Reinstatement of an Illegally-Dismissed Employee

So your employee filed an action for illegal dismissal before the National Labor Relations Commission (NLRC)? In the process of the litigation, exchange of harsh words in the pleadings ensued. In the event that your employee prevails should he/she be reinstated or should he/she be merely paid backwages and separation pay?

The Supreme Court made it clear that under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement.

Note that in order for the doctrine of strained relations to apply, it should be proven that the employee concerned occupies a position where he enjoys the trust and confidence of his employer and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned.

It bears to stress that reinstatement is the rule and, for the exception of strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the employee concerned.

Moreover, the filing of the complaint by employee cannot be used as a basis for strained relations. As a rule, no strained relations should arise from a valid and legal act asserting one’s right.

The Court stressed that it is human nature that some hostility will inevitably arise between parties as a result of litigation, but the same does not always constitute strained relations in the absence of proof  or explanation that such indeed exists.

The doctrine of strained relations has been made applicable to cases where the employee decides not to be reinstated and demands for separation pay. (Cabigting v. San Miguel Foods, Inc., G.R. No. 167706, November 5, 2009)

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What Is An Arbitration Clause?

An "arbitration" clause in a provision in a contract that states that all disputes arising from such contract will be handled by arbitration rather than litigation. This is important because with growing court congestion, protracted litigation and spiralling lawyers' fees, maintaining a suit has become so expensive and counterproductive, particularly to small business owners.

Arbitration has become an increasingly popular form of alternative dispute resolution. Arbitration  allows  an independent arbiter to settle a dispute rather than litigate it before a court in a lawsuit. Absent an agreement to do so, parties are not required to submit disputes to arbitration.

Arbitration can have the following advantages:

1. Parties can choose the arbitrators, local or foreign.
2. Proceedings are private and confidential.
3. Compared to court litigation, arbitration is speedier and more cost efficient
4. Parties can choose the place of arbitration, and the place where arbitration proceedings will be conducted.
5. A foreign arbitral award can be enforced in any country.
6. Arbitration is less formal.
7. Arbitrators tend to be more sophisticated and knowledgeable than juries.

You should negotiate the specifics of any arbitration clause. For example, you might want to provide for three arbitrators instead of one or require that certain rules have to be followed.

If you think arbitration is best for you, here is a sample clause:

"Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Philippine Dispute Resoluiton Center, Inc (PDRCI) Arbitration Rules as at present in force."

Note: Parties may wish to consider adding:

1. The number of arbitrator/s shall be ....(one or three)
2. The place of the arbitration shall be ... (city or country)
3. The language(s) to be used in the arbitral proceedings shall be ...
   

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Filing Insurance Claim For Your Flood-Damaged Car II

Most of the recent visitors of this blog arrived by searching the phrase "affidavit for insurance claim". Thus, I decided to make a part II of my blog on this topic on filing insurance claim for your flood-damaged car. For this post, I decided to share with you a sample affidavit of claim which you may simply customize for your purposes. So here it is:

REPUBLIC OF THE PHILIPPINES   }

PASIG CITY }

AFFIDAVIT

I, ____________, Filipino, of legal age, married, with office address at ____________________, after having been duly sworn to accordance with law hereby depose and state:

1. I am the registered owner of a motor vehicle, specifically described as follows:

Make/Mode:

C.R. No.:

Engine No.:

Chassis No.:

Plate No.:

2. To secure the abovementioned vehicle from loss or damage, I obtained coverage therefor from __________________.

3. On 26 September 2009, because of the heavy rains brought about by typhoon Ondoy, our street, including my house and the aforesaid vehicle, were submerged in ten-feet-deep floodwaters.  It lasted until the morning of 27 September 2009.

4. After the floodwaters had receded, I personally examined the subject vehicle and assessed that, considering the damage to the engine and other integral parts thereof, the same can no longer be used.  Nevertheless, I brought the subject vehicle for damage appraisal and possible repair to ___________.

5. I am executing this Affidavit to attest to the truth of the foregoing and in support of my application with ______________________Insurance for the full payment of the proceeds of the motor vehicle insurance covering the subject vehicle.

In witness whereof, I have hereunto set my hand this ___ day of _____________ 2009 at Pasig City, Philippines.

Affiant

SUBSCRIBED AND SWORN to before me this __ day of _________, affiant exhibited to me his ____________________.

NOTARY PUBLIC

Doc. No. ;

Page No. ;

Book No. ;

Series of 2009.

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Filing Insurance Claim For Your Flood-Damaged Car

Typhoon Ondoy has caused so much damage to the lives of many Filipinos when it devastated Metro Manila and nearby provinces with flashfloods brought about by heavy rains. News accounts show not only human casualties but also cars that have been totally submerged in water, some of them turned upside down.

After the storm, it is now time to pick the pieces and to resume our normal lives. The car, which is one of the prized possessions of a Filipino family, need to be repaired if not altogether replaced depending on the damage it suffered. The shortest route to accomplish this is to file a claim with your car insurance company.

