[LABOR CASES] DIGEST FOR AUGUST 2010

AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA BREWERY G.R. N O . 162025, A UGUST 3, 2010

VS .

ASIA BREWERY, INC.

FACTS • Respondent Asia Brewery, Inc. (ABI) entered into a CBA with Bisig at Lakas ng mga Manggagawa sa AsiaIndependent (BLMA-INDEPENDENT), the exclusive bargaining representative of ABI’s rank-and-file employees. The CBA defined the scope and composition of the bargaining unit. Under the CBA, 12 jobs were defined to be excluded from the bargaining unit. • Subsequently, a dispute arose when ABI’s management stopped deducting union dues from eighty-one (81) employees, believing that their membership in BLMA-INDEPENDENT violated the CBA. BLMA lodged a complaint before the NCMB but the parties eventually agreed to submit the case for arbitration to resolve the issue. • VA ruled in favor of BLMA. Accordingly, the subject employees were declared eligible for inclusion within the bargaining unit represented by BLMA. On appeal by ABI to the CA, it reversed the VA, ruling that the 81 employees are excluded from and are not eligible for inclusion in the bargaining unit as defined in Section 2, Article I of the CBA; and petitioner has not committed any act that restrained or tended to restrain its employees in the exercise of their right to self-organization. BLMA filed a motion for reconsideration.

•

In the meantime, a certification election was held wherein petitioner Tunay na Pagkakaisa ng Manggagawa sa Asia (TPMA) won. As the incumbent bargaining representative of ABI’s rank-and-file employees claiming interest in the outcome of the case, petitioner filed with the CA an omnibus motion for reconsideration of the decision and intervention, with attached petition signed by the union officer. Both motions were denied by the CA. Hence, an appeal by certiorari filed by petitioner under Rule 45. ISSUE Whether or not the workers were confidential employees; and whether or not the company committed an unfair labor practice by restraining its employees in the exercise of their right to self-organization. HELD No. Respondent failed to indicate who among the numerous employees have access to confidential data relating to management policies that could give rise to potential conflict of interest with their Union membership. Clearly, the rationale under previous rulings of the SC for the exclusion of executive secretaries or division secretaries would have little or no significance considering the lack of or very limited access to confidential information of these employees. As to the second issue, the dispute arose from a simple disagreement in the interpretation of the CBA provision on excluded employees from the bargaining unit, respondent cannot be said to have committed unfair labor practice that restrained its employees in the exercise of their right to self-organization, nor have thereby demonstrated an antiunion stance. DOCTRINE: Union; eligibility of confidential employees to join. Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee – that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. In the present case, there is no showing that the secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees and obtained confidential information relating to labor relations policies. And even assuming that they had exposure to internal business operations of the company, as respondent claims, this is not per se ground for their exclusion in the bargaining unit of the rank-and-file employees.

SAINT LOUIS UNIVERSITY, INC., vs. EVANGELINE C. COBARRUBIAS BUTOY™ 2010 - TAU KAPPA PHI

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST G.R. No. 187104, August 3, 2010 FACTS •

Respondent is a professor of petitioner and an active member of the Union of Faculty and Employees of Saint Louis University (UFESLU). The 2001-2006 and 2006-2011 CBA between SLU and UFESLU contain a provision on forced leaves which states that: teaching employees in college who fail the yearly evaluation for three (3) times within a five (5) year period shall be on forced leave for (1) regular semester during which period all benefits due them shall be suspended.

•

SLU placed respondent on forced leave for the first semester of School Year (SY) 07-08 when she failed the evaluation for SY 02-03, SY 05-06, and SY 06-07, with the rating of 85, 77, and 72.9 points, respectively, below the required rating of 87 points. Thereafter, Cobarrubias sought recourse from the CBA’s grievance machinery but the parties still failed to settle their dispute. Later, respondent filed a case for illegal forced leave or illegal suspension with the NCMB.

•

When circulation and mediation again failed, both parties submitted the issues between them for voluntary arbitration. Cobarrubias argued that the CA already resolved the forced leave issue in a prior case between the parties, CA-G.R. SP No. 90596, ruling that the forced leave for teachers who fail their evaluation for three (3) times within a five-year period should be coterminous with the CBA in force during the same five-year period.

•

VA: Ruled in favor of SLU and therefore dismissed the case; Respondent filed with the CA a petition for review under Rule 43 of the Rules of Court, but failed to pay the required filing fees; CA: First dismissed the petition for procedural lapses but reinstated it when respondent filed her motion for reconsideration, arguing that the ground cited is technical. SLU insisted that the VA decision had already attained finality for Cobarrubias’ failure to pay the docket fees on time.

•

CA: Ruled in favor of Cobarrubias declaring that the "three (3) cumulative years in five (5) years” means within the five-year effectivity of the CBA. Thus, the CA ordered SLU to pay all the benefits due Cobarrubias for the first semester of SY 2007-2008, when she was placed on forced leave.

ISSUE Whether or not failure to pay the appeal fee within the reglementary period renders the VA decision final and executory. HELD Yes. Appeal is not a natural right but a mere statutory privilege, thus, appeal must be made strictly in accordance with the provision set by law. Rule 43 of the Rules of Court provides that appeals from the judgment of the VA shall be taken to the CA, by filing a petition for review within fifteen (15) days from the receipt of the notice of judgment. Furthermore, upon the filing of the petition, the petitioner shall pay to the CA clerk of court the docketing and other lawful fees; non-compliance with the procedural requirements shall be a sufficient ground for the petition’s dismissal. Thus, payment in full of docket fees within the prescribed period is not only mandatory, but also jurisdictional. It is an essential requirement, without which, the decision appealed from would become final and executory as if no appeal has been filed. The VA decision had lapsed to finality when the docket fees were paid; hence, the CA had no jurisdiction to entertain the appeal except to order its dismissal.

ELPIDIO CALIPAY

VS .

NLRC, TRIANGLE ACE CORPORATION

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JOSE LEE PAGE 2 of 23

AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST G.R. N O . 166411, A UGUST 3, 2010 FACTS •

On July 16, 1999, Petitioner filed a complaint for illegal dismissal and several other protests against private respondents. Calipay and the other complainants alleged in their Position Paper that in the course of their employment, they were not given any specific work assignment; they performed various kinds of work; they were required by Lee to work for nine (9) hours a day, with a break of one hour at 12:00 noon; and several other complaints.

•

In their Position Paper, private respondents countered that the termination of Calipay and the other complainants was for a valid or just cause and that due process was observed. They claimed, among others, that Calipay was on absence without leave (AWOL) status from November 2, 1998 up to November 17, 1998; a memorandum dated November 17, 1998, requiring him to explain why his services should not be terminated, was sent by mail but he refused to receive the same; for failure to explain his side, another memorandum dated December 11, 1998 was issued terminating Calipay’s employment on the ground of abandonment of work; there is no unfair labor practice because there is no union; and there is full compliance with the law regarding payment of wages and other benefits due to their employees.

