Paulino Ungos III

Lawyer | Law Professor | Author

Author: Paulino Ungos III

  • Well Aware of Her Fixed-Term Employment

    Madelyn narrated that in April 2010, the school engaged her as a releasing clerk in its book sale, tasking her with the inventory and release of books to the school’s students.

    In July 2010, Madelyn worked as a filing clerk at the school’s Human Resources Department, where she updated employees’ files, delivered memoranda to different departments, and assisted in school programs. In April 2011, she was posted back as a releasing clerk. She held this position until July 14, 2011.

    On July 15, 2011, she worked as a secretary at the school’s Technical-Vocational Training Center (Claretech), which taught vocational and technical skills to underprivileged students. There she prepared materials, assisted in the delivery of correspondence to other departments, and encoded and filed documents.

    In May 2013, the school asked Madelyn to sign a Probationary Employment Contract covering the period of January 16, 2013 to July 15, 2013. When the contract expired, she was told that her tenure would expire on July 31, 2013 because of a change in school administration and due to cost-cutting.

    But Madelyn was able to work for the school starting August 1, 2013 as a substitute teacher aide at the school’s Child Study Center. When the permanent teacher aide returned on October 25, 2013, Madelyn stopped working for the school.

    Madelyn repeatedly pleaded to be reinstated at least as a checker at the school’s water station, but the school denied her requests.

    Thus, Madelyn filed her Complaint, claiming that she had been a regular employee since she performed various jobs that were usually necessary and desirable in the usual business of the school.

    The school denied Madelyn’s claims averring that she was merely a part-time fixed-term contractual employee whom the school accommodated because her husband was its longtime driver. It also argued that Madelyn was well aware of her fixed-term employment as confirmed by her application letters and biodata, which showed her employment’s duration.

    Moreover, the school claimed that Madelyn’s position at Claretech was not a plantilla position because the department was only at its experimental stage, merely relying on donations and the school’s marketing research fund. When Claretech began incurring deficits, the clerical functions were allegedly absorbed by the administrator’s functions, dissolving Madelyn’s position.

    Was Madelyn engaged under a fixed-term employment?

    The Supreme Court ruled in the negative.

    The Supreme Court reiterated the principles in Brent School v. Zamora which recognized the validity of fixed-term employment under both the Civil Code and the Labor Code of the Philippines, as follows:

    Brent recognized that the Civil Code and the Labor Code of the Philippines allow the execution of fixed-term employment contracts. But when periods have been imposed to prevent an employee from acquiring his or her security of tenure, the contract effectively runs counter to public policy and morals, and must, therefore, be disregarded.

    In drawing the line, Brent laid down the criteria under which a fixed-term employment cannot be deemed in circumvention of the security of tenure:

    • When the parties have knowingly and voluntarily agreed upon a fixed period of employment “without any force, duress[,] or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent”; or
    • When “it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms” with the employer not having exercised any moral dominance over the employee.

    The rationale behind this safeguard is that when a prospective employee, on account of special skills or market forces, is in a position to make demands upon the prospective employer, such prospective employee needs less protection than the ordinary worker. Lesser limitations on the parties’ freedom of contract are thus required for the protection of the employee.

    The Supreme Court has emphasized that Brent is the exception rather than the general rule, and a fixed-term employment is recognized as valid only under certain circumstances, particularly when a fixed-term is an essential and natural appurtenance.

    Moreover, the Court held that in determining the validity of a fixed-term employment, the level of protection accorded to labor is ascertained based on the nature of the work, qualifications of the employee, and other relevant circumstances.

    Hence, the criteria limit the application of Brent to particular cases where the employer and the employee are on a more or less equal footing in entering into the contract. If none of the aforementioned criteria are present, the Court will strike down a fixed-term employment contract.

    In the present case, the Supreme Court found no contract evidencing Madelyn’s fixed-term employment. The Court said that this militated against the school’s assertion of fixed-term employment. According to the Court, the decisive determinant in fixed-term employments is the day certain agreed upon by the parties for the commencement and termination of their employment relationship. For the Court no day certain was agreed upon by the parties.

    The Court noted that the school persistently asserted that Madelyn should have known that her employment was only for a fixed term given the circumstances and nature of her job. However, the Court found that the school failed to present the contracts for the positions held by Madelyn. The Court said that absent any contract, it cannot be said that Madelyn was informed of the nature of her employment, as well as the duration and scope of her work. A fixed-term employment, the Court said, cannot be held valid based on mere allegations and speculations.

    Furthermore, although the school argued that she executed a Memorandum of Agreement that provided for the terms of her employment, the Court found that such agreement referred to her engagement as a substitute teacher aide. As for the rest of the positions she held, the school failed to provide any contract.

    The Court ruled even then the criteria in Brent were absent. According to the Court the school did not deal with Madelyn in more or less equal terms with no moral dominance on its part. Madelyn’s whole family depended on the school. Her husband was the school’s longtime driver and their children were its scholars. Madelyn was a high school graduate whose ordinary qualifications compelled her to accept the various positions offered by the school. The Court said that given these circumstances, Madelyn was not in a position to bargain on the terms of her employment. It could not be said that no moral dominance was exerted by the school merely because both parties benefitted from the fixed-term employment.

    The Court added that there could be no genuine freedom to contract when a fixed-term employment is used as a vehicle to exploit the economic disadvantage of workers like Madelyn. Plain wage earners should not be faulted for tolerating jobs they desperately need. Brent recognized the validity of fixed-term employments only within the context that employers and employees are on an equal footing. That employees agree to be repeatedly hired on a fixed-term basis only reveals the deeper problem of poverty and growing economic inequality between labor and capital.

