Paulino Ungos III

Lawyer | Law Professor | Author

Tag: justice m.v. lopez

  • Based on Two Supreme Court Decisions, the Contractor Is Legitimate

    Rico alleged that on October 2, 2002, PPI Holdings, Inc. (PPI), the sole franchisee of Pizza Hut in the Philippines, hired him as a messenger for its human resources department, and later on, for its accounting department.

    Rico stated that his employment was transferred to a manpower agency, a certain Human Resources, Inc., and subsequently, to Consolidated Buildings Maintenance, Inc. (CBMI), now Atalian Global Services.

    Rico also stated that despite such transfer, nothing changed with his employment in that he continued to be PPI’s messenger in its accounting department until CBMI sent him, along with other coworkers, a letter dated August 1, 2016 informing him of the termination of his services with PPI.

    Rico thus filed an illegal dismissal case with money claims against PPI, CBMI, and their owners, arguing that he was a regular employee of PPI for having worked with it for 14 years, and that there was no just cause for his dismissal.

    PPI denied having an employer-employee relationship with Rico. It posited that Rico was merely assigned to it by CBMI, a legitimate contractor that had rendered janitorial, sanitation, warehousing services, and allied services to PPI until the termination of their latest Contract of Services Agreement on September 1, 2016. Invoking the service agreement with CBMI, PPI averred that it was CBMI which relayed the company rules, regulations, and working terms and conditions upon Rico’s engagement, and which paid Rico’s salary, Social Security System, Pag-IBIG, and PhilHealth contributions.

    For its part, CBMI acknowledged Rico as its employee assigned to PPI. It asserted that it is a legitimate contractor engaged in the business of providing janitorial, kitchen, elevator maintenance, and allied services to various entities, including PPI. However, while it recognized Rico’s employment, CBMI denied having terminated his services. Instead, it alleged that Rico, along with his other co-employees, was merely placed on floating status when it decided to terminate its latest service contract with PPI effective September 1, 2016 due to certain financial disagreements. Hence, for CBMI, Rico’s complaint should be dismissed for being prematurely filed.

    The Office of the Labor Arbiter considered CBMI as a legitimate contractor based on the following documents:

    • CBMI Securities and Exchange Commission (SEC) Registration;
    • CBMI Company Profile;
    • Contracts of Services entered into with PPI for several years;
    • CBMI Certificates of Registration with the Department of Labor and Employment under such Department’s Orders numbered 18-A, Series of 2011 and 18-02, Series of 2002; and
    • Audited Financial Statement filed with the SEC showing substantial capital or investment.

    The Office of the Labor Arbiter further found that, as stipulated in the service agreements, CBMI carried out its work/service independently from its principal in accordance with its own means, method, and manner.

    Nonetheless, the Office of the Labor Arbiter ruled that Rico was PPI’s regular employee as it found no evidence of the existence of an employer-employee relationship between CBMI and Rico. Such Office found that Rico’s 14 years of service with PPI, performing tasks which are usually necessary or desirable to PPI’s main business as messenger, proved that Rico was PPI’s employee. Since PPI failed to present any just or authorized cause in terminating his employment, the Office of the Labor Arbiter directed PPI to reinstate Rico and held PPI and CBMI solidarily liable for payment of his backwages.

    PPI filed a partial appeal from the Office of the Labor Arbiter’s Decision, insisting that Rico was not its employee but that of CBMI, which is a legitimate contractor as found by said Office.

    The National Labor Relations Commission ruled that CBMI is a labor-only contractor. The Commission found that, despite proof of substantial capitalization, there was no showing that CBMI carried on an independent business or undertook the performance of its service contracts according to its own manner and method, free from PPI’s control and supervision. The Commission added that the contracts of services between PPI and CBMI clearly showed that CBMI undertook to merely supply manpower. The Commission further added that CBMI’s registration with the DOLE as an independent contractor was not conclusive of such status.

    Further, the Commission agreed with the Office of the Labor Arbiter’s ruling that Rico was PPI’s regular employee. The Commission found that Rico’s job as a messenger was necessary and vital to PPI’s business as the only franchisee of Pizza Hut, which requires food and kitchen services, sanitation, delivery, warehousing, commissary, and related services for its various restaurants. The Commission also took note of Rico’s 14 years of uninterrupted service with PPI.

    Finally, the Commission upheld the Office of the Labor Arbiter’s finding that PPI failed to adduce evidence that Rico’s dismissal was for a just or authorized cause, and that procedural due process was observed in his dismissal from employment.

    When the case reached the Court of Appeals, such Court declared CBMI as a legitimate contractor, based solely on two cases decided by the Supreme Court concerning PPI and CBMI, specifically, Consolidated Building Maintenance, Inc. v. Asprec, Jr.1G.R. No. 217301, June 6, 2018 and Philippine Pizza, Inc. v. Cayetano.2G.R. No. 230030, August 29, 2018] On that premise, the Court of Appeals concluded that Rico was CBMI’s direct employer. Nevertheless, the Court of Appeals sustained the labor tribunals’ uniform ruling that Rico was illegally dismissed from employment.

    Rico filed a petition for review on certiorari to assail the ruling of the Court of Appeals.

    Did PPI and CBMI engage in labor-only contracting?

    The Supreme Court ruled that PPI and CBMI engaged in labor-only contracting.

    The Court began by stating that outsourcing of services is not totally prohibited in the Philippines. It pointed out that Articles 106 to 109 of the Labor Code of the Philippines, Department of Labor and Employment Orders numbered 18-02, Series of 2002 and 18-A, Series of 2011, or the implementing rules in force at the time of Rico’s employment, provided the legal basis for service contracting and delineated the situations when it is not permitted. Considering such laws and rules, the Court stated that the following must be considered in determining whether CBMI was a legitimate contractor or engaged in labor-only contracting:

    • registration with the proper government agencies;
    • existence of substantial capital or investment;
    • service agreement that ensures compliance with all the rights and benefits under labor laws;
    • nature of the activities performed by the employees, i.e., if they are usually necessary or desirable to the operation of the principal’s company or directly related to the main business of the principal within a definite predetermined period; and
    • the exercise of the right to control the performance of the employees’ work.3Barretto v. Amber Golden Pot Restaurant, G.R. No. 254596-97, November 24, 2021

    In the present case, the Supreme Court found the certificates of registration, financial statements, and service agreements insufficient in supporting PPI and CBMI’s claim of legitimate contracting. The Court mentioned the following reasons:

    • A certificate of registration as an independent contractor is not conclusive evidence of such status, as such registration merely prevents the legal presumption of being a labor-only contractor from arising;4Daguinod v. Southgate Foods, Inc., G.R. No. 227795, February 20, 2019
    • It is settled that, despite proof of substantial capital, a contractor is still considered engaged in labor-only contracting whenever it is established that the principal actually controls the manner of the employee’s work;5Mago v. Sun Power Manufacturing Limited, G.R. No. 210961, January 24, 2018 and
    • The true nature of the relationship between the principal, contractor, and employee cannot be dictated by mere expedience of a unilateral declaration in a contract;6Daguinod v. Southgate Foods, Inc., G.R. No. 227795, February 20, 2019

    The Supreme Court added that the totality of attendant circumstances led to a finding that PPI and CBMI engaged in labor-only contracting.

    First, there was no evidence that CBMI carried on an independent business or undertook the performance of its service contracts according to its own manner and method, free from the control and supervision of PPI. While the various service agreements between PPI and CBMI contained the latter’s undertaking for the employees’ qualification and training, hiring and payroll, as well as their supervision, discipline, suspension or termination, said clauses were still but empty words that hardly helped PPI’s case, in absence of concrete proof that CBMI indeed carried on an independent business.

    Second, there was also no evidence that CBMI hired Rico. In fact, there was no contract of employment showing that Rico was an employee of CBMI, nor were there records submitted in evidence to show such relationship.

    Third, the fact that PPI exercised the right of control over Rico’s work was clear and unmistakable. As messenger, Rico had been performing his tasks at PPI’s premises for about fourteen (14) years. All those times, all the tools and equipment which he used in the performance of his work were owned by PPI and the latter’s managers and supervisors controlled his work inside the company premises.

    Fourth, the various contract of services executed between PPI and CBMI, which spanned for several years from 1999 to 2012, showed that CBMI undertook to supply manpower only.

    And fifth, Rico’s job as messenger was necessary and vital to PPI’s business as the Philippine franchisee of Pizza Hut which requires waitering, food and kitchen services, sanitation, delivery, warehousing, commissary and related services for its various restaurants. Otherwise, Rico would not have been repeatedly and continuously hired by PPI for fourteen (14) years. The Court stressed that such repeated and continuing need for the performance of the job is sufficient evidence of the necessity, if not indispensability, of the activity to the business.

    The Supreme Court added that the Court of Appeals gravely erred in declaring CBMI as a legitimate contractor solely on the basis of the pronouncements in Consolidated Building Maintenance, Inc. v. Asprec, Jr.7G.R. No. 217301, June 6, 2018 and Philippine Pizza, Inc. v. Cayetano.8G.R. No. 230030, August 29, 2018]

    The Supreme Court emphasized that the principle of stare decisis cannot be applied in determining whether one is engaged in permissible contracting or otherwise, since such characterization should be based on the distinct features of the relationship between the parties, and the totality of the facts and attendant circumstances of each case, then measured against the terms of and criteria set by the statute.9San Miguel Foods, Inc. v. Rivera, G.R. No. 220103, January 31, 2018 and 7K Corp. v. National Labor Relations Commission, G.R. No. 148490, November 22, 2006, 537 PHIL 664-681 Specifically, the Court mentioned while those two cases also involved PPI and CBMI, the nature of work and treatment of employment of the employees in those cases may be different from Rico’s. Hence, the Court found it necessary to independently determine Rico’s case, which was aptly undertaken by the Commission in this case.

    The Supreme Court further pointed out that the Court of Appeals merely made inference from previous cases without reference to the evidence on hand in concluding that CBMI was a legitimate contractor, and as such was Rico’s direct employer. The Supreme Court reiterated that the totality of the facts and the surrounding circumstances of the case must be considered in distinguishing prohibited contracting from permissible contracting.10Philippine Pizza, Inc. v. Cayetano, G.R. No. 230030, August 29, 2018]

    With the finding that CBMI was a labor-only contractor, such company was considered as a mere agent of PPI, which, in turn, was deemed to be Rico’s employer. Consequently, PPI and CBMI were held solidarily liable for payment of Rico’s awards.

    This is because of the established principle that in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.11San Miguel Corp. v. MAERC Integrated Services Inc., G.R. No. 144672, July 10, 2003, 453 PHIL 543-576

    Further reading:

    • Conjusta v. PPI Holdings, Inc., G.R. No. 252720, August 22, 2022.

    Subscribe to YouTube and Spotify

  • But the President’s Approval of the Grant of CBA Benefits Was Presumed Under Article 4

    On March 20, 2012, the Clark Development Corporation, the operating arm of the Bases Conversion Development Authority, tasked to manage the Clark Special Economic Zone, executed a renegotiated collective bargaining agreement with its supervisory employees’ union.

    The collective bargaining agreement contained economic terms in favor of the supervisory employees, specifically the grant of additional annual union leave, bereavement leave, salary increases, uniform allowance, monthly Personal Economic Relief Allowance and a signing bonus. Said agreement also granted free use of guesthouses, use of a service vehicle, as well as the reproduction and distribution of the agreement to all members of the supervisory employees’ union.

    However, the Governance Commission for Government-Owned and -Controlled Corporations (Governance Commission) opined that the collective bargaining agreement violated Section 9 of Executive Order No. 7, which was signed by the Philippine President on September 8, 2010. Section 9 imposed a moratorium on increases in the salaries, allowances, incentives and other benefits in Government-Owned and -Controlled Corporations unless specifically authorized by the Philippine President.

    The Governance Commission stated that the Philippine President has not given Clark Development Corporation the authority to renegotiate the collective bargaining agreement with the supervisory employees’ union and to grant the union members increases or additional benefits.

    Furthermore, the Bases Conversion Development Authority recommended that Clark Development Corporation defer or renegotiate its collective bargaining agreement with the supervisory employees’ union should it fail to prove the financial sustainability of the economic terms of such agreement.

    On August 1, 2012, the supervisory employees’ union filed before the National Conciliation and Mediation Board a complaint against Clark Development Corporation for its failure to implement the collective bargaining agreement.

    On November 5, 2012, the Accredited Voluntary Arbitrator ruled in favor of the supervisory employees’ union and upheld the economic terms or grant of benefits in the collective bargaining agreement. According to the Accredited Voluntary Arbitrator, Section 10 of Executive Order No. 7, Series of 2010, suspended the grant of allowances, bonuses, incentives, and other perks to members of the boards of directors/trustees of Government-Owned and -Controlled Corporations, but only until December 31, 2010. The Accredited Voluntary Arbitrator also held that the approval of the Philippine President in the grant of additional benefits was presumed under the rule on liberal construction in favor of labor under Article 4 of the Labor Code of the Philippines.

    Aggrieved, Clark Development Corporation elevated the case to the Court of Appeals through a petition for review.

    On April 8, 2013, the Court of Appeals affirmed the Accredited Voluntary Arbitrator’s findings. The Court of Appeals explained that Executive Order No. 7, Series of 2010, does not apply to Clark Development Corporation, as well as to the supervisory employees’ union. The Court of Appeals added that the Philippine President’s approval of the grant of additional benefits was presumed in line with the principle that all doubts should be resolved in favor of labor.

    Clark Development Corporation filed its petition for review on certiorari before the Supreme Court and asserted that the Court of Appeals and the Accredited Voluntary Arbitrator erred in allowing the grant of additional benefits to the supervisory employees’ union.

    Clark Development Corporation asserted the following:

    • The economic terms of the collective bargaining agreement were invalid and cannot be enforced because these were renegotiated without the approval of the Philippine President.
    • The GOCC Governance Act of 2011 gave the Philippine President the authority to fix the Government-Owned and -Controlled Corporations’ compensation framework.
    • Corollarily, approval of additional benefits by the Philippine President cannot be presumed.

    By contrast, the supervisory employees’ union contended that:

    • The collective bargaining agreement was the law between the parties and must be respected.
    • The collective bargaining agreement was renegotiated consistent with the employees’ rights to organization and collective bargaining.
    • Executive Order No. 7, Series of 2010, was not applicable to Government-Owned and -Controlled Corporations without original charter.
    • The GOCC Governance Act of 2011 recognized the vested rights of government employees to their salaries.

    In the meantime, the Governance Commission moved to intervene in the proceedings and argued that:

    • The collective bargaining agreement contravened Executive Order No. 7, Series of 2010, and the GOCC Governance Act of 2011.
    • The moratorium on the grant of additional benefits remained effective pending the promulgation and approval of the compensation and position classification system for Government-Owned and -Controlled Corporations.
    • In any event, there were no factual and legal bases to presume the consent of the Philippine President on the collective bargaining agreement’s economic provisions.

    Were the additional benefits granted to the supervisory employees under the collective bargaining agreement valid?

    The Supreme Court ruled in the negative.

    The Supreme Court began with the settled rule that the right of government employees to self-organization is not as extensive as in the right of private employees. It then mentioned that the right of government employees to collective bargaining and negotiation is subject to limitations, in that only the terms and conditions of government employment not fixed by law can be negotiated.

    The Supreme Court pointed out that in order to control the grant of excessive salaries, allowances, incentives, and other benefits, Executive Order No. 7, Series of 2010, particularly Section 9, has imposed a moratorium on the grant of additional salaries and allowances to employees and officers of Government-Owned and -Controlled Corporations until specifically authorized by the Philippine President.

    The Supreme Court stressed that the clause “until specifically authorized by the Philippine President” is not in the nature of an exception. Rather, the clause provides for the situation where the Philippine President, deems it proper to lift the moratorium. According to the Supreme Court, the use of the preposition “until” before the phrase “specifically authorized by the Philippine President” denotes that the moratorium continues up to a particular time, i.e., when the President authorizes anew the grant of the prohibited increases.

    On this score, the Supreme Court took judicial notice that the Philippine President has not lifted the moratorium. The Court thus ruled that the economic terms of the collective bargaining agreement executed by the Clark Development Corporation with its supervisory employees’ union on March 20, 2012 were void for violating the law.

    The Supreme Court noted the reliance of the Accredited Voluntary Arbitrator and the Court of Appeals upon Section 10 of Executive Order No. 7, Series of 2010. The Supreme Court, however, pointed out that Section 10 is inapplicable to the supervisory employees’ union of Clark Development Corporation, as the said section pertains to members of the Board of Directors/Trustees of Government-Owned and -Controlled Corporations.

    The Supreme Court then declared as erroneous the exclusion by the Court of Appeals of Clark Development Corporation from the coverage of Executive Order No. 7, Series of 2010. This was because nothing in the law makes any express distinction between Government-Owned and -Controlled Corporations with original charter, and those incorporated under the Corporation Code. For the Supreme Court, Executive Order No. 7, Series of 2010, applies to all Government-Owned and -Controlled Corporations regardless of the manner of creation.

    The Supreme Court added that although the GOCC Governance Act of 2011 authorizes the Governance Commission to develop a compensation and position classification system applicable to all officers and employees of Government-Owned and -Controlled Corporations, such system is subject to approval of the Philippine President.

    In the present case, the Supreme Court found that the Governance Commission did not give its favorable recommendation on the renegotiation of additional benefits by Clark Development Corporation and the supervisory employees’ union. The Supreme Court noted that the Governance Commission even opined that the collective bargaining agreement violated Section 9 of Executive Order No. 7, Series of 2010.

    The Supreme Court then highlighted that on March 22, 2016, the Philippine President issued Executive Order No. 203, Series of 2016, which disallowed the Governing Boards of all covered Government-Owned and -Controlled Corporations, whether Chartered or Non-chartered, to negotiate with their officers and employees the economic terms of their collective bargaining agreements.

    For the Supreme Court, such provision supports the finding that the moratorium under Executive Order No. 7, Series of 2010, has remained effective pending the promulgation and approval of the compensation framework for all the Government-Owned and -Controlled Corporations. The Court found no factual and legal bases for the Court of Appeals and the Accredited Voluntary Arbitrator to presume that the Philippine President approved the renegotiated economic provisions of the collective bargaining agreement between Clark Development Corporation and its supervisory employees’ union.

    The Supreme Court emphasized that the construction in favor of labor only applies when there are doubts in the interpretation and implementation of the provisions of the Labor Code of the Philippines and its implementing rules and regulations. The Supreme Court stated that the language of Section 9 of Executive Order No. 7, Series of 2010, on the moratorium on increases in rates of salaries and other benefits is unambiguous. Consequently, the Supreme Court emphasized that the law must be interpreted following its plain and obvious meaning and applied according to its express terms. For the Supreme Court, the law requires the Philippine President’s consent as to additional benefits effectively lifting the moratorium, and any presumption of such approval is unwarranted.

    The Supreme Court concluded that Clark Development Corporation had valid reason not to implement the increases in salaries and benefits as provided in the renegotiated collective bargaining agreement. This is because the law has fixed the terms and conditions of government employment, and any contract that violates the law is void and cannot be a source of rights and obligations.

    Further reading:

    • Clark Development Corp. v. Association of CDC Supervisory Personnel Union, G.R. No. 207853, March 30, 2022.

    Subscribe to YouTube and Spotify

  • 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.

    Subscribe to YouTube and Spotify

  • Prima Facie Evidence of Employee’s Claim

    Reggie alleged that on March 13, 2011, he was hired as a security guard by the employer security agency. Reggie stated that he worked seven days a week from 7:00 a.m. to 7:00 p.m., or from 7:00 p.m. to 7:00 a.m., alternately every two weeks, for a monthly salary of Php8,500.00. Reggie mentioned that his employer did not pay him for overtime work, work rendered on holidays and rest days, as well as 13th month pay, service incentive leave, and night shift differentials.

    Reggie also alleged that on April 21, 2014, he, along with some of his colleagues, received a memorandum suspending them from employment starting April 21, 2014 up to May 20, 2014 without any formal investigation. Reggie claimed that he served the suspension and reported back to work on May 21, 2014. The employer security agency, however, refused to accept him.

    Thus, Reggie filed a complaint against the employer security agency for illegal suspension; underpayment of salary and 13th month pay; non-payment of overtime and holiday pay; holiday and rest day premiums pay; service incentive leave pay; night shift differentials; moral and exemplary damages; and attorney’s fees.

    The employer security agency asserted that Reggie’s suspension was justified since its inspection team caught Reggie sleeping in his post on April 20, 2014. According to the employer security agency, Reggie was directed to report to the head office to explain, but Reggie disregarded the directive. Thus, in a memorandum dated April 21, 2014, the employer security agency suspended him for 30 days, effective April 21, 2014, until May 20, 2014.

    As to Reggie’s money claims, the employer security agency argued that Reggie was oriented as to the salary and benefits to which he is entitled, and he agreed to the same. The employer security agency added that the applicable wage order provides that the minimum wage rate does not apply to persons employed in the personal service of another, such as a private security guard like Reggie.

    The employer security claimed attorney’s fees, and moral and exemplary damages for the besmirched goodwill and reputation that it suffered by reason of the filing of the complaint.

    The Office of the Labor Arbiter ruled that Reggie was validly suspended for sleeping in his post as proved by photographs, which Reggie did not dispute.

    The Office of the Labor Arbiter also held that Reggie failed to substantiate his entitlement to overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials.

    The Office of the Labor Arbiter, nonetheless, declared that Reggie is entitled to salary differentials, 13th month pay, and the monetization of his service incentive leave.

    Reggie appealed to the National Labor Relations Commission and insisted on his entitlement to overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials.

    The National Labor Relations Commission modified the Decision of the Office of the Labor Arbiter and granted such claims.

    The employer security agency filed a petition for certiorari with the Court of Appeals to question the awards of overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials in favor of Reggie. It also insisted that the National Labor Relations Commission failed to award damages and attorney’s fees in its favor.

    The Court of Appeals held that the National Labor Relations Commission erred in awarding him overtime pay, premium pay for holidays and rest days, and night shift differentials. Thus, it partly granted the petition of the employer security agency by deleting the award of said benefits.

    According to the Court of Appeals, entitlement to payment of overtime pay must first be established by proof that overtime work was actually performed. The Court of Appeals also ruled that entitlement to premium pay must first be established by proof that work was rendered during rest days and holidays because such benefit is not incurred in the normal course of business.

    The Court of Appeals found that Reggie submitted in evidence photocopies of the entries in a logbook and semi-monthly payroll report for a certain period to support his allegations.

    However, the Court of Appeals also found that the photocopies of entries in the logbook did not prove that Reggie rendered overtime work for such period. Said entries were found to have been made by Reggie and other security guards themselves. Although the Court of Appeals observed that these entries were signed by incoming and outgoing security guards, the same were not countersigned by a supervisor or any authorized representative of the employer security agency. According to the Court of Appeals, this raised serious doubt as to whether Reggie actually rendered work on a given date and time.

    The Court of Appeals then found that the semi-monthly payroll report presented by Reggie revealed a period different from that entered in the logbook.

    For the Court of Appeals, the payroll report submitted by Reggie did not clearly reflect that he performed overtime work as indicated in the photocopies of the entries in the logbook.

    On Reggie’s claim for premium pay for holidays and night shift differential, the Court of Appeals ruled that Reggie was unable to adduce concrete proof showing that he had rendered service during regular holidays or rest days or that he had rendered service between 10:00 p.m. and 6:00 a.m.

    Reggie elevated his case to the Supreme Court.

    Was Reggie entitled to the awards of overtime pay, premium pay for holidays and rest days, as well as night shift differentials?

    The Supreme Court ruled that Reggie was not entitled to premium pay, but he was ruled to be entitled to overtime pay and night shift differentials.

    The Court stated that in determining the employee’s entitlement to monetary claims, the burden of proof is shifted from the employer or the employee, depending on the monetary claim sought.

    On claims for payment of salary differentials, service incentive leave, holiday pay, and 13th month pay, the burden rests on the employer to prove payment. This standard follows the basic rule that in all illegal dismissal cases the burden rests on the defendant-employer to prove payment rather than on the plaintiff-employee to prove non-payment. This likewise stems from the fact that all pertinent personnel files, payrolls, records, remittances and other similar documents — which show that the differentials, service incentive leave and other claims of workers have been paid — are not in the possession of the worker but are in the custody and control of the employer.

    On the other hand, for overtime pay, premium pay for holidays and rest days, the burden is shifted on the employee, as these monetary claims are not incurred in the normal course of business. It is thus incumbent upon the employee to first prove that he actually rendered service in excess of the regular eight working hours a day, and that he, in fact, worked on holidays and rest days.

    In the present case, the Court found that in proving his entitlement to the payment of overtime pay, premium pay for holidays and rest days, and night shift differentials, Reggie submitted a photocopy of logbook entries which showed the dates and shift when he reported for work, as well as the specific tasks he performed on that particular work shift. The Court also found that before and after each particular work shift, the incoming and outgoing security guard will sign the corresponding entry in the logbook.

    However, the Court discovered that the logbook did not contain information on whether Reggie worked on holidays or during his rest days. Thus, the Court denied Reggie’s claim for premium pay for lack of factual basis.

    Nonetheless, the Court determined that the entries in the logbook revealed Reggie’s daily 12-hour shifts. Thus, the Court declared him entitled to overtime pay for such work performed beyond eight hours a day, or for four hours for every shift. Based also on the logbook, the Court found that Reggie was entitled to night-shift differentials for each hour of work performed between 10:00 p.m. to 6:00 a.m.

    In this regard, the Court acknowledged the following facts:

    • The logbook was only a personal record of Reggie and other security guards; and
    • It was not verified or countersigned by officers or employees of the employer security agency.

    However, the Court stressed that even if the entries were neither verified nor countersigned, the same would not militate against Reggie.

    This was because the entries in the logbook were prima facie evidence of Reggie’s claim.

    Prima facie evidence, said the Court, is such evidence as, in the judgment of the law, sufficient to establish a given fact, or the group, or chain of facts constituting the party’s claim or defense, and which if not rebutted or contradicted, will remain sufficient. Evidence which, if unexplained or uncontradicted, is sufficient to sustain a judgment in favor of the issue it supports, but which may be contradicted by other evidence. 1Wa-acon v. People, G.R. No. 164575, December 6, 2006.

    In the present case, the Court recognized the employer security agency’s dispute on the veracity of the entries in the logbook. However, the Court noticed that such employer did not proffer evidence to rebut them or showed that it paid Reggie for the services he rendered on the dates and the hours indicated in the logbook.

    The Court stressed that the best evidence for the employer security agency would have been the payrolls, vouchers, payslips, daily time records, and the like, which were in its custody and absolute control.

    For the Court, since the employer security agency failed to present such documents, such failure gave rise to the presumption that either it never had them, or if such employer did, their presentation was prejudicial to its cause.2Lepanto Consolidated Mining Co. v. Mamaril, G.R. No. 225725, January 16, 2019.

    The Court restated the established rule that the burden of showing with legal certainty that the obligation has been discharged with payment falls on the debtor, in accordance with the rule that one who pleads payment has the burden of proving it.3Lepanto Consolidated Mining Co. v. Mamaril, G.R. No. 225725, January 16, 2019. Any doubt arising from the evaluation of evidence as between the employer and the employee must be resolved in favor of the latter.4Lepanto Consolidated Mining Co. v. Mamaril, G.R. No. 225725, January 16, 2019; Dansart Security Force & Allied Services Company v. Bagoy, G.R. No. 168495, July 2, 2010.

    The Court accordingly ruled that Reggie should be paid for overtime work rendered beyond eight hours. In addition, the Court declared that Reggie should be paid night shift differentials.

    The Court thus partly granted Reggie’s petition and consequently modified the decision of the Court of Appeals by declaring his entitlement to the payment of overtime pay, and night shift differentials.

    Further reading:

    • Zonio v. 1st Quantum Leap Security Agency, Inc., G.R. No. 224944, May 5, 2021.

    Subscribe to YouTube and Spotify

  • Genuine Loss of Trust and Confidence

    Noel alleged that on January 2, 2013, he was hired as Assistant Vice President for Mining Services by Delta Earthmoving to take charge of the company’s human resources department and to perform other administrative functions. In June 2013, the company assigned him to work as Officer-in-Charge of the Oceana Gold Philippines, Inc. — Didipio Gold Project to assist in the operations while his immediate supervisor, Ian, was on roster break.

    Noel claimed that on December 29, 2013, Ian instructed him to pack his things and to not report back to work since his employment was already terminated. On January 6, 2014, Noel confirmed from Ed, who was Delta Earthmoving’s Executive Vice President and Chief Operating Officer, the termination of his employment.

    Noel stated that he was also asked to tender his resignation, but he refused. Instead, he filed the present complaint.

    Delta Earthmoving maintained that Noel was validly dismissed due to poor performance, resulting in loss of trust and confidence.

    To prove the just cause for the dismissal, Delta Earthmoving pointed to the Performance Evaluation and various memoranda indicating gross neglect of duty and inefficiency on the part of Noel, as follows:

    • neglecting instructions from his superiors, such as truck hauling and volume studies;
    • failing to improve KM 20 to serve as employees’ accommodation;
    • failing to submit 2013 mine operations budget;
    • delaying the submission of cost reports and billings, which delayed collection; and
    • failing to perform his duties despite constant reminders.

    Delta Earthmoving stated that Noel refused to receive the performance evaluation as he insisted on having performed his job well.

    Aside from the presence of just cause, Delta Earthmoving also claimed to have complied with the requirements of procedural due process in terminating Noel’s employment.

    The Office of the Labor Arbiter found that Noel was illegally dismissed, and it held Delta Earthmoving liable for payment of the awards.

    Delta Earthmoving filed an appeal with an urgent motion to reduce appeal bond before the National Labor Relations Commission.

    The Commission issued a Resolution, granting the prayer for reduction of appeal bond after considering Delta Earthmoving’s posting of a bond equivalent to ten percent (10%) of the monetary award to be reasonable and finding the grounds raised in the appeal to be meritorious.

    On the main issue of illegal dismissal, the Commission held in the same Resolution that Noel was validly dismissed by reason of loss of trust and confidence. According to the Commission, Delta Earthmoving received reports of Noel’s failure to perform various tasks, and this led to the issuance of six memoranda relative to his work assignments. Delta Earthmoving conducted a performance evaluation, which Noel failed. While Noel denied these allegations, he did not present any proof that he turned in the required reports, or that he completed the assigned tasks.

    On the procedural aspect of Noel’s dismissal from employment, the Commission ruled that Noel was afforded due process as his adamant refusal to submit a written explanation should not be taken against Delta Earthmoving.

    Noel elevated the matter on certiorari to the Court of Appeals.

    In its Decision, the Court of Appeals upheld the Commission’s judgment of Noel’s valid dismissal. Noel sought reconsideration but this too was denied.

    Noel filed his petition before the Supreme Court

    He claimed that Delta Earthmoving’s appeal should not have been given due course as there was no meritorious ground to justify the reduction of the appeal bond.

    As for his dismissal, Noel insisted that the alleged loss of trust and confidence was not proven since he was not even apprised of his superiors’ alleged dissatisfaction with his performance. Noel added that he was not given copies of the memoranda and the Performance Management Form and was therefore deprived of the opportunity to submit his explanation.

    Noel also pointed out that Hansen, his immediate superior, informed him of the good job he did on the mining site. In this regard, Noel contended that the Commission and the Court of Appeals failed to recognize that Hansen, who closely worked with him on-site, was in a better position to evaluate his work performance than his other superiors who were stationed in the Delta Earthmoving main office.

    On the procedural aspect, Noel alleged that his termination was aggravated by Delta Earthmoving’s failure to give the required notices. Noel mentioned that Hansen asked him to leave the company premises after the Christmas break and told him to stop reporting for work upon instruction of Delta Earthmoving’s management. Noel stated that Ed also tried to convince him to execute a letter of resignation in exchange for payment of one month’s salary.

    Was the Commission correct in giving due course to the appeal?

    The Supreme Court ruled in the affirmative.

    The Court cited Article 229 of the Labor Code of the Philippines which governs appeals in labor cases. The law provides that decisions, awards, or orders of the Office of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. 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 Court added that Section 4 (b), Rule VI of the 2011 NLRC Rules of Procedure, as amended, highlights the indispensable nature of the posting of a bond in appeals from the Office of the Labor Arbiter to the National Labor Relations Commission. Such rule states that a mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal.

    The Court explained that the posting by the employer of a cash or surety bond is mandatory to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer’s appeal. The requirement was designed to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees’ just and lawful claims.

    In the present case, the Court found that Delta Earthmoving’s appeal was accompanied by a motion to reduce appeal bond, and by an amount equivalent to ten percent (10%) of the judgment award, which was posted as appeal bond.

    The Court stressed that in order to stop the running of the period to perfect an appeal, a motion to reduce bond must comply with two conditions:

    • the motion to reduce bond shall be based on meritorious grounds; and
    • a reasonable amount of bond in relation to the monetary award is posted by the appellant.

    Regarding “meritorious ground” the Court expounded that the same takes into account the respective rights of the parties and the attending circumstances and could pertain to either the appellant’s lack of financial capability to pay the full amount of the bond, the merits of the main appeal, the absence of an employer-employee relationship, prescription of claims, and other similarly valid issues that are raised in the appeal.

    In the present case, the Court found that the Commission made a preliminary determination that Delta Earthmoving had a valid claim as there was no illegal dismissal to justify the award.

    For the Supreme Court, the Commission did not err in giving due course to the appeal. Thus, the Supreme Court did not fault the Court of Appeals in sustaining the Commission’s approval of the motion to reduce the appeal bond, considering that the determination of the presence of a “meritorious ground” is a matter fully within the Commission’s discretion.

    Was the dismissal of Noel from employment valid?

    The Supreme Court ruled that Noel was illegally dismissed from employment.

    The Court stated that Article 297 (c) of the Labor Code of the Philippines allows an employer to terminate an employment for willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.

    The Court explained that an employer cannot be compelled to retain an employee who is guilty of acts inimical to its interests, particularly one who has committed willful breach of trust under Article 297 (c). This is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. However, to justify a valid dismissal based on loss of trust and confidence, the concurrence of two (2) conditions must be satisfied:

    • the employee concerned must be holding a position of trust and confidence; and
    • there must be an act that would justify the loss of trust and confidence.

    The Court found that the first requisite was present in that the parties admitted that Noel was a managerial employee, thus held a position of trust and confidence. The Court noted that a great deal of Delta Earthmoving’s business relied on the competence of Noel.

    As regards the second requisite, the Court discussed that in terminating managerial employees based on loss of trust and confidence, proof beyond reasonable doubt is not required. The mere existence of a basis for believing that such employee has breached the trust of his employer is enough. This degree of proof differs from that of a rank-and-file employee which requires proof of involvement in the alleged events, and that mere uncorroborated assertions by the employer will be insufficient. Despite the less stringent degree of proof involving managerial employees, jurisprudence is firm that loss of trust and confidence as a ground for dismissal has never been intended to afford an occasion for abuse due to its subjective nature. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith.

    In the present case, the Court doubted the evaluation conducted on Noel’s performance based on the following findings:

    • The date of evaluation and period covered were not indicated;
    • Gaddi, the person who conducted the evaluation, was not competent to conduct the same since he was not Noel’s immediate supervisor;
    • No copy of the evaluation was given to Noel. If Noel really refused to receive the same, Delta Earthmoving should have sent a copy of the same to Noel by registered mail.

    For the Court, the Performance Evaluation was a mere afterthought to justify Noel’s termination from employment due to alleged poor performance.

    On the other hand, the Court found that Ian’s email to Noel was telling in that Noel was commended for all the good work he had done at Didipio Gold Project.

    At the same time, the Court discredited Delta Earthmoving’s memoranda which directed Noel to explain in writing certain acts of negligence because there was no showing that the same were served on Noel. The Court viewed the memoranda as concoctions on the part of the employer to strengthen its position against Noel. The Court emphasized that Delta Earthmoving should have instead submitted records revealing Noel’s dismal work performance. There being no showing of poor performance, gross negligence and inefficiency on Noel’s part, no basis supported the alleged loss of trust and confidence upon him.

    The Court pointed out that loss of trust and confidence, as a ground for dismissal, may not be invoked arbitrarily. Managerial employees could not simply be dismissed on account of their position.

    Moreover, the Court observed that Delta Earthmoving failed to comply with the requirements of procedural due process in the termination of Noel’s employment since the fact of his termination was only relayed to him by his immediate supervisor in the mining site, upon instructions received from Delta Earthmoving’s main office. Noel’s email correspondence with his supervisor even shows that he had to go to Delta Earthmoving’s office in Quezon City to verify for himself if his employment was indeed terminated.

    Noel’s dismissal was thus declared illegal as he was denied his right to substantive and procedural due process.

    The Court reminded employers that the misdeed attributed to the employee must be a genuine and serious breach of the established expectations required by the exigencies of the position regardless of its designation, and not a mere distaste, apathy, or petty misunderstanding. What is at stake are the employee’s reputation, good name, and source of livelihood, at the very least. Employment and tenure cannot be bargained away for the convenience of attaching blame and holding one accountable when no such accountability exists.

    Further reading:

    • Manrique v. Delta Earthmoving, Inc., G.R. No. 229429, November 9, 2020.

    Subscribe to YouTube and Spotify

  • No Second Contract, No Substitution

    Maria Antoniette alleged that she was hired by Thanaya Al-Yaqoot Medical Specialist through its agent, Fil-Expat Placement Agency, to work as an orthodontist specialist in the Kingdom of Saudi Arabia.

    Maria Antoniette narrated that in May 2016, her employer asked her to sign a document written in Arabic and wanted her to agree that only half of the stipulated salary would be declared to the Kingdom of Saudi Arabia (KSA) government for insurance purposes. She claimed to have expressed hesitation, but she eventually signed the document using a different signature.

    Maria Antoniette stated that the employer then repeatedly forced her to execute a new employment contract. When she refused, the employer subjected her to varied forms of harassment in that she was given additional duties. Her employer also threatened to deduct 10,000 Saudi Riyal from her salary and force her out of her accommodation. Furthermore, her employer attempted to make sexual advances on her, and showed no concern when she suffered a severe allergic reaction to latex surgical gloves.

    After her repatriation on June 24, 2016, she filed a complaint against her employer for constructive dismissal, contract substitution, breach of contract, and damages before the Office of the Labor Arbiter.

    The employer denied that Maria Antoniette was maltreated. It pointed out that Maria Antoniette was visited by the Philippine Overseas Labor Office Local Hire together with the employer’s representative. They observed that Maria Antoniette had no swollen hands, bleeding blisters, and evidence of additional duties or sexual abuse. The employer added that it did not receive any complaint from Maria Antoniette. Although Maria Antoniette mentioned an incident when she was shouted at, the employer explained that it was normal for Arab people to talk in a loud voice.

    The employer also denied that it committed contract substitution. Although it admitted that Maria Antoniette was asked to sign a new employment contract, this was only due to Maria Antoniette’s refusal to provide a copy of her contract and diploma, which must be submitted to the KSA Ministry of Health.

    The employer also stated that Maria Antoniette was not threatened with a salary deduction. Instead, it merely explained to her that it would be fined should it fail to submit a copy of the contracts to the government.

    Finally, the employer retorted that Maria Antoniette’s case could hardly be construed as one of constructive dismissal since she could decide to discontinue her contract. That no dismissal occurred could also be gleaned from its request for her to stay for two more months until her replacement arrives.

    The Office of the Labor Arbiter declared the employer guilty of breach of contract and constructive dismissal.

    This constrained the employer to appeal the Office of the Labor Arbiter’s Decision to the National Labor Relations Commission.

    The Commission reversed the Office of the Labor Arbiter’s Decision and ruled that there was no breach of contract and constructive dismissal. According to the Commission, no contract substitution happened since the employer never intended to prejudice Maria Antoniette in the execution of a new employment contract. The Commission also ruled that since the execution of the new contract was for the purpose of complying with a foreign law requirement of devising a uniform contract for the protection of the worker and the employer, there could be no contract substitution. Furthermore, the Commission ruled out constructive dismissal because if found no evidence that Maria Antoniette’s continued employment was rendered impossible, unreasonable, or unlikely.

    Aggrieved, Maria Antoniette elevated the case to the Court of Appeals.

    The Court of Appeals reinstated the Decision of the Office of the Labor Arbiter because there was substantial evidence that the employer attempted to force Maria Antoniette into signing a new employment contract. The Court of Appeals stressed that the employer’s attempt to commit contract substitution should be punished to avoid repetition. The Court of Appeals also held that Maria Antoniette was compelled to seek repatriation because her employment became intolerable as she suffered verbal and psychological abuses after she refused to sign the new contract.

    The employer assailed the Decision of the Court of Appeals before the Supreme Court.

    Did the employer commit contract substitution?

    The Supreme Court ruled in the affirmative.

    The Court stated that substitution or alteration of employment contracts is listed as a prohibited practice under Article 34 (i) of the Labor Code of the Philippines. The Court further stated that to substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment is considered an act of illegal recruitment under Section 6 (i) of the Migrant Workers and Overseas Filipinos Act of 1995.

    In the present case, the Supreme Court noted the admission of the employer that it attempted to make Maria Antoniette sign a new contract.

    However, the Supreme Court doubted the claim of the employer that it had no intention of prejudicing Maria Antoniette relative to the supposed second contract.

    This was because the employer failed to prove the specific foreign law which required a separate employment contract apart from the Philippine Overseas Employment Administration (POEA)-approved Standard Employment Contract.

    In addition, the Supreme Court found it illogical to require Maria Antoniette to sign a second contract for purposes of uniformity if it would only restate the contents of the POEA-approved employment contract, which incidentally, already included an Arabic translation of the agreed terms and conditions between the employee and the employer. The Supreme Court continued that assuming Maria Antoniette failed to provide the employer a copy of the POEA-approved employment contract, the employer could just easily request a copy of the same from its agent.

    The Supreme Court also noted the employer’s contention that because Maria Antoniette did not sign another document, there was no second contract, and hence, no contract substitution happened.

    The Supreme Court rejected such contention because under prevailing jurisprudence, a refusal of the Overseas Filipino Worker to sign another employment contract does not absolve the employer from liability and the mere intention to commit contract substitution should not be left unpunished.

    Was Maria Antoniette constructively dismissed from employment?

    The Supreme Court likewise ruled in the affirmative.

    The Supreme Court discussed that the law recognizes situations wherein the employee must leave his or her work to protect one’s rights from the coercive acts of the employer. The employee is considered to have been illegally terminated because he or she is forced to relinquish the job due to the employer’s unfair or unreasonable treatment. The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances.

    In the present case, the Supreme Court found that despite the seeming benevolence of the employer in providing housing accommodation and other benefits to its employees, evidence, nonetheless, showed that Maria Antoniette was singled out and verbally intimidated after she refused to sign the second employment contract. Record revealed the following facts, which impelled Marie Antoniette to seek assistance from the Philippine Embassy and Consulate Officials in Saudi Arabia, as well as from the media:

    • Her employer told her that “she will see hell” if she reports her situation to the Philippine embassy;
    • Her employer threatened to reduce her salary for her refusal to sign the new contract;
    • She was constantly harassed and pressured into signing the new employment contract even in the middle of work;
    • She was humiliated in front of her co-workers and her employer’s relatives and friends; and
    • Her employer showed no concern over her severe allergic reaction to latex surgical gloves.

    Moreover, the Supreme Court criticized the employer’s assertion of Marie Antoniette being overly sensitive. The Court viewed such assertion to be absurd if not downright insulting. According to the Court, Overseas Filipino Workers, especially medical professionals working abroad, could discern a loud voice from abusive language.

    Taken together, the Supreme Court considered the foregoing circumstances as sufficient indications of the employer’s bad faith, hostility, and disdain toward Maria Antoniette. The Court stressed that while there was no formal termination of her services, she was left without any option except to quit her job. Maria Antoniette’s continued employment was rendered unlikely and unbearable, amounting to constructive dismissal.

    Further reading:

    • Fil-Expat Placement Agency, Inc. v. Lee, G.R. No. 250439, September 22, 2020.

    Subscribe to YouTube and Spotify

  • Consequences of Deliberate Concealment

    Magno alleged that on November 13, 2014, he was hired by Goodwood Ship Management, Pte., Ltd., through its agent, Trans-Global Maritime Agency, Inc., as Oiler on board MT G.C. Fuzhou for a period of nine months. He stated that after he was declared fit for sea duty in his pre-employment medical examination, he boarded the vessel on November 15, 2014.

    Magno narrated that on January 25, 2015, he suddenly felt severe chest pain, accompanied by dizziness and weakness while carrying out his duties. He was made to endure his condition until his repatriation on May 18, 2015. Upon arrival in the Philippines, he was referred to the employer-company’s designated physician. From May 20, 2015, he was subjected to various tests and treatment for coronary artery disease. After five months of treatment, the company-designated physician discontinued his treatment. Consequently, he consulted his personal cardiologist, who concluded that the nature and extent of his illness rendered him permanently and totally unfit to work as a seaman. Thus, on January 19, 2016, he filed a complaint for disability benefits, medical expenses, damages and attorney’s fees against his employer.

    For its part, the employer retorted that Magno denied having a history of high blood pressure or any kind of heart disease when he ticked the “No” box opposite “High Blood Pressure” and “Heart Disease Vascular/Chest Pain” under the section, Medical History in his Pre-Employment Medical Examination (PEME). The employer stated that it was on May 17, 2015, that Magno complained of back and chest pains, with difficulty of breathing and easy fatigability, and was thereafter medically repatriated. During his treatment by the company-designated physician sometime in September 2015, Magno disclosed that he was diagnosed, as early as 2009, with coronary artery disease, for which he underwent Percutaneous Coronary Intervention of the left anterior descending artery. The company-designated physicians later stopped his treatment, prompting him to file a complaint for the payment of permanent total disability benefits.

    The Office of the Labor Arbiter ruled in favor of Magno and awarded him permanent total disability benefits. Said Office considered the company-designated physician’s continuation of Magno’s treatment despite his belated disclosure of his existing coronary artery disease as an instance of employer’s waiver of its right to deny liability for disability benefits. According to the Office of the Labor Arbiter, such treatment constituted an implied admission of compensability and work-relatedness of Magno’s lingering cardio-vascular illness. The Office of the Labor Arbiter further found that the company-designated physician failed to issue a final assessment of Magno’s illness or fitness to work, which failure deemed Magno totally and permanently disabled.

    On appeal, the National Labor Relations Commission affirmed the Office of the Labor Arbiter’s ruling because Magno’s illness occurred within the duration of his contract, and his treatment lasted for more than 120 days. For the Commission, the award of permanent total disability benefits was justified.

    The employer then filed a petition for certiorari with the Court of Appeals, which dismissed the petition.

    Thus, the employer sought recourse before the Supreme Court, alleging that the Court of Appeals committed serious errors of law in upholding the Commission’s Decision. The employer insisted that Magno was not entitled to permanent and total disability benefits and his other monetary claims because of deliberate concealment of his coronary artery disease.

    For his part, Magno maintained entitlement to permanent total disability benefits since his illness was work-related and had contributed to the development of his condition that resulted in his disability.

    Is Magno entitled to permanent total disability benefits?

    The Supreme Court ruled that Magno is not entitled to permanent total disability benefits. The Court of Appeals erred in upholding the decision of the National Labor Relations Commission.

    The Court started by stating that entitlement of seafarers on overseas work to disability benefits is a matter governed, not only by medical findings, but by law and by contract. The Court stated that the material statutory provisions are Articles 197 to 199 of the Labor Code of the Philippines in relation to Section 2 (a), Rule X of the Amended Rules on Employee Compensation. By contract, the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), the parties’ collective bargaining agreement, if any, and the employment agreement between the seafarer and the employer are pertinent.

    The Court pointed out that Section 20, paragraph E of the POEA-SEC clearly provides that “[a] seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment Medical Examination (PEME) shall be liable for misrepresentation and shall be disqualified from any compensation and benefits.” The Court said that such rule seeks to penalize seafarers who conceal information to pass the pre-employment medical examination. It even makes such concealment a just cause for termination.

    Under the POEA-SEC, there is a “pre-existing illness or condition” if prior to the processing of the POEA contract, any of the following is present:

    • the advice of a medical doctor on treatment was given for such continuing illness or condition; or
    • the seafarer has been diagnosed and has knowledge of such illness or condition but failed to disclose it during the pre-employment medical examination, and such cannot be diagnosed during such examination.

    In the present case the Court found that:

    • In his September 18, 2014 PEME, Magno indicated that he was not suffering from any medical condition likely to be aggravated by service at sea or which may render him unfit for sea service;
    • Magno also indicated in the PEME that he did not have a history of heart disease/vascular/chest pain, high blood pressure, or that he underwent treatment for any ailment and was taking any medication; and
    • He signed the PEME certificate acknowledging that he had read and understood and was informed of the contents of such certificate.

    However, the Court further found a medical report issued by the company-designated physician, dated September 17, 2015, which stated therein Magno’s disclosure of a history of coronary artery disease for which he underwent percutaneous coronary intervention of the left anterior descending artery in 2009.

    With this disclosure, the Court declared that Magno had obscured his pre-existing cardiac ailment, and such concealment thus disqualified him from disability benefits notwithstanding the medical attention extended by the company-designated physician upon his repatriation.

    The Court discussed that even if the misrepresentation was discovered during Magno’s treatment with the company-designated physician, the same was immaterial and could not have canceled out his deception.

    The Court reiterated that a PEME is generally not exploratory in nature, nor is it a totally in-depth and thorough examination of an applicant’s medical condition. It does not reveal the real state of health of an applicant, and does not allow the employer to discover any and all pre-existing medical condition with which the seafarer is suffering and for which he may be taking medication. The PEME is nothing more than a summary examination of the seafarer’s physiological condition and is just enough for the employer to determine his fitness for the nature of the work for which he is to be employed.

    Since the PEME is not exploratory, the Court emphasized that its failure to reveal or uncover Magno’s ailments cannot shield him from the consequences of his deliberate concealment. In this regard, the “fit to work” declaration in the PEME cannot be a conclusive proof to show that he was free from any ailment prior to his deployment.

    For knowingly concealing his history of coronary artery disease during the PEME, Magno committed fraudulent misrepresentation which unconditionally barred his right to receive any disability compensation from his employer.

    The Court added that even if it were to disregard Magno’s fraudulent misrepresentation, his claim would still fail.

    Coronary artery disease, which is subsumed under cardio-vascular disease, and hypertension are listed as occupational diseases under item 11, Section 32-A of the POEA-SEC.

    However, before such disease to be compensable, a seafarer must establish concurrence of the following conditions enumerated in the first paragraph of Section 32-A of the POEA-SEC:

    • The seafarer’s work must involve the risk described therein;
    • The disease was contracted as a result of the seafarer’s exposure to the described risks;
    • The disease was contracted within a period of exposure and under such other factors necessary to contract it; and
    • There was no notorious negligence on the part of the seafarer.

    Relevant thereto, the Court reiterated prevailing jurisprudence in that the table of illnesses and the corresponding nature of employment in Section 32-A only provides the list of occupational illnesses. However, even if the illness may be considered as work-related for having been specified in the table, the seafarer is still not exempted from providing proof of the conditions under the first paragraph of Section 32-A in order for the occupational illnesses complained of to be considered as compensable. Whoever claims entitlement to benefits provided by law should establish his right thereto by substantial evidence which is more than a mere scintilla; it is real and substantial, and not merely apparent. Further, while in compensation proceedings in particular, the test of proof is merely probability and not ultimate degree of certainty, the conclusion of the courts must still be based on real evidence and not just inference and speculations.

    In the present case, the Court found that Magno failed to present sufficient evidence to show how his working conditions contributed to or aggravated his illness. According to the Court, the general statements in his Position Paper were not validated by any written document or other proof. Neither was any expert medical opinion presented regarding the cause of his condition.

    The Court expounded that although Magno suffered from coronary artery disease, a cardiovascular illness under item 11 of Section 32-A of the POEA-SEC, the conditions for compensability under the same section were not present since Magno did not present any proof of the required conditions to demonstrate that his illness is work-related and, therefore, compensable. Specifically, Magno failed to discharge his burden to prove the risks involved in his work, that his illness was contracted as a result of his exposure to the risks within the period of exposure and under such other factors necessary to contract it, and that he was not notoriously negligent. The Court thus ruled that Magno was not entitled to permanent total disability benefits.

    In deciding against the seafarer in this case, the Court emphasized that the constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers, as justice is for the deserving and must be dispensed within the light of established facts, the applicable law, and existing jurisprudence. The Court said that its commitment to the cause of labor is not a lopsided undertaking. The Court concluded by stating that such commitment cannot and does not prevent it from sustaining the employer when it is in the right.

    Further reading:

    • Trans-Global Maritime Agency, Inc. v. Utanes, G.R. No. 236498, September 16, 2020.

    Subscribe to YouTube and Spotify

  • I Skipped Work as I Felt Sick

    Laurence alleged that on September 3, 2007, he was hired by Verizon Communications Philippines, Inc. (Verizon) as network engineer.

    Laurence narrated that sometime in January 2012, his doctor diagnosed him with pulmonary tuberculosis and pneumonia for which he was recommended to isolate and rest for 60 days.

    Laurence informed his manager of his medical condition, and did not report for work from February 3, 2012 to recuperate from his illness. He went to Guimaras Island to quarantine himself and avoid the spread of his disease.

    On March 14, 2012, Laurence received a notice to explain. When he called his manager to ask why he was being made to explain, the latter answered that the employer already terminated his employment on March 12, 2012.

    Two weeks later, Laurence received a letter of termination from his employer, prompting him to file a complaint for illegal dismissal and damages against the latter.

    In his case, Laurence claimed to have been illegally dismissed and entitled to his money claims. He asserted that there was no just or authorized cause for his dismissal and that the employer failed to observe the requirements of due process. Laurence also claimed that he did not abandon his work since he was able to notify the employer of his illness and the need for medical treatment on isolation. According to Laurence, his absence is justified due to his sickness that needed a long rest and quarantine period to prevent the spread of the disease to his co-workers.

    For its part, the employer acknowledged that on February 3, 2012, Laurence notified his manager through text message on his absence. However, the employer pointed out that Laurence did not indicate the duration of his leave and no longer answered its manager’s phone calls. After more than a month of not hearing from Laurence, the employer sent its nurse, who was able to check on Laurence and serve him a notice requiring him to explain his unauthorized absence and why he should not be considered to have abandoned his work. It was only on March 14, 2012 that Laurence called his manager regarding the notice and explained that he had no cellphone reception in the place where he was. On the same day, Laurence sent an email in which he admitted his mistake, apologized for his unauthorized absence, and sought reconsideration of his dismissal. In view of Laurence’s admission, the employer terminated his employment on March 28, 2012.

    The employer further averred that Laurence was aware of its policies on attendance and absences. Nonetheless, he failed to notify the employer of the duration of his leave. The notice he gave to his manager was not enough because he did not mention the length of his absence and did not submit a medical certificate or medical test results. For the employer, his 38-day absence, as well as his admission, warranted his termination from employment.

    In its Decision dated February 11, 2013, the Office of the Labor Arbiter dismissed the complaint for lack of merit.

    According to the Office of the Labor Arbiter, Laurence, a Network Engineer whose presence was always expected by the employer in the worksite, went on prolonged absence without official leave for 38 consecutive days, without informing his manager or the employer about it and without even offering any reasonable explanation for his failure to inform the employer of his prolonged absences. For the Office of the Labor Arbiter, the employer cannot be faulted in applying its rule on unauthorized absences for 5 consecutive days, which carried a penalty of dismissal from employment.

    Aggrieved, Laurence appealed before the National Labor Relations Commission, pointing out that his prolonged absence was due to health reasons and he did not intend to abandon his work. Laurence thus insisted on his stand that no valid cause attended his dismissal from employment.

    The National Labor Relations Commission reversed the Office of the Labor Arbiter’s ruling and upheld Laurence’s stand that the employer failed to show just cause in terminating his employment. The Commission explained that the rules of the employer only mandates its employees to notify their manager 4 hours before taking a sick leave and to submit his/her medical certificate upon return. The Commission found that Laurence was able to notify his immediate manager through text message about his sickness and his leave on February 3, 2012. Since the Commission did not consider the absences of Laurence as unauthorized, his dismissal from employment was declared illegal.

    The employer filed a petition for certiorari before the Court of Appeals, but the latter upheld the Decision of the National Labor Relations Commission. The Court of Appeals added that the length of his absence is justified considering that pulmonary tuberculosis and pneumonia are commonly considered to be serious infectious diseases.

    The employer elevated its case to the Supreme Court and asserted that Laurence was validly dismissed because of his deliberate violation of the employer’s rules on unauthorized absences and excessive absenteeism. The employer stated that it validly exercised its management prerogative in applying its rules. Finally, it granted Laurence ample opportunity to be heard.

    Was Laurence validly dismissed from employment?

    The Supreme Court ruled in the negative, because Laurence was not found to have violated the employer’s rules on authorized and unauthorized absences.

    The Court reiterated prevailing principles in that the employer in an illegal dismissal case has the burden of proving that an employee’s dismissal from service was for a just or authorized cause. Otherwise, the employer’s failure shall result in a finding that the dismissal is unjustified.

    Record showed that the employer dismissed Laurence because of his alleged violation of its rules. Under such rules, the absence of an employee may be authorized or unauthorized. An authorized absence, due to sickness, requires that the employee send his manager notice 4 hours before his shift, with a reasonable description of his illness, and the submission of the employee’s proof of illness on his return date. On the other hand, the employee’s absence becomes unauthorized if the employee fails to notify his/her immediate superior, or if the employee fails to submit a medical certificate on his/her return date.

    However, the Supreme Court found that on February 3, 2012, Laurence sent his manager a text message, informing the latter that he will be absent because he was sick with pulmonary tuberculosis, a contagious disease, and was advised to take medication. It was also found that the manager did not deny having received this message from Laurence.

    The Supreme Court thus stated that the information given by Laurence was sufficient to properly apprise the employer of his condition. Furthermore, Laurence’s failure to submit proof of illness while he was on sick leave and to indicate a return date did not render his absence unauthorized. The Court added that Laurence was no longer given the opportunity to submit his medical certificate and other documents to prove his illness.

    With regard to the employer’s policy on excessive absenteeism, which prescribes dismissal as penalty, the Court ruled that the same was harsh.

    The Court mentioned that the Constitution looks with compassion on the working class and is intent on protecting their rights. A worker’s employment is property in a constitutional sense, and he/she cannot be deprived thereof without due process and unless the deprivation is commensurate to his/her acts and degree of moral depravity. While the right of an employer to terminate the services of an employee for a just or authorized cause is recognized, the dismissal must be made within the parameters of law and pursuant to the tenets of equity and fair play. An employer’s power to discipline his employees must not be exercised in an arbitrary manner as to erode the constitutional guarantee of security of tenure.

    The Court continued that although the power to dismiss employees is a formal prerogative of the employer, such power is not without limitations. The employer is bound to exercise caution in terminating the services of his employees and dismissals must not be arbitrary and capricious. Due process must be observed and employers should respect and protect the rights of their employees. To effect a valid dismissal, the law requires not only that there be just and valid cause; it must also be supported by evidence. There must be a reasonable proportionality between the offense and the penalty. Even when there exist some rules agreed upon between the employer and employee on the subject of dismissal, the same cannot preclude the State from inquiring on whether their rigid application would work too harshly on the employee. Dismissal, without doubt, is the ultimate penalty that can be meted to an employee. Hence, where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. The Court stressed that it will not hesitate to disregard a penalty that is manifestly disproportionate to the infraction committed.

    In the present case, the Court noted that since the employer raised Laurence’s violation of its rules, it is incumbent upon the employer to prove that Laurence clearly, voluntarily and intentionally committed the infraction. However, the Court found that Laurence’s absence from work was due to sickness and that he gave proper notification of his absence, which reason should have been given kind consideration by the employer. The Court remarked that an employee cannot anticipate when an illness may happen, thus, he may not be able to give prior notice or seek prior approval of his absence, but could only do so after the occurrence of the incident.

    The Court added that even assuming that Laurence was found to have deliberately violated the employer’s rules, the penalty of dismissal imposed upon him was too harsh and disproportionate to the wrongdoing committed. In this regard, the Court maintained that it is not bound by the employer’s rules, as well as the employer’s findings of violation and dismissal. It is settled that the law serves to equalize the unequal. The labor force is a special class that is constitutionally protected because of the inequality between capital and labor. This constitutional protection presupposes that the labor force is weak. However, the level of protection to labor should vary from case to case; otherwise, the State might appear to be too paternalistic in affording protection to labor.

    The Court also found that Laurence was not accorded procedural due process.

    The Court stated that to effect a valid dismissal on the ground of just cause, the employer is bound to observe procedural due process. Procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with 2 written notices before the termination of employment can be implemented:

    • the first apprises the employee of the particular acts or omission for which his dismissal is sought; and
    • the second informs the employee of the employer’s decision to dismiss him.

    In the present case, the Court found that the notices issued by the employer failed to observe the standards set forth in case law. The Court said that while the employer ostensibly afforded Laurence the opportunity to refute the charge of AWOL and abandonment against him, the employer deprived him of due process when he was not given ample time to prepare his defense and later on, when his explanation was not given consideration on the ground that it was submitted beyond the 48-hour period.

    What reliefs were granted to Laurence?

    In view of the finding of illegal dismissal, the Court upheld the grant of separation pay, but it deleted the award of backwages.

    With regard to reinstatement, the Court discussed that usually, reinstatement without loss of seniority rights and other privileges and full backwages are granted to illegally dismissed employees.

    However, if actual reinstatement is no longer possible, the employee becomes entitled to separation pay in lieu of reinstatement. Based on jurisprudence, reinstatement is not feasible:

    • in cases where the dismissed employee’s position is no longer available
    • the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; and
    • when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved.

    In these instances, said the Court, separation pay is the alternative remedy to reinstatement in addition to the award of backwages. The payment of separation pay and reinstatement are exclusive remedies. Stated differently, the payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed.

    In the present case, the Court upheld the grant of separation pay in favor of Laurence since it was consistently found that he opted to receive separation pay instead of reinstatement.

    On the other hand, with regard to backwages, the Court elaborated that in labor cases, the Court is tasked with the delicate act of balancing the employee’s right to security of tenure against the employer’s right to freely exercise its management prerogatives. Even though it is basic in labor law that an illegally dismissed employee is entitled to reinstatement, or separation pay if reinstatement is not viable, and payment of full backwages, in some instances, the Court has carved out exceptions where the reinstatement of an employee was ordered without an award of backwages. This is on account of: (1) the fact that dismissal of the employee would be too harsh of a penalty; and (2) that the employer was in good faith in terminating the employment.

    The Court held that the employer is excused from paying backwages to Laurence because it considered the penalty of dismissal to be harsh. Although Laurence did not violate the employer’s rules on authorized and unauthorized absences since he was able to notify his immediate manager of his absence on February 3, 2012 because of his sickness, the Court found that he cannot be deemed entirely faultless. Aside from the text message he sent, he did nothing else to comply with the employer’s rules. He did not inform the employer that he would leave his residence nor leave any information on how he may be reached. On the other hand, his manager exerted efforts to contact Laurence, albeit to no avail. For such reasons, the Court held that no basis supported an award of backwages. Such award of backwages was thus deleted.

    Further reading:

    • Verizon Communications Philippines, Inc. v. Margin, G.R. No. 216599, September 16, 2020.

    Subscribe to YouTube and Spotify

  • Appalling Disregard of Physical Safety and Property

    Wilfredo alleged that he was engaged as a bus driver by the employer bus company since August 5, 2005.

    Wilfredo narrated that on May 31, 2015, a representative from the head office of the employer bus company instructed him to alight from his assigned bus and no longer allowed him to continue his supposed trip that day. When Wilfredo reported for work the next day, he was advised not to come to work in the meantime. He was told that the employer bus company will just send him an e-mail as to when he will be given a bus assignment.

    Wilfredo thus filed a complaint for illegal dismissal, money claims, damages and attorney’s fees against the employer bus company.

    Since the employer bus company failed to file its position paper during the proceedings, the Office of the Labor Arbiter deemed Wilfredo’s allegations to be admitted. The Office of the Labor Arbiter declared Wilfredo to be illegally dismissed from employment and ordered the employer bus company to pay Wilfredo separation pay and backwages, among other awards.

    In its appeal to the National Labor Relations Commission, the employer bus company averred that it filed its position paper with respect to the claim of Wilfredo and mailed the same to the Office of the Labor Arbiter.

    The Commission admitted the position paper of the employer bus company and ruled that just cause attended the dismissal of Wilfredo from employment. The Commission found that Wilfredo was involved in several reckless driving incidents that constituted misconduct.

    Wilfredo’s petition before the Court of Appeals was dismissed for lack of merit. The Court of Appeals found that there was valid ground to dismiss Wilfredo from employment and that the employer bus company complied with the procedural requirements of due process in such dismissal.

    Wilfredo elevated his case before the Supreme Court. Wilfredo insisted that the employer bus company failed to substantiate his alleged cumulative infractions of company rules for reckless driving that warranted his dismissal. Wilfredo further mentioned that the employer bus company failed to afford him procedural due process since he was not given a notice to explain, there was no hearing or conference to afford him an opportunity to present evidence to support his claim, and he did not receive a notice of termination.

    Was Wilfredo validly dismissed from employment?

    The Supreme Court ruled that Wilfredo was validly dismissed from employment.

    The Court discussed that dismissal from employment has two facets: first, the legality of the act of dismissal, which constitutes substantive due process; and second, the legality of the manner of dismissal, which constitutes procedural due process. The burden of proof rests upon the employer to show that the disciplinary action was made for lawful cause or that the termination of employment was valid. In administrative and quasi-judicial proceedings, the quantum of evidence required is substantial evidence or “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Thus, unsubstantiated suspicions, accusations, and conclusions of the employer do not provide legal justification for dismissing the employee.

    With regard to the substantive aspect, the Court found that the employer bus company terminated Wilfredo’s employment on the ground of serious misconduct. The Court stated that for serious misconduct to be a just cause for dismissal, the concurrence of the following elements is required: (a) the misconduct must be serious; (b) it must relate to the performance of the employee’s duties showing that the employee has become unfit to continue working for the employer; and (c) it must have been performed with wrongful intent.

    In the present case, the Court found that the employer bus company presented sufficient evidence to prove that Wilfredo committed numerous infractions of company rules and regulations since he started working with the employer bus company. According to the Court, the infractions can be traced as far back as 2002 up to the time he was rehired in 2008 when he admitted to hitting a concrete mixer truck in Baliuag, Bulacan. The Court added that in the year 2009, the side mirror of Wilfredo’s assigned bus was destroyed while he was trying to overtake another bus; and in 2013, he had an altercation with an inspector of the employer bus company for which he was meted a penalty of suspension. The Court continued that the last infraction was in March 2015 when he figured in a vehicular accident that caused injuries to his passengers.

    For the Court, the repeated and numerous infractions committed by Wilfredo in driving the passenger bus assigned to him cannot be considered minor. The Court took judicial notice of the gross negligence and the appalling disregard of the physical safety and property of others so commonly exhibited today by the drivers of passenger buses. Taking into account the nature of Wilfredo’s job, the Court determined Wilfredo’s infractions to be numerous to be ignored or treated lightly that the same may already be subsumed as serious misconduct. The Court accordingly held that Wilfredo was validly dismissed from employment on the ground of serious misconduct.

    With regard to requirements of procedural due process, the Court found that the employer bus company failed to comply with the same. The Court expounded that the following should be considered in terminating the services of employees:

    • 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 of at least five (5) calendar days from receipt of the notice.
    • After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to explain and clarify their defenses to the charge against them; present evidence in support of their defenses; and rebut the evidence presented against them by the management.
    • After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: all circumstances involving the charge against the employees have been considered; and grounds have been established to justify the severance of their employment.

    In the present case, the Court found that the employer bus company was unable to send Wilfredo a first written notice containing the specific causes or grounds for termination against him. Although Wilfredo submitted a lengthy explanation letter dated June 3, 2015 explaining his side on the incident that transpired two months back, the Court stressed that such explanation did not excuse the fact that there was a complete absence of the first notice. The Court thus sanctioned the employer bus company for disregarding due process requirements.

    According to the Court, where the dismissal is for a just cause, as in this case, the lack of statutory due process will not nullify the dismissal, or render it illegal or ineffectual. The employer will not be required to pay the employee backwages. However, the employer should indemnify the employee for the violation of his statutory right in the form of nominal damages in the amount of Thirty Thousand Pesos (Php30,000.00) in accordance with prevailing jurisprudence.

    Further reading:

    • Mariano v. G.V. Florida Transport, G.R. No. 240882, 16 September 2020.

    Subscribe to YouTube and Spotify