Circle 2016
University of Santo Tomas
Digested by: DC 2016 Members Editors: Tricia Lacuesta Lorenzo Gayya Cristopher Reyes Macky Siazon Janine Arenas Ninna Bonsol Lloyd JavierLABOR LAW
Supreme Court decisions penned by Associate Justice
Presbitero J. Velasco, Jr.
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Table of Contents
Illegal Recruitment ... 2
Regulatory and Visitorial Powers of the DOLE Secretary... 3
Labor Standards ... 4 Wages ... 4 Minimum Wage ... 5 Non-diminution of Benefits... 6 Separation Pay ... 7 Retirement Pay ... 8 Employer-employee Relationship ... 8 Four-fold Test ... 10 Project-employment ... 11 Job Contracting ... 12
Effects of Labor-Only Contracting ... 12
Termination of Employment ... 14
Just Causes... 14
Authorized Causes... 19
Twin-Notice Requirement ... 22
Hearing: Meaning of Opportunity to be Heard ... 23
Reinstatement ... 28
Preventive Suspension ... 29
Constructive Dismissal ... 30
Certification Election ... 31
Union Security Clauses ... 32
Unfair Labor Practice of Employers ... 33
Illegal Strike ... 34
Liability of Ordinary Workers ... 37
Procedure and Jurisdiction ... 38
Appeal to the NLRC ... 39
Jurisdiction of NLRC ... 40
Remedies ... 41
Original and Appellate Jurisdiction of Med Arbiters ... 42
Social Legislation... 45
SSS Law ... 45
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Recruitment and Placement Illegal Recruitment (Sec. 5, R.A. No. 10022)
PEOPLE OF THE PHILIPPINES v. GLORIA BARTOLOME G.R. No. 129486, July 4, 2008, Velasco, Jr., J.
Illegal recruitment is committed when two (2) elements concur: First, the offender does not have the required license or authority to engage in the recruitment and placement of workers. Second, the offender undertook (a) recruitment and placement activity defined under Article 13(b) of the Labor Code or (b) any prohibited practice under Art. 34 of the same code. Illegal recruitment is qualified into large scale, when three or more persons, individually or as group, are victimized.
Facts:
Gloria Bartolome, without a license for the placement of workers, impressed upon four (4) of her childhood acquaintances that she could send them to Bahrain for overseas employment. For her promise of employment, Gloria asked a fee from all of them to cover all expenses. Upon receiving payment, Gloria sent a photocopied plane ticket to each person. Gloria vanished after her promises did not materialize. The POEA initiated the complaints against Gloria, and the latter was convicted of illegal recruitment in large scale.
Issue:
Whether Gloria is guilty of illegal recruitment in large scale
Ruling:
Yes. Gloria lacked the required license as shown by the fact that the POEA no less initiated the filing of the complaints. Gloria also engaged in recruitment activities per Art. 13(b) of the Labor Code when she promised employment for a fee to all four (4) persons. Finally, she recruited more than three (3) persons. Hence, Gloria is guilty of illegal recruitment in large scale.
PEOPLE OF THE PHILIPPINES v. RODOLFO GALLO y GADOT, FIDES PACARDO y JUNGCO and PILAR MANTA DUNGO
G.R. No. 187730, June 29, 2010, Velasco, Jr., J.
The elements of syndicated illegal recruitment are: (a) the offender undertakes any activity within the meaning of recruitment and placement as defined under the Labor Code; (b) he has no valid license or authority to lawfully engage in recruitment and placement; and (c) the illegal recruitment is committed by a group of three or more persons conspiring or confederating with one another.
Facts:
The accused were convicted for the crime of syndicated illegal recruitment and estafa based on the complaint of Dela Caza. After having been assured that MPM Agency had already sent many workers abroad and that there are job placements for the complainant and other applicants in Korea, Dela Caza was convinced to part with her money in the amount of P45,000 as placement fee. After a few months of waiting to be deployed, Dela Caza and the other applicants took action. Thereafter, the accused were arrested. Rodolfo Gallo asserted that he was an errand boy, not an employee of the agency; thus, he could not be held criminally liable.
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Issue:
Whether accused is guilty of syndicated illegal recruitment
Held:
Yes. Testimonial evidence presented by the prosecution shows that, in consideration of a promise of foreign employment, appellant received the amount of PHP45,000.00 from Dela Caza. When accused-appellant made misrepresentations concerning the agency’s purported power and authority to recruit for overseas employment and collected money in the guise of placement fees, the former clearly committed illegal recruitment. Accused-appellant cannot argue that the trial court erred in finding that he was indeed an employee of the recruitment agency. His active participation in the illegal recruitment is unmistakable. The fact that he was the one who issued and signed the official receipt belies his profession of innocence.
Regulatory and Visitorial Powers of the DOLE Secretary
PEOPLE’S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.) v. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR,
DOLE REGION VII, AND JANDELEON JUEZAN G.R. No. 179652, March 6, 2012, Velasco, Jr., J.
The DOLE can make a prima facie determination of the existence of EER, to the exclusion of the NLRC, for purposes of determining if it has jurisdiction over a complaint brought before it.
Facts:
Jandeleon filed a complaint against Bombo Radyo with the DOLE Regional Office for delayed payment of wages, and non-payment of other benefits. Bombo Radyo disputed the existence of an employer-employee relationship (EER). After summary investigation, the Regional Director, as affirmed by the Acting Secretary of Labor and Employment, found the presence of EER and ruled for Jandeleon. The SC originally ruled that the DOLE Secretary has no jurisdiction to determine the presence of EER.
The Public Attorney’s Office and the DOLE moved to clarify the original decision as to the extent of the visitorial and enforcement powers of the DOLE.
Issue:
Whether the DOLE Secretary may determine the existence of an EER to the exclusion of the NLRC
Ruling:
Yes. (1) The law did not say that the DOLE must first seek the NLRC’s determination of the existence of an EER, or that should the existence of the EER be disputed, the DOLE should refer the matter to the NLRC. (2) The DOLE can use the same test (i.e. the four-fold test) used by the NLRC to determine the existence of EER. (3) The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the EER, force the referral of the matter to the NLRC. As to the extent of the findings of EER by the DOLE Secretary, a prima facie determination of the existence of EER is sufficient to determine if the DOLE has jurisdiction over the case.
The following are guidelines to determine if the DOLE has jurisdiction should a complaint be brought before the DOLE to give effect to labor standards provision of the Labor Code or other labor legislation: (1)
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The DOLE shall make a prima facie determination of the existence of EER, to the exclusion of the NLRC; (2) If the DOLE finds that there is no EER, the jurisdiction is properly with the NLRC; (3) If the complaint before the DOLE is accompanied by a claim for reinstatement, the jurisdiction belongs with the Labor Arbiter under Art. 217 (3); and (4) The findings of the DOLE may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. If the complaint is filed with the NLRC while there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE.
