Doctrine: Fixed-term employees enjoy security of tenure albeit limited to the duration
of the term indicated in the employment contract. Thus, a fixed-term employ prior to
the expiration of the term specified in the employment contract, may not be dismissed
except for a just or an authorized cause provided by law or the employment contract
and after due process has been afforded to employee.
Facts: Petitioner was initially appointed as Dean of the Law School of Cor Jesu College
(CJC) effective August 1, 2003 until May 31, 2004. On June 7, 2004, his appointment
as Law School Dean was renewed for a term of three years effective June 1, 2004. His
appointment letter provided that if CJC does not intend to renew/extend the
appointment, he will be informed in writing 30 days before the term appointment
ends.
After his three-year term ended, the petitioner had not received any notice of
termination from CJC. Thus, despite the lapse of the term of his appointment as Law
School Dean, the petitioner continued to perform his duties and proceeded to prepare
for the forthcoming firs semester of school year 2007-2008.
The petitioner received a letter from CJC’s President informing him that his services as
Law School Dean was already terminate.
The petitioner filed a complaint for illegal dismissal and damages with the Regional
Arbitration Branch of the NLRC in Davao City against the respondents. He claimed
that the respondents violated the express provision in his appointment letter as
regards the written notice of termination sent within 30 days prior to the expiration of
the term of his appointment in case the respondents do not desire to renew or extend
his services. He likewise claimed that no just or authorized cause exists to warrant his
dismissal.
The petitioner further posited that he should have been considered as a regular
employee since he had continuously and uninterruptedly worked for CJC for four
years and that he performed activities which are necessary and desirable in the usual
business or trade of CJC.
For their part, the respondents claimed that the petitioner's appointment is a term
employment which presupposes that a day certain has been agreed upon by the
parties for the commencement and termination of the employment contract. They
claimed that the petitioner's appointment as Law School Dean expired on May 31,
2007 and, thus, he was not illegally dismissed.
They also claimed that the petitioner was informed that his term as Law School Dean
would no longer be renewed, albeit orally in a meeting. They averred that Escuril,
during the said meeting, informed the petitioner that he was already being replaced in
view of the expiration of his contract. They further alleged that while the petitioner
continued to hold office as Law School Dean, he however knew that he only holds that
office temporarily and in hold-over capacity. In any case, the respondents averred that
the lack of a written notice of termination is inconsequential since the petitioner's
employment was terminated by reason of the expiration of the period stated in the
appointment letter.
Held: The petitioner was illegally dismissed and is entitled to payment of backwages
and separation pay.
Ratio: The nature of the petitioner's employment with CJC, contrary to his assertion,
is not a regular employment, but a fixed-term employment. Where the duties of the
employee consist of activities which are necessary or desirable in the usual business of
the employer, the parties are not prohibited from agreeing on the duration of
employment. Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period. There is nothing essentially contradictory
between a definite period of employment and the nature of the employee's duty.
A contract of employment with a fixed period necessitates that: (1) 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 on the employee and without
any circumstances vitiating consent; or (2) it satisfactorily appears that the employer
and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former on the latter.
It is indisputable that the petitioner and CJC knowingly and voluntarily agreed upon
the petitioner's fixed period of employment as the Law School Dean and, in doing so,
they dealt with each other on equal terms. Verily, appointments to the position of
Dean of an educational institution involves an employment contract to which a fixed
term is an essential and natural appurtenance.
The provision in the petitioner's appointment letter is clear that the petitioner will
serve as the Law School Dean for the entire duration of his appointment. However,
should CJC no longer wish to employ the petitioner's services after the term of The
initial appointment, it shall send him a written notice informing him that the
administration no longer intends to renew/extend his appointment at least 30 days
prior to the expiration of the term of his initial appointment.
Should CJC fail to send the petitioner the required written notice of termination 30
days prior to the expiration of the term of the original appointment, as what happened
in this case, it can be logically pad necessarily inferred that CJC intended to renew the
petitioner's appointment as Law School Dean under such terms and conditions set
forth in his original appointment.
The foregoing conclusion is bolstered by the fact that notwithstanding the lapse of the
term of the petitioner's original appointment, the respondents allowed the petitioner to
still assume his office as the Law School Dean. If indeed the respondents no longer
intended to renew the petitioner's appointment, they should not have allowed the
petitioner to serve as the Law School Dean after the lapse of the term of his original
appointment.
Fixed-term employees are akin to project employees. The period of employment of
fixed-term employees has been fixed prior to engagement while the project employees'
employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined likewise at the time of the engagement.
Fixed-term employees enjoy security of tenure albeit limited to the duration of the
term indicated in the employment contract. Thus, a fixed-term employ prior to the
expiration of the term specified in the employment contract, may not be dismissed
except for a just or an authorized cause provided by law or the employment contract
and after due process has been afforded to employee.
In the termination letter sent to the petitioner, which he received on July 12, 2007, the
respondents merely indicated that the petitioner was about to be replaced as the Law
School Dean; they did not provide any reason for the petitioner's dismissal. Clearly,
the petitioner was illegally dismissed since there was no just or authorized cause for
dismissal.
The normal consequences of an illegal dismissal are reinstatement without loss of
seniority rights, and payment of backwages computed the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer
viable as an option, separation fay equivalent to one month salary for every year of
service should be awarded as an alternative. The payment of separation pay is in
addition to payment of backwages.
However, considering that the petitioner's second term as the Law School Dean was
only for three years or from June 1, 2007 until May 31, 2010, the monetary awards to
which he is entitled as a consequence of his illegal dismissal are only limited to such
period. The petitioner is, thus, entitled to backwages computed from the time his
compensation was withheld until May 31, 2010. Further, considering that
reinstatement is no longer feasible not only because the relationship between the
parties already been strained, but also the term of the petitioner's second appointment
had already lapsed, he is entitled to separation pay equivalent one (1) month salary for
every year of service.
