Topic: Constructive Dismissal

Ponente: Perez, J.
Chiang Kai Shek College v. Torres, G.R. No. 189456, April 2, 2014
Facts: Petitioner Chiang Kai Shek College is a private educational institution
that offers elementary to college education to the public. Individual
petitioner Carmelita Espino is the Vice-President of the school. Respondent
had been employed as a grade school teacher of the school from July 1970
until 31 May 2003.
Respondent was accused of leaking a copy of a special quiz given to Grade 5
students of HEKASI 5. Petitioners came to know about the leakage from one
of the teachers of HEKASI 5, Aileen Benabese. Ms. Benabese narrated that
after giving a special quiz, she borrowed the book of one of her students,
Aileen Regine M. Anduyan, for the purpose of making an answer key. When
she opened Aileens book, a piece of paper fell. Said paper turned out to be a
copy of the same quiz she had just given and the same already contained
answers.
Assistant Supervisor Encarnacion Koo, confronted respondent, who had
initially denied leaking the test paper but later on admitted that she gave the
test paper to Mrs. Teresita Anduyan, her co-teacher and the mother of Aileen.
The schools Investigating Committee found respondent and Mrs. Anduyan
guilty of committing a grave offense of the school policies by leaking a
special quiz. The Investigating Committee had actually decided to terminate
respondent but the respondent pleaded that she suspended instead and that
she will resign at the end of the school year. Petitioners acceded to the
request.
On 14 February 2003 however, respondents counsel sent a letter to
petitioners demanding the payment of her backwages, bonus, teachers day
gift, moral damages and exemplary damages. Respondents counsel also
required petitioner to cease and desist from calling respondent for her
resignation at the end of the school year 2002 2003.
Petitioners, through counsel, wrote to respondents counsel asserting that
respondent was being terminated but the latter requested that "she be

suspended instead on condition that she will tender her voluntary resignation
at the end of the school year."
On 10 June 2003, respondent filed a complaint for constructive dismissal and
illegal suspension with the Labor Arbiter. However, the complaint was
dismissed for lack of merit. The Labor Arbiter deemed respondents
suspension coupled with petitioners allowance of respondents resignation
at the end of the school year as generous acts considering the offense
committed.
On appeal, the NLRC affirmed the decision but ordered the petitioners to pay
separation pay equivalent to one-half (1/2) month salary for every year of
service on the grounds of equity and social justice.
The Court of Appeals reversed the NLRC
Reconsideration was filed but it was denied.

decision.

Motion

for

Hence, this petition.

Issue: Does the schools act of imposing the penalty of suspension instead
of immediate dismissal from service at the behest of the erring employee, in
exchange for the employees resignation at the end of the school year,
constitute constructive dismissal?
Ruling: NO.
Resignation is the voluntary act of an employee who is in a situation where
one believes that personal reasons cannot be sacrificed for the favor of
employment, and opts to leave rather than stay employed. It is a formal
pronouncement or relinquishment of an office, with the intention of
relinquishing the office accompanied by the act of relinquishment. As the
intent to relinquish must concur with the overt act of relinquishment, the
acts of the employee before and after the alleged resignation must be
considered in determining whether, he or she, in fact, intended to sever his
or her employment.
There is constructive dismissal when there is cessation of work, because
continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a diminution in pay and other
benefits. Aptly called a dismissal in disguise or an act amounting to dismissal
but made to appear as if it were not, constructive dismissal may, likewise,

exist if an act of clear discrimination, insensibility, or disdain by an employer

becomes so unbearable on the part of the employee that it could foreclose
any choice by him except to forego his continued employment. There was
here no discrimination committed by petitioners. While respondent did not
tender her resignation wholeheartedly, circumstances of her own making did
not give her any other option. With due process, she was found to have
committed the grave offense of leaking test questions. Dismissal from
employment was the justified equivalent penalty. Having realized that, she
asked for, and was granted, not just a deferred imposition of, but also an
acceptable cover for the penalty.
Respondents profession, the gravity of her infraction, and the fact that she
waited until the close of the school year to challenge her impending
resignation demonstrate that respondent had bargained for a graceful exit
and is now trying to renege on her obligation. Respondent should not be
rewarded for reneging on her promise to resign at the end of the school year.
Otherwise, employers placed in similar situations would no longer extend
compassion to employees. Compromise agreements, like that in the instant
case, which lean towards desired liberality that favor labor, would be
discouraged.
Topic: employer employee relationship; illegal dismissal; doctrine
of strained relation
Ponente: Reyes, J.
Tenazas v. R. Villegas Taxi Transport, G.R. No. 192998, April 2, 2014
Facts: On July 4, 2007, Bernard A. Tenazas and Jaime M. Francisco filed a
complaint for illegal dismissal against R. Villegas Taxi Transport and/or
Romualdo Villegas and Andy Villegas. At that time, a similar case had already
been filed by Isidro G. Endraca against the same respondents. The two (2)
cases were subsequently consolidated.
Relaying the circumstances of his dismissal, Tenazas alleged that on July 1,
2007, the taxi unit assigned to him was sideswiped by another vehicle,
causing a dent on the left fender near the driver seat. The cost of repair for
the damage was estimated at P500.00. Upon reporting the incident to the
company, he was scolded by respondents Romualdo and Andy and was told
to leave the garage for he is already fired. He was even threatened with
physical harm should he ever be seen in the companys premises again.
Despite the warning, Tenazas reported for work on the following day but was

told that he can no longer drive any of the companys units as he is already
fired.
Francisco, on the other hand, averred that his dismissal was brought about
by the companys unfounded suspicion that he was organizing a labor union.
He was instantaneously terminated, without the benefit of procedural due
process, on June 4, 2007.
Endraca, for his part, alleged that his dismissal was instigated by an occasion
when he fell short of the required boundary for his taxi unit. He related that
before he was dismissed, he brought his taxi unit to an auto shop for an
urgent repair. He was charged the amount of P700.00 for the repair services
and the replacement parts. As a result, he was not able to meet his boundary
for the day. Upon returning to the company garage and informing the
management of the incident, his drivers license was confiscated and was
told to settle the deficiency in his boundary first before his license will be
returned to him. He was no longer allowed to drive a taxi unit despite his
persistent pleas.
For their part, the respondents admitted that Tenazas and Endraca were
employees of the company, the former being a regular driver and the latter a
spare driver. The respondents, however, denied that Francisco was an
employee of the company or that he was able to drive one of the companys
units at any point in time.
The respondents further alleged that Tenazas was never terminated by the
company. They claimed that Tenazas went to the company garage to get his
taxi unit but was informed that it is due for overhaul because of some
mechanical defects reported by the other driver who takes turns with him in
using the same. He was thus advised to wait for further notice from the
company if his unit has already been fixed. On July 8, 2007, however, upon
being informed that his unit is ready for release, Tenazas failed to report back
to work for no apparent reason.
As regards Endraca, the respondents alleged that they hired him as a spare
driver in February 2001. They allow him to drive a taxi unit whenever their
regular driver will not be able to report for work. In July 2003, however,
Endraca stopped reporting for work without informing the company of his
reason.
On May 30, 2008, the Labor Arbiter rendered a Decision stating that there
was no illegal dismissal as there was no proof of overt act of dismissal
committed by the respondents.
On appeal, the NLRC reversed the decision of the LA. It held that the
additional pieces of evidence belatedly submitted by the petitioners sufficed

to establish the existence of employer-employee relationship and their illegal

dismissal.
The respondents then filed a petition for certiorari with the CA. The CA
agreed with the NLRCs finding that Tenazas and Endraca were employees of
the company, but ruled otherwise in the case of Francisco for failing to
establish his relationship with the company. It also deleted the award of
separation pay and ordered for reinstatement of Tenazas and Endraca.
Hence, this petition.
Issue:
1. Is Francisco an employee of the respondent?
2. Is reinstatement of Tenazas and Endraca possible?
Ruling:
1. NO.
In determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following incidents, to
wit: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employers power to control
the employee on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most
important element."
There is no hard and fast rule designed to establish the aforesaid elements.
Any competent and relevant evidence to prove the relationship may be
admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization charts,
and personnel lists, serve as evidence of employee status.
In this case, however, Francisco failed to present any proof substantial
enough to establish his relationship with the respondents. Bereft of any
evidence, the CA correctly ruled that Francisco could not be considered an
employee of the respondents.
2. YES.
The CAs order of reinstatement of Tenazas and Endraca, instead of the
payment of separation pay, is also well in accordance with prevailing
jurisprudence. An illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are separate and
distinct. In instances where reinstatement is no longer feasible because of

strained relations between the employee and the employer, separation pay
is granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages.
After a perusal of the NLRC decision, this Court failed to find the factual basis
of the award of separation pay to the petitioners. The NLRC decision did not
state the facts which demonstrate that reinstatement is no longer a feasible
option that could have justified the alternative relief of granting separation
pay instead.
The petitioners themselves likewise overlooked to allege circumstances
which may have rendered their reinstatement unlikely or unwise and even
prayed for reinstatement alongside the payment of separation pay in their
position paper. A bare claim of strained relations by reason of termination is
insufficient to warrant the granting of separation pay. Likewise, the filing of
the complaint by the petitioners does not necessarily translate to strained
relations between the parties. As a rule, no strained relations should arise
from a valid and legal act asserting ones right. Although litigation may also
engender a certain degree of hostility, the understandable strain in the
parties relation would not necessarily rule out reinstatement which would,
otherwise, become the rule rather the exception in illegal dismissal cases.
Thus, it was a prudent call for the CA to delete the award of separation pay
and order for reinstatement instead, in accordance with the general rule
stated in Article 279 of the Labor Code.

Topic: probationary employment of teachers in private schools;

illegal dismissal
Ponente: Villarama, Jr., J.
Universidad De Sta. Isabel v. Sambajon, Jr., G.R. Nos. 196280 &
196286, April 2, 2014
Facts: Universidad de Sta. Isabel is a non-stock, non-profit religious
educational institution in Naga City. Petitioner hired Marvin-Julian L.
Sambajon, Jr. as a full-time college faculty member with the rank of Assistant
Professor on probationary status, as evidenced by an Appointment Contract
dated November 1, 2002, effective November 1, 2002 up to March 30, 2003.
After the aforesaid contract expired, petitioner continued to give teaching
loads to respondent who remained a full-time faculty member of the
Department of Religious Education for the two semesters of school-year
2003-2004 and two semesters of SY 2004-2005.
Sometime in June 2003, after respondent completed his course in Master of
Arts in Education, major in Guidance and Counseling, he submitted the
corresponding Special Order from the Commission on Higher Education
(CHED), together with his credentials for the said masters degree, to the
Human Resources Department of petitioner for the purpose of salary
adjustment/increase. Subsequently, respondents salary was increased, as
reflected in his pay slips starting October 1-15, 2004. He was likewise reranked from Assistant Professor to Associate Professor.
In a letter dated October 15, 2004 addressed to the President of petitioner,
Sr. Ma. Asuncion G. Evidente, D.C., respondent vigorously argued that his
salary increase should be made effective as of June 2003 and demanded the
payment of his salary differential. The school administration replied by
explaining that there is no re ranking during the employees probationary
period.
To resolve the issue, a dialogue was held between respondent and Sr.
Evidente but the parties gave conflicting accounts. On February 26, 2005,
respondent received his letter of termination.
On April 14, 2005, respondent filed a complaint for illegal dismissal against
the petitioner.
The Labor Arbiter ruled that there was no just or authorized cause in the
termination of respondents probationary employment. Consequently,
petitioner was found liable for illegal dismissal.

Petitioner appealed to the NLRC raising the issue of the correct interpretation
of Section 92 of the Manual of Regulations for Private Schools and DOLEDECS-CHED-TESDA Order No. 01, series of 1996, and alleging grave abuse of
discretion committed by the Labor Arbiter in ruling on a cause of action/issue
not raised by the complainant (respondent) in his position paper.
On August 1, 2008, the NLRC rendered its Decision affirming the Labor
Arbiter and holding that respondent had acquired a permanent status
pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for
Private Schools, in relation to Article 281 of the Labor Code, as amended.
Under the circumstances, it must be concluded that the complainant has
acquired permanent status. The last paragraph of Article 281 of the Labor
Code provides that "an employee who is allowed to work after a probationary
period shall be considered a regular employee." Based thereon, the
complainant acquired permanent status on the first day of the first semester
of SY 2003-2004.
As presently worded, Section 92 of the revised Manual of Regulations for
Private Schools merely provides for the maximum lengths of the
probationary periods of academic personnel of private schools in the three
(3) levels of education (elementary, secondary, tertiary). The periods
provided therein are not requirements for the acquisition, by them, of
permanent status.
Both parties filed separate appeals before the CA. The CA sustained the
conclusion of the NLRC that respondent had already acquired permanent
status when he was allowed to continue teaching after the expiration of his
first appointment-contract on March 30, 2003. However, the CA found it
necessary to modify the decision of the NLRC to include the award of back
wages to respondent.
Hence, this petition.
Issues:
1. Did the NLRC correctly resolve an issue not raised in petitioners appeal
memorandum?
2. Was the respondent illegally dismissed?
Ruling:
1. YES.
The NLRC shall, in cases of perfected appeals, limit itself to reviewing those
issues which are raised on appeal. As a consequence thereof, any other

issues which were not included in the appeal shall become final and
executory.
In this case, petitioner sought the correct interpretation of the Manual of
Regulations for Private School Teachers and DOLE-DECS-CHED-TESDA Order
No. 01, series of 1996, insofar as the probationary period for teachers. In
reviewing the Labor Arbiters finding of illegal dismissal, the NLRC concluded
that respondent had already attained regular status after the expiration of
his first appointment contract as probationary employee. Such conclusion
was but a logical result of the NLRCs own interpretation of the law. Since
petitioner elevated the questions of the validity of respondents dismissal
and the applicable probationary period under the aforesaid regulations, the
NLRC did not gravely abuse its discretion in fully resolving the said issues.
2. YES.
The probationary employment of teachers in private schools is not governed
purely by the Labor Code. The Labor Code is supplemented with respect to
the period of probation by special rules found in the Manual of Regulations
for Private Schools. On the matter of probationary period, Section 92 of the
1992 Manual of Regulations for Private Schools regulations states:
Section 92. Probationary Period. Subject in all instances to
compliance with the Department and school requirements, the
probationary period for academic personnel shall not be more than
three (3) consecutive years of satisfactory service for those in the
elementary and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the tertiary level, and
nine (9) consecutive trimesters of satisfactory service for those in
the tertiary level where collegiate courses are offered on a
trimester basis.
In this case, it was explicitly provided in the third appointment contract of
the respondent that unless renewed in writing respondents appointment
automatically expires at the end of the stipulated period of employment.
Simply because the word "probationary" no longer appears below the
designation (Full-Time Faculty Member), respondent had already become a
permanent employee.
It bears stressing that full-time teaching primarily refers to the extent of
services rendered by the teacher to the employer school and not to the
nature of his appointment. Its significance lies in the rule that only full-time
teaching personnel can acquire regular or permanent status.
In this case, petitioner applied the maximum three-year probationary period
equivalent to six consecutive semesters provided in the Manual of

Regulations. The circumstance that respondents services were hired on

semester basis did not negate the applicable probationary period, which is
three school years or six consecutive semesters.
In a situation where the probationary status overlaps with a fixed-term
contract not specifically used for the fixed term it offers, Article 281 should
assume primacy and the fixed-period character of the contract must give
way.
Notwithstanding the limited engagement of probationary employees, they
are entitled to constitutional protection of security of tenure during and
before the end of the probationary period. The services of an employee who
has been engaged on probationary basis may be terminated for any of the
following: (a) a just or (b) an authorized cause; and (c) when he fails to
qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Thus, while no vested right to a permanent appointment had as yet accrued
in favor of respondent since he had not completed the prerequisite threeyear period (six consecutive semesters) necessary for the acquisition of
permanent status as required by the Manual of Regulations for Private
Schools -- which has the force of law -- he enjoys a limited tenure. During the
said probationary period, he cannot be terminated except for just or
authorized causes, or if he fails to qualify in accordance with reasonable
standards prescribed by petitioner for the acquisition of permanent status of
its teaching personnel.
In a letter dated February 26, 2005, petitioner terminated the services of
respondent stating that his probationary employment as teacher will no
longer be renewed upon its expiry on March 31, 2005, respondents fifth
semester of teaching. No just or authorized cause was given by petitioner.
Prior to this, respondent had consistently achieved above average rating
based on evaluation by petitioners officials and students. He had also been
promoted to the rank of Associate Professor after finishing his masters
degree course on his third semester of teaching. Clearly, respondents
termination after five semesters of satisfactory service was illegal.

