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).
“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 employeremployee 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.”
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.”
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.”
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.”
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 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.
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) “
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.”
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.
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).”
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 readmit 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.”
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.”
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:
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, and other benefits 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)”
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.”
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.
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.”
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.”
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.”
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.”
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.”
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.”
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.”
THANK YOU SO MUCH FOR LISTENING…