•

The Labor Arbiter handling the case dismissed the complaint for lack of merit; On appeal to the NLRC, the decision appeal from was modified, ordering the respondent to reinstate the complainants and to pay them full back wages plus attorney’s fee; Respondent filed a MR which the NLRC granted. As a result, the LA’s decision was reinstated and affirmed. On appeal by petitioner to the CA: the CA dismissed the petition due to failure to timely file his appeal with the NLRC; and subsequently, also denied the MR of petitioner.

ISSUE Whether or not the petitioner had abandoned his work. HELD Yes. In the instant case, petitioner Calipay had failed to report for work for unknown reasons. His continued absences without the private respondents’ approval constituted gross and habitual neglect which is a just cause for termination under Article 282 of the Labor Code. In addition, the Court arrives at the conclusion that the filing of the complaint for illegal dismissal appears only as a convenient afterthought on the part of petitioner and the other complainants after they were dismissed in accordance with law. DOCTRINE: Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer for reinstatement. In the present case, however, petitioner filed his complaint more than one year after his alleged termination from employment. Moreover, petitioner did not ask for reinstatement in the complaint form, which he personally filled up and filed with the NLRC. The prayer for reinstatement is made only in the Position Paper that was later prepared by his counsel. This is an indication that petitioner never had the intention or desire to return to his job.

GSIS VS. ZARATE G.R. NO. 170847, AUGUST 3, 2010 BUTOY™ 2010 - TAU KAPPA PHI

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST FACTS •

Henry Zarate is a Senior Fire Officer of the Bureau of Fire Protection. Sometime in 1997, while he was assigned at a sub-station in Cubao, he met a traffic accident that cost him his life. As found by the ECC, Zarate went to Rosario, La Union on June 15, which was a Sunday, to visit his ailing mother. In order to report to his station the next day, Monday, he headed back to Metro Manila on the same day, June 15, aboard a Philippine Rabbit bus. At around 2:45 P.M., at Kilometer 80, North Expressway, Cacutud, Angeles City, Pampanga, the bus he was riding on collided with a Swagman Travel Shuttle bus. He sustained severe injuries and was rushed to the Angeles University Foundation. He was pronounced dead on arrival.

•

Felicitas, his wife, filed a claim for death benefits with the GSIS. The GSIS denied the claim by ruling that the death of her husband did not arise out of nor was it in the course of his employment. The wife appealed to ECC, however, she was not successful because the ECC ruled that the death was indeed not work-related.

•

Felicitas brought her case on appeal to the CA. The CA reversed the decision of the ECC and maintained that there was a reasonable work connection in Henry’s death and that it is the policy of the law to extend state insurance benefits to as many qualified employees as possible.

ISSUE Whether or not the death of Henry Zarate did not arise out of and in the course of employment. HELD No. The CA cited and relied on the Supreme Court’s previous ruling in Vano v. GSIS because of the similarity of the obtaining factual situations. Vano was a letter carrier who died as a result of a motorcycle accident while he was on his way from his hometown in Bohol to Tagbilaran City where he worked. The Court found that Vano’s death was compensable as an employment accident because Vano was then on his way to work. In Henry’s case, the CA granted death benefits on the reasoning that Henry lost his life while traveling from the home of his mother which he had been allowed to visit and was on his way back to Quezon City, in compliance with the timeline his superior gave him. DOCTRINE: Employee benefit; time of death. The death should be deemed compensable under the ECC since Henry was on his way back to Manila in order to be on time and be ready for work the next day when his accidental death occurred. He should already be deemed en route to the performance of his duty at the time of the accident. It should be noted that Henry’s superior allowed him to travel to La Union to visit his ailing mother on the condition that that he return the next day. Under these facts, Henry was in the course of complying with his superior’s order when he met his fatal accident. To be sure, he was not in an actual firefighting or accident situation when he died, but returning to work as instructed by his superior is no less equivalent to compensable performance of duty under Section 1, Rule III of the ECC Rules.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

D.M. CONSUNJI, INC., VS. ANTONIO GOBRES ET. AL., G.R. NO. 169170, AUGUST 8, 2010 FACTS •

Respondents worked as carpenters in the construction project of petitioner, a construction company, on several occasions and at various times. Their termination from employment for each project was reported to the DOLE. Respondents’ last assignment was at Quad 4-Project in Glorietta, Ayala, Makati. On October 14, 1998, respondents saw their names included in the Notice of Termination posted on the bulletin board at the project premises.

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Respondents filed a Complaint with the Arbitration Branch of the NLRC against petitioner D.M. Consunji, Inc. and David M. Consunji for illegal dismissal, and nonpayment of 13th month pay, five (5) days service incentive leave pay, damages and attorney’s fees. Petitioner countered that respondents, being project employees, are covered by Policy Instruction No. 20, as superseded by Department Order No. 19, series of 1993 with respect to their separation or dismissal. Respondents were employed per project undertaken by petitioner and within varying estimated periods indicated in their respective project employment contracts.

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Respondents replied that the project was estimated to take two years to finish, but they were dismissed within the two-year period. They had no prior notice of their termination. Hence, granting that they were project employees, they were still illegally dismissed for non-observance of procedural due process.

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The LA ruled in favor of petitioner dismissing respondents’ complaint. On appeal to the NLRC, the NLRC affirmed the LA’s decision. Respondents filed a petition for certiorari with the CA; CA: Affirmed the NLRC with modification, requiring petitioner to pay them the sum of P20,000 as nominal damages for non-compliance with the statutory due process.

ISSUE Whether or not there is basis for the CA in ordering petitioner to pay each respondents the sum of P20,000 as nominal damages for alleged non-compliance with the statutory due process. HELD No. The Court of Appeals held that respondents were entitled to nominal damages, because petitioner failed to give them advance notice of their termination. The appellate court cited the case of Agabon v. NLRC as basis for the award of nominal damages. However, unlike in Agabon, respondents, in this case, were not terminated for just cause under Article 282 of the Labor Code. Instead, respondents were terminated due to the completion of the phases of work for which their services were engaged. According to Cioco, Jr. v. C.E. Construction Corporation: "If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required." This is because completion of the project automatically terminates the employment, in which case, the employer is only obliged to render a report to the DOLE on the termination of the employment.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST DOCTRINE: Dismissal; project employees; damages. Prior or advance notice of termination is not part of procedural due process if the termination of a project employee is brought about by the completion of the contract or phase thereof. This is because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE. Therefore, failing to give project employees advance notice of their termination is not a violation of procedural due process and cannot be the basis for the payment of nominal damages.

CENTURY CANNING CORPORATION VS . VICENTE RANDY R. RAMIL G.R. N O . 171630, A UGUST 8, 2010 FACTS

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Respondent was employed as technical specialist by petitioner. His job includes the preparation of the purchase requisition (PR) forms and capital expenditure (CAPEX) forms, as well as the coordination with the purchasing department regarding technical inquiries on needed products and services of petitioner's different departments.

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Sometime in 1999, respondent was suspected to have committed forgery in preparing the forms. He was asked to explain in writing the events surrounding the incident. He vehemently denied any participation in the alleged forgery. Respondent was, thereafter, suspended. Subsequently, he received a Notice of Termination for loss of trust and confidence.

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Respondent filed a Complaint for illegal dismissal, non-payment of overtime pay, separation pay, moral and exemplary damages and attorney's fees against petitioner and its officers before the Labor Arbiter (LA).

