Paulino Ungos III

Lawyer | Law Professor | Author

Tag: 2018-06

  • Supervening Events Made It Impossible for Me to Reinstate My Employee

    The Court noted Rogel’s illegal dismissal case (G.R. No. 196038), a case related to the present one, which awarded the reliefs of reinstatement and backwages to Rogel. The Court stated that the decision in such case became final and executory on March 30, 2012. Thereafter, during execution proceedings therein, Rogel was granted separation pay in lieu of reinstatement.

    Furthermore, the Court found that Consolidated Distillers of the Far East, Inc. (Consolidated Distillers), or Rogel’s employer, no longer questioned the propriety of the awards of separation pay and backwages, as it only took issue with their computation. Specifically, the Court found that Consolidated Distillers argued that it should only be liable for separation pay and backwages until the year 2007 in view of the execution of the Asset Purchase Agreement and the termination of the subsequent Service Agreement it had with Emperador Distillers, Inc. (Emperador Distillers). For Consolidated Distillers, these were supervening events that caused the impossibility of Rogel’s reinstatement, as his position became inexistent as of 2007, consistent with the ruling of the Court in Olympia Housing, Inc. v. Lapastora1G.R. No. 187691, January 13, 2016

    Should computation of separation pay and backwages be limited to the year 2007, as Consolidated Distillers had asserted?

    The Court ruled in the negative.

    The Court stated that Consolidated Distillers cannot find support in Olympia Housing because the ruling in that case was against its position.

    The Court explained that in Olympia Housing, the employer therein was able to prove in a separate labor case that it had closed its business and followed all statutory requirements arising from the closure of its business. Given this, the Court in Olympia Housing ruled that the employer was liable for backwages and separation pay only until the date of the closure of the business of the employer, even if this was prior to the Office of the Labor Arbiter’s decision finding illegal dismissal.

    However, the Court stressed that for Olympia Housing to apply, the employer must prove the closure of its business in full and complete compliance with all statutory requirements prior to the date of the finality of the award of backwages and separation pay. The statutory requirements referred to by the Court were:

    In the present case, Consolidated Distillers failed to show that it had closed its business in 2007 and that it had complied with all the statutory requirements for the closure.

    The Court found that Consolidated Distillers only alleged the execution of the Asset Purchase Agreement and the termination of the Service Agreement with Emperador Distillers. For the Court, these never meant that Consolidated Distillers had closed its business. The Court even found no evidence that in 2007, Consolidated Distillers had notified the Department of Labor and Employment or its employees of the closure of its business and the reason for its closure. There was also no showing that Rogel was affected by this purported closure of Consolidated Distillers’ business.

    The Court thus ruled that Consolidated Distillers was liable for backwages and separation pay until the finality of its decision.

    It applied its Decision in Bani Rural Bank, Inc. v. De Guzman,2G.R. No. 170904, November 13, 2013 since separation pay, in lieu of reinstatement, was awarded after the finality of the decision declaring illegal dismissal and during the execution proceedings because the employees therein manifested that they no longer wanted to be reinstated. The Supreme Court held therein that when there is a supervening event that renders reinstatement impossible, backwages is computed from the time of dismissal until the finality of the decision ordering separation pay. The Court explained that when there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in light of a supervening event making the award of reinstatement no longer possible), the employment relationship is terminated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts-off the employment relationship and represents the final settlement of the rights and obligations of the parties against each other.

    In the present case, the Court found that the award of separation pay in lieu of reinstatement, was made subsequent to the finality of the decision in Rogel’s illegal dismissal case (G.R. No. 196038). The Court thus ruled that Consolidated Distillers could not evade its liability to Rogel for backwages and separation pay computed until the finality of the Court’s Decision which affirmed the order granting separation pay.

    Further reading:

    • Consolidated Distillers of the Far East, Inc. v. Zaragoza, G.R. No. 229302, June 20, 2018.

  • Dismissal of Employees for Minor Offenses

    Laura was hired to join ProHealth’s audit team in 2007. She was later promoted to Finance Officer.

    On November 26, 2007, Laura’s superior ordered her to give three thousand pesos from the training funds to Prohealth’s District Business Manager, to serve as cash advance.

    On November 27, 2007, Prohealth issued a show cause memorandum for Laura’s failure to release the cash advance. Laura was also relieved of her duties and reassigned to the Office of the Personnel and Administration Manager.

    In her explanation, Laura alleged that when the District Business Manager saw that she was busy receiving cash sales from another District Business Manager, he told her that he would just return the next day to collect his cash advance. When he told her that the cash advance was for car repairs, Laura told him to get the cash from his revolving fund, which she would reimburse after the repairs were done. Prohealth was dissatisfied with her explanation and transferred her to another office.

    On December 3, 2007, Laura was invited to a fact-finding investigation, which was held on December 10, 2007, where Laura was again asked to explain her actions.

    On December 17, 2007, she was handed a notice of termination effective December 31, 2007 for disobeying an order of her superior.

    Laura filed a complaint for illegal dismissal against Prohealth.

    The Office of the Labor Arbiter declared the illegality of Laura’s dismissal from employment. This ruling was affirmed by the National Labor Relations Commission. However, the Court of Appeals reversed and set aside the decision of the Commission and ruled the validity of Laura’s dismissal from employment. The Court of Appeals viewed Laura failure to comply with her superior’s order, an instance of arrogance and hostility, that, in turn, warranted her dismissal.

