Labor Law Review Digest

D. Application of Technical Rules: Burden of Proof

1. Technical Rules not binding

MERALCO vs. JAN CARLO GALA (2012)

FACTS: Gala was a probationary linesman of Meralco and assigned at the Valenzuela Sector.
Barely four months on the job, Gala was dismissed for alleged pilferages of Meralcos electrical
supplies wherein a certain non-Meralco employee, Norberto Llanes, took electrical supplies from
their truck with their knowledge when they were fixing a certain electrical post in Pacheco
Subdivision. Unknown to him and the crew, they were under surveillance by a Meralco task
force. When asked to explain, Gala argued that he was far from the truck where the pilferage
happened, he did not have an inkling of the illegal activity, he did not call the attention of his
superiors because he was a mere linesman and that he was just following instructions. His
employment was terminated due to misconduct and dishonesty. Upon compulsory arbitration, the
labor arbiter found in favor of Meralco. NLRC reversed and ordered reinstatement. CA affirmed
the NLRC decision.

Meralco argues that Gala was merely a probationary employee and that he failed to meet the
basic standards.

Gala on the other hand argues that the petition of Meralco should be dismissed since there were
procedural defects in the petition, that the Verification and Certification, Secretarys Certificate and
Affidavit of Service do not contain the details of the Community or Residence Tax Certificates of
the affiants and the lawyers who signed the petition failed to indicate their updated Mandatory
Continuing Legal Education (MCLE) certificate numbers, in violation of the rules.

ISSUE: WON the technical rules of procedure binding and are to be strictly construed?

HELD: NO. The SC ruled that it is the spirit and intention of labor legislation that the NLRC and
the labor arbiters shall use every reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law or procedure, provided due process is duly
observed.[19] In keeping with this policy and in the interest of substantial justice, we deem it proper
to give due course to the petition, especially in view of the conflict between the findings of the
labor arbiter, on the one hand, and the NLRC and the CA, on the other. As we said in S.S.
Ventures International, Inc. v. S.S. Ventures Labor Union,[20] the application of technical rules of
procedure in labor cases may be relaxed to serve the demands of substantial justice.

SC however ruled that Gala should be dismissed because, as a probationary employee, there
was substantial evidence that he was not able to comply with the standards of Meralco as
provided in the Company’s Code of Discipline.

2. Doubts
a. In employment contract interpretation

PRICE vs. INNODATA PHIL (2008)

FACTS: (INNODATA) is a domestic corporation engaged in the data encoding and data
conversion business. It employed encoders, indexers, formatters, programmers, quality/quantity
staff, and others, to maintain its business and accomplish the job orders of its clients. Petitioners
Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters by
INNODATA. The parties executed an employment contract denominated as a Contract of
Employment for a Fixed Period, stipulating that the contract shall be for a period of one year
ending February 16, 2000. On the said date, the company wrote a letter to the petitioners stating
that it is their last day of work. In May 2000, the petitioners filed a case of illegal dismissal
claiming that they should be considered regular employees since their positions as formatters
were necessary and desirable to the usual business of INNODATA as an encoding, conversion
and data processing company. INNODATA argued that their employment was only for a fixed
term, which expired according to the contract. LA ruled illegal dismissal while NLRC and CA
reversed the decision.

ISSUE: 1. WON the petitioners are to be considered regular employees?

2. How should ambiguities in the employment contract be construed?

HELD:
1. WON the petitioners are to be considered regular employees?
YES, they are regular employees.

Under Article 280 of the Labor Code, the applicable test to determine whether an
employment should be considered regular or non-regular is the reasonable connection between
the particular activity performed by the employee in relation to the usual business or trade of the
employer.[22]

In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as

formatters. The primary business of INNODATA is data encoding, and the formatting of the data
entered into the computers is an essential part of the process of data encoding. Formatting
organizes the data encoded, making it easier to understand for the clients and/or the intended
end users thereof. Undeniably, the work performed by petitioners was necessary or desirable in
the business or trade of INNODATA.

2. How should ambiguities in the employment contract be interpreted?

Being a contract of adhesion, they are to be construed strictly against the party who
prepared it.

The employment contract submitted to the NLRC stated to take effect on February 16,
1999 but appeared to have been crossed out to make it appear September 6, 1999. There is
now doubt as to when the contract took effect.