    The Court declared that Madelyn was a regular employee of the school for her repeated engagement under contract of hire was indicative of the necessity and desirability of her work. Her services as a clerk at the book sale, as a secretary at Claretech, and as a substitute teacher aide were found to be necessary and desirable to the school’s business as an educational institution. The school’s repeated hiring of Madelyn for over three (3) years only strengthened the conclusion that her services are necessary and desirable to its business.

    Further reading:

    • Claret School of Quezon City v. Sinday, G.R. No. 226358, October 9, 2019.

  • Exemptions under Section 10 of the CARL, an Exclusive List

    The MDA Corporation obtained a commercial loan from the Government Service Insurance System. This loan was secured by a mortgage over a parcel of agricultural land.

    Since the MDA Corporation was unable to pay the loan, the Government Service Insurance System foreclosed the agricultural land. After the lapse of the redemption period, ownership of said land was consolidated in the Government Service Insurance System.

    Subsequently, the Department of Agrarian Reform issued a Notice of Coverage concerning the agricultural land and offered to pay the Government Service Insurance System more than Php4 million for the property.

    The Government Service Insurance System, in turn, protested the coverage and filed before the Department of Agrarian Reform a Petition asking that the property be excluded from compulsory agrarian reform coverage. In support of its petition, the Government Service Insurance System asserts that under Section 39 of Republic Act No. 8291, or The Government Service Insurance System Act of 1997, its properties cannot be utilized for agrarian reform purposes as such provision exempts its properties from agrarian reform coverage.

    Should the property be excluded from coverage of the Comprehensive Agrarian Reform Program?

    No, the Court did not exclude the land from agrarian reform coverage because the exemptions under Section 10 of the Comprehensive Agrarian Reform Law of 1988 form an exclusive list. Thus, it could not simply impute into a statute an exception which Congress did not incorporate. Moreover, general welfare legislation such as land reform laws is to be construed in favor of the promotion of social justice to ensure the well-being and economic security of the people. Since a broad construction of the provision listing the properties exempted under the Comprehensive Agrarian Reform Law of 1988 would tend to denigrate the aims of agrarian reform, a strict application of these exceptions is in order.

    Further reading:

    • Government Service Insurance System v. Datoy, G.R. No. 232863, July 24, 2019.

  • Considered Neither the Intent Nor the Origin of the Gift

    Alvin claimed that on January 31, 2005, he was hired as a Hotel Personnel Planner for the Crewing Department of respondent Philippine Transmarine Carriers, Inc. (PTC), a manning agency acting as agent for foreign principals and engaged in the business of sending Filipino seafarers. Record established that at the start of his employment, Alvin was given PTC’s old company handbook.

    Alvin’s first few years with PTC went well, and he was promoted to Hotel Personnel Officer in 2008. In December 2010, he was seconded by PTC to its offshore processing unit, where he was given the position of “Scheduler.” During his time with PTC, he received several awards.

    However, in 2010, was given a verbal reprimand for a violation of PTC’s policy against receiving “pasalubong“.

    In 2012, PTC revised its Code of Discipline, which indicated more clearly its prohibition against accepting any gift with collective minimum value of Php500.00 and which punished the same with dismissal from employment. Record established that Alvin was served a copy of the revised Code of Discipline.

    On October 9, 2013, Alvin, along with a co-employee Aaron, was caught on the surveillance camera accepting a brown bag from Fred, another employee. It was soon discovered that the brown bag contained two bottles of Jack Daniel’s Whiskey given by Mustafa, a friend and co-employee of Alvin from a previous employment. Alvin was confronted about the incident and he readily admitted that he and Aaron did accept the gift. However, Alvin insisted that it was not a violation of the company policy for it did not come from a crewmember but from an outsider.

    An administrative hearing was held on November 6, 2013 and attended by Alvin. In said hearing, Aaron testified that Alvin told Fred not to hand the gift as there was a surveillance camera in his office and the handing of the gift might be misinterpreted. Aaron further stated that Alvin then advised Fred to proceed to the rear section of the crewing operations office.

    On November 12, 2013, Mustafa sent an email to PTC stating that he gifted Alvin two bottles of whiskey worth US$36.00 as a gesture of goodwill and token of their friendship. Mustafa also stated that personal favor between Alvin and Fred was not the reason for this gift.

    On November 22, 2013, Alvin received a written resolution from PTC informing him of the termination of his employment. PTC also terminated the employment of Aaron.

    On January 30, 2014, Alvin filed a case for illegal dismissal with the Labor Arbiter.

    Did PTC validly dismiss Alvin from employment?

    The Supreme Court ruled that Alvin was validly dismissed by PTC.

    The Court found that Alvin’s dismissal was anchored on his violation of a specific provision in PTC’s Code of Discipline which punished two separate acts:

    • offering or accepting, whether directly or indirectly, any gift with a collective value of Php500.00 or more, regardless of who it came from; and
    • acceptance by an employee of any gift — regardless of value — from a crew member, ex-crew member, or representative of a crew member.

    The Court noted from the said provision that a violation, even on the first instance, merited the penalty of dismissal from employment.

    In the present case, Alvin admitted to receiving a gift during his tenure with PTC. However, he contended that:

    • he did not violate PTC’s Code of Discipline since he did not receive the gift from a crew member, ex-crew member, or representative of a crew member; and
    • the provision was vague, unreasonable, and unfair.

