Dybongco, Lois N.

Labor Law 1 Case Digest

March 2013 to April 2013

1. Unfair labor practice

In the case of Bankard, Inc. vs National Labor Relations Commission-First Division (G.R. No.
171664, March 6, 2013), the Supreme Court held that:

Acts considered as unfair labor practice relate to the worker’s right to self-organization and
to the observance of a collective bargaining agreement.

Contracting out of services is an exercise of business judgment or management perogative.

Absent any proof that management acted in malicious or arbitrary manner, the Supreme Court
will not interfere with the exercise of judgment by an employer.

2. Recovery entitlement of employee in case of illegal dismissal

In the case of Tangga-an vs Philippines Transmarine Carriers, Inc (G.R. No. 180636, March
13, 2013), the Supreme Court held that:

Following the wording of section 10, R.A. No. 8042 and Supreme Court’s ruling in Marsaman
Manning Agency, Inc. vs. National Labor Relations Commission, 371 Phil. 827 (1999), when the
illegally dismissed employee’s employment contract has a term of less than one year, he shall be
entitled to recovery of salaries representing the unexpired portion of his employment contract.

More than the State guarantee’s the protection of labor and security of tenure, labor
disputes involve the fundamental survival of the employees and their families, who depend
upon the former for all the basic necessities in life.

It is the obligation of the employer to pay an illegally dismissed employee or worker the
whole amount of the salaries or wages, plus all other benefits and bonuses and general
increases, to which he would have been normally entitled had he not been dismissed and had
not stopped working.

3. Grounds for dismissal of an employee

In the case of Torres vs Rural Bank of San Juan, Inc. (G.R. No. 184520, March 13, 2013), the
Supreme Court held that:

As provided in Article 282 of the Labor Code and as firmly entrenched in jurisprudence, an
employer has the right to dismiss an employee by reason of willful breach of trust and
confidence reposed in him.

The Supreme Court has repeatedly emphasized that the act that breached the trust must be
willful such that it was done intentionally, knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

Lost of trust or confidence as a ground for dismissal has never been intended to afford an
occasion for abuse because of its subjective nature.

The award of separation pay in case of strained relations it more beneficial to both parties
in that it liberates the employee from what could be a highly oppressive work environment in as
much as it releases the employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.

In M+W Zander Philippines, Inc. vs. Enriques, 588 SCRA 590, the Court declared that illegal
dismissal, by itself alone, does not entitle the dismissed employee to moral damages; additional
facts must be pleaded and proven to warrant the grant of moral damages.

Pursuant to Memorandum Order No. 28, as implemented by the Revised Guidelines on the
Implementation of the 13th Month Pay Law dated November 16, 1987, managerial employees
are exempt from receiving such benefit without prejudice to the granting of other bonuses, in
lieu of the 13th month pay,to managerial employees upon the employer’s discretion.

Pursuant to Article 111 of the Labor Code, ten percent (10%) of the total award is the
reasonable amount of attorney’s fees that can be awarded.

4. What constitutes constructive dismissal

 In the case of The Orchard Golf and Country Club vs Francisco (G.R. No. 178125, March 18,
2013), the Supreme Court held that:

Constructive dismissal occurs not when the employee ceases to report for work, but when
the unwarranted acts of the employer are committed to the end that the employee’s continued
employment shall become so intolerable.

The power to dismiss an employee is a recognized perogative that is inherent in the

employer’s right to freely manage and regulate his business.

5. Instances wherein occupational diseases can be compensable

In the case of Transocean Ship Management (Phils.), Inc. vs Vedad (G.R. No. 194490-91,

March 20, 2013), the Supreme Court held that:

The fact that Inocencio’s sickness was later medically declared as not work-related does not
prejudice his right to receive sickness allowance, considering that he got ill while on board the
ship and was repatriated for medical treatment before the end of his 10-month employment
contract.

Tonsil cancer or tonsillar carconima is, indeed, not work related; it is not included in the list
of occupational diseases.