•

LA dismissed the complaint; On appeal to the NLRC: declared respondent's dismissal to be illegal and directed petitioner to reinstate respondent with full backwages and seniority rights and privileges. It found that petitioner failed to show clear and convincing evidence that respondent was responsible for the forgery; Petitioner filed a MR to the NLRC: Reversed itself and rendered a new Decision upholding the LA’s previous decision; Respondent filed a petition to the CA: Rendered judgment in favor of respondent and reinstated the earlier decision of the NLRC.

ISSUE Whether or not petitioner failed to present clear and convincing evidence to prove neither respondent’s participation in the charge of forgery nor caused any damage to the petitioner HELD Yes. In the case at bar, the NLRC's findings of fact, in granting the motion of petitioner, upon which its conclusion was based are not supported by substantial evidence, that is, the amount of relevant evidence, which a reasonable mind might accept as adequate to justify a conclusion. The record of the case is bereft of evidence that would clearly establish Ramil's involvement in the forgery. They did not even submit any affidavit of witness or present any during the hearing to substantiate their claim against Ramil. DOCTRINES: Dismissal; burden of proof. The law mandates that 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 not justified and, therefore, 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 labor laws and the Constitution. Dismissal; employee’s past infractions. A previous offense may be used as valid justification for dismissal from work only if the past infractions are related to the subsequent offense upon which the basis of termination is decreed. The respondent’s previous incidents of tardiness in reporting for work were entirely separate and distinct from his latest alleged infraction of forgery. Hence, the same could no longer be utilized as an added justification for his dismissal. Besides, respondent had already been sanctioned for his prior infractions. To consider these offenses as justification for his dismissal would be penalizing respondent twice for the same offense. Dismissal; loss of trust and confidence. Employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employers’ full trust and confidence and the mere existence of basis for believing that the employee has breached the trust of the employer is sufficient. However, this does not mean that the said basis may be arbitrary and unfounded. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST established. It must rest on substantial grounds and not on the employer’s arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. Dismissal; separation pay and backwages. The awards of separation pay and backwages are not mutually exclusive and both may be given to the respondent. The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement. These are two separate and distinct remedies granted to the employee and the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. The grant of separation pay is a proper substitute only for reinstatement; it cannot be an adequate substitute for both reinstatement and backwages.

JEFFREY NACAGUE, P ETITIONER VS. SULPICIO LINES, INC. G.R. N O . 172589, A UGUST 8, 2010 FACTS

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In 1995, petitioner was hired as “hepe de viaje" or the representative of Sulpicio Lines. A few year later, a housekeeper on the ship, submitted a report regarding a drug paraphernalia found inside the Mopalla Suite Room and the threat on his life made by Nacague. Sulpicio Lines sent a notice of investigation to Nacague informing him of the charges against him for use of illegal drugs and threatening a coemployee.

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When the ship docked in the port of Manila, some crew members of the ship, together with Nacague, were subjected to a random drug test. They were taken to S.M. Lazo Medical Clinic (S.M. Lazo Clinic) and were required to submit urine samples. The result of the random drug test revealed that Nacague was positive for methamphetamine hydrochloride or shabu.

•

Sulpicio Lines sent a memorandum to Nacague terminating him from the service. As a result, Nacague filed a complaint for illegal suspension, illegal dismissal and for reinstatement with backwages.

ISSUE Whether or not the termination of Nacague was valid. HELD No. S.M. Lazo Clinic drug test was not credible because Sulpicio Lines failed to show that S.M. Lazo Clinic is an authorized drug testing center. It was also proven that the urine samples were gathered carelessly without proper labels to identify their owners and that S.M. Lazo Clinic did not ask Nacague if he was taking any medication that might alter the results of the drug test. Nacague adds that Republic Act No. 9165 (R.A. No. 9165) and the Department of Labor and Employment Order No. 53-03 (Department Order No. 53-03) require two drug tests — a screening test and a confirmatory test. Nacague maintains that, since only a screening test was conducted, he was illegally dismissed based on an incomplete drug test. Nacague argues that Sulpicio Lines failed to discharge its burden of proving that the termination of his employment was legal. DOCTRINES: Dimissal; use of illegal drugs. The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center nor did it deny the complainant’s allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if the complainant was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test as required by R.A. 9165. Hence, Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs and failed to clearly show that it had a valid and legal cause for terminating Nacague’s employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

PICOP RESOURCES, INCORPORATED (PRI), VS . ANACLETO L. TAÑECA G.R. N O . 160828, A UGUST 9, 2010

ET . AL .

FACTS

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On February 2001, respondents filed a Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI). Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner PRI.

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The CBA between petitioner and NAMAPRI contained union security provisions of maintenance of membership, wherein as a condition of continued employment by the COMPANY, members are required to maintain their membership in the UNION in good standing during the effectivity of this AGREEMENT. On October 16, 2000, PRI served notices of termination to respondents on the ground of "acts of disloyalty" committed against it when respondents allegedly supported and signed the Petition for Certification Election of FFW before the "freedom period" during the effectivity of the CBA.

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Respondents then accused PRI of Unfair Labor Practice. Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition for Certification Election of FFW was merely prompted by their desire to have a certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-SPFL.

ISSUE Whether or not there was just cause to terminate the employment of respondents. HELD No. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW. Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000. Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period. This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents’ right to selforganization. DOCTRINES: Dismissal; union security. In terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA. The petitioner failed to satisfy the third requirement since nothing in the records would show that respondents failed to maintain their membership in good standing in the union. Significantly, petitioner’s act of dismissing respondents BUTOY™ 2010 - TAU KAPPA PHI

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST stemmed from the latter’s act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. The mere signing of an authorization letter before the freedom period is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. The court emphasizes anew that the employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement.

NAGKAKAISANG LAKAS VS . KEIHIN PHILIPPINES CORPORATION G.R. N O . 171115, A UGUST 9, 2010 FACTS •

Petitioner Helen Valenzuela (Helen) was a production associate in respondent Keihin Philippines Corporation (Keihin). It is a standard operating procedure of Keihin to subject all its employees to reasonable search before they leave the company premises. On day, when the lady guard on duty inspected Helen’s bag, she found a packing tape inside Helen’s bag. The guard confiscated it and submitted an incident report.

•

Helen’s supervisor, called her to his office and directed her to explain in writing why no disciplinary action should be taken against her. Helen, in her explanation, admitted the offense and even manifested that she would accept whatever penalty would be imposed upon her. Thereafter, Helen received a notice of disciplinary action informing her that Keihin has decided to terminate her services.

•

Petitioners filed a complaint against respondent for illegal dismissal, non-payment of 13th month pay, with a prayer for reinstatement and payment of full backwages, as well as moral and exemplary damages. Keihin, on the other hand, maintained that Helen was guilty of serious misconduct because there was a deliberate act of stealing from the company. Respondent company also claimed that motive and value of the thing stolen are irrelevant in this case.

