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Here are select January 2013 rulings of the Supreme Court of the Philippines on labor law and

procedure:
Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of
appeal; Joint declaration under oath accompanying the surety bond; Substantial compliance with
procedural rules. There was substantial compliance with the NLRC Rules of Procedure when the
respondents PAL Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit
belatedly, the Joint Declaration Under Oath, which is required when an employer appeals from
the Labor Arbiters decision granting a monetary award and posts a surety bond. Under the
NLRC rules, the following requisites are required to perfect the employers appeal: (1) it must be
filed within the reglementary period; (2) it must be under oath, with proof of payment of the
required appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied by
typewritten or printed copies of the memorandum of appeal, stating the grounds relied upon, the
supporting arguments, the reliefs prayed for, and a statement of the date of receipt of the
appealed decision, with proof of service on the other party of said appeal. If the employer posts
a surety bond, the NLRC rules further require the submission by the employer, his or her
counsel, and the bonding company of a joint declaration under oath attesting that the surety bond
posted is genuine and that it shall be in effect until the final disposition of the case.
In the case at bar, the respondents posted a surety bond equivalent to the monetary award and
filed the notice of appeal and the appeal memorandum within the reglementary period. When the
NLRC subsequently directed the filing of a Joint Declaration Under Oath, the respondents
immediately complied with the said order. There was only a late submission of the Joint
Declaration. Considering that there was substantial compliance with the rules, the same may be
liberally construed. The application of technical rules may be relaxed in labor cases to serve the
demands of substantial justice. Rolando L. Cervantes vs. PAL Maritime Corporation and/or
Western Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Completeness of service by registered mail; Exception to the general rule regarding a
corporations verification and certification of non-forum shopping; Interpretation of school
CBA. A school CBA must be read in conjunction with statutory and administrative regulations
governing faculty qualifications. Such regulations form part of a valid CBA without need for the
parties to make express reference to the same.
In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester
faculty appointments to the respondents Pepanio and Bueno, since they had not completed
postgraduate degrees. The respondents, however, claimed that the 1994 CBA between UE and
the faculty union did not yet require a masters degree for a teacher to acquire regular status.
Having rendered more than three consecutive years of full-time service to the school, the
respondents insisted that UE should have given them permanent appointments.

The Supreme Court observed that the policy requiring college teachers to have postgraduate
degrees was provided in the Manual of Regulations issued as early as 1992 by the Department of
Education, Culture and Sports (DECS), now the Department of Education. In promulgating the
Manual of Regulations, DECS exercised its power of regulation over educational institutions,
which includes prescribing the minimum academic qualifications for teaching personnel. The
legislature subsequently transferred the power to prescribe such qualifications for teachers in
institutions of higher learning to the Commission on Higher Education (CHED). However, the
1992 Manual of Regulations issued by DECS continued to apply to colleges and universities
until 2010, when CHED issued a Revised Manual of Regulations.
Thus, the requirement of a masters degree for college teachers, as originally provided in the
1992 Manual of Regulations, was deemed incorporated in the 1994 CBA between UE and the
faculty union. Furthermore, the subsequent CBA in 2001, which provided for the extension of
conditional probationary status to the respondents, subject to their obtaining a masters degree
within the probationary period, clearly showed that UE intended to subject the respondents
appointments to the standards set by the law.
The requirement of a masters degree for tertiary education teachers is not unreasonable,
considering that the operation of educational institutions involves public interest. The
government has a right to ensure that only qualified persons, in possession of sufficient academic
knowledge and teaching skills, are allowed to teach in such institutions.
The Supreme Court also overruled the respondents contention that UE filed its appeal to the
NLRC beyond the required ten (10)-day period. For completeness of service by registered mail,
the reckoning period starts either from the date of actual receipt of the mail by the addressee or
after five (5) days from the date he or she received the first notice from the postmaster. In this
case, the respondents averred that, on March 17, 2005, the postmaster gave UEs counsel a notice
to claim the mail containing the Labor Arbiters decision. The respondents claimed that UEs
counsel was deemed in receipt of the decision 5 days after the giving of the notice, or on March
22, 2005. Thus, according to the respondents, when UE filed its appeal to the NLRC on April
14, 2005, the 10-day reglementary period had already lapsed. The Supreme Court, however,
ruled that there must be conclusive proof that the registry notice was received by or at least
served on the addressee. In this case, the records did not show that UEs counsel in fact received
the alleged registry notice requiring him to claim the mail. On the other hand, UE was able to
present a registry return receipt showing that its counsel actually received a copy of the Labor
Arbiters decision on April 4, 2005. Reckoned from this date, the 10-day reglementary period
had not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005.
Anent UEs failure to comply with the general rule that the Board of Directors or Board of
Trustees of a corporation must authorize the person who shall sign the verification and
certification of non-forum shopping accompanying a petition, the Supreme Court held that such

