Tag: #GetThatBar2022

I Didn’t Report for Work Because You Failed to Answer My Query

In 2002, respondent company GRRI hired Neren as a part-time employee in its resort, LLB Resort and Spa. She became a regular employee on 1 February 2003, and was eventually promoted as head of the Housekeeping Department in 2005 and as head of the Front Desk Department in 2008.

Sometime in 2013, Neren was charged with and found guilty of violating company policies, i.e., abuse of authority, when she rejected walk-in guests without management approval, and threat to person in authority, when she threatened the assistant resort manager with physical harm. Neren was meted the penalty of seven days suspension without pay, subject to the agreement that Neren would be under strict performance monitoring and that any further violation which would warrant suspension would be elevated to immediate dismissal. After serving her suspension, Neren resumed her task.

In March 2014, GRRI implemented a reorganization in LLB Resort and Spa and issued a Notice to Transfer to Neren. Through the Notice to Transfer, she was informed of the reorganization within LLB Resort and Spa and was advised that she would be laterally transferred from the Reception Department to the Storage Department without diminution in rank and benefits.

However, Neren refused to sign the Notice to Transfer and remained at the reception area for two days before reporting to her new station on 4 March 2014. Neren also sent an e-mail addressed to GRRI on 9 March 2014 asking questions regarding her transfer.

On 10 March 2014, a Memorandum was issued to Neren directing her to explain within 24 hours from notice why she should not be penalized for insubordination for her repeated failure to sign the Notice to Transfer. In her handwritten letter dated 11 March 2014, Neren explained that she refused to sign the Notice to Transfer pending answers to the questions she sent to GRRI via e-mail.

GRRI also issued Neren a Notice of Preventive Suspension on 14 March 2014 placing her under preventive suspension until 21 March 2014 pending resolution of the charge against her.

Neren, however, failed to report back to work after the lapse of the period of her preventive suspension on 22 March 2014 until 26 March 2014. Thus, on 26 March 2014, GRRI’s Human Resource (HR) department issued Neren another Memorandum directing her to report to the HR department within 24 hours and to explain her absences without leave.

Upon reporting thereat, Neren was handed a Termination Notice dated 21 March 2014 advising her that GRRI found her guilty of:

“inhuman and unbearable treatment to person in authority; abuse of authority; serious misconduct — insubordination by not accepting her memorandum of re-assignment by the Executive Committee; and
gross and habitual neglect of duties — AWOL”

Can Neren’s employment be terminated on the ground of insubordination for her failure to sign the Notice to Transfer?

No.

In an illegal dismissal case, the onus probandi rests on the employer to prove that the employee’s dismissal was for a valid cause. A valid dismissal requires compliance with both substantive and procedural due process — that is, the dismissal must be for any of the just or authorized causes enumerated in Article 297 ¹ and Article 298 ², respectively, of the Labor Code of the Philippines, and only after notice and hearing³.

Insubordination or willful disobedience requires the concurrence of the following requisites: (1) the employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude”; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.⁴

The Supreme Court ruled that both requirements were not present in this case.

The Court found that as stated by Neren in her handwritten explanation, she withheld her signature on the Notice to Transfer because she was awaiting answers to the questions she raised to GRRI via e-mail. She could not be forced to affix her signature thereon if she did not really fully understand the reasons behind and the consequences of her transfer. While her action was willful and intentional, it was nonetheless far from being “wrongful and perverse.” The Court added, respondents failed to prove that there was indeed an order or company procedure requiring a transferee’s written conformity prior to the implementation of the transfer, and that such order or procedure was made known to Neren.

Given the foregoing, there was no basis to dismiss Neren on the ground of insubordination for her mere failure to sign the Notice to Transfer.

Was there cause to terminate Neren’s employment on the ground of gross and habitual neglect for her absences without leave from 22 to 26 March 2014?

No, because the Court found that Neren’s four-day absence without leave could not be characterized as gross and habitual neglect of her duties.

Jurisprudence⁵ provides that in order to constitute a valid cause for dismissal, the neglect of duties must be both gross and habitual. Gross negligence has been defined as “the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.” On the other hand, habitual neglect “imparts repeated failure to perform one’s duties for a period of time, depending on the circumstances.” A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.

Since the above-mentioned grounds failed to justify Neren’s dismissal from employment, should such dismissal be declared illegal?

No, because the Court, nonetheless, found that Neren’s absences from 22 to 26 March 2014 were still without justification. Therefore, while there may be no basis to dismiss her on the grounds of insubordination and gross and habitual neglect, Neren was still guilty of having committed a violation. For the Court, the principle on totality of infractions may thus be considered in determining the imposable sanction for her current infraction.

Under jurisprudence⁶, the totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee.

The Court said that the offenses committed by Neren should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. While it may be true that Neren was penalized for his previous infractions, this did not and should not mean that her employment record would be wiped clean of her infractions. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee’s past misconduct and present behavior must be taken together in determining the proper imposable penalty. Despite the sanctions imposed upon Neren, she continued to commit misconduct and exhibit undesirable behavior on board. Indeed, the employer could not be compelled to retain a misbehaving employee, or one who was guilty of acts inimical to its interests. It had the right to dismiss such an employee if only as a measure of self-protection.