ISSUE Whether or not Helen is guilty of serious misconduct in her act of taking the packing tape. HELD Yes. In the case at bar, Helen took the packing tape with the thought that she could use it for her own personal purposes. When Helen was asked to explain in writing why she took the tape, she stated, "Kumuha po ako ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay." In other words, by her own admission, there was intent on her part to benefit herself when she attempted to bring home the packing tape in question. DOCTRINES: Dismissal; serious misconduct. Misconduct is defined as “the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” For serious misconduct to justify dismissal under the law, “(a) it must be serious, (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer.” It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent company’s property and personal belongings of other employees. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive inspection procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the company’s Code of Conduct. Despite these reminders, complainant took the packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was not just an error of judgment, but a deliberate act of theft of company property.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

SCA HYGIENE PRODUCTS-FFW VS . SCA HYGIENE PRODUCTS CO. G.R. N O . 182877, A UGUST 9, 2010 FACTS •

Respondent SCA Hygiene Products Corporation has existing CBAs with SCA Hygiene Products Corporation Monthly Employees Union-FSM (Monthly Employees Union) and petitioner SCA Hygiene Products Corporation Employees Association-FFW (Daily Employees Union), which represent the monthly and daily paid rank-andfile employees, respectively.

•

Both CBAs contain provisions on Job Evaluation which state that xxx The Management (COMPANY) will conduct Job Evaluation when deemed necessary. A third party consultant may be tasked to conduct the program….The third party consultant will conduct an orientation to both Union and Management of the Job Evaluation Process. xxx

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Respondent informed 22 daily paid rank-and-file employees that their positions had been classified as Job Grade Level 2. As a result, the Monthly Employees Union demanded that the 22 daily paid rank-and-file employees be given conversion increase, promotion increase as well as retroactive salary increase from the time the job evaluation was completed on the ground that their positions had been converted into a higher job grade level which amounted to a promotion.

•

The company countered that the job evaluation was merely a process of determining the relative contribution and value of the positions in its operations and does not provide for any adjustment in the salaries of the covered employees.

ISSUE Whether or not the 22 employees, after their positions have been converted from Job Grade Level 1 to Job Grade Level 2, are entitled to conversion increase equivalent to 10% of their current basic salary. HELD No. The job evaluation program was undertaken to streamline respondent’s operations and to place its employees in their proper positions or groupings. A perusal of the CBAs of the parties showed that, as correctly ruled by the Court of Appeals, it merely provided the procedure for the implementation of the job evaluation and did not guarantee any adjustment in the salaries of the employees. Petitioner also failed to substantiate its allegation that it has been a long-standing company practice to grant a conversion or promotion increase every time an employee’s rank is converted to a higher job grade level. The instances which petitioner cited showed clear intent on respondent’s part to promote the employees concerned. The job titles and positions held by such employees have changed following the fact that they have assumed additional duties and responsibilities. DOCTRINES: Employee; evaluation and promotion. The fact that employees were re-classified from Job Grade Level 1 to Job Grade Level 2 as a result of a job evaluation program does not automatically entail a promotion or grant them an increase in salary. Of primordial consideration is not the nomenclature or title given to the employee, but the nature of his functions. What transpired in this case was only a promotion in nomenclature. The employees continued to occupy the same positions they were occupying prior to the job evaluation. Moreover, their job titles remained the same and they were not given additional duties and responsibilities.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

RODOLFO J. SERRANO VS . SEVERINO SANTOS TRANSIT G.R. N O . 187698, A UGUST 9, 2010 FACTS

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Petitioner Rodolfo J. Serrano was hired as bus conductor by respondent Severino Santos Transit. After 14 years of service, petitioner applied for optional retirement from the company whose representative advised him that he must first sign the already prepared Quitclaim before his retirement pay could be released. As petitioner’s request to first go over the computation of his retirement pay was denied, he signed the Quitclaim on which he wrote "U.P." (under protest) after his signature, indicating his protest to the amount of P75,277.45 which he received, computed by the company at 15 days per year of service.

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Petitioner soon after filed a complaint before the Labor Arbiter, alleging that the company erred in its computation since under the Retirement Pay Law, his retirement pay should have been computed at 22.5 days per year of service to include the cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of the 13th month pay which the company did not.

ISSUE Whether or not the computation of respondent in determining the retirement pay of Serrano was correct. HELD No. The retirement pay is equal to half-month’s pay per year of service. But "half-month’s pay" is "expanded" because it means not just the salary for 15 days but also one-twelfth of the 13th-month pay and the cash value of five-day service incentive leave. THIS IS THE MINIMUM. The retirement pay package can be improved upon by voluntary company policy, or particular agreement with the employee, or through a collective bargaining agreement." (The Labor Code with Comments and Cases, C.A. Azcunea, Vol. II, page 765, Fifth Edition 2004). Thus, having established that 22.5 days pay per year of service is the correct formula in arriving at the complete retirement pay of complainant and inasmuch as complainant’s daily earning is based on commission earned in a day, which varies each day, the next critical issue that needs discernment is the determination of what is a fair and rational amount of daily earning of complainant to be used in the computation of his retirement pay. DOCTRINES: Retirement pay; applicability to employees on commission basis. Even if the petitioner as bus conductor was paid on commission basis, he falls within the coverage of R.A. 7641 and its implementing rules. Thus, his retirement pay should include the cash equivalent of 5-days SIL and 1/12 of 13th month pay. The NLRC’s reliance on the case of R & E Transport, Inc. as a basis for ruling that bus conductors are not covered by the law on SIL and 13 th month pay is erroneous since that involved a taxi driver who was paid according to the “boundary system.” There is a difference between drivers paid under the “boundary system” and conductors who are paid on commission basis. In practice, taxi drivers do not receive fixed wages and retain only those sums in excess of the “boundary” or fee they pay to the owners or operators of the vehicles. Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for the day.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

W INSTON F. G ARCIA VS. M ARIO I. M OLINA, ET AL., G.R. N O. 157383/G.R. N O. 174137, A UGUST 18, 2010 FACTS •

Respondents, both Attorney V of the GSIS, were charged with grave misconduct, gross insubordination, and were accused of performing acts in violation of the Rules on Office Decorum. Afterward, petitioner ordered the preventive suspension of respondents for ninety (90) days without pay, effective immediately. Thereafter, respondents denied the charges against them and likewise opposed their preventive suspension for lack of factual and legal basis.

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Respondents strongly expressed their opposition to petitioner acting as complainant, prosecutor and judge. Respondents requested to transfer the investigation from the GSIS to the CSC, but the latter denied the same for lack of merit. On appeal, the CA rendered a decision in favor of respondents. The CA declared null and void respondents’ formal charges for lack of the requisite preliminary investigation.

