Paulino Ungos III

Lawyer | Law Professor | Author

Tag: decision

  • Regardless of the Cause of Repatriation

    Reynaldo entered into a three-month employment contract to work as an oiler with Maritime Management Services (Maritime Management), through its agent, Southeast Asia Shipping Corp. (SEASCORP). Before deployment, he underwent his pre-employment medical examination and was certified to be fit for sea duty. On January 30, 2010, Reynaldo boarded the M/V BP Pioneer.

    Reynaldo narrated that on March 29, 2010, he was carrying spare parts needed for his repair of the ship’s generators when the ship swayed due to big waves. This caused him to bend and nearly fall to his knees.

    Reynaldo claimed that he soon felt excruciating pain in his scrotal/inguinal area, including pain and numbness in his left leg to his foot. Despite this, he continued to carry the parts and repaired the generator until he was relieved by another oiler. After his duty, Reynaldo went to his cabin and took a pain reliever. He then went to the ship’s clinic to have himself checked by the doctor on board. In the Report of Illness by the ship’s doctor, the latter diagnosed Reynaldo to have epididymorchitis and advised him to rest until further observation since it may just be due to tiredness. The doctor also ruled out hernia and trauma.

    On May 19, 2010, Reynaldo visited the ship’s doctor and informed the latter that he still feels pain during prolonged standing or while walking, with numbness of his lower extremity. However, the doctor concluded that this was normal considering his age and just advised to take pain relievers.

    Upon the expiration of his contract on May 25, 2010, Reynaldo disembarked the vessel at the port of Takoradi, Ghana and was repatriated back to the Philippines. Believing that the pain in his scrotal/inguinal area was normal and, as the doctor had advised, Reynaldo took a complete rest for about a month.

    Eventually, SEASCORP called him for possible deployment. He was sent to Merita Diagnostic Clinic (Merita), the company-accredited clinic, for his pre-employment medical examination.

    During his examination, Reynaldo informed the doctor about the injury sustained while on board the M/V BP Pioneer. Thus, the doctor asked him to get an x-ray of his scrotal/inguinal area and lumbar spine.

    On July 30, 2010, Reynaldo also underwent Magnetic Resonance Imaging (MRI) of the Lumbo-Sacral Spine. It was found that Reynaldo had spondylolisthesis, among others.

    On August 26, 2010, Reynaldo consulted two doctors who advised him to have surgery for his spondylolisthesis. Reynaldo found the procedure costly.

    Reynaldo approached SEASCORP to request for financial assistance. However, his request was denied.

    Reynaldo thus filed a complaint against his employer before the National Labor Relations Commission and claimed for permanent total disability benefits, moral and exemplary damages, and attorney’s fees.

    The Office of the Labor Arbiter found that Reynaldo suffered an injury while performing his duties as an oiler. Being a work-related injury, it held that it must be compensable.

    On the other hand, the said Office found that the mandatory three-day reporting requirement for a post-employment examination under the Philippine Overseas Employment Administration Standard Employment Contract (POEA SEC) did not apply in the case of Reynaldo because he was repatriated not because of a medical condition but due to the expiration of his contract.

    The Office of the Labor Arbiter thus ruled in favor of Reynaldo and required the employer to pay Reynaldo his permanent total disability compensation plus attorney’s fees.

    The National Labor Relations Commission reversed and set aside the Decision of the Office of the Labor Arbiter and dismissed Reynaldo’s complaint for lack of merit.

    According to the Commission, the injury suffered by Reynaldo that was reflected on record was the discomfort on his scrotal and inguinal area. His assertion that he suffered an injury while on board and felt pain on his left leg to his foot was unsupported by evidence.

    The Commission added that a seafarer who claims to be medically infirm must be examined by the company-designated physician within three days from repatriation. The failure of Reynaldo to report within the mandatory period without justifiable cause resulted in the forfeiture of his right to claim compensation and disability benefits under the POEA-SEC.

    The Court of Appeals denied Reynaldo’s petition in view of his failure to comply with the mandatory reporting requirement under the POEA-SEC. Such failure resulted in the forfeiture of his right to claim compensation and benefits.

    Reynaldo elevated his case to the Supreme Court.

    Was Reynaldo entitled to permanent total disability benefits?

    The Supreme Court ruled in the negative.

    The Court reiterated settled jurisprudence that in order to claim compensability under the POEA-SEC, it is required that the seafarer must have:

    • suffered a work-related illness or injury during the term of his contract; and
    • submitted himself to a mandatory post-employment medical examination within three (3) working days upon his arrival.

    The purpose of the three-day mandatory reporting requirement is to enable the company-designated physician to ascertain if the seafarer’s injury or illness is work-related. After that period, there would be difficulty in ascertaining the real cause of the illness. To ignore the rule would set a precedent with negative repercussions because it would open the floodgates to a limitless number of seafarers claiming disability benefits. It would certainly be unfair to the employer who would have difficulty determining the cause of a claimant’s illness considering the passage of time. In such a case, the employers would have no protection against unrelated disability claims.

    In the present case, the Court found that Reynaldo was repatriated due to the expiration of his contract. The Court stated that regardless of the cause of his repatriation, he was required to submit himself to a post-employment medical examination by the company-designated physician within three working days upon his return in order to ascertain if he was really suffering from a work-related injury or illness. Reynaldo may only be excused from such requirement if he was physically incapacitated to do so. The Court stressed that this was not Reynaldo’s situation.

    The Court equally found that Reynaldo complained of pain in the scrotal/inguinal area while on board which is why the initial diagnosis by the ship doctor was epididymorchitis.

    On the other hand, the Court noted that aside from his bare assertion, Reynaldo proffered no evidence establishing that he felt pain or numbness on his lower extremities while on board or that the ship doctor concluded that he contracted spondylolisthesis. According to the Court, it was only in July 2010, or after his repatriation, that the said findings were made by a doctor, which was well-beyond the three-day mandatory reporting period.

    The Court stated that while it commiserated with Reynaldo’s plight, non-compliance with the requirements set forth in the POEA-SEC had rendered it difficult to ascertain if his injury or illness was work-related.

    The Court accordingly denied Reynaldo’s claim for permanent total disability benefits.

    Further reading:

    • Cabatan v. Southeast Asia Shipping Corp., G.R. No. 219495, February 28, 2022.

  • But the OFW Directly Communicated with the Principal and without the Knowledge of Its Agent

    SRL International Manpower Agency (SRL) posted a job opening for its principal, Akkila Co. Ltd. UAE/Al Salmeen Trading Est. (Akkila), for a certain project in Qatar.

    Pedro sent an application to Akkila, through SRL. In July 2010, SRL received word from Akkila that the latter was interested in hiring Pedro as Project Manager. Afterwards, SRL forwarded Pedro’s documents to Akkila for the processing of his employment visa.

    Akkila soon furnished Pedro an “Offer of Employment” for a two (2) year engagement without the approval of the Philippine Overseas Employment Administration (POEA). Akkila and Pedro directly contacted each other and the latter was able to depart for the United Arab Emirates (UAE) on October 14, 2010 using a visit visa instead of an employment visa.