Such modification and denial by respondents as to the real beginning date of petitioners
employment contracts render the said contracts ambiguous. The contracts themselves state that
they would be effective until 16 February 2000 for a period of one year. If the contracts took effect
only on 6 September 1999, then its period of effectivity would obviously be less than one year, or
for a period of only about five months.

Obviously, respondents wanted to make it appear that petitioners worked for INNODATA
for a period of less than one year. The only reason the Court can discern from such a move on
respondents part is so that they can preclude petitioners from acquiring regular status based on
their employment for one year. Nonetheless, the Court emphasizes that it has already found that
petitioners should be considered regular employees of INNODATA by the nature of the work they
performed as formatters, which was necessary in the business or trade of INNODATA. Hence,
the total period of their employment becomes irrelevant.

Even assuming that petitioners length of employment is material, given respondents

muddled assertions, this Court adheres to its pronouncement in Villanueva v. National Labor
Relations Commission,[28] to the effect that where a contract of employment, being a contract of
adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who
prepared it. The Court is, thus, compelled to conclude that petitioners contracts of employment
became effective on 16 February 1999, and that they were already working continuously for
INNODATA for a year.
Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends
that petitioners were project employees whose employment ceased at the end of a specific
project or undertaking. This contention is specious and devoid of merit.

In Philex Mining Corp. v. National Labor Relations Commission,[29] the Court defined project
employees as those workers hired (1) for a specific project or undertaking, and wherein (2) the
completion or termination of such project has been determined at the time of the engagement of
the employee.

Scrutinizing petitioners employment contracts with INNODATA, however, failed to reveal

any mention therein of what specific project or undertaking petitioners were hired for. Although
the contracts made general references to a project, such project was neither named nor
described at all therein. The conclusion by the Court of Appeals that petitioners were hired for the
Earthweb project is not supported by any evidence on record. The one-year period for which
petitioners were hired was simply fixed in the employment contracts without reference or
connection to the period required for the completion of a project. More importantly, there is also a
dearth of evidence that such project or undertaking had already been completed or terminated to
justify the dismissal of petitioners. In fact, petitioners alleged - and respondents failed to dispute
that petitioners did not work on just one project, but continuously worked for a series of projects
for various clients of INNODATA.

In Magcalas v. National Labor Relations Commission,[30] the Court struck down a similar
claim by the employer therein that the dismissed employees were fixed-term and project
employees. The Court here reiterates the rule that all doubts, uncertainties, ambiguities and
insufficiencies should be resolved in favor of labor. It is a well-entrenched doctrine that in illegal
dismissal cases, the employer has the burden of proof. This burden was not discharged in the
present case.

MARCOPPER MINING vs. NLRC

FACTS: On 23 August 1984, Marcopper Mining Corporation, a corporation duly organized and
existing under the laws of the Philippines, engaged in the business of mineral prospecting,
exploration and extraction, and private respondent NAMAWU-MIF, a labor federation duly
organized and... registered with the Department of Labor and Employment (DOLE), to which the
Marcopper Employees Union (UNION) is affiliated, entered into a Collective Bargaining
Agreement (CBA) effective from 1 May 1984 until 30 April 1987 which involves the following
terms:
Increase in minimum wage:

May 1,1985 5%
May 1,1986 5%
“It is expressly understood that this wage increase shall be exclusive of any increase in the
minimum wage and/or mandatory living allowance that may be promulgated during the life of this
Agreement.”

In compliance with the amended CBA, petitioner implemented the initial 5% wage increase due
on 1 May 1986.

The problem arose when, on 1 June 1987, Executive Order (E.O.) No. 178 was promulgated
mandating the integration of the cost of living allowance into the basic wage of workers resulting
to an INCREASE of minimum wage.
Following the CBA, petitioner MARCOPPER implemented the second five percent (5%) wage
increase due on 1 May 1987 and thereafter ADDED the integrated COLA.

Private respondent UNION however, assailed the manner in which the second wage increase
was effected. It argued that the COLA should first be integrated into the basic wage before the
5% wage increase is computed as mandated by EO 178.

Consequently, on 15 December 1988, the union filed a complaint for underpayment of wages
before the Regional Arbitration Branch IV, Quezon City.

On 24 July 1989, the Labor Arbiter promulgated a decision in favor of the union.
Petitioner appealed the Labor Arbiter's decision and on 18 November 1991 the NLRC rendered
its decision sustaining the Labor Arbiter's ruling.

