Paulino Ungos III

Lawyer | Law Professor | Author

Tag: 2019-04

  • 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.

  • 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.

  • 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.

  • The Party Who Secures the Opinion of a Third Doctor

    Under the Philippine Overseas Employment Administration Standard Employment Contract, when the seafarer sustains a work-related illness or injury while on board the vessel, his fitness or unfitness for work should be determined by the company-designated physician.

    However, if the doctor appointed by the seafarer makes a finding contrary to that of the assessment of the company-designated physician, a third doctor might be agreed upon jointly by the employer and the seafarer, and the third doctor’s decision would be final and binding on both parties.

    The non-observance of the requirement to have the conflicting assessments determined by a third doctor would mean that the assessment of the company-designated physician prevails.

    The Supreme Court denied the seafarer’s claim for disability benefits in this case.

    According to the Court, the need for the third doctor’s evaluation of the seafarer arose after his personal doctor declared him unfit for seafaring duties. The seafarer could not initiate his claim for disability solely on the basis of the declaration of his personal doctor. He should have instead set in motion the process of submitting himself to assessment by the third doctor by first serving the notice of his intent to do so on the employer.

    The Court stressed that there was no other way to validate the claim of the seafarer but this. Without the notice of intent to refer the seafarer’s case to the third doctor, the employer could not itself initiate the referral.

    Unless the seafarer served the notice of his intent, he could not then validly insist on an assessment different from that made by the company-designated physician. This outcome, which accorded with the procedure expressly set in the Philippine Overseas Employment Administration Standard Employment Contract, was unavoidable for him.

    The employer could insist on the disability rating of its company-designated physician even against a contrary opinion by another doctor, unless the seafarer signified his intent to submit the disputed assessment to a third doctor. The duty to secure the opinion of a third doctor belonged to the employee asking for disability benefits. Said employee must actively or expressly request for it.

    Further reading:

    • Maersk-Filipinas Crewing, Inc. v. Alferos, G.R. No. 216795, April 1, 2019.