    On March 24, 2011, Akkila asked Pedro to return to the Philippines with an instruction to apply for deployment anew under an employment visa and with the condition that he should return 10 days after its processing.

    In April 2011, Pedro returned to the Philippines and started processing his next deployment under new “Contract of Employment,” with the assistance of SRL

    Pedro underwent a medical examination with SRL’s accredited clinic, Seamed Medical Clinic (Seamed), to assess his fitness for work. However, Seamed found that Pedro had Uncontrolled Diabetes Mellitus Type II and declared him unfit for work. This finding was reflected in a Medical Certificate dated May 10, 2011.

    SRL disclosed such finding to Akkila and informed the latter that if it was still interested, it should send a waiver indicating its willingness to hire Pedro notwithstanding his unfitness for work.

    Akkila replied that it had a strict qualification not to hire an applicant who is not fit for work. Subsequently, in a letter dated May 22, 2011, Akkila informed Pedro that he cannot be hired due to medical reasons.

    In the case of SRL International Manpower Agency v. Yarza, the Supreme Court resolved three issues:

    First: Was the “Offer of Employment” furnished by Akkila to Pedro valid?

    The Supreme Court stated that since employment contracts of Overseas Filipino Workers are perfected in the Philippines, and following the principle of lex loci contractus (the law of the place where the contract is made), such contracts are governed primarily by the Labor Code of the Philippines and its implementing rules and regulations.

    The Court added that the laws generally apply even to employment contracts of Overseas Filipino Workers since the Constitution explicitly provides that the State shall afford full protection to labor, whether local or overseas. Thus, even if a Filipino is employed abroad, he or she is entitled to security of tenure, among other constitutional rights. Security of tenure remains even if employees, particularly the Overseas Filipino Workers, work in a different jurisdiction.

    Furthermore, the Court also stated that under the Labor Code of the Philippines, employers hiring Overseas Filipino Workers may only do so through entities authorized by the Secretary of the Department of Labor and Employment. The Court continued that unless the employment contract of an Overseas Filipino Worker is processed through the POEA, the same does not bind the concerned Overseas Filipino Worker because if the contract is not reviewed by the POEA, certainly the State has no means of determining the suitability of foreign laws to our overseas workers.

    In the present case, the Court found that the “Offer of Employment” was perfected when Pedro agreed to the same while he was still in the Philippines.

    However, the Court found that the “Offer of Employment” ran contrary to the Constitution and the law and was not approved by the POEA. Specifically, the Court found that the “Offer of Employment”, although stating that the rules and regulations found in UAE’s labor laws should apply, contained stipulations contrary to the policies of the Philippines concerning labor contracts and security of tenure.

    With these findings, the Court declared the “Offer of Employment” invalid.

    Second: Did an employer-employee relationship exist between Akkila and Pedro.

    The Court ruled in the affirmative. Notwithstanding the invalidity of the “Offer of Employment,” the Court ruled that an employer-employee relationship existed between Akkila and Pedro.

    According to the Court, absent a valid employment contract, the following elements of the four fold test should be considered:

    • selection and engagement of the employee;
    • payment of wages;
    • power of dismissal; and
    • the employer’s power to control the employee’s conduct.

    The Court reiterated that the most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. However, the power of control refers merely to the existence of the power, and not to the actual exercise thereof. No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. However, a finding that such relationship exists must still rest on some substantial evidence.

    In the present case, the Court found:

    • For the first element, Akkila, through the participation of SRL, selected and engaged the services of Pedro, precisely because he was deployed through a visit visa under Akkila’s instruction and endorsement.
    • For the second element, Akkila did not deny that it paid Pedro’s wages with the “Offer of Employment” as reference.
    • Regarding the third element, Akkila had the power to dismiss Pedro. In fact, it did so when it issued the termination letter dated May 22, 2011.
    • Lastly, on the fourth element, Akkila had control over Pedro’s work conduct, which included the means and methods he would employ to produce the results required by the company.

    In addition, the Court took into consideration the fact that Akkila did not show proof that it took no part in directing Pedro’s job output. In particular, Akkila did not appeal the finding of employer-employee relationship before the Court of Appeals. Hence, the Court bound Akkila by such conclusion.

    Third: Was Pedro illegally dismissed from employment?

    With the existence of the employer-employee relationship, the Court ruled that Akkila should accord Pedro due process, both substantial and procedural, before terminating his employment.

    The Court stated that to comply with substantive due process, Pedro can only be dismissed for a just or authorized cause, the absence of which renders his dismissal illegal.

    In the present case, it was found that Akkila dismissed the services of Pedro on the ground of disease, under Article 299 [284] of the Labor Code of the Philippines. The said provision essentially provides that “an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employee’s continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees.”

    The Court further stated that to be considered valid, the dismissal on the ground of disease must satisfy two requisites:

    • the employee suffers from a disease which cannot be cured within six months and his/her continued employment is prohibited by law or prejudicial to his/her health or to the health of his/her co-employees, and
    • a certification to that effect must be issued by a competent public health authority.

    In the present case, record showed Akkila’s decision to inform Pedro that he could not be hired due to medical reasons. However, the Court found that Akkila failed to present any certification from a competent public health authority citing that Pedro’s disease not could be cured within six months, or that his employment was prejudicial to his health or that of his co-employees. Said the Court, absent this certification, Akkila failed to comply with Article 299 [284] of the Labor Code of the Philippines as well as applicable regulations. For the Court, Pedro’s dismissal was not based on a valid cause.

    Furthermore, the Court found that Akkila did not accord Pedro procedural due process. Record showed that Akkila unilaterally dismissed him by simply issuing a letter dated May 22, 2011. Additionally, Akkila sent this termination letter after it already issued a “new” Contract of Employment dated April 15, 2011 to him. Clearly, Akkila, after discovering that Pedro was deemed unfit for work due to diabetes, sought to immediately sever ties with him.

    The Court accordingly ruled that Pedro was illegally dismissed from employment.

    On the relief granted, the Court stated that even with the invalid “Offer of Employment”, the existence of an employer-employee relationship between Akkila and Pedro, as well as the illegality of his dismissal, entitled him to claim for the payment of his salaries for the unexpired portion of his contract.

    In this regard, the Court also found it proper to award moral and exemplary damages under prevailing jurisprudence which allows the migrant worker to claim such damages in connection with the employment contract or as provided by law. Moreover, the Court awarded Pedro attorney’s fees at the rate of ten percent (10%) under Article 2208 of the Civil Code of the Philippines.

    The Court stressed that the liability of Akkila and SRL was solidary, under Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995, as amended.

    Further reading:

    • SRL International Manpower Agency v. Yarza, Jr., G.R. No. 207828, February 14, 2022.

  • A Prejudicial Transfer

    The employer, a business process outsourcing (BPO) company, hired Mario as one of its technical support representatives and assigned him to handle a client account.

    On October 30, 2009, the employer informed Mario that he would be transferred to a different client account upon successfully passing the training, assessment and examination and that his refusal to take the examinations would result in the termination of his services on the ground of redundancy.