In the present case, Neren alleged that she did not report back to work after serving her preventive suspension because GRRI did not reply to her query as to when she needed to report. However, the Court ruled that this reasoning did not justify her absences. The Notice of Preventive Suspension served on her clearly stated that the period of her preventive suspension was from 14 to 21 March 2014. Thus, she was expected to report back to work on her next working day. The Court noted that GRRI had already previously warned Neren that the penalty for her next infraction would be elevated to dismissal. For the Court, the dismissal of Neren, on the basis of the principle of totality of infractions, was justified.

What consequence does this new finding have insofar as procedural due process is concerned?

The Court ruled that Neren’s dismissal could be said to suffer from procedural lapses.

Jurisprudence⁷ has delineated the requirements of procedural due process for termination of employment, viz.:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. [297] is being charged against the employees.

In the present case, GRRI failed to observe the foregoing requirements, as follows:

While the Termination Notice cited four grounds for Neren’s dismissal, the Memorandum dated 10 March 2014 only charged Neren with insubordination for her refusal to sign the Notice to Transfer.
Neren was only given 24 hours to submit an explanation.
No administrative hearing was held, or even scheduled.
The Termination Notice already cited Neren’s absences without leave as ground for her dismissal even before she was even given any opportunity to be heard.

The Court ruled that Neren should be awarded nominal damages.

IDs, Uniforms, and Vague Affidavits

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

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

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

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

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

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

Was Arnulfo an employee of Ernesto?

The Supreme Court ruled in the affirmative.

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

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

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

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

The Court reiterated its ruling in Masonic Contractor, Inc. v. Madjos¹ in that it is common practice for companies to provide identification cards to individuals not only as a security measure, but more importantly to identify the bearers thereof as bona fide employees of the firm or institution that issued them. The provision of company-issued identification cards and uniforms, said the Court, indubitably constitutes substantial evidence sufficient to support the existence of the employment relation.

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

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

Moreover, the Court stated when Ernesto denied that Arnulfo was his employee but alleged that the latter rendered services as Cirilo’s employee, Ernesto effectively admitted the substantial fact that Arnulfo has been rendering butchering services for several years. The Court considered such denial as negative pregnants² which acknowledged that Ernesto indeed employed Arnulfo.

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

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

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

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

Was Arnulfo illegally dismissed from employment?

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

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

The Court ruled that Noelberto’s silence on this matter was deemed as an admission by Ernesto that Arnulfo was indeed dismissed on July 22, 2014.³

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

Considered Neither the Intent Nor the Origin of the Gift

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

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

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

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

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

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

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

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

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

Did PTC validly dismiss Alvin from employment?

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

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

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

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

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

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

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

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

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

The Court stated that company policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must be complied with until finally revised or amended.¹ Furthermore, a company’s management prerogatives shall be upheld so long as they are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.² In this regard, the Court ruled that the dismissal of Alvin which hinged on a provision that prescribed dismissal even on the first instance of violation, should therefore be upheld.

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

We Validly Placed Our Employee on Floating Status

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

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

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

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

Airborne insisted that Arnulfo was never dismissed from service because:

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

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

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

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

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

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

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

Ruling:

Arnulfo was constructively dismissed from employment.

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

To give semblance of legality to their act of not giving him an assignment, Airborne sent him two (2) letters with an incomplete address after the filing of the constructive dismissal complaint. The sending of the letters were products of afterthought. However, an “[a]fterthought cannot be given weight or credibility.”¹

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

On Airborne’s claim that Arnulfo was only placed on floating status under Article 301 of the Labor Code of the Philippines².

Jurisprudence³ dictates that:

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

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

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

Jurisprudence⁴dictates that constructive dismissal is a dismissal in disguise as it is an act amounting to dismissal but made to appear as if it were not.

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

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

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

A Long-Standing Practice

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

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

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

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

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

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

Was Quintin entitled to retirement benefits?

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

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

The Court then discussed Article 100² of the Labor Code of the Philippines. According to the Court, the said Article expressly prohibits the elimination or reduction of benefits received by employees. However, the basis for the grant of said benefit must be shown through an express policy, written contract, or an unwritten policy that has ripened into a company practice. To be considered a practice, it must be consistently and deliberately made by the employer over a significant period of time.³ The Court added that it has not defined what constitutes a “significant period of time.” Jurisprudence⁴ explains that the matter is decided according to the peculiar facts and circumstances of each case, the common denominator of which is the regularity and deliberateness of the grant of benefits over a significant period of time.

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

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

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

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

Filing a Strike Notice to Conceal the Illegality of the Strike

Bigg’s, Inc. (Bigg’s) operates a restaurant chain with headquarters in Naga City, Camarines Sur.

Bigg’s Employees Union (union) was formed by its employees and was granted a Certificate of Registration by the Department of Labor and Employment on January 30, 1996.