Topic: circumstances when a seaman may be allowed to pursue an

action for permanent and total disability benefits; award of
attorneys fees
Ponente: Villarama, Jr., J.
United Philippine Lines, Inc. v. Sibug, G.R. No. 201072, April 2, 2014
Facts: Petitioners United Philippine Lines, Inc. and Holland America Line
hired Sibug as waste handler on board the vessel MIS Volendam. On August
5, 2005, Sibug fell from a ladder while cleaning the silo sensor at a garbage
room of the Volendam and injured his knee. He was repatriated and had
anterior cruciate ligament (ACL) reconstruction surgery at the Manila Doctors
Hospital. On January 19, 2006, he was declared fit to return to work from an
orthopedic point of view.
Sibug sought reemployment, passed the pre-employment medical
examination, and was re-hired by petitioners in the same capacity for the
vessel M/S Ryndam. On board Ryndam, Sibug met another accident while
driving a forklift and injured his right hand and wrist. He was repatriated. He
arrived in the Philippines on January 15, 2007, and had surgery for his
Ryndam injury. On September 7, 2007, the company-designated doctor
issued a medical report that Sibug has a permanent but incomplete
disability. In an email dated September 28, 2007, the company-designated

doctor classified Sibugs disability from his Ryndam injury as a grade 10

disability.
Sibug filed two complaints for disability benefits, illness allowance, damages
and attorneys fees against petitioners anchored on his Volendam injury and
Ryndam injury.
The Labor Arbiter dismissed the Volendam case on the ground that Sibug
was declared fit to work after his ACL reconstruction surgery. He also passed
the pre-employment medical examination when he sought reemployment,
was reemployed and was able to work again in Ryndam. As regards the
Ryndam case, the Labor Arbiter awarded to Sibug US$10,075 which is the
equivalent award for the grade 10 disability rating issued by the companydesignated doctor.
The NLRC reversed the Labor Arbiters Decision. It ruled that Sibug is entitled
to permanent and total disability benefit of US$60,000 for his Volendam
injury and another US$60,000 for his Ryndam injury. On reconsideration, the
NLRC reinstated the Labor Arbiters Decision.
Later, the NLRC denied Sibugs motion for reconsideration. Thus, the case
was elevated to the CA. The CA set aside the NLRC Decision dated May 29,
2009 and reinstated the NLRC Decision dated December 8, 2008. It ruled
that Sibug was unable to perform his customary work for more than 120 days
on account of his Volendam and Ryndam injuries. Thus, he is entitled to
permanent and total disability benefit for both injuries.
Hence, this petition.
Issues:
1. Is Sibug entitled to permanent and total disability benefits for his
Volendam and Ryndam injuries?
2. Is he entitled to attorneys fees?
Ruling:
1. Sibug is not entitled to permanent and total disability benefit for his
Volendam injury. But he is entitled to permanent and total disability benefit
for his Ryndam injury and to attorneys fees.

Sibug is not entitled to permanent and total disability benefit for his
Volendam injury since he became already fit to work again as a seaman. He
even admitted in his position paper that he was declared fit to work. He was
also declared fit for sea service after his pre-employment medical
examination when he sought reemployment with petitioners. The medical
certificate declaring Sibug fit for sea service even bears his signature. And he
was able to work again in the same capacity as waste handler in Ryndam.
As regards his Ryndam injury, Sibug is entitled to permanent and total
disability benefit amounting to US$60,000. In Millan v. Wallem Maritime
Services, Inc., the following are the circumstances when a seaman
may be allowed to pursue an action for permanent and total
disability benefits:
(a) The company-designated physician failed to issue a declaration as
to his fitness to engage in sea duty or disability even after the lapse of
the 120-day period and there is no indication that further medical
treatment would address his temporary total disability, hence, justify
an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the
company-designated physician;
(c) The company-designated physician declared that he is fit for sea
duty within the 120-day or 240-day period, as the case may be, but his
physician of choice and the doctor chosen under Section 20-B(3) of the
POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is
partially permanently disabled but other doctors who he consulted, on
his own and jointly with his employer, believed that his disability is not
only permanent but total as well;
(e) The company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical
condition is not compensable or work-related under the POEA-SEC but
his doctor-of-choice and the third doctor selected under Section 20-B(3)
of the POEA-SEC found otherwise and declared him unfit to work;

(g) The company-designated physician declared him totally and

permanently disabled but the employer refuses to pay him the
corresponding benefits; and
(h) The company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse of
said periods.
Paragraph (b) applies to Sibugs case. The company-designated doctor failed
to issue a certification with a definite assessment of the degree of Sibugs
disability for his Ryndam injury within 240 days.
In Fil-Pride Shipping Company, Inc., et al. v. Balasta, we held that the
"company-designated physician must arrive at a definite assessment of the
seafarers fitness to work or permanent disability within the period of 120 or
240 days, pursuant to Article 192 (c)(1) of the Labor Code and Rule X,
Section 2 of the Amended Rules on Employees Compensation. If he fails to
do so and the seafarers medical condition remains unresolved, the latter
shall be deemed totally and permanently disabled." This definite assessment
of the seamans permanent disability must include the degree of his
disability, as required by Section 20-B of the POEA-SEC.
In this case, Sibug was repatriated and arrived in the country on January 15,
2007 after his Ryndam injury. He had surgery on his injured hand. On
September 7, 2007, the company-designated doctor issued a medical report
that Sibug has a permanent but incomplete disability. But this medical report
failed to state the degree of Sibugs disability. Only in an email dated
September 28, 2007, copy of which was attached as Annex 3 of petitioners
position paper, was Sibugs disability from his Ryndam injury classified as a
grade 10 disability by the company-designated doctor. By that time,
however, the 240-day extended period when the company-designated doctor
must give the definite assessment of Sibugs disability had lapsed. From
January 15, 2007 to September 28, 2007 is 256 days. Hence, Sibugs
disability is already deemed permanent and total.
2. YES. Sibug is entitled to attorneys fees of US$6,000 since he was forced
to litigate to protect his valid claim. Where an employee is forced to
litigate and incur expenses to protect his right and interest, he is entitled
to an award of attorneys fees equivalent to 10% of the award.

Topic: Illegal Dismissal/Floating Status

Ponente: Antonio T. Carpio, J.:
Emeritus Security and Maintenance Systems Inc. v. Dailig, G.R. No.
204761, April 2, 2014
Facts: Petitioner hired respondent as one of its security guards. Respondent
was relieved from his post. Respondent filed a complaint for underpayment
of wages, non-payment of legal and special holiday pay, premium pay for
rest day and underpayment of ECOLA before the DOLE. The hearing officer
recommended the dismissal of the complaint since the claims were already
paid.
Respondent filed a complaint for illegal dismissal and payment of separation
pay against petitioner before the Conciliation and Mediation Center of the
NLRC. Respondent filed another complaint for illegal dismissal,
underpayment of salaries and non-payment of full backwages before the
NLRC.
Labor Arbiter found illegal dismissal and ordered respondent to reinstate
complainant and to pay him backwages.
Court of Appeals affirmed the finding of illegal dismissal but ordered
separation pay instead of reinstatement.
Issues: Whether or not there is illegal dismissal
Whether or not respondent is entitled to separation pay, instead of
reinstatement
Ruling: Yes.
Respondent was on floating status from 10 December 2005 to 16 June 2006
or more than six months. The Court found that a floating status of a
security guard, such as respondent, for more than six months
constitutes constructive dismissal. Factual findings of quasi-judicial
bodies like the NLRC, if supported by substantial evidence, are
accorded respect and even finality by this Court, more so when they
coincide with those of the Labor Arbiter.
No.
Article 279 of the Labor Code of the Philippines mandates the reinstatement
of an illegally dismissed employee, to wit:

Security of Tenure. - x x x 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 back wages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
Thus, reinstatement is the general rule, while the award of
separation pay is the exception. The circumstances warranting the grant
of separation pay, in lieu of reinstatement, are laid down by the Court in
Globe-Mackay Cable and Radio Corporation v. National Labor Relations
Commission, thus:
Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law applicable
thereto; that reinstatement can no longer be effected in view of the long
passage of time (22 years of litigation) or because of the realities of the
situation; or that it would be inimical to the employers interest; or that
reinstatement may no longer be feasible; or, that it will not serve the best
interests of the parties involved; or that the company would be prejudiced by
the workers continued employment; or that it will not serve any prudent
purpose as when supervening facts have transpired which make execution
on that score unjust or inequitable or, to an increasing extent, due to the
resultant atmosphere of antipathy and antagonism or strained relations or
irretrievable estrangement between the employer and the employee.
Respondent admits receiving a reinstatement notice from petitioner.
Thereafter, respondent was assigned to one of petitioner's clients. However,
respondent pointed out that he was not sreinstated by petitioner, but was
employed by another company, Emme Security and Maintenance Systems,
Inc. Thus, according to respondent, he was not reinstated at all. Petitioner
countered that Emeritus and Emme are sister companies with the same
Board of Directors and officers, arguing that Emeritus and Emme are in effect
one and the same corporation.
Considering petitioner's undisputed claim that Emeritus and Emme are one
and the same, there is no basis in respondent's allegation that he was not
reinstated to his previous employment. Nothing in the records showed any
strained relations between the parties to warrant the award of separation

pay. There is neither allegation nor proof that such animosity existed
between petitioner and respondent.

Topic: Integration of Allowances

Ponente: Presbitero J. Velasco Jr., J.:
Land Bank v. Naval, G.R. No. 195687, April 7, 2014
Facts: Petitioner LBP granted its officers and employees Cost of Living
Allowance (COLA) and a monthly allowance called a "Bank Equity Pay" (BEP).
LBP issued a resolution integrating the COLA into the basic pay of LBP
employees which took effect on May 16, 1989. On August 21, 1989, R.A.
6758, otherwise known as the Salary Standardization Law (SSL), was enacted
which provides the integration/consolidation of allowances and additional
compensation into the standardized salary rates save for certain additional
compensation enumerated therein and others that the Department of Budget
and Management (DBM) is mandated to determine. DBM-CCC No. 10 (Rules
and Implementation of RA 6758 for GOCCs and GFIs) specifically stated that
the COLA and BEP granted to employees of GOCCs and GFIs shall be deemed
integrated into the basic salary effective July 1, 1989. Thus, LBP integrated
the BEP into the basic pay of its employees effective as of July 1, 1989.
On February 23, 1995, RA 7907 removed petitioner LBP from the coverage of
the SSL.
The Court nullified DBM-CCC No. 10 in De Jesus v. CoA because it was not
published in the Official Gazette or in a newspaper of general circulation, as
required by law.

The DBM remedied its circulars defect by publishing DBM-CCC No. 10 in the
Official Gazette in March 1999, which was released on July 1, 1999. Hence,
DBM-CCC No. 10, as published, took effect on July 16, 1999.
After the publication of the Decision in De Jesus, respondents started
negotiating with LBP for the payment of their COLA and BEP benefits over
and above their monthly basic salaries, and back payment of the same from
the time that LBP stopped to extend them until the finality of the Decision in
De Jesus.
Respondents appealed to LBP for the restoration of their COLA and BEP. LBP,
however, denied respondents appeal based on a Civil Service Commission
(CSC) ruling citing DBM Budget Circular 2001-03 which prohibits the payment
of COLA and similar allowances on top of the basic salary on the ground that
it would constitute double compensation.
Respondents instituted a Petition for Mandamus before the RTC to compel
LBP to pay their COLA and the BEP allowances over and above their basic
salaries. Trial court granted the petition for mandamus and ordered LBP to
pay respondents claim.
Court of Appeals affirmed with modification directing respondents to pay an
interest of 6% per annum on all the amounts due to respondents effective
May 16, 1989, in the case of COLA, and July 1, 1989, in the case of BEP, up to
the finality of this Decision, which interest rate should become 12% per
annum from the finality of this Decision up to its satisfaction.
Issue: Whether or not respondents and intervenors are entitled to the COLA
and the BEP on top of their basic salaries from 1989 up to the present
Ruling: No.
The Court clarified that the nullification of DBM-CCC No. 10 is irrelevant
to the validity of the provisions of the SSL. Notwithstanding the ruling
in De Jesus vs. Commission on Audit, the Court declared the nullity of DBMCCC No. 10, nothing in the decision suggested or intimated the suspension of
the effectivity of Rep. Act No. 6758 pending the publication in the Official
Gazette of DBM-CCC No. 10.
Section 12 of SSL. Consolidation of Allowances and Compensation. All
allowances, except for representation and transportation allowances;
clothing and laundry allowances; subsistence allowance of marine officers
and crew on board government vessels and hospital personnel; hazard pay;
allowances of foreign service personnel stationed abroad; and such other
additional compensation not otherwise specified herein as may be
determined by the DBM, shall be deemed included in the standardized salary

rates herein prescribed. Such other additional compensation, whether in

cash or in kind, being received by incumbents only as of July 1, 1989 not
integrated into the standardized salary rates shall continue to be authorized.
Existing additional compensation of any national government official or
employee paid from local funds of a local government unit shall be absorbed
into the basic salary of said official or employee and shall be paid by the
National Government.
From the foregoing provision, it is immediately apparent that the SSL
mandates the integration of all allowances except for the following:
1. Representation and transportation allowances;
2. Clothing and laundry allowances;
3. Subsistence allowance of marine officers and crew on board
government vessels;
4. Subsistence allowance of hospital personnel;
5. Hazard pay;
6. Allowances of foreign service personnel stationed abroad;
7. And such other additional compensation not otherwise specified
herein as may be determined by the DBM.
Since the COLA and the BEP are among those expressly excluded by
the SSL from integration, they should be considered as deemed
integrated in the standardized salaries of LBP employees under the
general rule of integration.
COLA is one of those allowances deemed integrated under Sec. 12 of the SSL
because (1) it had not been expressly excluded from the general rule of
integration and (2) it is a benefit intended to reimburse the employee for the
expenses he incurred in the performance of his official functions. COLA is not
in the nature of an allowance intended to reimburse expenses incurred by
officials and employees of the government in the performance of their official
functions. It is not payment in consideration of the fulfillment of official duty.
As defined, cost of living refers to "the level of prices relating to a range of
everyday items" or "the cost of purchasing those goods and services which

are included in an accepted standard level of consumption." Based on this

premise, COLA is a benefit intended to cover increases in the cost of living.
Thus, it is and should be integrated into the standardized salary rates.
LOI Nos. 104 and 116, however, would argue against the idea that they
prohibit the integration of either allowance into the basic pay of GFI
employees. Nowhere in either issuance is it mandated that these allowances
can only be paid on top of, and separate from, the basic and net pay of the
employees of GFIs. The rule is that the payment of a salary may be amended
by the power which granted it in the first place.
Sec. 10 of RA 7907 simply reads as follows:
Sec. 10. Section 90 of the same Act is hereby amended to read as follows:
"All positions in the Bank shall be governed by a compensation, position
classification system and qualification, standards approved by the Banks
Board of Directors based on a comprehensive job analysis and audit of actual
duties and responsibilities. The compensation loan shall be comparable with
the prevailing compensation plans in the private sector and shall be
subjected to periodic review by the Board no more than once every two (2)
years without prejudices to yearly merit reviews or increases based on
productivity and profitability. The bank shall therefore be exempt from
existing laws, rules and regulations on compensation, position classification
and qualification standards. It shall however endeavor to make its system
conform as closely as possible with the principle under Republic Act No.
6758."
It is at once apparent from the quoted provision that, by RA 7907,
petitioner LBP had been given sufficient independence and
autonomy to design its own compensation plan, i.e., to decide
whether to integrate the COLA and the BEP into the basic pay. This
Court cannot dictate the inclusion of the COLA and BEP contrary to the sound
business judgment of LBP recognized and sustained in RA 7907.
Thus, the back payment of the COLA and the BEP to respondents, were
reversed and set aside.

Topic: Unfair Labor Practice through Bad Faith Bargaining/ National

Interest
Ponente: Teresita J. Leonardo-De Castro, J.:
Tabangao Shell Refinery Employees Association v. Pilipinas Shell
Petroleum Corp., G.R. No. 170007, April 7, 2014
Facts: Near the expiration of the CBA, petitioner and respondent started
negotiations for a new CBA. Initially, the union proposed 20% annual
increase in basic pay for the next three years while the company made a
counter-proposal to grant all covered employees a lump sum amount of
P80,000.00 yearly for the three-year period of the new CBA. The union
lowered its proposal to 12% while the company increased the lump sum
amount to P88,000.00. The company justified that its counter-offer is based
on its affordability for the company, comparison with the then existing wage
levels of allied industry, and the then existing total pay and benefits package
of the employees. Unsatisfied, the union asked for additional justification and
requested for a copy of the comparison of the salaries of its members and
those from allied industries. The company denied the request on the ground
that the requested information was entrusted to the company under a
confidential agreement. Alleging failure on the part of the company to justify
its offer, the union manifested that the company was bargaining in bad faith.
The company proposed the declaration of a deadlock and recommended that
the help of a third party be sought. The union replied that they would
formally answer the proposal of the company a day after the signing of the
official minutes of the meeting. On that same day, however, the union filed a
Notice of Strike in the NCMB, alleging bad faith bargaining on the part of the
company. The NCMB immediately summoned the parties for the mandatory
conciliation-mediation proceedings but the parties failed to reach an
amicable settlement.
During the cooling off period, the members of the union unanimously voted
for the holding of a strike. Upon being aware of this development, the
company filed a Petition for Assumption of Jurisdiction with the Secretary of
Labor and Employment. Convinced that such a strike would have adverse
consequences on the national economy, the Secretary of Labor and
Employment ruled that the labor dispute between the parties would cause or
likely to cause a strike in an industry indispensable to the national interest.
Thus, he assumed jurisdiction and the union was enjoined from any form of
concerted action.
Court of Appeals ruled that the SoLE did not commit grave abuse of
discretion.
The union filed a complaint for unfair labor practice before NLRC on the
ground that the company refused, or violated its duty, to bargain. The

complaint was forwarded to SoLE because the issue raised by the union was
a proper incident of the labor dispute over which the Secretary of Labor and
Employment assumed jurisdiction.
SoLE held that there was already deadlock although the ground for the first
Notice of Strike was unfair labor practice for bargaining in bad faith. It found
no unfair labor practice through bad faith bargaining.
Issues: Whether or not there is unfair labor practice through bad faith
bargaining
Whether or not the Secretary of Labor committed grave abuse of discretion
when he assumed jurisdiction over the labor dispute
Ruling: No.
The doctrine of conclusiveness of judgment states that a fact or
question which was in issue in a former suit, and was there judicially passed
on and determined by a court of competent jurisdiction, is conclusively
settled by the judgment therein, as far as concerns the parties to that action
and persons in privity with them, and cannot be again litigated in any future
action between such parties or their privies, in the same court or any other
court of concurrent jurisdiction on either the same or a different cause of
action, while the judgment remains unreversed or unvacated by proper
authority. The only identities thus required for the operation of the judgment
as an estoppel x x x are identity of parties and identity of issues.
The Decision of the SoLE in the labor dispute over which he assumed
jurisdiction has long attained finality.
In this connection, Article 263(i) of the Labor Code is clear:
ART. 263. Strikes, picketing, and lockouts. x x x
xxxx
(i) The Secretary of Labor and Employment, the Commission or the voluntary
arbitrator shall decide or resolve the dispute within thirty (30) calendar days
from the date of the assumption of jurisdiction or the certification or
submission of the dispute, as the case may be. The decision of the President,
the Secretary of Labor and Employment, the Commission or the voluntary
arbitrator shall be final and executory ten (10) calendar days after receipt
thereof by the parties.