ISSUE Whether or not the conduct of preliminary investigation is an essential requisite to the conduct of adjudication. HELD Yes. Indeed, the CSC Rules does not specifically provide that a formal charge without the requisite preliminary investigation is null and void. However, as clearly outlined above, upon receipt of a complaint which is sufficient in form and substance, the disciplining authority shall require the person complained of to submit a Counter-Affidavit/Comment under oath within three days from receipt. Even if the complainant is the disciplining authority himself, to comply with such requirement, he could have issued a memorandum requiring respondents to explain why no disciplinary action should be taken against them instead of immediately issuing formal charges. DOCTRINE: Due process; decision rendered without due process. The violation of a party’s right to due process raises a serious jurisdictional issue that cannot be glossed over or disregarded at will. Where the denial of the fundamental right to due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction. This rule is equally true in quasi-judicial and administrative proceedings, for the constitutional guarantee that no man shall be deprived of life, liberty, or property without due process is unqualified by the type of proceedings (whether judicial or administrative) where he stands to lose the same.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

BPI VS . BPI EMPLOYEES UNION G.R. N O. 164301, A UGUST 10, 2010 FACTS •

On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger executed by and between BPI, and FEBTC, which was later approved by the SEC. As a result, all the assets and liabilities of FEBTC were transferred to and absorbed by BPI as the surviving corporation. FEBTC employees, including those in its different branches across the country, were hired by petitioner as its own employees, with their status and tenure recognized and salaries and benefits maintained.

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Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank (hereinafter the "Union”) is the exclusive bargaining agent of BPI’s rank and file employees. Prior to the effectivity of the merger, respondent Union invited said FEBTC employees to a meeting regarding the Union Shop Clause, which requires new employees to join the union, of the existing CBA between petitioner BPI and respondent Union.

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Respondent Union then sent notices to the former FEBTC employees who refused to join and called them to a hearing regarding the matter. When these former employees refused to attend the hearing, the president of the Union requested BPI to implement the Union Shop Clause of the CBA and to terminate their employment.

ISSUE Whether or not the former FEBTC employees that were absorbed by petitioner upon the merger between FEBTC and BPI should be covered by the Union Shop Clause found in the existing CBA between petitioner and respondent Union. HELD No. As a general rule, all employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely, employees who at the time the union shop agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds; employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect; confidential employees who are excluded from the rank and file bargaining unit; and employees excluded from the union shop by express terms of the agreement. Indeed, the situation of the former FEBTC employees cleaerly does not fall within the first three exceptions. The sole category therefore in which petitioner may prove its claim is the fourth recognized exception or whether the former FEBTC employees are excluded by the express terms of the existing CBA between petitioner and respondent. To reiterate, petitioner insists that the term "new employees," as the same is used in the Union Shop Clause of the CBA at issue, refers only to employees hired by BPI as non-regular employees who later qualify for regular employment and become regular employees, and not those who, as a legal consequence of a merger, are allegedly automatically deemed regular employees of BPI. However, the CBA does not make a distinction as to how a regular employee attains such a status. Moreover, there is nothing in the Corporation Law and the merger agreement mandating the automatic employment as regular employees by the surviving corporation in the merger. DOCTRINE: Merger; employee terms and conditions. That BPI is the same entity as FEBTC after the merger, is but a legal fiction intended as a tool to adjudicate rights and obligations between and among the merged corporations and the persons that deal with them. Although in a merger it is as if there is no change in the personality of the employer, there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed, there are presumably changes in his condition of employment even if his previous tenure and salary rate is recognized by BPI. It is reasonable to assume that BPI would have different rules and regulations and company practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new. Not the least of these changes is the fact that prior to the merger FEBTC employees were employees of an unorganized establishment and after the merger they became employees of a unionized company that had an existing CBA with the certified union. Thus, although in a sense BPI is continuing FEBTC’s employment of these absorbed employees, BPI’s employment of these absorbed employees will not be under exactly the same terms and conditions as stated in the latter’s employment contracts with FEBTC.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST Union shop; effect of merger. All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely, (1) employees who at the time the union shop agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds; (2) employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect; (3) confidential employees who are excluded from the rank and file bargaining unit; and (4) employees excluded from the union shop by express terms of the agreement. In the absence of any of these recognized exceptions, there is no basis to conclude that the terms and conditions of employment under a valid CBA in force in the surviving corporation should not be made to apply to the absorbed employees.

PHIMCO INDUSTRIES, INC., VS . PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA) G.R. N O. 170830, A UGUST 11, 2010 FACTS • Respondent is the duly authorized bargaining representative of PHIMCO’s daily-paid workers. PILA filed with the NCMB a Notice of Strike on the ground of bargaining deadlock. Thereafter, PHIMCO filed with the NLRC a petition for preliminary injunction and temporary restraining order (TRO), to enjoin the strikers from preventing – through force, intimidation and coercion – the ingress and egress of nonstriking employees into and from the company premises. • Subsequently, 36 union members were dismissed. PILA filed a complaint for unfair labor practice and illegal dismissal. The Acting Labor Secretary assumed jurisdiction over the labor dispute and ordered all the striking employees, except those who were dismissed, to return to work. The Secretary ordered PHIMCO to accept the striking employees, under the same terms and conditions prevailing prior to the strike. • Thereafter, PHIMCO filed a Petition to Declare the Strike Illegal with the NLRC, with a prayer for the dismissal of PILA officers and members who knowingly participated in the illegal strike. ISSUE Whether or not the strike was illegal. HELD Yes. Despite the validity of the purpose of a strike and compliance with the procedural requirements, a strike may still be held illegal where the means employed are illegal. The means become illegal when they come within the prohibitions under Article 264(e) of the Labor Code which provides: No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares. The picket, under the evidence presented, did effectively obstruct the entry and exit points of the company premises on various occasions. DOCTRINES: Dismissal; due process. The Labor Code recognizes the right to due process of all workers, without distinction as to the cause of their termination, even if the cause was their supposed involvement in strike-related violence. In the present case, PHIMCO sent a letter to the affected union members/officers, directing them to explain within 24 hours why they should not be dismissed for the illegal acts they committed during the strike; three days later, the union members/officers were informed of their dismissal from employment. We do not find this company procedure to be sufficient compliance with due process. It does not appear from the evidence that the union officers were specifically informed of the charges against them. Also, the short interval of time between the first and second notice shows that a mere token recognition of the due process requirements was made, indicating the company’s intent to dismiss the union members involved, without any meaningful resort to the guarantees accorded them by law. Union; liability for invalid strike. The effects of illegal strikes, outlined in Article 264 of the Labor Code, make a distinction between participating workers and union officers. The services of an ordinary striking worker cannot be terminated for mere participation in an illegal strike; proof must be adduced showing that he or she committed illegal acts during the strike. The services of a participating union officer, on the other hand, may be terminated, not only when he actually commits an illegal act during a strike, but also if he knowingly participates in an illegal strike.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST Strike; validity of strike. Despite the validity of the purpose of a strike and the union’s compliance with the procedural requirements, a strike may still be held illegal where the means employed are illegal. While the strike had not been marred by actual violence and patent intimidation, the picketing that respondent PILA officers and members undertook as part of their strike activities effectively blocked the free ingress to and egress from PHIMCO’s premises, thus preventing non-striking employees and company vehicles from entering the PHIMCO compound. In this manner, the picketers violated Article 264(e) of the Labor Code and tainted the strike with illegality.

