(SOURCES OF PHIL.

LABOR LAWS)

G.R. No. 204944-45               December 3, 2014

FUJI TELEVISION NETWORK, INC., Petitioner,

vs.
ARLENE S. ESPIRITU, Respondent.

It is the burden of the employer to prove that a person whose services it pays for is an independent
contractor rather than a regular employee with or without a fixed term. That a person has a disease
does not per se entitle the employer to terminate his or her services. Termination is the last resort. At
the very least, a competent public health authority must certify that the disease cannot be cured
within six ( 6) months, even with appropriate treatment.

In labor cases, the quantum of proof required is substantial evidence.  "Substantial evidence" has
136

been defined as "such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion."

In complaints for illegal dismissal, the burden of proof is on the employee to prove the fact of
dismissal.  Once the employee establishes the fact of dismissal, supported by substantial evidence,
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the burden of proof shifts to the employer to show that there was a just or authorized cause for the
dismissal and that due process was observed.

LABOR

Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.

The State shall promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.

The four-fold test  can be used in determining whether an employer-employee relationship exists.
180

The elements of the four-fold test are the following: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control, which
is the most important element. 181

The "power of control" was explained by this court in Corporal, Sr. v. National Labor Relations
Commission: 182
The power to control refers to the existence of the power and not necessarily to the actual exercise
thereof, nor is it essential for the employer to actually supervise the performance of duties of the
employee. It is enough that the employer has the right to wield that power.  (Citation omitted)
183

The test for determining regular employment is whether there is a reasonable connection between
the employee’s activities and the usual business of the employer. Article 280 provides that the
nature of work must be "necessary or desirable in the usual business or trade of the employer" as
the test for determining regular employment. 

Art. 279. Security of tenure.In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause of when authorized by this Title. An employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.

Thus, on the right to security of tenure, no employee shall be dismissed, unless there are just
orauthorized causes and only after compliance with procedural and substantive due process is
conducted.

For dismissal under Article 284 to bevalid, two requirements must be complied with: (1) the
employee’s disease cannot be cured within six (6) months and his "continued employment is
prohibited by law or prejudicial to his health as well as to the health of his co-employees"; and (2)
certification issued by a competent public health authority that even with proper medical treatment,
the disease cannot be cured within six (6) months.  The burden of proving compliance with these
237

requisites is on the employer.  Noncompliance leads to the conclusion that the dismissal was illegal.
238

Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a

matter of right. . . .

To protect labor’s security of tenure, we emphasize that the doctrine of "strained relations" should be
strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement.
Every labor dispute almost always results in "strained relations" and the phrase cannot be given an
overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.

(BALANCING OF INTERESTS)

G.R. No. 202961               February 4, 2015

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, BONIFACIO

MATUNDAN, NORA MENDOZA, et al., Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ·SOLID MILLS, INC., and/or PHILIP
ANG, Respondents.

Employer held in abeyance the benefits and other monetary claims of the employees due to the
failure of the employees to settle their accountabilities which is to return the awarded properties to
the latter during the existence of employer-employee relationship between the parties.
(Claims arising from an employer-employee relationship are not limited to claims by an employee.
Employers may also have claims against the employee, which arise from the same relationship. In
Bañez v. Valdevilla,  this court ruled that Article 217 of the Labor Code also applies to employers’
74

claim for damages, which arises from or is connected with the labor issue. Thus: Whereas this Court
in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for
damages filed by employees, we hold that by the designating clause "arising from the employer-
employee relations" Article 217 should apply with equal force to the claim of an employer for actual
damages against its dismissed employee, where the basis for the claim arises from or is necessarily
connected with the factof termination, and should be entered as a counterclaim in the illegal
dismissal case.

As a general rule, therefore, a claim only needs to be sufficiently connected to the labor issue
raisedand must arise from an employeremployee relationship for the labortribunals to have
jurisdiction.

As a general rule, employers are prohibited from withholding wages from employees. The Labor
Code provides:

Art. 116. Withholding of wages and kickbacks prohibited.It shall be unlawful for any person, directly
or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of
his wages by force, stealth, intimidation, threat or by any other means whatsoever without the
worker’s consent.

The Labor Code also prohibits the elimination or diminution of benefits. Thus:

Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.