Bigg’s Version of the Events

Bigg’s claimed that on February 16, 1996, approximately fifty (50) union members staged an illegal “sit-down strike”¹ in its restaurant.

Bigg’s stated that the union failed to file a notice of strike and conduct a strike vote. Bigg’s further stated that the union belatedly filed a notice of strike with the National Conciliation and Mediation Board on the same day of February 16, 1996 to cover up the illegality of the sit-down strike.

Bigg’s also stated that it issued to the striking union members a memorandum which placed them under preventive suspension and required them to explain their actions within twenty four (24) hours from receipt of the same. Bigg’s claimed that since the union members did not comply with its order, it sent the said union members their employment termination letters on February 19, 1996.

According to Bigg’s, it filed a complaint for illegal strike against the union members before the National Conciliation and Mediation Board.

Union’s Version of the Events

On the other hand, the union members accused Bigg’s of interfering with their union activities.

They stated that in February 1996, Bigg’s asked them to withdraw their union membership under threat of losing their employment.

They further stated that in the same month, Bigg’s dismissed two (2) employees from service due to their union membership.

They also stated that on February 16, 1996, the union president and other union members, were prevented from entering Bigg’s premises.

According to the union members, they filed a Notice of Strike with the National Conciliation and Mediation Board on the same day of February 16, 1996. When they attempted to return to work on the next day, they were instructed to obtain their respective memoranda from the main office in Naga City. They discovered that the memoranda informed them of their suspension from work for participating in a sit-down strike. Some union members tried to talk with Bigg’s management, but they were told not to report for work the next day.

The union members thus filed a complaint for unfair labor practices, illegal dismissal, and damages against Bigg’s before the National Conciliation and Mediation Board.

The National Conciliation and Mediation Board consolidated the two complaints and conducted mediation proceedings.

When mediation reached an impasse, the union went on strike on March 5, 1996.

Bigg’s claimed that during the strike on March 5, 1996, the union members:

1) committed violence and disruptions;

2) prevented ingress and egress of employees and customers to and from its premises;

3) stopped Bigg’s vans from making deliveries;

4) threw stones at the vans;

5) injured the driver;

6) damaged its vehicles and guardhouse; and

7) discouraged people from going to Bigg’s Diner.

The strike ceased when both parties agreed to compulsory arbitration.

Were the strikes held on February 16, 1996 and March 5, 1996 illegal?

The Supreme Court ruled that both strikes were illegal.

Requirements of a Valid Strike

The Court discussed established principles as follows:

Strike, Concept

A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute.²

Procedural Requirements

Article 278³ of the Labor Code of the Philippines, lays down the procedural requirements depending on the ground of the strike.⁴ This provision was further implemented by Department of Labor and Employment Order No. 40-03⁵ and Department of Labor and Employment Order No. 40-A-03⁶ which amended Book V of the Implementing Rules of the Labor Code of the Philippines.

Grounds

The Labor Code of the Philippines and its implementing rules limit the grounds for a valid strike to:

1) a bargaining deadlock in the course of collective bargaining, or

2) the conduct of unfair labor practices by the employer.⁷

Who Can Declare a Strike

Only a certified or duly recognized bargaining representative may declare a strike in case of a bargaining deadlock. However, in cases of unfair labor practices, the strike may be declared by any legitimate labor organization.⁸

Strike Vote

In both instances, the union must conduct a “strike vote” which requires that the actual strike is approved by majority of the total union membership in the bargaining unit concerned.

Strike Vote Report

The union is required to notify the regional branch of the National Conciliation and Mediation Board of the conduct of the strike vote at least twenty four (24) hours before the conduct of the voting. Thereafter, the union must furnish the National Conciliation and Mediation Board with the results of the voting at least seven (7) days before the intended strike or lockout.⁹

Jurisprudence teaches that this seven-day period has been referred to as the “seven-day strike ban”¹⁰ or the “seven-day waiting period”¹¹ and such period is intended to give the National Conciliation and Mediation Board an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.¹²

Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Bargaining Deadlock

In a strike due to bargaining deadlocks, the union must file a notice of strike with the regional branch of the National Conciliation and Mediation Board at least 30 days before the intended date of the strike and serve a copy of the notice on the employer. This is the so-called “cooling-off period” when the parties may enter into compromise agreements to prevent the strike.

Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Unfair Labor Practice

In case of unfair labor practice, the period of notice is shortened to 15 days in that the union must file a notice of strike with the regional branch of the National Conciliation and Mediation Board at least 15 days before the intended date of the strike.

In Cases of Union Busting

In case of union busting, the “cooling-off period” does not apply ¹³ and the union may immediately conduct the strike after the strike vote and after submitting the results thereof to the regional arbitration branch of the National Conciliation and Mediation Board at least seven (7) days before the intended strike.¹⁴

Strike Grounded on Unfair Labor Practice

According to the Court, in a strike grounded on unfair labor practice, the following are the requirements:

1) a strike declared by the duly certified bargaining agent or legitimate labor organization;

2) the conduct of the strike vote in accordance with the notice and reportorial requirements to the National Conciliation and Mediation Board and subject to the seven-day waiting period; and

3) the notice of strike filed with the National Conciliation and Mediation Board and copy furnished to the employer, subject to the 15-day cooling-off period. The Court restated that in cases of union busting, the 15-day cooling-off period shall not apply.