    Mario refused to undergo training and take the examinations under the belief that he was entitled to security of tenure.

    Thereafter, Mario received a memorandum informing him that those who declined to comply with the transfer directive were no longer required to log in their system since their respective team leaders will take care of their attendance instead until the redundancy offer is finalized.

    On November 17, 2009, Mario received a notice dated November 16, 2009 informing him of his dismissal due to redundancy effective December 16, 2009.

    Through his counsel, Mario sent a demand letter to his employer asserting that no redundancy in the company occurred considering that it was continuously hiring other technical support representatives. Mario further asserted that as a regular employee, he should no longer be required to take another examination to prove his qualifications.

    On January 7, 2010, Mario filed a complaint for illegal dismissal against the employer before the arbitration branch of the National Labor Relations Commission in Bacolod City.

    The employer argued that the decrease in volume of calls for the account to which Mario was originally assigned led to an excess number of technical support representatives working on the same. It stated that instead of immediately dismissing its employees, it offered to transfer Mario and other technical support representatives to another account, using the following criteria:

    • first call resolution scores for the last three preceding months; and
    • existence of remediation cases.

    The employer pointed out that using the foregoing criteria, Mario was one of the “bottom performers.” It then explained that transferring the said employees to another client account was without any demotion in rank or diminution in pay as long as they successfully passed the standard product training and assessment. It added that undergoing training and assessment were necessary due to the differences between the two client accounts. It posited that it was forced to dismiss Mario on the ground of redundancy since he refused to transfer and go through the training and examination. Finally, it claimed it sent a notice of termination to the Department of Labor and Employment (DOLE).

    The Office of the Labor and the National Labor Relations Commission ruled that the dismissal of Mario from employment on the ground of redundancy was valid.

    The Court of Appeals ruled that Mario was illegally dismissed from employment in view of the employer’s failure to show that his position was redundant.

    The employer went to the Supreme Court.

    Was Mario validly dismissed on the ground of redundancy?

    The Supreme Court ruled in the negative.

    The Court stated that in termination cases, the employer bears the burden of proving that the employee’s dismissal was for a valid and authorized cause. Consequently, an employer’s failure to prove that the dismissal was valid renders the dismissal illegal.

    Here, the Court ruled that Mario was illegally dismissed from employment since the employer’s evidence was found to be insufficient to support a claim of valid redundancy.

    The Court reiterated established principles by stating that redundancy exists when an employee’s services are in excess of what is reasonably demanded by the actual requirements of the business. To successfully invoke a valid dismissal due to redundancy, there must be:

    • a written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment;
    • payment of separation pay equivalent to at least one month pay for every year of service;
    • good faith in abolishing the redundant positions; and
    • fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.

    Moreover, the company must provide substantial proof that the services of the employees are in excess of what is required of the company.

    The Court noted the employer’s assertion that its business was slowing down and that it would require fewer representatives beginning November 2009. The Court also looked into the following documents submitted by the employer to support its claim of redundancy:

    • Affidavit of the human capital delivery site manager;
    • Mario’s Employment Contract;
    • FCR scores of the technical support representatives considered to be bottom performers;
    • FAQs for Transition Plans;
    • Attendance sheet for meeting with representatives dated October 30, 2009;
    • Transfer Agreement;
    • Recruitment Flowchart;
    • Comparison of the duties of representatives assigned to the different clients;
    • Notice of Termination addressed to Mario; and
    • Termination Report to DOLE.

    However, the Court was not convinced of the alleged decline in the employer’s business and the expected decrease in volume of calls. This was because other than the bare assertions of the human capital delivery site manager, the Court found no other evidence proving the business slow down or the alleged low volume of calls. According to the Court, the affidavit of the human capital delivery site manager did not substantiate the claim of slow down or decreased call volume and is mainly self-serving. The Court explained that the employer should have presented any document proving the decline in volume of calls for the past months, or affidavits of client officers who determined that business was slowing down and the basis thereof. Although other documents were submitted, the Court found that these hardly proved the fact of redundancy.

    The Court was also not convinced of the employer’s claim of good faith when Mario was offered a transfer. Under jurisprudence, for a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Failure of the employer to overcome this burden of proof, the employee’s demotion shall no doubt be tantamount to unlawful constructive dismissal.

    In the present case, the Transfer Agreement was found to be prejudicial to him. According to the Court, by requiring Mario to pass additional trainings and examination as a condition to retain his employment under the pain of dismissal, the employer disregarded his right to security of tenure. For the Court, the employer’s failure to prove redundancy, coupled with the imposition of a prejudicial condition to retain employment, rendered the offer of transfer invalid.

    Having been illegally dismissed from employment, Mario was awarded separation pay and backwages.

    Further reading:

    • Teletech Customer Care Management Philippines, Inc. v. Gerona, Jr., G.R. No. 219166, November 10, 2021.

  • But My Motion to Reduce Bond was Impliedly Approved by the NLRC

    Pacific Royal Basic Foods, Inc. (Pacific Royal) is a company that makes, processes, and sells coconut goods for export. It hired Violeta and a few other people as coconut parers.

    Pacific Royal received complaints about a product contamination incident from some of its clients. In response to the complaints, Pacific Royal sent letters to Violeta and her group.

    Violeta and some of her co-employees said they had nothing to do with product contamination when they answered Pacific Royal’s letters.

    Pacific Royal still dismissed Violeta and her group from employment, which prompted the latter to file a complaint against Pacific Royal for illegal dismissal.

    The Office of the Labor Arbiter ruled that Violeta and her group were regular employees who were illegally dismissed from employment. According to the Office of the Labor Arbiter, Pacific Royal failed to establish specific circumstances of the infractions allegedly committed by Violeta and her group. The said Office also found that Violeta and her group were likewise not informed of, and given opportunity to, explain their alleged violation of company policies and regulations on quality control, poor work performance, and repeated defiance of lawful orders of their supervisors. The Office of the Labor Arbiter directed the reinstatement of Violeta and her group. They were also awarded backwages and attorney’s fees.

    Pacific Royal appealed the Decision of the Office of the Labor Arbiter.

    The National Labor Relations Commission reversed the ruling of the Office of the Labor Arbiter.

    Record showed that Pacific Royal filed a Motion to Reduce Bond before the National Labor Relations Commission. However, the Commission did not act on the same.

    The Commission, nonetheless, resolved Pacific Royal’s appeal and found that Violeta and her group failed to dispute the fact of product contamination and was unable to show any ill motive on Pacific Royal’s part in charging them with causing such contamination. The Commission considered the difficulties of a food product export industry, which demanded a higher degree of cooperation and concern from the employees. According to the Commission, Violeta and her group were indifferent to such difficulties of Pacific Royal. In fact, some of them did not even participate in the investigation when they opted not to respond to the letters sent to them. The Commission classified Violeta and her group’s conduct as gross negligence, as they were not new to their jobs and were expected to know fully well the consequences of food product contamination to the company, its employees, and public health.

