LABOR LAW REVIEW CASE MATRIX VIISecurity of TenureTITLEFACTSISSUE/SHELDDOCTRINE

Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc. Pedro A. Tecson signed a contract of employment with Glaxo Wellcome Philippines, Inc. (Glaxo) as medical representative in October 1995.

He agreed to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company.

The same provision on disclosure of relationship is provided in the Employee Code of Conduct of Glaxo and it further states that if management perceives a conflict of interest or a potential conflict between such relationship and the employees employment, it could result in transfer to another department in a non-counterchecking position or preparation for employment outside the company after six months.

But Tecson, with all helplessness of the sort that often attends matters that concern the heart, developed a forbidden liking for Bettsy, an employee of Astra Pharmaceuticals, a competitor of Glaxo.

For reasons unmistakably attributable to feelings of love, their hearts refused to pump blood into their brains and so they suffered from a major lapse of judgment and ended up marrying in 1998.

As conflict of interest arose according to his superiors, Tecson was pulled out of the Camarines sales area and transferred to Butuan but he refused.

The matter was initially brought to Glaxos grievance committee but was not resolved and so the NCMB had to come in, which upheld the validity of Glaxos policy on relationships.

The Court of Appeals likewise found for Glaxo citing the valid exercise of management prerogatives.

WON Glaxos policy against its employees marrying employees from competitor companies is a valid exercise of management prerogative.

WON the policy violated the equal protection clause of the Constitution.

Whether or not Tecson was constructively dismissed by his transfer from Camarines to Butuan. YES.

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.

The prohibition under the circumstances is reasonable because relationships of such nature might compromise the interests of the company.

Glaxos right to protect its economic interests cannot be denied as no less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investment and to expansion and growth.

While protection is provided to labor, the law also recognizes managements rights which are also entitled to respect and enforcement in the interest of fair play.

NO.

It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under the color of its authority.

The only exception occurs when the state in any of its manifestations or actions has been found to have become entwined or involved in the wrongful private conduct.

The exception is not presented in this case.

The application of the policy was made in an impartial and even-handed manner, with due regard for the lot of the employee.

From the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies.

It merely seeks to avoid a conflict of interest between the employee and the company that may arise out of such relationships.

The company policy was clearly made known to Tecson prior to his employment; he is thus estopped from questioning said policy.

A contract has the force of law between the contracting parties and must be complied with in good faith.

NO.

Constructive dismissal is defined as quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.

None of these conditions are present in the instant case.

Glaxo properly exercised its management prerogative in reassigning Tecson to Butuan City sales area to avoid conflict of interest.

Tecson was warned against the conflict of interest and after his marriage, was given time to resolve the conflict by either resigning from the company or asking his wife to resign from Astra.

It was only when the problem could not be resolved after several years of waiting that Glaxo was constrained to reassign Tecson to a sales area different from that handled by his wife for Astra.

He was not terminated from employment, only reassigned to another area where his home province was included.

Glaxo even considered the welfare of Tecsons family, dispelling any suspicision of unfairness and bad faith on the part of Glaxo.. While protection is provided to labor, the law also recognizes managements rights which are also entitled to respect and enforcement in the interest of fair play.

It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under the color of its authority.

The only exception occurs when the state in any of its manifestations or actions has been found to have become entwined or involved in the wrongful private conduct.

Constructive dismissal is defined as quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.

