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Recent Supreme Court Decision on Labor Cases

Recent Supreme Court Decision on Labor Cases. by: Atty. Allan S. Montano Commissioner, Tripartite Voluntary Arbitration Advocacy Council Practicing Lawyer. COCA-COLA BOTTLERS PHILS., INC., VS. ALAN M. AGITO, ET AL., (February 13, 2009, G.R. No.179546).

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Recent Supreme Court Decision on Labor Cases

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  1. Recent Supreme Court Decisionon Labor Cases by: Atty. Allan S. Montano Commissioner, Tripartite Voluntary Arbitration Advocacy Council Practicing Lawyer

  2. COCA-COLA BOTTLERS PHILS., INC., VS. ALAN M. AGITO, ET AL., (February 13, 2009, G.R. No.179546). “A legitimate job contract, wherein an employer enters into a contract with a job contractor for the performance of the former’s work, is permitted by law.  Thus, the employer-employee relationship between the job contractor and his employees is maintained. In legitimate job contracting, the law creates an employer-employee relationship between the employer and the contractor’s employees only for a limited purpose, i.e., to ensure that the employees are paid their wages.  The employer becomes jointly and severally liable with the job contractor only for the payment of the employees’ wages whenever the contractor fails to pay the same.  Other than that, the employer is not responsible for any claim made by the contractor’s employees.” 

  3. COCA-COLA BOTTLERS PHILS., INC., VS. ALAN M. AGITO, ET AL., (February 13, 2009, G.R. No.179546). “On the other hand, labor-only contracting is an arrangement wherein the contractor merely acts as an agent in recruiting and supplying the principal employer with workers for the purpose of circumventing labor law provisions setting down the rights of employees.  It is not condoned by law.  A finding by the appropriate authorities that a contractor is a “labor-only” contractor establishes an employer-employee relationship between the principal employer and the contractor’s employees and the former becomes solidarily liable for all the rightful claims of the employees.”

  4. COCA-COLA BOTTLERS PHILS., INC., VS. ALAN M. AGITO, ET AL., (February 13, 2009, G.R. No.179546). “However, in Vinoya v. NLRC, we clarified that it was not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises, etc., to be considered an independent contractor.  In fact, jurisprudential holdings were to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether the contractor was carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the workers; the power of the employer with respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.”

  5. COCA-COLA BOTTLERS PHILS., INC., VS. ALAN M. AGITO, ET AL., (February 13, 2009, G.R. No.179546). “Thus, in San Miguel Corporation, the investment of MAERC, the contractor therein, in the form of buildings, tools, and equipment of more than P4,000,000.00 did not impress the Court, which still declared MAERC to be  a labor-only contractor.  In another case, Dole Philippines, Inc. v. Esteva,  the Court did not recognize the contractor therein as a legitimate job contractor, despite its paid-up capital of over P4,000,000.00, in the absence of substantial investment in tools and equipment used in the services it was rendering.”

  6. JUANITO A. GARCIA, ET. AL VS. PHILIPPINE AIRLINES, INC.(January 20, 2009, G.R. No.164856) “The view as maintained in a number of cases is that:         x x x [E]ven ifthe order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand,if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. (Emphasis in the original; italics and underscoring supplied) “

  7. JUANITO A. GARCIA, ET. AL VS. PHILIPPINE AIRLINES, INC.(January 20, 2009, G.R. No.164856) “In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately executory.  Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith.”

  8. JUANITO A. GARCIA, ET. AL VS. PHILIPPINE AIRLINES, INC.(January 20, 2009, G.R. No.164856) “The opposite view is articulated in Genuino which states: If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices.  However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund.

  9. JUANITO A. GARCIA, ET. AL VS. PHILIPPINE AIRLINES, INC.(January 20, 2009, G.R. No.164856) Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision. (Emphasis, italics and underscoring supplied).”

  10. JUANITO A. GARCIA, ET. AL VS. PHILIPPINE AIRLINES, INC.(January 20, 2009, G.R. No.164856) “The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.  It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employee’s salaries.”

  11. JUANITO A. GARCIA, ET. AL VS. PHILIPPINE AIRLINES, INC.(January 20, 2009, G.R. No.164856) “In sum, the obligation to pay the employee’s salaries upon the employer’s failure to exercise the alternative options under Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate rehabilitation.”