    Alvin argued that an analysis of the said provision would reveal that the same was utterly vague, without any qualification as to from whom the gift should come from and for what consideration. Alvin pointed out that the governing principles behind the PTC provision did not take into account the intent or the origin of the gift. Alvin concluded that the subject provision should have been declared to be unreasonable and unfair.

    The Court did not agree, for it determined that Alvin’s act clearly fell under the first act punished by the subject provision in PTC’s Code of Discipline. According to the Court, Alvin received a gift with a value of $36.00, which was clearly above the Php500.00 threshold under the PTC provision. The Court further stated that the subject provision in PTC’s Code of Conduct was not vague and unreasonable. Said the Court: The fact that it did not specify the origin of the gift or the purpose for which the gift was given did not automatically mean that the PTC provision was vague. It simply meant that this “no gift” policy of PTC was absolute, that is, the origin or the purpose of the gift was irrelevant. In simple terms, the mere act of offering or receiving a gift constituted a violation.

    Significantly, the Court took into account PTC’s rationale for the subject provision. According to PTC, in view of the Philippine Overseas Employment Administration’s strict requirements and the severity of the corresponding penalty imposed at the first instance, firm implementation of company rules and regulations was indispensable. PTC added that it was only just and reasonable to adopt measures to ensure that any act of its officials, employees, and representatives that would merit the cancellation of its license be imposed the supreme penalty of dismissal.

    The Court stated that company policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must be complied with until finally revised or amended.1 Aparente, Sr. v. National Labor Relations Commission, G.R. No. 117652, April 27, 2000. Furthermore, a company’s management prerogatives shall be upheld so long as they are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.2 Aparente, Sr. v. National Labor Relations Commission, G.R. No. 117652, April 27, 2000. In this regard, the Court ruled that the dismissal of Alvin which hinged on a provision that prescribed dismissal even on the first instance of violation, should therefore be upheld.

    In this case, the Court ruled that PTC was well within its management prerogative in terminating Alvin’s employment upon a finding of violation of its company rules. The Court stated that Alvin’s actions revealed that he was aware of his violation of PTC’s rule. By his own admission, he instructed Fred to give the gift to Aaron in the far end of the office, as he knew that there was a surveillance camera in their work area. He thus knew that he was at risk of getting caught doing an act he should not do. Despite this, he still received the gift and did not return the same to Mustafa or even turned over the same to the Human Resources Department as instructed by PTC’s Code of Discipline. For the Court, the acts of Alvin revealed willful misconduct or disobedience of company rules that further justified PTC’s decision to terminate his employment.

    Further reading:

    • De Leon v. Philippine Transmarine Carriers, Inc., G.R. No. 232194, June 19, 2019.

  • IDs, Uniforms, and Vague Affidavits

    Arnulfo alleged that in 1994 he was hired as a butcher by Ernesto (the proprietor of Kalookan Slaughterhouse) and was made to work the entire week, from 6:30 P.M. to 7:30 A.M. with a daily wage of P700.00, that later became P500.00.

    Arnulfo narrated that on July 21, 2014, he suffered from a headache and was unable to report for duty. The next day, Ernesto informed him that he could no longer report for work due to his old age.

    Aggrieved by these developments, Arnulfo filed a complaint for illegal dismissal against Ernesto.

    Ernesto, on the other hand, asserted that Arnulfo was an independent butcher engaged by his Operation Supervisor, Cirilo, and he was paid based on the number of hogs he butchered. Ernesto added that Arnulfo was only called into the slaughterhouse when customers brought hogs to be slaughtered.

    In arguing against Arnulfo’s claim of illegal dismissal, Ernesto contended that he imposed policies on the entry to the premises of Kalookan Slaughterhouse, which applied to employees, dealers, independent butchers, hog and meat dealers, and trainees. In this regard, Noelberto (one of Ernesto’s employees) stated that Arnulfo violated said policies and then misconstrued the disallowance to enter the slaughterhouse as an act of dismissal.

    Although the Office of the Labor Arbiter found that Arnulfo was hired by Ernesto himself, the National Labor Relations Commission and the Court of Appeals, however, ruled that Arnulfo was engaged by Cirilo (Ernesto’s Operation Supervisor) and he was Cirilo’s own employee.

    Was Arnulfo an employee of Ernesto?

    The Supreme Court ruled in the affirmative.

    The Court reiterated the settled rule that to determine the existence of an employer-employee relationship, four elements generally need to be considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct. The Court stated that these elements or indicators comprise the so-called ‘four-fold’ test of employment relationship.

    In the present case, it was found that the butchering services rendered by Arnulfo at the Kalookan Slaughterhouse was undisputed.

    However, Arnulfo was also found to have presented the following pieces of evidence:
    (1) an identification card and three gate passes stating that he was a butcher at the Kalookan Slaughterhouse;
    (2) log sheets for three days showing that he reported for work; and
    (3) a trip ticket showing that Arnulfo was the captain of a group of personnel that went to Bataan.

    The Court also considered Ernesto’s admission (by way of Noelberto’s statement) that uniforms were given to all employees, including Arnulfo.

    The Court reiterated its ruling in Masonic Contractor, Inc. v. Madjos1G.R. No. 185094, November 25, 2009 in that it is common practice for companies to provide identification cards to individuals not only as a security measure, but more importantly to identify the bearers thereof as bona fide employees of the firm or institution that issued them. The provision of company-issued identification cards and uniforms, said the Court, indubitably constitutes substantial evidence sufficient to support the existence of the employment relation.

    For the Court, the totality of Arnulfo’s evidence and the admissions of Ernesto led it to conclude that Arnulfo was Ernesto’s employee.

