REDUCTION OF WORKDAYS THAT IS UNILATERAL AND ARBITRARY MAY RESULT IN CONSTRUCTIVE DISMISSAL

Reduction of workdays should comply with the DOLE issued Department Advisory No. 2, Series of 2009 on requirement that the employer should notify DOLE of the reduction of workdays prior to its implementation.

Thus, the SC held in the case of Intec Cebu Inc., et al. vs. Hon. Court of Appeals, et al. as follows:

Intec Cebu Inc., et al. vs. Hon. Court of Appeals, et al.
G.R. No. 189951, June 22, 2016

Facts:

Petitioner Intec Cebu Inc. (Intec) is engaged in the manufacture and assembly of mechanical system and printed circuit board for cassette tape recorder, CD and CD ROM player while Respondents Rowena Reyes, et al. (Reyes, et al.) were hired by Intec as production workers.

Reyes, et al. alleged that in 2005, their working days were reduced from 6 to 2-4 days. Intec apparently explained that reduction in working days was due to lack of job orders. However, Reyes, et al. discovered that Intec hired around 188 contractual employees tasked to perform tasks which Reyes, et al. were regularly doing. Reyes, et al. claimed that they were effectively terminated from employment as shown in the Establishment Termination Report submitted to the Department of Labor and Employment (DOLE). Two (2) days later, Reyes, et al. filed a complaint for illegal dismissal.

Intec, for its part, claimed that the company was established to supply the required materials of Kenwood Precision Corporation (Kenwood). When Kenwood stopped its operations in the Philippines, Intec’s business operations were severely affected, prompting Intec to set up a new product line exclusively for Pentax Cebu Phils. Corporation (Pentax). In December 2005, Intec’s job orders from Pentax declined. On 4 January 2006, a memorandum was issued informing the employees that the working days would be reduced to 3-4 days from the normal 6 day-work week. The reduced workweek policy was extended from April to June 2006. A corresponding memorandum was issued and a copy thereof was submitted to the DOLE.

LA Ruling:

The LA declared that Reyes, et al. were illegally dismissed and adjudged Intec and its officials liable for payment of separation pay and backwages. The LA found that Intec hired casual employees to replace Reyes, et al.. As regards the other monetary claims of Reyes, et al., it was ruled that Intec was able to prove, by presenting copies of the payroll, that private Reyes, et al. were properly paid.

NLRC Ruling:

The NLRC set aside the Decision of the Labor Arbiter and held that Intec suffered tremendous financial losses which justified the reduction of working days.

CA Ruling:

The CA reversed the NLRC and reinstated the Decision of the Labor Arbiter. Intec filed a petition for certiorari before the SC.

SC Ruling:

The SC dismissed the petition and affirmed the CA.

Intec claims that the reduction of the number of working days was undertaken to forestall business losses as proven by the audited financial statements of Intec for the years 2001-2006. Intec reiterates that Reyes, et al. voluntarily resigned or abandoned their work when they filed their application for leave following the issuance of the second memorandum extending the implementation of the reduced number of working days. According to Intec, Reyes, et al. had categorically declared that they would no longer report for work.

Guide to Valid Dismissal of Employees Second Edition

Reyes, et al. refutes Intec’s claim that it is suffering from business reverses when it just hired additional workers from TESDA and Sisters of Mary despite the fact that Reyes, et al. were under reduced workdays.

The charge of constructive dismissal is predicated on the claim that the implementation of the reduced workweek is illegal.

The Court has held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place, and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor.

Thus, it was incumbent upon Intec to prove that   that the implementation of the reduced working days is valid and done in good faith.

Related: Constructive Dismissal

Transfer and constructive Dismissal

Constructive Dismissal Due to Failure to Re-assign

It was only in January 2009 where the DOLE issued Department Advisory No. 2, Series of 2009 which requires the employer to notify DOLE of the reduction of work days prior to its implementation. If the reportorial requirement in retrenchment under Article 283 is to be followed, the DOLE should be notified at least one month prior to the intended date of retrenchment. Be that as it may, Intec submitted its report after the reduction of workdays was implemented. Moreover, there is nothing on the records which show that a second notice was sent to the employees informing them of the extension of the reduced workdays to June 2006.

An examination of Intec’s financial statements for 2005-2006 shows that while Intec suffered a net loss of P9,240,929.00 in 2005, it earned a net income of P9,568,674.00 in 2006. The period covered in the financial statement of 2006 is from May 2005-April 2006. It was only on the 9th month of operation did Intec decide to carry out the reduced workday scheme. The reduced workday scheme was implemented only in January 2006. Unless evidence is shown by the company that the income for 2006 was earned only between the months of January to April, it is safe to presume that at the time the reduced work day scheme was being implemented, the company was still benefiting from its gains as shown in the numbers for 2006.

Furthermore, the loss incurred in 2005 may be attributed to the acquisition of property and equipment amounting to P9,218,967.00 in 2005. There is also no indication in the financial statements, much less an observation made by the independent auditor, that a reduction in demand would necessitate a reduction in the employees’ work days.

The SC did not give weight to the evidence presented by Intec to prove the slump in demand. First, the two-page delivery data are lacking in specifics. The report did not indicate when it was prepared. Second, the report was prepared by Intec employees and approved by their President. Third, the report appeared to be mere projections because it was not supported by corresponding sales or delivery receipts. The actual sales may vary from the projected demand, thus, the report cannot be made as basis of a slump in demand or a slow-down.

In addition, the hiring of 188 workers, whether they be trainees or casual employees, necessarily incurred cost to the company. No proof was submitted that these newly-hired employees were performing work different from the regular workers.

In sum, there is no reason to implement a cost-cutting measure in the form of reducing the employees’ working days.

Intec committed illegal reduction of work hours. Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. Intec’ s unilateral and arbitrary reduction of the workday scheme had significantly greatly reduced Reyes, et al.’ salaries thereby rendering it liable for constructive dismissal.

Intec’s unilateral and arbitrary reduction of the workday scheme had significantly greatly reduced Reyes, et al.’ salaries thereby rendering it liable for constructive dismissal.

The SC found no merit to Intec’s charge of abandonment against Reyes, et al. To constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the employer-employee relationship. Clearly, the operative act is still the employee’s ultimate act of putting an end to his employment. Furthermore, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment of employment. An employee who takes steps to protest his dismissal cannot logically be said to have abandoned his work. The filing of such complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.

The SC affirmed the Court of Appeals’ finding that there is no proof that Reyes, et al. committed unauthorized absences or had otherwise refused to work. The complaint for constructive dismissal is the best evidence against abandonment because the filing of a complaint for illegal dismissal is incompatible to abandonment.

Intec availed of the wrong mode of appeal. For certiorari to prosper, the following requisites must concur: (1) the writ is directed against a tribunal, a board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.

Well-settled is the rule that a petition for certiorari against a court which has jurisdiction over a case will prosper only if grave abuse of discretion is manifested. The burden is on the part of the petitioner to prove not merely reversible error, but grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the public respondent issuing the impugned order. Mere abuse of discretion is not enough; it must be grave. The term grave abuse of discretion is defined as a capricious and whimsical exercise of judgment so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, as where the power is exercised in an arbitrary and despotic manner because of passion or hostility.

A writ of certiorari will not issue where the remedy of appeal is available to the aggrieved party. In this case, appeal under Rule 45 of the Rules of Court was clearly available to Intec. Finding no grave abuse of discretion in this case, the SC dismissed the certiorari petition.