6. Work related injury arising out of employment contract

In the case of Magsaysay Maritime Services vs Laurel (G.R. No. 195518, March 20, 2013),
the Supreme Court held that:

For disability to be compensable under Section 20 (B) of the 2000 Philippines Overseas
Employment Administration-Standard Employment Contract (POEA-SEC), it must be the result of
a work related injury or a work-related illness, which are defined as injury(ies) resulting in
disability or death arising out of and in the course of employment and as any sickness resulting
to disability or death as a result of an occupational diseases listed under Section 32-A of the
contract with conditions set therein satisfied.
 Hyperthyroidism is the medical term to describe the signs and symptoms associated with an
over production of thyroid hormones.

Stress is a factor that appears to trigger the onset of Grave’s Disease. Researchers have
documented a definite connection between major life stressors and the onset of Grave’s
disease.

Chronic stress can cause a lot of different problems, and if not managed, it can ultimately
lead to a thyroid condition.

For illness to be compensable, it is not necessary that the nature of the employment to be
the sole and only reason for the illness suffered by the seafarer.

True, hyperthyroidism is not listed as an occupational disease under Section 32-A of the
2000 Philippines Overseas Employment Administration-Standard Employment Contract
(POEA-SEC). Nonetheless, Section 20 (B), paragraph (4) of the said POEA-SEC states that “those
illnesses not listed in Section 32 of this Contract are disputably presumed as work-related”.

The quantum of evidence required in labor cases to determine the liability of an employer
for the illness suffered by an employee for the illness suffered by an employee under the
Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC) is
not proof beyond reasonable doubt but mere substantial evidence or “such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion.

7. Principle of non-diminution

In the case of Vergara, Jr. vs Coca-Cola Bottlers Philippines, Inc. (G.R. No. 176985, April 1,
2013), the Supreme Court held that:

Any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-diminution of the
benefits is actually founded on the Constitutional mandate to protect the rights of workers, to
promote their welfare, and to afford them full protection.

Their is diminution of benefits when the following requisites are present: (1) the grant or
benefit is founded on a policy or has ripened into a practice over a long period of time; (2) the
practice is consistent and deliberate; (3) the practice is not due to error in the construction of
application of a doubtful or difficult questions of law; and (4) the diminution or discontinuance
is done unilaterally be the employer.

To be considered as a regular company practice, the employee must prove by substantial

evidence that the giving if the benefit is done over a long period of time, and that it has been
made consistently and deliberately.

The principle against diminution of benefits is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long period of time which is
consistent and deliberate; it presupposes that a company practice, policy and tradition favorable
to the employees has been clearly established; and that the payments made by the company
pursuant to it have ripened into benefits enjoyed by them.

8. Reinstatement of an employee in cases of illegal dismissal

In the case of Bañares vs Tabaco Women’s Transport Service Cooperative (G.R. No. 197353,
April 1, 2013), the Supreme Court held that:

Reinstatement, as a labor law concept, means the admission of an employee back to work
prevailing prior to his dismissal; restoration to a state or position from which one had been
removed ar separated, which presupposes that there shall be no demotion in rank and/or
diminution of salary, benefits and other privileges; if the position previously occupied no longer
exist, the restoration shall be to a substantially equivalent position in terms of salary, benefits
and other privileges.

An illegally dismissed employee is entitled to reinstatement without loss of seniority rights

and to other established employment privileges, and to his full backwages.

If the grant or benefit is founded on a express policy or has, for a considerable period of
time, been given regularly and deliberately, then the grant ripens into a vested right which the
employer cannot unilaterally diminish, discontinue or eliminate without offending the declared
constitutional policy on full protection to labor.

For abandonment to exist, it is essential (1) that the employee must have failed to report
for work or must have been absent without valid or justifiable reason; and (2) that there must
have been a clear intention to sever the employer-employee relationship manifested by some
overt acts.

Reinstatement and payment of backwages as the normal consequence of illegal dismissal,

presuppose that the previous position from which the employee has been removed is still in
existence or there is an unfilled position of a nature, more or less, similar to the one previously
occupied by said employee. Under the doctrine of strained relations, payment of separation pay
is considered an acceptable alternative to reinstatement when the latter option is no longer
desirable or viable.

Where reinstatement is no longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an alternative.

9. Constructive dismissal of an employee

In the case of Reyes vs RP Guardians Security Agency, Inc (G.R. No. 193756, April 10, 2013),
the Supreme Court held that:

The respondent was guilty of illegal dismissal when it placed petitioners on floating status
beyond the reasonable six-month period after the termination of their service contract with
Banco de Oro. Temporary displacement or temporary off-detail of security guard is, generally,
allowed in a situation where a security agency’s client decided not to renew their service
contract with the agency and no post is available for the relieved security guard. Such situation
does not normally result in a constructive dismissal. Nonetheless, when the floating status lasts
for more than six (6) months, the employee may be considered to have been constructively
dismissed.

