The law does not prevent employers from saving on labor costs. Thus, reorganization as a cost-saving measure is acknowledged by jurisprudence. An employer is not precluded from adopting a new policy conducive to a more economical and effective management, and the law does not require that the employer should be incurring financial losses before he can terminate the services of the employee on the ground of redundancy (213 SCRA 1992).
A “Release and Quitclaim” even if voluntarily signed by a discharged employee may not be a legally binding agreement if the compensation granted is less than what the employee is entitled to received. Nor which such quitclaim prevents him from demanding benefits to which he is entitled.
Aside from the basic requirement of voluntariness in its execution, the quitclaim must comply with these requisites: (a) that there was no fraud or deceit on the part of any of the parties; (b) that the consideration of the quitclaim is credible and reasonable; (c) that the agreement is not contrary to law, public order, public policy, morality or good customs or prejudicial to third persons with a legal right (G.R. 124927, 5/18/99).
Respondent bank offered two retirement programs to its Employees: (a) the Ordinary Retirement Program (ORP) which will pay 85% of the employee’s basic monthly salary times number years of service; and (b) the Special Retirement Program (SRP) which will pay 250% of the gross monthly salary of the employee times number years of his service. Since petitioner employee is only 45 years old, he was not qualified for retirement under ORP. Hence, he applied to retire under SRP for which he received the net amount of P963,619.28. Subsequently, he signed an undated “Release, Waiver and Quitclaim” acknowledging receipt of the net proceeds of his retirement benefits, and agreeing as well that the bank may bring any action for damages resulting from his breach of the Release and Quitclaim and that such award would include the return of the retirement pay he received under the SRP. The petitioner was likewise required to sign an Undertaking as a supplement to the Release and Quitclaim in which he promised that “he will not seek employment with a competitor bank or financial institution within one (1) year xxx” from his retirement date.
On May 11, 1995—or 3 months from his retirement—petitioner was employed by another bank for the same position he held in respondent bank. When petitioner refused to return the retirement pay granted to him, respondent bank filed a complaint for sum of money with the Regional Trial Court of Manila.
In his Answer, petitioner alleged among others that the Undertaking not to “seek employment with any competitor bank xxx within one (1) year from February 28, 1995” was void for being contrary to the constitution, the law and public policy, and as being unreasonable, arbitrary and oppressive.
The trial court ruled in favor of the bank, ordering petitioner to restitute the amount paid to him as retirement pay plus 12% interest.The court declared that the prohibition in the Undertaking was not unreasonable.
On appeal by the petitioner, the CA declared that having executed the Release and Quitclaim, including the undertaking not to seek employment within the proscribed one-year period, and thereafter receiving the benefits under the SRP, he is deemed to waive the right to assail the same, and hence, is estopped from retaining the amount granted under the SRP.
The Supreme Court disagreed with the trial court and CA rulings. The post-employment competitive employment ban is unreasonable because it has no geographical limits. Petitioner is not proscribed, by waiver or estoppel, from assailing the post-retirement competitive employment ban. Under Article 1409 of the Civil Code“contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy are inexistent or void from the beginnig.”Estoppel cannot validate an act that is prohibited by law or is against public policy.
However, since the terms of the undertaking state that any breach by the petitioner of his promise would entitle respondent to a cause of action in the courts of law, restitution of the SRP benefits is not automatic. Respondent bank must still prove its entitlement to the restitution of aforesaid benefits. Hence, the Court remanded the case to the RTC where respondent will have to prove its entitlement to the amount paid petitioner under the SRP (G.R. 16329, 4/19/06).
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Guidelines for hiring“name hires” revisited
With the recall/cancellation of POEA Memorandum Circular 04, Series 2007, deployment of so-called “name hires” (also called “direct hires”) for overseas employment shall be governed by the preceding guidelines, Memorandum Circular No. 07, Series of 2003.
As defined under MC-07, “name hire” refers to a worker who was able to secure an overseas employment without the participation of a recruitment agency. MC-07 applies to landbased direct hires, except household workers. Only Filipino workers hired by direct employers shall be processed as name or direct hires. Agency endorsed name hires shall no longer be allowed.
