#32 ISSUE: Whether the contracting out of activities or services
being performed by union members constitute ULP.
Labor-only contracting is an arrangement where the contractor,
who does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others,
supplies workers to an employer and the workers recruited are
performing activities which are directly related to the principal
business of such employer.
Criteria to gauge whether or not an arrangement constitutes
labor-only contracting:
Section 5. Prohibition against labor-only contracting. Labor-
only contracting is hereby declared prohibited. For this purpose,
labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or
places workers to perform a job, work or service for a
principal, and any of the following elements are present:
i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or
service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main
business of the principal; or
ii) The contractor does not exercise the right to control over
the performance of the work of the contractual employee.
"Substantial capital or investment" refers to capital stocks and
subscribed capitalization in the case of corporations, 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.
The "right to control" shall refer to the right reserved to the
person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but also
the manner and means to be used in reaching that end.
Labor-only contracting is considered as a form of ULP when
the same is devised by the employer to "interfere with,
restrain or coerce employees in the exercise of their rights to
self-organization.
Article 258. Concept of Unfair Labor Practice and Procedure
for Prosecution Thereof. -
Unfair labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate
interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace
and hinder the promotion of healthy and stable labor-management
relations.
There should be no dispute that all the prohibited acts
constituting unfair labor practice in essence relate to the
workers' right to self-organization. Thus, an employer may be
held liable under this provision if his conduct affects in whatever
manner the right of an employee to self-organize.
The Court has ruled that the prohibited acts considered as ULP relate
to the workers' right to self-organization and to the observance of a
CBA. It refers to "acts that violate the workers' right to
organize." Without that element, the acts, even if unfair, are
not ULP. Thus, an employer may only be held liable for unfair labor
practice if it can be shown that his acts affect in whatever manner
the right of his employees to self-organize.
CEPALCO's contracting arrangements with CESCO did not amount to
ULP. This is because respondent was not able to present any
evidence to show that such arrangements violated CEPALCO's
workers' right to self-organization, which, as above-mentioned,
constitutes the core of ULP. Records do not show that this finding
was further appealed by respondent. Thus, the complaints filed by
respondent should be dismissed with finality.
#31 ISSUE: whether or not the CA correctly ascribed grave abuse
of discretion on the part of the NLRC in ruling that Carbonilla, Jr.'s
dismissal was valid
The CA erred in ascribing grave abuse of discretion on the part of
the NLRC when the latter declared that CPMPC validly dismissed
Carbonilla, Jr. from his job. The totality and gravity of Carbonilla,
Jr.'s infractions throughout the course of his employment completely
justified CPMPC's decision to finally terminate his employment.
In labor disputes, grave abuse of discretion may be ascribed to
the NLRC when, inter alia, its findings and conclusions are not
supported by substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to
justify a conclusion.
Basic is the rule that an employer may validly terminate the
services of an employee for any of the just causes enumerated
under Article 296 (formerly Article 282) of the Labor Code, namely:
(a) Serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or representative in
connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed
in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against
the person of his employer or any immediate member of his family
or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
Misconduct as a 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 misconduct to be considered as a just cause for termination, the
following requisites must concur:
(a) the misconduct must be serious;
(b) it must relate to the performance of the employee's
duties showing that the employee has become unfit to
continue working for the employer; and
(c) it must have been performed with wrongful intent.
Loss of trust and confidence will validate an employee's
dismissal when it is shown that:
(a) the employee concerned holds a position of trust and
confidence; and
(b) he performs an act that would justify such loss of trust
and confidence.
There are two (2) classes of positions of trust:
first, managerial employees whose primary duty consists of the
management of the establishment in which they are employed or of
a department or a subdivision thereof, and to other officers or
members of the managerial staff; and
second, fiduciary rank-and-file employees, such as cashiers,
auditors, property custodians, or those who, in the normal exercise
of their functions, regularly handle significant amounts of money or
property. These employees, though rank-and-file, are routinely
charged with the care and custody of the employer's money or
property, and are thus classified as occupying positions of trust and
confidence.
The totality of infractions or the number of violations
committed during the period of employment shall be considered in
determining the penalty to be imposed upon an erring employee.
The offenses committed by petitioner should not be taken singly and
separately. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character,
conduct and ability separate and independent of each other.
Indeed, the employer cannot be compelled to retain a
misbehaving employee, or one who is guilty of acts inimical
to its interests.
Compensation can take place between two persons who are
creditors and debtors of each other. Considering that Carbonilla, Jr.
had existing debts to CPMPC which were incurred during the
existence of the employer-employee relationship, the amount which
may be due him in wages was correctly deducted therefrom.
#30 ISSUE: Whether or not Intec illegally impelemented reduction
of work hours; Whether or not Intec is guilty of constructive
dismissal
It was incumbent upon Intec to prove that that the implementation
of the reduced working days is valid and done in good faith. Intec
claims that it implemented a reduction of work days scheme to
forestall its losses. No proof was submitted that the newly-hired
employees were performing work different from the regular workers.
There is no reason to implement a cost-cutting measure in the form
of reducing the employees' working days. Intec committed illegal
reduction of work hours.
Management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work,
processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of
workers, and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not
absolute as it must be exercised in good faith and with due
regard to the rights of labor.
Constructive dismissal occurs when there is cessation of work
because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or
diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the
employee.
To constitute abandonment, there must be clear proof of
deliberate and unjustified intent to sever the employer-
employee relationship. Clearly, the operative act is still the
employee's ultimate act of putting an end to his employment.
Furthermore, it is a settled doctrine that the filing of a complaint
for illegal dismissal is inconsistent with abandonment of
employment. An employee who takes steps to protest his dismissal
cannot logically be said to have abandoned his work. The filing of
such complaint is proof enough of his desire to return to work, thus
negating any suggestion of abandonment.
For certiorari to prosper, the followingrequisites must concur:
(1) the writ is directed against a tribunal, a board or any officer
exercising judicial or quasi-judicial functions;
(2) such tribunal, board or officer has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction; and
(3) there is no appeal or any plain, speedy and adequate remedy in
the ordinary course of law.
A petition for certiorari against a court which has jurisdiction over a
case will prosper only if grave abuse of discretion is manifested. The
burden is on the part of the petitioner to prove not merely
reversible error, but grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the public
respondent issuing the impugned order. Mere abuse of
discretion is not enough; it must be grave. The term grave abuse of
discretion is defined as a capricious and whimsical exercise of
judgment so patent and gross as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law,
as where the power is exercised in an arbitrary and despotic manner
because of passion or hostility.
A writ of certiorari will not issue where the remedy of appeal
is available to the aggrieved party. In this case, appeal under
Rule 45 of the Rules of Court was clearly available to Intec.
#29 ISSUE: Does the TSPIC’s decision to deduct the alleged
overpayment from the salaries of the affected members of the Union
constitute diminution of benefits in violation of the Labor Code?
The path towards industrial peace is a two-way street. Fundamental
fairness and protection to labor should always govern dealings
between labor and management. Seemingly conflicting provisions
should be harmonized to arrive at an interpretation that is within the
parameters of the law, compassionate to labor, yet, fair to
management.
CBA is the law between the parties and they are obliged to
comply with its provisions.
A collective bargaining agreement or CBA refers to the
negotiated contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other terms and
conditions of employment in a bargaining unit. As in all contracts,
the parties in a CBA may establish such stipulations, clauses, terms
and conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order or public policy.
Thus, where the CBA is clear and unambiguous, it becomes the law
between the parties and compliance therewith is mandated by the
express policy of the law.
Moreover, if the terms of a contract, as in a CBA, are clear and leave
no doubt upon the intention of the contracting parties, the literal
meaning of their stipulations shall control. However, sometimes, as
in this case, though the provisions of the CBA seem clear and
unambiguous, the parties sometimes arrive at conflicting
interpretations.
Here, TSPIC wants to credit the increase granted by WO No. 8 to the
increase granted under the CBA. According to TSPIC, it is specifically
provided in the CBA that "the salary/wage increase for the year
2001 shall be deemed inclusive of the mandated minimum wage
increases under future wage orders that may be issued after Wage
Order No. 7." The Union, on the other hand, insists that the
"crediting" provision of the CBA finds no application in the present
case, since at the time WO No. 8 was issued, the probationary
employees (second group) were not yet covered by the CBA,
particularly by its crediting provision.
As a general rule, in the interpretation of a contract, the intention of
the parties is to be pursued. Littera necat spiritus vivificat. An
instrument must be interpreted according to the intention of the
parties. It is the duty of the courts to place a practical and realistic
construction upon it, giving due consideration to the context in
which it is negotiated and the purpose which it is intended to serve.
Considering that the parties have unequivocally agreed to substitute
the benefits granted under the CBA with those granted under wage
orders, the agreement must prevail and be given full effect.
It is a familiar rule in interpretation of contracts that conflicting
provisions should be harmonized to give effect to all. Likewise, when
general and specific provisions are inconsistent, the specific
provision shall be paramount to and govern the general provision.
Thus, it may be reasonably concluded that TSPIC granted the salary
increases under the condition that any wage order that may be
subsequently issued shall be credited against the previously granted
increase. The intention of the parties is clear: As long as an
employee is qualified to receive the 12% increase in salary, the
employee shall be granted the increase; and as long as an employee
is granted the 12% increase, the amount shall be credited against
any wage order issued after WO No. 7.
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.
As correctly pointed out by TSPIC, the overpayment of its employees
was a result of an error. This error was immediately rectified by
TSPIC upon its discovery. We have ruled before that an
erroneously granted benefit may be withdrawn without
violating the prohibition against non-diminution of benefits.
Payment may be said to have been made by reason of a mistake in
the construction or application of a "doubtful or difficult question of
law".
Since it is a past error that is being corrected, no vested right may
be said to have arisen nor any diminution of benefit under Article
100 of the Labor Code may be said to have resulted by virtue of the
correction.
Here, 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.
It is the state’s responsibility to afford protection to labor, this policy
should not be used as an instrument to oppress management and
capital. In resolving disputes between labor and capital, fairness and
justice should always prevail.
In the resolution of labor cases, we have always been guided by the
State policy enshrined in the Constitution: social justice and
protection of the working class. Social justice does not, however,
mandate that every dispute should be automatically decided in favor
of labor. In any case, justice is to be granted to the deserving and
dispensed in the light of the established facts and the applicable law
and doctrine.
#28 ISSUE:
This Court's labor pronouncements must be read and applied with
utmost care and caution, taking to mind that in the very heart of the
judicial system, labor cases occupy a special place. More than the
State guarantees of protection of labor and security of tenure, labor
disputes involve the fundamental survival of the employees and their
families, who depend -upon the former for all the basic necessities in
life.
In Marsaman Manning Agency, Inc. v. National Labor Relations
Commission, when the illegally dismissed employee’s
employment contract has a term of less than one year,
he/she shall be entitled to recovery of salaries representing
the unexpired portion of his/her employment contract.
The choice of which amount to award an illegally dismissed overseas
contract worker, i.e., whether his salaries for the unexpired portion
of his employment contract or three (3) months salary for every
year of the unexpired term, whichever is less, comes into play only
when the employment contract concerned has a term of at least one
(1) year or more. In interpreting a statute, care should be taken that
every part or word thereof be given effect since the lawmaking body
is presumed to know the meaning of the words employed in the
statute and to have used them advisedly. Ut res magis valeat quam
pereat.