    When the case reached the Supreme Court, Laura insisted that she was illegally dismissed from employment. According to Laura, she believed in good faith that the District Business Manager would just claim his cash advance the day after he tried to claim it and that there was nothing in her actions that would prove that she intended to disobey or defy respondent Prohealth’s order.

    Was the dismissal of Laura valid?

    The Supreme Court declared that Laura was illegally dismissed from employment.

    The Court stated that under the Labor Code of the Philippines an employer may terminate the services of an employee who commits willful disobedience of the lawful orders of the employer. The Court explained that for disobedience to be considered as just cause for termination, two (2) requisites must concur:

    • the employee’s assailed conduct must have been wilful or intentional; and
    • the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he [or she] had been engaged to discharge.

    For disobedience to be willful, the Court added, it must be characterized by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination. The conduct complained of must also constitute harmful behavior against the business interest or person of his [or her] employer. Thus, it is implied in every case of willful disobedience that the erring employee obtains undue advantage detrimental to the business interest of the employer.

    In the present case, the Court found that Laura, as Finance Officer, was instructed by her superior to give a cash advance of three thousand pesos to the District Branch Manager on November 26, 2007. For the Court, such instruction or order was reasonable, lawful, made known to Laura, and pertained to her duties.

    The Court then tried to determine whether Laura intentionally and willfully violated such order as to amount to insubordination.

    The Court ruled in the negative.

    The Court found that when the District Business Manager went to collect the money from Laura, he was told to return the next day as she was still busy. When Laura found out that the money was to be used for a car tune-up, she suggested to the District Business Manager to just get the money from his mobilization fund and that she just would reimburse it after.

    Diverging from the ruling of the Court of Appeals, the Supreme Court ruled that no ill will existed between the District Business Manager and Laura. According to the Supreme Court, Laura’s failure to immediately give the money to the District Business Manager was not the result of a perverse mental attitude but was merely because she was busy at the time. Neither did she profit from her failure to immediately give the cash advance for the car tune-up nor did respondents suffer financial damage by her failure to comply. For the Court, the severe penalty of dismissal was not commensurate to her infraction. Laura was illegally dismissed from employment.

    Further reading:

    • Malcaba v. ProHealth Pharma Philippines, Inc., G.R. No. 209085 , June 6, 2018.

  • Substantial Compliance with Appeal Bond Requirements

    The situation in this case was that the Office of the Labor Arbiter found that the employer had illegally dismissed three of its employees. This decision of the Office of the Labor Arbiter was affirmed by the National Labor Relations Commission. All parties then filed a Petition for Certiorari before the Court of Appeals.

    A portion of the Decision of the Court of Appeals related to its finding that the employer substantially complied with the requirement of an appeal bond despite it not appearing in the records of the surety company since the employer believed in good faith that the bond it secured was genuine.

    However, the employees argued that the Court of Appeals should have dismissed the Petition for Certiorari outright since the employer failed to post a genuine appeal bond before the National Labor Relations Commission. The petitioner-employees alleged that when the Sheriff of the Commission attempted to enforce the judgment award against the appeal bond, said Sheriff was informed that the appeal bond procured by the employer did not appear in the records of the bonding company. The petitioners-employees also claimed that the employer was notified by the National Labor Relations Commission that its appeal bond was not genuine, showing that the employer did exhibit good faith.

    On the other hand, the employer countered that procedural rules should liberally be applied to their case since it acted in good faith in posting their appeal bond. The employer further asserts that the issue should have already been considered moot since the employees were able to garnish and collect the amounts allegedly due to them.

    Did the employer perfect its appeal upon discovery of its forged appeal bond?

    Yes, because the Supreme Court found that the employer had substantially complied with the requirements on the posting of an appeal bond.

    The Court reiterated the principles that an appeal is not a matter of right. Courts and tribunals have the discretion whether to give due course to an appeal or to dismiss it outright. The perfection of an appeal is, thus, jurisdictional. Non-compliance with the manner in which to file an appeal renders the judgment final and executory. In labor cases, an appeal by an employer is perfected only by filing a bond equivalent to the monetary award.

    The Court further stated that the ruled of the National Labor Relations Commission require that the appeal bond filed be genuine. An appeal bond determined by the National Labor Relations Commission to be irregular or not genuine shall cause the immediate dismissal of the appeal. The Court also stated that while the procedural rules strictly require the employer to submit a genuine bond, an appeal could still be perfected if there was substantial compliance with the requirement.

    In this instance, the Court found that the National Labor Relations Commission certified that the employer was able to file a security deposit in the amount of more than 6.5 million pesos showing that the premium for the appeal bond was duly paid and that there was willingness to post it. The Court also noted that the employees likewise attached documents proving that Alpha Insurance was a legitimate and accredited bonding company.

    The Court stressed that despite the employees’ failure to collect on the appeal bond, the employees never denied that they were eventually able to garnish the amount from the employer’s bank deposits. For the Court, such situation fulfilled the purpose of the bond, which was, to guarantee the payment of valid and legal claims against the employer.

    The Court accordingly considered the employer to have substantially complied with the requirements on the posting of an appeal bond.

    Further reading:

    • Malcaba v. ProHealth Pharma Philippines, Inc., G.R. No. 209085 , June 6, 2018.