  12. UNIVERSITY OF SAN AGUSTIN, INC. VS. USAEU-FFW(July 23, 2009, G.R. No.177594) “In Cebu Institute, the Court held that SSS contributions and other benefits can be charged to the 70% and that the academic institution has the discretion to dispose of the said 70% with the precondition that the disposition goes to the payment of salaries, wages, allowances and other benefits of its personnel, viz:

  13. UNIVERSITY OF SAN AGUSTIN, INC. VS. USAEU-FFW(July 23, 2009, G.R. No.177594) For sure, the seventy percent (70%) is not to be delivered whole to the employees but packaged in the form of salaries, wages, allowances, andotherbenefits which may be in the form of SSS, Medicare and Pag-Ibig premiums, all intended for the benefit of the employees.  In other words, the private educational institution concerned has the discretion on the disposition of the seventy percent (70%) incremental tuition fee increase.  It enjoys the privilege of determining how much increase in salaries to grant and the kind and amount of allowances and other benefits to give.  The only precondition is that seventy percent (70%) of the incremental tuition fee increase goes to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel.  (Emphasis supplied)”

  14. UNIVERSITY OF SAN AGUSTIN, INC. VS. USAEU-FFW(July 23, 2009, G.R. No.177594) “Significantly, this ruling was arrived at in the absence of a CBA between the parties, unlike in the present case.”

  15. UNIVERSITY OF SAN AGUSTIN, INC. VS. USAEU-FFW(July 23, 2009, G.R. No.177594) “On the other hand, in Centro Escolar University, the issue was whether the University may source from the 70% incremental proceeds (IP) the integrated IP incorporated into the salaries of its teaching and non-teaching staff pursuant to the CBAs entered into by their union.   The controversy arose because the CBA provided different types of salary increases – some sourced from the University fund and the salary increases brought about by the IP integration which are deducted from the IP.  The Court held that the charging of the integrated IP against the 70% is not violative of the CBA which prohibits the deduction of the CBA-won benefits from the 70% of the IP because the integrated IP provided for in the CBAs of the teaching and the non-teaching staff is actually the share of the employees in the 70% of the IP that is incorporated into their salaries as a result of the negotiation between the university and its personnel.

  16. UNIVERSITY OF SAN AGUSTIN, INC. VS. USAEU-FFW(July 23, 2009, G.R. No.177594) “Even a perusal of the law will show that it does not make 70%  as the mandated ceiling”. “It is axiomatic that labor laws setting employee benefits only mandate the minimum that an employer must comply with, but the latter is not proscribed from granting higher or additional benefits if it so desires, whether as an act of generosity or by virtue of  company policy or a CBA, as it would appear in this case.  While, in following to the letter the subject CBA provision petitioner will, in effect, be giving more than 80% of the TIP as its personnel’s share in the tuition fee increase, petitioner’s remedy lies not in the Court’s invalidating the provision, but in the parties’ clarifying the same in their subsequent CBA negotiations.”

  17. TRIUMPH INTERNATIONAL PHILIPPINES, INC. VS. RAMON L. APOSTOL AND BEN OPULENCIA(June 16, 2009, G.R. No.164423) “Apostol and Opulencia were dismissed mainly on ground of fraud or willful breach of trust.  As previously mentioned, fraud or willful breach of the employer’s trust is a just cause for termination of employment under Article 282(c) of the Labor Code. This provision is premised on the fact that the employee concerned holds a position of trust and confidence, a situation which exists where such employee is entrusted by the employer with confidence on delicate matters, such as care and protection, handling or custody of the employer’s property.  But, in order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer.” 

  18. TRIUMPH INTERNATIONAL PHILIPPINES, INC. VS. RAMON L. APOSTOL AND BEN OPULENCIA(June 16, 2009, G.R. No.164423) “Recent decisions of this Court have distinguished the treatment of managerial employees from that of the rank-and-file personnel, insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal.  Hence, in the case of managerial employees, proof beyond reasonable doubt is not required.  It is sufficient that there is some basis for the employer’s loss of trust and confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position.  Nonetheless, the evidence must be substantial and must establish clearly and convincingly the facts on which the loss of confidence rests and not on the employer’s arbitrariness, whims, and caprices or suspicion.”

  19. ROWELL INDUSTRIAL CORPORATION, HON. COURT OF APPEALS and JOEL TARIPE (March 7, 2007 G.R. No. 167714) “The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories, namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the employer; (2)  project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.”

  20. ROWELL INDUSTRIAL CORPORATION, HON. COURT OF APPEALS and JOEL TARIPE (March 7, 2007 G.R. No. 167714) “Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular employees by years of service.  The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year.”

  21. ROWELL INDUSTRIAL CORPORATION, HON. COURT OF APPEALS and JOEL TARIPE (March 7, 2007 G.R. No. 167714) “The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an employment contract with a fixed period.  It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities.  There is nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties.  What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment.  The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status.  Management has rights which should also be protected.”

  22. ROWELL INDUSTRIAL CORPORATION, HON. COURT OF APPEALS and JOEL TARIPE (March 7, 2007 G.R. No. 167714) “Settled is the rule that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the employer.  The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.”  

  23. THANK YOU SO MUCH FOR LISTENING…

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