COCA-COLA FEMSA PHILIPPINES, INC.,* Petitioner, v. BACOLOD SALES FORCE
UNION-CONGRESS OF INDEPENDENT ORGANIZATION-ALU, Respondent.
Doctrine: Case law holds that the proper remedy to reverse or modify a Voluntary
Arbitrator's or a Panel of Voluntary Arbitrators' decision or award is to appeal the
award or decision before the CA under Rule 43 of the Rules on questions of fact, of
law, mixed questions of fact and law, or a mistake of judgment.
Meanwhile, petitioner hired new ADs who were, however, subject to a different set of
qualifications from the Cosmos integrees. The newly-hired ADs received a higher basic
monthly pay although, allegedly, occupying the same position, job description, and
functions as that of the Cosmos integrees. Furthermore, the newly-hired ADs were
given, upon union membership, a monthly 45-kilogram (kg.) rice provision with a
corresponding monthly deduction of the amount of P550.00 from their salaries.
After the grievance process failed, the parties agreed to submit the unresolved matters
to voluntary arbitration pursuant to Article 5 of the CBA, and filed a preventive
mediation case before the NCMB raising the aforesaid issues.
Respondent claimed that the Cosmos integrees were being discriminated against the
newly-hired ADs, in light of the disparity between their salaries and reiterated that the
monthly P550.00 deduction from the basic salaries of the new union members
constitutes a violation of the non-diminution rule.
In a Decision the VA held that the lower salary rate given to the Cosmos integrees
smacks of discrimination given that they hold the same position, perform the same
work, share the same functions, and have the same job description as that of the
newly-hired ADs. Thus, under the principle of "equal pay for equal work," the Cosmos
integrees' failure to meet the new set of qualifications for ADs in view of their "over-age
and lack of educational attainment" did not justify their lower salary rates. Moreover,
the P550.00 deduction from a union member's monthly salary and its conversion into
a 45-kg. sack of rice ration constituted: (a) non-compliance with Article X of the CBA,
which clearly provides that the grant of rice ration to employees shall be free of charge;
and (b) a violation of the non-diminution rule under Article 100 of the Labor Code, as
amended, because the said benefit has become part of the employment contract.
Petitioner filed its petition for review under Rule 43 of the Rules of Court before the CA
on June 5, 2012.
Respondent countered, among others, that the VA Decision had become final and
executory after ten (10) calendar days from receipt thereof pursuant to Article 262-A of
the Labor Code, as amended; hence, the CA petition must, perforce, fail.
In a Decision, the CA denied the petition on the ground that the VA Decision had
attained finality pursuant to Section 5, Article 5 of the CBA, which explicitly provides
that "[t]he decision of the Arbitration Committee shall be final and binding upon the
COMPANY and the UNION, and the employees and may be enforced in any court of
competent jurisdiction."
Issue: Whether or not the CA correctly held that the VA Decision can no longer be the
subject of its review for having attained finality pursuant to the express provision
under Section 5, Article 5 of the CBA
Held: Petitioner availed of the correct mode of review of the VA Decision by filing a
petition for review with the CA under Rule 43 of the Rules, and in conformity with
prevailing jurisprudence
Ratio: Case law holds that the proper remedy to reverse or modify a Voluntary
Arbitrator's or a Panel of Voluntary Arbitrators' decision or award is to appeal the
award or decision before the CA under Rule 43 of the Rules on questions of fact, of
law, mixed questions of fact and law, or a mistake of judgment.
In this case, petitioner availed of the correct mode of review of the VA Decision by filing
a petition for review with the CA under Rule 43 of the Rules, and in conformity with
prevailing jurisprudence.
The Court sees the prima facie reasonableness of petitioner's asseverations and finds
that the merits of its case, based on such argumentation, properly warrant judicial
review. As such, the CA should look into the soundness of the VA rulings in relation to
the nuances averred, particularly, the impact of the differences in the selection
processes applied and relevant qualifications between the Cosmos integrees and the
newly-hired ADs. Moreover, the CA ought to determine the proper application of the
"equal pay for equal work" principle vis-a-vis the business decision of an employer to
adopt a more competitive compensation scheme in light of the demands in human
resource. Thus, borrowing the language in Chung Fu Industries (Phils.) Inc. v. CA -
which similarly involved a restrictive stipulation on appeal from an arbitral award the
Court fmds that the CA erred in refusing "to look into the merits of this case, despite a
prima facie showing of the existence of grounds warranting judicial review," which,
thus, "effectively deprived petitioner of the opportunity to prove or substantiate its
allegations."
MARVIN G. FELIPE AND REYNANTE L. VELASCO, Petitioners, v. DANILO DIVINA
TAMAYO KONSTRACT, INC. (DDTKI) AND/OR DANILO DIVINA TAMAYO,
PRESIDENT/OWNER, Respondent.
Facts: DDTKI hired Felipe as Formworks Aide on December 19, 2005, and Velasco as
Warehouse Aide on March 14, 2007. Felipe and Velasco claimed regular employment
status for having continuously worked for DDTKI until September 2010 when they
were no longer given working assignments.
On October 12, 2010, Felipe and Velasco filed their complaint for illegal dismissal and
non-payment of service incentive leave and 13th month pay against the respondents
before the arbitration branch of the NLRC.