The Constitution guarantees the right of workers to security of tenure, thus, employees can
only be dismissed for just or authorized causes and after they have been afforded the due
process of law.

Settled is the rule that that an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges, and to his full
backwages, inclusive of allowances and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld up to the time of actual reinstatement.
If reinstatement is not possible, however, the award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally dismissed
employee in order to alleviate the economic damage brought about by the employee’s
dismissal.
"Reinstatement is a restoration to a state from which one has been removed or separated"
while "the payment of backwages is a form of relief that restores the income that was lost by
reason of the unlawful dismissal." Therefore, the award of one does not bar the other.
In this case, respondent would have been liable for reinstatement and payment of backwages.
Reinstatement, however, was no longer feasible because, as found by the LA, respondent had
already ceased operation of its business. Thus, backwages and separation pay, in the amount of
one month for every year of service, should be paid in lieu of reinstatement.

10. Management perogative of employer, employees benefit with regards to non-diminution

of benefits
In the case of Royal Plant Workers Union vs Coca-Cola Bottlers Philippines, Inc. Cebu Plant
(G.R. No. 198783, April 15, 2013), the Supreme Court held that:
The court 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.

There is no law that requires employers to provide chairs for bottling operators. The Labor
Code, specifically Article 132 thereof, only requires employers to provide seats for women, no
similar requirement is mandated for men or male workers. The rights of the Union under any
labor law were not violated. There was no violation either of the Health, Safety and Social
Welfare Benefit provisions under Book IV of the Labor Code of the Philippines. As shown in the
foregoing, the removal of the chairs was compensated by the reduction of the working hours
and increase in the rest period. The directive did not expose the bottling operators to safety and
health hazards.
 The operators’ chairs cannot be considered as one of the employee benefits covered in
Article 100 of the Labor Code. In the Court’s view, the term “benefits” mentioned in the
non-diminution rule refers to monetary benefits or privileges given to the employee with
monetary equivalents. Such benefits or privileges form part of the employees’ wage, salary or
compensation making them enforceable obligations.

The operators’ chairs cannot be considered as one of the employee benefits covered in
Article 100 of the Labor Code. In the Court’s view, the term “benefits” mentioned in the
non-diminution rule refers to monetary benefits or privileges given to the employee with
monetary equivalents.

The Supreme Court often declines to interfere in legitimate business decisions of employers.
The law must protect not only the welfare of the employees, but also the right of the employers.
Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage
interference with an employer’s judgment in the conduct of its business. For this reason, the
Court often declines to interfere in legitimate business decisions of employers. The law must
protect not only the welfare of the employees, but also the right of the employers.

11. Degree of proof required in the termination of services of an employee

In the case of Mendoza vs HMS Credit Corporation (G.R.No. 187232, April 17, 2013), the
Supreme Court held that:

In instances in which the termination of employment by the employer is based on breach of

trust, a distinction must be made between rank-and-file employees and managerial employees.

Recent decisions of this Court provides that with respect to rank-and-file personnel, loss of
trust and confidence as ground for valid dismissal requires proof of involvement in the alleged
events in question, and that mere uncorroborated assertions and accusations by the employer
will not be sufficient. But as regards a managerial employee, the mere existence of a basis for
believing that such employee has breached the trust of his employer would suffice for his
dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not
required, it being sufficient that there is some basis for such loss of confidence, such as when
the employer has reasonable ground to believe that the employee concerned is responsible for
the purported misconduct, and the nature of his participation therein renders him unworthy of
the trust and confidence demanded by his position.

Further, in the case of termination by the employer, it is not enough that there exists a just
cause therefor, as procedural due process dictates compliance with the two-notice rule in
effecting a dismissal: (a) the employer must inform the employee of the specific acts or
omissions for which the dismissal is sought, and (b) the employer must inform the employee of
the decision to terminate employment after affording the latter the opportunity to be heard.

On the other hand, if the termination of employment is by the employee, the resignation
must show the concurrence of the intent to relinquish and the overt act of relinquishment.