    On the other hand, the Court looked into Ernesto’s claims that Cirilo was the employer of Arnulfo and the person who paid the latter’s wages. However, the Court found no evidence supporting said claims. The Court even stated that Cirilo was not shown to (1) possess substantial capital and investment to have an independent business; (2) be Arnulfo’s employer; and (3) pay his salaries. Other than Cirilo’s Sinumpaang Salaysay, no document was presented to show that he paid Arnulfo’s salaries.

    Moreover, the Court stated when Ernesto denied that Arnulfo was his employee but alleged that the latter rendered services as Cirilo’s employee, Ernesto effectively admitted the substantial fact that Arnulfo has been rendering butchering services for several years. The Court considered such denial as negative pregnants2denials pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied which acknowledged that Ernesto indeed employed Arnulfo.

    The Court stressed that while Cirilo claimed to be Arnulfo’s employer, he also admitted that he never exercised any control over the means and methods by which Arnulfo rendered butchering services. Said the Court, if Cirilo was Arnulfo’s employer, he should have had control over Arnulfo’s means and methods for doing his job. As the Sinumpaang Salaysay of Cirilo reads, he only monitored whether the butchers finished their work.

    However, record revealed that Noelberto (Ernesto’s employee), was the one who actually exercised control in that he reprimanded Arnulfo (1) for his failure to properly store his butchering knives; (2) for coming to Kalookan Slaughterhouse with dirty clothes; (3) for reporting for work drunk; and (4) for not having an I.D. before going to the slaughterhouse.

    The Court concluded that all the foregoing circumstances established that Ernesto (through Cirilo) engaged Arnulfo, paid for his salaries, and in effect had the power to dismiss him. Further, Ernesto (through Noelberto) exercised control over Arnulfo’s conduct.

    To the mind of the Court, Ernesto was Arnulfo’s employer.

    Was Arnulfo illegally dismissed from employment?

    The Court found that Arnulfo was illegally dismissed from employment. This was because Ernesto failed to specifically deny that on July 22, 2014, Arnulfo was informed that he could no longer report for work.

    According to the Court, Noelberto only alleged that he merely barred Arnulfo from entering the slaughterhouse in several instances because of his failure to wear his I.D. and uniform but he failed to state that this was done on July 22, 2014.

    The Court ruled that Noelberto’s silence on this matter was deemed as an admission by Ernesto that Arnulfo was indeed dismissed on July 22, 2014.3Section 11, Rule 8 of the Rules of Court provides: SECTION 11. Allegations Not Specifically Denied Deemed Admitted. — Material averments in a pleading asserting a claim or claims, other than those as to the amount of unliquidated damages, shall be deemed admitted when not specifically denied.

    Having been illegally dismissed, the Court affirmed the Office of the Labor Arbiter’s awards of separation pay and backwages.

    Further reading:

    • Fernandez v. Kalookan Slaughterhouse, Inc., G.R. No. 225075, June 19, 2019.

  • His Position Became Unnecessary upon Shipment Completion

    On November 1, 2009, the employer hired Manuel as a technical consultant. Under the agreement, Manuel was tasked to:

    • Prepare reports;
    • Be the intermediary of certain teams;
    • Attend coordination meetings;
    • Evaluate billings; and
    • Conduct Site visits.

    Through a letter dated June 27, 2013, the employer informed Manuel of the termination of his employment due to the cessation of delivery operations and diminution of activities. Aggrieved by the actions of his employer, Manuel filed a complaint for illegal dismissal against it.

    The employer contended that it had sufficiently established redundancy of Manuel’s position. It presented certain documents to prove that there was a significant diminution in the volume of materials business and that the completion of shipment had rendered his position irrelevant. The employer further argued that it did not dismiss Manuel in bad faith, contending that it complied with labor law requirements in terminating his employment. The employer pointed out that he was given a notice of termination with computation of his separation pay, and that the Department of Labor and Employment was also notified.

    Was Manuel validly dismissed from employment on the ground of redundancy?

    The Supreme Court ruled that Manuel was not validly dismissed on said ground.

    The Court stated that redundancy is recognized as one of the authorized causes for dismissing an employee under the Labor Code of the Philippines. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.

    The Court further stated that for the implementation of a redundancy program to be valid, the employer must comply with the following requisites:

    • written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment;
    • payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher;
    • good faith in abolishing the redundant positions in that the employer must provide substantial proof that the services of the employees are in excess of what it requires; and
    • fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.

    In the present case, the Court acknowledged that the employer complied with the first and second requisites. It was able to notify Manuel and the Department of Labor and Employment at least a month before the planned redundancy. Manuel also received a computation of his separation pay corresponding to at least one month pay for every year of service with additional payment for economic assistance.

    However, the Court found that the employer failed to establish compliance with the third and fourth requisites.

    The Court discovered that the employer’s only basis for declaring petitioner’s position redundant was that his function, which was to monitor the delivery of supplies, became unnecessary upon completion of shipment.

    However, the Court discovered that Manuel’s employment agreement reveals the contrary as there was no mention of monitoring shipment as part of his tasks. The Court said that if his work pertains mainly to the delivery of supplies, it should have been specifically stated in his job description. Thus, the Court found no basis for the employer to consider Manuel’s position irrelevant when shipment had been completed.

    The Court also found that the employer failed to show that they used fair and reasonable criteria in determining what positions should be declared redundant.

    The Court explained that fair and reasonable criteria may take into account the preferred status, efficiency, and seniority of employees to be dismissed due to redundancy.