Labor Standards Wages
ASSOCIATED LABOR UNIONS(ALU) and DIVINE WORD UNIVERSITY EMPLOYEES UNION-ALU(DWUEU-ALU) v. CA, THE ROMAN CATHOLIC ARCHBISHOP OF PALO, LEYTE (RCAP) and DIVINE WORD
UNIVERSITY OF TACLOBAN (DWUT) G.R. No. 156882, October 31, 2008, Velasco, Jr., J.
Art. 110 of the Labor Code applies only to cases of bankruptcy and liquidation. Likewise, the concurrence and preference of credits properly come into play only in cases of insolvency.
Facts:
RCAP is a corporation sole which sold to Societas Verbum Dei (SVD) the subject 13 parcels of land, the last 4 of which were untitled when the sale was concluded. While the conveying document was not notarized, the SVD was able to secure the corresponding TCTs over the subject lots, but the deed conditions, restrictions, and reversionary right of the RCAP were not annotated. Due to labor unrest, DWUT, run by the SVD, and the Union engaged in a protracted legal battle. RCAP filed a petition for annotation. DWUT issued notices to union’s members of the closing of the university and consider themselves dismissed. Prompted by the closure of DWUT and the resulting termination of its members’ services, the Union filed a complaint.
The Union alleged in its complaint that the sale of the subject properties over which the DWUT is located was incomplete. What is more, the RCAP did not, despite the sale, sever its employment relations with DWUT which, thus, rendered the RCAP solidarily liable with DWUT for the payment of the benefits of the Union members. RTC dismissed the petition. The parties entered in a Memorandum of Agreement (MOA). CA reversed and granted the petition to annotate.
Issue:
Whether Article 110 of the Labor Code in relation to the Civil Code provisions on concurrence and preference of credits apply in the instant case
Ruling:
No. The judgment lien over the subject properties is really non-existent as it has not been shown that a levy on execution has been imposed over the subject properties. We agree with the RCAP that a judgment lien over the subject properties has not legally attached and that Art. 110 of the LC, in relation to Arts. 2242, 2243, and 2244 of the Civil Code on concurrence and preference of credits, does not cover the subject properties. Art. 110 of the LC applies only to cases of bankruptcy and liquidation. Likewise, the abovementioned articles of the Civil Code on concurrence and preference of credits properly come into play only in cases of insolvency. Since there is no bankruptcy or insolvency proceeding to speak of, much less a liquidation of the assets of DWUT, the Union cannot look to said statutory provisions for support.
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Moreover, we note the utter lack of showing that DWUT has no other assets to answer its obligations. DWUT may have liquidity problems hampering its ability to meet its judicially-imposed obligations. The school, however, appears to have other properties it can and in fact did use to settle its obligations as shown in the MOA. A scrutiny of the MOA readily shows that the subject properties were not included in the assets or properties earmarked to settle DWUT’s obligations.
Minimum Wage
NASIPIT INTEGRATED ARRASTRE AND STEVEDORING SERVICES, INC. (NIASSI) v. NASIPIT EMPLOYEES LABOR UNION (NELU)-ALU-TUCP
G.R. No. 162411 June 30, 2008 Velasco, Jr., J.
Expressio unius est exclusio alterius. The express mention of one person, thing, act, or consequence excludes all others. The beneficent, operative provision of WO RXIII-02 is specific enough to cover only minimum wage earners. Necessarily excluded are those receiving rates above the prescribed minimum wage.
Facts:
Wage Board of Caraga Region in Northeastern Mindanao issued Wage Order No. (WO) RXIII-02 which granted an additional PhP12 per day cost of living allowance to the minimum wage earners in that region. Owing allegedly to NIASSI’s failure to implement the wage order, the Union filed a complaint before the DOLE for inspection and the enforcement of WO 02. But the inspection team stated that WO RXIII-02 was not applicable to NIASSI’s employees since they were already receiving a wage rate higher than the prescribed minimum wage.
Voluntary Arbitrator Jesus G. Chavez rendered a decision granting the Union’s prayer for the implementation of WO RXIII-02 on the rationale that WO RXIII-02 did not specifically prohibit the grant of wage increase to employees earning above the minimum wage. On the contrary, Chavez said, the wage order specifically enumerated those who are outside its coverage, but did not include in the enumeration those earning above the minimum wage. On appeal, CA affirmed.
Issue:
Whether the WO RXIII-02 may be made to apply and cover Nasipit’s employees who, at the time of the issuance and effectivity of the wage order, were receiving a wage higher than the prevailing minimum wage
Ruling:
No. WO RXIII-02 and its IRR provide that only minimum wage earners are entitled to the wage increase. The only situation when employees receiving a wage rate higher than that prescribed by the WO RXIII-02 may still benefit from the order is, as indicated in Sec. 1 (c) of the IRRs, through the correction of wage distortions. In any case, it would be highly irregular for the Wage Board to issue an across-the-board wage increase, its mandate being limited to determining and fixing the minimum wage rates within its area of concern, in this case the Caraga Region, and to issue the corresponding wage orders and implementing rules.
In the same case, the Court held that a RTWPB commits an ultra vires act when, instead of setting a minimum wage rate, it prescribes a wage increase cutting across all levels of employment and wage brackets:
The RTWPB did not determine or fix the minimum wage rate by the floor-wage method or the salary-ceiling method in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all
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employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Orders to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling.
Only employees receiving salaries below the prescribed minimum wage are entitled to the wage increase set forth under WO RXIII-02, without prejudice, to the grant of increase to correct wage distortions consequent to the implementation of such wage order. Considering that NIASSI’s employees are undisputedly already receiving a wage rate higher than that prescribed by the wage order, NIASSI is not legally obliged to grant them wage increase. Decision of the arbitrator is reversed.
Non-diminution of Benefits
TSPIC CORPORATION v. TSPIC EMPLOYEES UNION (FFW) G.R. No. 163419, February 13, 2008, Velasco, Jr., J.
An erroneously granted benefit may be withdrawn without violating the prohibition against non-diminution of benefits.
Facts:
TSPI Corporation entered into a Collective Bargaining Agreement with the corporation Union for the increase of salary for the latter’s members for the year 2000 to 2002. Thus, the increase in salary was materialized on January 1, 2000. However, on October 6, 2000, the Regional Tripartite Wage and production Board raised daily minimum wage from P223.50 to P250.00 starting November 1, 2000. Conformably, the wages of the 17 probationary employees were increased to P250.00. They therefore became regular employees and received another 10% increase in salary. In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees who were senior to the 17 recently regularized employees, received less wages. On January 19, 2001, TSPIC’s Human Resource Development notified the 24 employees who are private respondents, that due to an error in the automated payroll system, they were overpaid and the overpayment would be deducted from their salaries starting February 2001. The Union asserted that there was no error and the deduction of the alleged overpayment constituted diminution of pay.
