Paulino Ungos III

Lawyer | Law Professor | Author

Tag: 2020-08

  • To Have Enough of Enough…

    In 1997, Home Credit gave its employee her first service vehicle. Later, the employee purchased the vehicle from Home Credit at its depreciated value.

    In 2003, Home Credit granted the employee’s request for a second service vehicle. However, Home Credit required the employee to pay for additional equity in excess of the maximum limit of Php660,000.00. In 2008, the employee again purchased the vehicle at its depreciated value.

    In 2009, the employee applied for a third service vehicle. This time, Home Credit informed the employee that she must pay the equity more than Php550,000.00. Home Credit likewise adopted a cost sharing scheme where the employer must shoulder 40% of the acquisition price.

    Aggrieved, the employee filed a complaint against Home Credit for violation of Article 100 of the Labor Code on non-diminution of benefits.

    Was the employee’s benefit diminished?

    The Supreme Court ruled that no diminution of benefits occurred.

    According to the Court, employees generally have a vested right over existing benefits that the employer voluntarily granted them.1University of the East v. University of the East Employees Association, G.R. No. 179593, September 14, 2011, 673 PHIL 273-290 These benefits cannot be reduced, diminished, discontinued or eliminated2Eastern Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union, G.R. No. 185665, February 8, 2012, 681 PHIL 519-536; and Tiangco v. Leogardo, Jr., G.R. No. L-57636, May 16, 1983, 207 PHIL 235-247 consistent with the constitutional mandate to protect the rights of workers and promote their welfare.3CONSTITUTION, Art.II, Sec. 18; and Art. XIII, Sec. 3. Article 100 of the Labor Code of the Philippines, provides:

    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. (Emphasis Supplied.)

    Jurisprudence4Arco Metal Products, Co., Inc. v. Samahan ng mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734, May 14, 2008, 577 PHIL 1-12, citing CONSTITUTION, Article II, Section 18 and Article XIII, Section 3. dictates that the principle of non-diminution of benefits is founded on the constitutional mandate to “protect the rights of workers and promote their welfare” and “to afford labor full protection.” The Court clarified that the basis for non-diminution rule is not Article 100 which refers solely to “benefits enjoyed at the time of the promulgation of the Labor Code,” thus:

    x x x Article 100 refers solely to the non-diminution of benefits enjoyed at the time of the promulgation of the Labor Code. Employer-employee relationship is contractual and is based on the express terms of the employment contract as well as on its implied terms, among them, those not expressly agreed upon but which the employer has freely, voluntarily and consistently extended to its employees. Under the principle of mutuality of contracts embodied in Article 1308 of the Civil Code, the terms of a contract — both express and implied — cannot be withdrawn except by mutual consent or agreement of the contracting parties.

    The Court added that the non-diminution rule applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice.5Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010, 639 PHIL 633-642

    In the present case, the Court found that the employee’s claim that the car plan was part of her hiring package was unsubstantiated. Record shows that Home Credit had no existing car plan at the time of the employee’s hiring. Her employment contract did not even contain any express provision on her entitlement to a service vehicle at full company cost.

    The Court also found that that the car plan had not ripened into a company practice. According to the Court, a “practice” or “custom” is not a source of a legally demandable or enforceable right. In labor cases, however, benefits which were voluntarily given by the employer, and which have ripened into company practice, are considered as rights and are subject to the non-diminution rule.6Makati Stock Exchange, Inc. v. Campos, G.R. No. 138814, April 16, 2009, 603 PHIL 121-134 To be considered a company practice, the benefit must be consistently and deliberately granted by the employer over a long period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employee is not covered by any provision of law or agreement for its payment.7Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc., G.R. No. 176985, April 1, 2013, 707 PHIL 255-266 The burden to establish that the benefit has ripened into a company practice rests with the employee.8Galang v. Boie Takeda Chemicals, Inc., G.R. No. 183934, July 20, 2016, 790 PHIL 582-604

    In the present case, the Court found that Home Credit’s act of giving service vehicles to the employee had been a company practice — but not as to the non-participation aspect. There was no substantial evidence to prove that the car plan at full company cost had ripened into company practice. The Court reiterated that the only time the employee was given a service vehicle fully paid for by the company was for her first car. For the second vehicle, the company already imposed a maximum limit of P660,000.00 but the employee never questioned this. She willingly paid for the equity in excess of said limit. Thus, the elements of consistency and deliberateness were not present.