WENSHA SPA CENTER, INC. VS . LORETA T. YUNG G.R. N O. 185122, A UGUST 16, 2010 FACTS • Respondent was hired as personal assistant of Mr. Xu, the President of Wensha. Sometime in August 2004, respondent was asked to leave her office because Xu and a Feng Shui master were exploring the premises. Later that day, Xu asked Loreta to go on leave with pay for one month. • When she returned, Xu and his wife asked her to resign from Wensha because, according to the Feng Shui master, her aura did not match that of Xu. Loreta refused but was informed that she could no longer continue working at Wensha. That same afternoon, Loreta went to the NLRC and filed a case for illegal dismissal against Xu and Wensha. • Wensha and Xu denied illegally terminating Loreta’s employment. They claimed those two months after Loreta was hired, they received various complaints against her from the employees. They advised her to take a leave of absence for one month while they conducted an investigation on the matter. Based on the results of the investigation, they terminated Loreta’s employment for loss of trust and confidence. ISSUE Whether or not dismissing an employee upon the advice of a Feng Shui master is legal. HELD No. To be a valid cause for termination of employment, the act or acts constituting breach of trust must have been done intentionally, knowingly, and purposely; and they must be founded on clearly established facts. The Court finds Loreta’s complaint credible. There is consistency in her pleadings and evidence. In contrast, Wensha’s pleadings and evidence, taken as a whole, suffer from inconsistency. Moreover, the affidavits of the employees only pertain to petty matters that, to the Court’s mind, are not sufficient to support Wensha’s alleged loss of trust and confidence. DOCTRINE: Employee; security of tenure. A worker’s security of tenure is guaranteed by the Constitution and the Labor Code. Under the security of tenure guarantee, a worker can only be terminated from his employment for cause and after due process. For a valid termination by the employer: (1) the dismissal must be for a valid cause as provided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend himself. A just and valid cause for an employee’s dismissal must be supported by substantial evidence, and before the employee can be dismissed, he must be given proper notice of such cause/s and an adequate opportunity to be heard. In the process, the employer bears the burden of proving that the dismissal of an employee was for a valid cause. Its failure to discharge this burden renders the dismissal unjustified and, therefore, illegal. Dismissal; feng shui; breach of trust and confidence. The Court finds that the complainant’s allegations are more credible and that she was dismissed from her employment because the Feng Shui master found that complainant’s Chinese Zodiac Sign was a mismatch to that of respondents. This is not a just and valid cause for an employee’s dismissal. In contrast, respondent’s pleadings and evidence suffer from several inconsistencies and the affidavits presented by respondents only pertain to petty matters that are not sufficient to support respondent’s alleged loss of trust and BUTOY™ 2010 - TAU KAPPA PHI

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST confidence. To be a valid cause for termination of employment, the act or acts constituting breach of trust must have been done intentionally, knowingly, and purposely; and they must be founded on clearly established facts. Reinstatement of employee; doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

JESUS E. DYCOCO, JR., VS . EQUITABLE PCI BANK (NOW BANCO DE ORO) G.R. N O. 188271, A UGUST 16, 2010 FACTS

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Petitioner was hired by respondent bank as Assistant Manager and/or OIC Branch Head. Eventually the petitioner became the Personal Banking Manager (PBM) of the Legazpi branch. In 2005, the bank hand out a “show cause” letter against petitioner for alleged unauthorized abstractions of various trust funds, treasury placements and deposits. Sometime in 2006, respondent bank issued a 2 nd "show cause" letter petitioner charging him with involvement in alleged dollar-trading activities. As a result, Petitioner was preventively suspended for one month.

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While petitioner was under preventive suspension, he filed a complaint in the NLRC alleging constructive dismissal and illegal suspension, and demanding reinstatement/separation pay and payment of incentives, 13th month pay, bonuses, moral and exemplary damages and attorney’s fees. However, respondent bank rendered a decision with respect to the first "show cause" letter finding petitioner guilty of violating the bank’s Code of Conduct, and Article 282 (b) of the Labor Code. ISSUE Whether or not petitioner was illegally dismissed. HELD No. As the banking industry is impressed with public interest, all bank personnel are burdened with a high level of responsibility insofar as care and diligence in the custody and management of funds are concerned. Petitioner miserably failed to discharge this burden. Petitioner violated his duties and responsibilities as PBM when he signed and approved the subject transactions without the necessary signatures of the concerned clients. As PBM, it was his obligation to ensure "that all documentary requirements (were) complied with by clients being handled and that the bank’s interest (was) at all times protected." It was incumbent on him to enforce "strict compliance with bank policies and internal control procedures while maintaining the highest level of service quality.” DOCTRINE: Dismissal; gross negligence and loss of confidence. Gross negligence connotes “want of care in the performance of one’s duties.” Petitioner’s failure on 3 separate occasions to require clients to sign the requisite documents constituted gross negligence. Furthermore, it has been held that if the employees are cashiers, managers, supervisors, salesmen or other personnel occupying positions of responsibility, the employer’s loss of trust and confidence in said employees may justify the termination of their employment. As the Bank’s Personal Banking Manager, petitioner’s failure to comply with basic banking policies and procedures were inimical to the interests of the bank, making his dismissal based on loss of confidence justified.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

ARNOLD F. ANIB VS . COCA-COLA BOTTLERS PHILS., INC. G.R. N O. 190216, A UGUST 16, 2010 FACTS • Petitioner was employed as helper by respondent, Coca-Cola Bottlers Philippines, Inc. Later on, he was assigned to supervise respondent’s mini warehouse in Makati City. Sometime in 2005, petitioner was notified in writing of the shortage in the warehouse and was required to explain why he should not be found guilty of violating the Code of Disciplinary Rules and Regulations. Petitioner asked for time to explain the shortage as his wife was sick at that time. • Respondent conducted further investigation and discovered other irregularities allegedly committed by petitioner. Respondent claimed that stocks were withdrawn from the warehouse and delivered to other outlets during the time that the warehouse was supposedly padlocked. Petitioner purportedly issued a receipt for an amount less than what was actually paid by the outlet, and he applied the overpayment to his other shortages. For these violations, petitioner was again made to explain. He then admitted the discrepancy in the receipt and requested that the shortage be deducted from his salary. Thereafter, Petitioner received a Notice of Termination. He then filed a complaint for illegal dismissal against respondent. • Labor Arbiter’s decision: sustained the validity of petitioner’s dismissal; Petitioner then elevated the case to the NLRC: the NLRC reversed the Labor Arbiter’s Decision, finding that there was no basis for petitioner’s dismissal [separation pay was awarded in lieu of reinstatement]; Petitioner filed a petition for certiorari with the CA. The CA denied outright the petition for failure to comply with Section 1 of Rule 65, Rules of Civil Procedure, as only a photocopy of the September 22, 2008 NLRC Resolution was submitted. ISSUE Whether or not a petition for certiorari may be dismissed upon a mere technicality, that is, failure to attach a certified true copy of the assailed NLRC Decision. HELD No. Such mere technicality should not be allowed to impede petitioner’s call for a just review of the decision in the illegal dismissal case, ordering the payment of separation pay in lieu of reinstatement. The Supreme Court therefore remand the case to the CA for further proceeding. DOCTRINE: Technical Rules not Controlling. It is well-settled that the application of technical rules of procedure may be relaxed to serve the demands of substantial justice, particularly in labor cases. Labor cases must be decided according to justice and equity and the substantial merits of the controversy. Procedural niceties should be avoided in labor cases in which the provisions of the Rules of Court are applied only in suppletory manner. Indeed, rules of procedure may be relaxed to relieve a part of an injustice not commensurate with the degree of non-compliance with the process required.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

PHARMACIA and UPJOHN, INC. (now PFIZER) VS. RICARDO P. ALBAYDA G.R. N O. 172724, A UGUST 23, 2010 FACTS • Pharmacia and Upjohn, Inc. were to distinct company. After merging, respondent was designated by petitioner Pharmacia and Upjohn (Pharmacia) as District Sales Manager. Sometime in 1999, there was a district territorial configuration for the new marketing and sales direction for the year 2000. Thereafter, respondent was assigned into another area. Respondent requested to be retained to his original area and claimed he could not improve the sales of products if he was assigned to an unfamiliar territory. However, his request was denied. • Despite several offer made by petitioner to respondent, the company concluded that it appeared to them that respondent would not accept any reason for the movement to another area and that nothing is acceptable to him except a Western Visayas assignment.

