October 2010 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are selected October 2010 rulings of the Supreme Court of the Philippine on labor law and procedure:

Compensable illness. Respondent is entitled to sickness wages because the shooting pain in his right foot is an injury which he suffered during the course of his employment. This is in consonance with the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels of the Department of Labor and Employment. Applying the said provisions of this standard contract, respondent is entitled to receive sickness wages covering the maximum period of 120 days. Moreover, petitioners violated the contract when it failed to provide continuous treatment for respondent in accordance with the recommendation of their company physician.  Because of this failure, respondent was forced to seek immediate medical attention at his own expense.  Thus, he is also entitled to reimbursement of his medical expenses. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No. 161934, October 6, 2010

Compensable illness. For an injury or illness to be duly compensated under the terms of the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), there must be a showing that the injury or illness and the ensuing disability occurred during the effectivity of the employment contract. Moreover, all of these conditions must be satisfied — 1.) The seafarer’s work must involve the risks described in the POEA-SEC; 2.) The disease was contracted as a result of the seafarer’s exposure to the described risks; 3.) The disease was contracted within a period of exposure and under such other factors necessary to contract it;  and 4.) There was no notorious negligence on the part of the seafarer.  Specifically, with respect to mental diseases, the POEA-SEC requires that it must be due to traumatic injury to the head which did not occur in this case.  In fact, respondent claimed that he became depressed due to the frequent verbal abuse he received from his German superiors. However, he failed to show concrete proof that, if indeed he was subjected to abuse, it directly resulted in his depression.  Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A. Nazam, G.R. No. 190804. October 11, 2010.

Constructive dismissal; transfer. It is management prerogative to transfer or assign employees from one office or area of operation to another. However, the employer must show that the transfer is not unreasonable, inconvenient or prejudicial to the employee, or that it does not involve a demotion in rank or a diminution of his salaries, privileges and other benefits.  Should the employer fail to overcome this burden, the employee’s transfer shall be tantamount to constructive dismissal. In the instant case, Del Villar’s demotion is readily apparent in his new designation as a mere Staff Assistant to the Corporate Purchasing and Materials Control Manager from being Transportation Services Manager. The two posts are not of the same weight in terms of duties and responsibilities. Moreover, while Del Villar’s transfer did not result in the reduction of his salary, there was a diminution in his benefits because as a mere Staff Assistant, he could no longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which he previously enjoyed as Transportation Services Manager. Thus, Del Villar was clearly constructively dismissed. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.

Dismissal; closure of business. Petitioner terminated the employment of respondents on the ground of closure or cessation of operation of the establishment which is an authorized cause for termination under Article 283 of the Labor Code. While it is true that a change of ownership in a business concern is not proscribed by law, the sale or disposition must be motivated by good faith as a condition for exemption from liability. In the instant case, however, there was, in fact, no change of ownership. Petitioner did not present any documentary evidence to support its claim that it sold the same to ALPS Transportation.  On the contrary, it continuously operates under the same name, franchises and routes and under the same circumstances as before the alleged sale. Thus, no actual sale transpired and, as such, there is no closure or cessation of business that can serve as an authorized cause for the dismissal of respondents. Peñafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang, G.R. No. 178397, October 20, 2010.

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October 2009 Philippine Supreme Court Decisions on Labor Law

Here are selected October 2009 Supreme Court decisions on labor law:

Dismissal; abandonment. To constitute abandonment, there must be a clear and deliberate intent to discontinue one’s employment without any intention of returning. Two elements must concur: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning.

In the instant case, petitioners failed to prove that it was Bolanos who refused to report for work despite being asked to return to work. Petitioners merely presented the affidavits of the officers of Henlin Panay narrating their version of the facts. These affidavits, however, are not only insufficient but also undeserving of credit as they are self-serving. Petitioners failed to present memoranda or show-cause letters served on Bolanos at her last known address requiring her to report for work or to explain her absence, with a warning that her failure to report would be construed as abandonment of work. Also, if indeed Bolanos abandoned her work, petitioners should have served her a notice of termination as required by law. Petitioners’ failure to comply with said requirement bolsters Bolanos’s claim that she did not abandon her work but was dismissed.

Moreover, if Bolanos had indeed forsaken her job, she would not have bothered to file a complaint for illegal dismissal. It is well settled that the filing by an employee of a complaint for illegal dismissal is proof of her desire to return to work, thus negating the employer’s charge of abandonment.  Henlin Panay Company and/or Edwin Francisco/Angel Lazaro III vs. National Labor Relations Commission and Nory A. Bolanos, G.R. No. 180718, October 23, 2009.

Dismissal; attorney’s fees. It is settled that in actions for recovery of wages or when the employee is illegally dismissed in bad faith or where an employee was forced to litigate and incur expenses to protect his rights and interests by reason of the unjustified acts of his employer, he is entitled to an award of attorney’s fees. This award is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 2208 of the Civil Code.

Moreover, in cases for recovery of wages, the award of attorney’s fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly.  Baron Republic Theatrical Major Cinema, et al. vs. Normita P. Peralta and Edilberto H. Aguilar, G.R. No. 170525, October 2, 2009.