They brought the issue to the grievance machinery but the TSPIC and the Union failed to reach an agreement. They went to a voluntary arbitration where the arbitrator held that the unilateral deduction made by TSPIC violated Art. 100 of the Labor Code. The decision was affirmed by the CA.
Issue:
Whether the deduction of the overpayment constitutes diminution of benefits
Ruling:
No. Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a policy or has ripened into a practice over a long period; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.
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The overpayment of its employees was a result of an error. This error was immediately rectified by TSPIC upon its discovery. No vested right accrued to individual respondents when TSPIC corrected its error by crediting the salary increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the CBA. Hence, any amount given to the employees in excess of what they were entitled to may be legally deducted by TSPIC from the employees’ salaries. It was also fair that TSPIC deducted the overpayment in installments over a period of 12 months starting from the date of the initial deduction to lessen the burden on the overpaid employees. TSPIC must refund to respondents any amount deducted from their salaries which was in excess of what TSPIC is legally allowed to deduct from the salaries.
Separation Pay
CENTRAL PHILIPPINES BANDAG RETREADERS, INC. v. PRUDENCIO J. DIASNES G.R. No. 163607, July 14, 2008, Velasco, Jr., J.
When dismissal is due to the employee’s fault, separation pay should not be awarded.
Facts:
Due to personal problems, Prudencio’s performance as sales manager of Central Philippines Bandag Retreaders, Inc. (Bandag) waned and his absences became more frequent. The Employee Adjudication Committee unanimously agreed to relieve Prudencio for three (3) months to settle his problems, after which Prudencio may either return to work but with another position, or retire and receive his separation pay.
Instead of availing either option in the report, Prudencio requested that he be transferred from Tacloban City to Cebu City, to which Bandag agreed. However, Prudencio’s attendance and punctuality were still poor. The company eventually dismissed Prudencio for gross and habitual neglect of duty under Art. 282 of the Labor Code. Prudencio claims that assuming that he was legally separated from his employment, he is still entitled to separation pay.
Issue:
Whether an employee validly dismissed due to his own fault is entitled to separation pay
Ruling:
No. When an employee is lawfully dismissed, separation pay may only be awarded if the cause of dismissal was not due to the employee’s fault, but due to: (1) the installation of labor saving devices, (2) redundancy, (3) retrenchment, (4) cessation of employer’s business, or (5) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees (Art. 283 & 284, Labor Code). It may also be awarded in case of strained relations.
When the case falls under Art. 282, like gross and habitual neglect of duty, separation pay should not be paid to the employee. Although there are cases when social justice may warrant the award of separation pay or financial assistance, the labor adjudicatory officials and the CA must be most judicious and circumspect lest the constitutional policy to provide full protection to labor be at the expense of the employers.
In addition, while the company did make an offer of separation pay upon adopting the original recommendation of the Committee, the same offer was superseded when Bandag agreed to Prudencio’s proposal to transfer to Cebu City.
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Retirement Pay
RICARDO G. PALOMA v. PHILIPPINE AIRLINES, INC. AND THE NATIONAL LABOR RELATIONS COMMISSION G.R. No. 148415, 156764, July 14, 2008, Velasco, Jr., J.
Unlike the public sector, there is no law allowing for commutation of unused or accrued sick leave credits in the private sector. Commutation in the private sector is allowed only by way of voluntary endowment by an employer through company policy or by a Collective Bargaining Agreement (CBA).
Facts:
Ricardo worked with Philippine Airlines (PAL) for 35 years and retired on March 1992, or 9 months before PAL was privatized. Ricardo was paid his sick leave credits worth in accord with company policy. Ricardo complained, arguing that the sick leave credits paid to him was much lower than that required by Executive Order No. 1077, issued in 1986. The said EO, allows retiring government employees to commute, without limit, all his accrued vacation and sick leave credits.
Issue:
Whether Ricardo is entitled to the benefits under EO 1077
Ruling:
No. PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service Law. PAL was incorporated as a private corporation. While PAL’s controlling interest was once owned by GSIS for a time, and while during the said period, PAL may be considered as a GOCC, one fact remains: PAL still functioned as a private corporation and for profit. It was the Labor Code and not the Civil Service Law that was applied to PAL through the years, since its incorporation. Since Ricardo was never a government employee covered by the Civil Service Law, he never acquired the benefits accorded by EO 1077. What applies instead is the company policy of PAL.
Employer-employee Relationship
RAUL G. LOCSIN and EDDIE B. TOMAQUIN v. PHILIPPINE LONG DISTANCE TELEPHONE CO. G.R. No. 185251, October 2, 2009, Velasco, Jr., J.
The power of control is the right to control not only the end to be achieved but also the means to be used in reaching such end.
Facts:
Philippine Long Distance Telephone Company (PLDT) and the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement (Agreement) whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices. Pursuant to such agreement, Raul Locsin and Eddie Tomaquin, among other security guards, were posted at a PLDT office. PLDT issued a Letter terminating the Agreement effective October 1, 2001. Despite the termination of the Agreement, however, petitioners continued to secure the premises of their assigned office. They were allegedly directed to remain at their post by representatives of respondent. In support of their contention, petitioners provided the Labor Arbiter with copies of petitioner Locsin’s pay slips for the period of January to September 2002.
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On September 30, 2002, petitioners’ services were terminated. They filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money claims.
Issue:
Whether petitioners became employees of PLDT after the Agreement between SSCP and PLDT was terminated
Ruling:
Yes. Respondent must be considered as petitioners’ employer from the termination of the Agreement onwards as this was the only time that any evidence of control was exhibited by respondent over petitioners. Respondent, by directing petitioners to remain at their posts and continue with their duties, exercised control over them. This is sufficient to establish the existence of an employer-employee relationship. While respondent and SSCP no longer had any legal relationship with the termination of the Agreement, petitioners remained at their post securing the premises of respondent while receiving their salaries, allegedly from SSCP. With the behest and, presumably, directive of respondent, petitioners continued with their services. Evidently, such are indicia of control that respondent exercised over petitioners.
GREGORIO V. TONGKO v. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS
G.R. No. 167622, November 7, 2008, Velasco, Jr., J.
Whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationship that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished.
Facts:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Petitioner Gregorio Tongko (Tongko) entered into a Career Agent’s Agreement with Manulife. As an agent, his duties consisted of canvassing for applications for group policies and other products of the company. Tongko was named unit manager in Manulife's Sales Agency Organization, branch manager, and sales manager. Tongko failed to comply with policies of Manulife, his Agency Agreement was terminated.