However, our law supports the employers’ institution of clearance procedures before the release of
wages. As an exception to the general rule that wages may not be withheld and benefits may not be
diminished, the Labor Code provides:

Art. 113. Wage deduction.No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:

1. In cases where the worker is insured with his consent by the employer, and the deduction
is to recompense the employer for the amount paid by him as premium on the insurance;

2. For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and

3. In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment. (Emphasis supplied)

The Civil Code provides that the employer is authorized to withhold wages for debts due:

Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It includes any
accountability that the employee may have to the employer. There is no reason to limit its scope to
uniforms and equipment, as petitioners would argue.)

Our laws provide for a clear preference for labor. This is in recognition of the asymmetrical power of
those with capital when they are left to negotiate with their workers without the standards and
protection of law. In cases such as these, the collective bargaining unit of workers are able to get
more benefits and in exchange, the owners are able to continue with the program of cutting their
losses or wind down their operations due to serious business losses. The company in this case did
all that was required by law.

The preferential treatment given by our law to labor, however, is not a license for abuse.  It is not a
84

signal to commit acts of unfairness that will unreasonably infringe on the property rights of the
company. Both labor and employer have social utility, and the law is not so biased that it does not
find a middle ground to give each their due.

(CONSTRUCTION IN FAVOR OF LABOR)

In the interpretation of their provisions, labor contracts require the resolution of doubts in favor of the
laborer because of their being imbued with social justice considerations. This rule of interpretation is
demanded by the Labor Code  and the Civil Code.
1 2

Both the Labor Arbiter  and the National Labor Relations Commission (NLRC)  resolved the doubt in
3 4

favor of the employer when it held that respondent Aguinaldo Naluis (Naluis) had been properly
repatriated, and, consequently, not illegally dismissed. However, on April 23, 2003, the Court of
Appeals (CA) set aside their resolutions, and ruled to the contrary.  Hence, this appeal by the
5

employer.

It is fundamental that in the interpretation of contracts of employment, doubts are generally resolved
in favor of the worker.  It is imperative to uphold this rule herein. Hence, any doubt or vagueness in
16

the provisions of the contract of employment should have been interpreted and resolved in favor of
Naluis.

Article 4. Construction in favor of labor. All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.

 Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor
2

of the safety and decent living for the laborer.

(MANAGEMENT PREROGATIVES)

G.R. No. 212003

PHILIPPINE SPAN ASIA CARRIERS CORPORATION (FORMERLY SULPICIO LINES,

INC.), Petitioner
vs.
HEIDI PELAYO, Respondent

Pelayo was employed by Sulpicio Lines as an accounting clerk at its Davao City branch office. As
accounting clerk, her main duties were "to receive statements and billings for processing of
payments, prepare vouchers and checks for the approval and signature of the branch manager, and
release checks for payment." 8

Sulpicio Lines uncovered several anomalous transactions in its Davao City branch office.

Pelayo was subjected to investigation and was put in preventive suspension for 30 days, hence, she
filed a Complaint against Sulpicio Lines charging it with constructive dismissal.

While adopted with a view "to give maximum aid and protection to labor,"  labor laws are not to be
42

applied in a manner that undermines valid exercise of management prerogative.

Indeed, basic is the recognition that even as our laws on labor and social justice impel a "preferential
view in favor of labor,"

[e]xcept as limited by special laws, an employer is free to regulate, according to his own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place and manner of work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work.  (Emphasis supplied).
43

The validity of management prerogative in the discipline of employees was sustained by this Court
in Philippine Airlines v. National Labor Relations Commission,  "In general, management has the
44

prerogative to discipline its employees and to impose appropriate penalties on erring workers
pursuant to company rules and regulations." 45

The rationale for this was explained in Rural Bank of Cantilan, Inc. v. Julve: 46

While the law imposes many obligations upon the employer, nonetheless, it also protects the
employer's right to expect from its employees not only good performance, adequate work, and
diligence, but also good conduct and loyalty. In fact, the Labor Code does not excuse employees
from complying with valid company policies and reasonable regulations for their governance and
guidance. 47

Accordingly, in San Miguel Corporation v. National Labor Relations Commission: 48

An employer has the prerogative to prescribe reasonable rules and regulations necessary for the
proper conduct of its business, to provide certain disciplinary measures in order to implement said
rules and to assure that the same would be complied with. An employer enjoys a wide latitude of
discretion in the promulgation of policies, rules and regulations on work-related activities of the
employees.