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July 2009 Philippine Supreme Court Decisions on Commercial, Tax and Labor Laws

Here are selected July 2009 Philippine Supreme Court decisions on commercial, tax and labor laws:

Commercial Law

Board action.  A corporate loan entered into by the President without board approval is binding on the corporation when the President is authorized under the by-laws to enter into loans on behalf of the corporation. Cebu Mactan Members Center, Inc. vs. Masahiro Tsukahara, G.R. No. 159624, July 17, 2009.

Tax Law

Franchise tax.  Jurisprudence suggests that aside from the national franchise tax, the franchisee is still liable to pay the local franchise tax, unless it is expressly and unequivocally exempted from the payment thereof under its legislative franchise. The “in lieu of all taxes” clause in a legislative franchise should categorically state that the exemption applies to both local and national taxes; otherwise, the exemption claimed should be strictly construed against the taxpayer and liberally in favor of the taxing authority.  Smart Communications, Inc., vs. The City of Davao, represented by its Mayor Hon. Rodrigo Duterte and the Sangguniang Panlunsod of Davao City, G.R. No. 155491, July 21, 2009.

Minimum corporate income tax. Under its charter, Philippine Airlines is exempt from the minimum corporate income tax. Commissioner of Internal Revenue vs.. Philippine Airlines, Inc., G.R. No. 180066, July 7, 2009.

Overseas communications tax.  Section 13 of Presidential Decree No. 1590, granting respondent tax exemption, is clearly all-inclusive. The basic corporate income tax or franchise tax paid by respondent shall be “in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description imposed, levied, established, assessed or collected by any municipal, city, provincial, or national authority or government agency, now or in the future x x x,” except only real property tax.  Even a meticulous examination of Presidential Decree No. 1590 will not reveal any provision therein limiting the tax exemption of respondent to final withholding tax on interest income or excluding from said exemption the overseas communications tax.  Commissioner of Internal Revenue vs. Philippine Airlines, Inc. (PAL), G.R. No. 180043, July 14, 2009.

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April 2009 Decisions on Commercial, Labor and Tax Laws

Here are selected April 2009 decisions of the Supreme Court on commercial, labor and tax laws:

Commercial Law

BOT;  public bidding. In a situation where there is no other competitive bid submitted for the BOT project, that project would be awarded to the original proponent thereof.  However, when there are competitive bids submitted, the original proponent must be able to match the most advantageous or lowest bid; only when it is able to do so will the original proponent enjoy the preferential right to the award of the project over the other bidder.  These are the general circumstances covered by Section 4-A of Republic Act No. 6957, as amended. In the instant case, AEDC may be the original proponent of the NAIA IPT III Project; however, the Pre-Qualification Bids and Awards Committee (PBAC) also found the People’s Air Cargo & Warehousing Co., Inc. Consortium (Paircargo), the predecessor of PIATCO, to be a qualified bidder for the project.  Upon consideration of the bid of Paircargo/PIATCO, the PBAC found the same to be far more advantageous than the original offer of AEDC.  It is already an established fact in Agan that AEDC failed to match the more advantageous proposal submitted by PIATCO by the time the 30-day working period expired on 28 November 1996; and since it did not exercise its right to match the most advantageous proposal within the prescribed period, it cannot assert its right to be awarded the project. Asia’s Emerging Dragon Corp. vs. DOTC, et al./Republic of the Philippines etc. et al. vs. Hon. CA, et al., G.R. No. 169914/G.R. No. 174166,  April 7, 2009.

Dividends. Dividends are payable to the stockholders of record as of the date of the declaration of dividends or holders of record on a certain future date, as the case may be, unless the parties have agreed otherwise. A transfer of shares which is not recorded in the books of the corporation is valid only as between the parties; hence, the transferor has the right to dividends as against the corporation without notice of transfer but it serves as trustee of the real owner of the dividends, subject to the contract between the transferor and transferee as to who is entitled to receive the dividends. Imelda O. Cojuangco, Prime Holdings, Inc., and the Estate of Ramon U. Cojuangco vs. Sandiganbayan, Republic of the Philippines and the Sheriff of Sandiganbayan, G.R. No. 183278, April 24, 2009.

Holdover. As a general rule, officers and directors of a corporation hold over after the expiration of their terms until such time as their successors are elected or appointed. Sec. 23 of the Corporation Code contains a provision to this effect. The holdover doctrine has, to be sure, a purpose which is at once legal as it is practical. It accords validity to what would otherwise be deemed as dubious corporate acts and gives continuity to a corporate enterprise in its relation to outsiders.

Authorities are almost unanimous that one who continues with the discharge of the functions of an office after the expiration of his or her legal term––no successor having, in the meantime, been appointed or chosen––is commonly regarded as a de factoofficer, even where no provision is made by law for his holding over and there is nothing to indicate the contrary. By fiction of law, the acts of such de facto officer are considered valid and effective. Dr. Hans Christian M. Señeres vs. Commission on Elections and Melquiades A. Robles, G.R. No. 178678, April 16, 2009.

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