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Respondent received a memorandum notifying him of the company’s decision to terminate his services after he repeatedly refused to report for work despite due notice. As a result, Respondent filed a complaint for constructive dismissal. ISSUE Whether or not the reassignment of respondent was a valid exercise of petitioners’ management prerogative. HELD Yes. The SC rules that the CA had overstepped its legal mandate by reversing the findings of fact of the LA and the NLRC as it appears that both decisions were based on substantial evidence. There is no proof of arbitrariness or abuse of discretion in the process by which each body arrived at its own conclusions. Thus, the CA should have deferred to such specialized agencies which are considered experts in matters within their jurisdictions. It is dangerous for the CA and even the SC to look into the wisdom of a management prerogative. Certainly, one can argue for or against the pros and cons of transferring respondent to another territory. Absent a definite finding that such exercise of prerogative was tainted with arbitrariness and unreasonableness, the CA should have left the same to petitioners’ better judgment. The rule is well settled that labor laws discourage interference with an employer's judgment in the conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. As long as the company's exercise of the same is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld. DOCTRINE: Dismissal; due process. In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employer’s decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. Separation pay. In those instances where an employee has been validly dismissed for causes other than serious misconduct or those reflecting on his moral character, separation pay may still be granted after giving considerable weight to his long years of employment. In this case, equity considerations dictate that respondent’s tenure be computed from 1978, the year

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST when respondent started working for Upjohn, and not only from 1996, when the merger of Pharmacia and Upjohn took place. Management prerogative; transfer of employees. Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. To determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal.

CARLOS DE CASTRO VS. LIBERTY BROADCASTING NETWORK, INC. G.R. N O. 165153, A UGUST 25, 2010 FACTS

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Petitioner worked as chief building administrator at LBNI. LBNI dismissed de Castro on the grounds of serious misconduct, fraud, and willful breach of the trust reposed in him as a managerial employee. Allegedly, de Castro committed the following acts: Soliciting and/or receiving money for his own benefit from suppliers/dealers/traders; Diversion of company funds by soliciting and receiving on different occasions; Theft of company property involving the unauthorized removal of one gallon of Delo oil from the company storage room; Disrespect/discourtesy towards a co-employee; Threat and coercion, for threatening to inflict bodily harm on the person of Niguidula [supply manager] and for coercing [Gil Balais], a subordinate, into soliciting money in behalf from suppliers/contractors; lander, for uttering libelous statements against Niguidula.

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Aggrieved, de Castro filed a complaint for illegal dismissal against LBNI with the National Labor Relations Commission. He maintained that he could not have solicited commissions from suppliers considering that he was new in the company. Moreover, the accusations were belatedly filed as the imputed acts happened in 1995. He explained that the one gallon of Delo oil he allegedly took was actually found in Gil Balais’ room. He denied threatening Vicente Niguidula, whom he claimed verbally assaulted him and challenged him to a fight, an incident which he reported to respondent Edgardo Quiogue, LBNI’s executive vice president, and to the Makati police. De Castro alleged that prior to executing affidavits against him, Niguidula and Balais had serious clashes with him.

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The SC, in its September 23, 2008 Decision, ruled that de Castro’s dismissal was based on unsubstantiated charges. LBNI now moves for a reconsideration of our September 23, 2008 Decision based on the following arguments: (1) LBNI had valid legal grounds to terminate de Castro’s employment for loss of trust and confidence; (2) the affidavits of LBNI’s witnesses should not have been totally disregarded; and (3) LBNI is currently under rehabilitation, hence, the proceedings in this case must be suspended. ISSUE Whether or not petitioner was illegally dismissed; and whether the pendency of the rehabilitation proceedings does not affect the Court’s jurisdiction to resolve the case. HELD The issue of illegal dismissal has already been resolved in the Court’s September 23, 2008 Decision, finding that de Castro’s dismissal was based on unsubstantiated charges. The court ruled that the grounds that LBNI invoked for de Castro’s dismissal were, at best, doubtful, based on the evidence presented. These doubts should be interpreted in de Castro’s favor, pursuant to Article 4 of the Labor Code. Between a laborer and his employer, doubts reasonably arising from the evidence or interpretation of agreements and writing should be resolved in the former’s favor. As to the second issue: Yes, the pendency of the rehabilitation proceedings does not affect the Court’s jurisdiction to resolve the case. It merely suspends the execution of the September 23, 2008 Decision. DOCTRINE: Dismissal; probationary employment. Though the acts charged against de Castro took place when he was still under probationary employment, the records show that de Castro was dismissed on the ninth month of his employment with LBNI. By then, he was already a regular employee by operation of law. As a regular employee, de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages, and damages.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST Illegal dismissal; effect of rehabilitation proceedings. The existence of the Stay Order – which would generally authorize the suspension of judicial proceedings – could not have affected the Court’s action on the present case due to the petitioner’s failure to raise the pendency of the rehabilitation proceedings in its memorandum to the Court. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it. Thus, the Court’s ruling on the principal issue of the case stands. Nevertheless, with LBNI’s manifestation that it is still undergoing rehabilitation, the Court resolves to suspend the execution of our Decision until the termination of the rehabilitation proceedings.

SPIC N’ SPAN SERVICES VS . GLORIA PAJE G.R. N O. 174084, A UGUST 25, 2010

ET AL .,

FACTS • SNS’s business is to supply manpower services to its clients for a fee. Swift and SNS have a contract to promote Swift products. Respondents worked as Deli/Promo Girls of Swift products in various supermarkets in Tarlac and Pampanga. They were all dismissed from their employment. They filed two complaints for illegal dismissal against SNS and Swift before the National Labor Relations Commission.

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After two unsuccessful conciliation hearings, the Labor Arbiter ordered the parties to submit their position papers. Swift filed its position paper; SNS did not. The complainants’ position papers were signed by Florencio P. Peralta who was not a lawyer and who claimed to be the complainants’ representative, although he never showed any proof of his authority to represent them.