It is not disputed that private respondent’s employment contract in
the instant case was for six (6) months. Hence, we see no reason to
disregard the ruling in Marsaman that private respondent should be
paid his salaries for the unexpired portion of his employment
contract.
Article 279 of the Labor Code mandates that an employee’s full
backwages shall be inclusive of allowances and other benefits or
their monetary equivalent.
It is the obligation of the employer to pay an illegally dismissed
employee or worker the whole amount of the salaries or wages, plus
all other benefits and bonuses and general increases, to which he
would have been normally entitled had he not been dismissed and
had not stopped working.
Article 111. Attorney’s fees. – (a) In cases of unlawful
withholding of wages, the culpable party may be assessed
attorney’s fees equivalent to ten percent of the amount of
wages recovered.
(b) It shall be unlawful for any person to demand or accept,
in any judicial or administrative proceedings for the recovery
of wages, attorney’s fees which exceed ten percent of the
amount of wages recovered.’
We explained in PCL Shipping Philippines, Inc. v. National Labor
Relations Commission that there are two commonly accepted
concepts of attorney’s fees – the ordinary and extraordinary.
In its ordinary concept, an attorney’s fee is the reasonable
compensation paid to a lawyer by his client for the legal services the
former renders; compensation is paid for the cost and/or results of
legal services per agreement or as may be assessed.
In its extraordinary concept, attorney’s fees are deemed
indemnity for damages ordered by the court to be paid by the losing
party to the winning party. The instances when these may be
awarded are enumerated in Article 2208 of the Civil Code,
specifically in its paragraph 7 on actions for recovery of wages, and
is payable not to the lawyer but to the client, unless the client and
his lawyer have agreed that the award shall accrue to the lawyer as
additional or part of compensation.
Article 111 of the Labor Code, as amended, contemplates the
extraordinary concept of attorney’s fees and that Article 111
is an exception to the declared policy of strict construction in
the award of attorney’s fees. Although an express finding of facts
and law is still necessary to prove the merit of the award, there need
not be any showing that the employer acted maliciously or in bad
faith when it withheld the wages.
Settled is the rule that in actions for recovery of wages, or where an
employee was forced to litigate and, thus, incur expenses to protect
his rights and interests, a monetary award by way of attorney's fees
is justifiable under Article Ill of the Labor Code; Section 8, Rule VIII,
Book III of its Implementing Rules; and paragraph 7, Article 208 of
the Civil Code. The award of attorney's fees is proper, and there
need not be any showing that the employer acted maliciously or in
bad faith when it withheld the wages.
There need only be a showing that the lawful wages were not paid
accordingly.
A plain showing that the lawful wages were not paid without
justification is sufficient.
In this case, it is already settled that petitioner's employment was
illegally terminated. As a result, his wages as well as allowances
were withheld without valid and legal basis. Otherwise stated, he
was not paid his lawful wages without any valid justification.
Consequently, he was impelled to litigate to protect his interests. He
is entitled to receive attorney’s fees.
#27 ISSUE: Whether or not Palad is an apprentice; Whether or not
Palad is illegally terminated
The Labor Code defines an apprentice as a worker who is covered by
a written apprenticeship agreement with an employer.
It is mandated that apprenticeship agreements entered into by the
employer and apprentice shall be entered only in accordance with
the apprenticeship program duly approved by the Minister of Labor
and Employment.
"Apprenticeship" training within employment with compulsory
related theoretical instructions involving a contract between an
apprentice and an employer on an approved apprenticeable
occupation;
"Apprentice" is a person undergoing training for an approved
apprenticeable occupation during an established period assured by
an apprenticeship agreement;
"Apprentice Agreement" is a contract wherein a prospective
employer binds himself to train the apprentice who in turn accepts
the terms of training for a recognized apprenticeable occupation
emphasizing the rights, duties and responsibilities of each party;
"Apprenticeable Occupation" is an occupation officially endorsed
by a tripartite body and approved for apprenticeship by the
Authority [TESDA];
In this case, the apprenticeship agreement was entered into
between the parties before petitioner filed its apprenticeship
program with the TESDA for approval. Petitioner and Palad executed
the apprenticeship agreement on 17 July 1997 wherein it was stated
that the training would start on 17 July 1997 and would end
approximately in December 1997.17 On 25 July 1997, petitioner
submitted for approval its apprenticeship program, which the TESDA
subsequently approved on 26 September 1997.18 Clearly, the
apprenticeship agreement was enforced even before the TESDA
approved petitioner’s apprenticeship program. Thus, the
apprenticeship agreement is void because it lacked prior approval
from the TESDA.
The TESDA’s approval of the employer’s apprenticeship program is
required before the employer is allowed to hire apprentices. Prior
approval from the TESDA is necessary to ensure that only employers
in the highly technical industries may employ apprentices and only
in apprenticeable occupations.
Since Palad is not considered an apprentice because the
apprenticeship agreement was enforced before the TESDA’s approval
of petitioner’s apprenticeship program, Palad is deemed a regular
employee performing the job of a "fish cleaner." Clearly, the job of a
"fish cleaner" is necessary in petitioner’s business as a tuna and
sardines factory.
Under Article 280 of the Labor Code, an employment is deemed
regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer.
Under Article 27922 of the Labor Code, an employer may
terminate the services of an employee for just causes or for
authorized causes.
Furthermore, under Article 277(b) of the Labor Code, the employer
must send the employee who is about to be terminated, a written
notice stating the causes for termination and must give the
employee the opportunity to be heard and to defend himself.
Thus, to constitute valid dismissal from employment, two
requisites must concur:
(1) the dismissal must be for a just or authorized cause; and
(2) the employee must be afforded an opportunity to be
heard and to defend himself.
Under Article 227 of the Labor Code, the employer has the burden of
proving that the termination was for a valid or authorized cause.
Petitioner failed to substantiate its claim that Palad was terminated
for valid reasons. 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.
Furthermore, Palad was not accorded due process. Even if petitioner
did conduct a performance evaluation on Palad, petitioner failed to
warn Palad of her alleged poor performance. In fact, Palad denies
any knowledge of the performance evaluation conducted and of the
result thereof. Petitioner likewise admits that Palad did not receive
the notice of termination30 because Palad allegedly stopped
reporting for work. The records are bereft of evidence to show that
petitioner ever gave Palad the opportunity to explain and defend
herself. Clearly, the two requisites for a valid dismissal are lacking in
this case.
#26 ISSUE: Whether or not a teacher's overload pay should be
considered in the computation of his or her 13th-month pay.
The appellate court’s jurisdiction to review a decision of the
NLRC in a petition for certiorari is confined to issues of
jurisdiction or grave abuse of discretion. An extraordinary
remedy, a petition for certiorari is available only and restrictively in
truly exceptional cases. The sole office of the writ of certiorari is the
correction of errors of jurisdiction including the commission of grave
abuse of discretion amounting to lack or excess of jurisdiction. It
does not include correction of the NLRC’s evaluation of the evidence
or of its factual findings. Such findings are generally accorded not
only respect but also finality. A party assailing such findings bears
the burden of showing that the tribunal acted capriciously and
whimsically or in total disregard of evidence material to the
controversy, in order that the extraordinary writ of certiorari will lie.
It is a settled rule that when an administrative or executive
agency renders an opinion or issues a statement of policy, it
merely interprets a pre-existing law and the administrative
interpretation is at best advisory for it is the courts that
finally determine what the law means.
Overload pay should be excluded from the computation of the
13th-month pay of petitioner's members. In resolving the issue
of the inclusion or exclusion of overload pay in the computation of a
teacher's 13th-month pay, it is decisive to determine what "basic
salary" includes and excludes.
In the same manner that payment for overtime work and
work performed during special holidays is considered as
additional compensation apart and distinct from an
employee's regular wage or basic salary, an overload pay,
owing to its very nature and definition, may not be
considered as part of a teacher's regular or basic salary,
because it is being paid for additional work performed in
excess of the regular teaching load.
Even if it is performed within the normal eight-hour working
day, an overload is still an additional or extra teaching work
which is performed after the regular teaching load has been
completed. Hence, any pay given as compensation for such
additional work should be considered as extra and not
deemed as part of the regular or basic salary.
Moreover, petitioner failed to refute private respondent's contention
that excess teaching load is paid by the hour, while the regular
teaching load is being paid on a monthly basis; and that the
assignment of overload is subject to the availability of teaching
loads. This only goes to show that overload pay is not integrated
with a teacher's basic salary for his or her regular teaching load. In
addition, overload varies from one semester to another, as it is
dependent upon the availability of extra teaching loads. As such, it is
not legally feasible to consider payments for such overload as part of
a teacher's regular or basic salary. Verily, overload pay may not be
included as basis for determining a teacher's 13th-month pay.
#25 ISSUE: Is a verbal appraisal of the charges against the
employee a breach of the procedural due process?
Due process under the Labor Code involves two aspects: first,
substantive––the valid and authorized causes of termination
of employment under the Labor Code; and second,
procedural––the manner of dismissal.
The following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees
should contain the specific causes or grounds for termination
against them, and a directive that the employees are given
the opportunity to submit their written explanation within a
reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every
kind of assistance that management must accord to the employees
to enable them to prepare adequately for their defense. This should
be construed as a period of at least five (5) calendar days from
receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the notice
should contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the employees. A
general description of the charge will not suffice. Lastly, the notice
should specifically mention which company rules, if any, are violated
and/or which among the grounds under Art. 282 is being charged
against the employees.

(2) After serving the first notice, the employers should
schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and
clarify their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management.
During the hearing or conference, the employees are given the
chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference
or hearing could be used by the parties as an opportunity to come to
an amicable settlement.
(3) After determining that termination of employment is
justified, the employers shall serve the employees a written
notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been
considered; and (2) grounds have been established to justify
the severance of their employment.
A verbal appraisal of the charges against an employee does
not comply with the first notice requirement.
In Agabon v. NLRC by ruling, if the dismissal is done without
due process, the employer should indemnify the employee
with nominal damages.
Thus, for non-compliance with the due process requirements in the
termination of respondent’s employment, petitioner KKTI is
sanctioned to pay respondent the amount of thirty thousand pesos
(PhP 30,000) as damages.
Section 3 of the Rules Implementing Presidential Decree No. 85122
provides the exceptions in the coverage of the payment of the
13th-month benefit.
SEC. 3. Employers covered.––The Decree shall apply to all
employers except to:
e) Employers of those who are paid on purely commission,
boundary, or task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the
time consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the
employer shall be covered by this issuance insofar as such
workers are concerned.
Respondent admitted that he was paid on commission only.
Moreover, this fact is supported by his pay slips25 which indicated
the varying amount of commissions he was receiving each trip.
Thus, he was excluded from receiving the 13th-month pay benefit.
#24 ISSUE: Whether Tanchico is a regular employee of petitioners;
Whether Tanchico is entitled to 13th month pay, disability benefits
and attorney’s fees.
Seafarers are contractual, not regular, employees.
Overseas employment contract is an example of contracts
where the concept of regular employment does not apply,
whatever the nature of the engagement and despite the
provisions of Article 280 of the Labor Code.
The agency is liable for payment of a seaman’s medical and
disability benefits in the event that the principal fails or
refuses to pay the benefits or wages due the seaman
although the seaman may not be a regular employee of the
agency.
[I]t is clear that seafarers are considered contractual employees.
