer may be terminated from employment for knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike. The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service.

NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and members was declared illegal.  The union leaders who conducted the illegal strike despite knowledge that NAMA-MCCH-NFL is not a duly registered labor union were declared to have been validly terminated by petitioner. However, as to the respondents who were mere union members, it was not shown that they committed any illegal act during the strike. The Labor Arbiter and the NLRC were one in finding that respondents actively supported the concerted protest activities, signed the collective reply of union members manifesting that they launched the mass actions to protest management’s refusal to negotiate a new CBA, refused to appear in the investigations scheduled by petitioner because it was the union’s stand that they would only attend these investigations as a group, and failed to heed petitioner’s final directive for them to desist from further taking part in the illegal strike. The CA, on the other hand, found that respondents’ participation in the strike was limited to the wearing of armbands.  Since an ordinary striking worker cannot be dismissed for such mere participation in the illegal strike, the CA correctly ruled that respondents were illegally dismissed. However, the CA erred in awarding respondents full back wages and ordering their reinstatement despite the prevailing circumstances. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014

Labor law; kinds of employment; casual employment; requisites. Casual employment, the third kind of employment arrangement, refers to any other employment arrangement that does not fall under any of the first two categories, i.e., regular or project/seasonal. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Labor law; kinds of employment; fixed term employment; requisites.  The Labor Code does not mention another employment arrangement – contractual or fixed term employment (or employment for a term) – which, if not for the fixed term, should fall under the category of regular employment in view of the nature of the employee’s engagement, which  is  to  perform  an  activity  usually  necessary  or  desirable in  the employer’s business.

In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the Court, for the first time, recognized  and  resolved  the  anomaly  created  by  a  narrow  and  literal interpretation of Article 280 of the Labor Code that appears to restrict the employee’s right to freely stipulate with his employer on the duration of his engagement.  In this case, the Court upheld the validity of the fixed-term employment  agreed  upon  by  the  employer,  Brent  School,  Inc., and the employee, Dorotio Alegre, declaring that the restrictive clause in Article 280 “should  be  construed  to  refer  to  the substantive evil that the Code itself x x x singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where [the] fixed period of  employment  was agreed upon knowingly and voluntarily by the parties x x x absent any x x x circumstances vitiating [the employee’s] consent, or where [the facts satisfactorily show] that the employer and [the] employee dealt  with each other on more or less equal terms[.]” The indispensability or desirability of the activity performed by the employee will not preclude the parties from entering into an otherwise valid fixed term employment agreement; a definite period of employment does not essentially contradict the nature of the employee’s duties as necessary and desirable to the usual business or trade of the employer.

Nevertheless,  “where  the  circumstances  evidently  show  that  the employer  imposed  the  period  precisely  to  preclude  the  employee from acquiring tenurial security, the law and this Court will not hesitate to strike down or disregard the period as contrary to public policy, morals, etc.” In such a case, the general restrictive rule under Article 280 of the Labor Code will apply and the employee shall be deemed regular. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Labor law; kinds of employment; nature of the employment depends on the nature of the activities to be performed by the employee. The nature of the employment does not depend solely on the will or word of the employer or on the procedure for hiring and the manner of designating the employee.  Rather, the nature of the employment depends on the nature of the activities to be performed by the employee, taking into account the nature of the employer’s business, the duration and scope of work to be done, and, in some cases, even the length of time of the performance and its continued existence.  Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Labor law; kinds of employment; project employment; requisites; length of time not controlling.  A  project  employment,  on  the  other  hand,  contemplates  on arrangement  whereby “the employment has been fixed for a specific project or  undertaking  whose completion  or  termination has been determined at the time of the engagement of the employee[.]” Two requirements, therefore, clearly need to be satisfied to remove the engagement from the presumption of regularity of employment, namely:  (1) designation of a specific project or undertaking for which the employee is hired; and (2) clear determination of the completion or termination of the project at the time of the employee’s engagement. The services of the project employees are legally and automatically terminated upon the end or completion of the project as the employee’s services are coterminous with the project. Unlike in a regular employment under Article 280 of the Labor Code, however, the length of time of the asserted “project” employee’s engagement is not controlling as the employment may, in fact, last for more than a year, depending on the needs or circumstances of the project.  Nevertheless, this length of time (or the continuous rehiring of the employee even after the cessation of the project) may serve as a badge of regular employment when the activities performed by the purported “project” employee are necessary and indispensable to the usual business or trade of the employer. In this latter case, the law will regard the arrangement as regular employment. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Labor law; kinds of employment; regular employment; requisites. Article 280 of the Labor Code provides for three kinds of employment arrangements, namely: regular, project/seasonal and casual.  Regular employment refers to that arrangement whereby the employee “has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer[.]” Under this definition, the primary standard that determines regular  employment  is  the  reasonable  connection  between  the  particular activity performed by the employee and the usual business or trade of the employer;  the  emphasis  is  on  the  necessity  or  desirability  of  the employee’s activity. Thus, when the employee performs activities considered necessary and desirable to the overall business scheme of the employer, the law regards the employee as regular.