authorization is not necessary when it is self-evident that the signatory is in a position to verify
the truthfulness and correctness of the allegations in the petition. The Supreme Court declared
that Dean Eleanor Javier, who signed UEs verification and certification, was in such a position,
since she knew the factual antecedents of the case and she actually communicated with the
respondents regarding the required postgraduate qualification. University of the East, et al. vs.
Analiza F. Pepanio and Mariti D. Bueno. G.R. No. 193897. January 23, 2013.
Disease as a ground for termination; Retirement under the Labor Code; Age and tenure
requirements for retirement; Financial assistance. Under the Labor Code provision on disease as
a ground for termination (formerly, Article 284, but now renumbered pursuant to Republic Act
No. 10151), it must be the employer who initiates the termination of the employees services.
The aforementioned provision cannot be applied in this case, considering that it was the late
petitioner Padillo, and not the Rural Bank of Nabunturan, Inc. (Bank), who severed the
employment relations. With his memory impaired after suffering a mild stroke due to
hypertension, Padillo wrote a letter to the Bank, expressing his intention to avail of an early
retirement package. The clear import of Padillos letter and the fact that he had stopped reporting
for work even before sending the said letter shows that he voluntarily retired. Given the
inapplicability of the Labor Code provision on disease as a ground for termination, it necessarily
follows that Padillos claim for separation pay must be denied.
As regards Padillos claim for retirement benefits, the provision of the Labor Code on retirement
(formerly, Art. 287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence
of any applicable agreement, an employee who has served at least five (5) years in the company
may retire upon reaching the age of sixty (60) years, but not beyond sixty-five (65) years, to be
entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, with a fraction of at least six (6) months being considered as one whole year. Notably,
the aforementioned age and tenure requirements are cumulative, and non-compliance with either
negates the employees entitlement to the retirement pay under the Labor Code. In this case, the
Bank did not have a retirement plan or any other contract with its employees, setting the terms
and conditions for retirement. Padillo also served the Bank for twenty-nine (29) years, far more
than the 5-year tenure requirement. Padillo, however, did not meet the age requirement,
considering that he was only fifty-five (55) years old, or less than 60 years of age, when he
retired. Thus, Padillos claim for retirement pay must also be denied.
Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000,
considering the length of time which had supervened before the disposition of this case and
Padillos unblemished record of 29 years of service to the Bank. The award was in addition to
the P100,000 benefit receivable under the Philam Life Plan that the Bank had procured in favor
of Padillo. Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc., et al. G.R. No. 199338.
January 21, 2013.

Redundancy as an authorized cause for termination; Difference between retirement and