They cannot be considered as regular employees under Article 280
of the Labor Code. Their employment is governed by the contracts
they sign everytime they are rehired and their employment is
terminated when the contract expires. Their employment is
contractually fixed for a certain period of time. They fall under the
exception of Article 280 whose employment has been fixed for a
specific project or undertaking the completion or termination of
which has been determined at the time of engagement of the
employee or where the work or services to be performed is seasonal
in nature and the employment is for the duration of the season. We
need not depart from the rulings of the Court in the two
aforementioned cases which indeed constitute stare decisis with
respect to the employment status of seafarers.
Filipino seamen are governed by the Rules and Regulations of the
POEA. The Standard Employment Contract governing the
employment of All Filipino Seamen on Board Ocean-Going Vessels of
the POEA, particularly in Part I, Sec. C specifically provides that the
contract of seamen shall be for a fixed period. And in no case
should the contract of seamen be longer than 12 months. Any
extension of the Contract period shall be subject to the
mutual consent of the parties.
As a Filipino seaman, petitioner is governed by the Rules and
Regulations Governing Overseas Employment and the said
Rules do not provide for separation or termination pay.
Hence, in the absence of any provision in his Contract
governing the payment of 13th month pay, Tanchico is not
entitled to the benefit.
In the absence of concrete proof that Tanchico acquired his disability
during his last deployment and not during his vacation, he is only
entitled to disability benefits for 18 days.
D. If disability should occur while SEAFARER is on vacation,
he must, within 3 days from date thereof, notify the
COMPANY’s Agent in the Philippines in order that the latter
shall be able to certify as to his condition. Certification of
disability required for payment of any disability benefits must
be approved by a doctor appointed by the COMPANY and
SEAFARER must be disabled seven (7) days or more to be
eligible to benefits and sick leave status, COMPANY benefits
shall be limited to a maximum of 18 days.
#23 ISSUE: Whether or not private respondents are entitled to
separation pay, 13th month pay and service incentive leave pay, and
granting that they are so entitled, what should be the reckoning
point for computing said awards
Under Arts. 283 and 284 of the Labor Code, separation pay is
authorized only in cases of dismissals due to any of these
reasons:
(a) installation of labor saving devices;
(b) redundancy;
(c) retrenchment;
(d) cessation of the employer's business; and
(e) 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.
However, separation pay shall be allowed as a measure of
social justice in those cases where the employee is validly
dismissed for causes other than serious misconduct or those
reflecting on his moral character, but only when he was
illegally dismissed.
In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to
Implement the Labor Code provides for the payment of separation
pay to an employee entitled to reinstatement but the
establishment where he is to be reinstated has closed or has
ceased operations or his present position no longer exists at
the time of reinstatement for reasons not attributable to the
employer.
The common denominator of the instances where payment of
separation pay is warranted is that the employee was
dismissed by the employer.
In the instant case, there was no dismissal to speak of. Private
respondents were simply not dismissed at all, whether legally or
illegally. What they received from JPL was not a notice of
termination of employment, but a memo informing them of the
termination of CMC’s contract with JPL. More importantly, they were
advised that they were to be reassigned. At that time, there was no
severance of employment to speak of.
Art. 286 of the Labor Code allows the bona fide suspension of
the operation of a business or undertaking for a period not
exceeding six (6) months, wherein an employee/employees
are placed on the so-called "floating status."
When that "floating status" of an employee lasts for more
than six months, he may be considered to have been illegally
dismissed from the service. Thus, he is entitled to the
corresponding benefits for his separation, and this would apply to
suspension either of the entire business or of a specific component
thereof.
As clearly borne out by the records of this case, private respondents
sought employment from other establishments even before the
expiration of the six (6)-month period provided by law. As they
admitted in their comment, all three of them applied for and were
employed by another establishment after they received the notice
from JPL. JPL did not terminate their employment; they themselves
severed their relations with JPL. Thus, they are not entitled to
separation pay.
An employer is liable to pay indemnity in the form of nominal
damages to a dismissed employee if, in effecting such
dismissal, the employer failed to comply with the
requirements of due process.
However, private respondents are not entitled to the payment of
damages considering that there was no violation of due process in
this case. JPL’s memo dated 13 August 1996 to private respondents
is not a notice of termination, but a mere note informing private
respondents of the termination of CMC’s contract and their re-
assignment to other clients. The thirty (30)-day notice rule does not
apply.
The payment of 13th month pay and service incentive leave
pay are mandated by law and should be given to employees
as a matter of right.
Presidential Decree No. 851, as amended, requires an
employer to pay its rank and file employees a 13th month pay
not later than 24 December of every year. However,
employers not paying their employees a 13th month pay or
its equivalent are not covered by said law. The term "its
equivalent" was defined by the law’s implementing guidelines as
including Christmas bonus, mid-year bonus, cash bonuses and other
payment amounting to not less than 1/12 of the basic salary but
shall not include cash and stock dividends, cost-of-living-allowances
and all other allowances regularly enjoyed by the employee, as well
as non-monetary benefits.
Service incentive leave, as provided in Art. 95 of the Labor
Code, is a yearly leave benefit of five (5) days with pay,
enjoyed by an employee who has rendered at least one year
of service. Unless specifically excepted, all establishments
are required to grant service incentive leave to their
employees. The term "at least one year of service" shall mean
service within twelve (12) months, whether continuous or broken
reckoned from the date the employee started working. Service
incentive leave is clearly demandable after one year of
service.
Admittedly, private respondents were not given their 13th month
pay and service incentive leave pay while they were under the
employ of JPL. Instead, JPL provided salaries which were over and
above the minimum wage. The Court rules that the difference
between the minimum wage and the actual salary received
by private respondents cannot be deemed as their 13th
month pay and service incentive leave pay as such difference
is not equivalent to or of the same import as the said benefits
contemplated by law.
While computation for the 13th month pay should properly
begin from the first day of employment, the service incentive
leave pay should start a year after commencement of service,
for it is only then that the employee is entitled to said
benefit. On the other hand, the computation for both benefits
should only be up to 15 August 1996, or the last day that
private respondents worked for JPL. To extend the period to
the date of finality of the NLRC resolution would negate the
absence of illegal dismissal, or to be more precise, the want
of dismissal in this case. These benefits are given by law on the
basis of the service actually rendered by the employee, and in the
particular case of the service incentive leave, is granted as a
motivation for the employee to stay longer with the employer. There
is no cause for granting said incentive to one who has already
terminated his relationship with the employer.
The law in protecting the rights of the employees authorizes
neither oppression nor self-destruction of the employer. It
should be made clear that when the law tilts the scale of
justice in favor of labor, it is but recognition of the inherent
economic inequality between labor and management. The
intent is to balance the scale of justice; to put the two parties on
relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests of
management but never should the scale be so tilted if the result is
an injustice to the employer. Justitia nemini neganda est (Justice is
to be denied to none).
#22 ISSUE: Whether or not the CA validly gave due course to the
petition for
certiorari filed before it under Rule 65 of the Rules of Court; whether
or not the
petitioners constructively dismissed the respondents
[R]ule 45 limits us to the review of questions of law raised against
the assailed CA decision. In ruling for legal correctness, we have to
view the CA decision in the same context that the petition for
certiorari it ruled upon was presented to it; we have to examine the
CA decision from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC decision on
the merits of the case was correct. In other words, we have to be
keenly aware that the CA undertook a Rule 65 review, not a review
on appeal, of the NLRC decision challenged before it. This is the
approach that should be basic in a Rule 45 review of a CA ruling in a
labor case. In question form, the question to ask is: Did the CA
correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case?
It is thus settled that this Court is bound by the CA's factual
findings. The rule, however, admits of exceptions, among
which is when the CA's findings are contrary to those of the
trial court or administrative body exercising quasi-judicial
functions from which the action originated.
In certiorari proceedings under Rule 65 of the Rules of Court,
the appellate court does not assess and weigh the sufficiency
of evidence upon which the Labor Arbiter and the NLRC based
their conclusion. The query in this proceeding is limited to the
determination of whether or not the NLRC acted without or in excess
of its jurisdiction or with grave abuse of discretion in rendering its
decision. However, as an exception, the appellate court may
examine and measure the factual findings of the NLRC if the same
are not supported by substantial evidence.
Essentially, the issues raised by the respondents for resolution by
the CA were anchored on an alleged misappreciation of facts and
evidence by the NLRC and the LA when they both ruled that
abandonment of work and not constructive dismissal occurred.
We agree with the petitioners that what the respondents sought was
a re-evaluation of evidence, which as a general rule cannot be
properly done in a petition for certiorari under Rule 65, save in cases
where substantial evidence to support the NLRC's findings are
wanting.
Substantial evidence is more than a mere scintilla of evidence. It
means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds equally
reasonable might conceivably opine otherwise. Second, in reviewing
administrative decisions of the executive branch of the government,
the findings of facts made therein are to be respected so long as
they are supported by substantial evidence. Hence, it is not for the
reviewing court to weigh the conflicting evidence, determine the
credibility of witnesses, or otherwise substitute its judgment for that
of the administrative agency with respect to the sufficiency of
evidence. Third, administrative decisions in matters within the
executive jurisdiction can only be set aside on proof of gross abuse
of discretion, fraud, or error of law. These principles negate the
power of the reviewing court to reexamine the sufficiency of the
evidence in an administrative case as if originally instituted therein,
and do not authorize the court to receive additional evidence that
was not submitted to the administrative agency concerned.
Constructive dismissal occurs when there is cessation of work
because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or
diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the
employee.
In the case now under our consideration, the petitioners did not
whimsically or arbitrarily impose the policy to post cash bonds or
make deductions from the workers' salaries. As attested to by the
respondents' fellow goldsmiths in their Joint Affidavit, the workers
were convened and informed of the reason behind the
implementation of the new policy. Instead of airing their concerns,
the respondents just promptly stopped reporting for work.
In sum, we agree with the petitioners that substantial evidence
support the LA's and the NLRC's findings that no dismissal occurred.
Hence, the CA should not have given due course to and granted the
petition for certiorari under Rule 65 filed by the respondents before
it.
Article 113 of the Labor Code is clear that there are only three
exceptions to the general rule that no deductions from the
employees' salaries can be made. The exception which finds
application in the instant petition is in cases where the
employer is authorized by law or regulations issued by the
Secretary of Labor to effect the deductions. On the other hand,
Article 114 states that generally, deposits for loss or damages
are not allowed except in cases where the employer is
engaged in such trades, occupations or business where the
practice of making deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of
Labor in appropriate rules or regulations.
While the petitioners are not absolutely precluded from imposing the
new policy, they can only do so upon compliance with the
requirements of the law.44 In other words, the petitioners should
first establish that the making of deductions from the salaries is
authorized by law, or regulations issued by the Secretary of Labor.
Further, the posting of cash bonds should be proven as a recognized
practice in the jewelry manufacturing business, or alternatively, the
petitioners should seek for the determination by the Secretary of
Labor through the issuance of appropriate rules and regulations that
the policy the former seeks to implement is necessary or desirable in
the conduct of business.
In view of the foregoing, we hold that no dismissal, constructive or
otherwise, occurred. The findings of the NLRC and the LA that it was
the respondents who stopped reporting for work are supported by
substantial evidence. Hence, the CA erred when it re-evaluated the
parties' respective evidence and granted the petition filed before it.
However, we agree with the CA that it is baseless for Niña Jewelry to
impose its new policy upon the goldsmiths under its employ without
first complying with the strict requirements of the law.
#21 ISSUE:
#20 ISSUE: Whether or not there was no substantial evidence to
support the grant of overtime pay; Whether or not Pigcaulan is
entitled to holiday pay, service incentive leave pay and proportionate
13th month pay; Whether or not the CA erred in dismissing the
claims instead of remanding the case to the Labor Arbiter for a
detailed computation of the judgment award.