By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a casual employment arrangement when the casual employee’s engagement is made to last for at least one year, whether the service is continuous or broken. The controlling test in this arrangement is the length of time during which the employee is engaged. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Labor law; kinds of employment; seasonal employment; requisites. Seasonal  employment  operates  much  in  the  same  way  as  project employment, albeit it involves work or service that is seasonal in nature or lasting  for  the  duration  of  the  season.  As  with  project  employment, although  the  seasonal  employment  arrangement  involves  work  that is seasonal or periodic in nature, the employment itself is not automatically considered seasonal so as to prevent the employee from attaining regular status.  To exclude the asserted “seasonal” employee from those classified as regular employees, the employer must show that: (1) the employee must be performing work or services that are seasonal in nature; and (2) he had been employed for the duration of the season.  Hence, when the “seasonal” workers are continuously and repeatedly hired to perform the same tasks or activities for several seasons or even after the cessation of the season, this length of time may likewise serve as badge of regular employment. In fact, even though denominated as “seasonal workers,” if these workers are called to work from time to time and are only temporarily laid off during the off-season, the law does not consider them separated from the service during the off-season period. The law simply considers these seasonal workers on leave until re-employed.  Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Overseas employment; that the entitlement of seamen on overseas work to disability benefits is a matter governed, not only by medical findings, but by law and by contract. With respect to the applicable rules, it is doctrinal that the entitlement of seamen on overseas work to disability benefits “is a matter governed, not only by medical findings, but by law and by contract. The material statutory provisions are Articles 191 to 193 under Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the Rules and Regulations Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided under Department Order No. 4, series of 2000 of the Department of Labor and Employment, and the parties’ Collective Bargaining Agreement bind the seaman and his employer to each other.”

In the foregoing light, the Court observes that respondent executed his contract of employment on July 17, 2000, incorporating therein the terms and conditions of the 2000 POEA-SEC which took effect on June 25, 2000. However, since the implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily suspended by the Court on September 11, 2000, particularly Section 20, paragraphs (A), (B), and (D) thereof, and was lifted only on June 5, 2002, through POEA Memorandum Circular No. 2, series of 2002, the determination of respondent’s entitlement to the disability benefits should be resolved under the provisions of the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondent’s employment contract was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014

Payment of separation pay as alternative relief for union members who were dismissed for having participated in an illegal strike is in lieu of reinstatement; circumstances when applicable. The alternative relief for union members who were dismissed for having participated in an illegal strike is the payment of separation pay in lieu of reinstatement under the following circumstances: (a) when reinstatement can no longer be effected in view of the passage of a long  period of time or because of the realities of the situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the workers’ continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee.

The Court ruled that the grant of separation pay to respondents is the appropriate relief under the circumstances considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered from its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or otherwise incapacitated. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014

Rule 45; only questions of law are allowed in a petition for review on certiorari. It is a settled rule in this jurisdiction that only questions of law are allowed in a petition for review on certiorari. The Court’s power of review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors, which the CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CA’s Rule 65 decision in a labor case, the Court examines the CA decision in the context that it determined whether or not there is grave abuse of discretion in the NLRC decision subject of its review and not on the basis of whether the NLRC decision on the merits of the case was correct. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Rule 45; the Court’s jurisdiction in a Rule 45 petition is limited to the review of pure questions of law; exceptions. The Court’s jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of Court is generally limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad and a departure therefrom may be warranted where the findings of fact of the CA are contrary to the findings and conclusions of the NLRC and LA, as in this case. In this regard, there is therefore a need to review the records to determine which of them should be preferred as more conformable to evidentiary facts. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014.

Section 20 (B) of the 1996 POEA-SEC; an employer shall be liable for the injury or illness suffered by a seafarer during the term of his contract; exception. The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and benefits for injury or illness was that an employer shall be liable for the injury or illness suffered by a seafarer during the term of his contract. To be compensable, the injury or illness must be proven to have been contracted during the term of the contract. However, the employer may be exempt from liability if he can successfully prove that the cause of the seaman’s injury was directly attributable to his deliberate or willful act as provided under Section 20 (D) thereof, to wit:

D. No compensation shall be payable in respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or criminal act, provided however, that the employer can prove that such injury, incapacity, disability or death is directly attributable to seafarer.

Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim that the respondent’s injury was caused by his willful act with the requisite quantum of evidence. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014

Substantial evidence; concept of. In labor cases, as in other administrative proceedings, only substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. To note, considering that substantial evidence is an evidentiary threshold, the Court, on exceptional cases, may assess the factual determinations made by the NLRC in a particular case.

The Court ruled that NLRC had cogent legal bases to conclude that petitioners have successfully discharged the burden of proving by substantial evidence that respondent’s injury was directly attributable to himself.  Records bear out circumstances which all lead to the reasonable conclusion that respondent was responsible for the flooding and burning incidents. While  respondent  contended  that  the  affidavits and  statements  of  the vessel’s officers and his fellow crew members should not be given probative value  as  they  were  biased,  self-serving, and  mere  hearsay,  he  nonetheless failed  to  present  any  evidence to  substantiate his  own  theory. Besides,  as correctly   pointed   out   by   the   NLRC,   the   corroborating   affidavits and statements  of  the  vessel’s  officers and crew  members  must  be  taken  as  a whole and cannot just be perfunctorily dismissed as self-serving absent any showing that they were lying when they made the statements therein. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014

 (Leslie thanks Mae Grace June C. Nillama for assisting in the preparation of this post.)

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