It is petitioner's contention that the basic wage referred to in the CBA pertains to the
"unintegrated" basic wage. Petitioner maintains that the rules on interpretation of contracts,
particularly Art. 1371 of the New Civil Code which states that:
Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered should govern.
Siding with the petitioner, the Solicitor General opines that for the purpose of complying with the
obligations imposed by the CBA, the integrated COLA should not be considered due to the
exclusivity of the benefits under the said CBA and E.O. No. 178.

Private respondent counters by asserting that the purpose, nature and essence of CBA
negotiation is to obtain wage increases and benefits over and above what the law provides and
that the principle of non-diminution of benefits should prevail.

Issues:
What should be the basis for the computation of the CBA increase, the basic wage without the
COLA or the so-called "integrated" basic wage which, by mandate of E.O. No. 178, includes the
COLA.

Ruling:
We rule for the respondent UNION. Hence, the COLA should first be integrated.

THE DOCTRINE OF LIBERAL INTERPRETATION IN FAVOR OF LABOR IN CASE OF DOUBT

IS NOT APPLICABLE TO THE INSTANT CASE.[13]

When conflicting interests of labor and capital are to be weighed on the scales of social justice,
the heavier influence of the latter should be counter-balanced by sympathy and compassion the
law must accord the underprivileged worker. The CBA is imbued with public interest.
Compliance with EO 178 is mandatory and beyond contractual stipulation.

The principle that the CBA is the law between the contracting parties stands strong and true.
However, the present controversy involves not merely an interpretation of CBA provisions. More
importantly, it requires a determination of the effect of... an executive order on the terms and the
conditions of the CBA.

It is unnecessary to delve too much on the intention of the parties as to what they allegedly meant
by the term "basic wage" at the time the CBA and MOA were executed because there is no
question that as of 1 May 1987, as mandated by E.O. No. 178, the basic wage of workers, or...
the statutory minimum wage, was increased with the integration of the COLA. As of said date,
then, the term "basic wage" includes the COLA. This is what the law ordains and to which the
collective bargaining agreement of the parties must conform.
Petitioner's arguments eventually lose steam in the light of the fact that compliance with the law is
mandatory and beyond contractual stipulation by and between the parties; consequently, whether
or not petitioner intended the basic wage to include the COLA becomes... immaterial. There is
evidently nothing to construe and interpret because the law is clear and
unambiguous. Unfortunately for petitioner, said law, by some uncanny coincidence, retroactively
took effect on the same date the CBA increase became effective.
Therefore, there cannot be any doubt that the computation of the CBA increase on the basis of
the "integrated" wage does not constitute a violation of the CBA.

What E.O. No. 178 did was exactly to integrate the COLA under Wage Orders Nos. 1, 2, 3, 5 and
6 into the basic pay so as to increase the statutory daily minimum wage.
Integration of monetary benefits into the basic pay of workers is not a new method of increasing
the minimum wage.

The purpose of E.O. No. 178 is to improve the lot of the workers covered by the said statute. We
are bound to ensure its fruition.
WHEREFORE, premises considered, the petition is hereby DISMISSED.

Principles:
While the terms and conditions of the CBA constitute the law between the parties, it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of
the Philippines which governs the relations between labor and capital, is not merely contractual in
nature but impressed with public interest, thus, it must yield to the common good. As such, it must
be construed liberally rather than narrowly and... technically, and the courts must place a practical
and realistic construction upon it, giving due consideration to the context in which it is negotiated
and purpose which it is intended to serve.

ii.) In Appreciation of Evidence

ASUNCION vs. NLRC (2001)

FACTS: Petitioner was an accountant/bookkeeper of the Mabini Medical Clinic. The DOLE
conducted a routine inspection of the company and discovered upon disclosure of the petitioner
Asuncion that there were violations of the labor standards law such as the non-coverage of SSS
of the employees. Subsequently, the Director of the clinic issued a memo charging petitioner
with the following:
1. Chronic Absentism (sic) You have incurred since Aug. 1993 up to the present 35
absences and 23 half-days.
2. Habitual tardiness You have late (sic) for 108 times. As shown on the record book.
3. Loitering and wasting of company time on several occasions and witnessed by
several employees.
4. Getting salary of an absent employee without acknowledging or signing for it.
5. Disobedience and insubordination - continued refusal to sign memos given to you.[1]
Petitioner was required to explain within two (2) days why she should not be terminated based on
the above charges. She submitted her response 3 days later and on the same day, she was
dismissed. She then filed a case of illegal dismissal. The LA ruled that there was illegal
dismissal since the company failed to present in evidence the time cards, logbooks or record
book which complainant signed recording her time in reporting for work. These documents,
according to the Labor Arbiter, were in the possession of the private respondents. The NLRC set
it saying that petitioner admitted that charges.