It is not for an employee to prove non-payment of benefits to
which he is entitled by law. Rather, it is on the employer that
the burden of proving payment of these claims rests.
The petition was brought only on behalf of Pigcaulan. Since no
appeal from the CA Decision was brought by Canoy, same has
already become final and executory as to him. The filing of a
certificate of non-forum shopping is mandatory so much so that non-
compliance could only be tolerated by special circumstances and
compelling reasons.26 This Court has held that when there are
several petitioners, all of them must execute and sign the
certification against forum shopping; otherwise, those who did not
sign will be dropped as parties to the case.
True, we held that in some cases, execution by only one of the
petitioners on behalf of the other petitioners constitutes
substantial compliance with the rule on the filing of a
certificate of non-forum shopping on the ground of common
interest or common cause of action or defense. We, however,
find that common interest is not present in the instant petition. To
recall, Canoy’s and Pigcaulan’s complaints were consolidated
because they both sought the same reliefs against the same
respondents. This does not, however, mean that they share a
common interest or defense. The evidence required to substantiate
their claims may not be the same. Particular evidence which could
sustain Canoy’s action may not effectively serve as sufficient to
support Pigcaulan’s claim.
The handwritten itemized computations are self-serving,
unreliable and unsubstantial evidence to sustain the grant of
salary differentials, particularly overtime pay. Unsigned and
unauthenticated as they are, there is no way of verifying the
truth of the handwritten entries stated therein. Written only in
pieces of paper and solely prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by the Labor Arbiter,
can hardly be considered as competent evidence to be used as basis
to prove that the two were underpaid of their salaries. We find
nothing in the records which could substantially support Pigcaulan’s
contention that he had rendered service beyond eight hours to
entitle him to overtime pay and during Sundays to entitle him to
restday pay. Hence, in the absence of any concrete proof that
additional service beyond the normal working hours and days
had indeed been rendered, we cannot affirm the grant of
overtime pay to Pigcaulan.
ART. 94. RIGHT TO HOLIDAY PAY. – (a) Every worker shall be
paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less
than ten (10) workers;
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. – (a) Every
employee who has rendered at least one year of service shall
be entitled to a yearly service incentive of five days with pay.
Under the Labor Code, Pigcaulan is entitled to his regular rate on
holidays even if he does not work. Likewise, express provision of the
law entitles him to service incentive leave benefit for he rendered
service for more than a year already. Furthermore, under
Presidential Decree No. 851, he should be paid his 13th month pay.
As employer, SCII has the burden of proving that it has paid these
benefits to its employees.
"Even when the plaintiff alleges non-payment, still the
general rule is that the burden rests on the defendant to
prove payment, rather than on the plaintiff to prove non-
payment." Since SCII failed to provide convincing proof that it has
already settled the claims, Pigcaulan should be paid his holiday pay,
service incentive leave benefits and proportionate 13th month pay
for the year 2000.
Indeed, the Labor Arbiter failed to provide sufficient basis for the
monetary awards granted. Such failure, however, should not result
in prejudice to the substantial rights of the party. While we disallow
the grant of overtime pay and rest day pay in favor of Pigcaulan, he
is nevertheless entitled, as a matter of right, to his holiday pay,
service incentive leave pay and 13th month pay for year 2000.
Hence, the CA is not correct in dismissing Pigcaulan’s claims in its
entirety.
Consistent with the rule that all money claims arising from an
employer-employee relationship shall be filed within three
years from the time the cause of action accrued, Pigcaulan can
only demand the amounts due him for the period within three years
preceding the filing of the complaint in 2000. Furthermore, since the
records are insufficient to use as bases to properly compute
Pigcaulan’s claims, the case should be remanded to the Labor Arbiter
for a detailed computation of the monetary benefits due to him.
#19 ISSUE: Whether respondent violated the CBA in its refusal to
grant its employees an across-the-board increase as a result of the
passage of Wage Order No. ROVII-06
Wage Order No. ROVII-06, issued by the Regional Tripartite
Wages and Productivity Board (RTWPB), merely fixed a new
minimum wage rate for private sector employees in Region
VII; hence, respondent cannot be compelled to grant an
across-the-board increase to its employees who, at the time
of the promulgation of the Wage Order, were already being
paid more than the existing minimum wage.
Stipulations in a contract must be read together, not in isolation
from one another. When the terms of its clauses are clear and leave
no room for doubt as to the intention of the contracting parties, it
would not be necessary to interpret those terms, whose literal
meanings should prevail.
We hold that the issue here is not about creditability, but the
applicability of Wage Order No. ROVII-06 to respondent’s
employees. The Wage Order was intended to fix a new
minimum wage only, not to grant across-the board wage
increases to all employees in Region VII.
There are two methods of adjusting the minimum wage.
These were identified as the "floor wage" and the "salary-ceiling"
methods. The "floor wage" method involves the fixing of a
determinate amount to be added to the prevailing statutory
minimum wage rates. On the other hand, in the "salary-ceiling"
method, the wage adjustment was to be applied to employees
receiving a certain denominated salary ceiling. In other words,
workers already being paid more than the existing minimum wage
(up to a certain amount stated in the Wage Order) are also to be
given a wage increase.
A cursory reading of the subject Wage Order convinces us that the
intention of the Regional Board of Region VII was to prescribe a
minimum or "floor wage"; not to determine a "salary ceiling."
The prescribed minimum wage after full implementation of the ₱10
increase in the Wage Order is ₱165 for Class A private non-
agriculture sectors. It would be reasonable and logical, therefore, to
infer that those employers already paying their employees more
than ₱165 at the time of the issuance of the Order are sufficiently
complying with the Order.
The CBA is no ordinary contract, but one impressed with
public interest. Therefore, it is subject to special orders on
wages.
The employees are not entitled to the claimed salary
increase, simply because they are not within the coverage of
the Wage Order, as they were already receiving salaries
greater than the minimum wage fixed by the Order.
Concededly, there is an increase necessarily resulting from raising
the minimum wage level, but not across-the-board. Indeed, a
"double burden" cannot be imposed upon an employer except by
clear provision of law. It would be unjust, therefore, to interpret
Wage Order No. ROVII-06 to mean that respondent should grant an
across-the-board increase. Such interpretation of the Order is not
sustained by its text.
In the resolution of labor cases, this Court has always been guided
by the State policy enshrined in the Constitution: social justice and
the protection of the working class. Social justice does not,
however, mandate that every dispute should be automatically
decided in favor of labor. In every case, justice is to be
granted to the deserving and dispensed in the light of the
established facts and the applicable law and doctrine.
#18 ISSUE: whether the implementation of R.A. No. 6640 resulted
in a wage distortion; whether such distortion was cured or remedied
by the 1987 CBA.
The Court has always promoted the policy of encouraging
employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases
prescribed by statute or administrative regulation. Consistent
with this, the Court also adopts the policy that requires
recognition and validation of wage increases given by
employers either unilaterally or as a result of collective
bargaining negotiations in an effort to correct wage
distortions.
"wage distortion" is a situation where an increase in prescribed
wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between
and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on
skills, length of service, or other logical bases of differentiation.
Otherwise stated, wage distortion means the disappearance or
virtual disappearance of pay differentials between lower and
higher positions in an enterprise because of compliance with
a wage order.
The re-establishment of a significant gap or differential
between regular employees and casual employees by
operation of the CBA was more than substantial compliance
with the requirements of the several Wage Orders (and of
Article 124 of the Labor Code). That this re-establishment of
a significant differential was the result of collective
bargaining negotiations, rather than of a special grievance
procedure, is not a legal basis for ignoring it.
To compel employers simply to add on legislative increases in
salaries or allowances without regard to what is already being paid,
would be to penalize employers who grant their workers more than
the statutory prescribed minimum rates of increases. Clearly, this
would be counter-productive so far as securing the interests of labor
is concerned.
In the resolution of labor cases, this Court has always been guided
by the State policy enshrined in the Constitution that the rights of
workers and the promotion of their welfare shall be
protected. However, consistent with such policy, the Court
cannot favor one party, be it labor or management, in
arriving at a just solution to a controversy if the party
concerned has no valid support to its claim, like respondents
here.
#17 ISSUE: whether there existed an employer-employee
relationship between the respondent company and the petitioner
The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the
employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the employer’s power to control the
employee’s conduct.
The most important element is the employer’s control of the
employee’s conduct, not only as to the result of the work to
be done, but also as to the means and methods to accomplish
it.
Wages are defined as "remuneration or earnings, however
designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for service rendered or
to be rendered."
That the petitioner was paid on a per trip basis is not significant.
This is merely a method of computing compensation and not a basis
for determining the existence or absence of employer-employee
relationship. One may be paid on the basis of results or time
expended on the work, and may or may not acquire an employment
status, depending on whether the elements of an employer-
employee relationship are present or not.
Under the Rules Implementing the Labor Code, every
employer is required to pay his employees by means of
payroll. The payroll should show, among other things, the
employee’s rate of pay, deductions made, and the amount actually
paid to the employee.
Compared to an employee, an independent contractor is one
who 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, 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. Hence, while an
independent contractor enjoys independence and freedom from the
control and supervision of his principal, an employee is subject to
the employer’s power to control the means and methods by which
the employee’s work is to be performed and accomplished.
The existence of an employer-employee relationship cannot be
negated by expressly repudiating it in a contract and providing
therein that the employee is an independent contractor when, as in
this case, the facts clearly show otherwise. Indeed, the
employment status of a person is defined and prescribed by
law and not by what the parties say it should be.
As a rule, the employer bears the burden to prove that the
dismissal was for a valid and just cause. In this case, the
respondents failed to prove any such cause for the petitioner’s
dismissal.
To constitute abandonment, these two factors must concur:
(1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever
employer-employee relationship.
Obviously, the petitioner did not intend to sever his relationship with
the respondent company for at the time that he allegedly abandoned
his job, the petitioner just filed a complaint for regularization, which
was forthwith amended to one for illegal dismissal. A charge of
abandonment is totally inconsistent with the immediate filing
of a complaint for illegal dismissal, more so when it includes
a prayer for reinstatement.
Gross negligence implies a want or absence of or failure to
exercise slight care or diligence, or the entire absence of
care. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them. The negligence, to warrant
removal from service, should not merely be gross but also
habitual. The single and isolated act of the petitioner’s negligence
in the proper maintenance of the truck alleged by the respondents
does not amount to "gross and habitual neglect" warranting his
dismissal.
Thus, the lack of a valid and just cause in terminating the
services of the petitioner renders his dismissal illegal.
Under Article 279 of the Labor Code, an employee who is
unjustly dismissed is entitled to reinstatement, without loss
of seniority rights and other privileges, and to the payment of
full backwages, inclusive of allowances, and other benefits or
their monetary equivalent, computed from the time his
compensation was withheld from him up to the time of his
actual reinstatement. However, as found by the Labor Arbiter, the
circumstances obtaining in this case do not warrant the petitioner’s
reinstatement. A more equitable disposition, as held by the Labor
Arbiter, would be an award of separation pay equivalent to one
month for every year of service from the time of his illegal dismissal
up to the finality of this judgment in addition to his full backwages,
allowances and other benefits.