Pursuant to Article 263(i) of the Labor Code, the Decision of the SoLE
became final and executory after the lapse of the period provided under
the said provision. Moreover, neither party further questioned the Decision.
A question of fact cannot properly be raised in a petition for review
under Rule 45 of the Rules of Court. The existence of bad faith is a
question of fact and is evidentiary. The crucial question of whether or
not a party has met his statutory duty to bargain in good faith typically turns
on the facts of the individual case, and good faith or bad faith is an inference
to be drawn from the facts. Thus, the issue of whether or not there was bad
faith on the part of the company when it was bargaining with the union is a
question of fact. It requires that the reviewing court look into the evidence to
find if indeed there is proof that is substantial enough to show such bad faith.
The issue of whether there was already deadlock between the union and the
company is likewise a question of fact. It requires the determination of
evidence to find whether there is a "counteraction" of forces between the
union and the company and whether each of the parties exerted "reasonable
effort at good faith bargaining."
It is so because a deadlock is x x x the counteraction of things
producing entire stoppage; x x x There is a deadlock when there is a
complete blocking or stoppage resulting from the action of equal
and opposed forces x x x. The word is synonymous with the word
impasse, which x x x presupposes reasonable effort at good faith bargaining
which, despite noble intentions, does not conclude in agreement between
the parties.
The findings of fact of the SoLE that there already existed a bargaining
deadlock when she assumed jurisdiction over the labor dispute between the
union and the company, and that there was no bad faith on the part of the
company when it was bargaining with the union are both supported by
substantial evidence.
No.
As there is already an existing controversy on the matter of wage increase,
the Secretary of Labor and Employment need not wait for a deadlock in the
negotiations to take cognizance of the matter. That is the significance of the
power of the Secretary of Labor and Employment under Article
263(g) of the Labor Code to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry

indispensable to the national interest. Article 263(g) is both an

extraordinary and a preemptive power to address an extraordinary situation a strike or lockout in an industry indispensable to the national interest. This
grant is not limited to the grounds cited in the notice of strike or lockout that
may have preceded the strike or lockout; nor is it limited to the incidents of
the strike or lockout that in the meanwhile may have taken place. As the
term "assume jurisdiction" connotes, the intent of the law is to give the Labor
Secretary full authority to resolve all matters within the dispute that gave
rise to or which arose out of the strike or lockout; it includes and extends to
all questions and controversies arising from or related to the dispute,
including cases over which the labor arbiter has exclusive jurisdiction.

Topic: Loss of Trust and Confidence

Ponente: Bienvenido L. Reyes, J.:
Bluer than Blue Joint Ventures v. Esteban, G.R. No. 192582, April 7,
2014
Facts: Esteban was hired as Sales Clerk by petitioner. Part of her primary
tasks were attending to all customer needs, ensuring efficient inventory,
coordinating orders from clients, cashiering and reporting to the accounting
department.
Petitioner received a report that several employees have access to its POS
system through a universal password given by Flores. Upon investigation, it
was discovered that it was Esteban who gave Flores the password. The
petitioner sent a letter memorandum to Esteban, asking her to explain in
writing why she should not be disciplinary dealt with for tampering with the
companys POS system through the use of an unauthorized password.
Esteban was also placed under preventive suspension for ten days.
Esteban admitted that she used the universal password three times on the
same day, after she learned of it from two other employees who she saw

browsing through the petitioners sales inquiry. She inquired how the
employees were able to open the system and she was told that they used
the "123456" password.
Estebans preventive suspension was lifted, but at the same time, a notice of
termination was sent to her, finding her explanation unsatisfactory and
terminating her employment immediately on the ground of loss of trust and
confidence. Esteban was given her final pay, including benefits and bonuses,
less inventory variances incurred by the store. Esteban signed a quitclaim
and release in favor of the petitioner.
Esteban filed a complaint for illegal dismissal, illegal suspension, holiday pay,
rest day and separation pay. LA ruled in favor of Esteban and found that she
was illegally dismissed.
NLRC reversed the decision of the LA and dismissed the case for illegal
dismissal but ordered petitioner to refund to Esteban the illegal deductions
based on inventory variances.
Court of Appeals reinstated LAs ruling.
Issue: Whether or not Estebans acts constitute just cause to terminate her
employment with the company on the ground of loss of trust and confidence
Ruling: No.
Loss of trust and confidence is premised on the fact that the
employee concerned holds a position of responsibility, trust and
confidence. The employee must be invested with confidence on delicate
matters, such as the custody, handling, care and protection of the
employers property and funds. Among the fiduciary rank-and-file employees
are cashiers, auditors, property custodians, or those who, in the normal
exercise of their functions, regularly handle significant amounts of money or
property. These employees, though rank-and-file, are routinely charged with
the care and custody of the employers money or property, and are thus
classified as occupying positions of trust and confidence.
In this case, Esteban was a sales clerk. Her duties, however, were more than
that of a sales clerk. Aside from attending to customers and tending to the
shop, Esteban also assumed cashiering duties. As consistently ruled by the
Court, it is not the job title but the actual work that the employee performs
that determines whether he or she occupies a position of trust and
confidence. In Estebans case, given that she had in her care and custody the
stores property and funds, she is considered as a rank-and-file employee
occupying a position of trust and confidence.
Loss of trust and confidence to be a valid cause for dismissal must
be work related such as would show the employee concerned to be

unfit to continue working for the employer and it must be based on

a wilful breach of trust and founded on clearly established facts.
Such breach is wilful if it is done intentionally, knowingly, and purposely,
without justifiable excuse as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. The loss of trust and confidence
must spring from the voluntary or wilful act of the employee, or by reason of
some blameworthy act or omission on the part of the employee.
In this case, Estebans acts do not amount to a wilful breach of trust. Her
acts were out of curiosity and without any obvious intention of defrauding
the petitioner. She was acting in good faith in verifying what her co-staff told
her about the opening of the computer by the use of the "123456" password,
x x x. She even told her co-staff not to open again said computer, and that
was the first and last time she opened said computer. Moreover, the
petitioner even admitted that Esteban has her own password to the POS
system. If it was her intention to manipulate the stores inventory and funds,
she could have done so long before she had knowledge of the unauthorized
password. But the facts on hand show that she did not. The petitioner also
failed to establish a substantial connection between Estebans use of the
"123456" password and any loss suffered by the petitioner. Indeed, it may be
true that, as posited by the petitioner, it is the fact that she used the
password that gives cause to the loss of trust and confidence on Esteban.
However, such breach must have been done intentionally, knowingly, and
purposely, and without any justifiable excuse, and not simply something
done carelessly, thoughtlessly, heedlessly or inadvertently. Her careless acts
do not merit the imposition of the penalty of dismissal.
Preventive suspension is a measure allowed by law and afforded to
the employer if an employees continued employment poses a
serious and imminent threat to the employers life or property or of
his co-workers. It may be legally imposed against an employee whose
alleged violation is the subject of an investigation.
In this case, the petitioner was acting well within its rights when it imposed a
10-day preventive suspension on Esteban. While it may be that the acts
complained of were committed by Esteban almost a year before the
investigation was conducted, still, it should be pointed out that Esteban was
performing functions that involve handling of the petitioners property and
funds, and the petitioner had every right to protect its assets and operations
pending Estebans investigation.
Article 113 of the Labor Code provides that no employer, in his own
behalf or in behalf of any person, shall make any deduction from the
wages of his employees, except in cases where the employer is

authorized by law or regulations issued by the Secretary of Labor

and Employment, among others.
The Omnibus Rules Implementing the Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. Where the employer is engaged
in a trade, occupation or business where the practice of making deductions
or requiring deposits is recognized to answer for the reimbursement of loss
or damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the
employees to make deposits from which deductions shall be made, subject
to the following conditions:
(a) That the employee concerned is clearly shown to be responsible for
the loss or damage;
(b) That the employee is given reasonable opportunity to show cause
why deduction should not be made;
(c) That the amount of such deduction is fair and reasonable and shall
not exceed the actual loss or damage; and
(d) That the deduction from the wages of the employee does not
exceed 20 percent of the employees wages in a week.
In this case, the petitioner failed to sufficiently establish that Esteban was
responsible for the negative variance it had in its sales and that Esteban was
given the opportunity to show cause the deduction from her last salary
should not be made. The petitioners should first establish that the making of
deductions from the salaries is authorized by law, or regulations issued by
the Secretary of Labor.
Thus, the decision of the Court of Appeals is affirmed but the affirmation of
respondents preventive suspension was reversed. LA was ordered to recompute the monetary award in favor of Esteban and to exclude the award
of backwages during such period of preventive suspension, if any.

Topic: Award of loss of future earnings, moral damages, exemplary

damages and attorneys fees for Seafarers.
Ponente: Justice Roberto A. Abad
MAGSAYSAY MARITIME CORPORATION vs. OSCAR D. CHIN, JR, G.R.
No. 199022, April 7, 2014
Facts:
Thome Ship Management Pte. Ltd., acting through its agent
petitioner Magsaysay Maritime Corporation (Magsaysay) hired respondent
Oscar D. Chin, Jr. to work for nine months as able seaman on board MV Star
Siranger Chin was to receive a basic pay of US$515 per month. Chin
sustained injuries while working on his job aboard the vessel. Dr. Solan of
Wilmington, North Carolina, USA, found him to have suffered from
lumbosacral strain due to heavy lifting of pressurized machine. The doctor
gave him medications and advised him to see an orthopedist and a
cardiologist. Chin was repatriated. On return to the Philippines, Chin
underwent a surgical procedure called laminectomy and discectomy L-4-L-5.
A year after the operation, Dr. Robert D. Lim of the Metropolitan Hospital
diagnosed Chin to have a moderate rigidity of his tract.
Chin filed a claim for disability with PandimanPhils., Inc. which is the local
agent of P & I Club of which Magsaysay Maritime is a member. Pandiman
offered US$30,000.00 as disability compensation which Chin accepted. He
then executed a Release and Quitclaim in favor of Magsaysay Maritime. Chin
filed a complaint with the National Labor Relations Commission (NLRC),
claiming underpayment of disability benefits and attorneys fees. He later
amended his complaint to include claims for damages. The Labor Arbiter
dismissed Chins complaint for lack of merit. The NLRC affirmed the
dismissal. On appeal, however, the Court of Appeals (CA) reversed the
dismissal and ruled that Chin was entitled to permanent total disability
benefit of US$60,000.00. The CA remanded the case to the Labor Arbiter for
determination of the other monetary claims of Chin. This prompted petitioner
Magsaysay to come before this court on a petition for review on certiorari.
The Court denied the petition, however, in a Resolution. This Resolution
became final and executor.
Magsaysay paid the deficiency award of US$30,000.00 in full and final
settlement of Chins disability compensation claim. On February 26, 2007,
however, the Labor Arbiter rendered a Decision ordering it to pay Chin: a)
P19,279.75 as reimbursement for medical expenses; b) US$147,026.43 as
loss of future wages; c) P200,000.00 as moral damages; d) P75,000.00 as
exemplary damages; and e) 10% of the total award as attorneys fees. NLRC
modified the Labor Arbiters Decision by deleting the awards of loss of future
wages and moral and exemplary damages for lack of factual and legal bases.
On appeal, the CA reversed the NLRCs Decision and ordered the
reinstatement of the Labor Arbiters Decision, hence, this petition.

Issue: Whether or not the award of loss of future earnings on top of his
disability benefits as well as awards of moral and exemplary damages and
attorneys fees is valid.
Ruling:No.
Labor Arbiters award of loss of earning is unwarranted since Chin had
already been given disability compensation for loss of earning capacity. An
additional award for loss of earnings will result in double recovery. In a
catena of cases, the Court has consistently ruled that disability should not
be understood more on its medical significance but on the loss of
earning capacity. Permanent total disability means disablement of an
employee to earn wages in the same kind of work, or work of similar nature
that he was trained for or accustomed to perform, or any kind of work which
a person of his mentality and attainment could do. Disability, therefore, is
not synonymous with "sickness" or "illness." What is compensated is ones
incapacity to work resulting in the impairment of his earning capacity.
Moreover, the award for loss of earning lacks basis since the Philippine
Overseas Employment Agency (POEA) Standard Contract of
Employment (POEA SCE), the governing law between the parties,
does not provide for such a grant. What Section 20, paragraph (G) of the
POEA SCE provides is that payment for injury, illness, incapacity, disability, or
death of the seafarer covers "all claims arising from or in relation with or in
the course of the seafarers employment, including but not limited to
damages arising from the contract, tort, fault or negligence under the laws of
the Philippines or any other country." The permanent disability compensation
of US$60,000 clearly amounts to reasonable compensation for the injuries
and loss of earning capacity of the seafarer.

Topic:Computation of backwages
Ponente: Justice Arturo D. Brion
WENPHIL CORPORATION vs. ALMER R. ABING and ANABELLE M.
TUAZON,G.R. No. 207983
April 7, 2014
Facts: In a complaint for illegal dismissal filed by respondents Almer R.
Abing and Anabelle M. Tuazon against petitioner Wenphil Corp., the former
were awarded backwages. But the period for the computation of the
backwages set by the Labor Arbiter (LA) was inconsistent with that of the
Court of Appeals (CA). According to the LA, whose ruling the National Labor
Relations Commission (NLRC) affirmed, the period for computation should be
from Feb. 15, 2002, the day when petitioner last paid respondents
backwages, until Nov. 8, 2002 when the NLRCs decision became final and
executory.
On the other hand, the CA, in setting aside the NLRCs rulings, relied on the
case of Pfizer v. Velasco (G.R. No. 177467, March 9, 2011, 645 SCRA 135)
where the Supreme Court ruled that the backwages of the dismissed
employee should be granted during the period of appeal until reversal by a
higher court. Since the first CA decision that found the respondents had not
been illegally dismissed was promulgated on Aug. 27, 2003, then the
reversal by the higher court was effectively made on Aug. 27, 2003.
Issue: Whether or not the Court of Appeals is correct that the date of
computation should start on February 15, 2002.
Ruling:No.
Among various views, the commanding one is the rule in Pfizer, which
merely echoes the rulings the Supreme Court (SC) made in the cases of
Roquero v. Philippine Airlines (G.R. No. 152329, 449 Phil. 437 (2003)) and
Garcia v. Philippine Airlines (G.R. No. 164856, January 20, 2009, 576 SCRA
479) that the period for computing the backwages due to the
respondents during the period of appeal should end on the date
that a higher court reversed the labor arbitration ruling of illegal
dismissal. In this case, the higher court that first reversed the NLRCs ruling
was not the SC but rather the CA. In this light, the CA was correct when it
found that that the period of computation should end on Aug. 27, 2003. The
date when the SCs decision became final and executory need not matter as
the rule in Roquero, Garcia and Pfizer merely referred to the date of reversal,
not the date of the ultimate finality of such reversal.

As a last minor detail, we do not agree with the CA that the date of
computation should start on Feb. 15, 2002. Rather, it should be on Feb. 16,
2002. The respondents themselves admitted in their motion for computation
and issuance of writ of execution that the last date when they were paid their
backwages was on Feb. 15, 2002. To start the computation on the same date
would result to a duplication of wages for this day; thus, computation should
start on the following date Feb. 16, 2002.

Topic: Award of moral and exemplary damages

Ponente: Justice Bienvenido L. Reyes
SPI TECHNOLOGIES, INC. and LEA VILLANUEVA vs. VICTORIA K.
MAPUA, G.R. No. 191154
April 7, 2014
Facts:
Victoria
K.
Mapua
was
the
Corporate
Developments
Research/Business Intelligence Unit Head and Manager of SPI Technologies,
Inc. (SPI). Subsequently, the Vice President and Corporate Development
Head, Peter Maquera hired Elizabeth Nolan as Mapuas supervisor. The hard
disk on Mapuas laptop crashed, causing her to lose files and data. Mapua
informed Nolan and her colleagues that she was working on recovering the
lost data and asked for their patience for any possible delay on her part in
meeting deadlines. Mapua retrieved the lost data with the assistance of
National Bureau of Investigation Anti-Fraud and Computer Crimes Division.
Yet, Nolan informed Mapua that she was realigning Mapuas position to
become a subordinate of co-manager Sameer Raina due to her missing a
work deadline.
Nolan and Raina started giving out majority of her research work and other
duties under Healthcare and Legal Division to the rank-and-file staff. Mapua
consulted these work problems with SPIs Human Resource Director, Lea
Villanueva and asked if she can be transferred to another department within
SPI. Mapua allegedly saw the new table of organization of the Corporate
Development Division which would be renamed as the Marketing Division.
The new structure showed that Mapuas level will be again downgraded
because a new manager will be hired and positioned between her rank and
Rainas. She was informed that she should cease reporting for work the next
day. Her laptop computer and company mobile phone were taken right away
and her office phone ceased to function.
Mapua filed with the Labor Arbiter (LA) a complaint for illegal dismissal,
claiming reinstatement or for separation pay. Afterwards, she went to a
meeting with SPI, where she was given a second termination letter, the
contents of which were similar to the first one.Mapua received through mail,
a third Notice of Terminationbut the date of effectivity of the termination was
changed. It further stated that her separation pay will be released and a
notation was inscribed, "refused to sign and acknowledge" with unintelligible
signatures of witnesses. A recruitment advertisementof SPI was published in
the Philippine Daily Inquirer. It listed all vacancies in SPI, including a position
for Marketing Communications Manager under Corporate Support.
Mapua submitted an affidavit and alleged that Prime Manpower Resources
Development posted an advertisement on the website of Jobstreet
Philippines for the employment of a Corporate Development Manager in an

unnamed Business Process Outsourcing company located in Paraaque City.