The respondents, on the other hand, claimed that the petitioners were former project
employees of DDTKI who were hired for a particular project. They presented various
project employment contracts duly signed by Felipe and Velasco to support their claim
that these employees were hired for specific construction projects for a specific period,
and that they were informed of the nature and duration of their employment from the
beginning of their engagement.
The respondents further averred that as of September 2010, Felipe and Velasco were
not rehired as the company "did not need any more workers after the completion of
their respective projects." After the completion of their last project, the US Embassy
New Office Annex 1 Project (MNOX-1), Felipe and Velasco were not rehired and their
termination was reported to the Department of Labor and Employment (DOLE) as
"completion of phase of work." DDTKI stressed that they were never employed for the
Glorietta Project and the illegally obtained MRF, a confidential document of DDTKI,
did not serve as its employment contract with Felipe and Velasco.8
Issue: Whether or not petitioners were project employees of the private respondents
Held: The CA did not err in affirming the findings of the NLRC that petitioners were
project employees of DDTKI.
In this case, the LA, the NLRC and the CA were one in finding that petitioners were
project employees hired by DDTKI for a specific task within a particular period already
determined at the time of their hiring as evidenced by their employment contracts.
As correctly noted by the CA, petitioners' employment was terminated due to the
expiration of the period for which they were contracted. Considering that their
employment contract for the US Embassy New Office Annex 1 Project (MNOX-1) had
been terminated on September 18, 2010, the CA correctly ruled that their termination
from work was not illegal but that the project for which they were hired merely
expired.
On their contention that they were regular employees due to their uninterrupted
service for DDTKI for four (4) years and the continuous employment contract renewal
every month, petitioners are mistaken.
In Aro v. NLRC, the Court explained that the length of service or the re-hiring of
construction workers on a project-to-project basis does not confer upon them regular
employment status, since their, re-hiring is only a natural consequence of the fact that
experienced construction workers are preferred. Employees who are hired for carrying
out a separate job, distinct from the other undertakings of the company, the scope
and duration of which has been determined and made known to the employees at the
time of the employment, are properly treated as project employees and their services
may be lawfully terminated upon the completion of a project.
Therefore, being project employees who have been validly terminated by reason of the
completion of the specific project, MNOX-1, for which they were hired, petitioners
Felipe and Velasco are not entitled to reinstatement and back wages.
THE PHILIPPINE GEOTHERMAL, INC. EMPLOYEES UNION, Petitioner, v. UNOCAL
PHILIPPINES, INC. (NOW KNOWN AS CHEVRON GEOTHERMAL PHILIPPINES
HOLDINGS, INC.), Respondent.
Doctrine: The merger of a corporation with another does not operate to dismiss the
employees of the corporation absorbed by the surviving corporation. This is in keeping
with the nature and effects of a merger as provided under law and the constitutional
policy protecting the rights of labor. The employment of the absorbed employees
subsists. Necessarily, these absorbed employees are not entitled to separation pay on
account of such merger in the absence of any other ground for its award.
On April 4, 2005, Unocal Corporation executed an Agreement and Plan of Merger with
Chevron Texaco Corporation (Chevron) and Blue Merger Sub, Inc. (Blue Merger). Blue
Merger is a wholly owned subsidiary of Chevron.
On October 20, 2006, the Union wrote Unocal Philippines asking for the separation
benefits provided for under the Collective Bargaining Agreement. According to the
Union, the Merger Agreement of Unocal Corporation, Blue Merger, and Chevron
resulted in the closure and cessation of operations of Unocal Philippines and the
implied dismissal of its employees.
Unocal Philippines refused the Union's request and asserted that the employee-
members were not terminated and that the merger did not result in its closure or the
cessation of its operations.
On February 5, 2007, the parties agreed to submit their dispute for voluntary
arbitration before the Department of Labor and Employment, with the Secretary of
Labor and Employment as Voluntary Arbitrator.
After the parties submitted their respective position papers, the Secretary of Labor
rendered the Decision23 on January 15, 2008 ruling that the Union's members were
impliedly terminated from employment as a result of the Merger Agreement. The
Secretary of Labor found that the merger resulted in new contracts and a new
employer for the Union's members. The new contracts allegedly required the
employees' consent; otherwise, there was no employment contract to speak of.
Issue: whether the Merger Agreement executed by Unocal Corporation, Blue Merger,
and Chevron resulted in the termination of the employment of petitioner's members
This acquisition of all assets, interests, and liabilities of the absorbed corporation
necessarily includes the rights and obligations of the absorbed corporation under its
employment contracts. Consequently, the surviving corporation becomes bound by the
employment contracts entered into by the absorbed corporation. These employment
contracts are not terminated. They subsist unless their termination is allowed by law.
Under Article 279 of the Labor Code, regular employees acquire security of tenure, and
hence, may not be terminated by the employer except upon legal grounds. Without
any of these legal grounds, the employer cannot validly terminate the employment of
regular employees; otherwise, the employees' right to security of tenure would be
violated.
The merger of two corporations does not authorize the surviving corporation to
terminate the employees of the absorbed corporation in the absence of just or
authorized causes as provided in Articles 282 and 283 of the Labor Code. Once an
employee becomes permanent, he is protected by the security of tenure clause in the
Constitution, and he can be terminated only for just or authorized causes as provided
by law.
These theories were dissents to the Decision in Bank of the Philippine Islands.
However, in the Resolution resolving the Motion for Reconsideration in that case, this
Court found it necessary to interpret Section 80 of the Corporation Code and the
constitutional provisions on labor as to strengthen the "judicial protection of the right
to security of tenure of employees affected by a merger and [avoid] confusion regarding
the status of various-benefits." Thus, this Court ruled that the surviving corporation
automatically assumes the employment contracts of the absorbed corporation. The
absorbed corporation's employees are not impliedly dismissed, but become part of the
manpower complement of the surviving corporation.