#16 ISSUE: whether the Union may collect from the PPHI, under
the terms of the CBA, its share of the service charges
The Court’s jurisdiction in a Rule 45 petition for review on certiorari
is limited to resolving only questions of law. A question of law arises
when the doubt or controversy exists as to what law pertains to a
particular set of facts; and a question of fact arises when the doubt
or controversy pertains to the truth or falsity of the alleged facts.

The present petition essentially raises the question – whether the
Union may collect from the PPHI, under the terms of the CBA, its
share of the service charges. This is a clear question of law that falls
well within the Court’s power in a Rule 45 petition.
A collective bargaining agreement, as used in Article 252
(now Article 262) of the Labor Code, is a contract executed at
the request of either the employer or the employees’
exclusive bargaining representative with respect to wages,
hours of work and all other terms and conditions of
employment, including proposals for adjusting any
grievances or questions under such agreement.
Jurisprudence settles that a CBA is the law between the
contracting parties who are obliged under the law to comply
with its provisions.
As a contract and the governing law between the parties, the
general rules of statutory construction apply in the interpretation of
its provisions. Thus, if the terms of the CBA are plain, clear and
leave no doubt on the intention of the contracting parties, the literal
meaning of its stipulations, as they appear on the face of the
contract, shall prevail. Only when the words used are ambiguous
and doubtful or leading to several interpretations of the parties’
agreement that a resort to interpretation and construction is called
for.
No service charges were due from the specified entries/transactions;
they either fall within the CBA-excepted "Negotiated Contracts" and
"Special Rates" or did not involve "a sale of food, beverage, etc."
The Union anchors its claim for services charges on Sections 68 and
69 of the CBA, in relation with Article96 of the Labor Code. Section
68 states that the sale of food, beverage, transportation, laundry
and rooms are subject to service charge at the rate of ten percent
(10%). Excepted from the coverage of the 10% service charge are
the so called "negotiated contracts" and "special rates."
Following the wordings of Section 68 of the CBA, three requisites
must be present for the provisions on service charges to operate:
(1) the transaction from which service charge is sought to be
collected is a sale;
(2) the sale transaction covers food, beverage, transportation,
laundry and rooms; and (3) the sale does not result fromnegotiated
contracts and/or at special rates.
Article 96 of the Labor Code provides for the minimum percentage
distribution between the employer and the employees of the
collected service charges, and its integration inthe covered
employees’ wages in the event the employer terminates its policy of
providing for its collection. It pertinently reads:
Art. 96. Service Charges.
x x x In case the service charge is abolished, the share of the
covered employees shall be considered integrated in their
wages.
This last paragraph of Article 96 of the Labor Code presumes the
practice of collecting service charges and the employer’s termination
of this practice. When this happens, Article 96 requires the employer
to incorporate the amount that the employees had been receiving as
share of the collected service charges into their wages.
In cases where no service charges had previously been
collected (as where the employer never had any policy
providing for collection of service charges or had never
imposed the collection of service charges on certain specified
transactions), Article 96 will not operate.
In this case, the CA found that the PPHI had not in fact been
collecting services charges on the specified entries/transactions that
we pointed out as either falling under "negotiated contracts" and/or
"special rates" or did not involve a "sale of food, beverage, etc."
Accordingly, Article 96 of the Labor Code finds no application in this
case; the PPHI did not abolish or terminate the implementation of
any company policy providing for the collection of service charges on
specified entries/transactions that could have otherwise rendered it
liable to pay an amount representing the covered employees’ share
in the alleged abolished service charges.
The Union’s claim for service charges for the year 1997 and the
early months of 1998 could not have yet prescribed at the time it
filed its complaint on May 3, 2001; Article 1155 of the Civil Code
applies suppletorily to Article 291 of the Labor Code Article 291 (now
Article 305)32 of the Labor Code states that "all money claims
arising from employer-employee relations x x x shall be filed
within three (3) years from the time the cause of action
accrued; otherwise, they shall forever be barred."
Like other causes of action, the prescriptive period for money
claims under Article 291 of the Labor Code is subject to
interruption. And, in the absence of an equivalent Labor Code
provision for determining whether Article 291’s three-year
prescriptive period may be interrupted, Article 1155 of the Civil
Code33 may be applied.
Thus, the period of prescription of money claims under Article
291 is interrupted by:
(1) the filing of an action;
(2) a written extrajudicial demand by the creditor; and
(3) a written acknowledgment of the debt by the debtor.
The Union’s written extrajudicial demand through its 1st audit report
and the successive negotiation meetings between the Union and the
PPHI – the running of the three-year prescriptive period under
Article 291 of the Labor Code could have effectively been
interrupted. Consequently, the Union’s claims for the alleged
uncollected service charges for the year 1997 could not have yet
prescribed at the time it filed its complaint on May 3, 2001.
This non-barring effect of prescription, notwithstanding (i.e., that
the running of the three-year prescriptive period had effectively
been interrupted – by the Union's written extrajudicial demand on
the PPHI), the CA, as it affirmed the LA, still correctly denied the
Union's claims for the alleged uncollected and/or undistributed
service charges on the specified entries/transactions for the year
1997 and the early part of 1998. As the CA found and discussed in
its decision, and with which we agree as amply supported by factual
and legal bases, the nature of these specified entries/transactions as
either excepted from the collection of service charges or not
constituting a "sale of food, beverage, etc.," and the Union's failure
to support its claims by sufficient evidence warranted, without
doubt, the denial of the Union's action.
#15 ISSUE:
If the terms of a CBA are clear and have no doubt upon the intention
of the contracting parties, as in the herein questioned provision, the
literal meaning thereof shall prevail. That is settled. As such, the
daily-paid employees must be paid their regular salaries on the
holidays which are so declared by the national government,
regardless of whether they fall on rest days.
Holiday pay is a legislated benefit enacted as part of the
Constitutional imperative that the State shall afford protection to
labor. Its purpose is not merely "to prevent diminution of the
monthly income of the workers on account of work
interruptions. In other words, although the worker is forced
to take a rest, he earns what he should earn, that is, his
holiday pay."
The CBA is the law between the parties, hence, they are obliged to
comply with its provisions. Indeed, if petitioner and respondents
intended the provision in question to cover payment only during
holidays falling on work or weekdays, it should have been so
incorporated therein.
The Labor Code specifically enjoins that in case of doubt in the
interpretation of any law or provision affecting labor, it should be
interpreted in favor of labor.
#14 ISSUE: whether Our Haus complied with the legal
requirements on the deductibility of the value of facilities
No substantial distinction between deducting and charging a facility’s
value from the employee’s wage; the legal requirements for
creditability apply to both.
In reality, deduction and charging both operate to lessen the actual
take-home pay of an employee; they are two sides of the same coin.
In both, the employee receives a lessened amount because
supposedly, the facility’s value, which is part of his wage, had
already been paid to him in kind. As there is no substantial
distinction between the two, the requirements set by law must apply
to both.
a. proof must be shown that such facilities are customarily
furnished by the trade;
b. the provision of deductible facilities must be voluntarily
accepted in writing by the employee; and
c. The facilities must be charged at fair and reasonable value
One of the badges to show that a facility is customarily
furnished by the trade is the existence of a company policy or
guideline showing that provisions for a facility were
designated as part of the employees’ salaries.
Apart from company policy, the employer may also prove
compliance with the first requirement by showing the
existence of an industry-wide practice of furnishing the
benefits in question among enterprises engaged in the same
line of business. If it were customary among construction
companies to provide board and lodging to their workers and treat
their values as part of their wages, we would have more reason to
conclude that these benefits were really facilities.
#13 ISSUE:
Factual findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdiction, are generally
accorded not only respect but even finality, and bind the Court when
supported by substantial evidence.
As a general rule, on payment of wages, a party who alleges
payment as a defense has the burden of proving it. Specifically with
respect to labor cases, the burden of proving payment of
monetary claims rests on the employer, the rationale being that
the pertinent personnel files, payrolls, records, remittances and
other similar documents — which will show that overtime,
differentials, service incentive leave and other claims of workers
have been paid — are not in the possession of the worker but in the
custody and absolute control of the employer.
Private respondents, on the other hand, are entitled to be paid the
minimum wage, whether they are regular or nonregular employees.
Section 3, Rule VII of the Rules to Implement the Labor Code
specifically enumerates those who are not covered by the payment
of minimum wage. Project employees are not among them.
On whether the value of the facilities should be included in the
computation of the "wages" received by private respondents, Section
1 of DOLE Memorandum Circular No. 2 provides that an employer
may provide subsidized meals and snacks to his employees provided
that the subsidy shall not be less that 30% of the fair and
reasonable value of such facilities. In such cases, the employer may
deduct from the wages of the employees not more than 70% of the
value of the meals and snacks enjoyed by the latter, provided that
such deduction is with the written authorization of the employees
concerned.
Moreover, before the value of facilities can be deducted from
the employees’ wages, the following requisites must all be
attendant:
first, proof must be shown that such facilities are customarily
furnished by the trade;
second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee; and
finally, facilities must be charged at reasonable value.
Mere availment is not sufficient to allow deductions from
employees’ wages.
These requirements, however, have not been met in this case. SLL
failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employee’s
salaries. It also failed to provide proof of the employees’ written
authorization, much less show how they arrived at their valuations.
At any rate, it is not even clear whether private respondents actually
enjoyed said facilities.
It is of the view that the food and lodging, or the electricity and
water allegedly consumed by private respondents in this case were
not facilities but supplements.
"Supplements," therefore, constitute extra remuneration or
special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages.
"Facilities," on the other hand, are items of expense
necessary for the laborer's and his family's existence and
subsistence so that by express provision of law (Sec. 2[g]),
they form part of the wage and when furnished by the
employer are deductible therefrom, since if they are not so
furnished, the laborer would spend and pay for them just the
same.
In short, the benefit or privilege given to the employee which
constitutes an extra remuneration above and over his basic or
ordinary earning or wage is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The
distinction lies not so much in the kind of benefit or item
(food, lodging, bonus or sick leave) given, but in the purpose
for which it is given.
In the case at bench, the items provided were given freely by SLL
for the purpose of maintaining the efficiency and health of its
workers while they were working at their respective projects.
#12 ISSUE:
As provided by Section 97(f) of the Labor Code, employee's wage
has been defined as "remuneration of earnings, however
designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a
written or unwritten contract of employment for work done
or to be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board, lodging, or
other facilities customarily furnished by the employer to the
employee.
While commissions are, indeed, incentives or forms of
encouragement to inspire employees to put a little more
industry on the jobs particularly assigned to them, still these
commissions are direct remunerations for services rendered.
In fact, commissions have been defined as the recompense,
compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions
or on the profit to the principal. The nature of the work of a
salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are part of a
salesman's wage or salary.
In cases involving non-payment of monetary claims of employees,
the employer has the burden of proving that the employees did
receive their wages and benefits and that the same were paid in
accordance with law.
It is settled that once the employee has set out with particularity in
his complaint, position paper, affidavits and other documents the
labor standard benefits he is entitled to, and which he alleged that
the employer failed to pay him, it becomes the employer's burden to
prove that it has paid these money claims. One who pleads payment
has the burden of proving it, and even where the employees must
allege non-payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove
non-payment.
In this case, the Court agrees with Asentista that she has already
set out the particularities of her unpaid monetary claims against the
respondents based on the electronic messages of Ascutia. The
respondents should have presented evidentiary proof based on the
employment records and personnel files that Asentista was already
paid of her benefits, instead of attributing the burden of proof back
to her.
As held in Toyota Pasig, the employer's act of simply dismissing the
employee's claim "for being purely self serving and unfounded
without even presenting any tinge or proof showing that respondent
(employee) was already paid of such benefits or that she was
entitled thereto" was rebutted by the Court. Failure on the part of
the employer to discharge the burden tilts the balance in favor of the
employee.
In the absence of specific terms and conditions governing a
car plan agreement between the employer and employee, the
former may not retain the installment payments made by the
latter on the car plan and treat them as rents for the use of
the service vehicle, in the event that the employee ceases his
employment and is unable to complete the installment
payments on the vehicle. The underlying reason is that the
service vehicle was precisely used in the former's business;
any personal benefit obtained by the employee from its use is
merely incidental.
The Court agrees with the factual findings of NLRC that the
respondents and Asentista did not agree on any car participation
plan. Since the inception of the complaint, Asentista has been
adamant that she did not authorize the respondents to deduct a car
plan participation payment from her sales commission.
Any benefit or privilege enjoyed by Asentista from using the service
vehicle was merely incidental and insignificant, because for the most
part the vehicle was under the respondents' control and supervision.
Given the high monthly quota requirement imposed upon Asentista
to generate sales for the company, the service vehicle given to her
was an absolute necessity. In truth, the respondents were the ones
reaping the full benefits of the vehicle assigned to Asentista in the
performance of her function.
Under the principle of unjust enrichment, no person may
unjustly enrich oneself at the expense of another. As
embodied in Article 22 of the New Civil Code, every person
who through an act of performance by another, or any other
means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall
return the same to him.
In this case, the respondents committed unjust enrichment against
Asentista when it allowed her to use the company vehicle to further
the performance of her function as a sales agent then unilaterally,
without any consent, deduct car participation and amortization
payment to Asentista's sales commission, to the latter's prejudice.
Finally, following the legal precepts laid down in Nacar v. Gallery
Frames, et al. and Rivero v. Spouses Chua, the total amount
adjudged in this Decision in favour of Asentista shall further earn
legal interest at the rate of six percent (6%) per annum computed
from its finality until full payment thereof, the interim period being
deemed to be a forbearance of credit.
#11 ISSUE:
"Wage Distortion" was explicitly defined as "a situation
where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative
differences in wage or salary rate between and among
employee groups an establishment as to effectively obliterate
the distinctions embodied in such wage structure based on
skills, length of service or other logical bases of
differentiation."
Article 124. Standards/Criteria for Minimum Wage Fixing.
xxxx
Where the application of any prescribed wage increase by virtue of a
law or Wage Order issued by any Regional Board results in
distortions of the wage structure within an establishment, the
employer and union shall negotiate to correct the distortions. Any
dispute arising from the wage distortions shall be resolved through
the grievance procedure under their collective bargaining agreement
and, if it remains unresolved, through voluntary arbitration.
Four elements of wage distortion, to wit:
(1) an existing hierarchy of positions with corresponding
salary rates;
(2) a significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher
one;
(3) the elimination of the distinction between the two levels;
and
(4) the existence of the distortion in the same region of the
country.
The alleged increase in their salaries was not a result of the
erroneous application of Article VII and Annex D of the CBA, rather,
it was because when they were hired by respondent in 2009, when
the hiring rates were relatively higher as compared to those of the
previous years.
Management prerogative gives an employer freedom to
regulate according to their discretion and best judgment, all
aspects of employment including work assignment, working
methods, the processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers
and the discipline, dismissal and recall of workers. This right is
tempered only by these limitations: that it must be exercised in
good faith and with due regard to the rights of the
employees.
There is no wage distortion in the case at bench. Not all increases in
salary which obliterate the salary differences of certain employees
should be perceived as wage distortion.
If the compulsory mandate under Article 124 to correct
"wage distortion" is applied to voluntary and unilateral
increases by the employer in fixing hiring rates which is
inherently a business judgment prerogative, then the hands
of the employer would be completely tied even in cases
where an increase in wages of a particular group is justified
due to a re-evaluation of the high productivity of a particular
group, or as in the present case, the need to increase the
competitiveness of Bankard's hiring rate. An employer would
be discouraged from adjusting the salary rates of a particular
group of employees for fear that it would result to a demand
by all employees for a similar increase, especially if the
financial conditions the business cannot address an across-
the-board increase.
It is the prerogative of management to regulate, according to its
discretion and judgment all aspects of employment. This flows from
the established rule that labor law does not authorize the
substitution of the judgment of the employer in the conduct of its
business. Such management prerogative may be availed of without
fear of any liability so long as it is exercised in good faith for the
advancement of the employer's interest and not for the purpose of
defeating or circumventing the rights of the employees under special
laws or agreements and are not exercised in a malicious, harsh,
oppressive, vindictive or wanton manner or out of malice or spite.
#10 ISUUE:
Article 106 of the Labor Code defines labor-only contracting as a
situation "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.
DOLE Department Order (DO) No. 18-02, the regulation in force at
the time of the petitioners' assignment to Sunpower, reiterated the
language of the Labor Code:
Section 5. Prohibition against labor-only contracting. x x x [L]abor
only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or
places workers to perform a job, work or service for a
principal, and any of the following elements are present:
i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or
service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main
business of the principal; or
ii) the contractor does not exercise the right to control over
the performance of the work of the contractual employee.
Thus, in order to become a legitimate contractor, the contractor
must have substantial capital or investment, and must carry a
distinct and independent business free from the control of the
principal. In addition, the Court requires the agreement between the
principal and the contractor or subcontractor to assure 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 welfare benefits.
Furthermore, the Court considers job contracting or
subcontracting as permissible when the principal agrees to
farm out the performance of a specific job, work or service to
the contractor, for a definite or predetermined period of time,
regardless of whether such job, work, or service is to be
performed or completed within or outside the premises of the
principal.
Ordinarily, a contractor is presumed to be a labor-only contractor,
unless the contractor is able to discharge the burden of overcoming
this presumption. In cases when it's the principal claiming the
legitimacy of the contractor, then the burden is borne by the
principal.
Preliminarily, the Court finds that there is no such burden resting on
either Sunpower or Jobcrest in this case. It is true that Sunpower
maintained its position that Jobcrest is a legitimate and independent
contractor. But since the petitioners do not dispute that Jobcrest was
a duly-registered contractor under Section 11 of DOLE DO No. 18-
02, there is no operative presumption that Jobcrest is a labor-only
contractor.
Conversely, the fact of registration with DOLE does not
necessarily create a presumption that Jobcrest is a legitimate
and independent contractor. The Court emphasizes, however,
that the DOLE Certificate of Registration issued in favor of
Jobcrest is presumed to have been issued in the regular
performance of official duty.
The petitioners must overcome the presumption of regularity
accorded to the official act of DOLE, which is no less than the agency
primarily tasked with the regulation of job contracting.
Substantial capital or investment was defined in DOLE DO No.
18-02 as "capital stocks and subscribed capitalization in the
case of corporations, 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."
Substantial capital refers to paid-up capital stocks/shares of
at least Php 3,000,000.00 in the case of corporations.
DOLE DO No. 18-02 and DO No. 18-A, as well as Article 106 of the
Labor Code itself, all use the conjunctive term "or" in
prescribing that the contractor should have substantial
capital or investment. Having established that Jobcrest had
substantial capital, it is unnecessary for this Court to
determine whether it had sufficient investment in the form of
tools, equipment, machinery and work premises.
The law does not require both substantial capital and investment in
the form of tools, equipment, machineries, etc. This is clear from the
use of the conjunction "or". If the intention was to require the
contractor to prove that he has both capital and the requisite
investment, then the conjunction "and" should have been used.
The "right to control" shall refer to the right reserved to the
person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but
also the manner and means to be used in reaching that end.
In other words, the contractor should undertake the
performance of the services under its contract according to
its own manner and method, free from the control and
supervision of the principal. Otherwise, the contractor is
deemed an illegitimate or labor-only contractor.
The control over the employees' performance of the work is, as the
Court ruled in some cases, usually manifested through the power to
hire, fire, and pay the contractor's employees, the power to
discipline the employees and impose the corresponding penalty, and
more importantly, the actual supervision of the employees'
performance.
The fact that the petitioners were working within the premises of
Sunpower, by itself, does not negate Jobcrest's control over the
means, method, and result of the petitioners' work. Job contracting
is permissible "whether such job, work, or service is to be performed
or completed within or outside the premises of the principal" for as
long as the elements of a labor-only contractor are not present.
Since Jobcrest was a provider of business process services, its
employees would necessarily work within the premises of its client
companies in order for Jobcrest to perform its contractual
undertaking. Mere physical presence in Sunpower's plant does
not necessarily mean that Sunpower controlled the means
and method of the petitioners' work. The petitioners, despite
working in Sunpower's plant for most of the time, admit that
whenever they file their leave application, or whenever required by
their supervisors in Jobcrest, they report to the Jobcrest office.
Designated on-site supervisors from Jobcrest were the ones who
oversaw the performance of the employees' work within the
premises of Sunpower.
Contracts for services does not necessarily provide
"untrammeled freedom" to the contractor in undertaking the
engagement. What is important, as incontrovertibly
established in this case, is that the principal's right to control
is limited to the results of the work of the contractor's
employees.
The four-fold test is the established standard for determining
the existence of an employer-employee relationship:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the power of control over the employee's conduct.
Of the four elements, the power of control is the most
important. Having found that Jobcrest exercised control over
the petitioners' work, the Court is constrained to determine
whether the petitioners were regular employees of Jobcrest
by virtue of the three other elements of the four-fold test.
Leilanie and Leo were respectively confirmed as regular employees
of Jobcrest. Jobcrest did not even deny that the petitioners were
their regular employees. Consequently, the petitioners cannot be
terminated from employment without just or authorized
cause.
A review of the petitioners' repeated submissions reveals that while
they claim to have been illegally dismissed from employment,
Jobcrest actually intended to assign Leo again to Sunpower, and
provide Leilanie with another engagement with a different client
company.
It was also uncontroverted that Jobcrest offered to accept the
petitioners' return to work, but they refused this offer during the
mandatory conference. Clearly, the petitioners were not illegally
dismissed, much less terminated from their employment. There is
nothing on record that established the dismissal of the petitioners in
the first place.
While the employer is generally required to establish the
legality of the employee's termination, the employee should
first establish the fact of dismissal from service. Failing such,
as in this case, the Court cannot rule that the employee was
illegally dismissed.
#9 ISSUE: whether or not petitioners are entitled to the payment of
their salaries for the unexpired portion of their employment contract.
Subsumed under this is the issue of whether or not Section 7 of
Republic Act No. 10022, which reinstated the three (3)-month cap,
has the force and effect of law; whether or not the Compromise
Agreement barred all other claims against respondents; whether or
not petitioners were illegally dismissed and, consequently, entitled
to the reimbursement of their placement fees and payment of moral
and exemplary damages and attorney's fees.
The clause "or for three (3) months for every year of the
unexpired term, whichever is less" as reinstated in Section 7
of Republic Act No. 10022 is unconstitutional, and has no
force and effect of law. It violates due process as it deprives
overseas workers of their monetary claims without any
discemable valid purpose.
This case is governed by Philippine laws. Both the Constitution40
and the Labor Code41 guarantee the security of tenure" It is not
stripped off when Filipinos work in a different jurisdiction. We follow
the lex loci contractus principle, which means that the law of the
place where the contract is executed governs the contract.
