RODOLFO C. ONDEVILLA, SUBSTITUTED BY HIS SISTER, ROSA C. ONDEVILLA, PETITIONER, VS. COLEGIO DE SAN JUAN DE LETRAN (LAGUNA), AND REV. FR. ARTHUR DINGEL, RESPONDENTS.

Ondevilla versus Colegio de San Juan de Letran

The Case

This is a labor case about a long-serving finance executive of a Catholic school in Laguna who was told, after fourteen years of service, that he was never really an employee at all. Rodolfo Ondevilla, substituted in the Supreme Court by his sister Rosa, brought a complaint for illegal dismissal, backwages, reinstatement, and money claims against Colegio de San Juan de Letran in Calamba City, Laguna, and its president, Reverend Father Arthur Dingel. The case matters because it gathers in one decision four questions that examiners love: who is a regular employee under the four-fold test, whether a managerial employee may share in collective bargaining agreement benefits, whether labor tribunals may rule on the withholding of income tax, and when an employee may be deemed retired before the compulsory age of sixty-five.

Procedural History

Ondevilla filed his complaint for illegal dismissal before the Labor Arbiter. The Labor Arbiter ruled in his favor, declaring him illegally dismissed and ordering reinstatement with backwages, thirteenth and fourteenth month pay, damages, and attorney's fees. Both sides appealed to the National Labor Relations Commission. The Commission denied both appeals but modified the award, reckoning backwages from the first of July 2018 and deleting the moral and exemplary damages. On the school's motion for reconsideration, the Commission partly granted it: it kept the finding of illegal dismissal, deleted the backwages, deleted the order of reinstatement, and instead ordered separation pay and retirement pay, treating Ondevilla as retired at the end of business hours on the twenty-ninth of August 2019. Ondevilla's motion for reconsideration was denied.

Ondevilla then filed a petition for certiorari with the Court of Appeals. The appellate court granted the petition in part. It annulled the Commission's rulings only insofar as they held that Ondevilla was terminated on the first of July 2018 and retired on the twenty-ninth of August 2019, and instead declared him illegally dismissed on the twenty-ninth of August 2019, with full backwages until his optional retirement on the thirty-first of July 2020, retirement pay for his entire service, and attorney's fees. Ondevilla moved for reconsideration, which the Court of Appeals denied. The matter then reached the Supreme Court by petition for review on certiorari under Rule 45.

Facts

The school hired Ondevilla in June 2004 as Comptroller for one year, and renewed him for another year. In May 2006 he was appointed Assistant Vice President for Finance and Controller, and also served concurrently as Acting Internal Auditor. His appointment as Assistant Vice President for Finance and Controller was renewed every three years thereafter, until it expired on the thirtieth of June 2018.

In June 2018 a new management took over and implemented a new organizational structure. Ondevilla was appointed Controller effective the first of July 2018 to the twenty-ninth of August 2019, but he expressed reservation, claiming the appointment was a demotion in rank that would substantially reduce his salaries and benefits. The school's Vice President for Administration wrote to him that there was no occasion for demotion since he was a consultant and not an organic employee. Ondevilla later sought clarification on the non-application to him of the Tax Reform for Acceleration and Inclusion Law, and wrote the president about his supposed demotion without due process. The president reminded him that his appointment as Controller would end on the twenty-ninth of August 2019 and asked him to turn over his functions by that date.

In November 2019 Ondevilla filed his complaint, claiming regular status as shown by his continued appointments, his Employee Status and Compensation Profiles, and an HRD form indicating regular employment. The school countered that he was an independent contractor: he prepared his own profiles, worked without supervision over the manner and means of his work, was exempt from logging in and out, reported only about three times a week, earned more than twice the highest paid official, and had fixed contract dates. The Labor Arbiter and the Commission found him a regular employee; the Court of Appeals held that this finding had already attained finality.

Issues

• Whether or not Ondevilla, a managerial employee, is entitled to the benefits provided under the collective bargaining agreement.
• Whether or not the labor tribunals have jurisdiction over the question of the withholding of income tax from his salaries under the Tax Reform for Acceleration and Inclusion Law.
• Whether or not Ondevilla may be considered retired from the service before reaching the age of sixty-five.

Applicable Provisions

Article 255 of the Labor Code provides:

Article 255. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. — Managerial employees are not eligible to join, assist or form any labor organization.

This bars Ondevilla, a managerial employee, from the bargaining unit and therefore from the benefits negotiated for rank-and-file employees, save by established company practice.

Article 302 of the Labor Code, as amended by the New Retirement Pay Law, provides:

Article 302. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

This governs Ondevilla's retirement in the absence of a company retirement plan, and fixes the ages within which retirement may be demanded or chosen.

Ruling

On the first issue, the Court held that Ondevilla is not entitled to collective bargaining agreement benefits. As a managerial employee he is barred by Article 255 from joining the bargaining unit, and he cannot share in concessions obtained by the union. The exception is an established company practice of extending those benefits to managerial employees, which requires an indubitable showing that the employer consistently and deliberately gave the benefits over a long period, knowing the employees were not covered by law. Ondevilla presented no documentary evidence that he ever received such benefits, and the profiles he relied on merely stated "other benefits as prescribed" without any copy of the agreement in the records. The Court also noted that he raised the claim only when his employment was on the brink of termination.

On the second issue, the Court held that the labor tribunals have no jurisdiction. The withholding of tax from salaries is governed by the Tax Code, and disputes over its propriety or legality must go to the Commissioner of Internal Revenue. Ondevilla's claim was in substance a refund of taxes, a matter expressly vested in the Commissioner. The Court distinguished the earlier case of Santos versus Servier Philippines, where the tax question was intertwined with the main issue of whether retirement benefits had been fully paid.

On the third issue, the Court ruled for Ondevilla. Under Article 302, an employee may retire upon reaching the retirement age in the agreement or contract, and in the absence of such a plan, the law supplies the ages. The Court held that Ondevilla did not expressly agree to an early retirement, and his letter of October 2019 could not be read as an election to retire. He therefore cannot be considered retired before reaching sixty-five.

Doctrine

• Managerial employees are ineligible to join any labor organization under Article 255, and as a rule cannot claim benefits negotiated under a collective bargaining agreement; the exception is an established company practice, proved by consistent and deliberate grant over a long period.
• Labor tribunals have jurisdiction only over labor disputes; questions on the accuracy or legality of withholding tax are tax matters for the Commissioner of Internal Revenue.
• Retirement before the compulsory age must be expressly agreed or clearly elected; it cannot be implied from a letter responding to an employer's demand.

Disposition

The petition was partly granted: Ondevilla was denied collective bargaining agreement benefits and his tax claim was dismissed for lack of jurisdiction, but he was declared not retired before sixty-five, and the case was resolved accordingly in his favor on that point.

Remember This

Memorize the line that a manager cannot sit at the bargaining table and then eat from it. Examiners use this case to test the managerial employee exception to collective bargaining benefits and the boundary between labor and tax jurisdiction.