termination due to redundancy; General rule regarding the factual findings of the NLRC and the
exceptions thereto. Under the Labor Code, redundancy is one of the authorized causes for
termination of employment. The following are the requisites for the valid implementation of a
redundancy program: (a) the employer must serve a written notice to the affected employees and
to the Department of Labor and Employment (DOLE) at least one month before the intended
date of termination; (b) the employer must pay the employees separation pay equivalent to at
least one month pay or at least one month pay for every year of service, whichever is higher; (c)
the employer must abolish the redundant positions in good faith; and (d) the employer must set
fair and reasonable criteria in ascertaining which positions are redundant and may be abolished.
The Supreme Court has also held that a company cannot simply declare redundancy without
basis. To exhibit its good faith and to show that there were fair and reasonable criteria in
ascertaining redundant positions, a company claiming to be over manned must produce adequate
proof of the same.
In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written
notice informing her of the termination of her services on the ground of redundancy. GMC also
submitted to the DOLE an Establishment Termination Report, regarding the employees,
including Viajar, whose positions were deemed redundant. Viajar and the DOLE received the
respective notices one month before the effective date of the employees termination.
Furthermore, GMC issued to Viajar two checks amounting to P440,253.02 and P21,211.35,
representing her separation pay. However, the Supreme Court held that, notwithstanding
compliance with the requirements on notice and the payment of separation pay, GMC is still
considered to have illegally dismissed Viajar because the company failed to present substantial
proof to support its general allegations of redundancy. GMC could have presented evidence to
substantiate redundancy, such as a new staffing pattern or feasibility studies or proposals on the
viability of newly created positions, job descriptions and the approval by management of the
restructuring program, or the companys audited financial reports. However, no such evidence
was submitted by GMC.
On the other hand, Viajar presented proof negating GMCs claim of redundancy and clearly
showing GMCs bad faith in implementing the redundancy program: (1) GMC had hired new
employees before it terminated Viajars employment; (2) Vaijar was barred from entering the
company premises even before the effectivity of her separation; and (3) Viajar was also forced to
sign an Application for Retirement and Benefits so that she could avail of her separation pay.
The last circumstance is significant, considering that there is a difference between voluntary
retirement and forced termination of an employee. Retirement from service is contractual or
based on a bilateral agreement of the employer and the employee, while termination of
employment is statutory or governed by the Labor Code and other related laws. Voluntary
retirement cuts employment ties, leaving no residual employer liability; involuntary retirement
amounts to a discharge, rendering the employer liable for termination without cause. GMCs

demand that Viajar sign an Application for Retirement and Benefits, when she had already been
informed of the termination of her services due to redundancy, shows that this case involves not
a voluntary retirement, but an illegal termination.
While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general
rule that the factual findings of the NLRC must be accorded respect and finality is not applicable
in this case. One of the exceptions to the said rule covers instances when the findings of fact of
the trial court, or of the quasi-judicial agencies concerned, are conflicting or contradictory with
those of the Court of Appeals, as in the present case. Another exception to the general rule is
when the said findings are not supported by substantial evidence or the inference or conclusion
arrived at is manifestly erroneous. In the case at bar, the Supreme Court agreed with the Court of
Appeals that the NLRCs conclusion that Viajar was legally dismissed is manifestly erroneous.
General Milling Corporation vs. Violeta L. Viajar. G.R. No. 181738. January 30, 2013.
Reinstatement; Backwages. It is basic in jurisprudence that illegally dismissed workers are
entitled to reinstatement with backwages plus interest at the legal rate.
This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER)
and the Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each
other for violating labor laws. AER filed a complaint against the Union and eighteen (18) of its
members for conducting an illegal strike. On the other hand, thirty-two (32) employees filed a
complaint against AER for unfair labor practices, illegal dismissal, illegal suspension, and runaway shop. In a previous decision (G.R. No. 160138, July 13, 2011), the Supreme Court had
held that both parties were at fault or in pari delicto; hence, the complaining employees should
be reinstated but without backwages. The Motion for Partial Reconsideration filed by the Union
is resolved in the present case.
The Supreme Court found that, of the 32 employees who filed the complaint against AER, only
18 had been charged by AER with illegal strike, leaving 14 excluded from the employers
complaint. As no charges had been filed against the 14 workers, they cannot be found guilty of
illegal strike. Neither can they be considered in pari delicto. However, of the 14 employees,
five failed to write their names and affix their signatures in the Membership Resolution attached
to their petition before the Court of Appeals, authorizing the union president to represent them.
Thus, while these five employees will also be reinstated, they cannot be granted backwages. On
the other hand, the nine workers who signed their names in the aforementioned Membership
Resolution will be reinstated with backwages plus interest at the legal rate. Automotive Engine
Rebuilders, Inc. (AER), et al. vs. Progresibong Unyon ng mga Manggagawa sa AER, et al. /
Progresibong Unyon ng mga Manggagawa sa AER, et al. vs. Automotive Engine Rebuilders,
Inc., et al. G.R. Nos. 160138 and 160192. January 16, 2013.

