Laguna Labor Management Council Seventh Convention on Legal Updates on Employment Relations

(August 2018)

1. Is the concept “management prerogative” still true and valid?

Employee’s Constutional Rights to Participate and to Self-organize:

 Samahan ng Manggawa sa Hanjin Shipyard vs, BLR (G.R. No, 211145, 14 Oct 2015)
Hanjin (employer) desires to cancel the registration of the Samahan’s association and to remove the
name of “Hanjin Shipyard” in the association’s name. The employer argues that only ambulant,
intermittent, itinerant, rural workers, self-employed, and those without definite employers may form
a workers' association. It further posited that one third (1/3) of the members of the association had
definite employers and the continued existence and registration of the association

Membership: the existence of employer-employee relationship is not mandatory in the formation of

workers' association. What the law simply requires is that the members of the workers' association,
at the very least, share the same interest. The very definition of a workers' association speaks of
"mutual aid and protection."

There is nothing in the foregoing implementing rules which provides that workers, with definite
employers, cannot form or join a workers' association for mutual aid and protection. Section 2
thereof even broadens the coverage of workers who can form or join a workers' association. Thus,
the Court agrees with Samahan's argument that the right to form a workers' association is not
exclusive to ambulant, intermittent and itinerant workers. The option to form or join a union or a
workers' association lies with the workers themselves, and whether they have definite employers or
not.

Association’s Name: It would be misleading for the members of Samahan to use "Hanjin Shipyard"
in its name as it could give the wrong impression that all of its members are employed by Hanjin.
Removal of the name has no abridgement of Samahan's right to self-organization was committed.

Civil law principle of Abuse of Right:

 Abuse of Right Doctrine trumps Management Prerogative (SSS v. Ubaña, G.R. No. 200114. 24
Aug. 2015) [Ponencia: Del Castillo]
Debbie Ubaña was hired as a “transitory employee” and she has worked for 6 years even her Service
Contract Agreement was never renewed, but she was required to work for SSS continuously under
different assignments at the same time, she was constantly assured of being absorbed into the SSS
plantilla. she was forced to resign on August 26, 2002 as she could no longer stand being exploited,
the agony of dissatisfaction, anxiety, demoralization, and injustice.

The Supreme Court ruled in favor of Debbie Ubaña. It was ruled upon this decision that there is no
existing employer-employee relationship between Ubaña and SSS (thus not being covered by the
Labor Code). She is now claiming proper payment of wages under Article 19 and 20 of the Civil
Code. SSS may not hide under its service contracts to deprive respondent of what is justly due her.
In this jurisdiction, the “long honored legal truism of ‘equal pay for equal work’” has been
“impregnably institutionalized;” “[p]ersons who work with substantially equal qualifications, skill,
effort and responsibility, under similar conditions, should be paid similar salaries.”
 2. May a human resource manager be dismissed for “lack of working knowledge of labor laws”?

 YES. (Flordeliza Maria Reyes-Rayel v. Phil Luen Thai Holdings, G.R. No. 174893, 11 Jul 2012)
In the leading jurisprudence, there were 2 other factors aside from “lack of working knowledge of labor laws”
of the HR manager: First, records show that petitioner indeed unreasonably failed to effectively communicate
with her immediate superior. There was an apparent neglect in her obligation Second, the affidavits of
petitioner’s co-workers revealed her negative attitude and unprofessional behavior towards them and the
company.

However, the Supreme Court emphasized the lack of knowledge as the most important display of inefficiency
and ineptitude in her job as a CHR Director. She gave wrong information regarding issues on leave and
holiday pay which generated confusion among employees in the computation of salaries and wages. The
employee is expected to have strong working knowledge of labor laws and regulations to help shed light on
issues and questions regarding the same instead of complicating them.

3. What is a prerequisite for a DOLE regional director to exercise visitorial-enforcement powers under
Article 1281 of the Labor Code?

 The existence of employer-employee relationship

The Secretary of Labor or any of his/her authorized representatives, is granted visitorial and enforcement
powers for the purpose of determining violations of, and enforcing, the Labor Code and any labor law,
wage order, or rules and regulations issued pursuant thereto. Indispensable to the DOLE' s exercise of
such power is the existence of an actual employer-employee relationship between the parties.

The determination of the existence of employer-employee relationship is still primarily lodged with the
NLRC. This is the meaning of the clause "in cases where the relationship of employer-employee still
exists" in Art. 128 (b ).

Thus, before the DOLE may exercise its powers under Article 128, two important questions must be
resolved: (I) Does the employer-employee relationship still exist, or alternatively, was there ever an
employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any
labor law?

4. May an employee have several employers under one employment contract? May a U.S. company, which is
operating in the Philippines without being registered with SEC, BIR, etc., validly dismiss an employee?

1
ARTICLE 128. Visitorial and Enforcement Power –
(a) The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to
employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy
therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or
which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly
authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2, 1994) xxx
  Several Employers is INVALID. (American Power Convention Corp (APCC) vs. Jason Yu Lim,
G.R. No. 214291, 11 January 2018) [Ponencia: Del Castillo]

The case have this unique situation where respondent was hired directly by APCC of the U.S.A., but was
being paid his remuneration by a separate entity-APCP BV of the Philippines, and is supervised and
controlled by APCS from Singapore and APC Japan - all in furtherance of APCC's objective of doing
business here unfettered by government regulation.

The only SEC-registered corporation then was American Power Conversion (Phils.), Inc. (APCPI) with
manufacturing and production facilities in Cavite and Laguna. Since American Power Conversion
Philippine Sales Office was unregistered but doing business in the country, respondent was included in
the list of employees and payroll of A.PCP!.