Mapua suspected that this advertisement was for SPI because the writing
style used was similar to Rainas. She also claimed that SPI is the only BPO
office in Paraaque City at that time. Thereafter, she applied for the position
under the pseudonym of "Jeanne Tesoro". On the day of her interview with
Prime Manpowers consultant, Ms. Portia Dimatulac the latter allegedly
revealed to Mapua that SPI contracted Prime Manpowers services to search
for applicants for the Corporate Development Manager position.She
wasconvinced that her former position is not redundant. According to her,
she underwent psychiatric counseling and incurred medical expenses as a
result of emotional anguish, sleepless nights, humiliation and shame from
being jobless. She also averred that the manner of her dismissal was
unprofessional and incongruous with her rank and stature as a manager as
other employees have witnessed how she was forced to vacate the premises
on the same day of her termination.
The company, through Villanueva, served a written notice to Mapua,
informing her of her termination effective. Mapua refused to receive the
notice, thus, Villanueva made a notation "refused to sign and acknowledge"
on the letter. On that same day, SPI filed an Establishment Termination
Report with the Office of the Regional Director of the Department of Labor
and Employment-National Capital Region (DOLE-NCR) informing the latter of
Mapuas termination. Mapua was offered her separation and final pay, which
she refused to receive. Before the effective date of her termination, she no
longer reported for work. SPI has not hired a Corporate Development
Manager since then.
LA rendered a Decision, the redundancy of [Mapuas] position being in want
of factual basis, her termination is therefore hereby declared illegal.
Accordingly, she should be paid her backwages, separation pay in lieu of
reinstatement, moral and exemplary damages and attorneys fees. SPI
appealed the LA decision to the National Labor Relations Commission
(NLRC).In ruling so, the NLRC held that "[t]he determination of whether
[Mapuas] position as Corporate Development Manager is redundant is not
for her to decide. It essentially and necessarily lies within the sound business
management." Mapua elevated the case to the CA by way of petition for
certiorari, arguing that based on evidence, the LA decision should be
reinstated.Mapuas petition was initially dismissed by the CA. Mapua filed a
motion for reconsideration which was granted by the CA. It promulgated its
Decision, reinstating the LAs decree.
Issue:
1) Whether or not Mapua is illegally dismissed from work.
2) Whether or not the award of moral and exemplary damages is valid.

1) Ruling: Yes.
The Court does not agree with the rationalization of the NLRC that "[i]f it
were true that her position was not redundant and indispensable, then the
company must have already hired a new one to replace her in order not to
jeopardize its business operations. The fact that there is none only proves
that her position was not necessary and therefore superfluous."
What the above reasoning of the NLRC failed to perceive is that "[o]f
primordial consideration is not the nomenclature or title given to
the employee, but the nature of his functions."It is not the job title but
the actual work that the employee performs. Also, change in the job title
is not synonymous to a change in the functions. A position cannot be
abolished by a mere change of job title. In cases of redundancy, the
management should adduce evidence and prove that a position which was
created in place of a previous one should pertain to functions which are
dissimilar and incongruous to the abolished office.
2) Ruling: Yes.
Award of moral and exemplary damages for an illegally dismissed
employee is proper where the employee had been harassed and
arbitrarily terminated by the employer. Moral damages may be awarded
to compensate one for diverse injuries such as mental anguish, besmirched
reputation, wounded feelings, and social humiliation occasioned by the
employers unreasonable dismissal of the employee.
The Court has consistently accorded the working class a right to recover
damages for unjust dismissals tainted with bad faith; where the motive of the
employer in dismissing the employee is far from noble. The award of such
damages is based not on the Labor Code but on Article 220 of the Civil Code.
However, the Court observes that the CA decision affirming the LAs award of
P500,000.00 and P250,000.00 as moral and exemplary damages,
respectively, is evidently excessive because the purpose for awarding
damages is not to enrich the illegally dismissed employee.
Consequently, the Court hereby reduces the amount of P50,000.00 each as
moral and exemplary damages

Topic: Seaman Permanent Disability

Ponente: Justice Bienvenido L. Reyes
BARKO INTERNATIONAL, INC. /CAPT. TEODORO B. QUIJANO AND/OR
FUYO KAIUN CO. LTD. vs. EBERLY S. ALCAYNO, G.R. No. 188190, April
21, 2014
Facts: The respondent was employed by Fuyo Kaiun Co. Ltd. through its
local manning agent, Barko International, Inc. (petitioners), as Able-bodied
Seaman. The employment contract provided for a contract period of nine
months. His prime duty, among others, was to paint and chip rust on deck or
superstructure of ship and to give directions to the crew engaged in cleaning
wheelhouse and quarterdeck on board the vessel, M/V Cape Iris.Having
passed the required Pre-Employment Medical Examination (PEME) and found
fit for sea service, the respondent boarded the ocean vessel M/V Cape Iris.
After one month on board the vessel, the respondent complained of stiff
neck, and his right jaw started to swell. His physical condition worsened
despite medications given him on board until he signed off at the port of the
Suez Canal, Egypt where he was examined by a certain Dr. Michael H.
Mohsen of the Dr.Nazmy Hospital. Dr. Mohsens diagnosis stated that the
respondent had a "firm mass in the left side of neck with severe diffuse
infection and pus collection in the neck, gangrene and necrosis in skin and
tissues of neck, Uncontrolled D.M., Toxaemia and this condition may be due
to chronic disease or malignancy." The Medical Report issued by the
Dr.Nazmy Hospital recommended hospital confinement.
The respondent was repatriated to the Philippines.Upon arrival in Manila, the
respondent was examined by Dr.Nicomedes G. Cruz, a company-designated
physician. The Diagnosis indicated: Uncontrolled diabetes mellitus and
tuberculous adenitis. The respondent was placed under a six-month antituberculosis treatment. The respondent consulted a private physician, Dr.
Regina Pascua Barba, who also medically assessed him to be suffering from
cervical tuberculosis adenitis as similarly assessed by the companydesignated physician. She recommended continuous treatment and
medication for the respondent.
The respondent filed a complaint for disability benefits, reimbursement of
medical expenses, payment of the unexpired portion of his contract, moral
and exemplary damages and attorneys fees against the petitioners. To
support his claim, he alleged that his illness was contracted while he was on
board M/V Cape Iris; that he was repatriated for medical reasons and was
treated for more than 120 days; and, that he suffered a permanent total
disability with Grade 1 impediment. Thus, he should be compensated by the
petitioners. The petitioners denied the claim and averred that a company-

designated physician, in fact, issued a handwritten medical evaluation

finding his condition well-controlled, asymptomatic, and stable and therefore,
physically fit to resume work anytime. Dr. Cruz declared the respondent fit to
work on even date after completion of the anti-Kochs medication for six
months. Such fact was not disputed; hence, there is no disability to speak
of.LA granted the claim of the respondent. The NLRC reversed the decision of
the LA as it found no factual and legal basis to support the respondents
allegation. The CA granted the petition of the respondent and reversed the
resolution of the NLRC. Hence this petition.
Issue: Whether or not the respondent is entitled to total and permanent
disability benefits just because his injury rendered him incapable of
performing his work for more than 120 days.
Ruling: Yes.
What is important is that he was unable to perform his customary
work for more than 120 days which constitutes permanent total
disability, and not the actual injury itself. Undoubtedly, the illness of the
respondent which incapacitated him to work more than 120 days after
repatriation is considered as work-related which entitles him to disability
benefits.
The Court, moreover, agrees with the CA regarding the applicability of the
doctrine in the case of Crystal Shipping that a seafarer's continuous
inability to work due to a work-related illness for a period of more
than 120 days need not be qualified by a declaration of fitness to
work by a company-designated physician for it to be considered as a
permanent total disability which is compensable. It would, thus, be
illogical to apply the ruling laid down in Vergara which was promulgated on
October 6, 2008, or more than two years from the time the complaint was
filed. The observance of the principle of prospectivity dictates that
Vergara should not operate to strip the respondent of his cause of
action for total and permanent disability that accrued since the time of his
inability to perform his customary work.

Topic: Retrenchment differentiated from Redundancy

Ponente: BRION, J.
ARABIT, et al., v. JARDINE PACIFIC FINANCE, INC., G.R. No. 181719,
April 21, 2014
Facts: Petitioners were former regular employees of respondent Jardine
Pacific Finance, Inc. (formerly MB Finance) (Jardine). The petitioners were also
officers and members of MB Finance Employees Association-FFW Chapter
(the Union), a legitimate labor union and the sole exclusive bargaining agent
of the employees of Jardine. On the claim of financial losses, Jardine decided
to reorganize and implement a redundancy program among its employees.
The petitioners were among those affected by the redundancy program.
Jardine thereafter hired contractual employees to undertake the functions
these employees used to perform. The Union alleged unfair labor practice on
the part of Jardine, as well as discrimination in the dismissal of its officers
and members. Negotiations ensued between the Union and Jardine under the
auspices of the NCMB, and both parties eventually reached an amicable
settlement. In the settlement, the petitioners accepted their redundancy pay
without prejudice to their right to question the legality of their dismissal with
the NLRC.
On June 1, 1999, the petitioners and the Union filed a complaint against
Jardine with the NLRC for illegal dismissal and unfair labor practice. The LA
ruled in the petitioners favor. The CA reversed the LAs and the NLRCs
rulings, and granted Jardines petition for certiorari.
Issue: Whether or not the CA correctly ruled that the NLRC committed grave
abuse of discretion when it found that Jardine validly terminated the
petitioners employment because of redundancy
Ruling: No.

Retrenchment and redundancy are two different concepts; they are not
synonymous; thus, they should not be used interchangeably. Redundancy
exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is
redundant where it is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as over hiring of workers,
decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise.
Primarily, employers resort to redundancy when the functions of an
employee have already become superfluous or in excess of what the
business requires. For the implementation of a redundancy program to be
valid, the employer must comply with the following requisites: (1) written
notice served on both the employees and the Department of Labor
and Employment at least one month prior to the intended date of
retrenchment; (2) payment of separation pay equivalent to at least one
month pay or at least one month pay for every year of service, whichever is
higher; (3) good faith in abolishing the redundant positions; and (4) fair and
reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished.
Topic: Payment of accrued wages despite reversal of decision
Ponente: BRION, J.
BERGONIO v. SOUTH EAST ASIAN AIRLINES, G.R. No. 195227, April
21, 2014
Facts: On April 30, 2004, the petitioners filed before the LA a complaint for
illegal dismissal and illegal suspension with prayer for reinstatement against
respondents South East Asian Airlines (SEAIR) and Irene Dornier as SEAIRs
President (collectively, the respondents). The LA found the petitioners
illegally dismissed and ordered the respondents, among others, to
immediately reinstate the petitioners with full backwages. The respondents
appealed with the NLRC the May 31, 2005 illegal dismissal ruling of the LA.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its
November 29, 2006 resolution final and executory. The CA rendered its
decision (on the illegal dismissal ruling of the LA) partly granting the
respondents petition. The Court likewise denied the petitioners subsequent
motion for reconsideration, and thereafter issued an Entry of Judgment
certifying that its August 4, 2008 resolution had become final and executory
on March 9, 2009. In its July 16, 2008 resolution, the NLRC affirmed in toto
the LAs March 13, 2008 order. The CA reversed, for grave abuse of
discretion, the NLRCs July 16, 2008 decision that affirmed the LAs order to
release the garnished amount.
Issue: Whether or not the petitioners may recover the accrued wages prior
to the CAs reversal of the LAs May 31, 2005 decision.

Ruling: Yes.
An employer, who, despite the Labor Arbiters order of reinstatement, did not
reinstate the employee during the pendency of the appeal up to the reversal
by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time the higher tribunal
reverses the decision. The rule, therefore, is that an employee may still
recover the accrued wages up to and despite the reversal by the higher
tribunal. This entitlement of the employee to the accrued wages proceeds
from the immediate and self-executory nature of the reinstatement aspect of
the LAs decision.
Exception. To determine whether an employee is thus barred, two tests
must be satisfied: (1) actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and (2) the delay must
not be due to the employers unjustified act or omission. Note that under the
second test, the delay must be without the employers fault. If the delay is
due to the employers unjustified refusal, the employer may still be required
to pay the salaries notwithstanding the reversal of the LAs decision.
Under the facts and the surrounding circumstances, the delay was due to the
acts of the respondents that we find were unjustified. The respondents'
failure in this case to exercise either option rendered them liable for the
petitioners' accrued salary until the LA decision was reversed by the CA on
December 17, 2008.
Topic: Standards for regularization; conceptual underpinnings
Ponente: PERLAS-BERNABE, J.
Abbot Laboratories Philippines, et al. v. Perlie Alcaraz GR No.
192571, April 23, 2013
Facts:
The
respondent Alcaraz was
the
Regulatory
Affairs
and Information Manager of Aventis Pasteur Philippines who showed interest
in applying as a Medical and Regulatory Affairs Manager, a position that was
published by the petitioner Abbot Laboratories in the newspaper. When the
petitioner formally offered the position to the respondent, the latter accepted
the position. It was on May 23, 2005 that Walsh, Almazar and Bernardo
formally handed to the respondent a letter terminating her employment with
the detailed explanation for her termination. The respondent then filed a
complaint for illegal dismissal with damages against the petitioner and its
officers. The Labor Arbiter upheld the termination of probationary
employment of the respondent holding that the termination was justified
with no evidence showing that the officers of the Abbot Lab acted in bad
faith when terminating her services.

The NLRC annulled and set aside the ruling of the Labor Arbiter which
prompted the petitioners to file before the Court of Appeals a petition for
certiorari with prayer for issuance of a temporary restraining order and writ
of preliminary injunction. Meanwhile, the action of the petitioner on its
motion for reconsideration of the CAs resolution in the second CA petition
was denied that became final on January 10, 2011 because the petitioner
failed to file a timely appeal on the said decision. Alcaraz, in her comment,
raised the issue on forum shopping when the petitioner filed its second
petition to the CA pending the resolution of the motion for reconsideration
that they filed earlier in the December 10, 2009 decision. Alcaraz further
contends that the petitioners failed to comply with certification requirement
under Section 5, Rule 7 of the rules of court when they failed to disclose in
their petition filed on June 16, 2010 Memorandum of Appeal filed before the
NLRC.
Issue: Whether or not Alcaraz was validly terminated from her employment.
Ruling: Yes.
Alcaraz was sufficiently informed of the reasonable standards. The employer
is made to comply with two (2) requirements when dealing with a
probationary employee: first, the employer must communicate the
regularization standards to the probationary employee; and second, the
employer must make such communication at the time of the probationary
employees engagement. If the employer fails to comply with either, the
employee is deemed as a regular and not a probationary employee.
A punctilious examination of the records reveals that Abbott had indeed
complied with the above-stated requirements. This conclusion is largely
impelled by the fact that Abbott clearly conveyed to Alcaraz her duties and
responsibilities as Regulatory Affairs Manager prior to, during the time of her
engagement, and the incipient stages of her employment.
Records show that Alcaraz was terminated because she (a) did not manage
her time effectively; (b) failed to gain the trust of her staff and to build an
effective rapport with them; (c) failed to train her staff effectively; and (d)
was not able to obtain the knowledge and ability to make sound judgments
on case processing and article review which were necessary for the proper
performance of her duties. Due to the nature and variety of these managerial
functions, the best that Abbott could have done, at the time of Alcaraz's
engagement, was to inform her of her duties and responsibilities, the
adequate performance of which, to repeat, is an inherent and implied
standard for regularization; this is unlike the circumstance in Aliling where a
quantitative regularization standard, in the term of a sales quota, was readily
articulable to the employee at the outset. Hence, since the reasonableness

of Alcaraz's assessment clearly appears from the records, her termination

was justified. Bear in mind that the quantum of proof which the employer
must discharge is only substantial evidence which, as defined in case law,
means that amount of relevant evidence as a reasonable mind might accept
as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise.
A different procedure is applied when terminating a probationary employee;
the usual two-notice rule does not govern. Section 2, Rule I, Book VI of the
Implementing Rules of the Labor Code states that "if the termination is
brought about by the failure of an employee to meet the standards of the
employer in case of probationary employment, it shall be sufficient that a
written notice is served the employee, within a reasonable time from the
effective date of termination."
As the records show, Alcaraz's dismissal was effected through a letter dated
May 19, 2005 which she received on May 23, 2005 and again on May 27,
2005. Stated therein were the reasons for her termination, i.e., that after
proper evaluation, Abbott determined that she failed to meet the reasonable
standards for her regularization considering her lack of time and people
management and decision-making skills, which are necessary in the
performance of her functions as Regulatory Affairs Manager. Undeniably, this
written notice sufficiently meets the criteria set forth above, thereby
legitimizing the cause and manner of Alcarazs dismissal as a probationary
employee under the parameters set by the Labor Code.

