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AT A GLANCE:
Flexible work arrangements provide employers a means to adjust during times of economic difficulties without outright laying off employees en masse. However, it must be done with the consent of the employees, lest it constitute an unconsented diminution in pay. Additionally, procedural defects with respect to providing notice to DOLE regarding such arrangements will not invalidate the flexible work arrangement.
On June 16, 2017, petitioners were employed by Fiber Textile Manufacturing Corp. (FMC), a textile manufacturing business, under a six-day workweek arrangement. However, this arrangement was reduced to two to three day workweeks, prompting the petitioners to seek the assistance of the Department of Labor and Employment (DOLE).
On July 27, 2018, petitioners went to FMC’s premises but Judy Que, the HR Manager, angrily told the petitioners to look for another job or to resign. During a mediation conference, a certain Sammy Chua (Chua) admitted that he advised petitioners to look for another job.
Petitioners filed a complaint for constructive illegal dismissal, reduction of workweek, and nonremittance of SSS, PhilHealth, and pag-IBIG contributions against FMC, Sherly, Judy, and Jason before the DOLE Regional Arbitration Branch II.
FMC and its officers alleged that on July 9, 2018, the management and employees of FMC were prevented from entering its warehouse in Valenzuela, containing raw materials and important office documents. FMC explained that the lack of raw materials gravely affected factory operations in Bulacan. As a remedy, FMC made an unscheduled purchase of fabrics, but there was a delay in the delivery. Due to the lack of materials, the number of production workers allegedly exceeded the available work in the factory. FMC then decided to implement a temporary work rotation schedule of production personnel until the raw materials were delivered.
On July 16, 2018, FMC issued Company Memo – 81, informing all personnel of the immediate implementation of the work rotation schedule. This was allegedly posted in a conspicuous place in the factory for everyone to read. The schedules prepared by the supervisor allotted each worker at least two working days in a week.
Each of the petitioners eventually stopped reporting in for work, due to the work rotation schedule and the aforementioned comments of Judy Que and Chua for them to leave or to resign. In July 2018, Arguel allegedly filed for leave to take care of his child while his wife was in the province taking care of her mother. His leave application was approved. After his leave though, he no longer reported for work. Delara was suspended for 12 days for sleeping during work hours. He also no longer returned to work after serving his suspension. During the first week of August 2018, Bacani, Cabrera, Sua, and Sebolino did not report for work on their scheduled work days. FMC denied that Chua admitted telling petitioners to look for another job or that Judy told them to resign, get out, and never return. It maintained that there was no illegal dismissal that occurred, actual or constructive.
In their reply, petitioners claimed that Company Memo – 81 should not be given consideration because FMC did not report the rotation plan to the DOLE and its claim that there was a lack of raw materials was not supported by substantial evidence.
On June 10, 2019, Labor Arbiter Jennifer Santos found that Bacani, Cabrera, Delara, Arguel, Waje, Sua, and Sebolino were constructively dismissed, while the complaints of Cabatuan, Jr. and Rivero were dismissed for failure to file their respective position papers.
The National Labor Relations Commission reversed and set aside the decision of the labor arbiter, ruling that the absence of notice to the DOLE Regional Office of the adoption of a flexible workweek is a mere procedural infirmity that did not affect the valid exercise of management prerogative by FMC.
The Court of Appeals dismissed the petition. It ruled that the notice requirement under DOLE Department Advisory No. 2, Series of 2009, serves only to assist and guide employers in implementing flexible work arrangements. More importantly, it lent credence to FMC’s allegation of a lack of raw materials, thereby justifying the implementation of reduced workdays. It found the arrangement to have been made in good faith, with the consent of production supervisors and personnel, and, ultimately, falling within the management prerogative of FMC.
The issue in this case is whether or not failure to notify the DOLE of the adoption of a flexible work arrangement, under DOLE Department Advisory No. 2, Series of 2009, invalidates the flexible work arrangement.
The Supreme Court granted the petition.
The scope of DOLE Department Advisory No. 2, Series of 2009 covers only the following flexible work arrangements and other similar alternative schemes that mitigate the loss of income of the employees:
- Compressed Workweek
- Reduction of Workdays
- Rotation of Workers
- Forced Leave
- Broken-time Schedule
- Flexi-holidays schedule
Thus, under DOLE Department Advisory No. 2, Series of 2009, a company seeking to adopt a flexible work arrangement must meet the following requisites: first, the adoption of a different work schedule or scheme is expressly and voluntarily supported by a majority of the workers affected, i.e., there should have been a consultation with the employees before a part time work arrangement is adopted and implemented; second, the implementation of a non-traditional work arrangement should be temporary. For reduction of workdays, specifically, the same should not exceed six months; third, the DOLE Regional Office should be notified before any flexible work arrangements may be implemented; and finally, the employer is suffering from actual or reasonably imminent economic difficulties or national emergencies and its adoption of flexible work arrangement was done in good faith to cope with such circumstances.