Tongko filed a complaint with the NLRC for illegal dismissal. Tongko, in a bid to establish an employer-employee relationship, alleged that De Dios gave him specific directives on how to manage his area of responsibility and also claimed that his dismissal was without basis and that he was not afforded due process. Manulife alleged that Tongko is not its employee, and that it did not exercise "control" over him. Manulife claimed that the NLRC has no jurisdiction over the case.
The labor arbiter decreed that no employer-employee relationship existed between the parties. The NLRC reversed the labor arbiter’s decision finding Tongko to have been illegally dismissed. The CA reversed the decision of the NLRC finding the absence of an employer-employee relationship between the parties and deeming the NLRC with no jurisdiction over the case.
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Whether there was an employer-employee relationship between Manulife and Tongko
Ruling:
Yes. The NLRC arrived at its conclusion, first, on the basis of the letter dated November 6, 2001 addressed by De Dios to Tongko. According to the NLRC, the letter contained "an abundance of directives or orders that are intended to directly affect complainant's authority and manner of carrying out his functions as Regional Sales Manager."
The NLRC further ruled that the different codes of conduct that were applicable to Tongko served as the foundations of the power of control wielded by Manulife over Tongko that is further manifested in the different administrative and other tasks that he was required to perform. The NLRC also found that Tongko was required to render exclusive service to Manulife, further bolstering the existence of an employer-employee relationship. Finally, the NLRC ruled that Tongko was integrated into a management structure over which Manulife exercised control, including the actions of its officers. The NLRC held that such integration added to the fact that Tongko did not have his own agency belied Manulife's claim that Tongko was an independent contractor. Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other administrative functions, leads to no other conclusion that he was an employee of Manulife.
Four-fold Test
MARIAN B. NAVARETTE v. MANILA INTERNATIONAL FREIGHT FORWARDERS, INC./MIFFI LOGISTICS COMPANY, INC., MR. HARADA, AND MBI MILLENNIUM EXPERTS, INC.,
G.R. No. 200580, February 11, 2015, Velasco, Jr., J.
The power of control is determinative of the existence of employer-employee relationship.
Facts:
MIFFI entered into a contract with MBI for the provision of production workers and technical personnel for MIFFI's projects or temporary needs. MBI hired Navarette and assigned her as a temporary project employee to MIFFI's Packaging Department. For a fixed period of three (3) months, she worked amongst MIFFI's regular employees who performed the same tasks as hers. She used MIFFI's equipment and was supervised by employees of MIFFI. Navarette, joined by other employees, filed a complaint for inspection against respondents MIFFI, MLCI, MBI and a certain PAMS with the DOLE Regional Arbitration Branch IV. Following an inspection of respondents' premises, certain violations of labor laws were uncovered, including labor-only contracting by MBI. Several hearings were had and eventually, the parties decided to submit an agreement to be signed by all concerned and to be approved by DOLE officials.
Pursuant to said covenant, MBI called a meeting where Navarette and her co-workers were asked to sign a document. However, Navarette found the contents of the document to be erroneous since it stated that the parties had already come to an agreement on the issues and conditions when, in fact, no such agreement was made. This angered Navarette, causing her to throw the document and to say, "Hindi ito ang pinag-usapan natin sa DOLE! Niloloko niyo lang kami." Her actuations, to MBI, constituted serious misconduct, for which a show-cause memorandum was issued directing her to explain herself. After issuing several memoranda setting conferences on the matter to which Navarette could not attend because of her work schedule, MBI terminated Navarette's employment. Navarette filed a complaint for illegal dismissal before the NLRC against MBI, MIFFI and MCLI. The respondents claimed that since MBI is a legitimate labor contractor, MBI is liable to the petitioner.
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Issue:
Whether Navarette is MBI's employee
Ruling:
Yes. A fundamental principle in Philippine labor law is the application of the four-fold test in determining the existence of an employer-employee relationship, thus: (1) selection and engagement; (2) payment of wages; (3) power to dismiss; and (4) power of control over the means and methods by which the work is to be accomplished.There are, however, instances when these elements are not exercised by a single person or entity. There are cases where one or more of the said factors are assumed by another entity, for which reason, the Court made it clear that of the four tests mentioned, it is the power of control that is determinative. One such instance is whenever an employer supplies workers to another pursuant to a contracting agreement, i.e., job contracting.
Per DOLE Order No. 3, Series of 2001, there is contracting or subcontracting whenever an employer, referred to as the principal, farms out the performance of a part of its business to another, referred to as the contractor or subcontractor, and for the purpose of undertaking the principal's business that is farmed out, the contractor or subcontractor then employs its own employees. In such an arrangement, the four-fold test must be satisfied by the contractor or subcontractor.Otherwise, it is the principal that shall be considered as the employer.
Project employment
EQUIPMENT TECHNICAL SERVICES (ETS) & JOSEPH JAMES DEQUITO v. CA, ALEX ALBINO, et.al. G.R. No. 157680, October 8, 2008, Velasco, Jr., J.
The principal test for determining whether one is a "project employee," as distinguished from "regular employee," is whether he was assigned to carry out "a specific project or undertaking," the duration and scope of which were specified at the time the employee was engaged for that project.
Facts:
One of ETS’ clients was Uniwide. Dequito was occupying the position of manager of ETS. ETS hired the services of Albino, et.al. as pipe fitters, plumbers, or threaders. ETS experienced financial difficulties when Uniwide failed to pay for the plumbing work being done at its Coastal Mall. ETS was only able to pay its employees 13th month pay equivalent to two weeks’ salary. Thus, Albino, et. al. filed a case before the LA, which decided in favor of Albino, et. al. and declared that their dismissal was illegal. NLRC reversed but upheld the validity of the monetary award given. The CA reversed and ordered ETS to pay their holiday pay and service incentive leave pay.
Issue:
Whether Albino, et. al. are project employees
Ruling:
No. The service of project employees are coterminous with the project and may be terminated upon the end or completion of that project or project phase for which they were hired. Regular employees, in
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contrast, enjoy security of tenure and are entitled to hold on to their work or position until their services are terminated by any of the modes recognized under the Labor Code.
ETS admits hiring Albino, et. al. to perform plumbing works for various projects. Regular employment may reasonably be presumed and it behooves ETS to prove otherwise, that the employment in question was contractual in nature ending upon the expiration of the term fixed in the contract or for a specific project or undertaking. But the categorical finding of the CA is that not a single written contract of employment fixing the terms of employment for the duration of the Uniwide project, or any other project, was submitted by ETS. Records of payroll and other pertinent documents, such as job contracts secured by ETS showing that they were hired for specific projects, were also not submitted by ETS. Moreover, if they were indeed employed as project employees, ETS should have had submitted a report of termination every time their employment was terminated owing to the completion of each plumbing project. ETS’ failure to report the employment termination and file the necessary papers after every project completion tends to support the claim of not being project employees.