The merger of Unocal Corporation with Blue Merger and Chevron does not result in an
implied termination of the employment of petitioner's members. Assuming respondent
is a party to the merger, its employment contracts are deemed to subsist and continue
by "the combined operation of the Corporation Code and the Labor Code under the
backdrop of the labor and social justice provisions of the Constitution." 83
The merger still does not operate to effect a termination of the employment of
respondent's employees. Should they be unhappy with the surviving corporation, the
employees may retire or resign from employment.
Given these considerations, the Court rule that petitioner is not entitled to the
separation benefits it claims from respondent. Separation benefits are not granted to
petitioner by law in case of voluntary resignation, or by any contract it entered into
with respondent.
Given these circumstances, petitioner is not entitled to separation pay. Although the
policy of the state is to rule in favor of labor in light of the social justice provisions
under the Constitution, this Court cannot unduly trample upon the rights of
management, which are likewise entitled to respect in the interest of fair play.
SONEDCO WORKERS FREE LABOR UNION (SWOFLU) et
al., Petitioners, v. UNIVERSAL ROBINA CORPORATION, SUGAR DIVISION-
SOUTHERN NEGROS DEVELOPMENT CORPORATION (SONEDCO), Respondent.
Doctrine: An employer who refuses to bargain with the union and tries to restrict its
bargaining power is guilty of unfair labor practice. In determining whether an
employer has not bargained in good faith, the totality of all the acts of the employer at
the time of negotiations must be taken into account.
On May 17, 2002, days after the 2002 Collective Bargaining Agreement was signed, a
certification election was conducted. SONEDCO Workers Free Labor Union won and
replaced PACIWU-TUCP as the exclusive bargaining representative.
Despite being the incumbent exclusive bargaining agent, SONEDCO Workers Free
Labor Union filed before the Department of Labor and Employment a Petition for
certification election on December 6, 2006 in view of the approaching expiration of the
2002 Collective Bargaining Agreement. On December 31, 2006, the 2002 Collective
Bargaining Agreement expired with no new collective bargaining agreement being
signed.
On August 28, 2007, with no collective bargaining agreement in effect, URC-
SONEDCO informed the rank-
URC-SONEDCO asked the employees who wished to avail themselves of these-benefits
to sign an acknowledgment receipt/waiver (2007 waiver).
Ratio: The Court of Appeals failed to take into account that unfair labor practice not
only involves acts that violate the right to self-organization but also covers several acts
enumerated in Article 259 of the Labor Code, to interfere with, restrain or coerce
employees in the exercise of their right to self-organization; to discriminate in regard to
wages, hours of work and other terms and conditions of employment in order to
encourage or discourage membership in any labor organization; to violate the duty to
bargain
Respondent repeatedly refused to meet and bargain with SONEDCO Workers Free
Labor Union, the exclusive bargaining agent of its rank-and-file employees.
Respondent admitted that it refused to meet with petitioners in light of the 2002
Collective Bargaining Agreement, which it signed with PACIWU-TUCP, the previous
bargaining representative. It claimed that the 2002 Collective Bargaining Agreement
remained in full force and effect without change until December 31, 2006, despite
PACIWU-TUCP losing the May 17, 2002 certification election to SONEDCO Workers
Free Labor Union.
Respondent's reliance on the 2002 Collective Bargaining Agreement as basis for not
negotiating with petitioners is unjustified. The Collective Bargaining Agreement that
respondent invoked had been entered into when a Petition for Certification Election
was already filed.
In Associated Trade Unions v. Trajano,50 this Court ruled on the temporary nature of
this type of collective bargaining agreement:
The Court will not rule on the merits and/or defects of the new CBA and shall only
consider the fact that it was entered into at a time when the petition for certification
election had already been filed by TUP AS and was then pending resolution. The said
CBA cannot be deemed permanent, precluding the commencement of negotiations by
another union with the management. In the meantime however, so as not to deprive
the workers of the benefits of the said agreement, it shall be recognized and given
effect on a temporary basis, subject to the results of the certification election. The
agreement may be continued in force if ATU is certified as the exclusive bargaining
representative of the workers or may be rejected and replaced in the event that TUP AS
emerges as the winner.
The Court explicitly held that the winning union had the option to either continue the
existing collective bargaining agreement or negotiate a new one. The new CBA
negotiated by petitioners whether or not submitted to the MOLE in accordance with
Article 231 of the Labor Code cannot be deemed permanent, precluding
commencement of negotiations by another union with management, considering that
it was entered into at a time when the petition for certification election had already
been filed by respondent union. Meantime, this interim agreement must be recognized
and given effect on a temporary basis so as not to deprive the workers of the favorable
terms of the agreement.
If, as a result of the certification election, respondent union or a union other than
petitioner union which executed the interim agreement is certified as the exclusive
bargaining representative of the rank and file employees of respondent company, then,
such union may adopt the interim collective bargaining agreement or negotiate with
management for a new collective bargaining agreement.
MANILA DOCTORS COLLEGE AND TERESITA O.
TURLA, Petitioners, v. EMMANUEL M. OLORES, Respondent.
Doctrine: in the event that the LA's decision is reversed by a higher tribunal, the
employer's duty to reinstate the dismissed employee is effectively terminated. This
means that an employer is no longer obliged to keep the employee in the actual service
or in the payroll. The employee, in tum, is not required to return the wages that he
had received prior to the reversal of the LA's decision. Notwithstanding the reversal of
the finding of illegal dismissal, an employer, who, despite the LA's order of
reinstatement, did not reinstate the employee during the pendency of the appeal up to
the reversal by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time of the reversal. By way of
exception, an employee may be barred from collecting the accrued wages if shown that
the delay in enforcing the reinstatement pending appeal was without fault on the part
of the employer.