Star Paper Corp. v. Simbol Simbol and Dayrit were regular employees of Star. They were single when they first entered Star but then decided to get married a few years later. The same situation happened between 2 more pairs of employees. The assailed company policy reads: 1. New applicants will not be allowed to be hired if in case he/she has a relative, up to the 3rd degree of relationship, already employed by the company.2. In case of two of our employees (both singles one male and another female) developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above. Simbol resigned on June 20, 1998 pursuant to the company policy, as did one of the spouses in the other 2 relationships. The respondents each signed a Release and Confirmation Agreement. They stated therein that they have no money and property accountabilities in the company and that they release the latter of any claim or demand of whatever nature. WON the policy of the employer banning spouses from working in the same company violates the rights of the employee under the Constitution and the Labor Code or is a valid exercise of management prerogative. NO. Petitioners sole contention that the company did not just want to have 2 or more of its employees related between the third degree by affinity and/or consanguinity is lame. That the second paragraph was meant to give teeth to the first paragraph of the questioned rule is evidently not the valid reasonable business necessity required by the law. Respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employees right to security of tenure. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employees right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company. Since the finding of a bona fide occupational qualification justifies an employers no-spouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice.To justify a bona fide occupational qualification, the employer must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.

Agabon v. NLRC Riviera Home Improvements, Inc. employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers. They were dismissed for abandonment of work. Petitioners assert that they were dismissed because Riviera refused to give them assignments unless they agreed to work on a "pakyaw" basis. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim that Riviera did not comply with the twin requirements of notice and hearing. Riviera, on the other hand, maintained that petitioners were not dismissed but had abandoned their work. In fact, Riviera sent two letters to the last known addresses of the petitioners advising them to report for work. Petitioners did not report for work because they had subcontracted to perform installation work for another company. Whether or not petitioners were dismissed based on a valid cause Whether or not Riviera observed due process in terminating the services of the petitioners Petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with Riviera. This was not the first time they did this. Previously, they did not report for work because they were working for another company. Riviera at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him. Riviera did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately, this is not a valid excuse because the law mandates the twin notice requirements to the employee's last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process. After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. Riviera was ordered to pay each of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. Requisites: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and (c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employee's last known address.

Jaka Food Processing v. Pacot Respondents were employees of Jaka because the company was in dire financial straits. However, the termination was effected without Jaka complying with the requirement regarding the service of written notice upon the employees and the DOLE at least one month before the intended date of termination. The respondents filed a complaint with the Labor Arbiter who ruled in favor of the respondents. The NLRC initially affirmed the decision of the Labor Arbiter but subsequently reversed it decision upon the filing of a Motion for Reconsideration. On appeal, the Court of Appeals reversed the decision of the NLRC based on the ruling of the SC in the case of Serrano vs. NLRC. What are the legal implications when an employee is dismissed without complying with the notice requirement under the Labor Code. The difference between this case and the case of Agabon vs. NLRC is that this case involves an authorized cause (particularly retrenchment) under Art. 283 while the Agabon case involves a just cause under Art. 282. The difference between the two is that in a just cause, the employee is the direct cause of the termination, while in an authorized cause, the main actor is usually the employer. Because of the distinction, the SC held that if the dismissal is based on a just cause under 282 and the employer failed to comply with the notice requirement, the sanction on the employer should be tempered because the dismissal was initiated by an act imputable to the employee. On the other hand, if the cause of the dismissal is one of the authorized causes under 283, failure of the employer to comply with the notice requirement should merit a stiffer sanction because the dismissal process was initiated by the employers exercise of management prerogative. In this case, the dismissal of the respondents was indeed caused by retrenchment due to financial losses of the company (one of the authorized causes). Therefore, Jaka is ordered to pay P50,000 as indemnity (this is greater than the P30,000 indemnity for failure to comply with the notice requirement if the dismissal is due to a just cause as held in the case of Agabon). If the dismissal is based on a just cause under 282 and the employer failed to comply with the notice requirement, the sanction on the employer should be tempered because the dismissal was initiated by an act imputable to the employee. If the cause of the dismissal is one of the authorized causes under 283, failure of the employer to comply with the notice requirement should merit a stiffer sanction because the dismissal process was initiated by the employers exercise of management prerogative.