Also, the constitutionally-protected right of labor to security of tenure covers both regular and project workers. Their termination must be for lawful cause and must be done in a way which affords them proper notice and hearing. Private respondents are regular employees whose services were terminated without lawful cause and effected without the requisite notice and hearing.
Job Contracting
Effects of Labor-only Contracting
FONTERRA BRANDS PHILS., INC. v. LEONARDO LARGADO AND TEOTIMO ESTRELLADO G.R. No. 205300, March 18, 2015, Velasco, Jr., J.
Respondents, by accepting the conditions of the contract, cannot now argue that they were illegally dismissed when their contracts were not renewed after expiration.
Facts:
Fonterra contracted the services of Zytron for the marketing of its dairy products. Pursuant to the contract, Zytron provided Fonterra with trade merchandising representatives (TMRs), including herein respondents. Subsequently, Fonterra sent Zytron a letter terminating its promotions contract and it soon entered into an agreement for manpower supply with A.C. Sicat Marketing and Promotional Services. Respondents submitted their job applications with A.C. Sicat, which hired them for a term of five months. When respondents’ 5-month contracts with A.C. Sicat were about to expire, they allegedly sought renewal thereof, but were allegedly refused. Respondents filed complaints for illegal dismissal, regularization, non-payment of service incentive leave and 13th month pay, and actual and moral damages, against Zytron and A.C. Sicat.
Issues:
1. Whether Zytron and A.C. Sicat are labor-only contractors 2. Whether respondents were illegally dismissed
Ruling:
1. Yes. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:
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The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;
The contractor or subcontractor has substantial capital or investment; and
The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.
2. No. The termination of respondents’ employment with the latter was simply brought about by the expiration of their employment contracts.
Respondents were employed by A.C. Sicat as project employees. In their employment contract with the latter, it is clearly stated that “[A.C. Sicat is] temporarily employing [respondents] as TMR[s] effective June 6, 2006 under the following terms and conditions: The need for your service being only for a specific project, your temporary employment will be for the duration only of said project of our client, namely to promote FONTERRA BRANDS products xxx which is expected to be finished on or before Nov. 06, 2006.”
Non-renewal of their contracts by A.C. Sicat is a management prerogative, and failure of respondents to prove that such was done in bad faith militates against their contention that they were illegally dismissed. The expiration of their contract with A.C. Sicat simply caused the natural cessation of their fixed-term employment thereat.
W.M. MANUFACTURING, INC. v. RICHARD R. DALAG AND GOLDEN ROCK MANPOWER SERVICES G.R. No. 209418, December 07, 2015, Velasco, Jr., J.
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
Facts:
Golden Rock contracted a “Service Agreement” with WM MFG. WM MFG engaged the services of Dalag as a factory worker assigned at its factory thus creating a five-month Employment Contract between them. Dalag later on filed a complaint for illegal dismissal as he was not allowed to work and that he was denied due process as to why he is not allowed. He further claimed that he was assigned as a side seal machine operator which was necessary and desirable for WM MFG’s plastic manufacturing business making him a regular employee. He alleged that Golden Rock and WM MFG engaged in labor-only contracting because all equipment for the job were furnished by WM MFG and all jobs were to be done in the vicinity of WM MFG and he was under the control by the supervisors of WM MFG. WM MFG alleged in their position paper that Dalag abandoned his work and was not illegally dismissed. He was sent memos for several faults he has done but never received them and did not report for work anymore. The Labor Arbiter dismissed the complaint of Dalag. The NLRC reversed the decision of the Labor Arbiter agreeing to the fact that WM MFG and Golden Rock engaged in labor-only contracting. A Motion for Reconsideration was later granted and setting aside the previous NLRC decision. The CA ultimately reversed the decision and ruled in favor of Dalag stating that Golden Rock was not able to prove that it was an independent contractor as they were not able to show proof that they had substantial capital and exercise control over Dalag.
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Issue:
Whether WM MFG and Golden Rock engaged in labor-only contracting
Ruling:
Yes. It may be that the DOLE Regional Director for the National Capital Region was satisfied by Golden Rock's capitalization as reflected on its financial documents, but the basis for determining the substantiality of a company's "capital" rests not only thereon but also on the tools and equipment it owns in relation to the job, work, or service it provides. DO 18-02 defines "substantial capital or investment" in the context of labor-only contracting as referring not only to a contractor's financial capability, but also encompasses the tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.
Notwithstanding the contract stipulation leaving Golden Rock the exclusive right to control the working warm bodies it provides WM MFG, evidence shows that it was WM MFG who exercised supervision over Dalag's work performance. Dalag was supervised by WM MFG's employees. WM MFG even furnished Dalag with not less than seven memos directing him to explain within twenty-four hours his alleged work infractions. The company took pains in issuing investigation reports detailing its findings on Dalag's culpability. Clearly, WM MFG disciplined Dalag for violation of company rules, regulations, and policies, validating the presence of the right to control.
Termination of Employment Just Causes
ESTRELLITA G. SALAZAR v. PHILIPPINE DUPLICATORS, INC., and /or LEONORA FONTANILLA G.R. No. 154628, December 6, 2006, Velasco, Jr., J.
The constitutional policy to provide full protection to labor is not meant to oppress employers. The cause of labor does not prevent us from sustaining the employer when the law is clearly on its side.
Facts:
Salazar was terminated from her employment due to alleged falsification of company records. Salazar denies receiving Duplicator's termination letter. The Labor Arbiter held that the dismissal was for a just cause but the company breached the twin-notice requirement as provided by law. It ordered Duplicators to pay the indemnity of PHP10,000.
Issue:
Whether Salazar validly dismissed
Ruling:
Yes. Petitioner was charged with falsifying company records. On this issue, Labor Arbiter Caday made the following findings, viz:
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A scrutiny of these documentary evidence reveals that on November 20, 1998, at around 3:00 PM complainant Salazar visited Juliet Alvarez of Banco-Filipino-Legal, Paseo de Roxas, Legaspi Village, Makati City (Annex A and A-1 attached to Respondents Rejoinder). This belies complainants claim that she visited the respondent’s customer, D.M. Consunji, Inc. on November 20, 1998 at around 3:00P.M. (Annex C attached to Complainants Reply). Moreover, Mr. Enrique Patag signed the Certification on December 15, 1998 on the date when complainant (Salazar) was no longer reporting for work and filed a case for illegal dismissal against respondents docketed as NLRC Case No. 00-12-10174-98 which was later ordered dismissed by Labor Arbiter Eduardo Carpio for lack of interest to prosecute. Similarly, the certification issued by Mr. Frederick Sison of the D.M. Consunji, Inc. attesting to complainants visit on November 20, 1998, at 2:00 p.m. is confuted [sic] by the fact that on November 20, 1998, complainant [Salazar] visited Fely/Federico and Lilian at the Makati Medical Center as appearing in customer ledger of Makati Medical Center. (Annex B and B-1 attached to Respondents Rejoinder). With the foregoing observations, complainant’s pretensions [are] at once noticeable and [merit] scant consideration.