The Union Conducted an Illegal Sit-down Strike on February 16, 1996

A Sit-down Strike Occurred on February 16, 1996

With regard to the first strike conducted by the union members on February 16, 1996, the Court found substantial evidence proving that the union staged a “sit-down strike.” Specifically, The Court considered the affidavits executed by certain Bigg’s employees deposing that the union members conducted a sit-down strike on February 16, 1996. These employees consistently narrated that in the morning of February 16, 1996, union members refused to do their jobs despite having directed to do so.

Union Did Not File a Notice of Strike And Failed to Observe Cooling-off Period

The Court further found that the union failed to file the requisite Notice of Strike and likewise failed to observe the cooling-off period. According to the Court, in an effort to legitimize the strike on February 16, 1996, the union filed a Notice of Strike on the same day. The Court said that this cannot be considered as compliance with the requirement, as the cooling-off period is mandatory. The cooling-off period is not merely a period during which the union and the employer must simply wait. The purpose of the cooling-off period is to allow the parties to negotiate and seek a peaceful settlement of their dispute to prevent the actual conduct of the strike. In other words, the Court said, there must be genuine efforts to amicably resolve the dispute.

Ground of Unfair Labor Practice Was Not Proven

Moreover, the Court found no proof that Bigg’s was guilty of unfair labor practice as defined under Article 259¹⁵ of the Labor Code of the Philippines to allow the union, a non-certified bargaining agent to initiate the strike.

Union Busting Was Also Not Proven

Likewise, the Court found that the union failed to prove the presence of union busting¹⁶ to exempt it from compliance with the cooling-off period. The union did not present any substantial evidence to prove its allegations that union members were actually dismissed or threatened with dismissal for their union membership.

For the Court, the union’s failure to comply with mandatory requirements rendered the strike on February 16, 1996 illegal.

The Strike on March 5, 1996 Was Illegal Despite Compliance with Procedural Requirements

With regard to the strike conducted on March 5, 1996, the Court found that the union complied with the procedural requirements of a valid strike. However, it was established that the striking union members committed acts of violence, aggression, vandalism, and blockage of the free passage to and from Bigg’s premises.

Specifically, the Court considered an audio-video footage showing the union members’ acts of violence, aggression, and prevention of ingress to and egress from the premises of Bigg’s. Furthermore, it considered the undisputed facts that the union members:

1) formed a human barricade and prevented delivery vehicles from passing through Bigg’s gates;

2) placed three big stones along the gate entrance to keep the vehicles from exiting the premises; and

3) flung stones at another van while it was on its way out of the area.

Said the Court, while the law protects the right of workers to engage in concerted activities for the purpose of collective bargaining or to seek redress for unfair labor practices, this right must be exercised in accordance with the law, specifically Article 279¹⁷ of the Labor Code of the Philippines which prohibits any person engaged in picketing from committing any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares.

For the Court, the strike conducted on March 5, 1996 was illegal.

Were the union officers and members validly dismissed?

The Court reiterated principles relating to Article 279¹⁸ of the Labor Code of the Philippines in that for union members, what is required is that they knowingly participated in the commission of illegal acts during the strike for there to be sufficient ground for termination of employment. For union officers, however, it suffices that they knowingly participated in an illegal strike.

Dismissal of the Union President Valid

In the present case, the Court, found that the union president not only knowingly participated, but also was the one who principally organized the two (2) illegal strikes on February 16, 1996 and March 5, 1996. For the Court, the dismissal of the union president and the other union officers after the illegal strike on February 16, 1996 as well as the March 5, 1996 strike was valid.

Union Members Who Did Not Participate in Any Prohibited Act During the Strikes, Dismissal Invalid

However, the Court clarified that as to the union members who did not participate in any prohibited act during the strikes, their dismissal was invalid.

Awards

Such employees were awarded separation pay as prayed for by Bigg’s. The Court said that considering that twenty three (23) years have passed since the dismissal of the union members on February 19, 1996, and bearing in mind Bigg’s manifestation that it could no longer trust the striking employees especially as it is in the food service industry, separation pay may be more appropriate in lieu of reinstatement.¹⁹

The relief of backwages was, however, not awarded said employees, consistent with jurisprudence which dictates that backwages are not granted to dismissed employees who participated in an illegal strike even if they are later reinstated.²⁰

But He Only Performed “Non-Core” Functions

Marvin executed a Service Contract dated September 9, 2010 with Generation One Resource Service and Multi-Purpose Cooperative (Generation One) and assigned to work as a counter crew and cashier of its client, Southgate Foods, Inc. (Southgate), the owner of a Jollibee franchise located in Alphaland Southgate Mall, Makati City (Jollibee Alphaland). Generation One and Southgate had a Service Agreement where the former was to provide “specified non-core functions and operational activities” for the latter’s Jollibee Alphaland branch. Prior to his employment in Generation One, Marvin was directly employed by Southgate from March 12, 2010 to August 26, 2010 as counter crew.