It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition.
Thus, in the implementation of its rules and policies, the employer has the choice to do so strictly or
not, since this is inherent in its right to control and manage its business effectively.
49

II

Disciplining employees does not only entail the demarcation of permissible and impermissible
conduct through company rules and regulations, and the imposition of appropriate sanctions. It also
involves intervening mechanisms "to assure that [employers' rules] would be complied with."  These
50

mechanisms include the conduct of investigations to address employee wrongdoing.

While due process, both substantive and procedural, is imperative in the discipline of employees, our
laws do not go so far as to mandate the minutiae of how employers must actually investigate
employees' wrongdoings. Employers are free to adopt different mechanisms such as interviews,
written statements, or probes by specially designated panels of officers.

In the case of termination of employment for offenses and misdeeds by employees, i.e., for just
causes under Article 282 of the Labor Code,  employers are required to adhere to the so-called
51

"two-notice rule."  King of Kings Transport v. Mamac  outlined what "should be considered in
52 53

terminating the services of employees"  :

54

(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. "Reasonable opportunity" under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.  (Citation omitted)
55
The two-notice rule applies at that stage when an employer has previously determined that there are
probable grounds for dismissing a specific employee. The first notice implies that the employer
already has a cause for termination. The employee then responds to the cause against him or her.
The two-notice rule does not apply to anterior, preparatory investigations precipitated by the initial
discovery of wrongdoing. At this stage, an employer has yet to identify a specific employee as a
suspect. These preparatory investigations logically lead to disciplinary proceedings against the
specific employee suspected of wrongdoing, but are not yet part of the actual disciplinary
proceedings against that erring employee. While the Labor Code specifically prescribes the two-
notice rule as the manner by which an employer must proceed against an employee specifically
charged with wrongdoing, it leaves to the employer's discretion the manner by which it shall proceed
in initially investigating offenses that have been uncovered, and whose probable perpetrators have
yet to be pinpointed.

Thus, subject to the limits of ethical and lawful conduct, an employer is free to adopt any means for
conducting these investigations. They can, for example, obtain information from the entire roster of
employees involved in a given workflow. They can also enlist the aid of public and private
investigators and law enforcers, especially when the uncovered iniquity amounts to a criminal
offense just as much as it violates company policies.

When employee wrongdoing has been uncovered, employers are equally free to adopt contingency
measures; lest they, their clients, and other employees suffer from exigencies otherwise left
unaddressed. These measures may be enforced as soon as an employee's wrongdoing is
uncovered, may extend until such time that disciplinary proceedings are commenced and
terminated, and in certain instances, even made permanent. Employers can rework processes,
reshuffle assignments, enforce stopgap measures, and put in place safety checks like additional
approvals from superiors. In Mandapat v. Add Force Personnel Services, lnc.,  this Court upheld the
56

temporary withholding of facilities and privileges as an incident to an ongoing investigation. Thus,

this Court found no fault in the disconnection of an employee's computer and the suspension of her
internet access privilege.  Employers can also place employees under preventive suspension, not
57

as a penalty in itself, but as an intervening means to enable unhampered investigation and to

foreclose "a serious and imminent threat to the life or property of the employer or of the employee's
co-workers."  As Artificio v. National Labor Relations Commission  illustrated:
58 59

In this case, Artificio's preventive suspension was justified since he was employed as a security
guard tasked precisely to safeguard respondents' client. His continued presence in respondents' or
its client's premises poses a serious threat to respondents, its employees and client in light of the
serious allegation of conduct unbecoming a security guard such as abandonment of post during
night shift duty, light threats and irregularities in the observance of proper relieving time.

Besides, as the employer, respondent has the right to regulate, according to its discretion and best
judgment, all aspects of employment, including work assignment, working methods, processes to be
followed, working regulations, transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of workers. Management has the prerogative to discipline its
employees and to impose appropriate penalties on erring workers pursuant to company rules and
regulations.

This Court has upheld a company's management prerogatives so long as they are exercised in good
faith for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements. 60