The findings of Arbiter Caday jibe with those of the NLRC, to wit:
Specifically, in a report she stated that she made a follow-up with Leny Sambrano of Bengson Law Office on November 20, 1998. However, in her Reply, she admitted that she saw, not Sambrano, who was not around, but his secretary. It appears that [in] the report in question, Sambrano wrote, there was no visit last Friday,11/20 and then affixed [her] signature. In another report, she stated that she made a follow-up with Jun of ICLARM on November 20, 1998, but it appeared that Jun Fedrigon wrote on the same report, which he also signed, that she did not visit his office on the date in question. In a letter dated December 15, 1998, he stated that he had no memory of seeing the complainant on the date in question. x x x
The findings of both Arbiter Caday and the NLRC were sustained by the CA, which ruled that there is ample proof to bear out that the petitioner knowingly recorded erroneous entries in her Daily Sales Reports. It is well-settled that the findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence; more so when such findings were affirmed by the CA and such findings are binding and conclusive upon this Court. Petitioner committed fraud or willful breach of the employer’s trust reposed in her under Article 282 of the Labor Code.
EDI-STAFFBUILDERS INTERNATIONAL, INC. v. NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN
G.R. No. 145587, October 26, 2007, Velasco, Jr., J.
In termination disputes or illegal dismissal cases, the employer has the burden of proving that the dismissal is for just and valid causes. The employer is bound to adduce clear, accurate, consistent, and convincing evidence to prove that the dismissal is legal.
Facts:
EDI is engaged in recruitment and placement of OFWs. Eleazar Gran was an OFW recruited by EDI to work Omar Ali Bin Bechr Est. at Riyadh, Saudi Arabia. EDI and OAB entered into an employment contract with Gran whereby the latter will work as a computer specialist for OAB while EDI would process the papers of Gran necessary for his employment at Saudi Arabia. Gran started working for OAB. However, Gran was terminated by OAB on the ground of insubordination against the management of OAB. Gran was given his final pay and was sent back to the Philippines. Gran filed a complaint for underpayment and illegal dismissal against EDI before the LA.
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The LA dismissed the complaint. On appeal with the NLRC, the NLRC reversed the decision of the LA and held that there was underpayment and illegal dismissal thus warranting the award of backwages in favor of Gran. The CA affirmed the decision of the NLRC. Hence this petition.
Issue:
Whether EDI is guilty of underpayment of wages and illegal dismissal
Ruling:
Yes. EDI claims that Gran was validly dismissed for just cause, due to incompetence and insubordination or disobedience. To prove its allegations, EDI submitted two letters as evidence. The first is the July 9, 1994 termination letter, addressed to Gran, from Andrea E. Nicolaou, Managing Director of OAB. The second is an unsigned April 11, 1995 letter from OAB addressed to EDI and ESI, which outlined the reasons why OAB had terminated Gran’s employment.
Petitioner claims that Gran was incompetent for the Computer Specialist position because he had insufficient knowledge in programming and zero knowledge of the ACAD system. Petitioner also claims that Gran was justifiably dismissed due to insubordination or disobedience because he continually failed to submit the required Daily Activity Reports. However, other than the abovementioned letters, no other evidence was presented to show how and why Gran was considered incompetent, insubordinate, or disobedient.
EDI failed to overcome the burden of proving that Gran was validly dismissed. An allegation of incompetence should have a factual foundation. Incompetence may be shown by weighing it against a standard, benchmark, or criterion. EDI failed to establish any such bases to show how petitioner found Gran incompetent.
ROLANDO V. AROMIN v. NATIONAL LABOR RELATIONS COMMISSION, BANK OF THE PHILIPPINE ISLANDS, XAVIER P. LOINAZ, President, and EDMUNDO A. BARCELON, Senior Vice-President
G.R. No. 164824, April 30, 2008, Velasco, Jr., J.
Loss of confidence, as a ground for dismissal, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence.
Facts:
Aromin worked for BPI for 26 years and he was the assistant vice-president when he was terminated. He headed the BPI’s Real Property Management Unit (RPMU) when the botched purchase by Limketkai of a trust asset held by BPI happened. Revilla, authorized by the owner to sell the lot, informed BPI that he has a buyer in Limketkai. The brothers Limketkai met with Aromin to negotiate whether they can pay the purchase price on terms instead of in cash. Limketkai tendered full payment a few days after but BPI refused to receive it. Limketkai, in a bid to consummate the sale, filed a case against BPI. Asked to comment on the material allegations of the said complaint, Aromin sent to the BPI Legal Services Division a September 6, 1988 memorandum. He also received a warning about belated submission of work assignments, tardiness, and unexplained absences. In the course of the trial of the civil case filed by Limketkai, specifically on December 3, 1990 hearing, Aromin testified to the surprise of BPI’s legal counsel. A show-cause memorandum gave Aromin five days to explain why he did so. It appears that Aromin’s testimony, apart from being inimical to BPI’s interests, contradicted what he wrote in the September 6, 1988 memorandum. The RTC found the testimony of Aromin vital in determining a "meeting-of-the-minds" regarding the sale of, and the price for, the Pasig property. The RTC rendered judgment finding for Limketkai. BPI served on Aromin a Notice of
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Termination, citing willful breach of trust and loss of confidence, as grounds for termination. Aromin filed a complaint for illegal dismissal.
Issue:
Whether Aromin was illegally dismissed
Ruling:
No. BPI had indeed a valid case for dismissal against Aromin on the ground of loss of confidence. Being an AVP during the period material, Aromin falls under the category of a managerial employee upon whom trust and confidence had been reposed by the employing bank. Violating that trust and confidence is a valid cause for dismissal under Art. 282 of the Labor Code. However, the employer must clearly and convincingly establish the charges. Loss of confidence, as a ground for termination, should not be (1) simulated; (2) used as a subterfuge for causes which are improper, illegal, or unjustified; (3) arbitrarily asserted; and (4) a mere afterthought to justify earlier action taken in bad faith.
The position assumed and the answers given by Aromin when he testified proved to be adverse to his employer’s interest. The acts committed, inclusive of those done before he took the witness stand to testify falsely against the interest of the employer, adversely reflected on his competence, loyalty, and integrity. Said acts were sufficient for his employer to lose trust and in him.