Following are the required minimum provisions of the employment contract of name hires:
(1) Guaranteed wages for regular work hours and overtime pay, as appropriate, shall not be lower than the prescribed minimum wage in the host country, or the minimum wage set by a bilateral agreement or international convention duly ratified by the host country and the Philippines, or the minimum wage in the Philippines, whichever is higher;
(2) Free transportation to and from the worksite or offsetting benefits;
(3) Free food and accommodation or offsetting benefits;
(4) Just I authorized causes for termination of the contract or of the services of the workers taking into consideration the customs, traditions, norms, mores practices, company policies and the labor laws and social legislations of the host country;
(5) Repatriation of the workers remains and proper disposition thereof, upon previous arrangement with the worker’s next-of-kin or in the latter’s absence, he nearest Philippines embassy or consulate to the worksite; or offsetting benefit/arrangement.
A name hire shall be registered by the POEA upon submission of the following documents:
1. Valid passport (original and photocopy)
2. Employment contract or offer of employment or equivalent document, duly signed by the employer and worker, (original and photocopy).
3. Visa/employment or work permit, or equivalent entry document (original and photocopy).
4. Certificate of medical fitness (with photograph of the worker).
5. Certificate of attendance to the required employment orientation/briefing.
6. Duly accomplished OFW Info Sheet.
The documentary requirements for name hires shall be subject to country-skill-specific deployment guidelines that the Administration may adopt. Verification of employment contracts of workers belonging to the professional workers category or those going to countries with highly developed system of labor and social security shall not be required, unless otherwise specified by the Philippine Overseas Labor Office (POLO) or defined under separate country-specific guidelines C. Medical Examination.
Name hires shall undergo pre-employment medical examination at a medical hospital or clinic accredited by the Department of Health (DOH) or foreign embassy/consulate in Manila or other government authorities of the host countries to conduct medical examination of overseas Filipino workers, in accordance with the medical requirements of the host country.
The name hire shall choose a clinic from the list of accredited medical hospitals and clinics which will be made available by the POEA. A medical referral/endorsement form shall be issued by the POEA to the worker for this purpose.
A name hire with an “unfit to work” or expired medical certificate shall not be registered unless the employer assumes full responsibility in writing for the worker’s medical condition should a medical problem arise during the term of his/her employment.
A name hire may be exempted from undergoing the pre-employment medical certificate requirement if the host country requires medical examination upon arrival at the jobsite and the employer guarantees repatriation of the worker should a medical problem arise.
E. Pre-Departure Orientation Seminar
All name hires, except those returning to the same jobsite shall be required to attend a pre-departure orientation seminar or a special briefing to be conducted by POEA before they shall be registered by the Administration. Workers belonging to the professional category may be administered a special briefing on relevant information requirements. The workers shall be referred to the Workers Education Division of this Administration for the appropriate orientation/briefing.
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Jurisdiction of CIAC
The presence of the arbitration clause in the parties’ contract vests jurisdiction on the Construction Industry Arbitration Commission (CIAC) on all controversies arising from such contract (498 SCRA 186).
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Preventive suspension
Preventive suspension that lasts beyond the maximum period allowed by the Implementing Rules, Labor Code, amounts to constructive dismissal (487 SCRA 182).
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Jurisdiction of DOLE Regional Director
The Regional Director of DOLE has jurisdiction, in the presence of employer-employee relationship, to hear and decide cases involving violations of labor standard provisions of the Labor Code (484 SCRA, 340).
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Indian, Chinese nationals delisted from “high-risk/restricted’ category
Under a Foreign Service Circular issued in January 2005, the nationals of India and China (PROC) are not included as among those nationals who may enter the country visa-free. Thus, Indian and Chinese nationals were considered then as high-risked individual or restricted nationals pursuant to a Foreign Service Circular issued by DFA in 1960.
With the passage of time and circumstances, however, Indian and Chinese nationals have been recognized as no longer threats to Philippine national security, health and safety, and have in fact been acknowledged as reputable businessmen who have made significant contributions to the Philippine economy.
On 26 September 2007– following consultations and favorable inputs from the Dept. of Justice, DFA, DOLE, DOT, and the NICA --- the Bureau of Immigration delisted Indians and Chinese (PROC) national from the “high-restricted” category and reclassifying said nationals to the “visaed” and/or “visa-required” category. The delisting will enable Indian and Chinese nationals coming in as temporary visitors or tourists to extend their stay in the country by applying for one to two months extension per application up to a maximum of sixteen (16) months instead of the six (6) months allowable stay prior to their delisting as “high-risk” or “restricted” nationals. These delisted nationals are, however, still required to secure entry visas pending their removal from the list of “VISA-REQUIRED” foreigners by the Department of Foreign Affairs (MCL-07-003,BI).