ISSUE: WON Petitioner was illegally dismissed?

HELD: YES.
There are serious doubts in the evidence on record as to the factual basis of the charges against
petitioner. These doubts shall be resolved in her favor in line with the policy under the Labor
Code to afford protection to labor and construe doubts in favor of labor. [22] The consistent rule is
that if doubts exist between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. The employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause. [23] Not having satisfied
its burden of proof, we conclude that the employer dismissed the petitioner without any just
cause. Hence, the termination is illegal.

Here, the evidence submitted was merely unsigned handwritten records and printouts. This is
insufficient to justify a dismissal. The provision for flexibility in administrative procedure does not
justify decisions without basis in evidence having rational probative value. Here both the
handwritten listing and computer print outs being unsigned, so the authenticity is suspect and
devoid of any rational probative value.

Nor was there due process. There is no showing that there was warning of the absences and
tardiness. The 2 day period given to answer the allegations is an unreasonably short period of
time.

iii.) In application of policies and programs

PNCC vs. NLRC

Doctrine: In the interpretation of an employers retrenchment program providing for separation
benefits, all doubts should be construed in favor of the underprivileged worker.
FACTS: The facts in this case are undisputed. From July 14, 1981 until September 23, 1982,
Petitioner PNCC employed Private Respondent Mendoza as Driver II at its Magat Dam Project. A
few days after, on September 27, 1982, private respondent was again employed as Driver II at
PNCCs LRT Project until January 31, 1983. The following day, February 1, 1983, UNTIL August
1, 1984, petitioner deployed private respondent, also as Driver II, in its Saudi Arabia Project. It
took more than six months for private respondent to be repatriated to the Philippines. Upon his
return, he resumed his work as Driver II in the PG-7B Project of petitioner from February 22, 1985
until May 18, 1986.
For more than two years afterwards, private respondent was not given any work assignment. On
August 17, 1988, he was hired anew as Driver II for the Molave Project of petitioner. This lasted
until June 15, 1989.
Thereafter, private respondent claimed the benefits of petitioners Retrenchment Program,
particularly under paragraph. 2.1 thereof which provides:
Coverage. -- Special separation benefits shall be given to all regular, project employees and
permanent employees who have rendered at least one (1) year of continuous service with PNCC
and are actively employed in the company as of the date of their separation. [6]
However, petitioner denied his claim. Petitioner argues further that private respondent was
employed only for ten (10) months
Thus, on September 5, 1989, private respondent filed a complaint for nonpayment of separation
pay as provided for in said program.

The Labor arbiter as well as the NLRC granted the separation pay of the Petitioner.

ISSUE: WON the Petitioner is entitled to the separation pay as provided under the Retrenchment
Program?

HELD: YES.
Under the separation program, an employee may qualify if he has rendered at least one year of
continuous service. As public respondent has stated, the plain language of the program did not
require that continuous service be immediately prior to the employees separation. Thus, private
respondents other stints at PNCC prior to his last service in 1989 can properly be considered in
order to qualify him under the program. That the duration of private respondents last stint was
less than one year does not militate against his qualification under the program. We grant this
liberality in favor of private respondent in the light of the rule in labor law that when a conflicting
interest of labor and capital are weighed on the scales of social justice, the heavier influence of
the latter must be counter-balanced by the sympathy and compassion the law must accord the
under-privileged worker.[30]

3. Burden of Proof
a. In Illegal dismissal cases

GURANGO VS. BEST CHEMICALS PHILS. INC. (BCPI)

Doctrine: In termination cases, the employer has the burden of proving, by substantial evidence,
that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the
dismissal is deemed illegal.

FACTS: Gurango and Albao worked as boiler operator and security guard, respectively, in BCPI.
It was alleged that Gurango brought an unloaded camera into the work premises. The said
camera was confiscated by security guard Albao and a fistfight ensued between him and
Gurango. Albao on the otherhand argued that Gurango also tried to grab his gun which prompted
him to engage with a fistfight. This was denied by Gurango. Gurango was then dismissed from
the company because of starting a fight and of bringing the said camera inside the work premises
which are violations of the company’s Code of Discipline stating:

Please be reminded of the following existing rules and regulations that all employees are
expected to strictly observe and adhere to:

xxxx

Bringing in to work station/area of personal belongings other than those required in the
performance of one’s duty which disrupt/obstruct Company’s services and operations,
except those authorized by higher authorities. This offense shall include the following items [sic]:
radios, walkman, discman, make-up kits, ladies’ bags, workers’ knapsacks and the like
which must be left behind and safe kept [sic] in the employees’ respective lockers. This
being a Serious Offense, the penalty of which is six (6) days suspension from work without pay.