But you should examine your policy if it includes damages caused by typhoon and flood. The more general auto insurance policies exclude damages caused by flood and typhoon. So you must examine your policy if there is an exception clause that says "INCLUSION OF FLOOD AND TYPHOON COVERS". If there is such a provision, then well and good. It is now time to file a claim. The general procedure is as follows:

1. Prepare your policy number.
2. Call your insurance company and secure a claim number. This claim number will be your reference number when you make a follow-up regarding your claim.
3. Prepare an Affidavit of Claim detailing the circumstances that led to the damages to the vehicle.
   
4. Prepare photocopy of the vehicle's registration certificate and current official receipt
5. Prepare photocopy of the driver's license and official receipt.
6. Submit these documents to your insurance company.
7. Have your vehicle examined by the insurance company's estimator.
8. Do not proceed with the repair of your damaged vehicle without the clearance or approval of your insurance company.
9. Once cleared, you may have your vehicle repaired. 

Please remember that you have to pay the deductible amount. This is what is usually referred to as the "insurance participation".

Finally, please remember that even if your car looks fine after floodwaters recede, remember that a car's engine, as well as its braking, steering, and transmission systems are prone to hidden flood damage. As a result, any car that has been subject to flooding should not be started until it has been inspected and cleaned by a qualified mechanic. If you try to start a flood-damaged car before a mechanic looks at it, you could endanger yourself and/or cause further damage to the vehicle. Your mechanic can also give you a repair estimate for your auto insurance company.

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Demand Before Foreclosing On A Mortgage

One common mistake committed by creditors in dealing with their debtors is the failure to send a demand letter. For some, it is sufficient that the loan has reached the maturity date, and without sending any demand, they soon commence to file collection suits, including foreclosure of mortgage if the loan is secured.

That is not correct. You must bear in mind that unless there is demand, your debtor is not yet technically in default. Your right to foreclose on the mortgage or collateral did not accrue on the maturity dates stated in the loan agreement. It is only when demand to pay is made and subsequently refused that your debtor can be considered in default and you obtain the right to file an action to collect the debt or foreclose the mortgage.

The rule in the Philippines is that since a cause of action requires, as essential elements, not only a legal right of the creditor and a correlative duty of the debtor but also "an act or omission of the [debtor] in violation of said legal right," the cause of action does not accrue until the debtor refuses, expressly or impliedly, to comply with his duty.

Thus, the following must be present before a collection suit or foreclosure of mortgage can be validly initiated:

1. a right in favor of the creditor to receive payment;
2. an obligation on the part of the debtor to pay; and
3. an act or omission on the part of the debtor violative of the right of the creditor or constituting a breach of the obligation of the debtor to the creditor.

It is only when the last element occurs that a cause of action arises. Accordingly, a cause of action on a written contract accrues only when an actual breach or violation occurs.

Hence, without a demand sent to the debtor, your foreclosure of mortgage may be annulled by the courts for being illegal.

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Filing a Collection Suit Without A Lawyer

Collection of accounts receivable is one of the aspects that a small business owner should be very familiar with. In our dealings, it is inevitable that we sometimes have to give some accommodations in the form of loan to our customers. It is, of course, important to set up an internal guideline on who do we lend our funds to. There are times though that inspite of strict adherence to the guidelines in ensuring the credit-worthiness of our customer, there will be those who will be unable to honor their commitment.

At times, we are left with no recourse but to sue in court. Going through this process however raises another issue of practicality. Should you spend more (filing fees, attorney's fees) to go after this debt? Is not that a case of good money after bad?

Let me share to you today an instance where you can actually file a suit in court to collect sum of money by yourself and without hiring a lawyer.

If your claim for a sum of money is P100,000 or less (interest and penalties not included), you can actually file a case with the Municipal Trial Court (MTC) or the Metropolitan Trial Court (MeTC). The difference between the two is that the MTC pertains to those located in municipalities and the MeTC are those in cities.

The basic procedure is as follows:

1. You should file a Statement of Claim (Form 1-SCC) which should be under oath and in two copies together with two certified true copies of Certification of Non Forum Shopping (Form 1-A, SCC). Do not forget to attach certified true copies (2 copies also) of the document proving the loan, together with the affidavits of yourself and your witnesses. (The Forms are available here).
2. Upon filing you shall be assessed the appropriate filing fee which must be paid; otherwise, your complaint will not be accepted.
3. Assuming that the court finds your complaint in order, it will issue a Notice, which the court will issue on the same date that it received your Statement of Claim, to you and to your debtor requiring the two of you to appear on a specific time and date. Your debtor will be served copies of your Statement of Claim and supporting documents.
4. Upon receipt of the Notice and Summons, your debtor has 10 days to file his response. He is prohibited to file a motion to dismiss. Should your debtor fail to file a Response, the Court will render judgment based on your Statement of Claim alone, although it may reduce your claim for damages if it is found to be excessive.
5. During the scheduled hearing, both parties must appear. If you cannot make it, you must be able to execute a Special Power of Attorney (SPA) in favor of your representative. Your non-appearance without a representative may result in the dismissal of your case. In the same vein, if your debtor fails to appear, the Court will render judgment based on your Statement of Claim. PLEASE NOTE THAT APPEARANCE OF A LAWYER IN YOUR, OR YOUR DEBTOR'S, BEHALF IS NOT ALLOWED.
6. During the hearing, the judge will briefly explain the procedure to the parties. The judge will then try to resolve the case by mediation, conciliation or any other mode of judicial dispute resolution. If the parties come to an agreement, then the case is resolved at this stage.
7. If no agreement is arrived at, an informal and expeditious hearing will be conducted. It must be completed within one day.
8. After the hearing and on the same day, the judge will render judgment which is FINAL and cannot be appealed from.
9. You will then have to file a motion for the execution of the judgment.