BLUE ANGEL MANPOWER AND SECURITY SERVICES, INC. v. COURT OF APPEALS, ROMEL CASTILLO, WILSON CIRIACO, GARY GARCES, AND CHESTERFIELD MERCADER
G.R. No. 161196, July 28, 2008, Velasco, Jr., J.
To constitute resignation, it must be unconditional with the intent to operate as such. There must be clear intention to relinquish the position. The filing of a complaint for illegal dismissal is inconsistent with resignation.
Facts:
Blue Angel hired respondents as security guards and detailed them at the National College of Business and Arts (NCBA). On April 20, 1999, respondents filed a complaint for illegal deductions against Blue Angel and later on amended it to be an action for illegal dismissal. The respondents allege that Blue Angel deducted P100 from their salary as a cash bond. Upon being apprised of the original complaint for illegal deductions, Blue Angel terminated their services. In its defense, Blue Angel contended that the respondents committed Insubordination, sleeping on duty, and absence without leave and when told that they will be subjected to investigation, they pleaded that they be allowed to resign instead. They tendered their pro-forma letters of resignation, followed by handwritten resignation letters.
Issue:
Whether the pro-forma letters of resignation and handwritten resignation letters are indication of respondents’ resignation
Ruling:
No. The undated, similarly worded resignation letters tended to show that the guards were made to copy the pro-forma letters, in their own hand, to make them appear more convincing that the guards had voluntarily resigned. The element of voluntariness of the resignations is even more suspect considering that
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the second set of resignation letters were pre-drafted, similarly worded, and with blank spaces filled in with the effectivity dates of the resignations. Respondents claimed being forced to sign and copy the pro-forma resignation letters on pain that they would not get their remaining compensations. The fact that respondents filed a complaint for illegal dismissal from employment against Blue Angel completely negates the claim that private respondents voluntarily resigned. Respondents actively pursued their illegal dismissal case against Blue Angel such that they cannot be said to have voluntarily resigned from their jobs.
GREGORIO V. TONGKO v. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS
G.R. No. 167622, November 7, 2008, Velasco, Jr., J.
The burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was illegal. Unsubstantiated suspicions, accusations and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of our labor laws and Constitution.
Facts:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Gregorio Tongko entered into a Career Agent’s Agreement with Manulife. As an agent, his duties consisted of canvassing for applications for group policies and other products of the company. Tongko was named unit manager in Manulife's Sales Agency Organization, branch manager, and sales manager. Tongko failed to comply with policies of Manulife; thus, his Agency Agreement was terminated.
Tongko filed a complaint with the NLRC against Manulife for illegal dismissal. Tongko, in a bid to establish an employer-employee relationship, alleged that De Dios gave him specific directives on how to manage his area of responsibility and also claimed that his dismissal was without basis and that he was not afforded due process. Manulife alleged that Tongko is not its employee, and that it did not exercise control over him. Manulife claimed that the NLRC has no jurisdiction over the case.
The labor arbiter decreed that no employer-employee relationship existed between the parties. The NLRC reversed the labor arbiter’s decision finding Tongko to have been illegally dismissed. The CA reversed the decision of the NLRC finding the absence of an employer-employee relationship between the parties and deeming the NLRC with no jurisdiction over the case.
Issues:
Whether Manulife is guilty of illegal dismissal
Ruling:
Yes. Manulife failed to cite evidence to support its claims. Manulife did not point out the specific acts that Tongko was guilty of that would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's alleged "laggard performance," without substantiating such claim.
Manulife failed to overcome such burden of proof. Manulife even failed to identify the specific acts by which Tongko's employment was terminated much less support the same with substantial evidence. Mere conjectures cannot work to deprive employees of their means of livelihood. Tongko was illegally dismissed. Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its
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employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.
WESLEYAN UNIVERSITY PHILIPPINES v. NOWELLA REYES G.R. No. 208321, July 30, 2014, Velasco, Jr., J.
An employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests of the employer.
Facts:
Wesleyan University dismissed its University Treasurer Nowella Reyes since it allegedly lost trust and confidence owing to an interplay of the events such as: (1) encashing a check payable to the University Treasurer in the amount 300K; (2) encashing crossed checks payable to the University Treasurer, when the intention of management in this regard was to merely transfer funds from one of petitioner’s accounts to another in the same bank; and (3) spurious duplicate checks bearing her signature were encashed causing damage to petitioner.
Respondent post-haste filed a complaint for illegal dismissal. Labor Arbiter ruled in her favor. However, this was reversed by NLRC. On appeal, CA reinstated the Decision of the Labor Arbiter. Hence, this Petition.
Issue:
Whether there was a valid dismissal on the ground of loss of trust and confidence
Ruling:
Yes. Petitioner adequately proved respondent’s dismissal was for a just cause, based on a willful breach of trust and founded on clearly established facts as required by jurisprudence. The question of whether she was a managerial or rank-and file employee does not matter in this case because not only is there basis for believing that she breached the trust of her employer, her involvement in the irregularities attending to petitioner’s finances has also been proved.
A company has the right to dismiss its employees if only as a measure of self-protection. This is truer in the case of supervisors or personnel occupying positions of responsibility. Respondent was not an ordinary rank-and-file employee as she was the Treasurer who was in charge of the coffers of the University. It would be oppressive to require petitioner to retain in their management an officer who has admitted to knowingly and intentionally committing acts which jeopardized its finances and who was untrustworthy in the handling and custody of University funds.
Authorized causes
RUBEN L. ANDRADA, BERNALDO V. DELOS SANTOS, JOVEN M. PABUSTAN, FILAMER ALFONSO, VICENTE A. MANTALA, JR., HARVEY D. CAYETANO, and JOVENCIO L. POBLETE v. NATIONAL LABOR RELATIONS COMMISSION, SUBIC LEGEND RESORTS AND CASINO, INC., and/or MR. HWA PUAY, MS.
FLORDELIZA MARIA REYES RAYEL, and its CORPORATE OFFICERS G.R. No. 173231, December 28, 2007, Velasco, Jr., J.
Employment is not merely a lifestyle choice to stave off boredom. Employment to the common man is his
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termination of employment. Imagined or undocumented business losses present the least propitious scenario to justify retrenchment.
Facts:
Ruben Andrada, Jovencio Poblete, Filamer Alfonso, Harvey Cayetano, Vicente Mantala, Jr., Bernaldo delos Santos, and Joven Pabustan were hired on various dates as architects, draftsmen, operators, engineers, and surveyors in the Subic Legend Resorts and Casino, Inc. (Legend) Project Development Division on various projects. Legend sent notice to the DOLE of its intention to retrench and terminate the employment of thirty-four (34) of its employees, which include petitioners, in the Project Development Division. Legend explained that it would be retrenching its employees on a last-in-first-out basis on the strength of the updated status report of its Project Development Division.