    However, the Court found that the employer never showed that it used any of these in choosing Manuel as among the employees affected by redundancy.

    The Court accordingly declared Manuel to have been illegally dismissed from employment.

    Further reading:

    • Acosta v. Matiere SAS, G.R. No. 232870, June 3, 2019.

  • A Long-Standing Practice

    Quintin was hired in June 1990 by AMA Education System (AMA) as a Mathematics and CAD Instructor. Eight years later, he was promoted as its School Registrar and was able to work as such until April 1999. While serving as School Registrar, he was promoted to the position of School Administrator/Chief Operations Officer of AMA’s College in Biñan, Laguna in January 1999.

    Quintin alleged that sometime in 2008, he applied for retirement relying on a long-standing policy of AMA Education System in granting early retirement benefits to its employees. While the said application for early retirement was being processed, Quintin was requested to continue his employment until after the enrollment period. Later, he was informed of the approval of his application, and the processing of the payment of his benefits.

    On June 3, 2008 Quintin was compelled to leave immediately for the USA to avoid the cancellation of his visa as a permanent resident.

    On September 3, 2010, while on vacation in the Philippines, Quintin filed a complaint for payment of retirement benefits/separation pay against AMA.

    AMA contended that Quintin’s request in 2008 for early retirement was disapproved. Before the denial could be communicated to him, Quintin had already left the country without submitting a resignation letter and following the standard company policy on proper turn over of work and accomplishment of clearance. AMA added that it was willing and ready to release to Quintin his last salary and 13th month pay in the total amount of PhP28,046.34, less an unliquidated amount for the 2008 graduation.

    Quintin retorted that he underwent an exit interview, clearance procedures, and turn over of work accountabilities. Quintin then claimed that his basic monthly salary was PhP51,310.00 and not PhP25,000.00. He also denied that he received the unliquidated budget for the 2008 graduation. Lastly, Quintin argued that while it had no written retirement plan, AMA had a long-standing practice of granting early retirement, separation pay, or cash gift or benefit to those who have not reached the compulsory retirement age or mandatory twenty-year service requirement.

    Was Quintin entitled to retirement benefits?

    The Supreme Court ruled that Quintin was entitled to retirement benefits from AMA.

    The Court stated that Article 3021formerly Article 287 of the Labor Code of the Philippines provides for the voluntary retirement age of 60 years old and mandatory retirement age of 65 years old. In addition to the age requirements, the employee must have served at least five years in the company. The statutory retirement benefit is pegged at one-half month salary for every year of service or a fraction thereof. The employer however, is free to grant other retirement benefits and impose different age or service requirements, provided that the benefits shall not be lesser than those provided in Article 302.

    The Court then discussed Article 1002ARTICLE 100. Prohibition against Elimination or Diminution of Benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. of the Labor Code of the Philippines. According to the Court, the said Article expressly prohibits the elimination or reduction of benefits received by employees. However, the basis for the grant of said benefit must be shown through an express policy, written contract, or an unwritten policy that has ripened into a company practice. To be considered a practice, it must be consistently and deliberately made by the employer over a significant period of time.3Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, 639 Phil. 633, 641 (2010). The Court added that it has not defined what constitutes a “significant period of time.” Jurisprudence4Metropolitan Bank and Trust Co. v. National Labor Relations Commission, 607 Phil. 359 (2009). explains that the matter is decided according to the peculiar facts and circumstances of each case, the common denominator of which is the regularity and deliberateness of the grant of benefits over a significant period of time.

    In the present case, the Court found that Quintin was able to prove through substantial evidence the existence of an established company practice of granting early retirement to its employees who have rendered at least ten years of service, regardless of age. Specifically, the Court admitted the affidavits of Salvacion and Elsa, two former AMA employees, who both attested in their separate affidavits that they were former employees of AMA who were granted retirement benefits. The Court noted that although they did not personally confirm the award of their early retirement, the affidavits showed that they occupied managerial positions and were privy to the policies of the school and to the movements or retirement of their subordinate personnel. Nonetheless, the Court found that the affidavits revealed the following:

    • Salvacion was AMA’s School Director in Quezon City, while Elsa was its Registrar of the Basic Education Department, also in Quezon City;
    • Salvacion worked for AMA for 11 years and Elsa was with AMA for 18 years;
    • AMA granted an early retirement program to its employees who had rendered at least 10 years of service;
    • Both received early retirement benefits of one-month salary for every year of service pursuant to the early retirement program of AMA; and
    • Eight other employees were able to avail of the early retirement program.

    On the other hand, the Court also found that AMA merely denied that it had any existing early retirement policy and the grant of Salvacion and Elsa’s requests were isolated cases. However, the Court stressed that AMA did not submit controverting evidence to refute Salvacion and Elsa’s statements in their affidavits as to the grant of early retirement benefits to its other employees. Notably, AMA did not explain why Salvacion and Elsa’s requests for early retirement were granted but Quintin’s request was denied.

    The Court held that Quintin substantially proved that AMA had a consistent company practice of granting early retirement to its employees who have rendered at least 10 years of service. For the Court, Quintin is entitled to retirement benefits.

    Further reading:

    • Beltran v. AMA Computer College-Biñan, G.R. No. 223795, April 3, 2019.

  • We Validly Placed Our Employee on Floating Status

    On 9 April 1992, Airborne, a company engaged in providing manpower services to various clients, hired the services of Arnulfo as Janitor. He was assigned at the Balintawak Branch of Meralco, a client of Airborne.