Resignation; Resignation in relation to the subsequent filing of an illegal dismissal case.


Petitioner Cervantess claim that he did not resign but was terminated from employment is
untenable. Resignation is the voluntary act of an employee who finds himself in a situation
where he believes that personal reasons cannot be sacrificed in favor of the exigency of the
service, such that he has no other choice but to disassociate himself from his employment.
In the present case, Cervantess employer merely informed him of the numerous complaints
against him. It was Cervantes himself who opted to be relieved from his post and who initiated
his repatriation to Manila. This is clear from the tenor of his telex message, which reads in part:
ANYHOW TO AVOID REPETITION [ON] MORE HARSH REPORTS TO COME. BETTER
ARRANGE MY RELIEVER [AND] C/O BUSTILLO RELIEVER ALSO. UPON ARR NEXT
USA LOADING PORT FOR THEIR SATISFACTION. Cervantess message contains an
unmistakable demand to be relieved of his assignment. His employer merely accepted his
resignation. Thus, the rule that the filing of a complaint for illegal dismissal is inconsistent with
resignation does not hold true in this case. The clear tenor of Cervantess resignation letter and
the filing of this case one year after his alleged termination shows that the complaint for illegal
dismissal was a mere afterthought. Rolando L. Cervantes vs. PAL Maritime Corporation and/or
Western Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary arbitrator; Concept and
exercise of management prerogative; Limitations on the exercise of management prerogative;
Nature of collective bargaining agreements (CBA). Goya, Inc.s contention that the Voluntary
Arbitrator (VA) exceeded his power in ruling on a matter not covered by the sole issue submitted
for voluntary arbitration is untenable. In a prior case, the Supreme Court has ruled that, in
general, the arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the adjudication of
disputes, the arbitrator can assume that he has the power to make a final settlement. The VA has
plenary jurisdiction and authority to interpret the CBA and to determine the scope of his or her
own authority. Subject to judicial review, this leeway of authority and adequate prerogative is
aimed at accomplishing the rationale of the law on voluntary arbitration speedy labor justice.
In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary
arbitration the sole issue of whether or not the company is guilty of an unfair labor practice in
engaging the services of PESO, a third party service provider, under existing CBA, laws, and
jurisprudence. The Union claimed that the hiring of contractual workers from PESO violated the
CBA provision that prescribes only three categories of workers in the company, namely: the
probationary, the regular, and the casual employees. Instead of hiring contractual workers, Goya,
Inc. should have hired probationary or casual employees, who could have become additional
Union members, pursuant to the union security clause in the CBA. The VA ruled that while
Goya, Inc. was not guilty of any unfair labor practice, it still committed a violation of the CBA,
though such violation was not gross in character. The Supreme Court held that the VAs ruling is

interrelated and intertwined with the sole issue submitted for arbitration. The ruling was
necessary to make a complete and final adjudication of the dispute between the parties.
Furthermore, Goya, Inc.s assertion that its hiring of contractual workers was a valid exercise of
management prerogative is erroneous. Declaring that a particular act falls within the concept of
management prerogative is significantly different from acknowledging that such act is a valid
exercise thereof. While the VA and the Court of Appeals ruled that the act of contracting out or
outsourcing work is within the purview of management prerogative, they did not declare such act
to be a valid exercise thereof. As repeatedly held, the exercise of management prerogative is not
unlimited; it is subject to the limitations found in the law, CBA, or general principles of fair play
and justice.
In this case, the CBA provision prescribing the categories of employees in the company and the
union security clause are interconnected and must be given full force and effect. The parties in a
CBA are free to establish such stipulations they may deem convenient, provided that the same
are not contrary to law, morals, good customs, public order, or public policy. Where the CBA is
clear and unambiguous, the literal meaning of its stipulations shall control. The CBA becomes
the law between the parties, and compliance therewith is mandated by the express policy of the
law. Goya, Inc. vs. Goya, Inc. Employees Union-FFW. G.R. No. 170054. January 21, 2013.

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