    Further reading:

    • Home Credit Mutual Building and Loan Association v. Prudente, G.R. No. 200010, August 27, 2020.

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  • Specified at the Time of Engagement

    Respondent RSCI is a construction company engaged in short-term projects such as renovation or construction of bank branches, stores in malls and similar projects with short duration. For its projects, RSCI hired construction workers like masons, carpenters, whose contracts of engagement were indicated to be co-terminous with the projects to which they were assigned.

    Sometime in 2005, RSCI hired several employees and were assigned to its various projects.

    Sometime in February and May 2016, the RSCI’s foreman twice directed said employees to report for work for another short-term project, but the latter failed to do so. Said employees, nonetheless, filed a complaint for illegal dismissal against RSCI.

    RSCI denied that it illegally dismissed the employees. It asserts that they were project employees whose employment was validly terminated after end of each construction project.

    Could the employees be considered project employees?

    Jurisprudence1Dacuital v. L.M. Camus Engineering Corp., G.R. No. 176748, September 1, 2010, 644 PHIL 158-175 dictates that a project employee is assigned to a project that starts and ends at a determined or determinable time. The principal test to determine if an employee is a project employee is — whether he or she is assigned to carry out a particular project or undertaking, which duration or scope was specified at the time of engagement.

    In the present case, the Court found that at the time of hiring, the employees were not given a notice informing them of their engagement for a specific project. The Court also found that the employees were all continuously engaged by RSCI to render construction services for its short-term projects. Finally, the Court found that RSCI was unable to file any termination report to the DOLE due to alleged project completion or pay the workers any completion bonus supposedly due to project employees following completion of each project.

    The Supreme Court thus ruled that the employees were regular employees of RSCI, as they rendered services necessary and desirable to its construction business. As such, the Court stated that they may not be dismissed upon the mere expiration or completion of each project for which they were engaged.

    Further reading:

    • Inocentes, Jr. v. R. Syjuco Construction, Inc., G.R. No. 240549, August 27, 2020.

  • Loss of Trust and Confidence

    SMC employed RAG on 16 September 1986 as a researcher in the Security Department and concurrently as Executive Secretary to the Head of the Security Department. Sometime in October 1994, RAG was assigned as coordinator in the Mailing Department of SMC.

    Sometime in January 2001, C2K, a corporation engaged in courier and delivery services, entered into business with SMC as the latter’s courier. Although the relationship between the two companies started smoothly, C2K soon encountered difficulty in collecting its service fee from SMC.

    Investigation yielded a finding that C2K’s former manager formed another courier services entity, used fake C2K receipts, and collected the C2K fees. C2K claimed that it was through RAG’s intervention that the other courier services group was able to transact business with SMC. RAG was also found to have collected 25% commission from the total payment received by C2K and was allegedly involved in anomalies which caused tremendous losses to SMC.

    SMC conducted an administrative investigation and hearing where RAG was able to present her evidence and witnesses to disprove the charges against her. After the investigation, RAG was found guilty of committing fraud against SMC and of receiving commissions in connection with the performance of her function. On 20 December 2002, SMC terminated her services on the ground of willful breach of trust. RAG thus filed a case for illegal dismissal against SMC.

    Was RAG’s employment validly terminated on the ground of loss of trust and confidence?

    The Supreme Court ruled in the affirmative, as SMC was able to discharge the burden of proving that just cause attended RAG’s dismissal from employment.