Topic: Illegal Dismissal

Ponente: VILLARAMA, JR., J.
Mirant (Philippines) Corporation, et al. v. Joselito A. Caro,G.R. No.
181490, April 23, 2014
Facts: Respondent filed a complaint for illegal dismissal and money claims
for 13th and 14th month pay, bonuses and other benefits, as well as the
payment of moral and exemplary damages and attorneys fees. It is the
contention of respondent that he was illegally dismissed by petitioner

corporation due to the latters non-compliance with the twin requirements of

notice and hearing. He asserts that while there was a notice charging him of
"unjustified refusal to submit to random drug testing," there was no notice of
hearing and petitioner corporations investigation was not the equivalent of
the "hearing" required under the law which should have accorded respondent
the opportunity to be heard. To the mind of petitioners, they are not liable for
illegal dismissal because all of these circumstances prove that respondent
really eluded the random drug test and was therefore validly terminated for
cause after being properly accorded with due process. Labor Arbiter found
respondent to have been illegally dismissed. The NLRC found that
respondent was not only validly dismissed for cause he was also properly
accorded his constitutional right to due process. The CA disagreed with the
NLRC and ruled that it was immaterial whether respondent failed, refused, or
avoided being tested. The CA however found that award of moral and
exemplary damages is without basis due to lack of bad faith on the part of
the petitioner corporation which merely acted within its management
prerogative.
Issue: Whether or not the respondent was illegally dismissed
Ruling: Yes.
There was illegal dismissal. While the adoption and enforcement by
petitioner corporation of its anti-drugs policy is recognized as a valid exercise
of management prerogative as an employer, such exercise is not absolute
and unbridled.
We agree with the disposition of the appellate court that there was illegal
dismissal in the case at bar.
While the adoption and enforcement by petitioner corporation of its AntiDrugs Policy is recognized as a valid exercise of its management prerogative
as an employer, such exercise is not absolute and unbridled. Managerial
prerogatives are subject to limitations provided by law, collective bargaining
agreements, and the general principles of fair play and justice.46 In the
exercise of its management prerogative, an employer must therefore ensure
that the policies, rules and regulations on work-related activities of the
employees must always be fair and reasonable and the corresponding
penalties, when prescribed, commensurate to the offense involved and to
the degree of the infraction.47 The Anti-Drugs Policy of Mirant fell short of
these requirements.
Topic: Accident and Disability Benefits
Ponente: Brion, J.

Sunga v. Virjen Shipping Corporation, G.R. No. 198640, April 23,

2014
Facts: Virjen Shipping Corporation (Virjen), acting in behalf of its foreign
principal, Nissho Odyssey Ship Management Pte. Ltd., entered into a contract
of employment with Sunga. Under the contract, Sunga would be working as a
fitter on board the ocean-going vessel MT Sunway for nine (9) months on a
monthly salary of US$ 566.00. Sungas employment was covered by the IBF
JUS/AMOSUP-IMMAJ Collective Bargaining Agreement (CBA) executed
between Virjen and Nissho Odyssey, All Japan Seamens Union and AMOSUP.
Sometime in 2007, while already on board the MT Sunway vessel, Sunga
started to experience an on-and-off right flank pain, making it difficult for
him to work. The pain became more intense as the days progressed, thereby
prompting him to request for repatriation. The request was granted. Sunga
reported to Virjens company-designated physician, Dr. Cruz, for medical
examination. The doctor instructed him to undergo Magnetic Resonance
Imaging (MRI) of his lumbosacral spine. The MRIs results merited the
medical advice that Sunga undergo physical therapy for a period of four (4)
months under the supervision of Dr. Cruz. Despite the therapy, Sunga still
experienced episodes of moderate to severe pain on his right lower
extremity and back. He also manifested limited trunk mobility and was
unable to undertake lifting activities.
Dr. Cruz issued a medical certificate recommending a Grade 8 disability
(Moderate rigidity or 2/3 loss of motion or lifting power of the trunk) based on
the Philippine Overseas Employment Administration (POEA) Standard
Employment Contract for Seafarers. Dr. Cruz also issued another medical
certificate recommending a disability grading of 25% (Back pains with
considerable reduction of mobility) in accordance with the parties CBA. On
the strength of these two certificates, Virjen immediately offered Sunga the
amount of US$ 16,795.00, in accordance with the POEA Standard
Employment Contract for Seafarers, as full settlement for the latters
disability benefits. However, Sunga rejected the offer; he demanded instead
that his disability benefits be based on the disability grading of 25%,
pursuant to the provisions of the parties CBA.
Virjen denied Sungas demand. Hence, on October 23, 2007, Sunga filed a
complaint before the NLRC against Virjen for disability benefits as stated in
the parties CBA (not under the POEA Standard Employment Contract for
Seafarers) in the amount of US$ 110,000.00. The complaint likewise prayed
for attorneys fees, plus moral and exemplary damages.
Labor Arbiter ruled in Sungasfavour. It ordered Virjen to pay Sunga his
disability compensation benefits in the amount of US$ 110,000.00 pursuant
to the provisions of the parties CBA. The Labor Arbiter ruled that Sungas

injury is not merely an anatomical defect but a bodily harm brought upon by
the performance of his duties and functions as fitter of the vessel.
Virjen filed a petition for certiorari with the CA, attributing grave abuse of
discretion on the part of the NLRC which was granted. The CA reasoned that
accident is an unintended and unforeseen injurious occurrence, something
that does not occur in the usual course of events or could not be reasonably
anticipated. According to the appellate court, the injury was not accidental; it
is common knowledge that carrying heavy objects can cause injury and that
lifting and carrying heavy objects are part of his duties as fitter. Thus, a back
injury is reasonably anticipated. It cannot serve as basis, therefore, for Sunga
to be entitled to disability benefits.
Issues:
1. Whether the NLRC committed grave abuse of discretion to justify its
substitution by the CA
2. Whether the injury suffered by Sunga is accidental for him to get
disability benefits.
Ruling:
1. NO. Grave abuse of discretion, amounting to lack or excess of
jurisdiction, has been defined as the capricious and whimsical exercise
of judgment amounting to or equivalent to lack of jurisdiction. There is
grave abuse of discretion when the power is exercised in an arbitrary
or despotic manner by reason of passion or personal hostility, and
must be so patent and so gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty enjoined or to
act at all in contemplation of law.
The Court failed to see any grave abuse of discretion on the part of the
NLRC which would authorize the appellate court to substitute its own
ruling over that of the NLRC. There was ample evidence to support the
findings of the NLRC. The CA, in a Rule 65 petition, is limited to a
simple review of whether there existed grave abuse of discretion; the
CA should not concern itself with the determination of whether the
NLRC, after evaluation of the evidence presented before it, had
correctly ruled on the merits of the case. The question of intrinsic
merits is an issue best left to the labor tribunals which are deemed to
have mastery over the subject matter.
2. YES. As found by both the NLRC and the Labor Arbiter, Sungas injury
was the result of the accidental slippage in the handling of the 200kilogram globe valve which triggered Sungas back pain; the weight of
the globe valve, coupled with the abruptness of the fall, explained why
the injury was so severe as to render Sunga immobile. While indeed
Sunga had not explained in the request for repatriation the proximate

cause of the injury, there was enough circumstantial evidence to

substantiate the claim.
In Jarco Marketing Corporation, et al., v. Court of Appeals, we ruled that
an accident pertains to an unforeseen event in which no fault or
negligence attaches to the defendant. It is a fortuitous circumstance,
event or happening; an event happening without any human agency,
or if happening wholly or partly through human agency, an event
which under the circumstances is unusual or unexpected by the person
to whom it happens.
Since Sunga encountered an accident on board MT Sunway, the CA
thus grossly misappreciated and misread the ruling of the NLRC,
leading the appellate court to find a grave abuse of discretion sufficient
for a reversal of the NLRC ruling. In other words, as the NLRC found,
Sunga's disability benefits should fall within the coverage of the
parties' CBA, which provides:
Article 28: Disability 28.1
A seafarer who suffers permanent disability as a result of an accident
whilst in the employment of the Company regardless of fault, including
accidents occurring while traveling to or from the ship, and whose
ability to work as a seafarer is reduced as a result thereof, but
excluding permanent disability due to willful acts, shall in addition to
sick pay, be entitled to compensation according to the provisions of
this Agreement.
In sum, we find that the NLRC did not abuse its discretion. It arrived at
a proper decision after fully appreciated of the parties' arguments and
carefully considering the presented evidence. Thus, there was no basis
for the CAs conclusion that the NLRC committed grave abuse of
discretion.

Topic: Reimbursement of medical expenses

Ponente: Brion, J.
Javier v. Transmarine Carriers, Inc., G.R No. 204101, July 02, 2014
Facts: Philippine Transmarine Carriers, Inc. (PTCI) hired Alberto as
pumpman, on board the vessel MT Neptune Glory. This was Albertos 20th
contract with the respondents. Pursuant to the agreement, Alberto received
a basic monthly salary of US$656.00 for a contract period of nine months.
Prior to his hiring on March 3, 2003, Alberto underwent the required Preemployment Medical Examination (PEME) and was declared fit for work by
PTCIs designated physician. In 2003, Alberto suddenly felt severe headache
accompanied by dizziness, vomiting and physical weakness while he was on
board
MT
Neptune
Glory.
On November 15, 2003, Alberto was confined at the University of Texas
Medical Branch Hospital in Galveston, Texas. He underwent a series of
medical examination and was diagnosed to be suffering from hypertension.
On the doctors advice, Alberto was repatriated to the Philippines on
November
23,
2003
for
further
medical
treatment.
Upon arrival in Manila, Alberto was referred to Dr. Cammayo at the Manila
Doctors Hospital. Alberto underwent a series of medical treatment and
examination. On March 30, 2004, Alberto underwent coronary artery bypass
surgery due to a three vessel Coronary Artery Disease.
On April 14, 2004, Alberto was discharged from the Manila Doctors Hospital.
The doctors, however, failed to either declare him as fit to return to work or
to assess his disability grading. Thus, Alberto sought the opinion of Dr.
EfrenVicaldo, a private doctor-cardiologist, who assessed Albertos disability
as impediment grade 1 and declared the latter as unfit to resume work as

seaman in any capacity and not expected to land a gainful employment

given his medical background.
In view of Dr. Vicaldos assessment, Alberto claimed from the respondents
disability benefits and sickness allowance pursuant to the Philippine
Overseas Employment Administration Standard Employment Contract (POEASEC). The respondents denied Albertos claim. Hence, Alberto filed before the
LA a complaint for disability benefits, illness allowance, and reimbursement
of medical expenses, damages and attorneys fees. The LA ordered the
respondents to pay Alberto the total amount of US$68,886.40 or its
Philippine Peso equivalent at the prevailing rate of exchange; it consisted
of disability benefits (in the amount of US$60,000.00), sickness allowance (in
the amount of US$2,624.00 or Albertos basic monthly wage of US$656.00
for four months), and attorneys fees equivalent to 10% of the monetary
award. According to the LA, Alberto contracted his illness during the term of
his contract with the respondents and because of his constant exposure to
extraneous work. Hence, he is entitled to disability benefits.
The NLRC affirmed the LAs decision with modification. The NLRC found that
Alberto made an April 12, 2004 certification acknowledging receipt in full of
his sickness allowance equivalent to 120 days (in the amount of
P144,318.03) and payment in full of his medical treatment (in the amount of
P1,928,841.27). Since these expenses, in the total amount of P2,073,159.30,
have already been paid, the NLRC ordered its deduction from the peso
equivalent of the total monetary award of US$68,886.40.
CA affirmed the NLRCs resolution. The CA brushed aside the petitioners
claim for reimbursement of medical expenses incurred by Alberto because
the petitioners failed to appeal the portion of the LAs decision that denied
Albertos claim on these. It also denied Albertos claim for sickness allowance
because of Albertos April 12, 2004 certification. It rejected the petitioners
claim for death benefits. It pointed out that death benefits are granted to the
heirs of the seafarer only when the seafarer dies during the term of the
contract and for causes that are work-related. In this case, Alberto died after
his employment contract with the respondents had already been terminated.
Issue: Whether Albertos heirs are entitled to reimbursement of the
expenses that Alberto incurred for his medical treatment as medical
expenses and sickness allowance are separate and distinct from one another
and from disability benefits
Ruling: YES. The employment of seafarers and its incidents are governed by
the contracts they sign every time they are hired or rehired. These contracts
have the force of law between the parties as long as their stipulations are not
contrary to law, morals, public order or public policy. Every seaman and the
vessel owner (directly or represented by a local manning agency) are

required to execute the POEA-SEC as a condition sine qua non to the

seafarers deployment for overseas work. While the seafarers and their
employers are governed by their mutual agreements, the POEA rules and
regulations require that the POEA-SEC, which contains the standard terms
and conditions of the seafarers employment in foreign ocean-going vessels,
be
integrated
in
every
seafarers
contract.
In the present case, Section 20-B of the 2000 POEA-SEC (the governing
POEA-SEC at the time the respondents employed Alberto in 2003) is the
applicable provision. Under this section, the employers assume several kinds
of liabilities to the seafarer for any work-related illness or injury that the
seafarer may have suffered during the term of the contract.
The separate treatment of, and the distinct considerations in, these three
kinds of liabilities under the POEA-SEC can only mean that the POEA-SEC
intended to make the employer liable for each of these three kinds of
liabilities. In other words, employers must: (1) pay the seafarer sickness
allowance equivalent to his basic wage in addition to the medical treatment
that they must provide the seafarer with at their cost; and (2) compensate
the seafarer for his permanent total or partial disability as finally determined
by the company-designated physician.
Significantly, too, while Section 20 of the POEA-SEC did not expressly state
that the employers liabilities are cumulative in nature so as to hold the
employer liable for the sickness allowance, medical expenses and disability
benefits it does not also state that the compensation and benefits are
alternative or that the grant of one bars the grant of the others.
Under this setup, the Court must be guided by the principle that as a labor
contract, the POEA-SEC is imbued with public interest. Accordingly, its
provisions must be construed fairly, reasonably and liberally in favor of the
seafarer in the pursuit of his employment on board ocean-going vessels.
After all, the constitutional policy, which we here uphold and emphasize in
construing as we do these POEA-SEC provisions, accords and guarantees full
protection to labor, both local and overseas.
However,
since
the
sickness
allowance
was
already
paid,
it
should
be
deleted
from the monetary award. The Court finds no compelling reason to overturn
the NLRC and the CAs factual finding that the respondents have fully paid
Albertos sickness allowance. In this regard, we agree with the CA that the
NLRC committed no grave abuse of discretion in ordering the deletion of the
sickness allowance benefit in the amount of P144, 318.03 from the peso
equivalent of the amount awarded to Alberto. The LAs grant of sickness
allowance despite its full payment is clearly contrary to the provisions of the
POEA-SEC; its ruling inequitably resulted in a double payment to Alberto at
the respondents expense.

Similarly, we are bound by the NLRC and the CAs factual finding that the
respondents fully paid Albertos medical expenses. However, unlike the
deletion of sickness allowance benefits, we find that the CA legally erred in
not finding that the NLRC committed grave abuse of discretion in ordering
the deduction of the medical expenses paid by the respondents from the
total monetary award. The NLRCs action is whimsical and arbitrary for clear
lack of factual, legal and jurisprudential basis.
As earlier stated, the LA denied for lack of basis Albertos prayer for
reimbursement of medical expenses. The total monetary award of
US$68,886.40 consisted only of the disability benefits, sickness allowance
and attorneys fees. In view of the NLRCs ruling that ordered the deletion of
the sickness allowance from the total monetary award, Alberto was
effectively left with only the disability benefits and the 10% attorneys fees
as his monetary award. In this regard, the NLRC had no reason, both in fact
and in law, to order the deduction from the total monetary award
(US$68,886.40) the amount of P1,928,841.27 incurred (and which the
respondents had already paid in full) for Albertos medical treatment.
As a matter of fact, the LA did not award Alberto any amount as
reimbursement for his medical expenses which the NLRC could arguably
consider as double reimbursement or payment resulting in unjust
enrichment on Albertos part. As a matter of law, the benefit of medical
treatment at the employers expense is, as earlier discussed, separate and
distinct from the disability benefits and sickness allowance to which the
seafarer
is
additionally
entitled.
The NLRC reached its conclusion even if the POEA-SEC treats these two kinds
of liabilities distinctly and even if the bases for their payment are different.
This clearly smacks of grave abuse of discretion amounting to lack and
excess of jurisdiction. Grave abuse of discretion was patent when the NLRC
acted contrary to the facts that the LA did not award Alberto medical
expenses and the provisions of the law - in this case, the POEA-SEC.

Topic: Reinstatement without loss of seniority rights

Ponente: Perez, J.
Ampeloquio v. Jaka Distribution, Inc., G.R. No. 196936, July 2, 2014
Facts: Ampeloquio is a reinstated employee of respondent Jaka Distribution,
Inc. (JAKA), formerly RMI Marketing Corporation (RMI). Previously,
Ampeloquio had filed a complaint for illegal dismissal against RMI before the
National Labor Relations Commission (NLRC). Subsequently, the Labor
Arbiter found RMI guilty of illegal dismissal. Ampeloquio resumed work as

merchandiser at JAKA and reported at JAKAs outlets within Metro Manila,

Shopwise Makati and Alabang. He received a daily wage of P252.00, without
meal and transportation allowance. In 2005, Ampeloquio was transferred
outside of Metro Manila, to Lucena City and subsequently to San Pablo City.
At that time, he was receiving the same daily wage of P252.00, without meal
and transportation allowance. Ampeloquio was given a monthly cost of living
allowance (COLA) of P720.00.
Ampeloquio requested for salary adjustment and benefits retroactive to the
date of his reinstatement, 6 August 2004, and payment of salary differential
in the total amount of P42,196.00. In another letter, Ampeloquio wrote JAKA
reiterating his request for salary adjustment and payment of benefits
retroactive to his reinstatement, and an increase from his previous request of
salary differential which amounted to a total of P180,590.00.Ampeloquio
based his request on what other merchandisers of JAKA received.
Because of the discrepancy in wages, Ampeloquio filed anew before the
NLRC, a complaint for underpayment of wages, COLA, non-payment of meal
and transportation allowances.
LA Hernandez granted Ampeloquios complaint for underpayment of wages,
basic and COLA and non-payment of allowances, meal and transportation.
On appeal by JAKA, the NLRC proper, in its Resolutionmodified the amounts
ordered by the Labor Arbiter to be paid by JAKA to Ampeloquio. Ampeloquiois
therefore entitled to a total salary differential of only P22,172.00.