    Violeta and her group filed a Petition for Certiorari before the Court of Appeals. They imputed grave abuse of discretion on the part of the Commission for entertaining Pacific Royal’s appeal. In addition to their assertion of illegality of their dismissal from employment, Violeta and her group pointed out that Pacific Royal failed to timely post the requisite appeal bond as the same was posted only almost a month after the appeal period had lapsed.

    The Court of Appeals granted the petition of Violeta and her group. It found that Pacific Royal did not find any proof of compliance with the required posting of an appeal bond. According to the Court of Appeals, Pacific Royal’s appeal before the Commission should have been deemed not perfected, and such Commission did not acquire jurisdiction over Pacific Royal’s appeal. The Court of Appeals stressed that Pacific Royal cannot rely on the presumption of regularity in the Commission’s performance of official duties.

    Pacific Royal filed before the Supreme Court its petition for review on certiorari to assail the decision of the Court of Appeals. Pacific Royal asserted, among others, that the inaction of the National Labor Relations Commission on its Motion to Reduce Bond, coupled with the Commission’s resolution of the case on all its substantial points, was tantamount to an implied affirmance of the perfection of the appeal.

    The Supreme Court was confronted with the issue of whether there is a need for the Commission to expressly rule on motions filed by the employer to reduce the appeal bond. Or could an implied approval of such motion to reduce bond by way of the disposal of the appeal by final decision, order, or resolution suffice as a grant of the employer’s motion to reduce bond?

    The Supreme Court in this case emphasized the need for an express ruling by the National Labor Relations Commission on the appellant’s motion to reduce bond.

    The Court reiterated established principles as follows:

    Appeals by an employer before the National Labor Relations Commission of decisions by the Office of the Labor Arbiter that involve monetary awards to an employee must be secured by a cash or surety bond in the full amount of the monetary award.

    By way of exception, the payment of this full amount may be excused if the appealing employer files a motion to reduce bond showing meritorious grounds, and upon posting of a bond in a reasonable amount.

    Mcburnie v. Ganzon1G.R. Nos. 178034, 178117 & 186984-85, October 17, 2013, 719 PHIL 680-728 has already set the “reasonable amount” of the provisional reduced bond at a percentage of 10% of the monetary award, excluding the amount of damages and attorney’s fees, if any.

    The Court stated that Mcburnie requires the concurrence of the following conditions before an aggrieved employer appealing before the National Labor Relations Commission may be allowed to post a bond in a reduced amount:

    • The employer-appellant files a motion to reduce bond;
    • The motion to reduce bond shall be based on meritorious grounds;
    • The employer-appellant posts the provisional percentage of at least 10% of the monetary award, excluding therefrom the award of damages and attorney’s fees;
    • The provisional bond must be posted within the reglementary period for appeal; and
    • If the National Labor Relations Commission eventually determines that a greater or the full amount of the bond shall be posted, the employer-appellant shall comply accordingly within ten (10) days from notice of the order issued by the Commission directing such posting of the increased or full amount of the bond.

    Once these are complied with, the aggrieved employer’s appeal of the Office of the Labor Arbiter’s decision before the National Labor Relations Commission shall be deemed perfected.

    The Court further noted that the requisites laid out by Mcburnie also presupposes a sixth requirement: that the National Labor Relations Commission issue an express ruling on the appellant’s motion to reduce bond.

    In the present case, the Supreme Court found that Pacific Royal’s Motion to Reduce Bond was never acted upon by the National Labor Relations Commission. Still, the Commission resolved Pacific Royal’s appeal of the Labor Arbiter’s Decision on the merits and issued its own resolutions thereon.

    However, the Court stressed that Section 6, Rule VI of the 2011 NLRC Rules of Procedure, as amended, provides that an appeal may be perfected by the appellant-employer only by the posting of a bond in the equivalent amount of the full monetary award granted to the appellee-employee. The Court then repeated that the perfection of an appeal in the manner and within the period set by law is not only mandatory but jurisdictional.2Boardwalk Business Ventures, Inc. v. Villareal, G.R. No. 181182, April 10, 2013, 708 PHIL 443-457

    Consequently, for the Court, there should be no implied approval of a jurisdictional requirement that has not been complied with. Otherwise, the Court said, the ground of lack of jurisdiction becomes a waivable defect in procedure. Whether the National Labor Relations Commission accepts or rejects the appellant’s motion to reduce bond, the ruling must be unequivocal, and such ruling must be issued before or at the time the Commission resolves the appeal by final judgment. Failure to do so shall render the National Labor Relations Commission liable for grave abuse of discretion for having ruled on an appeal without acquiring jurisdiction over the same, and the judgment it had issued shall be vacated as null and void.

    The Court further stated that Pacific Royal could not rely on the mere presumption of regularity in the performance of official duties in favor of the National Labor Relations Commission when the latter gave due course to its appeal; not when it is faced with a serious imputation of non-compliance from Violeta and her group. Considering that the requirements provided under the Labor Code of the Philippines and its Implementing Rules are mandatory for purposes of perfecting an appeal, the rule on presumption of regularity cannot apply.

    The Supreme Court affirmed the Decision of the Court of Appeals and explained that in setting aside the ruling of the National Labor Relations Commission, it is merely exercising prudence in applying the provisions of the law.

    Further reading:

    • Pacific Royal Basic Foods, Inc. v. Noche, G.R. No. 202392, October 4, 2021.

  • The Subcontractor Assigned Him to Work on Our Projects

    Freddie alleged that in April 2012, he was hired by Helenar Construction as painter and made to work in its various products.

    Freddie narrated that on October 24, 2014, Helenar Construction’s foreman required him to sign a labor contract for a period of 3 months with a clause stating that his employment would be renewable depending on the evaluation of such company’s site engineer and foreman. Believing that the contract would violate his security of tenure, Freddie refused to sign the contract. On November 7, 2014, Helenar Construction’s project-in-charge, barred him from entering the construction site.

    On November 9, 2014, Freddie filed a complaint claiming that he was Helenar Construction’s regular employee who was illegally dismissed from employment.

    Helenar Construction countered that Freddie is not its regular employee. It explained that Freddie was hired by its subcontractor as a painter for projects. Helenar Construction pointed out that in the construction industry, subcontractors are hired for the flooring, ceiling, painting, electrical and other related services. It likewise claimed that Freddie unjustifiably stopped reporting for work after refusing to sign the labor contract it prepared.

    The Office of the Labor Arbiter declared Freddie as a regular employee of Helenar Construction and ruled that he was illegally dismissed from service.

    Helenar Construction appealed to the National Labor Relations Commission, which reversed the Office of the Labor Arbiter’s findings. According to the Commission, no employment relationship existed between Freddie and Helenar Construction. Applying the four-fold tests, the Commission ruled that the subcontractor was Freddie’s true employer, based on the following findings: First, the unsigned contract bore the name of the subcontractor and identified him as the employer. Second, through cash vouchers, it was revealed that the subcontractor paid Freddie’s weekly wages. Third, the contract showed that the subcontractor reserved the right to dismiss his painters if they have violated the terms of the labor contract. Finally, Helenar Construction hired subcontractors for specific works such as painting.