It would seem that all of the petitioners are for all practical purposes Jason's employers. He was selected
and engaged by APCC. His salaries and benefits were paid by APCP BV. And he is under the supervision
and control of APCS and APC Japan. But of course, there is no such thing in legitimate employment
arrangements. This bizarre labor relation was made possible and necessary only by the petitioners'
common objective: to enable APCC to skirt the law. For all legal purposes, APCC is Jason's
employer. It is null and void for being contrary to law and public policy as it is in furtherance of an
illegal scheme perpetrated by APCC with the aid of the other APC

And from a labor standpoint, they are all guilty of violating the Labor Code as a result of their concerted
acts of fraud and misrepresentation upon the respondent, using him and placing him in a precarious
position without risk to themselves, and thus deliberately disregarding their fundamental obligation to
afford protection to labor and insure the safety of their employees.

Supreme Court said that all of them are employers. All of them are liable. The issue on
redundancy is fake. The hiring is fake. The whole operation is fake. (Azucena) No one can runaway
from their liability.

5. What is “employment avoidance”? Is “labor contracting” a form of “employment avoidance”?

 Skirting a regular employee under some other legal temporary employment contract; entering
into a fixed term contract regularly or putting a different nomenclature on what seems to be an
employment contract. (Nelson Begino vs. ABS-CBN, G.R. No. 199166. 20 April 2015)

The petitioners are cameramen/editors for TV Broadcasting reporters employed through Talent Contracts
and their services are regularly renewed over the years. The Court finds that, notwithstanding the
nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and condition
embodied therein, petitioners are regular employees of ABS-CBN. The reporters and camera mans were
purported to be talents. avoid paying what is due them, however, ABS-CBN purportedly resorted to the
simple expedient of using said Talent Contracts and/or Project Assignment Forms which denominated
petitioners as talents, despite the fact that they are not actors or TV hosts of special skills.

The petitioners are under the control of ABS-CBN proven by the facts under the stipulation of a contract.

The nature of the employment depends, after all, on the nature of the activities to be performed by the
employee, considering the nature of the employer’s business, the duration and scope to be done, and, in some
cases, even the length of time of the performance and its continued existence. In the same manner that the
practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid
and compliant with labor law, it has, consequently, been ruled that the assertion that a talent contract exists
does not necessarily prevent a regular employment status.

6. Are part time employees entitled to retirement benefit under the Labor Code?
  As a part-time employee with fixed-term employment, Bernardo is entitled to retirement benefits.
(De la Salle Araneta University vs. Juanito Bernardo, G.R. No. 190809, 13 February 2017).

In the present case, DLS-AU, through Dr. Bautista, denied Bernardo's claim for retirement benefits
because only full-time permanent faculty of DLS-AU are entitled to said benefits pursuant to university
policy and the CBA. Since Bernardo has not been granted retirement benefits under any agreement with
or by voluntary act of DLS-AU

The Labor Advisory made clear of the advisory which is affirmed by the SC: RA 7641 or the Retirement
Pay Law shall apply to all employees in the private sector, regardless of their position, designation or
status and irrespective of the method by which their wages are paid. They shall include part-time
employees, employees of service and other job contractors and domestic helpers or persons in the
personal service of another.

Prescriptive period: The prescriptive period did not run after the compulsory retirement age which is 65.
It started to run when he was denied re-employment (at age 75) and he starting to claim his retirement
benefits. (arguendo that 65 is the rule, DLSU-AU is estopped for still rehiring him for the next 10 years).

7. Does the two-notice rule apply when an employee has to be terminated on the ground of disease?

 The twin-notice requirement applies to terminations under Article 284 of the Labor Code. (Marlo a.
Deoferio vs. Intel Technology Philippines, Inc. G.R. No. 202996. June 18, 2014)

The Labor Code and its IRR are silent on the procedural due process required in terminations due to
disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly states
that the employee should be afforded procedural due process in all cases of dismissals

In Sy v. Court of Appeals and Manly Express, Inc. v. Payong, Jr., promulgated in 2003 and 2005,
respectively, the Court finally pronounced the rule that the employer must furnish the employee two
written notices in terminations due to disease, namely: (1) the notice to apprise the employee of the
ground for which his dismissal is sought; and (2) the notice informing the employee of his dismissal, to
be issued after the employee has been given reasonable opportunity to answer and to be heard on his
defense. These rulings reinforce the State policy of protecting the workers from being terminated without
cause and without affording them the opportunity to explain their side of the controversy.

8. Are employees strikers, whose dismissal was declared illegal, entitled to backwages for the period they
were on strike?

 No they are not entitled to backwages during the period they were on strike but entitled to
nominal damages provided that these employees are dismissed illegally due to based on a valid
cause but lacked compliance with procedural due process

The dismissed employees participated in illegal strikes (without DOLE permit). HSBC refuses to give
backwages hinging on the doctrine under Agabon.

There are for two types of illegal dismissal - the first type was made without both substantive and
procedural due process, while the other was based on a valid cause but lacked compliance with
procedural due process. To the first type belonged the dismissal of Fermin, Fagutao and the 18 employees
initially identified by the NLRC, while the second type included the rest of the other petitioners. Agabon
involved the second type of dismissal, not the first type to which the 18 employees belonged. The rule
for employees unlawfully terminated without substantive and procedural due process is to entitle them
to the reliefs provided under Article 279 of the Labor Code. However, the award of backwages is subject
to the settled policy that when employees voluntarily go on strike, no backwages during the strike shall
be awarded.

In Agabon, we said that a dismissal based either on a just or authorized cause but effected without due
process should be upheld. The employer should be nonetheless liable for non-compliance with
procedural due process by paying indemnity in the form of nominal damages amounting to P30,000.00