First, established is the rule that lex loci contractus (the law of the
place where the contract is made) governs in this jurisdiction. There
is no question that the contract of employment in this case was
perfected here· in the Philippines. Therefore, the Labor Code, its
implementing rules and regulations, and other laws affecting labor
apply in this case. Furthermore, settled is the rule that the
courts of the forum will not enforce any foreign claim
obnoxious to the forum's public policy. Here in the
Philippines, employment agreements are more than
contractual in nature. The Constitution itself, in Article XIII,
Section 3, guarantees the special protection of workers ....
Waivers and quitclaims executed by employees are generally
frowned upon for being contrary to public policy. This is based
on the recognition that employers and employees do not stand on
equal footing.
Along this line, we have more trenchantly declared that quitclaims
and/or complete releases executed by the employees do not estop
them from pursuing their claims arising from unfair labor practices
of the employer. The basic reason for this is that such quitclaims
and/or complete releases are against public policy and, therefore,
null and void. The acceptance of termination does not divest a
laborer of the right to prosecute his employer for unfair labor
practice acts.
Quitclaims do not bar employees from filing labor complaints and
demanding benefits to which they are legally entitled. They are
"ineffective in barring recovery of the full measure of a worker's
rights, and the acceptance of benefits therefrom does not amount to
estoppel. The law does not recognize agreements that result
in compensation less than what is mandated by law. These
quitclaims do not prevent employees from subsequently claiming
benefits to which they are legally entitled.
The amounts already received by the retrenched employees
as consideration for signing the quitclaims should, however,
be deducted from their respective monetary awards.
Under the Labor Code, employers may only terminate employment
for a just or authorized cause and after complying with procedural
due process requirements.
ARTICLE 297. [282] Termination by employer. - An employer may
terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee
against the person of his employer or any immediate member
of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
ARTICLE 300. [285] Termination by employee. –
(a) An employee may terminate without just cause the
employee-employer relationship by serving a written notice
on the employer at least one (1) month in advance. The
employer upon whom no such notice was served may hold
the employee liable for damages.
(b) An employee may put an end to the relationship without
serving any notice on the employer for any of the following
just causes:
1. Serious insult by the employer or his representative on the
honor and person of the employee;
2. Inhuman and unbearable treatment accorded the
employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his
representative against the person of the employee or any of
the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
In illegal dismissal cases, the burden of proof that employees
were validly dismissed rests on the employers. Failure to
discharge this burden means that the dismissal is illegal.
A review of the records here shows that the termination of
petitioners' employment was effected merely because respondents
no longer wanted their services. This is not an authorized or just
cause for dismissal under the Labor Code. Employment contracts
cannot be terminated on a whim.
Moreover, petitioners did not voluntarily sever their employment
when they signed the Compromise Agreement, which, again, cannot
be used to justify a dismissal.
Furthermore, petitioners were not accorded due process. A valid
dismissal must comply with substantive and procedural due
process: there must be a valid cause and a valid procedure.
The employer must comply with the two (2)-notice
requirement, while the employee must be given an
opportunity to be heard. Here, petitioners were only verbally
dismissed, without any notice given or having been informed of any
just cause for their dismissal.
As a consequence of the illegal dismissal, petitioners are also
entitled to moral damages, exemplary damages, and attorney's fees.
Moral damages are recoverable when the dismissal of an
employee is·attended by bad faith or fraud or constitutes an
act oppressive to labor, or is done in a manner contrary to
good morals, good customs or public policy. Exemplary
damages, on the other hand, are recoverable when the
dismissal was done in a wanton, oppressive, or malevolent
manner.
The award of attorney's fees is proper because: (1)
exemplary damages is also awarded; (2) respondents acted
in gross bad faith in refusing to pay petitioners their hard-
earned salaries in form of overtime premiums; and (3) this
case is also a complaint for recovery of wages.
In addition, we further sustain the Court of Appeals' ruling in having
ordered the reimbursement of petitioners' placement fees. As they
were terminated without just, valid, or authorized cause, petitioners
are entitled to the full reimbursement of their placement fees with
interest at 12% per annum in accordance with Section 7 of Republic
Act No. 10022.
#8 ISSUE: At the core of this case are the validity of the
respondents’ waivers and quitclaims and the issue of whether these
should bar their claim for unpaid salaries. At the completely legal
end is the question of whether Section 10 of R.A. No. 8042 applies
to the respondents’ claim.
The settled rule is that a petition for review on certiorari under Rule
45 is limited to the review of questions of law, i.e., to legal errors
that the CA may have committed in its decision, in contrast with the
review for jurisdictional errors that we undertake in original
certiorari actions under Rule 65.
In reviewing the legal correctness of a CA decision rendered under
Rule 65 of the Rules of Court, we examine the CA decision from the
prism of whether it correctly determined the presence or absence of
grave abuse of discretion in the NLRC decision before it, and not
strictly on the basis of whether the NLRC decision under review is
intrinsically correct. In other words, we have to be keenly aware that
the CA undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it.
Viewed in this light, we do not re-examine the factual findings of the
NLRC and the CA, nor do we substitute our own judgment for theirs,
as their findings of fact are generally conclusive on this Court. We
cannot touch on factual questions "except in the course of
determining whether the CA correctly ruled in determining whether
or not the NLRC committed grave abuse of discretion in considering
and appreciating the factual [issues before it]."
The application of Section 10 of R.A. No. 8042 presumes a finding of
illegal dismissal.
A plain reading of this provision readily shows that it applies only to
cases of illegal dismissal or dismissal without any just, authorized or
valid cause and finds no application in cases where the overseas
Filipino worker was no illegally dismissed. Section 10 of R.A. No.
8042 applies only to an illegally dismissed overseas contract worker
or a worker dismissed from overseas employment without just, valid
or authorized cause.
Management has the right to regulate the business and
control its every aspect. Included in this management right is
the freedom to close or cease its operations for any reason,
as long as it is done in good faith and the employer faithfully
complies with the substantive and procedural requirements
laid down by law and jurisprudence.
Art. 283. Closure of establishment and reduction of
personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a
written notice on the workers and the [Department of Labor
and Employment] at least one (1) month before the intended
date thereof. x x x In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least onehalf (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one
(1) whole year.
This provision applies in the present case as under the contract the
employer and the workers signed and submitted to the Philippine
Overseas Employment Agency (POEA), the Philippine labor law
expressly applies.
This legal reality is reiterated under Section 18-B, paragraph 2, in
relation with Section 23 of the POEA Standard Employment Contract
(POEA-SEC) (which is deemed written into every overseas
employment contract) which recognizes the validity of the cessation
of the business operations as a valid ground for the termination of
an overseas employment. This recognition is subject to compliance
with the following requisites:
1. The decision to close or cease operations must be bona
fide in character;
2. Service of written notice on the affected employees and on
the Department of Labor and Employment (DOLE) at least
one (1) month prior to the effectivity of the termination; and
3. Payment to the affected employees of termination or
separation pay equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service,
whichever is higher.
Van Doorn’s termination of the respondents’ employment arising
from the cessation of its fishing operations complied with the above
requisites and is thus valid.
Generally, this Court looks with disfavor at quitclaims executed by
employees for being contrary to public policy. Where the person
making the waiver, however, has done so voluntarily, with a
full understanding of its terms and with the payment of
credible and reasonable consideration, we have no option but
to recognize the transaction to be valid and binding.
While Van Doorn has a just and valid cause to terminate the
respondents’ employment, it failed to meet the requisite procedural
safeguards provided under Article 283 of the Labor Code. In the
termination of employment under Article 283, Van Doorn, as
the employer, is required to serve a written notice to the
respondents and to the DOLE of the intended termination of
employment at least one month prior to the cessation of its
fishing operations. Poseidon could have easily filed this notice, in
the way it represented Van Doorn in its dealings in the Philippines.
While this omission does not affect the validity of the
termination of employment, it subjects the employer to the
payment of indemnity in the form of nominal damages.
#7 ISSUE:
This Court's labor pronouncements must be read and applied with
utmost care and caution, taking to mind that in the very heart of the
judicial system, labor cases occupy a special place. More than the
State guarantees of protection of labor and security of tenure, labor
disputes involve the fundamental survival of the employees and their
families, who depend -upon the former for all the basic necessities in
life.
When the illegally dismissed employee’s employment
contract has a term of less than one year, he/she shall be
entitled to recovery of salaries representing the unexpired
portion of his/her employment contract.
It is not disputed that private respondent’s employment contract in
the instant case was for six (6) months. Hence, we see no reason to
disregard the ruling in Marsaman that private respondent should be
paid his salaries for the unexpired portion of his employment
contract.
Article 279 of the Labor Code mandates that an employee’s
full backwages shall be inclusive of allowances and other
benefits or their monetary equivalent." As we have time and
again held, "it is the obligation of the employer to pay an
illegally dismissed employee or worker the whole amount of
the salaries or wages, plus all other benefits and bonuses and
general increases, to which he would have been normally
entitled had he not been dismissed and had not stopped
working.
Art. 111. Attorney’s fees. –
(a) In cases of unlawful withholding of wages, the culpable
party may be assessed attorney’s fees equivalent to ten
percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept,
in any judicial or administrative proceedings for the recovery
of wages, attorney’s fees which exceed ten percent of the
amount of wages recovered.
Section 8, Rule VIII, Book III of its Implementing Rules also
provides, viz.:
‘Section 8. Attorney’s fees. – Attorney’s fees in any judicial or
administrative proceedings for the recovery of wages shall
not exceed 10% of the amount awarded. The fees may be
deducted from the total amount due the winning party.
Article 111 of the Labor Code, as amended, contemplates the
extraordinary concept of attorney’s fees and that Article 111
is an exception to the declared policy of strict construction in
the award of attorney’s fees. Although an express finding of
facts and law is still necessary to prove the merit of the
award, there need not be any showing that the employer
acted maliciously or in bad faith when it withheld the wages.
'Settled is the rule that in actions for recovery of wages, or
where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interests, a monetary
award by way of attorney's fees is justifiable. The award of
attorney's fees is proper, and there need not be any showing
that the employer acted maliciously or in bad faith when it
withheld the wages. There need only be a showing that the
lawful wages were not paid accordingly.
#6 ISSUE:
Article XIII, Section 3, guarantees the special protection of workers,
to wit:
The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and
equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work,
and a living wage. They shall also participate in policy and decision-
making processes affecting their rights and benefits as may be
provided by law.
By our laws, overseas Filipino workers (OFWs) may only be
terminated for a just or authorized cause and after compliance with
procedural due process requirements.
Art. 282. Termination by employer. An employer may
terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee
against the person of his employer or any immediate member
of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
Petitioner’s allegation that respondent was inefficient in her work
and negligent in her duties may, therefore, constitute a just cause
for termination under Article 282(b), but only if petitioner was able
to prove it. The burden of proving that there is just cause for
termination is on the employer. "The employer must affirmatively
show rationally adequate evidence that the dismissal was for a
justifiable cause. Failure to show that there was valid or just cause
for termination would necessarily mean that the dismissal was
illegal.
To show that dismissal resulting from inefficiency in work is
valid, it must be shown that: 1) the employer has set
standards of conduct and workmanship against which the
employee will be judged;
2) the standards of conduct and workmanship must have
been communicated tothe employee; and
3) the communication was made at a reasonable time prior to
the employee’s performance assessment.
This is similar to the law and jurisprudence on probationary
employees, which allow termination of the employee only when
there is "just cause or when [the probationary employee] fails to
qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time
of his [or her] engagement."
However, we do not see why the application of that ruling should be
limited to probationary employment. That rule is basic to the idea of
security of tenure and due process, which are guaranteed to all
employees, whether their employment is probationary or regular.