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In their position papers, the complainants alleged that they were employees of Swift and SNS, and their services were terminated without cause and without due process. The termination came on the day they received their notices; thus, they were denied the procedural due process requirements of notice and hearing prior to their termination of employment. Swift, in its position paper, moved to dismiss the complaints on the ground that it entered into an independent labor contract with SNS for the promotion of its products; it alleged that the complainants were the employees of SNS, not of Swift. In addition, the petitioner contended that the case should be decided in their favor on the ground of non-signing of the position paper by the respondents. ISSUE Whether or not signature in a pleading is fatal to respondents’ case; and whether or not representation by a non-lawyer is sufficient justification for respondents’ failure to comply with the requirements of law. HELD Both answers are in the negative. The lack of a verification in a pleading is only a formal defect, not a jurisdictional defect, and is not necessarily fatal to a case. The primary reason for requiring a verification is simply to ensure that the allegations in the pleading are done in good faith, are true and correct, and are not mere speculations. As for the second issue, Our Labor Code allows a non-lawyer to represent a party before the Labor Arbiter and the Commission, but provides limitations: Non-lawyers may appear before the Commission or any Labor Arbiter only: (1) If they represent themselves; or (2) If they represent their organization or members thereof. Thus, SNS concludes that the respondents’ representative had no personality to appear before the Labor Arbiter or the NLRC, and his representation for the respondents should produce no legal effect. Our approach to these arguments is simple as the problem boils down to a balance between a technical rule and protected constitutional interests. The cited technical infirmity cannot defeat the respondents’ preferred right to security of tenure which has primacy over technical requirements. Thus, we affirm the CA’s ruling on this point, without prejudice to whatever action may be taken against the representative, if he had indeed been engaged in the unauthorized practice of law. BUTOY™ 2010 - TAU KAPPA PHI

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST DOCTRINE: Job contracting. In permissible job contracting, the principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. The test is whether the independent contractor has contracted to do the work according to his own methods and without being subject to the principal’s control except only as to the results, he has substantial capital, and he has assured 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.

ALEX GURANGO VS . BEST CHEMICALS & PLASTICS INC. G.R. N O. 174593, A UGUST 25, 2010 FACTS

•

Petitioner Alex R. Gurango and Romeo S. Albao worked as boiler operator and security guard, respectively, in BCPI. In a memorandum dated 2 May 2003, BCPI prohibited its empoyees from bringing personal items to their work area. Erring employees would be suspended for six days.

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According to Gurango, he performed his routine check-up inside the production area. He had in his pocket a camera without film. On his way out of the production area, he saw Albao standing near the bundy clock. Albao pulled him, grabbed his pocket, and tried to confiscate the camera. Gurango refused to give the camera because there was no reason to surrender it. Albao held Gurango’s arm and punched him on the face. Gurango shouted for help. Elvin Juanitas (Juanitas), saw what happened and asked Albao and Pablis to stop hitting Gurango. Gurango agreed to surrender the camera on the condition that the security guards would prepare a document acknowledging receipt of the camera. • BCPI wrote a letter to Gurango finding him guilty of engaging in a fistfight and violating company policy by bringing a camera. Gurango filed with the NLRC a complaint against BCPI for illegal dismissal. ISSUE Whether or not the petitioner was illegally dismissed. HELD Yes. In the present case, the findings of fact of the Court of Appeals conflict with the findings of fact of the NLRC and the Labor Arbiter. Also, the finding of the Court of Appeals that Gurango engaged in a fistfight is a conclusion without citation of specific evidence on which it is based. The surrounding circumstances show that Gurango did not engage in a fistfight: (1) in his 9 May 2003 letter to BCPI, Juanitas corroborated Gurango’s version of the facts; (2) nobody corroborated Albao’s version of the facts; (3) in his medical report, Dr. Aguinaldo found that Gurango suffered physical injuries; (4) Gurango filed with the MCTC a complaint against Albao, Cordero and Pablis for slight physical injury; (5) the Labor Arbiter found Gurango’s statement credible and unblemished; (6) the Labor Arbiter found Albao’s statement contradictory; (7) the Labor Arbiter stated, “I am convinced Albao lied in his statement”; (8) the NLRC found that Gurango did not start a fight; (9) the NLRC found Albao’s statement unbelievable and exaggerated; and (10) the Court of Appeals’ reversal of the findings of fact of the Labor Arbiter and the NLRC is baseless. In Triumph International (Phils.), Inc., the Court held that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are accorded not only respect but finality when supported by susbstantial evidence.

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST DOCTRINE: Dismissal; burden of proof. In termination cases, the employer has the burden of proving, by substantial evidence that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the dismissal is deemed illegal. In the present case, BCPI failed to discharge its burden when it failed to present any evidence of the alleged fistfight, aside from a single statement, which was refuted by statements made by other witnesses and was found to be incredible by both the Labor Arbiter and the NLRC.

AGRICULTURAL AND INDUSTRIAL SUPPLIES G.R. N O. 177970, A UGUST 25, 2010

VS .

SIAZAR

FACTS

•

Respondent works with AISC as a product designer, mold maker, and CNC programmer with a monthly salary of P25,000.00. In early 1997, Siazar discovered that his company was not remitting much of his SSS premiums although the computations appeared on his pay slips. When he told his co-employees about it, they made their own inquiries, too. On Siazar’s arrival at work on June 17, 1997, the company guard refused him entry and handed him two notes from the management: one said that he was not to report for work; the other said that he was to report after two days to Atty. Rodriguez at his office in Binondo.

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Too anxious over the matter, Siazar did not wait and went straightaway to see Atty. Rodriguez. The latter told Siazar that the company had decided to abolish his department because of redundancy and he could no longer work. AISC claimed the company thought of closing down Siazar’s department where he worked solo since it was no longer making money.

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Siazar had a different version. According to him, Atty. Rodriguez asked him to make a computation of what amount he expected from the company and return to the lawyer with such computation on the following day and the company would immediately pay him. When Siazar and his wife saw Atty. Rodriguez again at his office, the latter insisted on getting Siazar to do the computation he asked. As Siazar was unsure of his situation, however, he consulted a lawyer on that same day. This lawyer went with him back to Atty. Rodriguez who confirmed that Siazar had indeed been dismissed because his department was no longer earning money. This surprised Siazar because his department did not generate income on its own, being a mere support unit of the company. Since all attempts at negotiation proved futile, Siazar filed his complaint. ISSUE Whether or not the company dismissed respondent from work; and whether it was valid. HELD Yes. The court based its finding on the following: (a) Rodriguez told Siazar that he had been terminated; (b) the company did not allow Siazar to enter its premises; (c) it wanted to close his department and retrench him from work; (d) Rodriguez asked Siazar to compute what he expected was to be his separation pay; (e) the company neither gave Siazar notice nor informed him of the reason for his dismissal; and (f) it showed no valid or just cause for the dismissal. DOCTRINE: Dismissal; validity. The company did not adduce any evidence to prove that Siazar’s dismissal had been for a just or authorized cause, as in fact it had been its consistent stand that it did not terminate him and that he quit on his own. But given the findings of the Court that the company had indeed dismissed Siazar and that such dismissal has remained unexplained, there can be no other conclusion but that the dismissal was illegal. BUTOY™ 2010 - TAU KAPPA PHI

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AUGUST 2010 PHILIPPINE SUPREME COURT DECISIONS ON LABOR LAW  CASE DIGEST

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