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What determines whether contract is reasonable or not?
To determine whether a contract is reasonable or not, these factors should be considered: (a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy (G.R. 163269, 4/19/06).
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Moral damages for breach of contract
In culpa contractual or breach of contract, moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is found guilty of gross negligence amounting to bad faith or in wanton disregard of his contractual obligations.
There is no hard-and-fast rule in determining what would be a fair amount of damages. The yardstick should that it is not palpably and scandalously excessive (G.R. 146918, 5/2/06).
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Arbitrary tax assessment is void
Assessment and collection of taxes should be made in accordance with law as any arbitrariness will negate the very reason for government itself. Thus, the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. Otherwise, the assessment shall be void (480 SCRA 382).
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Assumption of jurisdiction covers all issues
The DOLE Secretary’s assumption of jurisdiction power necessarily includes matters incidental to the labor dispute not just to those ascribed in the Notice of Strike or otherwise submitted to him for resolution. The authority to assume jurisdiction over a labor dispute must include all questions and controversies arising therefrom.
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Effect of merger
In cases of merger or consolidation of two corporations, the surviving or consolidated corporation assumes all the liabilities and obligations of the absorbed entity as if the surviving or consolidated corporation had itself incurred such liabilities or obligations (G.R. 89007, citing Sec. 80 [5], Corporation Code).
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Gross and habitual neglect of duties
To constitute a just and validcausefor termination, the neglect of duties must not only be gross but habitual as well (435 SCRA 234).
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Supreme Court Upheld payment of excise tax with Tax Credit Certificates (TCC)
From 1988 to 1999 petitioner (PSPC) paid part of its excise tax with so-called Tax Credit Certificates (TCC) acquired for value from other Board of Investment (BOI) registered companies through the Department of Finance Tax Credit and Duty Drawback Center (CENTER).
After PSPC advised the Center that it will use its TCCs to pay part of its excise tax, the payments was duly approved by the Center through Tax Debit Memoranda (TDM), and the BIR accepting the TCCs as payments by issuing its own TDM and the corresponding Authorities to Accept Payment for Excise Taxes (ATAPETs).
However, on 22 April 1998, the BIR sent a collection letter to PSPC for alleged deficiency excise tax for 1992 and 1994 to 1997, on the ground that PSPC is not a qualified transferee of the TCCs acquired from other BOI-registered companies.
PSPC then went before the CTA for review of the BIR action. On July 23, 1999, the CTA Division ruled that the use by PSPC of the TCC’s was legal and valid. The BIR was enjoined from any acts to collect from petitioner the alleged excise tax deficiency.
On 3 November 1999 the CENTER informed PSPC of the cancellation of the first batch of TCCs transferred to PSPC and the TPM covering use of these TCCs as well as the corresponding TCC assignments. On 22 November 1999, PSPC received another assessment from the BIR for excise tax deficiencies based on the first batch of cancelled TCCs and TPM covering PSPC’s use of said TCCs. The protest of the taxpayer was denied so it filedanother petition for review before the CTA docketed as CTA Case No. 6003 which was heard and decided by a CTA Division.
On August 2, 2004 the CTA Division ruled that---the assessment issued by the respondent [BIR] dated November 15, 1999 against petitioner is CANCELLED and SET ASIDE.
On appeal by the BIR, this ruling by the CTA Division was, however, SET ASIDE by the CTA en banc, ordering the taxpayer to pay deficiency excise tax as assessed by the BIR.
On the petition for review by PSPC, the Supreme Court REVERSED and SET ASIDE the CTA En Banc decision, and REINSTATED the CTA Decision disallowing the BIR assessment. A transferee in good faith and for value of a TCC who relied on the Center’s representation of the genuineness and validity of the TCC transferred to it may not be legally required to pay again the tax covered by the TCC which has been declared null and void—after the TCCs have been fully used as payment of internal revenue taxes.Any fraud or breach of law or rule relating to the issuance of the TCC by the Center to the transferor or the original grantee is the latter’s responsibility and liability (G.R. 172598, December 21, 2007).