In such a case, the employer’s failure to notify the DOLE prior to the implementation of the flexible work arrangements does not remove the tremendous effect of the national emergency or economic difficulties on the finances and operations of the employer. Thus, the consequences relevant to the situation which, in the first place, necessitated the employment of drastic measures, like reducing the work hours of employees, remain pressing and valid. Consequently, we find no reason why the employer’s adoption of any of the flexible work arrangements under DOLE Department Advisory No. 2, Series of 2009, should not be upheld as lawful so long as the other requisites for its validity are present and proved. The employer, however, shall not escape unpunished for its utter disregard of the employee’s right to due process. The employer shall still be held liable, not by invalidating its adoption of a flexible work arrangement, but by being liable to indemnify the employee for the wrong caused through the payment of nominal damages.
In cases where flexible work arrangements under DOLE Department Advisory No. 2, Series of 2009 and similar issuances were validly implemented, but the employer failed to give prior notice to the DOLE, the adoption and implementation of the flexible work arrangements shall remain valid but the employer shall be liable for nominal damages in the amount of PHP 100,000.00 for each employee. We find that PHP 100,000.00 is an amount high enough to serve (i) as an effective deterrent against employers from failing to comply with the notice requirement under DOLE Department Advisory No. 2, Series of 2009 and (ii) as sufficient compensation and indemnity to employees who were prejudiced by such noncompliance.
Where, however, noncompliance with the notice requirement under DOLE Department Advisory No. 2, Series of 2009 is attended also by noncompliance with the other requisites for the valid adoption of flexible work arrangement, the adoption and implementation of such flexible work arrangement shall be declared invalid and the affected employees shall receive the proper reliefs corresponding to constructive or illegal dismissal.
First, the adoption of the flexible work arrangement must be expressly and voluntarily supported by a majority of the workers affected, such that there was a prior consultation with the employees. The burden to prove compliance with this requirement lies with FMC, the employer. This, FMC failed to discharge. Here, the facts merely indicated that FMC management called for a meeting to inform the production supervisors and personnel of the predicament involving FMC’s raw materials and the need to implement a work rotation schedule. Thereafter, Company Memo – 81 was issued, informing the workers of the adoption of flexible work arrangement.
Next, the third requisite or the notice requirement. Albeit the labor tribunals and appellate court differed on the legal consequence of noncompliance therewith, all are uniform in their finding that FMC failed to adduce any evidence that it sent notice to the DOLE Regional Office regarding its reduction of workdays and rotation of workers. Neither did FMC, in any of its pleadings, proffer any explanation for its noncompliance. What was consistently reiterated was that the same did not render its implementation of the flexible work arrangements illegal. Verily, FMC’s failure to notify the relevant DOLE Regional Office of its intention to reduce its worker’s workdays and to rotate their work prior to implementation is also beyond contention. Finally, FMC also failed to establish the fourth requisite, i.e., that it was suffering from actual or reasonably imminent economic difficulties or national emergencies and its adoption of flexible work arrangement was done in good faith to cope with such circumstances. Whether actual or imminent, FMC did not submit as evidence any relevant reports or documents to substantiate its claim. What it merely adduced were several pleadings-verified complaint, answer, and complaintaffidavit-from the ejectment case and grave coercion case involving its Valenzuela City compound, which was allegedly locked out, causing the lack of raw materials. But these are not proofs. These pleadings do not contain incontestable facts upon which the reduction of workdays can be justified, but mere allegations that still need to be proved during trial.
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. Here, petitioners suffered a decrease in their pay due to the unlawful adoption by FMC of rotation of workers and reduction of work days,rendering the continued employment of petitioners unreasonable or unlikely. As a matter of fact, petitioners were quick to seek assistance from DOLE regarding FMC’s reduction of their six-day work week to two to three days per week.Vedly, we find that petitioners were constructively dismissed by FMC.
The Court ruled that failure to notify the DOLE regional Office does not, by itself, render the arrangement invalid. The 2009 Advisory provides that flexible work arrangements must be a temporary arrangement mutually agreed upon by the employer and the employee and communicated to the Regional Office which has jurisdiction over the workplace. Flexible work arrangements are perfected by mere consent, therefore their perfection and validity do not hinge on any specific formality or the prior performance of an act, such as notifying the DOLE of their adoption. Failure to notify the DOLE constitutes a procedural defect that does not affect the validity of the flexible work arrangement. As long as the arrangement was mutually agreed upon by the employer and employees, it remains valid. However, the employer may be held liable for nominal damages for noncompliance with procedural due process.
Source: Andro T. Bacani, et al., Vs. Fiber Textile Manufacturing Corp., et al. (G.R. No. 271518 | September 30, 2025)
Related article: What is the purpose of a flexible working arrangement?
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