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Survey of Recent Cases on Labor LawJanuary 2012 Philippine Supreme Court Decisions on Labor Law andProcedurePosted on February 17, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases Here are selected January 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:Certiorari; effect of receipt of award. The prevailing partys receipt of the full amount of the judgment award pursuant to a writ of execution issued by the labor arbiter does not close or terminate the case if such receipt is qualified as without prejudice to the outcome of the petition for certiorari pending with the Court of Appeals. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.Constructive dismissal; change in position. Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in disguise of an act amounting to dismissal but made to appear as if it were not,constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.In cases of a transfer of an employee, the rule is settled that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employees transfer shall be tantamount to unlawful constructive dismissal. Jonathan V. Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.Contract; novation. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites is indispensable: (1) There must be a previous valid obligation; (2) There must be an agreement of the parties concerned to a new contract; (3) There must be the extinguishment of the old contract; and (4) There must be the validity of the new contract. The parties impliedly extinguished the first contract by agreeing to enter into the second contract. The records also reveal that the 2nd contract extinguished the first contract by changing its object or principal. These contracts were for overseas employment aboard different vessels. The first contract was for employment aboard the MV Stolt Aspiration while the second contract involved working in another vessel, the MV Stolt Pride. Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract. Undoubtedly, he was still employed under the first contract when he negotiated with petitioners on the second contract. Since Madequillo was still employed under the first contract when he negotiated with petitioners on the second contract, novation became an unavoidable conclusion. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.Employee; money claims. On the issue of how the seafarer will be compensated by reason of the unreasonable non-deployment, the Supreme Court decreed the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment. The law provides: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 the 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. x x x (Underscoring supplied)Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of the provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary measure resorted to by the employer pending investigation of an alleged malfeasance or misfeasance committed by an employee. The employer temporarily bars the employee from working if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. On the other hand, the penalty of suspension refers to the disciplinary action imposed on the employee after an official investigation or administrative hearing is conducted. The employer exercises its right to discipline erring employees pursuant to company rules and regulations. In the present case, Henry Delada filed a grievance against Manila Pavilion Hotel (MPH). Failing to reach a settlement, Delada lodged a Complaint before the National Conciliation and Mediation Board, which was eventually referred to a panel of voluntary arbitrators (PVA). Meanwhile, citing security and safety reasons, MPH placed Delada on a 30-day preventive suspension and proceeded with the administrative case against him. MPH eventually found Delada liable for insubordination and willful disobedience of the transfer order and imposed upon him a penalty of 90-day suspension. The PVA ruled that there was no legal and factual basis to support MPHs imposition of preventive suspension on Delada, and that the penalty of 90-day suspension imposed by MPH against Delada went beyond the 30-day period of preventive suspension prescribed by the Implementing Rules of the Labor Code. PVA also ruled that MPH lost its authority to continue with the administrative proceedings for insubordination and willful disobedience of the transfer order and to impose the penalty of 90-day suspension on Delada. According to the panel, it acquired exclusive jurisdiction over the issue when the parties submitted the aforementioned issues before it. The Supreme Court held that MPH did not lose its authority to discipline, and that MPH had the authority to continue with the administrative proceedings for insubordination and willful disobedience against Delada and to impose on him the penalty of suspension. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.Employee; release and quitclaim. While the law looks with disfavor upon releases and quitclaims by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborers claims should be respected by the courts as the law between the parties. Considering the petitioners claim of fraud and bad faith against Philcomsat to be unsubstantiated, the Supreme Court found the quitclaim in dispute to be a legitimate waiver. The Court of Appeals and the National Labor Relations Commission were unanimous in holding that the petitioner voluntarily executed the subject quitclaim. The Supreme Court is not a trier of facts, and this doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve and whether the petitioner voluntarily executed the subject quitclaim is a question of fact. In this case, the factual issues have already been determined by the National Labor Relations Commission and its findings were affirmed by the Court of Appeals. Judicial review by the Supreme Court does not extend to a reevaluation of the sufficiency of the evidence upon which the proper labor tribunal has based its determination. Hypte R. Aujero vs. Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.Employee benefit; holiday pay, service incentive leave pay and proportionate 13th month pay. Under the Labor Code, the employee 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 if he has rendered service for more than a year already. Furthermore, under Presidential Decree No. 851, the employee should be paid his 13th month pay. The employer has the burden of proving that it has paid these benefits to its employees. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.Employee benefit; overtime pay. In the absence of any concrete proof that additional service beyond the normal working hours and days had been rendered, overtime pay cannot be granted. Handwritten itemized computations are self-serving, unreliable and unsubstantiated 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. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National Labor Relations Commission, G.R. No. 159887, April 12, 2006, which stated that: Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. In Philippine Transmarine Carriers v. NLRC, G.R. No. 123891, February 28, 2001, seaman Carlos Nietes was found to be suffering from congestive heart failure and cardiomyopathy and was declared as unfit to work by the company-accredited physician. The Court affirmed the award of disability benefits to the seaman, citing ECC v. Sanico, G.R. No. 134028, December 17, 1999, GSIS v. CA, G.R. No. 117572, January 29, 1998, GSIS v. CA, G.R. No. 116015, July 31, 1996 and Bejerano v. ECC, G. R. No. 84777, January 30, 1992, that disability should not be understood more on its medical significance but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that [he] was trained for or accustomed to perform, or any kind of work which a person of [his] mentality and attainment could do. It does not mean absolute helplessness. It likewise cited Bejerano to reiterate that in a disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of ones earning capacity. The Court also cited the more recent case of Crystal Shipping, Inc. v. Natividad, G.R. No. 154798, October 20, 2005, applying the same principles, and GSIS v. Cadiz, G.R. No. 145093, July 8, 2003, and Ijares v. CA, G.R. No. 105854, August 26, 1999, which declared that permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. Magsaysay Maritime Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25, 2011.Employee dismissal; due process. Notice and hearing constitute the essential elements of due process in the dismissal of employees. The employer must furnish the employee with two written notices before termination of employment can be legally effected. The first apprises the employee of the particular acts or omissions for which dismissal is sought. The second informs the employee of the employers decision to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held. These requirements were satisfied in this case. The first required notice was dated November 3, 2003, sufficiently notifying Yabut of the particular acts being imputed against him, as well as the applicable law and the company rules considered to have been violated. On November 17, 2003, Meralco conducted a hearing on the charges against the petitioner where he was accorded the right to air his side and present his defenses on the charges against him. Significantly, a high-ranking officer of the supervisory union of Meralco assisted him during the said investigation. His sworn statement that forms part of the case records even listed the matters that were raised during the investigation. Finally, Meralco served a notice of dismissal dated February 4, 2004 upon Yabut. Such notice notified the latter of the companys decision to dismiss him from employment on the grounds clearly discussed therein.Norman Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.Employee dismissal; due process. Even if there is a just or valid cause for terminating an employee, it is necessary to comply with the requirements of due process prior to the termination. Lolita S. Concepcion vs. Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as the want of care in the performance of ones duties and habitual neglect has been defined as repeated failure to perform ones duties for a period of time, depending upon the circumstances. These are not overly technical terms, which, in the first place, are expressly sanctioned by the Labor Code of the Philippines, to wit: ART. 282. Termination by employer. An employer may terminate an employment for any of the following causes: [xxx](b) Gross and habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed from service due to habitual tardiness and absenteeism, and for having continued disregarding attendance policies despite his undertaking to report on time. His weekly time record for the first quarter of the year 2000 revealed that he came late 19 times out of the 47 times he reported for work. He also incurred 19 absences out of the 66 working days during the quarter. His absences without prior notice and approval from March 11-16, 2000 were considered to be the most serious infraction of all because of its adverse effect on business operations. The Supreme Court held that even in the absence of a written company rule defining gross and habitual neglect of duties, Bitaras omissions qualify as such warranting his dismissal from the service. Mansion Printing Center and Clement Cheng vs. Diosdado Bitara, Jr., G.R. No. 168120, January 25, 2011.Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the existence of a just and valid cause. Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latters representative in connection with the employees 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 his 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 representative; and (e) other causes analogous to the foregoing.It is unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a conviction before terminating him when there is already sufficient showing of the wrongdoing. Requiring that certainty may prove too late for the employer, whose loss may potentially be beyond repair. In the present case, no less than the DOJ Secretary found probable cause for qualified theft against Concepcion. That finding was enough to justify her termination for loss of confidence. Lolita S. Concepcion vs. Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.Employee dismissal; loss of trust and confidence. For loss of trust and confidence to be a valid ground for dismissal, it must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. In addition, loss of trust and confidence must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion. Manila Electric Company (Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January 30, 2011.Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an employment because of an employees serious misconduct, a cause that was present in this case in view of the petitioners violation of his employers code of conduct. Misconduct is defined as the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. For serious misconduct to justify dismissal, the following requisites must be present: (a) it must be serious; (b) it must relate to the performance of the employees duties; and (c) it must show that the employee has become unfit to continue working for the employer. Installation of shunting wires is without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to wrongfully obtain electric power through unlawful means. The act clearly relates to the petitioners performance of his duties given his position as branch field representative who is equipped with knowledge on meter operations, and who has the duty to test electric meters and handle customers violations of contract. Instead of protecting the companys interest, the petitioner himself used his knowledge to illegally obtain electric power from Meralco. His involvement in this incident deems him no longer fit to continue performing his functions for respondent-company. Norman Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.Employer-employee relationship; commencement. The POEA Standard Employment Contract provides that employment shall commence upon the actual departure of the seafarer from the airport or seaport in the port of hire. Distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship would have taken place had petitioner been actually deployed from the point of hire. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has already become final and executory as to Canoy since he did not appeal from it. Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be stated as follows: (1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either before the same or any other tribunal; and (2) Any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether the claim or demand, purpose, or subject matter of the two suits is the same or not. These two main rules mark the distinction between the principles governing the two typical cases in which a judgment may operate as evidence. In speaking of these cases, the first general rule, and which corresponds to paragraph (b) of Section 47 of Rule 39 of the Rules of Court is referred to as bar by former judgment while the second general rule, which is embodied in paragraph (c) of the same section, is known as conclusiveness of judgment. The present labor case is closely related to the civil case that was decided with finality. The acts and omissions alleged by the Bank in the civil case as basis of its counterclaim against Mauricio are the very same acts and omissions which were used as grounds to terminate his employment. Considering that it has already been conclusively determined with finality in the civil case that the questioned acts of Mauricio were well within his discretion as branch manager and approving officer of the Bank, and the same were sanctioned by the Head Office, the Supreme Court found that the Court of Appeals did not err in holding that there was no valid or just cause for the Bank to terminate Mauricios employment. Prudential Bank (now Bank of the Philippine Islands) vs. Antonio S.A. Mauricio, substituted by his legal heirs Maria Fe, Voltaire, Antonio, Jr., Antonio, Earl John, and Francisco Roberto all surnamed Mauricio, G.R. No. 183350, January 18, 2011.Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, G.R. No. 90426, December 15, 1989, the Supreme Court ruled that the voluntary arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. It was also held in that case that the failure of the parties to specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction over the related issue. In Ludo & Luym Corporation v. Saornido, G.R. No. 140960, January 20, 2003, the Supreme Court recognized that voluntary arbitrators are generally expected to decide only those questions expressly delineated by the submission agreement; that, nevertheless, they can assume that they have the necessary power to make a final settlement on the related issues, since arbitration is the final resort for the adjudication of disputes. Thus, the Supreme Court ruled that even if the specific issue brought before the arbitrators merely mentioned the question of whether an employee was discharged for just cause, they could reasonably assume that their powers extended beyond the determination thereof to include the power to reinstate the employee or to grant back wages. In the same vein, if the specific issue brought before the arbitrators referred to the date of regularization of the employee, law and jurisprudence gave them enough leeway as well as adequate prerogative to determine the entitlement of the employees to higher benefits in accordance with the finding of regularization. Indeed, to require the parties to file another action for payment of those benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor and speedy labor justice. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.Procedural rules; liberal application; when waived. Procedural rules may be waived or dispensed with in absolutely meritorious cases. The Supreme Court, in past cases, has adhered to the strict implementation of the rules and considered them inviolable when it is shown that the patent lack of merit of the appeals render liberal interpretation pointless and naught. The contrary obtains in this case as Philcomsats case is not entirely unmeritorious. Specifically, Philcomsat alleged that the petitioners execution of the subject quitclaim was voluntary despite his claim that he did not do so. Philcomsat likewise argued that the petitioners educational attainment and the position he occupied in Philcomsats hierarchy militate against his claim that he was pressured or coerced into signing the quitclaim. The emerging trend in our jurisprudence is to afford every party-litigant the amplest opportunity for the proper and just determination of his cause free from the constraints of technicalities. Far from having gravely abused its discretion, the NLRC correctly prioritized substantial justice over the rigid and stringent application of procedural rules. In the present case, the Supreme Court held that the CA was correct in not finding grave abuse of discretion in the NLRCs decision to give due course to Philcomsats appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment of personnel is permissible even without the employees prior consent, it cannot be done when the transfer is a preliminary step toward his removal, or a scheme to lure him away from his permanent position, or when it is designed to indirectly terminate his service, or force his resignation. Such a transfer would in effect circumvent the provision which safeguards the tenure of office of those who are in the Civil Service. Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when an employee quits his work because of the agency heads unreasonable, humiliating, or demeaning actuations which render continued work impossible. Hence, the employee is deemed to have been illegally dismissed. This may occur although there is no diminution or reduction of salary of the employee. It may be a transfer from one position of dignity to a more servile or menial job. Republic of the Phil., represented by the Civil Service Commission vs. Minerva M.P. Pacheco, G.R. No. 178021, January 31, 2011.Reinstatement; not possible; backwages. In case separation pay is awarded and reinstatement is no longer feasible, backwages shall be computed from the time of illegal dismissal up to the finality of the decision should separation pay not be paid in the meantime. It is the employees actual receipt of the full amount of his separation pay that will effectively terminate the employment of an illegally dismissed employee. Otherwise, the employer-employee relationship subsists and the illegally dismissed employee is entitled to backwages, taking into account the increases and other benefits, including the 13thmonth pay, that were received by his co-employees who are not dismissed. 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. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.Reorganization; management prerogative. Admittedly, the right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. By management prerogative is meant the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers. Although jurisprudence recognizes said management prerogative, it has been ruled that the exercise thereof, while ordinarily not interfered with, is not absolute and is subject to limitations imposed by law, collective bargaining agreement, and general principles of fair play and justice. Thus, an employer may transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. Indeed, having the right should not be confused with the manner in which that right is exercised. Jonathan V. Morales was hired by Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance Officer, with a monthly salary of P18,000.00. Regularized on November 17, 2000, Morales was promoted to Division Manager of the Accounting Department, for which he was compensated a monthly salary of P33,700.00, plus allowances starting July 1, 2002. Subsequent to HCPTIs transfer to its new offices at Vitas, Tondo, Manila on January 2, 2003, Morales received an inter-office memorandum dated March 27, 2003, reassigning him to Operations Cost Accounting, tasked with the duty of monitoring and evaluating all consumables requests, gears and equipment related to the corporations operations and of interacting with its sub-contractor, Bulk Fleet Marine Corporation. The memorandum was issued by HCPTIs new Administration Manager, duly noted by its new Vice President for Administration and Finance, and approved by its President and Chief Executive Officer. Morales protested that his reassignment was a clear demotion since the position to which he was transferred was not even included in HCPTIs plantilla. In response to Morales grievance that he had been effectively placed on floating status, an inter-office memorandum was issued on April 4, 2003 to the effect that transfer of employees is a management prerogative and that HCPTI had the right and responsibility to find the perfect balance between the skills and abilities of employees to the needs of the business. However, the Supreme Court found that HCPTI did not even bother to show that it had implemented a corporate reorganization and/or approved a new plantilla of positions which included the one to which Morales was being transferred. Thus, the Court reinstated the NLRCs July 29, 2005 Decision which found Morales reassignment to be a clear demotion despite lack of showing of diminution of salaries and benefits. Jonathan V. Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a petition for review on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law. Moreover, if factual findings of the National Labor Relations Commission and the Labor Arbiter have been affirmed by the Court of Appeals, the Supreme Court accords them the respect and finality they deserve. It is well-settled and oft-repeated that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to deviate from what are clearly procedural guidelines and disturb and strike down the findings of the Court of Appeals and those of the labor tribunals if there is a showing that they are unsupported by the evidence on record or there was a patent misappreciation of facts. Indeed, that the impugned decision of the Court of Appeals is consistent with the findings of the labor tribunals does not per se conclusively demonstrate the correctness thereof. By way of exception to the general rule, the Supreme Court will scrutinize the facts if only to rectify the prejudice and injustice resulting from an incorrect assessment of the evidence presented. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.(Leslie thanksDianne Caroline V. Ducepec for assisting in the preparation of this post.)February 2012 Philippine Supreme Court Decisions on Labor Law andProcedurePosted on March 5, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged appeal, Civil Service Commission, constructive dismissal, dismissal, employee benefits, employer-employee relationship, forum shopping, NLRC, probationary employment, reinstatement, res judicata, security of tenure Here are select February 2012 rulings of the Supreme Court on labor law and procedure:Appeal; factual finding of NLRC. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect but finality when affirmed by the Court of Appeals. Factual findings of quasi-judicial bodies like the NLRC, if supported by substantial evidence, are accorded respect and even finality by the Supreme Court, more so when they coincide with those of the Labor Arbiter. Such factual findings are given more weight when the same are affirmed by the Court of Appeals. In the present case, the Supreme Court found no reason to depart from these principles since the Labor Arbiter found that there was substantial evidence to conclude that Oasay had breached the trust and confidence of Palacio Del Gobernador Condominium Corporation, which finding the NLRC had likewise upheld. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its existence to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the implementing and operating arm of the Bases Conversion and Development Authority tasked to manage the Clark Special Economic Zone. Expressly, CDC was formed in accordance with Philippine corporation laws and existing rules and regulations promulgated by the Securities and Exchange Commission pursuant to Section 16 of Republic Act 7227. CDC, a government owned or controlled corporation without an original charter, was incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1) of the Constitution, the civil service embraces only those government owned or controlled corporations with original charter. As such, CDC and its employees are covered by the Labor Code and not by the Civil Service Law. Antonio B. Salenga, et al. vs.Court of Appeals, et al., G.R. No. 174941,February 1, 2012.Dismissal; resignation vs. illegal dismissal; telex is not equivalent to tender of resignation. Article 285 of the Labor Code recognizes termination by the employee of the employment contract by serving written notice on the employer at least one (1) month in advance. Given that provision, the law contemplates the requirement of a written notice of resignation. In the absence of a written resignation, it is safe to presume that the employer terminated the seafarers. In this case, the Supreme Court found the dismissal of De Gracia, et al. to be illegal since Cosmoship merely sent a telex to Skippers, the local manning agency, claiming that De Gracia, et al. were repatriated because the latter voluntarily pre-terminated their contracts. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs.Nathaniel Doza, et al., G.R. No. 175558.February 8, 2012.Dismissal; substantive and procedural due process. For a workers dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process. Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the employee of the employers decision to dismiss him. Before the issuance of the second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted. Substantive due process, on the other hand, requires that dismissal by the employer be made based on a just or authorized cause under Articles 282 to 284 of the Labor Code. In this case, there was no written notice furnished to De Gracia, et al. regarding the cause of their dismissal. Cosmoship furnished a telex to Skippers, the local manning agency, claiming that De Gracia, et al. were repatriated because they voluntarily pre-terminated their contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment contract akin to resignation and no illegal dismissal. However, as correctly ruled by the CA, the telex message is a biased and self-serving document that does not satisfy the requirement of substantial evidence. If, indeed, De Gracia, et al. voluntarily pre-terminated their contracts, then De Gracia, et al. should have submitted their written resignations. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs.Nathaniel Doza, et al., G.R. No. 175558.February 8, 2012.Employee benefits; right to bonus; diminution. From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the recipient cannot demand as a matter of right. The grant of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses. However, a bonus becomes a demandable or enforceable obligation if the additional compensation is granted without any conditions imposed for its payment. In such case, the bonus is treated as part of the wage, salary or compensation of the employee. Particularly instructive is the ruling of the Court in Metro Transit Organization, Inc. v. National Labor Relations Commission (G.R. No. 116008, July 11, 1995) where the Court said:Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage.In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern Telecoms Employees Union agreed on the inclusion of a provision for the grant of 14th, 15thand 16thmonth bonuses in the 1998-2001 CBA Side Agreement, as well as in their 2001-2004 CBA Side Agreement, which contained no qualification for its payment. There were no conditions specified in the CBA Side Agreements for the grant of the bonus. There was nothing in the relevant provisions of the CBA which made the grant of the bonus dependent on the companys financial standing or contingent upon the realization of profits. There was also no statement that if the company derives no profits, no bonus will be given to the employees. In fine, the payment of these bonuses was not related to the profitability of business operations. Consequently, the giving of the subject bonuses cannot be peremptorily withdrawn by Eastern Telecommunications Phils., Inc. without violating Article 100 of the Labor Code, which prohibits the unilateral elimination or diminution of benefits by the employer. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection. Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union, G.R. No. 185665, February 8, 2012.Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that the transfer of an employee is for just or valid ground, such as genuine business necessity. The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not involve a demotion in rank or a diminution in salary and other benefits. If the employer fails to overcome this burden of proof, the employees transfer is tantamount to unlawful constructive dismissal. [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25, 2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground. Petitioners bare assertions of imminent threat from the respondents are mere accusations which are not substantiated by any proof. The Supreme Court agreed with the Court of Appeals in ruling that the transfer of respondents amounted to a demotion. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for termination, Article 284 of the Labor Code provides that an employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health, as well as to the health of his co-employees. In order to validly terminate employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code requires that: (i) the employee be suffering from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, and (ii) a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. In Triple Eight Integrated Services, Inc. v. NLRC (G.R. No. 129584, December 3, 1998), the Court held that the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and, thus, defeat the public policy on the protection of labor.In this case, Ynson should have reported back to work or attended the investigations conducted by Wuerth Philippines, Inc. immediately upon being permitted to work by his doctors, knowing that his position remained vacant for a considerable length of time. However, he did not even show any sincere effort to return to work. Clearly, since there is no more hindrance for him to return to work and attend the investigations set by Wuerth Philippines, Inc., Ynsons failure to do so was without any valid or justifiable reason. His conduct shows his indifference and utter disregard of his work and his employers interest, and displays his clear, deliberate, and gross dereliction of duties. The power to dismiss an employee is a recognized prerogative inherent in the employers right to freely manage and regulate his business. The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The workers right to security of tenure is not an absolute right, for the law provides that he may be dismissed for cause. As a general rule, employers are allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal. Needless to say, an irresponsible employee like Ynson does not deserve a position in the workplace, and it is Wuerth Philippines, Inc.s management prerogative to terminate his employment. To be sure, an employer cannot be compelled to continue with the employment of workers when continued employment will prove inimical to the employers interest. Wuerth Philippines, Inc. vs. Rodante Ynson, G.R. No. 175932, February 15, 2012.Employee dismissal; due process. With respect to due process requirement, the employer is bound to furnish the employee concerned with two (2) written notices before termination of employment can be legally effected. One is the notice apprising the employee of the particular acts or omissions for which his dismissal is sought and this may loosely be considered as the proper charge. The other is the notice informing the employee of the managements decision to sever his employment. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge, thereby giving him ample opportunity to be heard and defend himself with the assistance of his representative should he so desire. The requirement of notice, it has been stressed, is not a mere technicality but a requirement of due process to which every employee is entitled. Here, Palacio Del Gobernador Condominium Corporation complied with the two-notice rule stated above. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.Employee dismissal; due process. Cityland did not afford Galang the required notice before he was dismissed. As the Court of Appeals noted, the investigation conference Tupas called to look into the janitors complaints against Galang did not constitute the written notice required by law as he had no clear idea what the charges against him were. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.Employee dismissal; grounds. The validity of an employees dismissal from service hinges on the satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the employee was accorded due process the basic components of which are the opportunity to be heard and to defend himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor Code of the Philippines. This constitutesthe substantive aspect. On the substantive aspect, the Supreme Court found that Palacio Del Gobernador Condominium Corporations termination of the Oasays employment was for a cause provided under the Labor Code. In terminating Oasays employment, Palacio Del Gobernador Condominium Corporation invoked loss of trust and confidence. The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be holding a position of trust and confidence. Here, it is indubitable that Oasay holds a position of trust and confidence. The position of Building Administrator, being managerial in nature, necessarily enjoys the trust and confidence of the employer. The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. Palacio Del Gobernador Condominium Corporation had established, by clear and convincing evidence, Oasays acts which justified its loss of trust and confidence on the former. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to continue his employment. The evidence supports the view that he continued to exhibit undesirable traits as an employee and as a person, in relation to both his co-workers and his superiors, particularly Tupas, her immediate supervisor. Quoting the Court of Appeals decision with approval, the Supreme Court held: Without offering any possible ill motive that might have impelled [the respondents] to summarily dismiss [Galang], who admitted having been absorbed by the former as janitor upon the termination of his contract with his agency, this Court is more inclined to give credence to the evidence pointing to the conclusion that [Galangs] employment was actually severed for a just cause. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.Employer; right to discipline employee. In Sagales v. Rustans Commercial Corporation (G.R. No. 166554, November 27, 2008), the Supreme Court ruled:Truly, while the employer has the inherent right to discipline, including that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise of its police power.In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer. (Emphasis in the original.)In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of dismissal. There was no warning or admonition for respondents violation of team rules, only outright termination of his services for an act which could have been punished appropriately with a severe reprimand or suspension. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence. The issue of Javiers alleged illegal dismissal is anchored on the existence of an employer-employee relationship between him and Fly Ace. As the records bear out, the Labor Arbiter and the Court of Appeals found Javiers claim of employment with Fly Ace as wanting and deficient. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Hence, when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received, subject only to the requirement that their decision must be supported by substantial evidence. [Salvador Lacorte v. Hon. Amado G. Inciong, 248 Phil. 232 (1988)] Accordingly, Javier needs to show by substantial evidence that he was indeed an employee of the company against which he claims illegal dismissal. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.Employer-employee relationship; test. To determine the existence of an employer-employee relationship, the following are considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct.Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished. In this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javiers allegations did not establish that his relationship with Fly Ace had the attributes of an employer-employee relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was also baffling to realize that Javier did not dispute Fly Aces denial of his services exclusivity to the company. In short, all that Javier laid down were bare allegations without corroborative proof. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract and (c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal, International Shipping Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a 3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is the service to be rendered by Agustin and Minimo on board the vessel while the cause of the contract is the monthly compensation they expect to receive. These terms were embodied in the Contract of Employment which was executed by the parties. The agreement upon the terms of the contract was manifested by the consent freely given by both parties through their signatures in the contract. Neither parties disavow the consent they both voluntarily gave. Thus, there is a perfected contract of employment. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R. No. 179469, February 15, 2012.Employment relationship; commencement. The commencement of an employer-employee relationship must be treated separately from the perfection of an employment contract. Santiago v. CF Sharp Crew Management, Inc., (G.R. No. 162419, 10 July 2007) is an instructive precedent on this point. In that case, the Supreme Court made a distinction between the perfection of the employment contract and the commencement of the employer-employee relationship, thus:The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party.Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy Agustin and Minimo in this case, Agustin and Minimo are entitled to rights arising from the perfected Contract of Employment, such as the right to demand performance by C.F. Sharp of its obligation under the contract. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R. No. 179469, February 15, 2012.Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a) there be identity of parties or at least such parties that represent the same interests in both actions; (b) there be identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in one action will, regardless of which party is successful, amount to res judicata in the other action. Petitioners are correct as to the first two requisites of forum shopping. First, there is identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there is identity of rights asserted i.e., the right of management to terminate employment and the right of an employee against illegal termination. However, the third requisite of forum shopping is missing in this case. Any judgment or ruling of the Office of the Commissioner of the Metropolitan Basketball Association will not amount to res judicata. Res judicata is defined in jurisprudence as to have four basic elements: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter, and causes of action. Here, although contractually authorized to settle disputes, the Office of the Commissioner of the Metropolitan Basketball Association is not a court of competent jurisdiction as contemplated by law with respect to the application of the doctrine of res judicata. At best, the Office of the Commissioner of the Metropolitan Basketball Association is a private mediator or go-between as agreed upon by team management and a player in the Metropolitan Basketball Association Players Contract of Employment. Any judgment that the Office of the Commissioner of the Metropolitan Basketball Association may render will not result in a bar for seeking redress in other legal venues. Hence, respondents action of filing the same complaint in the Regional Arbitration Branch of the NLRC does not constitute forum shopping. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forum-shopping by the parties-in-interest themselves. The purpose of verification is to secure an assurance that the allegations in the pleading are true and correct and have been filed in good faith. In the case at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark Development Corporation as the employer. A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when authorized by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board. Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent corporation, may be considered as the appellant and employer referred to by the NLRC Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal. Antonio B. Salenga, et al. vs.Court of Appeals, et al., G.R. No. 174941,February 1, 2012.Labor; effect if procedural due process not followed but with a valid cause for termination. It is required that the employer furnish the employee with two written notices: (1) a written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; and (2) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. The twin requirements of notice and hearing constitute the elements of due process in cases of employees dismissal. The requirement of notice is intended to inform the employee concerned of the employers intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the requirement of hearing affords the employee an opportunity to answer his employers charges against him and accordingly, to defend himself therefrom before dismissal is effected. Obviously, the second written notice, as indispensable as the first, is intended to ensure the observance of due process. In this case, there was only one written notice which required respondents to explain within five (5) days why they should not be dismissed from the service. Alcovendas was the only one who signed the receipt of the notice. The others, as claimed by Lynvil, refused to sign. The other employees argue that no notice was given to them. Despite the inconsistencies, what is clear is that no final written notice or notices of termination were sent to the employees. Due to the failure of Lynvil to follow the procedural requirement of two-notice rule, nominal damages in the amount of P50,000 were granted to Ariola, et al. despite their dismissal for just cause. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974,February 1, 2012.Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate directors and officers are solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith. Indeed, 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.The term bad faith contemplates a state of mind affirmatively operating with furtive design or with some motive of self-interest or will or for ulterior purpose. The Supreme Court agreed with the ruling of both the NLRC and the Court of Appeals when they pronounced that there was no evidence on record that indicates commission of bad faith on the part of De Borja, the general manager of Lynvil, who was tasked with the supervision of the employees and the operation of the business. There is no proof that he imposed on Ariola, et al. the por viaje provision for purpose of effecting their summary dismissal. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974,February 1, 2012.Labor; nature of employment; security of tenure. In the context of these facts (1) Ariola, et al. were doing tasks necessary to Lynvils fishing business with positions ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement continued for more than ten years the Court believed that Lynvil intended to go around the security of tenure of Ariola, et al. as regular employees. The Court held that by the express provisions of the second paragraph of Article 280 which cover casual employment, Ariola, et al. had become regular employees of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974,February 1, 2012.Labor; procedural and substantive due process; grounds for valid termination; breach of trust. Just cause is required for a valid dismissal. The Labor Code provides that an employer may terminate an employment based on fraud or willful breach of the trust reposed on the employee. Such breach is considered willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based on substantial evidence and not on the employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence in delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized. The Supreme Court found that breach of trust is present in this case, when Ariola (the captain), Alcovendas (Chief Mate), Calinao (Chief Engineer), Nubla (cook), Baez (oiler), and Sebullen (bodegero) conspired with one another and stole pampano and tangigue fish and delivered them to another vessel, to the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974,February 1, 2012.Labor; public prosecutors decision not binding on the labor tribunal. The Supreme Court has held in Nicolas v. National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a criminal conviction is not necessary to find just cause for employment termination. Otherwise stated, an employees acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty of acts inimical to the employers interests. In the reverse, the finding of probable cause is not followed by automatic adoption of such finding by the labor tribunals. In other words, whichever way the public prosecutor disposes of a complaint, the finding does not bind the labor tribunal. Lynvil contends that the filing of a criminal case before the Office of the Prosecutor is sufficient basis for a valid termination of employment based on serious misconduct and/or loss of trust and confidence. The Supreme Court held that Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft, the Labor Arbiter must follow the finding as a valid reason for the termination of respondents employment. The proof required for purposes that differ from one and the other are likewise different. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974,February 1, 2012.Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court decisions have laid two conditions for the validity of a fixed-contract agreement between the employer and employee: First, the fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or Second, it satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. Lynvil contends that Ariola, et al. were employed under a fixed-term contract which expired at the end of the voyage. Contrarily, Ariola, et al. contend that they became regular employees by reason of their continuous hiring and performance of tasks necessary and desirable in the usual trade and business of Lynvil. Textually, the provision in the contract between Lynvil and Ariola, et al. that: NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa patakarang por viaje na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of employment. In the context, however, of the facts that: (1) Ariola, et al. were doing tasks necessarily to Lynvils fishing business with positions ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement continued for more than ten years, the clear intention is to go around the security of tenure of Ariola, et al. as regular employees. As such, the Supreme Court found that Ariola, et al. are regular employees. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974,February 1, 2012.Labor Code; maximum award of attorneys fees in cases of recovery of wages. Article 111 of the Labor Code provides for a maximum award of attorneys fees in cases of recovery of wages:a. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys 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, attorneys fees which exceed ten percent of the amount of wages recovered.Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and protect their interest, attorneys fees in the amount of ten percent (10%) of the total claims was imposed. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs.Nathaniel Doza, et al., G.R. No. 175558.February 8, 2012.Labor contracting; elements. There is labor-only contracting where: (a) 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 (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. In the present case, the Supreme Court found that both the capitalization requirement and the power of control on the part of Requio are wanting. Generally, the presumption is that the contractor is a labor-only contractor unless such contractor overcomes the burden of proving that it has the substantial capital, investment, tools and the like. In the present case, though Garden of Memories is not the contractor, it has the burden of proving that Requio has sufficient capital or investment since it is claiming the supposed status of Requio as independent contractor. Garden of Memories, however, failed to adduce evidence purporting to show that Requio had sufficient capitalization. Neither did it show that she invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the completion of the service contract. Garden of Memories Park and Life Plan, Inc., et al. vs. NLRC, 2nd Div., et al., G.R. No. 160278, February 8, 2012.Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts: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 percent (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.The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co. Inc. (G.R. No. 167614), the Court, in an En Banc Decision, declared unconstitutional the clause or for three months for every year of the unexpired term, whichever is less and awarded the entire unexpired portion of the employment contract to the overseas Filipino worker. On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once again reiterated the provision of awarding the unexpired portion of the employent contract or three (3) months for every year of the unexpired term, whichever is less. Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA 10022, the Supreme Court applied RA 8042, without touching on the constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the unconstitutionality of the clause or for three months for every year of the unexpired term, whichever is less in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional provision is inoperative, as if it was not passed into law at all. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs.Nathaniel Doza, et al., G.R. No. 175558.February 8, 2012.NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters) may hold any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the Rules of Court. Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings before the trial court. This mode is to be observed only when there is no law granting them contempt powers. As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to hold the offending party or parties in direct or indirect contempt. Robosa, et al., therefore, have not improperly brought the indirect contempt charges against the respondents before the NLRC. Federico S. Robosa, et al. vs. National Labor Relations Commission (First Division), et al., G.R. No. 176085, February 8, 2012.NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The Supreme Court, however, found that the doctrine of great respect and finality has no application to the case at bar. The Labor Arbiter dismissed Arnaiz, et al.s complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in favor of Julies bakeshop. Therefore, contrary to Reyess claim, the NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides, the Court of Appeals may still resolve factual issues by express mandate of the law despite the respect given to administrative findings of fact. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.Probationary employee; valid cause for dismissal but without procedural due process; employee entitled to nominal damages. Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations provides:If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination. Dalangin was hired by Canadian Opportunities as Immigration and Legal Manager, subject to a probationary period of six months. One month after hiring Dalangin, the company terminated his employment, declaring him unfit and unqualified to continue as Immigration and Legal Manager, for reasons which included obstinacy and utter disregard of company policies. Propensity to take prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the policies and objectives, lack of concern for the companys interest despite having just been employed in the company (Declined to attend company sponsored activities, seminars intended to familiarize company employees with Management objectives and enhancement of company interest and objectives),lack of enthusiasm toward work, and lack of interest in fostering relationship with his co-employees. The company contends that it complied with the rule on procedural due process when it asked Dalangin, through a Memorandum, to explain why he could not attend the seminar. When he failed to submit his explanation, the company served him a notice the following day terminating his employment. According to the Supreme Court, the notice to Dalangin was not served within a reasonable time from the effective date of his termination as required by the rules since he was dismissed on the very day the notice was given to him. However, because of the existence of a valid cause for termination, the Supreme Court did not invalidate his dismissal but penalized the company for its non-compliance with the notice requirement, and ordered the company to pay an indemnity, in the form of nominal damages amounting to P10,000. Canadian Opportunities Unlimited, Inc. vs.Bart Q. Dalangin, Jr., G.R. No. 172223,February 6, 2012.Probationary employee; valid dismissal even before 6 months. The essence of a probationary period of employment fundamentally lies in the purpose or objective of both the employer and the employee during the period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the latter seeks to prove to the former that he has the qualifications to meet the reasonable standards for permanent employment. The trial period or the length of time the probationary employee remains on probation depends on the parties agreement, but it shall not exceed six (6) months under Article 281 of the Labor Code. The Supreme Court found substantial evidence indicating that the company was justified in terminating Dalangins probationary employment. Dalangin admitted in compulsory arbitration that the proximate cause for his dismissal was his refusal to attend the companys Values Formation Seminar scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after he learned that it had no relation to his duties, as he claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in the province. When the Chief Operations Officer, insisted that he attend the seminar to encourage his co-employees to attend, he stood pat on not attending, arguing that marked differences exist between their positions and duties, and insinuating that he did not want to join the other employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of the law. This incident reveals Dalangins lack of interest in establishing a good working relationship with his co-employees, especially the rank and file; he did not want to join them because of his view that the seminar was not relevant to his position and duties. It also betrays his arrogant and condescending attitude towards his co-employees, and a lack of support for the company objective. Dalangin also exhibited negative working habits, particularly with respect to the one hour lunch break policy of the company and the observance of the companys working hours. Dalangin would take prolonged lunch breaks or would go out of the office without leave of the company and call the personnel manager later only to say that he would be unable to return to the office because of some personal matters he needs to attend to. Canadian Opportunities Unlimited, Inc. vs.Bart Q. Dalangin, Jr., G.R. No. 172223,February 6, 2012.Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by courts in order to impart stability in the legal system. However, in not a few instances, the Supreme Court has relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the merits. This is in line with the time honored principle that cases should be decided only after giving all the parties the chance to argue their causes and defenses. In that way, the ends of justice would be better served. For indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure is not to hinder but to promote the administration of justice. In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation (G.R. No. 168115, June 8, 2007), the Supreme Court ruled:Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties right to due process. In numerous cases, this Court has allowed liberal construction of the rules when to do so would serve the demands of substantial justice and equity. x x xIndeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just determination of their causes, free from the constraints of needless technicalities. In this case, besides the fact that a denial of the recourse to the Court of Appeals would serve more to perpetuate an injustice and violation of Tengs rights under our labor laws, the Supreme Court found that as correctly held by the Court of Appeals, no intent to delay the administration of justice could be attributed to Teng. The Court of Appeals therefore did not commit reversible error in excusing Tengs one-day delay in filing his motion for reconsideration and in giving due course to his petition for certiorari. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.Reinstatement; backwages. Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the employee is actually reinstated to his former position. Pursuant to the order of reinstatement rendered by the Labor Arbiter, the Bank of Lubao sent Manabat a letter requiring him to report back to work on May 4, 2007. Notwithstanding the said letter, Manabat opted not to report for work. Thus, it is but fair that the backwages to be awarded to Manabat should be computed from the time that he was illegally dismissed until the time when he was required to report for work, i.e. from September 1, 2005 until May 4, 2007. Bank of Lubao, Inc. vs.Rommel J. Manabat, et al., G.R. No. 188722,February 1, 2012.Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable.On one hand, such payment liberates the employee from what could be a highly oppressive work environment.On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. In the present case, the Supreme Court found that the relations between the parties had been already strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of Manabat. Manabats reinstatement to his former position would only serve to intensify the atmosphere of antipathy and antagonism between the parties. Undoubtedly, Bank of Lubaos filing of various criminal complaints against Manabat for qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against the former, taken together with the pendency of the instant case for more than six years, had caused strained relations between the parties. Considering that Manabats former position as bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the part of the Bank of Lubao to be ordered to maintain the former in its employ since it may only inspire vindictiveness on the part of Manabat. Also, the refusal of Manabat to return to work is in itself an indication of the existence of strained relations between him and the petitioner. Bank of Lubao, Inc. vs.Rommel J. Manabat, et al., G.R. No. 188722,February 1, 2012.Seafarers; employment contract; perfection stage vs. commencement stage. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract, and (c) cause of the obligation. The object of the contract was the rendition of service by Fantonial on board the vessel for which service he would be paid the salary agreed upon. In this case, the employment contract was perfected on January 15, 2000 when it was signed by the parties who entered into the contract in behalf of their principal. However, the employment relationship never commenced since Fantonial was not allowed to leave on January 17, 2000 and go on board the vessel M/V AUK in Germany on the ground that he was not yet declared fit to work on the day of his scheduled departure. But, even if no employer-employee relationship commenced, there was, contemporaneous with the perfection of the employment contract, the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Bright Maritime Corporation (BMC) / Desiree P. Tenorio vs.Ricardo B. Fantonial, G.R. No. 165935,February 8, 2012.(Leslie thanksDianne Caroline V. Ducepec for her assistance in the preparation of this post.)

March 2012 Philippine Supreme Court Decisions on Labor Law