Philippine Labor Law and Jurisprudence

Labor cases may entail the award of damages, including those originating from sanctions
imposed by the Civil Code, such as torts, human relations, breach of contract, etc.,
provided these arise from employer- employee relations. Amendments by R.A. 6715 on Alt
217 of the Code confer on labor arbiters original and exclusive jurisdiction over termination
cases and over claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations. This has erased the distinction--to determine
jurisdiction--between the right to dismiss and the manner of dismissal. Both are now under
the jurisdiction of labor arbiters. This includes claims for moral damages arising from the
manner of the dismissal. In. this case, however, the plaintiff has to plead and prove that
the manner was oppressive or anti-social, resulting in grave anxiety, social humiliation,
besmirched reputation, wounded feelings, etc. entitling him to moral damages. A
dismissed employee cannot justify moral damages solely upon the premise that he was
fired without just cause. Additional facts must be pleaded and proved to warrant the grant
of damages under the Civil Code. When he institutes proceedings before a labor arbiter,
he should claim for all said relief, and should not split his causes of action and sue in two
forums. This would lead to multiplicity of suits, which is prejudicial to the efficient
administration of justice. (Primero vs. ICA, 156 SCRA 435) An action for damages based
on tort is applicable if employment relationship exists, although the employer is not
engaged in any business or industry. (Martin vs. CA, 205 SCRA 591).

Moral damages are recoverable only where the employee's dismissal was attended by bad
faith, or constituted an act oppressive to labor, or was done in a manner contrary to
morals, good customs, or public policy. A party is entitled to moral damages only where
grounds for actual or compensatory damages are established. Without the latter, a claim
for moral damages has no leg to stand on. In the absence of a wrongful act or omission, or
of fraud or bad faith, moral damages cannot be awarded. Mere allegations of entitlement to
moral damages would not suffice to justify the award, absent any concrete proof. In the
absence of fraud or bad faith on the part of the employer, an award of moral damages is
not proper. (Rutaqulo vs.NLRC et a], supra) It is incumbent upon the petitioner to prove
there was malice or bad faith on the part of the employer In terminating him. (Suario vs.
BPI and NLRC, 176 SCRA 699) In one case, lack of due process was held to justify an
award of moral damages, and for having been compelled to litigate, attorney's fees were
deemed to be in order. (National Service Corp. vs. NLRC, 168 SCRA 122).

Exemplary damages may be awarded only if the dismissal was effected in a wanton,
oppressive, or malevolent manner (Garcia vs. NLRC, 235 SCRA 632; Estiva vs. NLRC,
225 SCRA 169).

In actions for recovery of wages or where an employee was forced to litigate and incur
expenses to protect his rights and interests, he is entitled to an award of attorney's fees.
(Building Care Corp. vs. NLRC, 268 SCRA 666) This applies as well to household helpers,
laborers and skilled workers. (Art. 2208, Civil Code; Rasonable vs. NLRC, 253 SCRA 815,
819) But attorney's fees are not recoverable where there is no sufficient showing of bad
faith. (Thmbiga vs. NLRC, 274 SCRA 338) Attorney's fees may be granted where the

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illegal dismissal entails an unlawful withholding of wages. (Lantion vs. NLRC, 181 SCRA
513) In such case, the culpable party may be assessed attorney's fees equivalent to 10
percent of the amount recovered. (Art. 111 LC cited in Lincoln Gerard vs. NLRC, 187
SCRA 701)

14. RESIGNATIONS AND CONSTRUCTIVE DISMISSALS. An employee who voluntarily

resigns is not entitled to separation pay, unless stipulated in an employment contract or a
collective bargaining agreement, or sanctioned by established employer practice or policy.
( CJC Trading Inc. vs. NLRC, 246 SCRA 724) A resigned employee who desires to take
his job back has to reapply the refit and he shall have the status of a stranger who cannot
unilaterally demand an appointment. Resignation, after its acceptance, can no longer be
withdrawn without the consent of the employer. (Phil.lbday, Inc. vs. NLRC, 268 SCRA
202).

Non-entitlement to separation pay and other termination benefits is subject to additional

exceptions, as when the resignation is forced, and when it constitutes constructive
dismissal. (Concrete Aggregates Corp. vs.NLRC, 177 SCRA 337).

Constructive dismissal is a quitting because continued employment is rendered

impossible, unreasonable, or unlikely as an offer involving a demotion in rank and
diminution in pay. (Phil - Japan Active Carbon Corp. vs. NLRC, 171 SCRA 164) Hence,
where a company suffers great financial losses such that it has no choice but to resort to
reassignment of its employees to lower positions, or to reduction of working hours and
days, eventually resulting in retrenchment, or virtually depriving them of their jobs by
gradual diminutive of salaries and benefits, there is constructive dismissal. (Lemery
Savings and Loan Bank vs. NLRC, 205 SCRA 492).

The transfer of an employee may amount to constructive dismissal if it results in demotion

in rank or diminution in salary, benefits and other predicative of the employee. A transfer
that entails greater transportation expenses means that the employee would earn less. For
practical purposes, he would suffer a cut in his salary. Unnecessary or inconvenient and
prejudicial transfers cannot be justified. Neither may management exercise this prerogative
as a pretext for disciplining its employees without due process. (Asis vs. NLRC, 252 SCRA
379) There is constructive dismissal when the reassignment of an employee involves a
demotion in rank or a discrimination in pay. (Ledesma vs. NLRC, 246 SCRA47).