JAKAs contention that Ampeloquio is not entitled to reimbursement of

transportation expenses from the latters house to the outlet where he was
assigned and back is impressed with merit as JAKA submitted a copy of their
policies and the pertinent portion, states:
"7. The only transportation expenses allowed to be reimbursed are
those incurred from the first outlet to succeeding outlets. The
transportation reimbursement shall not include house to first outlet
and last outlet to house."
Aggrieved by the NLRCs modification of what Ampeloquio obviously
perceived as an acceptable monetary award, the latter filed a petition for
certiorari before the Court of Appeals bewailing grave abuse of discretion in:
(1) the reduction of his award of salary differential to only 22,172.00; (2) the
deletion of his entitlement to transportation expenses; and (3) the deletion of
the award of moral and exemplary damages.The appellate court dismissed
Ampeloquios petition for certiorari finding no grave abuse of discretion in
the NLRCs ruling and finding that, in fact, it is supported by substantial
evidence.
Issues:

1. What is the scope vis-a-vis wages of reinstatement "without loss of

seniority rights and other privileges."?
2. What is the salary rate he is entitled to?
Ruling:
Seniority rights refer to the creditable years of service in the employment
record of the illegally dismissed employee as if he or she never ceased
working for the employer. In other words, the employees years of service is
deemed continuous and never interrupted. Such is likewise the rationale for
reinstatements twin relief of full back wages.
Ampeloquio is correct in asserting that he is a senior employee compared to
the other merchandisers whom he himself designates as casual or
contractual merchandisers. He is likewise senior to other regular employees
subsequently hired by JAKA, specifically two regular messenger employees
which Ampeloquio claims receive wages higher than what he is receiving
from JAKA. Attached to the recognition of seniority rights of a reinstated
employee who had been illegally dismissed is the entitlement to wages
appurtenant thereto.
The case of Ampeloquio is outside the ordinary. His reinstatement was
ordered when merchandisers like him were no longer employed by JAKA. He
is not entitled to the same terms and conditions of employment as that
which was offered to the other regular employees (not merchandisers)
subsequently hired by JAKA.JAKAs decision to grant or withhold certain
benefits to other employees is part of its management prerogative as a
function of an employers constitutionally protected right to reasonable
return on investments.
Ampeloquio cannot likewise compare his wages to that received by "casual
or contractual merchandisers" or merchandisers who are admittedly
outsourced from manpower agencies or those who are considered seasonal
employees hired only during peak season when JAKA is in need of extra
merchandisers.
To say the least, these merchandisers are not, strictly speaking, employees
of JAKA, but of a service provider company which has a service contract with
JAKA. The merchandisers in this case simply perform the work at JAKAs
outlets, wearing uniforms approved by JAKA but provided by the service
company who is actually their employer. There is no employer-employee
relationship between JAKA and these merchandisers.
Receipt by these merchandisers of a benefit such as transportation or meal
allowance is part of the monies they receive from their employer and

embedded in the contract price of the service agreement the employer has
with JAKA.
The phrase without loss of seniority rights applies with practical and real
effect to Ampeloquio upon his retirement because he will reach earlier than
other regular employees of JAKA the required number of years of service to
qualify for retirement.
In all, the labor tribunals were right in using as guidepost the existing
statutory minimum wages and COLA during the three (3) year prescriptive
period within which Ampeloquio can make his money claims.
We are not unaware that reinstatement is the rule and such covers
reinstatement to the same or substantially equivalent position without loss of
seniority rights and privileges.
In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e.,
(1) strained relations, or (2) abolition of the position; JAKA immediately
complied with the Labor Arbiters order of reinstatement.
We note that, specifically, JAKA could have claimed that the position of
merchandiser no longer exists and has been abolished with the contracting
of this job function. However, it merely opted to reinstate Ampeloquio to the
same position. There is no quarrel that with his reinstatement, Ampeloquio is
now the lone regular merchandiser of JAKA.
The option of reinstatement to a substantially equivalent position does not
apply herein as reinstatement to a substantially equivalent position entails
the same or similar job functions and not just same wages or salary. As
applied to this case, Ampeloquio cannot be reinstated to a messengerial
position although such is a regular employment enjoying the same
employment benefits and privileges. His employment cannot likewise be
converted into a contractual employment as such is actually a downgrade
from his regular employment enjoying security of tenure with JAKA.
As the sole regular merchandiser of JAKA, Ampeloquios reinstatement
entitles him, at the minimum, to the standard minimum wage at the time of
his employment and to the wages he would have received from JAKA had he
not been illegally dismissed, as if there was no cessation of employment.
Ampeloquio is likewise entitled to any increase which JAKA may have given
across the board to all its regular employees. To repeat, Ampeloquio is not
entitled to all benefits or privileges received by other employees
subsequently hired by JAKA just by the fact of his seniority in the service with
JAKA.

Topic: Payment of separation pay

Ponente: Villarama, Jr., J.
Immaculate Conception Academy v. Camilon G.R. No. 188035 July 2,
2014
Facts: Petitioner Immaculate Conception Academy (ICA) is an educational
corporation duly organized and existing under the laws of the Philippines and
co-petitioner Dr. Jose Paulo Campos is the president of ICA. Respondent
Evelyn Camilon was an employee of ICA for 12 years. She was ICAs Chief
Accountant and Administrator from June 2000 until her dismissal. As Chief
Accountant, respondent was responsible, among others, for pre-auditing the
school cashiers report, checking the entries therein and keeping custody of
the petty cash fund. She has also direct supervision over the School Cashier,
Janice Loba (Loba).
In July 2004, ICAs Treasurer, Shirley Enobal, received a complaint from the
father of one student who claimed that his son was denied issuance of an
examination permit for nonpayment oftuition fees despite the fact that the
said fees had already been paid.
Cristina Javier, Internal Auditor of ICA, conducted an audit upon the
instruction of petitioner Campos. She made the following findings:
a) There were several payments of tuition and school fees made by a
number of ICA students which were neither accounted for, turned
over and/or posted by the ICA Cashier, Ms.Janice C. Loba, to the
students subsidiary ledgers, nor were the collected amounts
deposited in ICAs account with the Rural Bank of Dasmarias, Inc.;
b) The unaccounted collections received from more or less 186 ICA
students amount to ONE MILLION ONE HUNDRED SIXTY SEVEN
THOUSAND ONE HUNDRED EIGHTY-ONE PESOS and 45/100
(P1,167,181.45).
c) There were missing or unsurrendered booklets of official receipts
issued to and received by Ms. Janice C. Loba as cashier which were
not accounted for, the amount of collection made therein is still
undetermined.

d) Ms. Janice C. Loba manipulated entries in the computerized

subsidiary ledger and destroyed records so that the unaccounted
amounts collected by her and the missing official receipts issued to
her as cashier could not be traced or detected.
Petitioner Campos placed respondent under suspension pending
investigation of the case in light of her duties and responsibilities as Chief
Accountant of ICA.Respondent denied any involvement in the irregularities
committed and claimed that she had no intention of profiting at the expense
of the school or of betraying the trust reposed on her by the corporation.
On October 27, 2004, petitioners terminated the services of respondent after
finding that respondent was negligent and remiss in her duties as the
superior officer of Loba.
On November 26, 2004, respondent filed a complaint for illegal dismissal and
other money claims against petitioners. She claimed that petitioners failed to
cite specific negligent acts or to state the manner and means she employed
in assisting or cooperating with the cashier in the misappropriation of school
funds. Respondent claimed that she was suspended from work without pay
despite the absence of any evidence directly or indirectly implicating her in
the financial irregularity from September 1, 2004 until her termination on
October 27, 2004. Also, she was not given her salary from August 16-30,
2004 and the proportionate sick leave pay and 13th month pay.
The Labor Arbiter rendered a decisiondeclaring ICA guilty of illegal
dismissal.Petitioners appealed the decision of the Labor Arbiter to the NLRC. The
NLRC rendered a decision finding respondents dismissal and preventive
suspension legal and setting aside the awards for back wages, separation
pay and attorneys fees. However, the awards for unpaid salary for the
period from August 15-30, 2004, 13th month pay and service incentive leave
pay which respondent already earned even prior to her dismissal was upheld.
The NLRC likewise ordered the payment to respondent of her unpaid salaries
for the number of working days she remained under preventive suspension
beyond 30 days.
Respondent appealed to the CA. CA rendered a decision affirming the ruling
of the NLRC but with the modification that petitioners are held liable to pay
separation pay to respondent as a measure of social justice.
Issue: Whether the award of separation pay is proper despite legality of
suspension and dismissal
Ruling: NO. The issue of whether a validly dismissed employee is entitled to
separation pay has been settled in the 2007 case of Toyota Motor Philippines
Corporation Workers Association (TMPCWA) v. NLRC, where it was further

clarified that "in addition to serious misconduct, in dismissals based on other

grounds under Art. 282 like willful disobedience, gross and habitual neglect
of duty, fraud or willful breach of trust, and commission of a crime against
the employer or his family, separation pay should not be conceded to the
dismissed employee."
This ruling was reiterated in the case of Central Philippines Bandag
Retreaders, Inc. v. Diasnes, where the Court set aside the award of
separation pay to Diasnes in view of the latters gross and habitual
negligence. To quote:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must
demur the award of separation pay based on social justice when an
employees dismissal is based on serious misconduct or willful disobedience;
gross and habitual neglect of duty; fraud or willful breach of trust; or
commission of a crime against the person of the employer or his immediate
family grounds under Art.282 of the Labor Code that sanction dismissals of
employees. They must be most judicious and circumspect in awarding
separation pay or financial assistance as the constitutional policy to provide
full protection to labor is not meant to be an instrument to oppress the
employers. The commitment of the Court to the cause of labor should not
embarrass us from sustaining the employers when they are right, as here. In
fine, we should be more cautious in awarding financial assistance to the
undeserving and those who are unworthy of the liberality of the law.
Again in the recent case of Moya v. First Solid Rubber Industries, Inc., the
Court disallowed the payment of separation pay to an employee dismissed
from work based on one of the grounds under Article 282 of the Labor Code
or willful breach by the employee of the trust reposed in him by his
employer. Therein, the Court held that Moyas act of concealing the truth
from the company is outside of the protective mantle of the principle of
social justice.
Pursuant to the aforementioned rulings, respondent is clearly not entitled to
separation pay. Respondent was holding a position which involves a high
degree of responsibility requiring trust and confidence as it involves the
financial interests of the school. However, respondent proved to be unfit for
the position when she failed to exercise the necessary diligence in the
performance of her duties and responsibilities as Chief Accountant, thus
justifying her dismissal from service. Respondent was guilty of gross and
habitual negligence when she failed to regularly pre-audit the report of the
school cashier, check the entries therein and keep custody of the petty cash
fund. Respondents dereliction in her duties spanned a period of 11 months
thus enabling the school cashier to misappropriate tuition fee payments,
manipulate the school records and destroy official receipts, in the total
amount of P1,167,181.45 to the prejudice of petitioners. Hence, she should

not be granted separation pay. To rule otherwise would be to reward

respondent for her negligent acts instead of punishing her for her offense.
As we held in Reno Foods, Inc. v. NagkakaisangLakasngManggagawa (NLM)Katipunan,"separation pay is only warranted when the cause for termination
is not attributable to the employee's fault, such as those provided in Articles
283 and 284 of the Labor Code, as well as in cases of illegal dismissal in
which reinstatement is no longer feasible. It is not allowed when an
employee is dismissed for just cause."
As to whether respondents length of service with petitioners justifies the
award of separation pay, we rule in the negative. Respondents 12 years of
service and clean employment record cannot simply erase her gross and
habitual negligence in her duties. Length of service is not a bargaining chip
that can simply be stacked against the employer. As we held in Central
Pangasinan Electric Cooperative, Inc. v. NLRC, although long years of
service might generally be considered for the award of separation benefits or
some form of financial assistance to mitigate the effects of termination, this
case is not the appropriate instance for generosity. The fact that private
respondent served petitioner for more than twenty years with no negative
record prior to his dismissal, in our view of this case, does not call for such
award of benefits, since his violation reflects a regrettable lack of loyalty and
worse, betrayal of the company. If an employees length of service is to be
regarded as a justification for moderating the penalty of dismissal, such
gesture will actually become a prize for disloyalty, distorting the meaning of
social justice and undermining the efforts of labor to cleanse its ranks of
undesirables.

Topic: Jurisdiction
Ponente: DEL CASTILLO, J..
Amecos Innovations, Inc. and Antonio F. Mateov. Eliza R. Lopez, G.R.
No. 178055, July 2, 2014
Facts: Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly
incorporated under Philippine laws engaged in the business of selling
assorted products created by its President Antonio F. Mateo (Mateo). On May
30, 2003, Amecos received a Subpoena from the Office of the City Prosecutor
in connection with a complaint filed by the Social Security System (SSS) for
alleged delinquency in the remittance of SSS contributions.
Amecos settled its obligations with the SSS; consequently, SSS filed a Motion
to Withdraw Complaintwhich was approved by the Office of the City
Prosecutor.
Thereafter, petitioners sent a demand letter to respondent for P27,791.65
representing her share in the SSS contributions and expenses for processing,
but to no avail. Thus, petitioners filed the instant Complaint for sum of
money and damages against respondent.

Respondent filed her Answer with Motion to Dismiss claiming,among others,

that the regular courts do not have jurisdiction over the instant case as it
arose out of their employer-employee relationship.
The petitioner argued that their Complaint is one for recovery of a sum of
money and damages based on Articles 19, 22, and 2154 of the Civil Code;
that their cause of action is based on solutioindebitior unjust enrichment,
which arose from respondents misrepresentation that there was no need to
enroll her with the SSS as she was concurrently employed by another outfit,
Triple A Glass and Aluminum Company, and that she was self-employed as
well. They argue that the employer-employee relationship between Amecos
and respondent is merely incidental, and does not necessarily place their
dispute within the exclusive jurisdiction of the labor tribunals; the true source
of respondents obligation is derived from Articles 19, 22, and 2154 of the
Civil Code. They add that by reason of their payment of respondents
counterpart or share in the SSS premiums even as it was not their legal
obligation to do so, respondent was unjustly enriched, for which reason she
must return what petitioners paid to the SSS. Thus, the regular courts have
jurisdiction over the case.
Respondent, on the other hand, maintains that jurisdiction over petitioners
case lies with the Labor Arbiter, as their cause of action remains necessarily
connected to and arose from their employer-employee relationship. At any
rate, respondent insists that petitioners, as employers, have the legal duty to
enroll her with the SSS as their employee and to pay or remit the necessary
contributions.
Issue: Whether the regular civil court and not the Labor Arbiter has
jurisdiction over claims for reimbursement and claims for damages for
misrepresentation arising from employer-employee relations.
Ruling: The Court denies the Petition.
This Court holds that as between the parties, Article 217(a)(4) of the Labor
Code is applicable. Said provision bestows upon the Labor Arbiter original
and exclusive jurisdiction over claims for damages arising from employeremployee relations. The observation that the matter of SSS contributions
necessarily flowed from the employer-employee relationship between the
parties shared by the lower courts and the CA is correct; thus, petitioners
claims should have been referred to the labor tribunals. In this connection, it
is noteworthy to state that "the Labor Arbiter has jurisdiction to award not

only the reliefs provided by Labor Laws, but also damages governed by the
Civil Code."