Petitioners filed an appeal before the NLRC, in a Decision granted the appeal and
reversed the December 8, 2010 Decision of the LA and dismissed the complaint a
quo for lack of merit. On January 11, 2012, while the case was pending
appeal, respondent filed a Motion for Issuance of Writ of Execution seeking to collect
(a) the service incentive leave pay ordered in the September 30, 2011 Decision of the
NLRC, and (b) the equivalent wages from the issuance of the December 8, 2010
Decision of the LA ordering reinstatement until the finality of the September 30, 2011
Decision of the NLRC reversing the LA, or on November 5, 2011, as per Entry of
Judgment30 dated December 5, 2011.31
In an Order dated October 23, 2012, the LA granted respondent's motion and ordered
the issuance of a writ of execution for the total amount of P213,076.92
Subsequently, the NLRC granted the petition and modified the Order dated October
23, 2012 of LA Rioflorido by deleting the award of the supposed reinstatement
backwages in the amount of P201,538.46. It retained, however, the grant of service
incentive leave pay of P11,538.46.
Anent the deletion of the award of reinstatement backwages, the NLRC observed that
since respondent's dismissal was eventually determined to be legal, there is no more
basis for either payroll reinstatement backwages or separation pay.38
Respondent was prompted to elevate the matter via a petition for certiorari before the
CA the CA reversed the December 26, 2012 Decision and February 5, 2013 Resolution
of the NLRC, citing jurisprudence to the effect that the LA's order of reinstatement is
immediately executory; thus, the employer has to either re-admit the employee to work
under the same terms and conditions prevailing prior to his dismissal, or to reinstate
him in the payroll; and that even if such order of reinstatement is reversed on appeal,
the employer is still obliged to reinstate and pay the wages of the employee during the
period of appeal until reversal by a higher court or tribunal.
Petitioners moved for a reconsideration of the foregoing Decision, arguing that the
December 8, 2010 Decision of LA Amansec explicitly granted respondent, not
petitioners, the option of being reinstated or being paid separation pay, and that
respondent had not exercised said option. The motion was denied, however, in a
Resolution.
Issue: Whether or not the CA correctly reversed the NLRC ruling deleting the award of
reinstatement backwages in favor of respondent in the amount of P201,538.46
Ratio: Under Article 223 of the Labor Code, "the decision of the [LA] reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is concerned,
shall immediately be executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement x x x." Verily, the employer is duty-bound to reinstate the employee,
failing which, the employer is liable instead to pay the dismissed employee's salary.
However, in the event that the LA's decision is reversed by a higher tribunal, the
employer's duty to reinstate the dismissed employee is effectively terminated. This
means that an employer is no longer obliged to keep the employee in the actual service
or in the payroll. The employee, in tum, is not required to return the wages that he
had received prior to the reversal of the LA's decision. Notwithstanding the reversal of
the finding of illegal dismissal, an employer, who, despite the LA's order of
reinstatement, did not reinstate the employee during the pendency of the appeal up to
the reversal by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time of the reversal. By way
of exception, an employee may be barred from collecting the accrued wages if shown
that the delay in enforcing the reinstatement pending appeal was without fault on the
part of the employer.
In this case, petitioners contend that that they should not be faulted for failing to
enforce the December 8, 2010 Decision of LA Amansec which had given respondent
the option to receive separation pay in lieu of reinstatement for the reason that it was
respondent who failed to choose either relief. However the reinstatement aspect of the
LA's Decision is immediately executory and, hence, the active duty to reinstate the
employee devolves upon no other than the employer, even pending appeal.
In any event, petitioners have no one else to blame but themselves for misconstruing
LA Amansec's December 8, 2010 Decision, despite its straightforward language of
primarily directing MDC, as employer, to reinstate respondent. Clearly, the statement
of such directive is only secondarily followed by the alternative option given to
respondent. This is consistent with the above-stated conclusion that the duty to
reinstate is initiated by, as it only devolves upon, the employer from the time the LA
renders its Decision directing reinstatement.
OYSTER PLAZA HOTEL, ROLITO GO, AND JENNIFER
AMPEL, Petitioners, v. ERROL O. MELIVO, Respondent.
Doctrine: In quasi-judicial proceedings before the NLRC and its arbitration branch,
procedural rules governing service of summons are not strictly construed. Substantial
compliance thereof is sufficient. The constitutional requirement of due process with
respect to service of summons only exacts that the service of summons be such as
may reasonably be expected to give the notice desired. Once the service provided by
the rules reasonably accomplishes that end, the requirement of justice is answered,
the traditional notion of fair play is satisfied, and due process is served.
Facts: On October 22, 2009, respondent Melivo filed before the NLRC a Complaint for
illegal dismissal against petitioners Oyster Plaza Hotel, Rolito Go, and Jennifer Ampel.
The Summons, together with a copy of the complaint, was served on the petitioners
thru registered mail. The said summons ordered the petitioners to appear before the
Labor Arbiter for mandatory conciliation/mediation conferences. The registry return
receipt showed that the summons and the copy of the complaint were duly served. The
petitioners, however, failed to appear during the scheduled conferences. Thereafter,
the case was set for formal hearing and a notice of hearing was sent to the petitioners,
requiring them to appear before the LA and file their position paper, with a warning
that failure to appear therein would be construed as a waiver of the opportunity to be
heard. The notice, however, was returned unserved as there was no one to receive the
same. The formal hearing was, thus, reset and a notice of hearing was again sent to
the petitioners, wherein they were reminded to file their position paper. The registry
return receipt showed that the said notice was received by a certain Charlie Miraña. At
the hearing, however, only Melivo appeared.