It has been held that an employee originally assigned as a food technologist in a laboratory
where only highly trusted authorized personnel are allowed access, who is transferred to a
vegetable processing section where she did menial, not mental, work is an act of clear
discrimination, insensibility or disdain by an employer that constitutes constructive
dismissal. (Blue Dairy Corp. et a] vs. NLRC et a] Sept 14, 1999).

Where an employer terminates an employee, but by circumstance or stratagem makes this

appear as a resignation, there is constructive dismissal which entitles the employee to
separation benefits. Thus, where a bank directs its employees to submit letters of
"courtesy resignation", the bank in effect forces upon its employees an act which they

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themselves should voluntarily do. Resignation, per Se, means voluntary relinquishment of
a position or office. Adding the word "courtesy" does not change the essence of
resignation. (Batungbacal vs. Associated Bank and NLRC, 168 SCRA 600) Failure to file a
courtesy resignation cannot automatically result in dismissal or inclusion in a retrenchment
program. (Araneta Univeai1y Foundation vs. NLRC, 155 SCRA 301)

An employee forced to resign is considered to have been fire, dismissed. (Guatson Int'l
Travel and Tours, Inc . vs. NLRC, 230 SCRA 81

In another case, it was held that an alleged "compulsory was in effect a dismissal due to
violations of the requirements on notice there being no proof of losses, and if done three
years prior to the employee retirement age. Under tile circumstances, the employee
concerned is entitled to full tackwages,a1lowances and benefits for three years, plus
retirement benefits equivalent to gross monthly pay, allowances and other benefits for
every year of service up to age 60. (Villeria vs. NLRC and BLTB Co., 193 SCRA 686)

But the imposition of a forced leave due to economic conditions without a showing that it
was for the purpose of defeating or circumventing rights of employees is a management
prerogative. (Phil. Graphic Arts vs. NLRC, 166 SCRA 118) Neither is there anything illegal
with the practice of allowing an employee to resign, instead of being separated for just
cause, so as not to smear his employment record. (Sicangco vs. NLRC, 235 SCRA96).

The placing of security guards on "floating status" (i.e. no work assignment and no wages)
exceeding six months constitutes termination of employment. Thus, they are entitled to the
corresponding benefits for their separation. (Agro-Commercial Security Services Agency
vs. NLRC, 175 SCRA 790) This is because the suspension of operations of a business or
undertaking which does not terminate employment should be for a period not exceeding
six months (Art. 286 LC). Inactivity of an employee placed on reserve status should
continue only for a period of six months, otherwise the employer could be liable for
constructive dismissal under Art. 286 of the Labor Code. (Manipon vs. NLRC, 239
SCRA47 1) The temporary layoff wherein employees cease to work should not last longer
than six months, after which period they should either be recalled to work or permanently
retrenched following the requirements of the law, (Sebuguero vs. NLRC. 248 SCRA 532)

15. PREVENTIVE SUSPENSION. The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious and imminent threat to
the life or property of the employer or of his co-workers (Rule XIV, Sec. 3 OR). This rule
gives the only valid ground for preventive suspension, namely if the continued employment
of the worker poses a serious and imminent threat to the life or property of the employer or
of his co-workers. If this threat is absent, preventive suspension is improper. Hence,
preventive suspension is not proper if the employee i charged with willful disobedience for
violation of company rules due to repeated absences and tardiness. (Global Inc. vs.
Atienza, 143 SCRA 69) Preventive suspension does not prejudge the employee's guilt, but
is necessary for the protection of the company, its operations and assets pending
investigation of the alleged malfeasance of the employee. (Soriano vs, NLRC, 155 SCRA
124)

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Preventive suspension should not last longer than 30 days. The employer shall thereafter
reinstate the worker in his former or in a substantially equivalent position, or the employer
may extend the period of suspension provided that during the period of extension, he pays
the wages and other benefits due to the worker. In such case, the worker shall not be
bound to reimburse the amount paid to him during the extension if the employer decides,
after completion of the hearing, to dismiss the worker (Rule XIV, Sec. 4). A preventive
suspension going beyond 30 days incurs a p i ,000 fine. (JRS Business Corp. vs. NLRC,
246 SCRA 445)

The period of preventive suspension shall be included in computing the time when
compensation was withheld from the dismissed employee if his dismissal is found to be
illegal. (Buhain vs. CA and Swift Foods, supra)

16. TERMINATION BY THE EMPLOYEE. An employee may terminate his employment

with or without just cause. If without just cause, he may do this by serving a written notice
to the employer at least one month in advance. The employer upon whom no such notice
was served may hold the employee liable for damages. Serving the written notice is
required by law, but the practice of requiring an employee to stay or complete the 30-day
period prior to the effectively of his resignation becomes discretionary on the part of
management as an employee who intends to resign may be allowed a shorter period
before his resignation becomes effective. Non-compliance with the period cannot be used
by management as a subterfuge to avoid the payment of separation pay. (Phimco
Industries, Inc. vs. NLRC, 273 SCRA 286) An employee may put an end to the employer-
employee relationship without serving any notice on the employer for any of the following
just causes:

a) Serious insult by the employer or his representative on the honor and person of the
employee. As the employer has the right to expect and receive from the employee good
work, diligence and good behavior, so also the employee has the right to receive from his
employer a just wage and fair treatment.

b) Inhuman and unbearable treatment accorded the employee by the employer or his
representative. In this case, the employer may even be liable for damages, because under
Art. 21 of the Civil Code, any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.

c) Commission of a crime or offense by employer or his representative against the person

of the employee or any of the immediate members of his family. The employer in this case
will also be liable for whatever penalty the Penal Code provides for the crime thus
committed.

d) Other causes analogous to any of the foregoing (cf . Art. 285 LC).