Later, Marvin filed a complaint for illegal dismissal against Generation One and Southgate. The latter alleged, among others, that they had a legitimate contracting arrangement and that their Service Agreement was valid.

The labor tribunals ruled that Generation One was a legitimate contractor, having been a registered cooperative with substantial capital, investment, or equipment to perform its business. Said tribunals also ruled that Generation One had its own office where its members met and conducted activities.

The Court of Appeals held that Generation One was a legitimate contractor as it was issued a Certificate of Registration by the Department of Labor and Employment. The Court of Appeals also found that the Service Agreement between Generation One and Southgate clearly stated that the former was to provide specific non-core functions and operational activities which included management and supervision of the food chain system, assistance in food preparation and quality control, cleaning of the dining area, comfort room, and other areas of the restaurant, assistance in cash control activities and warehouse and utilities management.

Marvin filed a petition with the Supreme Court to assail, among others, the finding of legitimate contracting between Generation One and Southgate.

Was Generation One a legitimate contractor?

The Court ruled in the negative. It considered Generation One as a labor-only contractor.

The Court first stated that outsourcing of services is not prohibited in all instances. The rules¹ relevant to the case provided that legitimate contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. The principal refers to any employer who puts out or farms out a job, service or work to a contractor or subcontractor.

The Court then cited relevant rules on the prohibition against labor-only contracting, which describes the arrangement as one where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal, and any of the following elements is present:

The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or
The contractor does not exercise the right to control over the performance of the work of the contractual employee.

The Court stated that based on the foregoing rules, a factor in determining whether there is labor-only contracting is the nature of the employee’s job, i.e., whether the work he performs is necessary and desirable to the business of the principal. Another factor is the ownership of substantial capital in the form of tools, equipment, machinery, work premises, and other properties by the contractor.

In the present case, the Court disagreed with the assertion that Marvin performed “non-core” functions or peripheral activities. According to the Court, the assertion was simply preposterous and contrary to the basic business model of a fast food restaurant. Instead, the Court found that Marvin’s cash control activities which involved order-taking, food-assembling, receiving payments, and giving change were necessary and desirable to the business of a fast food restaurant, such as the franchise owned by Southgate.

Furthermore, the Court disagreed with the labor tribunals’ findings that Generation One was able to prove that it had substantial capital.

The Court found that Generation One’s Income Tax Return for the year ended December 2010 showing a gross income of around P9.5 million was hardly substantial evidence to prove substantial capitalization because the same was not submitted to the Bureau of Internal Revenue. The Court also found that Generation One only submitted the Notes to the Audited Financial Statements for the year ended 2010, and not the actual Audited Financial Statements itself. For the Court, the said Notes failed to show a complete picture of its financial standing.

The Court then ruled that the Certificate of Registration relied upon by the Court of Appeals was not conclusive evidence of legitimate contracting status. According to the Court, registration with Department of Labor and Employment as an independent contractor does not automatically vest status of a legitimate contractor; it is merely presumptive proof. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.²

With regard to control, the Court noticed that Southgate took it upon itself to discipline Marvin for an alleged violation of its company rules, regulations, and policies. For the Court, this validated the presence of its right to control Marvin. The Court also looked into Marvin’s Service Contract and discovered that his work responsibilities were to be specified at the designated place of assignment. This suggested that the right to determine not only the end to be achieved, but also the manner and means to achieve that end, was reposed in Southgate.

Finally, it did not accept the reliance by the Court of Appeals on the provision in the Service Agreement between Generation One and Southgate which stated the absence of an employment relation between Southgate and the employees of Generation One. The reason was that the character of the business, whether as labor-only contractor or as a job contractor, should be determined by the criteria set by statute and the parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business.³

The Court stated that in distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. Here, the Court found that ruled that the badges of labor-only contracting were too blatant to ignore.

With the finding that Generation One was a labor-only contractor, the Court applied the rule that the principal shall be deemed the employer of the contractual employee where there is labor-only contracting. Marvin was thus declared to be a regular employee of Southgate.

Supervening Events Made It Impossible for Me to Reinstate My Employee

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

Furthermore, the Court found that Consolidated Distillers of the Far East, Inc. (Consolidated Distillers), or Rogel’s employer, no longer questioned the propriety of the awards of separation pay and backwages, as it only took issue with their computation. Specifically, the Court found that Consolidated Distillers argued that it should only be liable for separation pay and backwages until the year 2007 in view of the execution of the Asset Purchase Agreement and the termination of the subsequent Service Agreement it had with Emperador Distillers, Inc. (Emperador Distillers). For Consolidated Distillers, these were supervening events that caused the impossibility of Rogel’s reinstatement, as his position became inexistent as of 2007, consistent with the ruling of the Court in Olympia Housing, Inc. v. Lapastora¹

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

The Court ruled in the negative.