On even date, Melivo filed his Position Paper, alleging the following: that Oyster Plaza
was a business entity engaged in the business of hotel operation, under the
ownership/management of Go and Ampel; that in August 2008, Oyster Plaza hired
him as a trainee room boy; that in November 2008, Oyster Plaza hired him as a
probationary room boy and he was made to sign an employment contract but he was
not furnished a copy, that the said contract expired in March 2009 and his work
ended; that on April 7, 2009, Oyster Plaza hired him again as a room boy, but without
any employment contract or document; and that in September 2009, his supervisor
Ampel verbally told him that his contract was expiring, thus, he must stop reporting
for work.
For the last time, another notice of hearing for the March 24, 2010, was again sent to
the petitioners with a directive to file their position paper, but it was again returned
unserved. Hence, the case was submitted for decision ex parte.
Issue: Whether or not the petitioners were deprived of their right to due process of law
as they were not properly served with summons
In Scenarios, Inc. vs. Vinluan, the Court considered as substantial compliance the
service of summons by registered mail at the respondent's place of business. The
Court explained therein that technical rules of procedure were not strictly applied in
quasi-judicial proceedings and only substantial compliance was required; and that the
notation in the registry receipt that "a registered article must not be delivered to
anyone but the addressee, or upon the addressee's written order" creates the
presumption that the persons who received the summons and notice were presumably
able to present a written authorization to receive them and, therefore, the notices were
presumed to be duly received in the ordinary course of events.
Similarly, in this case, the summons and notices were served by registered mail at the
petitioners' place of business. Thus, the person who received the same was presumed
authorized to do so. Consequently, the summons and notices were presumed to be
duly served. The burden of proving the irregularity in the service of summons and
notices, if any, is on the part of the petitioners. In this case, the petitioners clearly
failed to discharge that burden.
Ratio: Probation is the period during which the employer may determine if the
employee is qualified for possible inclusion in the regular force. The employer has the
right or is at liberty to choose who will be hired and who will be denied employment. In
that sense, it is within the exercise of the right to select his employees that the
employer may set or fix a probationary period within which the latter may test and
observe the conduct of the former before hiring him permanently. 33 An employee
allowed to work beyond the probationary period is deemed a regular employee.
In this case, Melivo was first hired as a trainee in August 2008. His training lasted for
three (3) months. As a room boy, his performance was certainly under observation.
Thus, it can be reasonably deduced that Melivo's probationary employment actually
started in August 2008, at the same time he started working as a trainee. Therefore,
when he was re-hired as room boy after his training period sometime in November
2008 he attained regular employment status.
Facts: Petitioner Ferraris, the owner and manager of petitioner DJIC, engaged the
services of respondent cashier for a monthly salary of P3,000.00.
Respondent averred that sometime in January 2005, she asked from petitioner
Ferraris the latter's share as employer in the SSS contributions and overtime pay for
the 11 hours of work respondent rendered per day at petitioner DJIC. Petitioner
Ferraris got infuriated and told respondent to seek another employment. This
prompted respondent to file her complaints. After learning of respondent's complaints,
petitioner Ferraris terminated respondent's employment.
The records, on the other hand, is bereft of any evidence linking to the allegation of
dismissal. In fact, there is no positive or unequivocal act on the part of petitioners that
would buttressed a fact that respondent was dismissed. The respondent did not
controvert the petitioners’ categorical denial and more, she failed to demonstrate the
burden. As such, the allegations of the respondent to the effect that she was dismissed
remains gratuitous.
Issue: Whether or not a cause of action belatedly included in the position paper and
not originally pleaded in the complaint can still be given cognizance
Held: Parties could allege and present evidence to prove any cause or causes of action
included, not only in the complaint, but in the position papers as well
Ratio: The record shows that respondent filed her complaint sometime in January
2005 and position paper on September 8, 2005. During said period, the 2002 NLRC
Rules of Procedure, as amended by NLRC Resolution No. 01-02, was still in effect. The
2005 Revised Rules of Procedure of the NLRC only took effect on January 7, 2006.
Section 4, Rule V of the 2002 NLRC Rules of Procedure, as amended, provides that the
Labor Arbiter shall direct both parties to submit simultaneously their position papers
with supporting documents and affidavits within an inextendible period of ten (10)
days from notice of termination of the mandatory conference. These verified position
papers to be submitted shall cover only those claims and causes of action raised in the
complaint excluding those that may have been amicably settled, and shall be
accompanied by all supporting documents including the affidavits of their respective
witnesses which shall take the place of the latter's direct testimony. The parties shall
thereafter not be allowed to allege facts, or present evidence to prove facts, not referred
to and any cause or causes of action not included in the complaint or position papers,
affidavits and other documents.
Stated differently, the parties could allege and present evidence to prove any cause or
causes of action included, not only in the complaint, but in the position papers as
well.
A complaint before the NLRC does not contain specific allegations of these wrongful
acts or omissions which constitute the cause of action. All that it contains is the term
by which such acts or omissions complained of are generally known. It cannot
therefore be considered as the final determinant of the cause of action.
Ratio: The Court of Appeals was correct in its observation that the Labor Arbiter's
quote on the shifting of the burden of proof in dismissal cases, supposedly from De
Paul, could not actually be found in said case. Yet, it does not necessarily mean that
the Labor Arbiter's ruling on the matter was fallacious or entirely baseless.