Topic: Disability Compensation in relation to fit to work

declaration of an in-house physician against the declaration of
unfit for further work by a physician of choice of the claimant
Ponente: BRION, J.
BAHIA SHIPPING SERVICES, INC. and FRED OLSEN CRUISE LINES
LIMITED v.CRISANTE C. CONSTANTINO, G.R. No. 180343, July 9, 2014
Facts: On February 27, 2002, respondent Crisante C. Constantino
(Constantino) entered into a nine-month contract of employment as utility

with petitioners. The contract had been verified and approved by the
Philippine Overseas Employment Administration (POEA).
Sometime in April 2002 while at work on-board the vessel, Constantino
complained of low back pain radiating to his right thigh after allegedly lifting
several pieces of heavy luggage. The ship doctor gave him medications and
advised him to rest. When the vessel arrived at the Barbados, he was
referred to a shore-based physician, orthopaedic surgeon Dr. Jerry A.W.
Thorne, for examination and Magnetic Resonance Imaging (MRI). Dr. Thorne
diagnosed Constantino to besuffering from an acute exacerbation of a preexisting lumbar disc syndromeand declared him unfit to work for 10 days.
On April 25, 2002, Constantino was repatriated and referred to petitioners
physician, Dr. Robert D. Lim (Dr. Lim) of the Metropolitan Hospital, who
placed him under the care of an orthopaedic surgeon. Constantino
underwentseveral medical examinations until he was pronounced by Dr. Lim
to be fit-for-work.
However, he was not rehired by the company. Constantinoengaged the
services of a lawyer to claim disability compensation from the
petitioners. The claim was grounded on the declaration of Dr. Marciano
Almeda (Dr.Almeda), physician of choice of Constantino, that the latter is
unfit for further sea duties contrary to the declaration of Dr. Lim. The
petitioners denied the claim, prompting Constantino to file a complaint for
disability benefits, illness allowance, reimbursement of medical expenses,
damages and attorneys fees against them.
Issue: Is Constantino entitled to receive disability compensation?
Ruling: No.
First. The employment relationship between Constantino and the petitioners
is governed by the POEA-SEC, otherwise known as the Amended Standard
Terms and Conditions Governing the Employment of Filipino Seafarers OnBoard Ocean-Going Vessels. Thus, when the seafarer enters into an
individual contract with the employer, as Constantino did, the terms and
conditions of the contract must be in accordance with the POEA-SEC and
shall be strictly and faithfully observed. It is customary therefore that the
individual contract between the seafarer and the employer is verified and
approved by the POEA. Ashad been declared by the Court in an earlier ruling,

the POEA-SEC is the law between the parties, together with their CBA, if
there any.
Under the POEA-SEC, it is the company-designated physician who declares
the fitness to work of a seafarer who sustains a work-related injury/illness or
the degree of the seafarers disability. Section 20 (B) 3 of the POEA-SEC
provides:
Upon sign-off from the vessel for medical treatment, the seafarer shall
be entitled to sickness allowance equivalent to his basic wage until he
is declared fit to work or the degree of his permanent disability has
been assessed by the company-designated physician but in no case
shall this period exceed one hundredtwenty (120 days)
Dr. Lim, the company-designated physician, declared Constantino fit to work
after almost six months of extensive examination, treatment and
rehabilitation (therapy sessions) by the company-accredited specialists,
including an orthopaedic surgeon, upon his repatriation.
Second. There is no dispute that under the POEA-SEC, Constantino was not
precluded from seeking a second opinionon his medical condition or
disability. The third paragraph of the Section 20 (B)3 of the POEA-SEC states
that:
If a doctor appointed by the seafarer disagrees with the assessment
(of the company-designated physician), a third doctor may be agreed
jointly between the Employer and the seafarer. The third doctors
decision shall be final and binding on both parties.
Constantino did consult Dr.Almeda whose assessment of his medical
condition and disability disagreed with that of Dr. Lim. Dr.Almeda found
Constantino unfit to work, he gave him a POEA-SEC Grade 11 impediment
equivalent to permanent partial disability as compared with the fit-to-work
assessment of Dr. Lim who managed the petitioners medical team handling
Constantinos treatment and rehabilitation.
The disagreement should have been referred to a third doctor for final
determination, jointly by Constantino and the petitioners. There was no such
referral. To our mind, the non-referral cannot be blamed on the petitioners.
Since Constantino consulted with Dr.Almeda without informing the
petitioners, he should have actively requestedthat the disagreement

between his doctors assessment and that of Dr. Lim be referred to a final
and binding third opinion.
In the absence of any request from Constantino (as shown by the records of
the case), the employer-company cannot be expected to respond. As the
party seeking to impugn the certification that the law itself recognizes as
prevailing, Constantino bears the burden of positive action to prove that his
doctors findings are correct, as well as the burden to notify the company
that a contrary finding had been madeby his own physician.
In the absence of a third doctor resolution of the conflicting assessments
between Dr. Lim and Dr.Almeda, Dr. Lims assessment of Constantinos
health should stand.
Topics: (1) 120 days inability to work in relation to permanent and
total disability; (2) Disability Compensation in relation to fit to
work declaration of an in-house physician against the declaration
of unfit for further work by a physician of choice of the claimant
Ponente: BRION, J.
MAGSAYSAY MARITIME CORPORATION, EDUARDO U. MANESE AND
NORWEGIAN CRUISE LINEv. HENRY M. SIMBAJON,G.R. No. 203472,
July 09, 2014
Facts:Norwegian Cruise Line (NCL) hired respondent Henry M. Simbajon as a
cook on board its vessel, the Norwegian Star (Hotel), under a Philippine
Overseas Employment Administration Standard Employment Contract (POEASEC). Simbajons employment contract was coursed through petitioner
Magsaysay Maritime Corporation (Magsaysay), the authorized manning
agent of NCL in the Philippines.This was already the fourth time that NCL
hired Simbajon through Magsaysay.
Before hiring, Simbajon was required to undergo and pass the mandatory
Pre-Employment Medical Examination (PEME). Simbajon medical tests
confirmed this claim and he was given a clean bill of health and declared fit
for employment or fit for sea service.
Only six days after embarkation, he complained of increased urination and
having a constant feeling of thirst. He consulted the doctor on board and
was initially diagnosed with possible Diabetes mellitus Type II (DM Type II).
For more than 120 days from embarkation, he was not able to work. He

underwent several test and medication until he was finally declared fit to
work by the company-designated physician.
Despite the fit to work declaration of Magsaysays designated physician,
Simbajon was not rehired by petitioners. Dissatisfied with the companydesignated physicians medical opinion, Simbajon sought a second opinion
from Dr.Efren R. Vicaldo, an internal medicine doctor from the Philippine
Heart Center. After conducting a series of tests, Dr.Vicaldo opined that
Simbajons DM Type II was work-aggravated/related and that he is
now unfit to resume work as a seaman in any capacity. Based on this
medical assessmentSimbajon filed with the LA a complaint for disability
benefits, illness allowance, reimbursement of medical expenses, damages,
and attorneys fees, against the petitioners.
Issues: (1) Did Simbajon suffer a permanent and total disability because he
was not able to work for 120 days?
(2) Is Simbajon entitled to receive disability compensation?
Ruling: No.
(1) On Simbajons claim that his inability to resume his usual work as a cook
for a period exceeding 120 days, automatically entitles him to permanent
and total disability benefits based on a Grade I (120%) impediment rating.
The Court had the occasion to clarify when a seafarer becomes entitled to
permanent and total disability benefits:
As these provisions operate, the seafarer, upon sign-off from his vessel,
must report to the company-designated physician within three (3) days
from arrival for diagnosis and treatment. For the duration of the
treatment but in no case to exceed 120 days, the seaman is
on temporary total disability as he is totally unable to work. He receives
his basic wage during this period until he is declared fit to work or his
temporary disability is acknowledged by the company to be permanent,
either partially or totally, as his condition is defined under the POEA
Standard Employment Contract and by applicable Philippine laws. If the
120 days initial period is exceeded and no such declaration is
made because the seafarer requires further medical attention,
then the temporary total disability period may be extended up to
a maximum of 240 days, subject to the right of the employer to
declare within this period that a permanent partial or total
disability already exists. The seaman may of course also be declared

fit to work at any time such declaration is justified by his medical

condition.
Under this ruling, a finding by the company-designated doctor that
the seafarer needs further treatment beyond the initial 120-day
period results in the extension of the period for the declaration of
the existence of a permanent partial or total disability to 240 days.
Thus, contrary to Simbajons claim, his inability to resume work after the
lapse of more than 120 days from the time he suffered his illness does not by
itself automatically entitle him to permanent and total disability benefits.
The Court enumerated the following instances when a seafarer may claim for
permanent and total disability benefits:
(a) the company-designated physician failed to issue a declaration as to his
fitness to engage in sea duty or disability even after the lapse of the 120day period and there is no indication that further medical treatment
would address his temporary total disability, hence, justify an extension
of the period to 240 days;
(b) 240 days had lapsed without any certification being issued by the
company-designated physician;
(c) the company-designated physician declared that he is fit for sea duty
within the 120-day or 240-day period, as the case may be, but his
physician of choice and the doctor chosen under Section 20-B(3) of the
POEA-SEC are of a contrary opinion;
(d) the company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his own
and jointly with his employer, believed that his disability is not only
permanent but total as well;
(e) the company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
(f) the company-designated physician determined that his medical condition
is not compensable or work-related under the POEA-SEC but his doctorof-choice and the third doctor selected under Section 20-B(3) of the
POEA-SEC found otherwise and declared him unfit to work;
(g) the company-designated physician declared him totally and permanently
disabled but the employer refuses to pay him the corresponding benefits;
and
(h) the company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse of
the said periods.
Thus, even assuming that Simbajons illness is work-related, he is still not

entitled to permanent and total disability benefits because his situation does
not fall in any of the foregoing circumstances.
(2) We now resolve the issue of the conflicting findings of the petitioners
designated physicians and Simbajons own physician. The companydesignated physicians have declared Simbajon as fit to work after 172
days of treatment from his disembarkation. On the other hand, Simbajons
chosen physician, Dr.Vicaldo, came out with the findings that Simbajons
illness had rendered him unfit to resume work as a seaman in any
capacity, with a Grade VI (50%) disability rating.
Under the POEA-SEC, the applicable provision to resolve the issue of
conflicting medical findings is Section 20-B (3), which states:
Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is
declared fit to work or the degree of permanent disability has been
assessed by the company-designated physician but in no case shall
this period exceed one hundred twenty (120) days.
xxx
If a doctor appointed by the seafarer disagrees with the
assessment, a third doctor may be agreed jointly between the
Employer and the seafarer. The third doctors decision shall be
final and binding on both parties.
The glaring disparity between the findings of the petitioners designated
physicians and Dr.Vicaldo calls for the intervention of a third independent
doctor, agreed upon by petitioners and Simbajon. In this case, no such thirdparty physician was ever consulted to settle the conflicting findings of the
first two sets of doctors. After being informed of Dr.Vicaldos unfit-to-work
findings, Simbajon proceeded to file his complaint for disability benefits with
the LA. This move totally disregarded the mandated procedure under the
POEA-SEC requiring the referral of the conflicting medical opinions to a third
independent doctor for final determination.
The Supreme Court ruled that the duty to secure the opinion of a third doctor
belongs to the employee asking for disability benefits.
The obligation to comply with the requirement of securing the opinion of a
neutral, third-party physician rested on Simbajons shoulders. By failing to
observe the required procedure under the POEA-SEC, he clearly violated its
terms, i.e., the law between the parties. And without a binding third-party

opinion, the fit-to-work certification of petitioners designated physicians

prevails over that of Dr.Vicaldos unfit-to-return-to-work finding.
Lastly, we have observed that Dr.Vicaldo only examined Simbajon once. We
take this is in comparison with the series of tests and treatments made by
Magsaysays designated physicians to Simbajon. Between the two, the
latters medical opinion deserves more credence for being more thorough
and exhaustive.

Topic: Claim for Permanent Disability Benefits

Ponente: MENDOZA, J.:
ALONE AMAR P. TAGLE v. ANGLO-EASTERN CREW MANAGEMENT,
PHILS., INC., ANGLO-EASTERN CREW MANAGEMENT (ASIA) AND
CAPT. GREGORIO B. SIALSA, G.R. No. 209302, July 09, 2014

Facts: Petitioner was hired by Anglo-Eastern Crew Management, Phils., Inc.

for Anglo-Eastern Crew Management (Asia) and was assigned to work on
board the vessel NV Al Ishaa as 3rd Engineer. Just two days after boarding
the vessel, petitioner was found unconscious inside the engine room of the
vessel. He was diagnosed to be suffering from cervical spondylosis and heat
exhaustion. He was thereafter repatriated.
A day after his return to the country, petitioner was admitted at the
Metropolitan Medical Center. There, petitioner was diagnosed to be suffering
from cervical and lumbar spondylosis, chronic L5 spondylosis and Grade 1
spondylolisthesis. Following orders from the company-designated physician,
petitioner continued his treatment and rehabilitation and had regular checkups. While his back improved, he continued to suffer from on and off bouts of
pain on his neck.
The company-designated physician conducted a repeat study on petitioner
and found that he was suffering from L5 riduculopathy. As a result,
petitioner was advised to continue the rehabilitation and to return after three
(3) weeks,11 suggesting at the same time the following disability grading:
Suggested disability grading is Grade 12 (neck) slight stiffness of the neck
and Grade 11 (chest-trunk-spine) slight rigidity or 1/3 loss of motion or
lifting power of the trunk.
Per suggestion, petitioner reported for his check-up and, thereafter, was
advised to continue with his medication.
On January 6, 2009, petitioner again complained of back pains. He was again
examined by the company-designated physician. Petitioner was advised to
continue his physical therapy and medication and to report back on February
3, 2009 for re-evaluation. This time, however, petitioner no longer reported
back to the company-designated physician. Instead, he sought the opinion of
his own physician, Dr. Nicanor F. Escutin (Dr. Escutin). During the
consultation, petitioner informed Dr. Escutin that he is given a (sic)
PERMANENT DISABILITY. HE IS UNFIT TO BE A SEAMAN (sic) ON WHATEVER
CAPACITY.
Acting on petitioners request for compensation, respondents offered a
settlement based on the disability grading given by the company-designated
physician. Petitioner refused and insisted that he be paid the benefits
corresponding to that given to those suffering from permanent total
disability.
Petitioner filed his complaint before the LA claiming permanent total
disability benefits.

Respondents sought the dismissal of the complaint for lack of merit, or, in
the alternative, the limitation of the award of disability benefits to Grade 11
and/or 12 as suggested by its company-designated physician. According to
respondents, rather than upholding the findings of Dr. Escutin that petitioner
suffered from permanent disability, the disability gradings suggested by
the company-designated physicians should prevail considering that they
thoroughly examined and treated petitioner from August 2008 to January
2009.
The LA ruled in favor of the petitioner. The NLRC and CA ruled in favor of the
respondent.
Issue: Whether or
benefits

not the petitioner is entitled to permanent disability

Ruling: NO.
The rule is that, a seafarer may have basis to pursue an action for total and
permanent disability benefits only if any of the following conditions are
present:
(a) The company-designated physician failed to issue a declaration as to his
fitness to engage in sea duty or disability even after the lapse of the 120-day
period and there is no indication that further medical treatment would
address his temporary total disability, hence, justify an extension of the
period to 240 days;
(b) 240 days had lapsed without any certification issued by the company
designated physician;
(c) The company-designated physician declared that he is fit for sea duty
within the 120-day or 240-day period, as the case may be, but his physician
of choice and the doctor chosen under Section 20-B(3) of the POEA-SEC are
of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his own and
jointly with his employer, believed that his disability is not only permanent
but total as well;
(e) The company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical condition
is not compensable or work-related under the POEA-SEC but his doctor-of-

choice and the third doctor selected under Section 20-B(3) of the POEA-SEC
found otherwise and declared him unfit to work;
(g) The company-designated physician declared him totally and permanently
disabled but the employer refuses to pay him the corresponding benefits;
and
(h) The company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he remains
incapacitated to perform his usual sea duties after the lapse of said
periods.37
After an assiduous assessment of the evidence, however, the Court finds that
petitioners claim for permanent disability benefits is without basis at all.
First. Petitioners complaint is premature. When petitioner decided to seek
the opinion of Dr. Escutin, it was yet to be established by the companydesignated physicians whether he was totally or partially disabled, as the
disability grading was tentatively given and only as a suggestion, from the
results of the various examinations conducted on him as of that time. To be
sure, the findings of the company-designated physicians are worth
reiterating to wit, suggested disability grading is Grade 12. In fact, he was
still required to return for re evaluation but instead of returning, he went to
Dr. Escutin.
At this juncture, noteworthy, is the observation of the CA that from the time
petitioner sustained his injury until a disability grading of Grade 11 (for the
chest-trunk-spine) and Grade 12 (for the neck), only 110 days had lapsed. At
the time he instituted his labor complaint on February 11, 2009, only 196
days had lapsed. Clearly, respondents were deprived of the opportunity to
determine whether his claim for permanent total disability benefits had any
merit.
Second. Even assuming ex gratia argumenti that the company-designated
physicians had arrived at a final conclusion of Grade 11/12 disability,
petitioners evidence would still cast doubt on such findings. In stark contrast
to the detailed medical reports by the company-designated physicians, a
reading of the medical report of Dr. Escutin shows that it was not supported
by any diagnostic tests and/or procedures sufficient to refute the results of
those administered to petitioner by the company-designated physicians. Dr.
Escutins assessment of permanent disability for petitioner merely hinged
on general impressions.
Moreover, Dr. Escutins conclusion that petitioner suffered from permanent
disability and that he was unfit to serve as a seaman in any capacity was
anchored primarily on petitioners own narration.

Third. Assuming that petitioner indeed suffered the most severe of back
injuries, in addition to his neck injury, he could still not be entitled to his
claim for permanent total disability benefits. It should be remembered that
under the terms of the POEA-SEC, for an illness suffered by a seafarer to be
compensable, it must first fall within the definition of the term work-related
illness, that is, any sickness as a result of an occupational disease listed
under Section 32-A with the conditions set therein satisfied.
Thus, for disability to be compensable under Section 20 (B)(4) of the POEASEC, two elements must concur: (1) the injury or illness must be workrelated; and (2) the work-related injury or illness must have existed during
the term of the seafarers employment contract. In other words, to be
entitled to compensation and benefits under this provision, it is not sufficient
to simply establish that the seafarers illness or injury has rendered him
permanently or partially disabled; it must also be shown that there is a
causal connection between the seafarers illness or injury and the work for
which he had been contracted. In this case, the record is bereft of any
evidence to prove satisfaction of the said conditions.

Topic: Serious Misconduct as a just cause in termination

Ponente: PEREZ, J.:
COLEGIO DE SAN JUAN DE LETRAN-CALAMBA v. ENGR. DEBORAH P.
TARDEO, G.R. No. 190303, July 9, 2014
Facts: Petitioner is an educational institution created and existing under
Philippine laws. Respondent, on the other hand, was employed as a full-time
faculty member of the petitioner since 1985. In August 2006, respondentwas
elected as Union President of Letran-Calamba Faculty and Employees
Association (LECFEA) and served in such capacity until she was suspended
from work in 2008.
Respondents suspension arose from her request for Faculty Development
Program and Fund Assistance submitted for consideration of petitioner. In a
Letter dated 25 March 2008, addressed to Vice-President for Academic Affairs
Dr. Rhodora Odejar, respondent manifested her intention to participate in the
30th National Physics Seminar Workshop Convention in Siquijor State
College. In connection therewith, she requested for fund assistance in the
amount of P17,000.00. Attached to her request was a two-page invitation
allegedly downloaded from Philippine Physics Societys (PPS) website which
detailed the supposed expenses in the upcoming convention. The foregoing
request was recommended for approval by the Dean for College of
Engineering, Engr. Delfin Jacob (Jacob) and the Human Resource Director,
Prof. Dulce Corazon T. Barraquio. During pre-audit, the Vice-Presidentfor
Finance and concurrently Letrans Controller Rodolfo Ondevilla (Ondevilla)
noted that the supporting document appended to respondents request was
altered. While the documents appeared to have been taken from the PPS
website, significant portions thereof were missing which led him to conclude
that the said parts were deliberately omitted by respondent.