    Almost twenty years thereafter, or on 30 June 2011, the contract between Airborne and the Balintawak Branch of Meralco expired. Meralco entered into a new contract with Landbees, which absorbed employees of Airborne except Arnulfo, who allegedly had a heart ailment.

    Arnulfo consulted a doctor, who declared that he was in good health and fit to work. He presented a medical certificate to Airborne, but the latter disregarded the same. He also reported for work but Airborne told him that no work was available for him.

    Feeling aggrieved, Arnulfo filed a complaint for constructive dismissal on 5 August 2011.

    Airborne insisted that Arnulfo was never dismissed from service because:

    • when its contract with the Balintawak Branch of Meralco ceased, it directed all its employees, including Arnulfo, to report to its office for reposting;
    • when Arnulfo failed to do so, it sent two (2) letters dated 12 August 2011 and 21 September 2011 at Arnulfo’s last known address, directing him to report to his new assignment at Meralco’s Commonwealth Business Center; and
    • said letters, however, were returned to sender with a notation “RTS unknown”

    The Office of the Labor Arbiter dismissed Arnulfo’s complaint.

    Arnulfo appealed and reiterated that he was constructively dismissed by Airborne. He pointed out that:

    • He made several follow-ups since 1 July 2011, but Airborne ignored him. He was not given a new assignment since then.
    • The letters were products of afterthought since Airborne was already aware of the constructive dismissal complaint prior to the sending of the said letters;
    • The letters could not possibly reach him because his address stated therein was incomplete. Arnulfo posits that such mistake was intentionally done for him not to receive the letters; and
    • He left his cellphone number with an administrative officer of Airborne, but never received a call from the latter.

    Airborne countered that Arnulfo introduced for the first time on appeal new factual allegations, as well as spurious, fabricated and self-serving evidence which should not be given credence.

    The National Labor Relations Commission reversed the findings of the Office of the Labor Arbiter and declared that Arnulfo was constructively dismissed from employment.

    The Court of Appeals and the Supreme Court agreed with the findings of the Commission.

    Ruling:

    Arnulfo was constructively dismissed from employment.

    The Supreme Court ruled that Airborne denied Arnulfo his employment because he had a heart ailment. Despite the declaration that he was fit to work, Airborne still did not give him any assignment.

    To give semblance of legality to their act of not giving him an assignment, Airborne sent him two (2) letters with an incomplete address after the filing of the constructive dismissal complaint. The sending of the letters were products of afterthought. However, an “[a]fterthought cannot be given weight or credibility.”1Skippers United Pacific, Inc. vs. NLRC, G.R. No. 148893, July 12, 2006.

    The Court was not convinced of the Airborne’s sincerity to give him a new assignment, for there was reason to believe that the incomplete address was intentionally done so that Arnulfo would not receive it and Airborne can thus set up the defense that it had the intention to have the complainant reposted by sending the letters.

    On Airborne’s claim that Arnulfo was only placed on floating status under Article 301 of the Labor Code of the Philippines2ARTICLE 301. (Formerly Article 286) When Employment not Deemed Terminated. — The bonafide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty..

    Jurisprudence3Lopez v. Irvine Construction Corp., G.R. No. 207253, August 20, 2014. dictates that:

    • The employer must prove the existence of a clear and compelling economic reason for the temporary shutdown of its business or undertaking and that there were no available posts to which the affected employee could be assigned; and
    • It should notify the Department of Labor and Employment and the affected employee, at least one month prior to the intended date of suspension of business operations.

    The Supreme Court found that Airborne failed to prove that the termination of the contract with Meralco resulted in a bona fide suspension of its business operations so as to validly place Arnulfo in a floating status. Airborne did not show that after the termination of its contract with Meralco, it was faced with a clear and compelling economic reason to temporarily shut down its operations or a particular undertaking. It also failed to show that there were no available posts to which Arnulfo could be assigned.

    Airborne also failed to show compliance with the notice requirement to the Department of Labor and Employment and to Arnulfo.

    Jurisprudence4Morales v. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012.dictates that constructive dismissal is a dismissal in disguise as it is an act amounting to dismissal but made to appear as if it were not.

    In the present case, the Court found that the totality of the foregoing circumstances, specifically, Airborne’s

    • failure to prove the bona fide suspension of its business or undertaking;
    • failure to inform the Department of Labor and Employment, as well as Arnulfo, of the suspension of its operations,
    • act of ignoring Arnulfo’s follow-ups on a new assignment, and
    • belated sending of letters/notices which were returned to it

    were done to make it appear as if Arnulfo had not been dismissed. According to the Court, such acts, however, clearly amounted to a dismissal, for which Airborne should be liable.

    Further reading:

    • Airborne Maintenance and Allied Services, Inc. v. Egos, G.R. No. 222748, April 3, 2019.

  • Seafarer’s Obligation to Comply with His Medical Treatment

    Seachest Associates, through its manning agent, Maunlad Trans, Inc. hired the seafarer as a Galley Steward on-board MV Carnival. Several months into his employment, the seafarer began experiencing seasickness and extreme low back pains. Despite medications administered by the ship’s clinic, the pain persisted and extended down to the seafarer’s left thigh.

    Soon, the seafarer was medically repatriated and arrived in the Philippines on 23 January 2010. He reported to Maunlad Trans, Inc. and was referred to its designated physician. The seafarer underwent physical therapy sessions and was diagnosed with ‘lumbar spondylosis with disc extrusion, L3-L4.’ He was also advised to undergo surgery, spine laminectomy. However, he did not approve of the same and instead underwent physical therapy sessions. According to the seafarer, he refused because the company-designated physician informed him that the surgery will not guarantee a return to his normal condition.