Industrial Timber Corp. v. Ababon SC rendered judgment finding: (1) the closure or cessation of ITC's business valid, and (2) ordering ITC to pay separation pay equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher, and P50,000.00 as nominal damages to each employee, which damages are for the failure of ITC to comply with the requirements of statutory due process. To this judgment, ITC filed a Motion for Partial Reconsideration seeking to delete or reduce the nominal damages awarded to each employee, considering that since August 17, 1990 it had ceased operation of its business and that the award involves a huge amount considering that there are 97 workers. Is ITC entitled to a reduction or deletion of the nominal damages awarded to the employees dismissed based on an authorized cause but was not accorded due process? YES. Nominal damages reduced to P10,000 per employee. In the case at bar, there was valid authorized cause considering the closure or cessation of ITC's business which was done in good faith and due to circumstances beyond ITC's control. ITC had ceased to generate any income since its closure. Several months prior to the closure, ITC experienced diminished income due to high production costs, erratic supply of raw materials, depressed prices, and poor market conditions for its wood products. It appears that ITC had given its employees all benefits in accord with the CBA upon their termination. Thus, considering the circumstances obtaining in the case at bar, SC deemed it wise and just to reduce the amount of nominal damages to be awarded for each employee to P10,000.00 each instead of P50,000.00 each. In the determination of the amount of nominal damages which is addressed to the sound discretion of the court, several factors are taken into account: the authorized cause invoked, whether it was a retrenchment or a closure or cessation of operation of the establishment due to serious business losses or financial reverses or otherwise;

the number of employees to be awarded;

the capacity of the employers to satisfy the awards, taken into account their prevailing financial status as borne by the records;

the employer's grant of other termination benefits in favor of the employees; and

whether there was a bona fide attempt to comply with the notice requirements as opposed to giving no notice at all

Equitable Banking Corp. v. Sadac Sadac was appointed as the banks VP of the Legal Department. He later became General Counsel. 9 lawyers from the department addressed a letter to the board of directors complaining of Sadacs abusive conduct and petitioned for a change in leadership in the department.

Sadac was then instructed to deliver all materials in his custody in all the cases he was handling. He then requested for a full and formal hearing. But his request was unheeded.

He then filed an illegal dismissal case. The bank then terminated his services.

In a previous case, the SC held that there was EER between the bank and Sadac and that he was illegally dismissed. It was also found that the bank disregarded the procedural requirements in terminating his employment. The issue remaining is the manner of computation of the monetary award to Sadac. Sadac claims that the total amount of the award should include general increases which he should have earned during the period of his illegal termination. He claims that his salary is increased by 15% annually.

On the other hand, the bank claims that such salary increases should not be included in the computation of backwages. It argued that the award of salary differentials is not allwed, the rule being that upon reinstatement, illegally dismissed employees are to be paid their backwages without deduction and qualification as to any wage increases or other benefits. How must backwages be computed?

WON the salary increases should be considered in computing the backwages to be awarded to Sadac. The current rule (Bustamante v. NLRC) is that backwages should be allowed to be recovered in full without deduction and without qualification pursuant to Art. 279 of the Labor Code, i.e. without any deduction of income the employee may have derived from employment elsewhere from the date of his dismissal up to his reinstatement. NO. Article 279 mandates that an employees full backwages shall be inclusive of allowances and other benefits or their monetary equivalent. A salary increase cannot be interpreted as either an allowance or a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused with either. If the intent were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits. The cases relied upon by Sadac are inapplicable to this case. East Asiatic involved a situation where there was ULP and the employee was granted the whole amount of salary plus the general increases and bonuses she would have received during the period of lay-off. Millares dealt with computation of the salary base used in computing the separation pay. St. Louis of Tuguegarao involved the issue of inclusion of fringe benefits in computing backwages. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the formers unlawful act or bad faith. An unqualified award of backwages means that the employee is paid at the wage rate at the time of his dismissal. The base figure to be used in the computation of backwages is pegged at the wage rate at the time of the employees dismissal, inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated under the law.

1cj tan, jay beron, julie domino, mars rongo, mike lopez, ryan quan / 4C 07-08 / atty. marlon j. manuel