Gurango filed an illegal dismissal case against BCPI and criminal case of slight physical injuries
against Albao. Labor Arbiter and NLRC rulex in favor of Gurango. The CA however reversed
stating that Gurango engaged in the fistfight.

ISSUE: 1. Who has the burden of proof in illegal dismissal cases?

2. WON Gurango was illegally dismissed?

1. Who has the burden of proof in illegal dismissal cases?

In termination cases, the employer has the burden of proving, by substantial evidence, that the
dismissal is for just cause. If the employer fails to discharge the burden of proof, the dismissal is
deemed illegal.

When there is no showing of a clear, valid and legal cause for the termination of employment, the
law considers the matter a case of illegal dismissal and the burden is on the employer to prove
that the termination was for a valid or authorized cause. And the quantum of proof which the
employer must discharge is substantial evidence. An employee’s dismissal due to serious
misconduct must be supported by substantial evidence. Substantial evidence is that amount of
relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even
if other minds, equally reasonable, might conceivably opine otherwise.

2. WON Gurango was illegally dismissed? YES.

In the present case, aside from Albao’s statement, BCPI did not present any evidence to show
that Gurango engaged in a fistfight. Moreover, there is no showing that Gurango’s actions were
performed with wrongful intent.

The surrounding circumstances show that Gurango did not engage in a fistfight. Witness Mr.
Juanitas corroborated Gurango’s version of the facts while nobody corroborated Albao’s version.
The Labor Arbiter found Gurango’s statement credible and unblemished and found Albao’s
statement contradictory. Lastly, the Court of Appeals reversal of the findings of fact of the Labor
Arbiter and the NLRC is baseless.

LABADAN vs. FOREST HILLS (2008)

DOCTRINE: While in cases of illegal dismissal, the employer bears the burden of proving that
the dismissal is for a valid or authorized cause, the employee must first establish by substantial
evidence the fact of dismissal.

FACTS: Labadan was hired by private respondent Forest Hills Mission Academy (Forest Hills) in
July 1989 as an elementary school teacher. From 1990 up to 2002, petitioner was registrar and
secondary school teacher.

Petitioner alleged that she was allowed to go on leave from Forest Hills, and albeit she had
exceeded her approved leave period, its extension was impliedly approved by the school principal
because she received no warning or reprimand and was in fact retained in the payroll up to 2002.

To belie petitioners claim that she was dismissed, Forest Hills submitted a list of faculty members
and staff from School Year 1998-1999 up to School Year 2001 to 2002 which included her name.

In 2003, petitioner filed a complaint[1] against respondent Forest Hills for illegal dismissal, non-
payment of overtime pay, holiday pay, allowances, 13 th month pay, service incentive leave, illegal
deductions, and damages.

Labor Arbiter ruled that she was illegally dismissed. NLRC reversed. CA dismissed the petition
for non-payment of docket fees.

ISSUE: WON Labadan was illegally dismissed?

HELD: There was no illegal dismissal. The SC ruled that while in cases of illegal dismissal, the
employer bears the burden of proving that the dismissal is for a valid or authorized cause, the
employee must first establish by substantial evidence the fact of dismissal. [16]

The records do not show that petitioner was dismissed from the service. They in fact show that
despite petitioners absence from July 2001 to March 2002 which, by her own admission,
exceeded her approved leave,[17] she was still considered a member of the Forest
Hills faculty[18] which retained her in its payroll.[19]

Petitioner argues, however, that she was constructively dismissed when Forest Hills merged her
class with another so much that when she reported back to work, she has no more claims to hold
and no more work to do.
Petitioner, however, failed to refute Forest Hills claim that when she expressed her intention to
resume teaching, classes were already ongoing for School Year 2002-2003. It bears noting that
petitioner simultaneously held the positions of secondary school
teacher and registrar and, as the NLRC noted, she could have resumed her work as registrar had
she really wanted to continue working with Forest Hills.