    On 6 May 2010, the seafarer returned for a follow-up, and the report on his condition stated:

    Follow-up case of 28 years old male with Herniated Nucleus
    Pulposus, L3-L4, Left.
    EMG-NCV Study — chronic left L5-S1 radiculopathy
    Not keen on surgery.
    Continue rehabilitation.
    His suggested disability grading is Grade 8 — 2/3 loss of motion or lifting power of the trunk.
    To come back after 3 weeks.

    On 14 May 2010, the seafarer filed his complaint for total and permanent disability benefits since his condition did not improve for purposes of resuming regular duties as a seafarer. The employers retorted that the company-designated physician assessed the seafarer a disability rating of Grade 8, which had equivalent monetary benefits in the amount of US$16,795.00.

    The Office of the Labor Arbiter ruled that the company-designated physician’s Grade 8 disability rating was premature, in that it was made only to comply with the 120-day period as mandated in the Philippine Overseas Employment Administration Standard Employment Contract. The said Office further ruled that the work-related disability incurred by the seafarer had prevented him from seeking employment. Permanent disability benefits was accordingly awarded in favor of the seafarer.

    The National Labor Relations Commission and the Court of Appeals affirmed the Decision of the Office of the Labor Arbiter. The Court of Appeals added that:

    • the company-designated physician failed to arrive at a definite assessment of the seafarer’s fitness or disability within the 120/240-day periods provided under the law;
    • the company-designated physician’s last report on the seafarer’s condition which “suggested” a disability grading of “Grade 8 — 2/3 loss of motion or lifting power of the trunk” was not a final or definite assessment of his fitness or disability because the seafarer was still required to return after three weeks for further examination;
    • regardless of the fact that the seafarer was required to return for further examination, the statutory 120/240-day periods would have elapsed without the seafarer being issued either a final and definitive disability assessment or a fit-to-work certification;
    • the seafarer’s condition would not have improved even with the prescribed surgery, which he refused to undergo, because as admitted by the company-designated physician it did not guarantee improvement of seafarer’s condition;
    • the seafarer was unable to resume his regular sea duties, his inability to find work had continued, and he was not re-employed; and
    • with the lapse of the statutory 120/240-day periods without the seafarer’s having gone back to work, he should be deemed totally and permanently disabled.

    Ruling:

    The Supreme Court reversed the ruling of the Court of Appeals and declared that the seafarer was entitled to disability benefits in the amount of US$16,795.00 only, equivalent to Grade 8 disability under the Philippine Overseas Employment Administration Standard Employment Contract.

    Section 20(D) of the Philippine Overseas Employment Administration Standard Employment Contract states that “[n]o compensation and benefits shall be payable in respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or criminal act or intentional breach of his duties, provided however, that the employer can prove that such injury, incapacity, disability or death is directly attributable to the seafarer.”

    According to the Supreme Court, the seafarer was duty-bound to comply with his medical treatment in order to give the company-designated physician the opportunity to determine his fitness to work or to assess the degree of his disability. His inability to continue his treatment without any valid explanation showed that he neglected such duty to continue his medical treatment.

    In the present case, the seafarer filed his complaint on 14 May 2010 — or just 110 days from his medical repatriation on 23 January 2010 — before the 120/240-day periods allowed under the Labor Code of the Philippines could elapse, and before the company-designated physician could render a definite assessment of his medical condition. According to the Court, the filing of the labor case was premature. By failing to continue with the treatment prescribed by the company-designated physician and instead filing the labor case before the expiration of the 120-day period, the seafarer violated the law and his contract with his employer and was thus guilty of abandoning his treatment.

    With regard to the claim of the seafarer that the surgery was not a guarantee that his condition will return to normal, the Court stated that the same does not entitle him to the indemnity he has sought. The fact remained that he violated his contract and the law. His infraction erased any benefit he may have derived from such argument. Although acknowledging that this was a medical opinion shared by the company-designated physician, the Court stated that it had the discretion to rely on such opinion or discard it altogether.

    The Court added that without the seafarer undergoing the prescribed 120/240-day periods for treatment, his employer was deprived of the opportunity to assist him in finding a cure for his condition and thus minimize any legal and pecuniary liability it may be held answerable for. At the same time, there was no way of assessing the seafarer’s medical condition with finality. Without such assessment, no corresponding indemnity was forthcoming. The seafarer must subject himself to treatment as prescribed by the law and the Philippine Overseas Employment Administration Standard Employment Contract, for such requirement is patently for his benefit in all respects.

    Further reading:

    • Maunlad Trans, Inc. v. Rodelas, Jr., G.R. No. 225705, April 1, 2019.

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  • Managerial Employees’ Entitlement to Optional Retirement Benefits under a Collective Bargaining Agreement

    Erika and Edna were both employees of Philippine Journalists, Inc. Erika started with the company on 11 May 1994 and left the company on 15 November 2008. She was an Ad Taker/Account Executive. Edna was employed since 05 September 1989 and was the Human Resources Department Supervisor when she ended her employment on 15 March 2009.

    Erika and Edna wrote separate letters on 28 October 2008 and 23 January 2009, respectively, informing Philippine Journalists, Inc. of their desire to avail of its optional retirement plan as embodied in the Collective Bargaining Agreement. They tendered their resignation from employment.

    Since Philippine Journalists, Inc. refused to give their optional retirement benefits, Erika and Edna filed a complaint for unfair labor practice and money claims, nonpayment of optional retirement benefits and service incentive leave against Philippine Journalists, Inc. before the Office of the Labor Arbiter.