    Freddie elevated the case to the Court of Appeals, which, however, affirmed the judgment of the Commission.

    Freddie thus filed his petition before the Supreme Court and maintained that he was a regular employee of Helenar Construction and that he was illegally dismissed from employment.

    Was Freddie a regular employee of Helenar Construction?

    The Supreme Court ruled that Freddie was a regular employee of Helenar Construction.

    The Court discussed that what determines regular employment is not the employment contract, written or otherwise, but the nature of the job. The applicable test is the reasonable connection between the particular activity performed by the employee, in relation to the usual business of the employer. The standard supplied by Article 295 of the Labor Code of the Philippines is whether the work undertaken is necessary or desirable in the usual business or trade of the employer. This can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business is pursued in the usual course.

    In the present case, the Court found that Helenar Construction was principally engaged in the construction business and that Freddie, as a painter, was tasked with preparing, sanding and painting various construction works. The Court mentioned that the nature of Freddie’s job inarguably required him to perform activities which were deemed necessary in Helenar Construction’s usual business and that Freddie’s continuous rehiring to different construction projects from April 2012 until his dismissal in November 2014 attested to the desirability of his services.

    The Court added that at any rate, Helenar Construction, as well as the supposed subcontractor, did not comply with the requirements of the law with respect to the hiring of project employees. The Court reiterated that the principal test in determining project-based employment is whether a person is assigned to carry out a specific project or undertaking, the duration and scope of which was specified at, and made known to him, at the time of his engagement. It is crucial that the worker was informed of his status as a project employee at the time of hiring and that the period of his employment must be knowingly and voluntarily agreed upon by the parties, without any force, duress, or improper pressure vitiating consent.

    In the present case, the Court found no substantial evidence proving that Freddie was adequately informed of his status as a project employee at least at the time of his engagement. There was also no showing that Freddie was fully apprised of the duration and scope of the projects.

    While the Court noted the reliance on the provisions of the unsigned labor contract to characterize Freddie as a project employee, the Court viewed the labor contract as an afterthought designed to deny Freddie the benefits of a regular employee, particularly, his security of tenure. The Court stressed that a worker shall be presumed a regular employee absent clear agreement showing that he was properly informed of the nature of his employment. For the Court, the Office of the Labor Arbiter correctly held that Freddie was a regular employee of Helenar Construction.

    As a regular employee, said the Court, Freddie may be dismissed subject to both substantive and procedural limitations.

    Was the termination of Freddie’s employment valid?

    The Court expounded that the dismissal must be for a just or authorized cause provided in the Labor Code of the Philippines, and the employee must be accorded procedural due process, basic of which is the opportunity to be heard and to defend himself. The Court reiterated that in termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a valid cause, failure to do so would necessarily mean that the dismissal is not justified. Likewise, evidence must be clear, convincing and free from any inference that the prerogative to dismiss an employee was abused and unjustly used by the employer to further any vindictive end.

    In the present case, the Court found that Helenar Construction failed to establish a valid cause for dismissing Freddie since there was no proof that Freddie unjustifiably stopped reporting for work. The Court gathered that Freddie refused to sign the belated labor contract that Helenar Construction prepared. This irked the foreman and engineer of Helenar Construction and resulted in Freddie being barred from the construction site. The Court similarly found that Freddie’s dismissal from employment was attended with procedural infirmity as there was no administrative investigation conducted. Neither were there prior notices served upon Freddie.

    The Court thus affirmed the Office of the Labor Arbiter’s ruling of Freddie’s illegal dismissal.

    Further reading:

    • Laurente v. Helenar Construction, G.R. No. 243812, 07 July 2021.

  • Just a Lessor; Not an Employer

    Albina and several persons alleged that Abelardo, Quirino, and Lucia employed them for various years, as lady keeper, waitress, receptionist, dispatcher, bus boy, DJ, entertainer, cook, and cashier in the latter’s restaurant.

    Albina and her group narrated that in June 2006, restaurant management began harassing them after they formed a union. Albina and her group further stated that on June 30, 2006, Lucia informed them of the termination of their employment since the restaurant will be closing due to bankruptcy.

    Aggrieved by the development, Albina and her group filed a complaint for unfair labor practice, illegal dismissal, and money claims against Abelardo, Quirino, and Lucia before the Office of the Labor Arbiter. Albina and her group asserted therein that the restaurant was financially stable and that the claim of serious business losses was merely a ruse to terminate their employment.

    On the other hand, Abelardo denied the existence of an employment relationship with Albina and her group. Abelardo argued that he was not the owner of the restaurant since he was merely the lessor of the building where the said restaurant operated.

    As supporting evidence, Abelardo submitted contracts of lease and tax returns showing that he earned income from rentals. Abelardo likewise presented the restaurant’s certificate of registration of business name, mayor’s permit, and certificate of registration with the Bureau of Internal Revenue which were all issued in Lucia’s name.

    The Office of the Labor Arbiter found that the presented contracts of lease were inconclusive to disavow any employment relationship between Abelardo and Albina and her group. Said Office ruled that Albina and her group were illegally dismissed from employment. Abelardo, Lucia, and Quirino were held solidarily liable to pay the awards in the total amount of Three Million Six Hundred Eighty Three Thousand Three Hundred Ninety Four Pesos and Forty Five Centavos (Php3,683,394.45). Record showed that the Decision of the Office of the Labor Arbiter was received by Abelardo on March 23, 2007.

    On March 30, 2007, or seven days after receiving the Office of the Labor Arbiter’s Decision, Abelardo filed his appeal with the National Labor Relations Commission. He posted a cash bond of Five Hundred Thousand Pesos (Php500,000.00). Abelardo also moved to reduce the bond.

    On April 2, 2007, or the last day within which to file his appeal, Abelardo posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00).

    Thereafter, Abelardo moved to substitute the cash bond earlier posted in the amount of Five Hundred Thousand Pesos (Php500,000.00) with a surety bond of the same amount. The National Labor Relations Commission granted the motion and ordered Abelardo to post the surety bond. Abelardo complied with the order.

    Later, the National Labor Relations Commission exonerated Abelardo from liability as it found no substantial evidence of employment relationship with Albina and her group.

    Albina and her group elevated the case to the Court of Appeals and asserted that the National Labor Relations Commission committed grave abuse of discretion in giving due course to Abelardo’s appeal despite his failure to post a bond equivalent to the monetary award.

    The Court of Appeals granted the petition. It ruled that Abelardo failed to perfect his Appeal to the National Labor Relations Commission, and it reinstated the decision of the Office of the Labor Arbiter. According to the Court of Appeals, only the amount of Five Hundred Thousand Pesos (Php500,000.00) was posted as bond when Abelardo filed his appeal. The Court of Appeals added that Abelardo’s Motion to Reduce Bond was deemed denied since the same was not acted upon by the National Labor Relations Commission and since no meritorious ground supported the same.

    For the Court of Appeals, the full amount of the appeal bond should have been posted by Abelardo when he filed his appeal. For failure to comply with the mandatory and jurisdictional appeal bond requirement and in the absence of substantial proof to the contrary, the Court of Appeals ruled that Abelardo’s appeal was never perfected and that the National Labor Relations Commission did not acquire jurisdiction over the case.

    Abelardo filed his petition with the Supreme Court and pointed out the following:

    • He posted a cash bond of Five Hundred Thousand Pesos (Php500,000.00) on March 30, 2007, within the period to file an Appeal;
    • Such cash bond was subsequently substituted by a surety bond of the same amount; and
    • He then posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00).

    Abelardo also insisted that Albina and her group failed to establish their employment relationship with him. Abelardo stressed that Albina and her group even alleged in their position paper that it was Lucia who dismissed them.

    In their comment, Albina and her group retorted with three points:

    • There was no evidence that Abelardo posted the appeal bond within the reglementary period;
    • The indemnity agreement between Abelardo and the bonding company did not provide the effectivity period and the amount of premium paid; and
    • Through the affidavit of the restaurant’s former manager, it was shown that Abelardo had the final authority in the hiring of employees and their work assignments.

    Was Abelardo’s appeal perfected?

    The Supreme Court ruled in the affirmative.

    The Court reiterated the principle that the right to appeal is a mere statutory privilege exercised only in the manner and in accordance with the requirements of the law.

    With regard to appeals to the National Labor Relations Commission from decisions, awards, or orders of the Office of the Labor Arbiter, the Supreme Court pointed to Article 229 of the Labor Code of the Philippines, which provides that in case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

    The Supreme Court also referred to Section 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was effective at the time Abelardo questioned the Office of the Labor Arbiter’s Decision. Relevant portion of the provision states:

    No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award.

    The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal.

    The Supreme Court explained that the purpose of the posting of cash or surety bond is to assure the employees that they will receive the monetary award granted them if they finally prevail in the case. The bond also serves to discourage employers from using the appeal to delay, or even evade, their obligation to satisfy the judgment. Notably, the Court added, the posting of appeal bond is not only mandatory but jurisdictional as well. Non-compliance with the bond requirement is fatal and has the effect of rendering the judgment final and executory.

    The Supreme Court clarified that in exceptional cases, however, the bond requirement may be relaxed, provided that:

    • There is substantial compliance with the rules;
    • Surrounding facts and circumstances constitute meritorious grounds to reduce the bond;
    • A liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or
    • The appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.

    The Supreme Court continued that the reduction of the bond is not warranted when:

    • No meritorious ground is shown to justify the same;
    • The appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or
    • When circumstances show the employer’s unwillingness to ensure the satisfaction of its workers’ valid claims.

    In the present case, the Supreme Court ruled that the Court of Appeals erred in dismissing Abelardo’s Appeal for non-perfection. The Supreme Court found that Abelardo received on March 23, 2007 the Office of the Labor Arbiter’s Decision and that he had until April 2, 2007 (or the tenth [10th] day from his receipt of such Decision) to file an appeal. On March 30, 2007, Abelardo appealed and moved to reduce the bond. At the same time, Abelardo deposited a cashier’s check in the amount of Five Hundred Thousand Pesos (Php500,000.00) in favor of Albina and her group. On April 2, 2007 (or the last day of the period to appeal) Abelardo posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00). Subsequently, with the approval of the National Labor Relations Commission, Abelardo replaced the Five Hundred Thousand Peso (Php500,000.00) check deposit with a surety bond of the same amount. For the Supreme Court, Abelardo posted a total of Three Million Six Hundred Thousand Pesos (Php3,600,000.00) within the reglementary period, which substantially covered the total monetary award of Three Million Six Hundred Eighty Three Thousand Three Hundred Ninety Four Pesos and Forty Five Centavos (Php3,683,394.45). The Supreme Court considered such amount as substantial compliance and the same demonstrated Abelardo’s willingness to abide with the rules on perfection of appeals.

    The Supreme Court found no merit to the assertions of Albina and her group regarding the failure of the indemnity agreement to indicate the effectivity period and the amount of premium paid. This is because such aspects do not affect the validity of the surety bond and since the Rules of Procedure of the National Labor Relations Commission does not require such formalities with respect to the contents of the indemnity agreement. The Court stressed that in any case, the rules are explicit that a cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied. This condition shall be deemed incorporated in the terms and conditions of the surety bond and shall be binding on the appellants and the bonding company.

    The Supreme Court accordingly ruled that the Court of Appeals should have considered the merits of the case given that the labor adjudication system rests on the norm that rules of technicality must yield to the broader interest of substantial justice.

    In this regard, while the Supreme Court remarked that it could have remanded the case to the Court of Appeals for proper disposition on the merits, the Supreme Court deemed it more appropriate and practical to resolve the question of the existence of the employment relationship in order to avoid further delay.

    Did an employer-employee relationship exist between Abelardo and Albina and her group?

    For this issue, the Supreme Court ruled in the negative.

    The Supreme Court enumerated the four-fold test of employment relationship, namely:

    • Selection and engagement of the employee or the power to hire;
    • Payment of wages;
    • Power to dismiss; and
    • Power to control the employee.

    Applying such test, the Supreme Court declared that Abelardo was not the employer of Albina and her group. This was based on the following findings:

    First, there was no substantial evidence that Abelardo participated in the selection of the restaurant employees. Although the Supreme Court noted the affidavit of the restaurant’s former manager which was presented by Albina and her group, it ruled that the same was not substantial proof absent supporting evidence such as pre-employment records, appointment letters or engagement contracts indicating Abelardo’s involvement in the recruitment process.

    Second, Albina and her group did not present any payslip showing that they directly received their premiums and salaries from Abelardo.

    Third, as to the power to dismiss, Albina and her group admitted that it was Lucia who terminated their services. There was no evidence that Abelardo wielded such authority.

    Fourth, concerning the power of control, there was no proof that Abelardo issued orders and instructions to Albina and her group, or that he supervised and monitored the proper performance of their work.

    On the other hand, the Supreme Court found that Abelardo substantiated his claim that he was a mere lessor of the restaurant. Abelardo submitted contracts of lease and tax returns showing that he earned income solely from building rentals. Abelardo likewise presented the certificate of registration of business name, mayor’s permit, and certificate of registration with the Bureau of Internal Revenue which were all issued in Lucia’s name. The Supreme Court considered such certifications as executed in the performance of official duty of the government agencies concerned and can be relied upon as evidence of the facts stated therein. Furthermore, such documents enjoy the presumption of regularity unless the contrary is proved. The Supreme Court thus ruled that Albina and her group’s idle implication that Abelardo used these documents as subterfuge to evade liability deserved scant consideration.

    In sum, the Court reiterated that the quantum of proof in labor cases is substantial evidence or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The burden of proof rests upon the party who asserts the affirmative of an issue. In the present case, the Supreme Court found that Albina and her group utterly failed to establish with substantial evidence their supposed employment relationship with Abelardo. The Supreme Court concluded that their case for illegal dismissal cannot prosper absent employment relationship between the parties.