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

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

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

notice to the Department of Labor and Employment;
notice to the employees; and
financial statements substantiating its claim that it was operating at a loss.

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

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

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

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

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

Employment Status the Day Before the Occurrence of the Strike or Lockout

The employer here found a need to improve its selling and distribution system if it wanted to remain viable and competitive in the business. Thus, it decided to implement a new cost-effective and simplified scheme of selling and distributing its products, that, in turn, led to a separation of twenty seven (27) rank-and-file, regular employees and union members on the ground of redundancy.

The employer claimed that prior to the termination of employment, it had made a careful study of how to be more cost effective in operations and competitive in the business. It recognized in the process that its multi-layered selling and distribution system had to be simplified. Thus, it determined that the phasing out of said system was necessary which, however, resulted in the termination of employment of certain employees as their positions have become redundant.

On May 29, 2009, the employer issued notices of termination to twenty seven (27) rank-and-file, regular employees and members of the union on the ground of redundancy due to the ceding out of its selling and distribution systems to the Market Execution Partners. The termination of their employment was made effective on June 30, 2009, but the union members were no longer required to report for work as they were put on leave of absence with pay until the effectivity date of termination. The union members were also granted individual separation packages, which many of them accepted, but under protest.

The union asserted that the new selling and distribution system adopted and implemented by the employer would result in the diminution of the union membership amounting to union busting and to a violation of the Collective Bargaining Agreement provision against contracting out of services or outsourcing of regular positions. Thus, they filed a Notice of Strike with the National Conciliation and Mediation Board on June 3, 2009 on the ground of unfair labor practice, among others. On June 11, 2009, the union conducted a strike vote where a majority decided on conducting a strike.

On June 23, 2009, the Secretary of the Department of Labor and Employment assumed jurisdiction over the labor dispute by certifying for compulsory arbitration to the National Labor Relations Commission the issues raised in the notice of strike. The Secretary also enjoined the parties from committing any act that may further exacerbate the situation.

At this point, the union asserted that the employer should have enjoined the termination of employment which took effect on July 1, 2009. On the other hand, the employer contended that termination of employment was a certainty, from the time it issued the notices of termination and that the status quo prior to the issuance of the assumption order included the impending termination of the employment of the 27 employees.

On March 16, 2010, the National Labor Relations Commission ruled that the employer implemented a valid redundancy program and that it did not commit unfair labor practice. The Commission further found no violation in the dismissal of the employees from employment because their respective notices of dismissal were received prior to the assumption order of the Secretary of the Department of Labor and Employment. The Commission found that the employer did not commit an act that exacerbated the dispute.

The Court of Appeals affirmed the Decision of the National Labor Relations Commission.

The Supreme Court, in turn, affirmed the validity of the employer’s redundancy program.

One issue that reached the Supreme Court was whether the employer’s implementation of the redundancy program was an unfair labor practice.

The other issue resolved by the Court was whether the employer should have enjoined the effectivity of the termination of the employment of the 27 affected union members when the Secretary of the Department of Labor and Employment assumed jurisdiction over their labor dispute.

The Court reiterated prevailing jurisprudence in that unfair labor practice refers to acts that violate the workers’ right to organize. The Court stated that there should be no dispute that all the prohibited acts constituting unfair labor practice in essence relate to the workers’ right to self-organization. Thus, an employer may only be held liable for unfair labor practice if it can be shown that his acts affect in whatever manner the right of his employees to self-organize. To prove the existence of unfair labor practice, substantial evidence has to be presented.

In the present case, the Court found that the union failed to substantiate its charge of unfair labor practice against the employer. According to the Court, the consequent termination of employment due to redundancy is not per se an act of unfair labor practice amounting to union busting. For while the number of union membership was diminished due to the termination of the employment of union members, it cannot safely be said that the employer acted in bad faith in terminating their services because the termination was not without a valid reason. There was no showing that the redundancy program was motivated by ill will, bad faith or malice, or that it was conceived for the purpose of interfering with the employees’ right to self-organize.

The findings of the National Labor Relations Commission and the Court of Appeals on said issue were affirmed.

However, the Court found that the employer violated the return-to-work order in that the status quo was not maintained after the Secretary of the Department of Labor and Employment had assumed jurisdiction over the dispute on June 23, 2009.

In this regard, the Court relied on Article 278 [Formerly 263] (g) of the Labor Code of the Philippnines, which provides the conditions for, and the effects of, the assumption of jurisdiction by the Secretary of the Departent of Labor and Employment over a dispute.

The Court explained that the powers given to the Secretary of the Department of Labor and Employment under Article 278 [Formerly 263] (g) is an exercise of police power with the aim of promoting public good. In fact, the scope of the powers is limited to an industry indispensable to the national interest as determined by the Secretary of the Department of Labor and Employment. Industries that are indispensable to the national interest are those essential industries such as the generation or distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries. And following Article 263 (g), the effects of the assumption of jurisdiction are the following:

the enjoining of an impending strike or lockout or its lifting, and

an order for the workers to return to work immediately and for the employer to readmit all workers under the same terms and conditions prevailing before the strike or lockout, or the return-to-work order.