In Exodus International Construction Corporation v. Biscocho, the Court pronounced
that "in illegal dismissal cases, it is incumbent upon the employees to first establish
the fact of their dismissal before the burden is shifted to the employer to prove that
the dismissal was legal." The Court then explained the employer bears the burden of
proof to prove that the termination was for a valid or authorized cause." But before the
petitioners must bear the burden of proving that the dismissal was legal, the
respondent must first establish by substantial evidence that indeed they were
dismissed. If there is no dismissal, then there can be no question as to the legality or
illegality thereof.
The Court, in Cañedo v. Kampilan Security and Detective Agency, Inc., expressly
recognized the rule that in illegal dismissal cases, while the employer bears the burden
to prove that the termination was for a valid or authorized cause, the employee must
first establish by substantial evidence the fact of dismissal from service. The burden of
proving the allegations rests upon the party alleging and the proof must be clear,
positive and convincing. Thus, in this case, it is incumbent upon petitioner to prove
his claim of dismissal.
The Court reiterated in Brown Madonna Press, Inc. v. Casas29 that "[i]n illegal
dismissal cases, the employer has the burden of proving that the employee's dismissal
was legal. However, to discharge this burden, the employee must first prove, by
substantial evidence, that he had been dismissed from employment."
The appellate court applied the equipoise doctrine: with all things considered equal, all
doubts must be resolved in favor of labor, that is, respondent. Given the jurisprudence
cited in the preceding paragraphs, the application by the Court of Appeals of the
equipoise doctrine and the rule that all doubts should be resolved in favor of labor was
misplaced. As both the Labor Arbiter and the NLRC held, since respondent was unable
to establish with substantial evidence her dismissal from employment, the burden of
proof did not shift to petitioners to prove that her dismissal was for just or authorized
cause.
A. NATE CASKET MAKER AND/OR ARMANDO AND ANELY
NATE, Petitioners, v. ELIAS V. ARANGO, EDWIN M. MAPUSAO, JORGE C.
CARIÑO, JERMIE MAPUSAO, WILSON A. NATE, EDGAR A. NATE, MICHAEL A.
MONTALES, CELSO A. NATE, BENJES A. LLONA AND ALLAN A.
MONTALES, Respondent.
Doctrine: It should be remembered that the control test merely calls for the existence
of the right to control, and not necessarily the exercise thereof. It is not essential that
the employer actually supervises the performance of duties by the employee. It is
enough that the former has a right to wield the power. Hence, pakyaw workers are
considered regular employees for as long as their employers exercise control over
them. Thus, while respondents' mode of compensation was on a per-piece basis, the
status and nature of their employment was that of regular employees.
Facts: Petitioners are the owners/proprietors of A. Nate Casket Maker. They employed
respondents on various dates as carpenters, mascilladors and painters in their casket-
making business from 1998 until their alleged termination in March 2007. Petitioners
alleged in their Position Paper that respondents are pakyaw workers who are paid per
job order.7 Respondents are "stay-in" workers with free board and lodging, but they
would "always" drink, quarrel with each other on petty things such that they could not
accomplish the job orders on time. Hence, petitioners would then be compelled to
"contract out" to other workers for the job to be finished. On February 3, 2007, they
met with respondents in order to present a proposed employment agreement which
would change the existing pakyaw system to "contractual basis" and would provide for
vacation leave and sick leave pay and other benefits given to regular employees.
Petitioners alleged that the proposed employment agreement would be more beneficial
to respondents.
On the other hand, respondents alleged in their Position Paper, that they worked from
Monday to Saturday, from 7:00a.m. to 10:00 p.m., with no overtime pay and any
monetary benefits despite having claimed for such. On March 15, 2007, they were
called by petitioners and were made to sign a Contract of Employment with the
following terms and conditions: (1) they shall be working on contractual basis for a
period of five months; (2) renewal of employment contract after such period shall be on
a case-to-case basis or subject to respondents' efficiency and performance; (3)
petitioners shall reserve the right to terminate their employment should their
performance fall below expectations or if the conditions under which they were
employed no longer exist; (4) their wages shall be on a piece-rate basis; (5) in the
performance of their tasks, they shall be obliged to strictly follow their work schedules;
(6) they shall not be eligible to avail of sick leave or vacation leave, nor receive
13th month pay and/or bonuses, or any other benefits given to a regular employee.
Respondents then alleged that when they were adamant and eventually refused to sign
the contract, petitioners told them to go home because their employment has been
terminated.
On February 8, 2007, respondents filed a Complaint for illegal dismissal and non-
payment of separation pay against petitioners. On March 15, 2007, they amended the
complaint to include claims for underpayment of wages, non-payment of overtime pay,
holiday pay, 5-day service incentive leave pay and 13th month pay.
Ratio: As correctly observed by the CA, there was the absence of proof to show that
petitioners conducted an investigation on the alleged drinking and petty quarrelling of
respondents nor did the petitioners provide respondents with an opportunity to
explain their side with respect to charges against them. The validity of the charge
must be established in a manner consistent with due process.
In termination cases, the burden of proving just and valid cause for dismissing an
employee from his employment rests upon the employer, and the latter's failure to do
so would result in a finding that the dismissal IS unjustified. Petitioners failed to
discharge this burden.
It must be emphasized that employers cannot seek refuge under whatever terms of the
agreement they had entered into with their employees. The law, in defining their
contractual relationship, does so, not necessarily or exclusively upon the terms of
their written or oral contract, but also on the basis of the nature of the work of
employees who had been called upon to perform. The law affords protection to an
employee, and it will not countenance any attempt to subvert its spirit and intent. A
stipulation in an agreement can be ignored as and when it is utilized to deprive the
employee of his security of tenure. The sheer inequality that characterizes employer
employee relations, where the scales generally tip against the employee, often scarcely
provides him real and better options.