    Philippine Journalists, Inc. countered that at the time Erika and Edna applied for optional retirement, it was suffering losses and had implemented a retrenchment program owing to these losses. It also averred that there was no express company policy on optional retirement when Erika and Edna applied for the same.

    Philippine Journalists, Inc. further asserted that there were employees who were granted optional retirement benefits in the past, but they were covered by an existing and approved optional retirement program. Two former employees attested to this assertion.

    The Office of the Labor Arbiter dismissed the complaint for lack of merit. It found that the Collective Bargaining Agreement categorized certain positions within Philippine Journalists, Inc. as managerial and are therefore excluded from the bargaining unit. According to the Office of the Labor Arbiter, since Erika and Edna were managerial employees, they were not entitled to optional retirement benefits.

    The National Labor Relations Commission, however, set aside the Decision of the Office of the Labor Arbiter and ruled that Erika and Edna were entitled to optional retirement benefits under the Collective Bargaining Agreement. According to the Commission, even if managerial employees were excluded from the coverage of the Collective Bargaining Agreement, there was a showing that there were certain managerial employees who were able to avail of, and were granted, optional retirement benefits.

    The Court of Appeals affirmed the ruling of the Commission on the ground that Philippine Journalists Inc.’s grant of optional retirement benefits to two of its managerial employees had ripened into a company practice that may be considered an enforceable obligation. Specifically, one managerial employee availed of the optional retirement benefits in 2003 while another retired optionally in 2001. For the Court of Appeals, Philippine Journalists, Inc. consistently granted optional retirement benefits in a considerable length of two years.

    Thus, the grant of optional retirement benefits by Philippine Journalists, Inc., even if it was not obliged under the Collective Bargaining Agreement, already constituted voluntary employer practice which cannot be unilaterally withdrawn or diminished by the employer without violating the Labor Code of the Philippines.1Article 100 of the Labor Code of the Philippines states: “ART. 100. Prohibition against elimination or diminution of benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.”

    Ruling:

    In agreeing with the Court of Appeals, the Supreme Court ruled:

    To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.

    In the present case, the Supreme Court found that the grant of optional retirement benefits to two managerial employees in the past was voluntary, deliberate, and done with sufficient regularity as would indicate that this had become a company practice within Philippine Journalists, Inc.

    The Supreme Court further found that Philippine Journalists, Inc. was not incurring losses, and was in fact exhibiting conduct inconsistent with the claim.

    1)

    Philippine Journalists, Inc. appeared to have discriminated against its core employees, such as Erika and Edna, while it favored those in the upper tier of its management. It had been found guilty of illegal dismissal based on an illegal retrenchment scheme, while upper management continued to enjoy its perks and privileges and refused to tighten its belt in this respect.

    2)

    Philippine Journalists, Inc. pursued a scheme to reduce its personnel by any means necessary, which the Supreme Court viewed as unfair and prejudicial to the interests of labor. The Court took note of the situation of Erika and Edna, who resigned under the honest belief that they could avail of an optional retirement scheme similar to other employees in the past. According to the Court, if Philippine Journalists, Inc. believed that Erika and Edna were not entitled to avail of the optional retirement scheme, then it should have at least put their respective resignations on hold to clarify any issues. Instead, Philippine Journalists, Inc. was found to have taken a hostile stance, and had quickly grabbed the opportunity to declare Erika and Edna separated from their employment by voluntary resignation. It failed to take time to explain that the optional retirement program was no longer in effect and afford Erika and Edna the opportunity to reconsider their actions. The Court stated that Philippine Journalists, Inc. exhibited bad faith.

    3)

    Finally, the Court stressed that Philippine Journalists, Inc.’s bad faith was further evident when it falsely declared that it had suffered financial reverses since 1997. The Court found that Philippine Journalists, Inc. deceived their employees and used this false claim to deprive the latter of a fair appraisal of the facts and circumstances during negotiations leading to such agreement.

    For the Supreme Court, Philippine Journalists, Inc. engaged in unfair labor activities and took an anti-labor stance at the expense of its employees, which included Erika and Edna. The Court did not countenance the same.

    Further reading:

    • Philippine Journalists, Inc. v. De Guzman, G.R. No. 208027, April 1, 2019.

  • Extent of Disability vs. Determination of Fitness for Sea Duty

    If there is a claim for total and permanent disability benefits by a seafarer, the following rules shall govern:

    • The company-designated physician must issue a final medical assessment on the seafarer’s disability grading within a period of 120 days from the time the seafarer reported to him;
    • If the company-designated physician fails to give his assessment within the period of 120 days, without any justifiable reason, then the seafarer’s disability becomes permanent and total;
    • If the company-designated physician fails to give his assessment within the period of 120 days with a sufficient justification (e.g., seafarer required further medical treatment or seafarer was uncooperative), then the period of diagnosis and treatment shall be extended to 240 days. The employer has the burden to prove that the company-designated physician has sufficient justification to extend the period; and
    • If the company-designated physician still fails to give his assessment within the extended period of 240 days, then the seafarer’s disability becomes permanent and total, regardless of any justification.

    The extent of the disability (whether total or partial) of the seafarer is determined, not by the number of days that he could not work, but by the disability grading the doctor recognizes based on his resulting incapacity to work and earn his wages.

    However, the determination of the fitness of a seafarer for sea duty is the province of the company-designated physician, subject to the periods prescribed by law.

    Further reading:

    • Intermodal Shipping, Inc. v. Escalona, G.R. No. 243380 April 1, 2019.