The Court added that when the Secretary of the Department of Labor and Employment exercises these powers, he is granted “great breadth of discretion” in order to find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to the National Labor Relations Commission for compulsory arbitration, always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout.

The Court then highlighted the significance of the return-to-work order, which is interlocutory, and is merely meant to maintain the status quo while the main issue is being threshed out in the proper forum. The Court stressed that the status quo is simply the status of the employment of the employees the day before the occurrence of the strike or lockout.

According to the Court, from the date the Secretary of the Department of Labor and Employment assumes jurisdiction over a dispute until its resolution, the parties have the obligation to maintain the status quo while the main issue is being threshed out in the proper forum — which could be with Secretary of the Department of Labor and Employment or with the National Labor Relations Commission. This is to avoid any disruption to the economy and to the industry of the employer — as this is the potential effect of a strike or lockout in an industry indispensable to the national interest — while the Secretary of the Department of Labor and Employment or the National Labor Relations Commission is resolving the dispute.

In the present case, the Court found that since the union voted for the conduct of a strike on June 11, 2009, when the Secretary of the Department of Labor and Employment issued the return-to-work order dated June 23, 2009, this meant that the status quo was the employment status of the employees on June 10, 2009. This status quo should have been maintained until the National Labor Relations Commission resolved the dispute in its Resolution dated March 16, 2010. For the Court, the said Resolution then took the place of the return-to-work order of the Secretary of the Department of Labor and Employment and the employer no longer had the duty to maintain the status quo after March 16, 2010.

The Court accordingly awarded to the employees backwages and other benefits from July 1, 2009 until March 16, 2010, with a recomputation of their separation pay taking into consideration the termination of their employment beginning March 16, 2010.

No Danger to the Safety of the Crew or Vessel

Rogelio was engaged by his employer, Free Bulkers, through its agent Evic, as Chief Mate on board the M/V Free Lady for a period of six (6) months with a basic monthly salary of US$1,088.00.

On August 28, 2010, Rogelio boarded the vessel. However, on September 24, 2010, Rogelio was repatriated to the Philippines without completing the contracted employment period.

On September 28, 2010, Rogelio filed an illegal dismissal complaint against his employer. According to Rogelio, the ship captain developed a hostile attitude towards him. Specifically, Rogelio narrated that on September 7, 2010, he took a sip from the small flask of whisky given to him by one of the stevedores he dealt with and went to bed; but the ship captain had him awakened and ordered him to make a report on some damages in the railings of the ship caused by the stevedores. When he submitted the report to the ship captain, the latter allegedly smelled a faint odor of whisky and asked him if he had been drinking, to which Rogelio truthfully replied that he drank a little whisky and was willing to take an alcohol test. The ship captain shrugged off his offer to take an alcohol test, but still made a logbook entry dated September 7, 2010, recommending Rogelio’s immediate replacement.

The employer contended that Rogelio was dismissed for just cause. On the basis of a Crew Behavior Report dated September 8, 2010 prepared by the ship captain, Rogelio was claimed to have violated company policies, instructions, and stipulations of the employment contract:
1) by being grossly negligent since he failed to observe the safety precautions during the mooring and unmooring operations;
2) by displaying arrogance towards his co-employees on board; and
3) by having been found intoxicated.

According to the employer, it feared for the safety of the vessel and determined that the crew may be at risk with Rogelio’s continued presence. Thus, it was constrained to ask that Rogelio be relieved, invoking Section 33 of the POEA Standard Employment Contract (POEA-SEC).

Was Rogelio validly dismissed from employment?

The Court ruled in the negative. It declared that Rogelio was illegally dismissed from employment.

The Court reiterated established principles in that in labor cases, the employer has the burden of proving that the dismissal of an employee was for a just or authorized cause, and failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal. Furthermore, not only must the dismissal be for a cause provided by law, it should also comply with the rudimentary requirements of due process, that is, the opportunity to be heard and to defend one’s self. Hence, for dismissal to be valid, the employer must show through substantial evidence that (1) the dismissal was for a just or authorized cause; and (2) the dismissed employee was afforded due process of law.

In the present case, the Court found that the employer failed to establish the existence of a just cause in the dismissal of Rogelio from employment.

It noted that the Crew Behavior Report, from which Rogelio’s dismissal from employment was based, alleged Rogelio’s inefficiency, incompetence and gross negligence in the performance of his duties.

However, the Court considered the said report sorely inadequate in meeting the required quantum of proof to discharge the employer’s burden.

The Court discussed that incompetence or inefficiency, as a ground for dismissal, means the failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. Neglect of duty, on the other hand, must be both gross and habitual. Gross negligence implies a lack of or failure to exercise slight care or diligence, or the total absence of care in the performance of duties, not inadvertently but willfully and intentionally, with conscious indifference insofar as other persons may be affected. Habitual neglect involves repeated failure to perform duties for a certain period of time, depending upon the circumstances, and not mere failure to perform duties in a single or isolated instance.