    Article 2971Formerly Article 282 of the Labor Code of the Philippines provides that an employer may terminate the services of its employee for “(f)raud or willful breach x x x of the trust reposed in him by his employer or duly authorized representative.” As a rule, employers have the discretion to manage its own affairs, which includes the imposition of disciplinary measures on its employees.2Manila Hotel Corp. v. De Leon, G.R. No. 219774, July 23, 2018. Thus, “employers are generally given wide latitude in terminating the services of employees who perform functions which by their nature require the employer’s full trust and confidence.”3University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R. Nos. 178085-178086, September 14, 2015, 769 PHIL 630-665; Wuerth Phils., Inc. v. Ynson, G.R. No. 175932, February 15, 2012, 682 PHIL 143-163; and Ancheta v. Destiny Financial Plans, Inc., G.R. No. 179702, February 16, 2010, 626 PHIL 550-565.

    Nonetheless, jurisprudence4The Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, December 15, 2010, 653 PHIL 45-71 teaches that “(l)oss of confidence as a ground for dismissal has never been intended to afford an occasion for abuse by the employer of its prerogative, as it can easily be subject to abuse because of its subjective nature.” Furthermore, it dictates that employers may not arbitrarily dismiss their employees by simply invoking Article 297. The loss of confidence must be genuine and cannot be used as a “subterfuge for causes which are improper, illegal or unjustified.”5Matis v. Manila Electric Co., G.R. No. 206629, September 14, 2016

    The Court reiterated the guidelines to determine whether loss of confidence would constitute a valid ground for dismissal:

    (T)he language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the employer’s whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized.6University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R. Nos. 178085-178086, September 14, 2015, 769 PHIL 630-665, citing Cruz, Jr. v. Court of Appeals, G.R. No. 148544, July 12, 2006, 527 PHIL 230-248

    Thus, the requisites for dismissal on the ground of loss of trust and confidence are:

    • The employee concerned must be holding a position of trust and confidence;7What constitutes a “position of trust and confidence”? Loss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employer’s money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. (Mabeza v. National Labor Relations Commission, G.R. No. 118506, April 18, 1997, 338 PHIL 386-402; Philippine Auto Components, Inc. v. Jumadla, G.R. Nos. 218980 & 219124, November 28, 2016, 801 PHIL 170-186; and University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R. Nos. 178085-178086, September 14, 2015, 769 PHIL 630-665)
    • There must be an act that would justify the loss of trust and confidence;8Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established facts. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. (Cadavas v. Court of Appeals, G.R. No. 228765, March 20, 2019) and
    • Such loss of trust relates to the employee’s performance of duties.

    In the present case, the Court found:

    • RAG occupied a position of trust and confidence, since she was entrusted with SMC’s property, in particular its mail matter which included weighing and determining volumes of documents to be shipped. Thus, she was routinely charged with custody of SMC’s mail matter.
    • RAG willfully, intentionally, knowingly, purposely, and without justifiable excuse disregarded SMC’s rules and regulations in the workplace. It was through RAG’s intervention that the other courier services entity was able to transact business with SMC, wherein such entity used fake receipts and collected the fees pertaining to C2K. The Court stated that RAG, as the coordinator in SMC’s Mailing Department, should have known or noticed said fake receipts since she had previously transacted with C2K.
    • Moreover, RAG was found to have collected 25% commission from the total payment received by C2K. SMC’s investigation revealed that RAG was guilty of committing fraud against SMC and of receiving bribes through commissions in connection with the performance of her function.

    Further reading:

    • San Miguel Corp. v. Gomez, G.R. No. 200815, August 24, 2020.

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  • Beyond Occasional Discomforts

    On 9 June 2006, the respondent group hired the employee as a legal officer. On 23 February 2007, it promoted her to corporate affairs manager and assigned her to head the human resources and legal departments of said respondent.

    The employee narrated that a supervisor gave her a new and additional assignment as a customer service representative (CSR). She was told to answer phone calls and jot notes on her communications with clients. Since the CSR task was far from a managerial job, she approached said supervisor to suggest a different procedure. However, the latter negatively reacted and called the employee stupid and incompetent. On 6 and 9 December 2011, the president of the respondent group of companies verbally advised her to resign and remarked that even if the employee stays for 10 years, the respondent group would not spend Php1 million to pay her salary. The employee stated that the various heads of the respondent group then treated her indifferently. She also received emails implying that she was remiss in her duties to make her appear incompetent.

    On 29 March 2012, she filed a complaint for constructive dismissal against the respondent group.