    The Supreme Court thus granted Abelardo’s petition and reinstated the Decision of the National Labor Relations Commission.

    Further reading:

    • Salazar v. Simbajon, G.R. No. 202374, June 30, 2021.

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  • But Their Services were Coterminous with Their Assigned Projects

    The employees in this case were hired on various dates by Sigma Construction and Supply (Sigma Construction), an independent contractor owned by Eduardo. As cement cutters, the said employees were assigned to work at the drilling site of Philippine Geothermal, Inc. (Philippine Geothermal), beginning in April 1990.

    However, Philippine Geothermal preterminated one of its contracts with Sigma Construction on April 1, 1993. Due to such termination, the project manager of Sigma Construction issued a notice to all cement cutters, informing them that the contract with Philippine Geothermal will be effective only until April 30, 1993.

    The employees filed a complaint for illegal dismissal against Sigma Construction and Philippine Geothermal. They argued that they were regular employees of Sigma Construction because they were continuously hired and assigned to different Philippine Geothermal projects from the beginning of their employment in 1990 until their recent termination in 1993. The employees added that they were even transferred to other projects prior to the completion of a previously assigned project and they also cleaned canals and pipes, fixed tools, and other related work at Philippine Geothermal.

    Eduardo alleged that Sigma Construction was an independent contractor that hired project employees to work on its projects with Philippine Geothermal. In support of this stand, Eduardo presented Sigma Construction’s Service contracts with Philippine Geothermal. According to Eduardo, when Philippine Geothermal preterminated its latest contract with Sigma Construction, the latter was forced to dismiss its employees from employment their services were coterminous with Sigma Construction’s projects with Philippine Geothermal. Eduardo posited that it would be unjust to require Sigma Construction to retain employees in the absence of projects with Philippine Geothermal.

    Are the employees here project employees of Sigma Construction?

    The Supreme Court held that said employees were not project employees, but were regular employees of Sigma Construction.

    The Court stated that the principal test in determining whether an employee is a project employee is whether he/she is assigned to carry out a “specific project or undertaking,” the duration and scope of which are specified at the time the employee is engaged in the project, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring.

    In the present case, the Court found no proof that the employees’ engagement as project employees had been predetermined, as required by law. There was no showing that the employees were informed that they were to be assigned to a “specific project or undertaking” upon their hiring. No employment contracts for the specific project signed by the employees were presented.

    The Court pointed out that Eduardo only presented Sigma Construction’s Service Contracts with Philippine Geothermal. According to the Court, nowhere in the contracts did it show that employees were parties to such contract. More importantly, the said documents did not prove that employees were hired for the projects with Philippine Geothermal.

    For the Court, the presentation of service contracts between Sigma Construction and Philippine Geothermal (even if it showed the duration of the project), in lieu of the employees’ individual employment contracts, did not establish that the latter were project employees.

    Further reading:

    • Jovero v. Cerio, G.R. No. 202466, June 23, 2021.

  • Stubborn Unwillingness to Return to Work

    In October 1988, Jose was employed as a security guard by Twinstar Professional Protective Services, Inc. (Twinstar). He was deployed at the Las Haciendas in Tarlac City.

    Sometime in January 2011, Jose sought assistance from the program of a certain Mr. Tulfo to complain about the underpayment of his salaries. On January 24, 2011, Twinstar directed Jose to report to its office in Quezon City. Jose stated that upon reporting to the office the next day, Twinstar informed him that he was being placed on floating status. Jose also stated that his floating status lasted for more than six (6) months.

    This was why he filed a complaint for illegal dismissal against Twinstar.

    The Office of the Labor Arbiter held that Jose was constructively dismissed from employment. The National Labor Relations Commission reversed the ruling of the Office of the Labor Arbiter and held that no constructive dismissal took place. The Court of Appeals affirmed the decision of the National Labor Relations Commission.

    Was Jose constructively dismissed from employment?

    The Supreme Court ruled in the negative.

    Jurisprudence teaches that 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.”

    However, the Court emphasized that “not every inconvenience, disruption, difficulty, or disadvantage that an employee must endure sustains a finding of constructive dismissal.” What is vital is the weighing of the evidence presented and a consideration of whether, given the totality of circumstances, the employer acted fairly in exercising a prerogative.

    In the present case, the Court found that Jose failed that he was constructively dismissed by Twinstar. According to the Court, Jose never presented any evidence, aside from his self-serving allegations, that he was forced to be on floating status for more than six (6) months without being given new assignment by Twinstar.

    On the other hand, the Court found that Twinstar was able to establish that Jose went on absence without leave on or about January 21, 2011 and that it had subsequently sent several notices directing Jose to report for work. The Court also found that Twinstar’s duty officer vainly tried to contact Jose by calling him and sending text messages. Also Twinstar’s field inspector attempted to deliver a company letter on June 8, 2011 but Jose refused to receive the same. Furthermore, the Court discovered that Jose himself admitted declining the assignment offered to him by Twinstar within six (6) months from the time he was placed on floating status in the hearing dated October 18, 2011 before the Office of the Labor Arbiter. According to the Court, Jose’s flimsy claim that he did not understand the question of the Office of the Labor Arbiter and the Minutes of the said hearing, as both were in the English language, would seem like a desperate attempt to feign ignorance in order to retract such statements. The Court stated that Jose had all the opportunity to request the Office of the Labor Arbiter to translate the question and the Minutes to a language he understood, but he chose not to. The Court pointed out that Jose himself indicated in his bio-data that English is one of the languages he can speak and write.

    For the Court, the totality of circumstances led it to conclude that no constructive dismissal happened. Instead, the circumstances revealed Jose’s stubborn unwillingness to return to work despite being required by Twinstar to report to work multiple times within six (6) months from January 21, 2011.

    Thus, this Court ruled that Twinstar had just cause to terminate Jose’s employment.

    Further reading:

    • Dela Torre v. Twinstar Professional Protective Services, Inc., G.R. No. 222992, June 23, 2021.

  • An Employer’s Last Resort

    In 1990, Cathay Pacific Airways Limited (Cathay) hired Salvacion as cabin crew. On May 19, 2007, Cathay received a report that Salvacion and other crew members were caught in possession of goods, specifically bottled water and magazines, after alighting from the aircraft.

    After receiving a written explanation from Salvacion, Cathay terminated her services effective immediately for committing serious misconduct by removing company property without authorization. According to Cathay, it could no longer repose its trust and confidence on Salvacion considering the seriousness of her violation.

    Hence, Salvacion instituted a complaint for illegal dismissal against Cathay.

    Was Salvacion validly dismissed on the ground of loss of trust and confidence?

    No. The Supreme Court ruled that Salvacion was illegally dismissed from employment.

    The Court explained that Salvacion’s termination was not commensurate to the infraction committed.

    There is loss of trust and confidence when an employee fraudulently and willfully committed acts or omission in breach of the trust reposed in her/him by the employer. Two requisites must be complied with to justify this ground for termination. First, the employee must be holding a position of trust, and second, the employer shall sufficiently establish the employee’s act that would justify loss of trust and confidence. The act must be characterized as real wherein the facts that brought about such act were clearly established, and that the employee committed the same without any justifiable reason.

    Cathay has complied with the two aforementioned requisites for loss of trust and confidence.

    The Court declared that Salvacion’s position was imbued with trust and confidence.

    The Court then found that the nature of Salvacion’s duties and obligations required the highest degree of trust and confidence because she had in her control properties of Cathay. In this regard, the Court held that Salvacion’s position was imbued with trust and confidence. According to the Court, she had in her custody and control company properties which are of significant value, and she also had the responsibility of informing the In-flight Service Manager whether there was defective or missing equipment. Moreover, she had oversight over two to four cabin crew members assigned in her section of the aircraft and rated their performance for promotion purposes. She had been entrusted with the custody and control of valuable company properties in the normal and routine exercise of her duties.

    Likewise, the Court ruled that the airline clearly demonstrated that Salvacion committed an infraction of company policy that breached its trust and confidence on her. Said the Court, pilferage of company property is an act characterized by fraud or dishonesty which may be meted with summary dismissal as specifically provided in Cathay’s Disciplinary & Grievance Policy,

    The Court stated that Cathay attached a confirmation from the bottled water brand that the batch number of the Evian water confiscated from Salvacion belonged to the batch of bottled water that was exclusively shipped to Cathay. This certainly established that the bottle of water confiscated from her was Cathay’s property. Admittedly, Salvacion transgressed Cathay’s Disciplinary and Grievance Policy by taking out the bottle of water without authorization.

    The Court stressed that Salvacion’s infraction was clearly a case of misconduct considering that it is “a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” It evidently eroded Cathay’s trust and confidence in her.

    However, the Court also considered that this was Salvacion’s first infraction in her 17 years of service in the airline which involved a mere bottle of water.

    Thus, although Cathay had laid down penalties for violation of its policies, the Court cautioned that all surrounding circumstances must be considered and the penalty must be commensurate to the violation committed by an employee. Termination of the services of an employee should be the employer’s last resort especially when other disciplinary actions may be imposed, considering the employee’s long years of service in the company, devoting time, effort and invaluable service in line with the employer’s goals and mission, as in Salvacion’s case.

    In the present case, the Court found that during Salvacion’s span of employment, she did not commit any infraction or was ever sanctioned except in the incident subject of the present controversy. In this regard, the Court stated that to impose a penalty as grave as dismissal for a first offense and considering the value of the property allegedly taken would be too harsh under the circumstances. The Court accordingly concluded that Salvacion was illegally dismissed from service.

    Further reading:

    • Lamadrid v. Cathay Pacific Airways Limited, G.R. No. 200658, June 23, 2021.

  • Employee Quitclaims vis-à-vis Nominal Damages

    In October 1988, Twinstar Professional Protective Services, Inc. (Twinstar) employed Jose as a security guard and deployed him at the Las Haciendas in Tarlac City.

    In January 2011, Jose sought help from a program to complain about the underpayment of his salaries. On January 24, 2011, Twinstar directed Jose to report to its office in Quezon City. Jose stated that upon reporting to the office the next day, Twinstar informed him that he was being placed on floating status. Jose also stated that his floating status lasted for over six (6) months.

    This was why he filed a complaint for illegal dismissal against Twinstar.

    Twinstar failed to file a position paper.

    The Office of the Labor Arbiter then ruled that Twinstar illegally dismissed Jose from employment, which prompted Twinstar to file an appeal.

    The National Labor Relations Commission applied the rules liberally; allowed Twinstar to present evidence on appeal; granted the same; and reversed the decision of the Office of the Labor Arbiter.

    The Commission found that Twinstar had just cause to dismiss Jose from employment because Jose went on unauthorized leave of absence and was unwilling to return to duty.

    However, the Commission also found that Twinstar failed to observe the requirements of procedural due process in the termination of Jose’s employment. Despite such finding, the Commission did not direct Twinstar to pay nominal damages because of the effects of the quitclaim executed by Jose on March 3, 2012.

    The Court of Appeals ruled that the Commission did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in allowing Twinstar to present its evidence for the first time on appeal; in ruling that Jose was not illegally dismissed; and in considering his quitclaim as valid.

    In upholding the validity of the quitclaim, the Court of Appeals ruled that the same erased the infirmities in the notice of termination, which consequently meant that it could not impute abuse of discretion upon the Commission in not awarding nominal damages.

    The totality of circumstances led the Supreme Court to conclude that no constructive dismissal happened. Instead, the circumstances revealed Jose’s stubborn unwillingness to return to work despite being required by Twinstar to report for work multiple times within six (6) months from January 21, 2011.

    Thus, the Court ruled that Twinstar had just cause to terminate Jose’s employment.

    However, the Court also found that Twinstar failed to provide Jose with an ample chance to explain and be heard on the allegations against him. For the Court, this necessitated an award of nominal damages to the latter.

    In this regard, the Court ruled that it was erroneous for the Commission and the Court of Appeals to not award nominal damages because of the existence of the quitclaim executed by Jose on March 3, 2012.

    The Court reiterated the standards that must be observed in determining whether a waiver and quitclaim has been validly executed. Said the Court:

    Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction.

    In the present case, while the Court considered the quitclaim valid for complying with all the requisites stated above, it stressed that the stipulations in such quitclaim must still be interpreted within the bounds of law and reason. A waiver/quitclaim is a contract by nature, and thus, following the rule that the law is deemed written into every contract, the stipulations therein must be interpreted with this in mind.

    According to the Court, Jose’s statement in the quitclaim that he had “no more claim, right or action of whatsoever nature whether past, present or contingent against the said respondent and/or its officers” did not include the illegal dismissal case. This is because the legality of an employee’s dismissal is determined by law, and it is the Office of the Labor Arbiter that has the original and exclusive jurisdiction to determine such a case.

    The Court added that while an employee may indeed accept his dismissal and agree to waive his claims or right to initiate or continue any action against his employer, both parties do not have the jurisdiction or authority to determine the legality of such termination; such question of law is still subject to the final determination of the competent labor tribunals and courts, as the case may be. It follows then that the award of nominal damages, which by its nature, arises from the determination of a violation of the employee’s rights in an illegal dismissal case, cannot be deemed to be covered by the quitclaim.

    The Court stressed that nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

    The Court further stated that any quitclaim or agreement executed by the parties, as with all contracts, must not be contrary to law or public policy. It is apparent that the public policy in the stiffer imposition of nominal damages is to discourage the abhorrent practice of dismiss now, pay later.

    The Court then explained that if it were to allow the quitclaim to cover nominal damages, this will promote, either advertently or inadvertently, the practice of dismiss now, pay later, which would obviously run afoul to the public policy behind the imposition of such nominal damages in the first place.

    For the Court, regardless of the quitclaim, Jose was entitled to an award of P30,000.00 as nominal damages.

    Further reading:

    • Dela Torre v. Twinstar Professional Protective Services, Inc., G.R. No. 222992, June 23, 2021.