Here, the Court found that the statements contained in the Crew Behavior Report were uncorroborated and self-serving because no other evidence was presented to support the statements of the ship captain. The Court added that while the report was signed by four (4) crew members, the statements contained therein were based on acts witnessed only by the ship captain.

Specifically, the Court noted the claim of the ship captain that a crew was injured when Rogelio failed to observe safety precautions in the mooring and unmooring operations and that an agent informed him that Rogelio was hard to deal with because of intoxication. However, the Court found no affidavits of either the injured seaman or the concerned agent to corroborate the ship captain’s statements. For the Court, no basis constrained it to conclude that there was truth to the ship captain’s accusations.

The Court found that the employer failed to show that Rogelio willfully or deliberately caused the alleged accident during the mooring operations or that Rogelio repeatedly committed mistakes or repeatedly failed to perform his duties. The Court stated that the single unverified incident on Rogelio’s supposed negligence was insufficient to warrant a finding of just cause for termination.

With regard to the charge of intoxication, the Court applied Section 33 (6) of the POEA-SEC which provides that drunkenness must be committed while on duty to merit dismissal from employment.

In the present case, the Court found that Rogelio was admittedly off duty when he was allegedly caught by the master drinking on board. The Court ruled that the penalty of dismissal from employment was unwarranted.

The Court continued that the lack of just or valid cause of Rogelio’s dismissal was further exacerbated by the employer’s failure to afford Rogelio procedural due process. The Court stressed the two-notice rule in Section 17 of the POEA-SEC in that an erring seaman should be given a written notice of the charge against him and afforded an opportunity to explain or defend himself. Should sanctions be imposed, then a written notice of penalty and the reasons for it shall be furnished the erring seafarer. It is only in the exceptional case of clear and existing danger to the safety of the crew or vessel that the required notices are dispensed with; nonetheless, a complete report should be sent to the manning agency, supported by substantial evidence of the findings.

In the present case, the Court found no evidence showing that Rogelio was given a written notice of the charges against him, or that he was given an opportunity to explain or defend himself. Neither was there proof that Rogelio was furnished with a written notice of the penalty imposed against him and the reasons for its imposition. Although the Court noted the employer’s claim that the required notices were dispensed with because of a clear and existing danger to the safety of the crew or vessel, no evidence was presented to prove such was the situation when Rogelio’s employment was terminated.

With the illegality of Rogelio’s dismissal, the employer was held liable to pay Rogelio’s salaries for the unexpired portion of his employment contract under Section 10 of Republic Act No. 8042, as amended by Republic Act No. 10022.

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Can Neren’s employment be terminated on the ground of insubordination for her failure to sign the Notice to Transfer?

Was there cause to terminate Neren’s employment on the ground of gross and habitual neglect for her absences without leave from 22 to 26 March 2014?

Since the above-mentioned grounds failed to justify Neren’s dismissal from employment, should such dismissal be declared illegal?

What consequence does this new finding have insofar as procedural due process is concerned?

Further reading:

Was Arnulfo an employee of Ernesto?

Was Arnulfo illegally dismissed from employment?

Further reading:

Did PTC validly dismiss Alvin from employment?

Further reading:

Ruling:

Arnulfo was constructively dismissed from employment.

Further reading:

Was Quintin entitled to retirement benefits?

Further reading:

Bigg’s Version of the Events

Union’s Version of the Events

Were the strikes held on February 16, 1996 and March 5, 1996 illegal?

Requirements of a Valid Strike

Strike, Concept

Procedural Requirements

Grounds

Who Can Declare a Strike

Strike Vote

Strike Vote Report

Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Bargaining Deadlock

Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Unfair Labor Practice

In Cases of Union Busting

Strike Grounded on Unfair Labor Practice

The Union Conducted an Illegal Sit-down Strike on February 16, 1996

A Sit-down Strike Occurred on February 16, 1996

Union Did Not File a Notice of Strike And Failed to Observe Cooling-off Period

Ground of Unfair Labor Practice Was Not Proven

Union Busting Was Also Not Proven

The Strike on March 5, 1996 Was Illegal Despite Compliance with Procedural Requirements

Were the union officers and members validly dismissed?

Dismissal of the Union President Valid

Union Members Who Did Not Participate in Any Prohibited Act During the Strikes, Dismissal Invalid

Awards

Further reading:

Was Generation One a legitimate contractor?

Further reading:

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

Further reading:

One issue that reached the Supreme Court was whether the employer’s implementation of the redundancy program was an unfair labor practice.

The other issue resolved by the Court was whether the employer should have enjoined the effectivity of the termination of the employment of the 27 affected union members when the Secretary of the Department of Labor and Employment assumed jurisdiction over their labor dispute.

Further reading:

Was Rogelio validly dismissed from employment?

Further reading: