Labor Law Digests 2

Q. The factory workers of Sime Darby used to work from 7:45 a.m. to 3:45 p.m. with a 30-minute paid “on call” lunch break.   In 1992, Sime Darby issued a memorandum to all factory workers advising them of a change in work schedule.   The new work schedule eliminated the 30-minute paid “on call” lunch break and gave the workers a one-hour unpaid lunch break.  Under the new schedule, the workers will still work for eight hours per day.   The workers filed a complaint for unfair labor practice.   Did the company commit any unfair labor practice when it revised the work schedule?

A. No, the company did not commit any unfair labor practice.   The right to fix the work schedules of the employees rests principally on their employer.   Under the old schedule, the workers could be called upon to do jobs during their 30-minute paid lunch break.   Under the new schedule, the workers were given a one-hour lunch break without any interruption from their employer.   Thus, there is no need to compensate the workers for this period.   Since the new schedule applies to all employees in the factory whether union members or not, it is not discriminatory.   It cannot be said that this new scheme prejudices the workers’ right to self-organization.   Hence, there is no unfair labor practice in this case.  

Q. Should the appeal bond be posted within the ten (10) day reglementary period for filing an appeal from the Labor Arbiter’s decision?

A. As a general rule, yes.   When the judgment involves a monetary award, an appeal by the employer may be perfected only upon posting of a cash or surety bond in an amount equivalent to the monetary award in the judgment appealed from.  Compliance with the requirement of posting a bond is both mandatory and imperative as the perfection of an appeal within the reglementary period is jurisdictional.  In a growing number of cases, however, the Supreme Court has relaxed the stringent application of the rule concerning the posting of the appeal bond within the ten (10) day reglementary period as a requirement for the perfection of an appeal.  The Supreme Court has allowed the filing of a motion for reduction of bond in lieu of the appeal bond within the reglementary period for filing an appeal.   In such case, the appeal bond may be filed after the lapse of the reglementary period and after the resolution of the motion to reduce the amount of the bond .   (Alcosero v. NLRC, 288 SCRA 129, March 26, 1998) 

Q. Roberto was a driver of Philtranco who was assigned to the Legaspi City-Pasay City route.   He was dismissed from the service.   He filed a complaint for illegal dismissal before the NLRC’s National Capital region Arbitration Branch in Manila.   Philtranco filed a Motion to Dismiss stating that the complaint should have been lodged with the NLRC’s Regional Arbitration Branch in Legaspi City not only because Roberto was a resident thereof but also because the latter was hired, assigned, and based in Legaspi City.   Decide.

A. The Motion to Dismiss must be denied.   The question of venue pertains to the trial and relates more to the convenience of the parties rather than upon the substance and merits of the case.   Provisions on venue are intended to assure convenience for the plaintiff and his witnesses and to promote the ends of justice.   The New Rules of Procedure of the NLRC cited by Philtranco speaks of the complainant’s workplace, evidently showing that the rule is intended for the exclusive benefit of the worker.   This being the case, the worker may waive said benefit.   Moreover, since Roberto was assigned to Legaspi City-Pasay City route, the filing of the complaint with the National Capital Region Arbitration Branch was proper, Manila being considered as part of Roberto’s workplace.  (Philtranco Service Enterprises, Inc. v. NLRC, 288 SCRA 585, April 1, 1998)

Q. Mario was hired to work on board the passenger cruise vessel Odyssey for 12 months as utility man.   When he boarded the vessel, he was unaware that there was an existing animosity between the Filipino crew and the Greek crew.   One day, a heated argument occurred between Mario and a Greek deck steward, Zakkas, which resulted in a scuffle between the two.   Zakkas pushed Mario who fell hitting his head against the steel molding of the door.   Mario suffered a cut in the head.   Prior to this incident, Zakkas and the other Greek workers continuously ridiculed Mario.   The night before the incident, Zakkas threatened to pour hot coffee on Mario’s head.   Mario reported the abuses to the ship captain but the latter just blamed Mario for joining the ship.   Because of his fear that further trouble may erupt between him and the Greek crew, Mario left the ship.   When he was repatriated to the Philippines, he filed a complaint for illegal dismissal.   The labor arbiter dismissed the complaint on the ground that Mario voluntarily signed off from the vessel.   Is the ruling correct?

A. No, the ruling is erroneous.   Constructive dismissal exists when there is a quitting because continued employment is rendered impossible, unreasonable or unlikely.  In this case, Mario quit because he feared for his life and his fear was well founded.   His decision to leave the ship was not voluntary but was impelled by a legitimate desire for self-preservation.   The ship captain, as the general agent of the ship owner, could be held responsible for failing to make the workplace safe for Mario.   This is a clear case of constructive dismissal.   (Singa Ship Managament Phils., Inc. v. NLRC, 288 SCRA 692, April 14, 1998)

Q. PISI is a duly licensed security agency.   It hired Escobin and several other security guards to work as guards in the premises of Basilan Plantations, Inc. in Basilan, Mindanao.   Escobin and his companions were residents of Basilan and heads of families.   After working for five years as guards in the plantation, Escobin and his group were placed under reserved or floating status.   This was due to the reduction of the security force ordered by Basilan Plantations, Inc..   Later, the guards placed on reserved or floating status were instructed by registered letter to report to PISI Head Office in Metro Manila for posting to PISI clients within Metro Manila.   The guards did not reply.   A second letter was sent but the guards likewise failed to reply.   PISI sent individual letters to the guards ordering them to explain why no disciplinary action should be taken against them for failing to comply with PISI’s order.   The guards did not send their answers to PISI.  PISI dismissed the guards on the ground of insubordination or willful disobedience to lawful orders of their employer.    During the proceedings before the Labor Arbiter, the guards justified their inability to comply with PISI’s order to report to the head office in Metro Manila, saying: they were residents of Basilan, have families of their own in Basilan, have never traveled beyond Visayas and Mindanao, not provided by PISI with fare money as they cannot, on their own, finance their travel from Basilan to Manila.   Assuming the allegations of the guards were true, was the dismissal valid?

A. No, the dismissal was not valid.   Disobedience, to be a just cause for termination, must be willful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination.   A willful or intentional disobedience justifies dismissal only when the rule, order or instruction is (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with the duties which the employee has been engaged to discharge.   The reasonableness and lawfulness of a rule depend on the circumstances of each case.   Reasonableness pertains to the kind or character of directives and commands and to the manner in which they are ade.   In this case, the order to report to the Manila office fails to meet this standard.   It was grossly inconvenient for the guards who were residents and heads of families in Basilan.   The guards were not provided with funds to defray their transportation and living expenses.    The dismissal in this case was too harsh a penalty for the insubordination which was neither willful nor intentional.    The guards’ failure to answer PISI’s show-cause letters does not negate this conclusion as PISI granted other guards a second chance to explain, an opportunity it denied Escobin and his group.  (Escobin v. NLRC, 289 SCRA 48, April 15, 1998)

Q. Drivers/salesmen and truck helpers of a softdrinks merchandiser filed a case for illegal dismissal, underpayment of wages, and other claims.   The Labor Arbiter decided, among others, that the employer had not complied with the minimum wage requirements.   In arriving at this conclusion, the Labor Arbiter refused to include the commissions paid to the workers in determining compliance with the minimum wage requirement.   As part of their compensation, the workers received commissions per case of softdrinks sold.   Is the Labor Arbiter’s ruling correct?

A. No, the ruling is erroneous.   The definition of the term “wage” in the Labor Code explicitly includes commissions.   While commissions are incentives or forms of encouragement to inspire workers to put a little more industry on their jobs, still these commissions are direct remunerations for services rendered.   There is no law mandating that commissions be paid only after the minimum wage has been paid to the worker.   The establishment of a minimum wage only sets a floor below which an employee’s remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law.   (Iran v. NLRC, 289 SCRA 433, April 22, 1998)

Q. In a complaint for illegal dismissal and unfair labor practices, judgment was rendered in favor of Buda Labor Union.   The Labor Arbiter ordered the company, Buda Enterprises to reinstate the individual complainants and to pay them full backwages.   The decision became final and executory and a writ of execution was issued.   Parcels of land allegedly belonging to Buda Enterprises, but later found to be registered under the names of Co Tuan, S. Ang, J. Lim, and E Gotamco, were levied upon.   Upon learning of such levy, Co Tuan and his three other relatives filed an Urgent Motion to Quash the Writ of Execution claiming that they hold valid and lawful title to the said properties by virtue of the “Extra-judicial Settlement and Sale of the Estate of the Deceased Edilberto Soriano” executed by the heirs.   None of the heirs, except Lourdes Soriano, the proprietress and manager of Buda Enterprises, were parties in the labor case.   The motion was granted.   The workers appealed and asked the Commission to order the Labor Arbiter to implead the movants, praying that the sale between the movants and Buda Enterprises be declared void.  Is the NLRC competent to determine the legality of the sale?

A. No. The power of the NLRC to execute its judgment extends only to properties unquestionably belonging to the judgment debtor.   If the property under levy does not belong to the judgment debtor in the NLRC case, it could not be levied upon by the sheriff for the satisfaction of the judgment therein.   Even upon a mere prima facie showing of ownership by the third-party claimant, if the third party claim does not involve nor grows out of a labor dispute, a separate action for injunctive relief against such levy may be maintained in court.   If there is suspicion that the sale of properties was not in good faith, i.e. was made in fraud of creditors, the NLRC is incompetent to make a determination .   The task is judicial and the proceedings must be adversary.   (Co Tuan v. NLRC, 289 SCRA 415, April 22, 1998)

Q. The Regional Wage Board for Region X issued Wage Order No. RX-01.   Three corporations filed applications for exemption as “distressed establishments” under Guidelines No. 3 issued by the Regional Wage Board.    Under the Regional Wage Board’s guideline, a corporation is a “distressed establishment” if it is engaged in an industry that is “distressed due to conditions beyond its control.”   This criterion is different from the criterion laid down in the guidelines promulgated by the National Wages and Productivity Commission.   Should the applications be granted pursuant to the Regional Wage Board’s guidelines?

A. No, the applications should be denied.   The law grants the NWPC, not the Regional Wage Board, the power to “prescribe the rules and guidelines” for the determination of minimum wage and productivity measures.   While the Regional Wage Board has the power to issue wage orders, such wage orders are subject to the guidelines prescribed by the NWPC.   Since the Regional Wage Board’s Guideline No. 3 was not approved by the NWPC and is contrary to NWPC’s guidelines, the said guideline issued by the Regional Wage Board is inoperative and cannot be used by the latter in deciding on the applications for exemption.    (Nasipit Lumber Company, Inc. v. NWPC, 289 SCRA 667, April 27, 1998) 

Q. Virginia was an employee of Judy Philippines, Inc..  Because of her erroneous assortment and packaging of 2,680 dozens of infant wear, the company dismissed her from employment on the ground of gross negligence.   Virginia committed the infraction for the first time.   Is the dismissal valid?

A. No, the dismissal is invalid.   Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care.   It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.   Article 282 (b) of the Labor Code requires that such neglect must not only be gross, it should be “gross and habitual neglect”.  The penalty of dismissal is quite severe here since the worker committed the infraction for the first time.   (Judy Philippines, Inc. v. NLRC, 289 SCRA 755, April 29, 1998)       

Q. In an illegal dismissal case filed by security guards of Scout Security Agency, the labor arbiter held Rosewood, Inc., the principal, jointly and severally liable with the security agency for wage differential, backwages, and separation pay.   The labor arbiter stated that Rosewood was liable as the guards’ indirect employer under Arts. 106, 107, and 109 of the Labor Code.   Rosewood appealed claiming that it had no participation in the illegal dismissal of the guards.   Assuming Rosewood’s claim is true, should the labor arbiter’s ruling be reversed?

A. Yes, the labor arbiter’s ruling should be reversed.   Under the Labor Code, an employer is solidarily liable for legal wages due security guards for the period of time they were assigned to it by its contracted security agency.   However, in the absence of proof that the employer itself committed the acts constitutive of illegal dismissal or conspired with the security agency in the performance of such acts, the employer shall not be liable for backwages and/or separation pay arising as a consequence of such unlawful termination.    (Rosewood Processing, Inc. v. NLRC, 290 SCRA 408, May 21, 1998)

Q. In an illegal dismissal case, the Labor Arbiter upheld the validity of a retrenchment program implemented by a mining company.   As basis for the ruling, the Labor Arbiter took “judicial notice” of the economic difficulties suffered by the mining sector.   Is the ruling correct?

A. No, the ruling is erroneous.   Jurisprudence prescribes the minimum standards necessary to prove the validity of a retrenchment:  (a) the losses expected must be substantial and not merely de minimis in extent; (b) the substantial losses apprehended must be reasonably imminent; (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (d) the alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved by sufficient and convincing evidence.   In this case, the retrenchment cannot be considered valid on the basis of the “judicial notice” taken by the Labor Arbiter. (Anino v. NLRC, 290 SCRA 489, May 21, 1998)

Q. Included in a complaint for illegal dismissal is a claim for night shift differentials.   The employer did not deny that the complainant rendered night shift work.   The labor arbiter dismissed the claim for night shift differentials because the complainant allegedly failed to substantiate his claim for night shift differentials.   Is the ruling correct?

A. No, the ruling is erroneous.   The fact that the complainant neglected to substantiate his claim for night shift differentials is not prejudicial to his cause.   The burden of proving payment rests on the employer.   The worker’s claim of non-payment of this benefit is a negative allegation which need not be supported by evidence.   The worker cannot adequately prove the fact of non-payment of the night shift differentials since the pertinent employee files, payrolls, records, and other similar documents are not in his possession but in the custody and absolute control of petitioner.   By choosing not to fully and completely disclose information to prove that it had paid all the nights shift differentials due the worker, the employer failed to discharge the burden of proof.  (National Semiconductor Distribution, Ltd. V. NLRC, 291 SCRA 348, June 26, 1998)

Q. After the Labor Arbiter dismissed a complaint for illegal dismissal, the worker appealed.   The employer was not furnished a copy of the memorandum of appeal.   Thus, the employer was not aware of the appeal and did not participate in the appeal interposed by the worker.    Without the employer’s participation, the NLRC reversed the Labor Arbiter’s decision and ruled in favor of the appellant worker.   Is the decision valid?

A. No, the NLRC’s decision is null and void.   It is a cardinal rule in law that a decision or judgment is fatally defective if rendered in violation of a party-litigant’s right to due process.   The fault lies with the NLRC and not with the appellant worker.   While the New Rules of Procedure of the NLRC require proof of service of the appeal on the other party, non-compliance therewith will present no obstacle to the perfection of the appeal nor does it amount to a jurisdictional defect to the NLRC’s taking cognizance thereof.   While the law excuses the appellant from notifying the other party of the appeal, no reason can be given by the NLRC that would exempt it from informing the latter of the appeal and giving it an opportunity to be heard.  The case should be set for further proceedings to afford the employer the opportunity to be heard.  (Philippine National Construction Corporation v. NLRC, 292 SCRA 266, July 10, 1998)

Q. In their answer to a case for illegal dismissal, the employer filed position papers supported by affidavits. Subsequently, the Labor Arbiter ordered the company to pay wage differentials and other benefits.  They appealed to the NLRC by filing a supplemental memorandum to correct and amplify inadequate allegations and certain omissions.  In this appeal, the seek to introduce new evidence to prove that there was no employee-employer relationship. Should the NLRC admit new evidence?

A. No. Hearings had already been scheduled, yet the employer chose merely to submit position papers. As such, the company  had every opportunity to submit before the labor arbiter the evidence which they sought to adduce before the NLRC. (Santos v. NLRC; July 23, 1998)

Q. Petitioner was employed as Accounting Manager entrusted with the evaluation and assessment of contacts.  A contractor complained that petitioner was asking two thousand pesos for every contract the contractor gets from the company.  Petitioner admitted having accepted money on four different occasions. The company terminated petitioner on this ground. Was she validly dismissed?

A. Yes, the company’s reliance on petitioner’s assessment of contracts was based primarily on trust and confidence.  Her acceptance of money, even if voluntary on the contractor’s part, casts doubt on her integrity.  Having occupied a managerial position, petitioner maybe dismissed on the ground of loss of trust and confidence.  Even if she was a first-time offender, a company may resort to acts of self-defense against a managerial employee who has breached their trust and confidence.  Furthermore, each of the four occasions is treated as a separate offense; hence, militating her plea of first infraction. (Villanueva v. NLRC; July 27, 1998)

       

Q. Petitioners were dismissed from service after they were asked by the company to go through drug-tests, as the company received information that they were smoking something (‘shabu’) inside the work premises.  Petitioners and the company submitted their respective position papers on the incident. The Labor Arbiter found the dismissal based on the position papers as valid which the NLRC affirmed.   Can a full-blown trial be dispensed with by the labor arbiter?

A. Yes. Rules of evidence in courts shall not be controlling in any case brought before the commission (Art. 221, LC).  The Labor Code allows the labor arbiter and NLRC to decide the case based on position papers and other documents.  The holding of a trial is discretionary on the labor arbiter and cannot be demanded as a matter of right by the parties. (Suarez v. NLRC; July 31, 1998)

Q. A supervisory employee labor organization was issued a charter certificate by a national federation to which the company’s rank and file union was also affiliated` with.  It filed a petition for certification election, opposed by the company because the union was allegedly composed of both supervisory and rank and file employees since both unions are affiliated with the same federation. Should the petition for certification elections be granted?

A. Yes.  The affiliation of two local unions in a company with the same national federation is not a negation of their independence (as unions) since in relation to the employer, the local unions are considered as principals while the federation is deemed as their agent.  The locals are separate from each other and their affiliation with the same federation would not make them members of the same labor union.  A supervisory organization is prohibited from joining the same federation as that of the rank and file organization only if two conditions are present: 1. The R & F employees are directly under the authority of supervisory employees and 2. The national federation is actively involved in union activities in the company. (DLSU Medical Center v. Laguesma; August 12, 1998)

Q. Private respondents were employed by PAL with a salary of P1,860.  They got a salary increase of P400/mo. for a total monthly compensation of P2,260 under the CBA.  Subsequently, RA 6640 was passed raising the minimum wage of worker.  Their salaries were adjusted again by adding P304 pursuant to the RA thus their total gross pay amounted to P2,565.   After four months, they were promoted and their basic pay of P1,860  was raised to P2,300/mo. plus the CBA wage increase of P400/mo. thereby making their gross pay to P2,700/mo..  The employees were not satisfied with their gross pay, invoking the P304 wage increase under RA 6640.  PAL however refused claiming that the increase of P440 which is the difference between their new basic salary and their old basic salary (P2,300-1,860) was sufficient compliance with the RA.  Thus respondents instituted an action against PAL for violations of RA 6640.   Is the salary increase of the employees sufficient compliance with RA 6640?  Should the CBA increase be credited to the wage increase under the RA?

A. No.  Sec. 7 of the RA prohibits the diminution of existing benefits and allowances by workers.  Consequently, it was improper and not allowed by law for petitioner to apply or consider as compliance, with the mandated wage hike of its workers, the salary increases corresponding to their promotion in rank.  Unlike the Wage Order Nos. 5 and 6 in the Apex ruling, there is no creditability provision in RA 6640.  It was not the intention of Congress to credit salary increases by reason of CBA wage adjustments or  promotions in rank for the mandated wage increase. (PAL v. NLRC; Sept. 3,1998)

 Q. Complaints for illegal dismissal were filed against respondent.  Summons and notices of hearings were sent to the respondent which were received by its bookkeeper.  Thereafter, the labor arbiter rendered a judgment by default after finding that the respondent tried merely evaded all the summons and notices by refusing to claim its mails.  Respondent contends that the he was not validly served with summons since the bookkeeper cannot be considered an agent under the Rules of Court and thus the labor arbiter never acquired jurisdiction over respondent. Did the labor arbiter acquire jurisdiction over respondent?

A. Yes. Procedural rules are liberally construed and applied in quasi-judicial proceedings.  Substantial compliance in this case is considered adequate.  The bookkeeper can be considered an agent because his job is integrated with the corporation. (Pabon v. NLRC, Sept. 24,1998)

Q. Can  a company, dissatisfied with the decision of the Labor Arbiter, file a Motion to Amend the Order of the Labor Arbiter more than a month after the date of issuance of the Order?

A. No. To allow the amendment of the order will result in the circumvention of Sec. 17 of the Rules of Procedure of the NLRC which provide that “No Motion for Reconsideration of any order or decision of the Labor Arbiter shall be allowed.”  To permit this would only allow the petitioner to violate the statutory 10-day period requirement for appeal. (Schering Employees Labor Union v. NLRC, Sept. 25,1998)

Q. Respondent was first hired by SMC (engaged in the manufacture of glass)  for a period of 4 months to repair and upgrade its furnace. 10 days after his first contract ended, he was again hired to drain another furnace for 3 months.  Is he a project employee?

A. Yes.  There are two kinds of project employees: 1.Those employed in a project usually necessary or desirable in the usual trade or business (UNOD in UTOB) of the employer but is separate and distinct from the other undertaking of the company; or 2.Those not UNOD in UTOB but is also distinct and separate from the other undertaking of the company.  But both jobs begin and end at determined or determinable time.  In the case at bar, the employee falls under the second category.  The process of manufacturing glass requires a furnace which is to be repaired only after being used continuously for varying period of 5-10 years.  Therefore, the job of the respondent is a project not UNOD in UTOB. (SMC v. NLRC, October 7,1998)

 

Q. Petitioner was employed as an assistant credit and collection manager.  From the start, he was informed that those not eligible for membership in the bargaining unit are not entitled to CBA benefits, but to benefits at least equivalent or higher than that provided in the CBA. Subsequently, petitioner was diagnosed with pulmonary disease, prompting him to apply for optional retirement as provided by the CBA.   He wished to retire on July 16,1992 but was asked by the company to change it to April 30,1992.  The employee, due to urgent need, agreed, for which he received P100,000 as advances on his retirement pay.  Could the employee avail of the optional retirement benefit in the CBA? Could the employer vary the effective date of retirement?

A. Yes, although managerial employees are not covered by the CBA, the employer voluntarily agreed to grant them benefits at least equivalent or higher than that provided in the CBA.  Thus, this agreement is the applicable retirement contract under the Labor Code.  Moreover, the employer may vary the effective date of retirement as petitioner assented to the change, in consideration for an advance of his retirement pay. So long as the agreement is voluntary and reasonable, it is valid. (Martinez v. NLRC, October 12, 1998)

Q. Respondent employee was a truck driver who was dismissed because he allegedly drove while drunk after he chase an office personnel with a knife.  The incident resulted to the damage of the ten-wheeler truck he drove. The employee only reported the incident on March 1993, though it happened on December 1992.  Prior to the accident, he was already caught stealing diesel fuel from the company.  As a result of these actions, he was dismissed for serious misconduct. Was the dismissal valid?  Can the company rely on past offenses to justify the dismissal?

A. No, the reliance by petitioner corporation on his past offenses to justify his dismissal is unavailing.  The correct rule has always been that such previous offenses may be used as valid justification for dismissal from work only if the infractions are related to the subsequent offense upon which basis the termination is decreed. The vehicular accident causing damage to the truck is not a just cause for dismissal.  The penalty of dismissal is grossly disproportionate to the offense of driving through reckless imprudence resulting in damage to property.  He was likewise deprived of due process as he was not afforded ample opportunity to be heard.  If after the thirty-day period the employee does not give his explanation of what happened, he must again be sent a notice of dismissal stating the particular acts constituting the ground for dismissal and an inquiry why he did not give his explanation. (La Carlota Planters Association v. NLRC, October 27, 1998)

Q. PAL entered into a service agreement with STELLAR Corp., a corporation in the business of job contracting janitorial services.  After the agreement expired, PAL called for a bidding but in the meantime allowed STELLAR to maintain the janitorial contract.  Subsequently, PAL sent a letter to STELLAR informing them that the contract would no longer be renewed. STELLAR, terminated their services, so respondent employees filed a case for illegal dismissal against PAL and STELLAR.  The NLRC affirmed the decision of the labor arbiter finding the dismissal illegal. Was there an employee-employer relationship existing between PAL and respondents? And were they illegally dismissed?

A. No, there is no employee-employer relationship between PAL and the respondents.  PAL is not engaged in labor-only contracting evidenced by the service agreement that it would be STELLAR who will employ the janitors.  PAL was engaged in permissible job contracting and the employees were employees of STELLAR not PAL. However, the employees were illegally dismissed by STELLAR.  They were regular employees not project employees.  A project employee must be employed in a project distinct, separate and identifiable from the main business of the employer and its duration must be determined or determinable.  While the service agreement may have had a specific term, STELLAR disregarded it and repeatedly renewed the agreement and continued hiring the respondents for thirteen years. (PAL. V. NLRC, Nov. 9, 1998)

Q. Several security guards of Sentinel Security, assigned to PHILAM were found to have been illegally dismissed. Can PHILAM be made liable for the payment of backwages and separation pay of the illegally dismissed  employees?

A. Yes.  Although an indirect employer should not be made liable without a finding that it had committed or conspired in the illegal dismissal (Rosewood ruling), in the case at bar the exoneration of PHILAM was not included in the dispositive portion of the Court’s decision despite the fact that it was clearly stated in the body of the decision that they were exonerated.  The decision did not completely exonerate PHILAM which, as an indirect employer is solidarily liable with Sentinel for the complainants’ unpaid service incentive leave pursuant to Art. 106, 107 and 109 of the Labor Code.  Should the contractor fail to pay the wages of its employees in accordance with law, the indirect employer is jointly and severally liable with the contractor, but such responsibility should be understood to be limited to the extent of work performed under the contract, in the same manner and extent that he is liable to the employees directly employed by him. (Sentinel Security v. NLRC, Nov. 16,1998)

Q. Producer’s Bank was placed by the Central Bank under a conservator to protect its assets.  When the retired employees sought the implementation of the CBA regarding their retirement plan and uniform allowance, the conservator objected, resulting in an impasse between the bank and the union. Should the CBA provisions be implemented, despite the bank’s status?

A. Yes.  The conservator cannot rescind a valid and existing contract and the CBA is the law between the contracting parties.  Although the employees are already retired, retirement does not affect their employment status when it involves all rights and benefits due them.  The retirement scheme was part of their employment package and the benefits under the scheme constituted a continuing consideration for services rendered and effective inducement to remain in the company.  The employees were not pleading for the company’s generosity but were demanding their rights under the CBA. (Producer’s Bank v. NLRC, Nov. 16,1998)

Q. After negotiations failed to produce any agreement, the exclusive bargaining agent of Coca-Cola decided to file a notice of strike.  Conciliation hearings were conducted but were unavailing. The union conducted a strike vote on April 14, which shoed that the members were in favor of conducting a strike. On April 20, the union staged the strike.  The company filed a petition to declare the strike illegal as it was staged without observing the mandatory seven-day strike ban and that it was staged in bad faith.  The company then fired alleged union officers by virtue of the illegal strike. Was the strike legal? Was the termination of the employees (allegedly, union officers) valid?

A. The strike was illegal for failure to observe the mandatory requirements of  Articles 264 and 265 of the Labor Code. The failure of the union to observe the 7-day strike ban made the strike illegal.  While the strike vote was conducted around 7:30 am to 8:45 am and the strike held on April 20 was around 8:30 am, the Civil Code states that in computing a period, the first day shall be excluded and the last day included; hence the failure to observe 7 days.  However, the dismissal of the strikers was not valid.  The employees were mere union members and not officers who should not be dismissed unless they knowingly participate in illegal acts during a strike.  Although these employees signed the CBA, nowhere in these documents can it be found that the cited employees signed it as union officers.  Their active participation in the negotiations did not render them union officers. (CCBPI Postmix Workers Union v. NLRC, Nov. 27,1998)

Q. A case for illegal dismissal was filed against Orlando Farms Growers Association, an informal association of landowners engaged in the production of export quality bananas. Can an unregistered association be considered an employer independently of the respective members it represents?

A. Yes, being an unregistered association and having been formed solely to serve as an affective medium for dealing collectively with another company is not an element of an employee-employer relationship.  The Labor Code does not require an employer to register before he may come within the purview of the said law. (Orlando Farms Growers Association v. NLRC, Nov. 25,1998)

Q. Respondent employee was recruited for employment with Gulf Catering Company in Saudi as a waitress.  When she was deployed to Saudi, she was made to wash dishes, cooking pots and utensils, janitorial work and other unrelated jobs in 12-hour shifts without overtime pay. Due to the strenuous work, she was confined in a housing facility during which, she was not paid her salaries.  She worked again after getting well but was not paid her compensation.  Subsequently, she was hospitalized and went through surgical operations, again without compensation. She was then dismissed on the ground of illness without any separation pay or salary payment for the periods she was not allowed to work.  She filed a complaint before POEA against petitioner for underpaid salaries and damages. Was she illegally dismissed? Is the employee entitled to the payment of underpaid salaries?

A. She was illegally dismissed because the manner by which she was terminated was in violation of the Labor Code since her illness was not prohibited by law nor was it prejudicial to her health as well as that of her co-employees (Art. 284). Her illness was not even contagious (Carpal Tunnel Syndrome).   As for the time she was hospitalized and she was not given any compensation, the ‘no work-no pay’ rule does not apply since that period was due to her illness which was clearly work-related. (Triple Eight Integrated Services v. NLRC, Dec. 3, 1998)

Q. Does Section 4, Rule V of the NLRC New Rules of Procedure require the Labor Arbiter to propound clarificatory questions to the parties in order to determine whether a formal hearing is necessary?

A. There is no legal justification for a mandatory interpretation. A reading of Sec 4 Rule V of the New Rules of Procedure of the NLRC readily shows that clarificatory questions may be propounded to the parties at the discretion of the LA.  Aside from employing the word “may” which denotes discretion negating a mandatory or obligatory effect, the provision expressly states that it is discretionary on the part of the LA. (RDS Trucking vs NLRC, 294 SCRA NLRC)

Q. Melchor, a taxi driver under the boundary system, met a vehicular accident.  After filing a report to the office of respondents, he was allegedly advised to stop working and have a rest.  He thus filed a complaint for illegal dismissal.  The company maintains that Melchor was not illegally dismissed, there being in the first place no employer-employee relationship between them. Is there an employer-employee relationship under the boundary system?

A. The employer-employee relationship was deemed to exist. (Martinez v. NLRC)
The relationship of taxi owners and taxi drivers is the same as that between jeepney owners and jeepney drivers under the “boundary system”.  The taxi operator exercises control over the driver. In Martinez v NLRC this court already ruled that the relationship of taxi owners and taxi drivers is the same as that between jeepney owners and jeepney drivers under the “boundary system.”  In both cases the employer-employee relationship was deemed to exist, viz: “The relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee.xxx Thus, private respondent were employees xxx because they had been engaged to perform activities which were usually necessary or desirable in the usual trade or business of the employer.  (Paguio Transport Corporation v NLRC, 294 SCRA 65)

Q. Moneral Andal applied with G & M Phils. Inc. for an overseas employment as a domestic helper in Riyadh KSA.  She was hired for a term of 2 years (1991-1993) at a monthly basic salary of $200.00.  However, she was repatriated on 11 Jan 1992. Upon her repatriation she filed a complaint before the POEA for illegal dismissal, non-payment and underpayment of salaries. Impleaded as co-respondent in the complaint was Empire Insurance (petitioner), in its capacity as the surety of G & M.  Is Empire solidarily liable for the payment of the employee’s monetary claims?

A. Yes. Petitioner is solidarily liable with its principal.  When Empire entered into suretyship agreement with G & M Phils Inc it bound itself to answer for the debt or default of the latter.  Where the surety bound itself solidarily with the principal obligor, the former is so dependent on the principal debtor such that the surety is considered in law as being the same party as the debtor in relation to whatever is adjudged touching the obligation of the latter, and the liabilities are interwoven as to be inseparable.   The purpose of the required bond is to insure that the rights of the overseas are violated by their employer recourse would still be available to them against the local companies that recruited them for the foreign principal. (Empire Insurance Company v NLRC, 294 SCRA 263)

Q. Private respondent is Samuel L. Bangloy was a production supervisor and radio commentator of the DZJC-AM radio station in Laoag City, owned by MBC. Bangloy subsequently applied for a leave of absence  in order to run for Board Member in Ilocos Norte.  The company later on informed him that, as a matter of company policy, any employee who files a certificate of candidacy for any elective national or local office would be considered resigned from the company.  Bangloy nonetheless ran, but lost. Neither was he permitted to return to work.  Is MBC’s policy that any employee who is running for elective public position shall be considered to have voluntarily terminated his employment relations valid?

 

A. The policy is justified.  Working for the government and the company at the same time is clearly disadvantageous and prejudicial to the rights and interest not only of the company but the public as well.  In the event that the employee loses in the election, the impartiality and cold neutrality of an employee as broadcast personality is suspect, thus readily eroding and adversely affecting the confidence and trust of the listening public to employer’s station. As such, the dismissal is justified.  An employee may be dismissed for willful disobedience of the lawful orders of his employer in connection with his work. (Manila Broadcasting Company v NLRC, 294 SCRA 486)

Q. What are the requirements for a valid closure due to retrenchment?

A. The following requirements must be met to justify retrenchment. First, the loss should be  substantial and not merely de minimis. Second, the loss must be reasonably imminent, perceived objectively and in good faith by the employer. In other words, there should be a certain degree of urgency for the retrenchment. Third, the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. Fourth, the employer should have taken other measures prior or parallel to retrenchment to forestall losses, so retrenchment may only be undertaken  as a last resort. Finally, the alleged losses if already realized, and the expected imminent losses to be forestalled must be proven by sufficient evidence. (Stainless Steel Corporation v. NLRC, 11 March 1998) 

Q. Victoria Abril was employed by PFCCI in different capacities from 1982-1988, until she went on maternity leave. Upon her return in 1989, she discovered that another person had been appointed to her former position. Nevertheless, she accepted another position as evidenced by a contract which stipulated that her employment would be probationary for a period of 6 months. After the period elapsed, she continued to work until she and her employer entered into another employment contract for a period of 1 year, after which her employment was terminated.  Abril filed a case for illegal dismissal. PFCCI claims that her appointment  had been fixed for a specific project, and should therefore be considered as causal or contractual employment under Article 280 of the Labor Code. Was Abril's termination valid? Is she a regular employee?

A. Article 281 of the Labor Code allows the employer to secure the services of an employee on a probationary basis – allowing the employer to terminate the latter for just cause or upon failure to qualify in accordance with reasonable standards set forth by the employer at the time of his employment. A probationary employee is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. Probationary employees, notwithstanding their limited tenure, are also entitled to security of tenure. Thus, except for just cause as provided by law, or under the employment contract a probationary employee cannot be terminated.

               Under Article 280 of the Labor Code, there are 3 kinds of employees: regular, project and casual employees.  With respect to contractual employees, stipulations in employment contracts providing for term employment are valid when the period was agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure being brought to bear upon the employee, and absent any other circumstances vitiating his consent, or where is satisfactorily appears that the employer and employee dealt with each other in more or less equal terms.

               The present employment contract entered into initially provides that the period of employment is for a fixed period. However, the succeeding provisions contradicted the same when it provided that respondent would be under probationary status. Given the ambiguity in the contract, and following the pronouncement in Villanueva v. NLRC (10 Sept. 1998), where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. Furthermore, all labor contracts should be construed in favor of the laborer, pursuant to Article 1702 of the Civil Code. Thus,  notwithstanding the designation made by PFCCI, having completed the probationary period and allowed to work thereafter, Abril became a regular employee who may be dismissed only for just or authorized causes under the Labor Code. Hence, the dismissal, premised on the expiration of the contract, is illegal. (Phil. Federation of Credit Cooperatives v. NLRC, 300 SCRA 72, 11 December 1998)

Q. X was dismissed by her employer, FTH. Upon her dismissal, FTH withheld 15 days worth of her salary, and applied it to a X’s personal loan to the company’s general manager. Both the labor arbiter and the NLRC approved the deduction of the amount of the personal loan from X’s salary. Is this action of the labor arbiter correct?

A. Article 217 of the Labor Code limits the jurisdiction of labor arbiters to:

(a) unfair labor practice cases;

(b) termination disputes

(c) if accompanied by a claim for reinstatement, cases involving wages, rates of pay, hours of work, and other terms and conditions of employment

(d) claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations

(e) cases arising from violations of Article 264 of the Labor Code, including questions on the legality of strikes and lockouts

(f) all other claims from employer-employee relations, including those of persons in domestic/household service involving an amount not exceeding P5,000 regardless of whether accompanied by a claim for reinstatement (except for claims of Employees Compensation, SSS, Medicare and maternity benefits)

               As the personal loan did not arise from the employer-employee relationship, said loan is not within the ambit of the Labor Arbiter's jurisdiction. Moreover, following Article 217 of the Labor Code, if a claim does not fall within the exclusive original jurisdiction of the labor arbiter, the NLRC cannot have appellate jurisdiction therein. Thus, the garnishment of Espino's salary was disregarded. (Food Traders House v. NLRC, 300 SCRA 360, 21 December 1998)

Q. In a case for illegal dismissal, the Labor Arbiter found the dismissal of X unjustified, and ordered the employer to reinstate X with full backwages. On appeal by the company, the NLRC reversed the labor arbiter’s decision, in effect finding the termination legal. However, the NLRC ordered the employer to pay X’s wages from 25 January 1991 (date of filing the appeal with the NLRC) up to 23 September 1993 (promulgation of the NLRC decision), pursuant to Article 223 of the Labor Code. Under Article 223 of the Labor Code,  the employer found to have illegally dismissed an employee is required to reinstate the employee either actually or through payroll at the employer's option. Does this requirement need execution of enforcement? Or was the LA's decision immediately self-executory?

A. While the interpretation of Article 223 has been divergent, the Court in the 1997 Pioneer Case laid down the doctrine that henceforth an award or order for reinstatement is self-executory, and does not require a writ of execution, much less a motion for its issuance. Article 224 only applies to final and executory decisions which are not within the coverage of Article 223. Thus, the employer was bound to either re-admit X or include him in the payroll, and inform X of its choice in order to enable him to act accordingly. Failing to exercise these options, the company must pay his salary, which automatically accrued from notice of the LA's order until its reversal by the NLRC. International Container Terminal Services, Inc. v. NLRC 300 SCRA 335 (21 December 1998)

Q. Eduardo Felipe, employee of Hyundai Engineering and Construction Co., through its local agent Omanfil, perished in an accident. Hyundai deposited 14,400 Malaysian Ringgit as Felipe's death benefits in the Melacca labor office. This was done pursuant to Section 8 of Malaysia's labor law, which provides that death benefits in a lump sum equal to 45 months earnings ($27,902.02) or MR 14,400 shall be awarded, whichever is less. Felipe's widow alleged that the amount should be US$27,902.02, and that the deposit made by Hyundai to the Melacca labor office did not constitute payment.  What amount is the Felipe family entitled to?

A. The Felipe's are entitled to MR 14,400, in compliance with the provisions of Malaysia's labor law. A manning agency cannot be faulted for following applicable foreign law. As a result, Omanfil has discharged its monetary obligation to Mrs. Felipe. (Omanfil International Manpower Devt. Corp v. NLRC, 300 SCRA 454 ,22 December 1998)

Q. X was one of the 2 employees of Gandara Mill Supply. In February 1995, X did not report to work for 2 weeks, and when he returned, he was informed that someone had been hired to replace him. However he was advised that he was to be readmitted in June of 1996.  Was there an illegal dismissal?

A. Admittedly, it is unclear whether respondent was actually dismissed. However, there is no indication that he was  to be reinstated. In effect, the offer to re-admit Germano was merely a gesture used to mitigate the impact of his extended suspension. This is contrary to the explicit provisions of the Labor Code,  which provide that no preventive suspension should last more than 30 days. As the supposed suspension was expected to last for more than the period allowed by law, the suspension constitutes an illegal dismissal.

               Even assuming that X's absence caused difficulty to the company, his dismissal was unwarranted. Given the constitutional mandate of protection to labor, the rigid rules of procedure may sometimes be dispensed with to give room for compassion. In calling for the protection of labor, the Constitution does not condone wrongdoing by the employee, it nevertheless urges a moderation of the sanctions to be applied, in the light of the many disadvantages of laborers. (Gandara Mill Supply v. NLRC, 300 SCRA 702, 29 December 1998)

Q. The offices and factory of Master Shirt Co. were burned, so the company had to cease operations. Management and the union held a conference with the NCMB, where they agreed that the company would try to resume operations ASAP, but if this did not occur within 6 months, the workers would be paid their corresponding separation benefits. After 6 months, the company failed to resume operations, but the company refused to grant separation pay, for it had not recovered on their claim for damages against their insurance company. The union and its members filed a complaint for illegal dismissal, separation pay and damages against Manila Shirt Co. Are the employees entitled to separation pay?

A. Separation  pay is paid to an employee whose services are validly terminated as a result of retrenchment, suspension, closure of business or disease. IT does not necessarily follow that if there is no illegal dismissal, no award of separation pay may be made. The basis for the award in this case is the agreement entered into between the company and the employees. The agreement is the law between the parties and must be enforced. The claim for damages is unavailing, in the absence of malice or bad faith. (Master Shirt Co. v. NLRC, 300 SCRA 649, 29 December 1998)

Thank you to Cris, Yumi, Andrew and Sten.

1997 CASES

Q. In an illegal dismissal case, the Labor Arbiter ruled in favor of the complainant and ordered his reinstatement.   The employer appealed.   Refusing to reinstate the worker pending appeal, the employer claims that the order of reinstatement needs a writ of execution.   The employer further maintains that even if a writ of execution was issued, a timely appeal coupled by the posting of appropriate supersedeas bond effectively forestalled and stayed the execution of the Labor Arbiter’s reinstatement order.  Is the employer’s contention correct?

A. No, the employer’s contention is erroneous.   The law as now worded employs the phrase “shall immediately be executory” without qualification emphasizing the need for prompt compliance.   The term “shall” denotes an imperative obligation and is inconsistent with the idea of discretion.   The Labor Arbiter’s order of reinstatement does not need a writ of execution.   It is self-executory.   The posting of a bond by the employer shall not stay the execution for reinstatement.    After receipt of the decision ordering reinstatement, the employer has the right to chose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll.   In either instance, the employer has to inform the employee of his choice.   (Pioneer Texturizing Corp. v. NLRC, 280 SCRA 806, October 16, 1997)

Q. When can R.A. No. 7641 (Retirement Pay Law), which took effect on January 7, 1993, be given retroactive effect?

A. R.A. 7641 may be given retroactive effect where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant was in compliance with the requirements for eligibility under the statute for such retirement benefits.  Thus, the law can apply to labor contracts still existing at the time the statute took effect and its benefits can be reckoned not only from the date of the law’s enactment but retroactively to the time said employment contracts have started.   (Cabcaban v. NLRC, 277 SCRA 671, August 18, 1997)

Q. An insurance agent was required to solicit business exclusively for AFP Mutual Benefit Association, Inc. pursuant to an Insurance Commission regulation.   He was also bound by company policies, memo/circulars, rules and regulations issued by the company relating to payment of the agent’s accountabilities, availment by the agent of cash advances, incentives and awards, and other matters concerning the selling of insurance, in accordance with the rules promulgated by the Insurance Commission.    Given this set of facts, can the insurance agent be considered an employee of the company?

A. No, the facts are not sufficient to support the conclusion that there exists an employer-employee relationship between the agent and the company.   The significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control.   Not every form of control, however, may be accorded the effect of establishing an employer-employee relationship.   There is a difference between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means.   The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it.   In this case, the rules that the agent should follow merely aim to promote the result desired, primarily to conform to the requirements of the Insurance Commission.   (AFP Mutual Benefit Association v. NLRC, 267 SCRA 47, January 28, 1997)

Q. An employer appealed from the Labor Arbiter’s decision.   Instead of posting cash or surety bond, the employer posted a Real Estate Bond consisting of land and various improvements.   Is such property bond allowed?

A. While Article 223 of the Labor Code provides that an appeal by the employer may be perfected only upon the posting of cash or surety bond, this provision should be given a liberal interpretation.   This policy stresses the importance of deciding cases on the basis of their substantive merit and not on strict technical rules.   When the real property bond sufficiently protects the interests of the workers should they finally prevail, the appeal should be allowed. (UERM-Memorial Medical Center v. NLRC, 269 SCRA 70, March 3, 1997)

Q. CFTI, a close family corporation owned by the Naguiat family, stopped its taxi business within Clark Air Base because of the phase-out of U.S. military presence at the said installation.    In an illegal dismissal complaint filed by CFTI’s dismissed employees, the Labor Arbiter ruled that Sergio Naguiat, CFTI’s president who had actively engaged in the management and operation of the corporation, was solidarily liable with CFTI for the separation pay due the employees.   Is the Labor Arbiter’s ruling correct?

A. Yes, the ruling is correct.   Sergio Naguiat can be held solidarily liable with the corporation.   First, as the president of CFTI who actively managed the business, Naguiat falls within the meaning of an “employer” as contemplated by the Labor Code, who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees.   Second, Section 100 of the Corporation Code states that stockholders actively engaged in the management or operation of the business of a close corporation shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance.   Tort is a breach of a legal duty.   Since the Labor Code mandates the payment of separation pay to employees in case of closure or cessation of operations not due to business losses, failure to comply with this law-imposed duty can be considered a “corporate tort”.   Hence, pursuant to the Corporation Code, Naguiat should be held solidarily liable for this corporate tort.   In this case, the rule that a corporate officer cannot be held solidarily liable with a corporation in the absence of evidence that he acted in bad faith is not applicable.   (Naguiat v. NLRC, 269 SCRA 564, March 13, 1997)

***In another case, the Court held:

The fictional veil of a corporation can be pierced by the very same law which created it when “the notion of the legal entity is used as a means to perpetrate fraud, an illegal act, as a vehicle for the evasion of an existing obligation, and to confuse legitimate issues.”   Under the Labor Code, for instance, when a corporation violates a provision declared to be penal in nature, the penalty shall be imposed upon the guilty officer or officers of the corporation.  

To justify solidary liability, there must be an allegation or showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation to its employees, or a showing that the officers indiscriminately stopped its business to perpetrate an illegal act, as a vehicle for the evasion of existing obligations, in circumvention of statutes, and to confuse legitimate issues.   (Reahs Corporation v. NLRC, 271 SCRA 247, April 15, 1997)

Q. Purificacion was a founding member, a member of the Board of Trustees, and the corporate secretary of pamana Golden Care Medical Center Foundation, a non-stock corporation engaged in extending medical and surgical services.   In 1990, the Board of Trustees issued a memorandum appointing Purificacion as Medical Director and Hospital Administrator of the foundation’s medical center.   A medical director and aa hospital administrator are considered as corporate officers under the foundation’s by-laws.   When the Board of Trustees relieved Purificacion of her position as Medical Director and Hospital Administrator, she filed a complaint for illegal dismissal and non-payment of wages before the Labor Arbiter.  Does the Labor Arbiter have jurisdiction over the case?

A. No, the Labor Arbiter has no jurisdiction over the case.   The Securities and Exchange Commission has jurisdiction.   The charges filed by Purificacion partake of the nature of an intra-corporate controversy. An “office” is created by the charter of the corporation and the officer is elected by the directors or stockholders.  On the other hand, an “employee” usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid such employee.   In this case, Purificacion was appointed by the Board of Trustees to offices stated in the by-laws.    She is deemed an officer of the corpporation.   An officer’s dismissal is always a corporate act, or an intra-corporate controversy, and the nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action.   The question of remuneration of an officer is likewise not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy.   (Tabang v. NLRC, 266 SCRA 462, January 21, 1997)

Q. Reformist Union, a labor union staged a strike against R.B. Liner in 1989.   R.B. Liner petitioned the Secretary of Labor to assume jurisdiction over the dispute or certify it to the NLRC.   The Secretary certified the case to the NLRC for compulsory arbitration.   The certified case was dismissed after the union and the company reached an agreement providing, among others, for the holding of a certification election.   Later, when the union filed a complaint for unfair labor practice against the company, i.e. illegal lockout that allegedly took place after the strike and the election, R.B. Liner countered with another case that sought to declare the 1989 strike illegal.   Can the company still contest the legality of the 1989 strike?

A. No, the company can no longer contest the legality of the strike.   The company itself sought compulsory arbitration in order to resolve that very issue.   The dispute or strike was settled when the company and the union entered into an agreement.   By acceding to the peaceful settlement brokered by the NLRC, the company waived the issue of the illegality of the strike.   The very nature of compulsory arbitration makes the settlement binding upon the company.  Compulsory arbitration has been defined both as “the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties,” and as a mode of arbitration where the parties are “compelled to accept the resolution of their dispute through arbitration by a third party.”   Clearly, the legality of the strike can no longer be reviewed.   (Reformist Union of R.B. Liner, Inc. v. NLRC, 266 SCRA 713, January 27, 1997)

Q. From 1953 until 1991, Honorio worked as maintenance man, carpenter, plumber, electrician and mason at the Tanjangco apartments and residential buildings.   In short, he took charge of the maintenance and repair of the buildings.  He reported for work from 7:00 a.m. to 4:00 p.m..  He earned P180 a day (latest salary).   When Honorio filed a complaint for illegal dismissal, Tanjangco claimed that Honorio was an independent contractor.    Tanjangco further claimed that even assuming that Honorio can be considered an employee, he was merely a project employee whose services were hired only with respect to a specific job and only while the same exists.

(a)        On the basis of this set of facts, can Honorio be considered an independent contractor?

A. No, Honorio was not an independent contractor but an employee of Tanjangco.    He was not compensated in terms of profits for his labor orservices like an independent contractor.   Rather, he was paid on a daily wage basis.   It is absurd to expect that with such humble resources,  Honorio woulld have substantial capital or investment in the form of tools, equipment, and machineries with which to conduct the business of supplying Tanjangco with manpower and services for maintaining the apartments and buildings.   The most important requisite of control that determines the existence of an employer-employee relationship is present.   The power of control refers merely to the existence of the power and not to the actual exercise thereof.   Naturally, Honorio’s work as maintenance man had to be performed within the premises of Tanjangco.   It is not far-fetched to expect that Honorio had to observe the instructions and specifications given by Tanjangco as to how his work had to be performed.   Tanjangco could easily exercise control on Honorio.

(b)          What kind of an employee is Honorio?

A. Honorio is a regular employee.   There are two kinds of regular employees: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual trade or business of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.   Whichever standard is applied, Honorio qualifies as a regular employee.   Honorio cannot be considered a project employee.   If he was employed as a project employee, Tanjangco should have submitted a report of termination to the nearest public employment office everytime his employment is terminated due to completion of each project, as required by Policy Instruction No. 20.    There should have been filed as many reports of termination as there were projects actually finished.    (Aurora Land Projects Corp. v. NLRC, 266 SCRA 48, January 2, 1997)

Q. Antonio was hired by Orient Express as crane operator subject to a 3-month probationary period.   After only one month and five days, he was dismissed.   When he filed a complaint for illegal dismissal, Orient Express claimed that he was terminated for poor job performance.   Orient Express did not inform Antonio about the standards of work required of him by which his competency would be adjudged.  When he was dismissed, Orient Express did not point out the reasonable standards of work by which he was evaluated and how he failed to live up to such standards.   Is the dismissal valid?

A. No, the dismissal is not valid.   The services of an employee hired on a probationary basis may be terminated when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. Antonio’s dismissal cannot be sustained on this ground because Orient Express failed to specify the reasonable standards by which Antonio’s alleged poor performance was evaluated, much less to prove that such standards were made known to him at the time of his recruitment.   (Orient Express Placement Philippines v. NLRC, 273 SCRA 256, June 11, 1997)

Q. Capili was an instructor of a private educational institution.   In 1993, the school informed Capili that he would be eligible for retirement when he would reach the age of 60 years.  Capili answered that he was not opting to retire but would continue to serve until he reaches the age of 65.  When the school reiterated its position that it could retire him, Capili filed a complaint questioning his forced retirement.   Later, after receiving the Labor Arbiter’s decision but before filing his appeal, Capili received partial payment of his retirement pay.   During the pendency of his apppeal with the NLRC, he received full payment of his retirement benefiits.  

(a)   Can an employee be compelled to retire at the age of sixty years?

A. No, an employee cannot be compelled to retire at the age of sixty years in the absence of a provision on retirement in the CBA or if the employer has no retirement plan.   Under the Labor Code, as amended by R..A. NO. 7641, the option of the employer to retire an employee at age 60 no longer exists.   Under the present rule, the option to retire upon reaching the age of 60 years or more but not beyond 65 is the exclusive prerogative of the employee if there is no provision on retirement in the CBA or any agreement or if the employer has no retirement plan.  

(b)   Will the  subsequent acceptance of retirement benefits estop an employee

from pursuing his complaint questioning the validity of his forced retirement?

A. Yes, the acceptance of retirement benefits will estop the employee from pursuing his case.   By accepting the retirement benefits, the employee is deemed to have opted to retire under the present rule stated above.   (Capili v. NLRC, 273 SCRA 576, June 17, 1997)

Q. Can an employee unilaterally withdraw his/her resignation?

A. No, an employee cannot unilaterally withdraw his/her resignation.   Resignation, once accepted, may not be withdrawn without the consent of the employer. If the employer consents to the withdrawal, the employee retains the job.   If the employer does not, the employee cannot claim illegal dismissal.   To say that an employee who has resigned is illegally dismissed is to encroach upon the right of the employers to hire persons who will be of service to them.   An employment contract is consensual and voluntary.   If the resignation is accepted by the employer, its consequent effect is severance of the contract of employment.   A resigned employee who desires to take his job back has to reapply therefor and cannot demand an appointment.   (Philippines Today, Inc. v. NLRC, 267 SCRA 202, January 30, 1997)

Q. Can the employer dismiss an employee who is afflicted with pulmonary tuberculosis?

A. Yes, but only if there is a prior certification from a competent public authority that the disease afflicting the employee sought to be dismissed is of such nature or at such stage that it cannot be cured within six (6) months even with proper medical treatment.  The fact that an employee is suffering from a disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to that of his co-employees does not ipso facto make the employee a candidate for dismissal.    (Tan v. NLRC, 271 SCRA 216, April 14, 1997)

Q. In the proceedings before the Labor Arbiter, only the unregistered trade name of the employer–corporation, “Hacienda Lanutan,” and its administrator-manager were impleaded and subsequently held liable for illegal dismissal.   On appeal, the NLRC motu proprio included the corporate name of the employer as jointly and severally liable for the workers’ claims.   There is no dispute that Hacienda Lanutan which was owned solely by the employer-corporation was impleaded and heard.  It was represented by its corporate officer in the proceedings before the Labor Arbiter.    Is the NLRC’s action justified?

A. Yes, the action is justified.   In quasi-judicial proceedings, procedural rules governing service of summons are not strictly construed.   Substantial compliance thereof is sufficient.   In labor cases, punctillious adherence to stringent technical rules may be relaxed in the interest of the worker;  it should not defeat the complete and equitable resolution of the rights and obligations of the parties.   Furthermore, the NLRC is given the power to correct, amend, or waive any error, defect or irregularity whether in the substance or in the form of the proceedings before it.   The non-inclusion of the corporate name of the employer was a mere procedural error which did not at all affect the jurisdiction of the labor tribunals.    (Pison-Arceo Agricultural and Development Corp. v. NLRC, 279 SCRA 312, September 18, 1997)

The State is bound under the Constitution to afford full protection to labor and when conflicting interests of labor and capital are to be weighed

on the scales of social justice

the heavier influence of the latter should be counterbalanced

with the sympathy and compassion

the law accords the less privileged worker.  

This is only fair

if the worker is to be given the opportunity and the right

to assert and defend his/her cause

not as a subordinate

but as part of management with which he/she can negotiate on even plane.  

Thus labor is not a mere employee of capital but its active and equal partner.

(Fuentes v. NLRC, 266 SCRA 24, January 2, 1997)