Legend sent the 34 employees their respective notices of retrenchment, stating the same reasons for their retrenchment. On the same day, the Labor and Employment Center of the Subic Bay Metropolitan Authority advertised that Legend was in need of employees for positions similar to those vacated by petitioners.
Subsequently, 14 of the 34 retrenched employees filed before the Labor Arbiter (LA) a complaint for illegal dismissal and money claims which ruled in their favor. On appeal, the NLRC reversed the LA’s decision. Said employees filed a petition for certiorari before the CA but it was dismissed on the ground that the retrenched employees were validly dismissed from employment due to redundancy and not retrenchment. It also held that the CA held that the NLRC had sufficiently explained that it was not Legend but Gaehin International Inc. (Gaehin) which asked for Subic Bay Metropolitan Authority’s help in recruiting personnel. Hence, this petition was filed.
Issue:
Whether the petitioners were validly dismissed based on redundancy and not on retrenchment
Ruling:
No. Retrenchment and redundancy are two different concepts; they are not synonymous and therefore should not be used interchangeably. This Court explained in detail the difference between the two concepts in Sebuguero v. NLRC (G.R. No. 115394, September 27, 1995):
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment is used interchangeably with the term lay-off. It is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. It is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court.
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Redundancy exists when the number of employees is in excess of what is reasonably necessary to operate the business. The declaration of redundant positions is a management prerogative. The determination that the employees services are no longer sustainable and therefore properly terminable is an exercise of business judgment by the employer. The wisdom or soundness of this judgment is not subject to the discretionary review of the Labor Arbiter and NLRC.
However, the pieces of evidence submitted by Legend are mere allegations and conclusions not supported by other evidence. Legend did not even or explain why it considered petitioners’ positions superfluous. The CA puts too much weight on petitioners’ failure to refute Legend’s allegations contained in the document it submitted. However, the employer bears the burden of proving the cause or causes for termination. Its failure to do so would necessarily lead to a judgment of illegal dismissal.
Substantial evidence is the question of evidence required to establish a fact in cases before administrative and quasi-judicial bodies. It is that amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion.
The basis for retrenchment was not established by substantial evidence, Legend failed to establish by the same quantum of proof the fact of redundancy; hence, petitioners termination from employment was illegal.
ALFREDO A. MENDROS, JR. v. MITSUBISHI MOTORS PHILS. CORPORATION (MMPC) G.R. No. 169780, February 16, 2009, Velasco, Jr., J.
Decisional law teaches that the requirements for a valid retrenchment are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) that the employer serves written notice both to the employees concerned and the DOLE at least a month before the intended date of retrenchment; (3) that the employer pays the retrenched employee separation pay in an amount prescribed by the Code; (4) that the employer exercises its prerogative to retrench in good faith; and (5) that it uses fair and reasonable criteria in ascertaining who would be retrenched or retained.
Facts:
Mitsubishi Motors Philippines Corporation (MMPC) hired Alfredo A. Mendros, Jr. as regular body prepman, he was then promoted as an assembler major in the company’s manufacturing division. Due to some economic problems, MMPC sustained financial losses. MMPC implemented various cost-cutting measures, such as but not limited to: cost reduction on the use office supplies and energy, curtailment of representation and travel expenses, employment-hiring freeze, separation of casuals and trainees, manpower services reduction, intermittent plant shutdowns, and reduced work week for managerial and other monthly-salaried personnel. Eventually MMPC instituted a series of retrenchment program, one of those who were affected is Petitioner. The temporary lay-off move was not enough to avert the losses; thus, petitioner and other personnel received notices of their permanent lay-off. Alfredo filed a case for illegal dismissal and damages.
Issues:
Whether Alfredo’s temporary lay-off and eventual retrenchment is legal and valid.
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Yes. The right of management to retrench or to lay-off workers to meet clear and continuing economic threats or during periods of economic recession to prevent losses is recognized by Article 283 of the Labor Code. First, MMPC suffered substantial losses in FY 1997 and continued to bleed in 1998. Second, Alfredo cannot feign ignorance that MMPC was in dire straits in 1997 and 1998. Neither can he impugn the bona fides of MMPC’s retrenchment strategy. Third, Art. 283 uses the phrase "retrenchment to prevent losses." The phrase implies that retrenchment may be effected even in the event only of expected losses. The employer need not wait for substantial losses to materialize before preventing such losses. MMPC was already financially hemorrhaging before finally resorting to retrenchment. Fourth, MMPC had complied with the prior written notice and separation pay requirements. Finally, as the Court sees it, the merit rating system MMPC adopted as one of the criteria for selecting who are to be eased out was fair and reasonable under the premises.
ROSALES v. NEW A.N.J.H. ENTERPRISES G.R. No. 203355, August 18, 2015, Velasco, Jr., J.
Mere ownership by a single stockholder of all or nearly all of the capital stock of the corporation does not by itself justify piercing the corporate veil.
Facts:
Due to alleged dwindling capital, respondent wrote the Director of the DOLE Region IV-A a letter regarding New ANJH’s impending cessation of operations and the sale of its assets to respondent NH Oil Mill Corporation (NH Oil), as well as the termination of thirty-three (33) employees by reason thereof. Petitioners received their respective separation pays, signed the corresponding check vouchers and executed Quitclaims and Release before Labor Arbiter Melchisedek A. Guan (LA Guan). LA Guan then declared the “labor dispute” between New ANJH and petitioners as “dismissed with prejudice on ground of settlement.”
Petitioners however, filed a complaint for illegal dismissal, with NLRC Regional Arbitration alleging in their complaint that while New ANJH stopped its operations, it resumed its operations as NH Oil using the same machineries and with the same owners and management, thus, in circumvention of their security of tenure. Petitioners advance the application of the doctrine because they were terminated from employment on the pretext that there will be an impending permanent closure of the business as a result of an intended sale of its assets to an undisclosed corporation, and that there will be a change in the management.
Issue:
Whether the cessation of the operations and subsequent sale of ANJH constitutes illegal dismissal
Ruling:
Yes. The application of the doctrine of piercing the veil of corporate fiction is frowned upon. However, the Court may disregard the corporate fiction if it is used to such an extent that injustice, fraud, or crime is committed against another. Subsequent events revealed that the buyer of the assets of their employer was a corporation owned by the same employer and members of his family. Furthermore, the business re-opened in less than a month under the same management. Mere ownership by a single stockholder of all or nearly all of the capital stock of the corporation does not by itself justify piercing the corporate veil. Nonetheless, in this case, other circumstances show that the buyer of the assets of petitioners’ employer is none other than his alter ego.