    The respondent group stated that one of its companies requested the employee to handle complaints from its customers. However, the employee did not address the complaints and instead delegated the task to other personnel. The respondent group thus created a CSR project and designated the employee to man the same. Despite this, the employee still failed to perform her tasks. When asked for her justification, the employee explained that health concerns and stress caused her poor performance. The respondent group then suggested her resignation from employment, where she would receive financial assistance should she resign. However, the employee accused the respondent group not only of forcing her to resign, but also of bribing her with financial assistance. Because of this, the respondent group withheld their offer of financial assistance and just advised the employee to stay in her job, which she did. The respondent group, however, remarked that the employee became difficult to supervise.

    Was the employee constructively dismissed from employment?

    Jurisprudence1Rodriguez v. Park N Ride, Inc., G.R. No. 222980, March 20, 2017, 807 PHIL 747-764 dictates:

    There is constructive dismissal when an employer’s act of clear discrimination, insensibility or disdain becomes so unbearable on the part of the employee so as to foreclose any choice on his part except to resign from such employment. It exists where there is involuntary resignation because of the harsh, hostile and unfavorable conditions set by the employer. The standard for constructive dismissal is “whether a reasonable person in the employee’s position would have felt compelled to give up his employment under the circumstances.”

    The unreasonably harsh conditions that compel resignation on the part of an employee must be way beyond the occasional discomforts brought about by the misunderstandings between the employer and employee. Strong words may sometimes be exchanged as the employer describes her expectations or as the employee narrates the conditions of her work environment and the obstacles she encounters as she accomplishes her assigned tasks. As in every human relationship, there are bound to be disagreements.

    However, when these strong words from the employer happen without palpable reason or are expressed only for the purpose of degrading the dignity of the employee, then a hostile work environment will be created. In a sense, the doctrine of constructive dismissal has been a consistent vehicle by this Court to assert the dignity of labor.

    In the present case, the Court declared the employee to be constructively dismissed from employment. It found instances of disdainful and hostile acts committed against the employee that degraded her dignity as a person and eventually led her to file her constructive dismissal complaint:

    • The employee, who already held the position of corporate affairs manager, was made to work as a CSR, a function fit for a rank-and-file employee. The Court viewed this not only as a demotion, but also as an act of disdain and disrespect because she was treated as if she was unworthy of her managerial position.
    • When the employee suggested a different procedure for the CSR Project, her supervisor reacted negatively and told her she was stupid and incompetent — “No you don’t know anything stupid, stupid, I don’t care about what you say, if you do not accept this project by doing the procedure of answering phone calls from clients and jot down your communication with them and fill in the forms provided then resign, we do not need you here, all you have to do is put in writing that you are not accepting this project and that you are incompetent.” For the Court, these words clearly worsened her already hostile working environment and were plainly demeaning, degrading, and disrespectful to her dignity.
    • The employee was asked to resign on more than one occasion and was offered financial assistance. According to the Court, this shows that her employer was eager to remove her from its employ.
    • Although management told the employee to keep her job, it treated her indifferently thereafter.

    According to the Court, the employee’s overall experience was mentally, emotionally and psychologically burdensome and made her tenure unbearable. Such experience prompted her to involuntarily give up her employment.

    The Court noted that although the respondent group argued that the employee failed to meet the standard performance expected of her, said instance of poor performance was unsubstantiated. Furthermore, the fact that it assigned her to lead the CSR Project was an odd move considering her alleged poor performance. The Court stated that common sense would dictate that the project should have been headed by a competent and efficient employee if the employee’s performance was not satisfactory as the respondent group would claim.

    Also, the Court said that the respondent group did not want to retain the employee, for otherwise, it could have asked her to take a medical leave or have her treated and diagnosed by a government physician.

    The employee was accordingly awarded separation pay, backwages, and damages.

    Takeaway:

    Acts of disdain and hostile behavior such as demotion, uttering insulting words, asking for resignation, and apathetic conduct towards an employee constitute constructive illegal dismissal.

    Further reading:

    • Bayview Management Consultants, Inc. v. Pre, G.R. No. 220170, August 19, 2020.