Issue: Whether respondents who are pakyaw workers and considered regular workers
are entitled to overtime pay, holiday pay, service incentive leave pay and 13 th month
pay
Held: Pakyaw workers are considered regular employees for as long as their
employers exercise control over them
Ratio: A regular employment, whether it is one or not, is aptly gauged from the
concurrence, or the non-concurrence, of the following factors (a) the manner of
selection and engagement of the putative employee; (b) the mode of payment of wages;
(c) the presence or absence of the power of dismissal; and (d) the presence or absence
of the power to control the conduct of the putative employee or the power to control
the employee with respect to the means or methods by which his work is to be
accomplished. The "control test" assumes primacy in the overall consideration. Under
this test, an employment relation obtains where work is performed or services are
rendered under the control and supervision of the party contracting for the service,
not only as to the result of the work but also as to the manner and details of the
performance desired.
There is no dispute that the tasks performed by respondents as carpenters, painters,
and mascilladors were necessary and desirable in the usual business of petitioners
who are engaged in the manufacture and selling of caskets. The Court have to also
consider the length of time that respondents worked for petitioners, commencing on
various dates from 1998 to 2007. In addition, the power of control of petitioners over
respondents is clearly present in this case. Respondents follow the steps in making a
casket, as instructed by the petitioners, like carpentry, mascilla, rubbing and painting.
They had their own notebooks where they listed the work completed with their
signature and the date finished. The same would be checked by petitioners as basis
for the compensation for the day. Thus, petitioners wielded control over the
respondents in the discharge of their work.
It should be remembered that the control test merely calls for the existence of the right
to control, and not necessarily the exercise thereof. It is not essential that the
employer actually supervises the performance of duties by the employee. It is enough
that the former has a right to wield the power. Hence, pakyaw workers are considered
regular employees for as long as their employers exercise control over them. Thus,
while respondents' mode of compensation was on a per-piece basis, the status and
nature of their employment was that of regular employees.
Doctrine: A Retirement Plan in a company partakes the nature of a contract, with the
employer and the employee as the contracting parties. It creates a contractual
obligation in which the promise to pay retirement benefits is made in, consideration of
the continued faithful service of,the employee for the requisite period. Being a
contract, the employer and employee may establish such stipulations, clauses, terms
and conditions as they may deem convenient.
Facts: Perez started her employment with [CII] on 16 July 1988 and became a regular
employee thereof on 01 September 1988. After years of working and after several
promotions, she was eventually appointed as Marketing Manager. She held this
position from 1998 up to 10 January 2009, the date when she resigned from her work.
CII has a retirement program for its managerial employees or officers covered by
"Comparts Industries, Inc. Employees Retirement Plan” which took effect on 01 June
1999 and was amended on 25 January 2001. Included therein are provisions relating
to optional or early retirement and optional retirement benefits.
Prior to her resignation, Perez manifested to CII her intention to avail of the optional
retirement program since she was already qualified to retire under it. Her application
was denied. Perez asked for reconsideration of the denial of her application for
optional retirement. In response, Perez was informed by CII that it could only give her
Php100,000.00 as gratuity for her twenty years of service as this was the only amount
it could afford. Perez refused the offer.
Perez received a letter from CII which contained the, acceptance of her resignation
effective 10 January 2009. The letter likewise contained CIFs denial of Perez's claim
for optional retirement benefits or separation pay.
At this point, Perez filed a Complaint with the NLRC. On the whole, Perez asked for
payment of separation pay under all circumstances of severance of employment,
including separation pay due to a retrehchment.
Held: No, termination of employment by the employee, as in this instance, does not
entitle the employee to separation pay.
Ratio: At the outset, the Court note that Perez intended to end her employment
desiring, however, to receive separation pay in any form and from any source, thus
persistently asking for either availment pf an optional retirement scheme whether
under the Retirement Plan for CII Officers, or the CBA. Covering all scenarios to
ensure her receipt of a separation package, she even requested inclusion in CII's
retrenchment plan. Essentially, Perez exercised her right to terminate the employment
relationship by resigning, simultaneously invoking a hodgepodge of provisions from
the Retirement Plan, CBA, from the retrenchment provisions of the Labor Code, from
well-settled jurisprudence, and from the supposed company practice for the payment
of optional retirement benefits to managerial employees.
First and foremost, the Court emphasize that termination of employment by the
employee, as in this instance, does not entitle the employee to separation
pay. Separation pay is that amount which an employee receives at the time of his
severance from employment, designed to provide the employee with the wherewithal
during the period that he is looking for another employment and is recoverable only in
instances enumerated under Articles 283 and 284 of the Labor Code or in illegal
dismissal cases when reinstatement is not feasible.
Second, in the matter of Perez's entitlement to optional retirement benefits, the Court
agree with the NLRC and the appellate court that as a managerial employee, she is
covered by the Retirement Plan for CII Officers which took effect in 1999 and was
amended in 2001.
A Retirement Plan in a company partakes the nature of a contract, with the employer
and the employee as the contracting parties. It creates a contractual obligation in
which the promise to pay retirement benefits is made in, consideration of the
continued faithful service of,the employee for the requisite period. Being a contract,
the employer and employee may establish such stipulations, clauses, terms and
conditions as they may deem convenient.
Perez contends that as she had already completed the minimum number of years to
avail of the optional retirement, she has acquired a vested right to her optional
retirement benefits. Such contention is misplaced.
Clearly, contrary to the stance of Perez, she has not acquired a vested right to optional
retirement benefits by the mere fact of her rendering at least fifteen (15) years of
credited service.