For your convenience, you can access the rules of procedure, as well as the forms needed in filing your action here.

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How To Fire Your Employees Legally

Many employers haphazardly terminate the services of their employees without complying with certain basic requirements laid down by law. This usually results in complicated legal issues and litigation that can negatively impact one's business ventures.

To serve as your guide when confronted with this concern, I will share with you the basic guidelines to implement a valid termination of employment in terms of procedure.

The law basically requires that as employer, you must observe the basic rules of due process when terminating the services of your employees. Practically, this requires that you send two written notices and conduct a hearing to give your employee the ample opportunity to explain his or her side.

1. The first written notice that you should serve on your employee should contain the specific causes or grounds for termination against him/her.

• It should also include an instruction that he/she is given the opportunity to submit his/her written explanation within a reasonable period, say at least five (5) calendar days from receipt of the notice to give the employee an opportunity to study the accusation against him/her, consult a union official or lawyer, gather data and evidence, and decide on the defenses that he/she will raise against the complaint.
  
• Moreover, in order to enable your employee to intelligently prepare his/her explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against hims/her. A general description of the charge is not enough.
• Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under the Labor Code of The Philippines (specifically, Art. 282) is being charged against the employee.
  

2. After serving the first notice, you should schedule and conduct a hearing or conference where the employee will be given the opportunity to:

• explain and clarify his/her defenses to the charge against him/her;
• present evidence in support of his/her defenses; and
• rebut the evidence presented against him/her by the management.

3. During the hearing or conference, the employee is given the chance to defend himself/herself personally, with the assistance of a representative or counsel of his/her choice. Moreover, this conference or hearing could be used as an opportunity to come to an amicable settlement, if feasible.

4. After determining that termination of employment is justified, you should serve the employee a written notice of termination indicating that:

• all circumstances involving the charge against him/her have been considered; and
  
• the grounds have been established to justify the severance of his/her employment.

With these steps you can be sure that in the event that your employee files a complaint for illegal dismissal, you can confidently defend your position and eventually prevail.

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How To Choose Your Corporate Name

Your corporation has a separate and distinct legal standing from you and the other stockholders. It must thus have a name that is essential to its existence. This name cannot be changed except in accordance with the Corporation Code and it is by that name alone that your corporation is authorized to transact business.

It is therefore important that you choose the name of your corporation carefully. Although you may use another name as a business or brand name, you cannot use another corporation's name because it will confuse the public. The law does not allow a corporation to adopt a name identical or deceptively or confusingly similar to any other name already protected by law.

The Securities & Exchange Commission (SEC) has provided guidelines for the use of corporate names in order to avoid future conflicts and to safeguard public interest and I want to share them to you. These are:

1. The corporate name should contain the word "Corporation" or "Incorporated";
2. The name must not tend to mislead or confuse the public and must not contain such descriptive words as "excellent", "fair", "good", etc.;
3. The name should not be similar to one already used by another corporation or partnership;
4. If the proposed name contains a word similar to one already used as part of the firm name or style of a registered company, the proposed name must contain two other words different from the name of the company already registered;
5. If the name or surname of a person is used as part of a corporate name or style, the incorporators must have a basis for such name or surname, as for instance, the name or surname may be that one of the incorportors; otherwise, the consent of the persons whose name name is being used, or his heirs, must be submitted;
6. If the corporate name contains initials, an explanation must accompany the articles stating its meaning and relevance or reason for its use; and
7. The use of the word "State", "Maharlika" and "Barangay" are prohibited since these are reserved for the exclusive use of the government.

Also, there are legal prohibitions on the use of certain words as part of the name of a corporation. These are:

1. The word "National" cannot be used as part of the corporate name;
2. The word "Finance" or "Financing" cannot be used as part of the name of a corporation which is not engaged in financing business;
3. The use of the words "Engineer" and "Engineers" or "Architects" are prohibited to be used; and
   
4. "Investment" cannot be used as part of a corporate name of a corporation if it is not organized as an investment company.

The SEC has the right to require a corporation to change its name in case there will later on appear a person or company with a prior right to the use of that name.

You can actually check the availability of your proposed name by going to the SEC website.

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