A valid dismissal requires both a valid cause and adherence
to the valid procedure of dismissal. The employer is required
to give the charged employee at least two written notices
before termination. One of the written notices must inform
the employee of the particular acts that may cause his or her
dismissal. The other notice must "[inform] the employee of
the employer’s decision." Aside from the notice requirement,
the employee must also begiven "an opportunity to be heard.
Respondent Joy Cabiles, having been illegally dismissed, is entitled
to her salary for the unexpired portion of the employment contract
that was violated together with attorney’s fees and reimbursement
of amounts withheld from her salary.
Section 10 of Republic Act No. 8042,otherwise known as the
Migrant Workers and Overseas Filipinos Act of1995, states
that overseas workers who were terminated without just,
valid, or authorized cause "shall be entitled to the full
reimbursement of his placement fee with interest of twelve
(12%) per annum, plus his salaries for the unexpired portion
of his employment contract or for three (3) months for every
year of the unexpired term, whichever is less."
Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of
law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and
other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims under
this section shall be joint and several. This provisions [sic]
shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its
approval. The performance bond to be filed by the
recruitment/placementagency, as provided by law, shall be
answerable for all money claims or damages that may be
awarded to the workers. If the recruitment/placement
agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves
be jointly and solidarily liable with the corporation
orpartnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or
duration of the employment contract and shall not be
affected by any substitution, amendment or modification
made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary
agreement on money claims inclusive of damages under this
section shall be paid within four (4) months from the
approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, the
workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve (12%) per annum, plus
his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the
unexpired term, whichever is less.
Section 15 of Republic Act No. 8042 states that "repatriation of the
worker and the transport of his [or her] personal belongings shall be
the primary responsibility of the agency which recruited or deployed
the worker overseas." The exception is when "termination of
employment is due solely to the fault of the worker,"80 which as we
have established, is not the case.
The Labor Code also entitles the employee to 10% of the amount of
withheld wages as attorney’s fees when the withholding is unlawful.
The award of the three-month equivalent of respondent’s salary
should, however, be increased to the amount equivalent to the
unexpired term of the employment contract.
#5 ISSUE:
Recruitment and placement refers to the act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad,
whether for profit or not. When a person or entity, in any
manner, offers or promises for a fee employment to two or
more persons, that person or entity shall be deemed engaged
in recruitment and placement.
Article 38(a) of the Labor Code, as amended, specifies that
recruitment activities undertaken by non-licensees or non-holders of
authority are deemed illegal and punishable by law. And when the
illegal recruitment is committed against three or more
persons, individually or as a group, then it is deemed
committed in large scale and carries with it stiffer penalties
as the same is deemed a form of economic sabotage.
But to prove illegal recruitment, it must be shown that the accused,
without being duly authorized by law, gave complainants the distinct
impression that he had the power or ability to send them abroad for
work, such that the latter were convinced to part with their money in
order to be employed. It is important that there must at least be a
promise or offer of an employment from the person posing as a
recruiter, whether locally or abroad.
#4 ISSUE:
In labor cases, issues of fact are for the labor tribunals and the CA
to resolve, as this Court is not a trier of facts. However, when the
conclusion arrived at by them is erroneous in certain respects, and
would result in injustice as to the parties, this Court must intervene
to correct the error. While the Labor Arbiter, NLRC, and CA are one
in their conclusion in this case, they erred in failing to resolve
petitioner’s charge of unfair labor practices against respondents.
An intra-union dispute refers to any conflict between and
among union members, including grievances arising from any
violation of the rights and conditions of membership,
violation of or disagreement over any provision of the union’s
constitution and by-laws, or disputes arising from chartering
or disaffiliation of the union.
However, petitioner’s charge of unfair labor practices falls within
the original and exclusive jurisdiction of the Labor Arbiters,
pursuant to Article 217 of the Labor Code. In addition, Article 247 of
the same Code provides that "the civil aspects of all cases
involving unfair labor practices, which may include claims for
actual, moral, exemplary and other forms of damages,
attorney’s fees and other affirmative relief, shall be under the
jurisdiction of the Labor Arbiters."
Unfair labor practices may be committed both by the
employer under Article 248 and by labor organizations under
Article 249 of the Labor Code.
ART. 249. Unfair labor practices of labor organizations. - It shall be
unfair labor practice for a labor organization, its officers, agents or
representatives:
(a) To restrain or coerce employees in the exercise of their
right to self-organization. However, a labor organization shall
have the right to prescribe its own rules with respect to the
acquisition or retention of membership;
(b) To cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an
employee with respect to whom membership in such
organization has been denied or to terminate an employee on
any ground other than the usual terms and conditions under
which membership or continuation of membership is made
available to other members;
(c) To violate the duty, or refuse to bargain collectively with
the employer, provided it is the representative ofthe
employees;
(d) To cause or attempt to cause an employer to pay or
deliver or agree to pay or deliver any money or other things
of value, in the nature of an exaction, for services which are
not performed or not to be performed, including the demand
for fee for union negotiations;
(e) To ask for or accept negotiation or attorney’s fees from
employers as part of the settlement of any issue in collective
bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
Only the officers, members of governing boards,
representatives or agents or members of labor associations
or organizations who have actually participated in,
authorized or ratified unfair labor practices shall be held
criminally liable.
Petitioner contends that respondents committed acts constituting
unfair labor practices – which charge was particularly laid out in his
pleadings, but that the Labor Arbiter, the NLRC, and the CA ignored
it and simply dismissed his complaint on the ground that his causes
of action were intra- or inter-union in nature. Respondents are guilty
of unfair labor practices under Article 249 (a) and (b) – that is,
violation of petitioner’s right to self-organization, unlawful
discrimination, and illegal termination of his union membership –
which case falls within the original and exclusive jurisdiction of the
Labor Arbiters, in accordance with Article 217 of the Labor Code.
Article 247. Concept of unfair labor practice and procedure
for prosecution thereof. –– Unfair labor practices violate the
constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both
labor and management, including their right to bargain
collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-
management relations.
"In essence, [unfair labor practice] relates to the commission
of acts that transgress the workers’ right to organize."[A]ll
the prohibited acts constituting unfair labor practice in
essence relate to the workers’ right to selforganization."
"[T]he term unfair labor practice refers to that gamut of
offenses defined in the Labor Code which, at their core,
violates the constitutional right of workers and employees to
self-organization."
Guaranteed to all employees or workers is the ‘right to self-
organization and to form, join, or assist labor organizations of their
own choosing for purposes of collective bargaining.’
ART. 243. Coverage and employees’ right to self-
organization. — All persons employed in commercial, industrial and
agricultural enterprises and in religious, charitable, medical, or
educational institutions whether operating for profit or not, shall
have the right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes or collective
bargaining. Ambulant, intermittent and itinerant workers, self-
employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and
protection.
Article 248 (a) declares it to be an unfair labor practice for an
employer, among others, to ‘interfere with, restrain or coerce
employees in the exercise of their right to self-organization.’
Similarly, Article 249 (a) makes it an unfair labor practice for a labor
organization to ‘restrain or coerce employees in the exercise of their
rights to self-organization.
The right of self-organization includes the right to organize or
affiliate with a labor union or determine which of two or more
unions in an establishment to join, and to engage in
concerted activities with co-workers for purposes of
collective bargaining through representatives of their own
choosing, or for their mutual aid and protection, i.e., the
protection, promotion, or enhancement of their rights and
interests.
Bad faith implies breach of faith and willful failure to respond to plain
and well understood obligation." This warrants an award of moral
damages in the amount of P100,000.00. Moreover, the Civil Code
provides:
Art. 32. Any public officer or employee, or any private
individual, who directly or indirectly obstructs, defeats,
violates or in any manner impedes or impairs any of the
following rights and liberties of another person shall be liable
to the latter for damages:
(12) The right to become a member of associations or
societies for purposes not contrary to law;
#3 ISSUE: whether an officer of a corporation may be included as
judgment obligor in a labor case for the first time only after the
decision of the Labor Arbiter had become final and executory, and
whether the twin doctrines of "piercing the veil of corporate fiction"
and personal liability of company officers in labor cases apply.
In the absence of malice, bad faith, or a specific provision of law
making a corporate officer liable, such corporate officer cannot be
made personally liable for corporate liabilities. Indeed, in Reahs
Corporation v. NLRC, the conferment of liability on officers for a
corporation's obligations to labor is held to be an exception
to the general doctrine of separate personality of a
corporation.
The veil of corporate fiction can be pierced, and responsible
corporate directors and officers or even a separate but
related corporation, may be impleaded and held answerable
solidarily in a labor case, even after final judgment and on
execution, so long as it is established that such persons have
deliberately used the corporate vehicle to unjustly evade the
judgment obligation, or have resorted to fraud, bad faith or
malice in doing so.
When the shield of a separate corporate identity is used to commit
wrongdoing and opprobriously elude responsibility, the courts and
the legal authorities in a labor case have not hesitated to step in and
shatter the said shield and deny the usual protections to the
offending party, even after final judgment.
The key element is the presence of fraud, malice or bad faith. Bad
faith, in this instance, does not connote bad judgment or negligence
but imports a dishonest purpose or some moral obliquity and
conscious doing of wrong; it means breach of a known duty through
some motive or interest or ill will; it partakes of the nature of fraud.
Guillermo, the officer being held liable, is the person responsible in
the actual running of the company and for the malicious and illegal
dismissal of the complainant; he, likewise, was shown to have a role
in dissolving the original obligor company in an obvious "scheme to
avoid liability" which jurisprudence has always looked upon with a
suspicious eye in order to protect the rights of labor.
#1 ISSUE:
ART. 217. Jurisdiction of Labor Arbiters and the Commission.—(a)
Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide
within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations.
Case law has it that the nature of an action and the subject matter
thereof, as well as which court has jurisdiction over the same, are
determined by the material allegations of the complaint and the
reliefs prayed for in relation to the law involved.
It is evident that the causes of action of the private respondent
against the petitioner do not involve the provisions of the Labor
Code of the Philippines and other labor laws but the New Civil Code.
Thus, the said causes of action are intrinsically civil. There is no
causal relationship between the causes of action of the private
respondent’s causes of action against the petitioner and their
employer-employee relationship. The fact that the private
respondent was the erstwhile employer of the petitioner under an
existing employment contract before the latter abandoned his
employment is merely incidental. In fact, the petitioner had already
been replaced by the private respondent before the action was filed
against the petitioner.

Not every controversy or money claim by an employee

against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter. A money claim by a worker
against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter only if there is a "reasonable
causal connection" between the claim asserted and
employee-employer relation. Absent such a link, the
complaint will be cognizable by the regular courts of justice.

Actions between employees and employer where the

employer-employee relationship is merely incidental and the
cause of action precedes from a different source of obligation
is within the exclusive jurisdiction of the regular court.

Jurisdiction of the Labor Arbiter under Article 217 of the

Labor Code, as amended, is limited to disputes arising from
an employer-employee relationship which can only be
resolved by reference to the Labor Code of the Philippines,
other labor laws or their collective bargaining agreements.

In Singapore Airlines Limited v. Paño, the complaint of the employer

against the employee for damages for wanton justice and refusal
without just cause to report for duty, and for having maliciously and
with bad faith violated the terms and conditions of their agreement
for a course of conversion training at the expense of the employer,
we ruled that jurisdiction over the action belongs to the civil court.