Consequently, Ondevilla disapproved respondents request for fund

assistance on the ground that her fund request was significantly higher
compared to the amount requested byanother faculty member who also
wanted to participate in the same convention. While respondent requested
for the disbursement of the amount of P17,000.00, a certain Delorino only
asked for P11,000.00. It was noted that after the convention, Delorinos
actual expense was only P10,754.00.9
After investigation, the Committee of Discipline found that respondent is
guilty of dishonesty and serious misconduct and meted out the penalty of
suspension for one semester starting 19 August 2008 up to 20 December
2008. The Committee of Discipline found that respondents guilt was
established by her own admission that she deleted certain portions from the
invitation before attaching it to her fund request, and by the apparent
disparity between the amount requestedby the respondent from that of
another faculty member who also applied for fund assistance for the same
purpose.
Feeling aggrieved, respondent assailed the adverse decision of the
Committee of Discipline to the Office ofthe Voluntary Arbitrator arguing that
she was denied of her right to dueprocess when she was not allowed to
confront Ondevilla in person during the hearing.
The Office of the Voluntary Arbitrator and the CA declared the suspension of
respondent from employment illegal.
Issue: Whether or not [respondent] committed dishonesty and serious
misconduct in knowingly submitting a materially altered document to
support her funding request;
Ruling: NO.
Misconduct is defined as improper and wrongful conduct. It is the
transgression of some established and definite rule of action, a forbidden act,
a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment. Of course, ordinary misconduct would not justify the
termination of the services of an employee. The law is explicit that the
misconduct should be serious. It is settled that in order for misconduct to be
serious, it must be of such grave and aggravated character and not merely
trivial or unimportant. As amplified by jurisprudence, the misconduct must
(1) be serious; (2) relate to the performance of the employees duties; and
(3) show thatthe employee has become unfit to continue working for the
employer.
Under Article 282 of the labor Code, the misconduct, to be just cause for
termination, must be serious. This implies that it must be of such grave and

aggravated character and not merely trivial or unimportant. Examples of

serious misconduct justifying termination, as held in some of our decisions,
include: sexual harassment (the managers acts of fondling the hands,
massaging the shoulder and caressing the nape of the secretary); fighting
within company premises, uttering obscene, insulting or offensive words
against a superior; misrepresenting that a student is his nephew and
pressuring and intimidating a co-teacher to change a students failing grade
to passing.
Although respondent was not terminated from employment but was merely
suspended from work for one semester or equivalent to 101 days school
days, her infraction should still be measured against the foregoing standards
considering that the charge leveled against her is serious misconduct.
As correctly pointed out by the appellate court, there is no substantial
evidence to prove that in not including a portion of the invitation to her fund
request, respondent acted in malicious and contemptuous manner with the
intent to cause damage to the petitioner. In other words, there is no basis for
the allegation that respondents actconstituted serious misconduct that
warrants the imposition of penalty of suspension. Indeed, considering the
fact that before the act complained of, respondent has been rendering
service untarnished for 23 years, it is not easy to conclude that for P600.00,
respondent would willfully and for wrongful intentions omit portions of the
documents taken from the PPS website. In other words, as found by the
Voluntary Arbitrator and the Court of Appeals, there is no substantial proof of
petitioner's allegation of malicious conduct against respondent.

Topic: Illegal Constructive dismissal

Ponente: DEL CASTILLO, J.:
GIRLY G. ICO v. SYSTEMS TECHNOLOGY INSTITUTE, INC., MONICO V.
JACOB and PETER K. FERNANDEZ, G.R. No. 185100, July 9, 2014
Facts: Respondent Systems Technology Institute, Inc. (STI) is an educational
institution duly existing under Philippine laws. Respondents Monico V. Jacob
(Jacob) and Peter K. Fernandez (Fernandez) are STI officers, the former being
the President and Chief Executive Officer (CEO) and the latter Senior VicePresident. Petitioner Girly G. Ico, a masteral degree holder with doctorate
units earned, was hired as Faculty Member by STI College Makati (Inc.),
which operates STI College-Makati (STI-Makati). STI College Makati (Inc.) is a
wholly-owned subsidiary of STI.
At STI, petitioner served under contract from June 1997 to March 1998. In
April 1998, she was recalled to STIs Makati Central Office orHeadquarters
(STIHQ) and promoted to the position of Dean of STI College-Paraaque (STI
Paraaque). In November 1999, she was again recalled to STI-HQ and STI
appointed her as Full-Time Assistant Professor I reporting directly to STIs
Academic Services Division (ASD).

In June 2000, petitioner was promoted to the position of Dean under ASD,
and assigned to STI College-Guadalupe (STI-Guadalupe), where she served
as Dean from June 5, 2000 up to October 28, 2002. Meanwhile, petitioners
position as Dean was reclassified from "Job Grade 4" to "Job Grade Manager
B" with a monthly salary of P37,483.58 effective April 1, 2002, up from the
P27,000.00 salary petitioner was then receiving.
After petitioners stint as Dean of STI-Guadalupe, she was promoted to the
position of Chief Operating Officer (COO) of STI-Makati, under the same
position classification and salary level of "Job Grade Manager B". She
concurrently served as STI-Makati School Administrator.
Sometime in July 2003, or during petitioners stint as COO and School
Administrator of STI-Makati, a Plan of Merger was executed between STI and
STI College Makati (Inc.), whereby the latter would be absorbed by STI. The
merger was approved by the Securities and Exchange Commission on
November 12, 2003. STI College Makati (Inc.) thus ceased to exist, and STIMakati was placed under STIs Education Management Division (EMD).
In a March 12, 2004 Memorandum, STI "[i]n line with the recently approved
organizational structure effective August 1, 2003" updated petitioners
appointment as COO, "Job Grade Manager B" with a gross monthly salary of
P37,483.58. She was re-appointed as COO of STI-Makati, under the
supervision of the AcademicServices Group of the EMD and reporting directly
to the Head thereof, herein respondent Fernandez. However, petitioner was
not given the salary commensurate to her position as COO, which by this
time appeared to be pegged at P120,000.00. It likewise appears that she was
not given benefits and privileges which holders of equivalent positions were
entitled to, such as a car plan.
Two months after confirming petitioners appointment as STI-Makati COO,
another Memorandum dated May 18, 2004 was issued by STI Human
Resources Division Head, Yolanda Briones (Briones), signed and approved by
STI Senior Vice-President for Corporate Services Division Jeanette B. Fabul
(Fabul), and noted by respondent Jacob
a) Cancelling, effective May 20, 2004, petitioners COO assignment at STIMakati, citing managements decision to undertake an "organizational
restructuring" in line with the merger of STI and STI-Makati;
b) Ordering petitioner to report to STI-HQ on May 20, 2004 and to turn over
her work to one Victoria Luz (Luz), who shall function as STI-Makatis School
Administrator; and

c) Appointing petitioner, effective May 20, 2004, as STIs Compliance

Manager with the same "Job Grade Manager B" rank and salary level,
reporting directly to SchoolCompliance Group Head Armand Paraiso (Paraiso).
According to STI, the "organizational re-structuring" was undertaken "in order
to streamline operations. In the process, the positions of Chief Executive
Officer and Chief Operating Officer of STI Makati were abolished."
On May 20, 2004, petitioner reported to her new office at STIs School
Compliance Group, only to find out that all members ofthe department had
gone to Baguio City for a planning session. Petitioner, who was not apprised
of the official trip, was thus left behind. That same day, an official
communication was disseminated throughout STI, announcing Jacobs
appointment as the new STI President and CEO, Fernandez as the new COO
of STI-Makati,and Luz as the new STI-Makati School Administrator; however,
petitioners appointment as Compliance Manager was left out.
In a May 24, 2004 letter to Jacob, petitioner took exception to the incidents
of May 18 and 20, 2004, claiming that she became the victim of a series of
discriminatory acts and objecting to the manner by which she was
transferred, asserting that she was illegally demoted and that her name was
tarnished as a result of the demotion and transfer. Jacob replied through a
June 7, 2004 letter advising petitioner that her letter was forwarded to
Fernandez for comment.
Prior to that, on May 25, 2004, during the 17th STI Leaders Convention held
in Panglao, Bohol, petitioners achievement as a Silver Awardee for the 2004
STI Winners Circle Awards was announced, but she did not attend, claiming
that she was too embarrassed to attend owing to the events leading to her
transfer, which to her was a demotion. STI withheld petitioners prize a
South Korea trip termed "Travel Incentive Award" for the Winners Circle for
STI fiscal year 2003-2004 "pending the final result of the investigations
being conducted" by STI relative to irregularities and violations of company
policies allegedly committed by petitioner.
On June 24, 2004, petitioner received another Memorandum from Briones
dated June 23, 2004, this time stating that charges for the alleged violations
have already been filed against her allegedly "based on the Audit Findings",
yet making reference to the June 21, 2004 Memorandum and without
informing petitioner of the particulars of the charges or the results of the
audit. Nor was a copy of the said audit findings attached to the
memorandum.
In a June 28, 2004 demand letter29 addressed to Jacob,petitioner protested
anew her alleged maltreatment, claiming illegal constructive dismissal and
demanding immediate reinstatement to her COO position and the payment
of actual and other damages, under pain of suit.

The Labor Arbiter found that the petitioner had been illegally constructively
and in bad faith dismissed. The NLRC and CA reversed the decision of the LA.
Issue: Whether or not petitioner is illegally constructively dismissed
Ruling: YES.
Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a diminution in pay and other
benefits. Aptly called a dismissal in disguise or anact amounting to dismissal
but made to appear as if it were not, constructive dismissal may, likewise,
exist if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it could foreclose
any choice by him except to forego his continued employment. In cases of a
transfer of an employee, the rule is settled that the employer is charged with
the burden of proving that its conduct and action are for valid and legitimate
grounds such as genuine business necessity and that the transfer is not
unreasonable, inconvenient or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the employees transfer shall be
tantamount to unlawful constructive dismissal.
There is no doubt that petitioner was subjected to indignities and humiliated
by the respondents. As correctly observed by the Labor Arbiter, she was
bullied, threatened, shouted at, and treated insolently by Fernandez on May
18, 2004 inside the latters own office. She was shamed when, on her very
first day at the School Compliance Group, all of the employees of the
department have gone on an official out-of-town event without her and, as a
result, she was left alone at the office for several days. Respondents did not
even have the courtesy to offer her the opportunity to catch up with the
group sothat she could makeit to the event, even if belatedly. Then again, on
May 20, 2004, STI made an official companywide announcement of Jacobs
appointment as new STI President and CEO, Fernandez as new STI-Makati
COO, and Luz asnew STI-Makati School Administrator, but petitioners
appointment as new Compliance Manager was inconsiderately excluded.
Respondents made her go through the rigors of a contrived investigation,
causing her to incur unnecessary legal expenses as a result of her hiring the
services of counsel. Her well-deserved awards and distinctions were unduly
withheld in the guise of continuing investigation which obviously was taking
too long to conclude; investigation began formally on May 28, 2004 (start of
audit), yet by August 17 (date of memorandum informing petitioner of the
withholding of Korea travel award), the investigation was still allegedly
ongoing. She was deprived of the privilege to attend company events where
she would have received her well-deserved awards with pride and honor, and
her colleagues would have been inspired by her in return. Certainly,

respondents made sure that petitioner suffered a humiliating fate and

consigned to oblivion.
Indeed, petitioner could not be faulted for taking an indefinite leave of
absence, and for altogether failing to report for work after August 9, 2004.
Human nature dictates that petitioner should refuse to subject herself to
further embarrassment and indignitiesfrom the respondents and her
colleagues. All told, petitioner was deemed constructively dismissed as of
May 18, 2004. Finally, since the position of STI-Makati COO was never
abolished, it follows that petitioner should bereinstated to the very same
position, and there to receive exactly what Fernandez gets by way of
salaries, benefits, privileges and emoluments, without diminution in amount
and extent. Petitioner, multi-awarded, deserving and loyal, is entitled to what
Fernandez receives, and is deemed merely to take over the office from him;
moreover, the position of Chief Operations Officer is not merely an ordinary
managerial position, asit is a senior managerial office. In turn, Fernandez or
anyone who currently occupies the position of STIMakati COO must
vacatethe office and hand over the same to petitioner.
Nonetheless, the Court failsto discern any bad faithor negligence on the part
of respondent Jacob. The principal character that figures prominently in this
case is Fernandez; he alone relentlessly caused petitioners hardships and
suffering. He alone is guilty of persecuting petitioner. Indeed, some of his
actions were without sanction of STI itself, and were committedoutside of the
authority given to him by the school; they bordered on the personal, rather
than official. His superior, Jacob, may have been, for the most part, clueless
of what Fernandez was doing to petitioner. After all, Fernandez was the Head
of the Academic Services Group of the EMD, and petitioner directly reported
to him at the time; his position enabled him to pursue a course of action with
petitioner that Jacob was largely unaware of.
A corporation, as a juridical entity, may act only through its directors, officers
and employees. Obligations incurred as a result of the directors and officers
acts as corporate agents, are nottheir personal liability but the direct
responsibility of the corporation they represent. As a rule, they are only
solidarily liable with the corporation for the illegal termination of servicesof
employees if they acted with malice or bad faith.
To hold a director or officer personally liable for corporate obligations, two
requisites must concur: (1) it must be alleged in the complaint that the
director or officer assented to patently unlawful acts of the corporation or
that the officer was guilty of gross negligence or bad faith; and (2) there
must be proof that the officer acted in bad faith.

Topic: Illegal Dismissal, Money Claims

Ponente: Mariano C. Del Castillo
Angeles v. Bucad, G.R. No. 196249, July 21, 2014
Facts: The Labor Arbiter rendered a Decision adjudging Petitioners guilty of
illegal dismissal and ordered to them to pay the Respondents their respective
money claims. Petitioners appealed to the National Labor Relations
Commission (NLRC) flatly denying the charges against them. The NLRC held
that the respondents failed to submit sufficient evidence to warrant the
reversal of the findings of the Labor Arbiter. The best evidence of payment is
the payroll, whereas in this case, respondents merely allege payment.
The CA held that there is no proof that respondent Ducusin abandoned his
employment. Ducusins immediate filing of the labor complaint indicated that
he did not abandon his employment; it characterizes him as one who deeply
felt wronged by his employer.
With regard to respondents Benitez and Reynante, the CA believed that they
voluntarily left their jobs when they were caught by management having an
illicit affair. This showed that they abandoned their employment, which does
not entitle Benitez to an award of backwages and separation pay.
The CA further held that petitioners did not commit illegal dismissal with
respect to respondent Berdin, since Berdin resigned from his position after
management caught him sneaking food out for his girlfriend. There is thus no
ground for awarding Berdin backwages and separation pay as well.
On the issue of money claims, the CA ruled that apart from bare allegations
of payment, petitioners have not satisfactorily shown by adequate
documentary evidence which should be in its custody and possession that
the salaries, benefits and other claims due to the respondents have been
accordingly paid; that petitioners failed to discharge the burden of proving
payment; that their defense that the relevant payroll and daily time records
were stolen constitutes a lame excuse which cannot excuse them from
proving that they have paid what they owed respondents.
Issues:
1. Whether Ducusin was illegally terminated.
2. Whether petitioners failed to discharge the burden of proving that
respondents have been paidt heir monetary claims.
Ruling:
1. YES.

This Court is not a trier of facts. The findings of fact of the CA are
conclusive and binding. This principle applies with greater force in labor
cases, where this Court has consistently held that findings of fact of the
NLRC are accorded great respect and even finality, especially if they
coincide with those of the Labor Arbiter and are supported by substantial
evidence.
2. YES.
There exists serious doubt with respect to petitioners proffered evidence,
considering that the relevant payroll and daily time records are missing as
they were, according to petitioners, stolen. It would be difficult if not
impossible to validate and reconcile petitioners documentary evidence
and unilateral claims of payment, if the official payroll and daily time
records are not taken into account. Without them, there could be no
sufficient basis for this Court to overturn the assailed Decision; the Court
can only rely on the findings of the Labor Arbiter, the NLRC, and the CA.
The purpose of a time record is to show an employees attendance in
office for work and to be paid accordingly, taking into account the policy
of "no work, no pay". A daily time record is primarily intended to prevent
damage or loss to the employer, which could result in instances where it
pays an employee for no work done; it is a mandatory requirement for
inclusion in the payroll, and in the absence of an employment agreement,
it constitutes evidence of employment.
The punching of time card is undoubtedly work related. It signifies and
records the commencement of one's work for the day. It is from that
moment that an employee dons the cape of duties and responsibilities
attached to his position in the workplace. It is the reckoning point of the
employer's corresponding obligation to him - to pay his salary and provide
his occupational and welfare protection or benefits.
What "daily time records" petitioners refer to in this Petition pertain to the
supposed attendance record of several of the respondents, which
however do not contain the latter's respective signatures and those of
their superiors. They appear to be incomplete as well; indeed, some are
barely readable. They can hardly be considered proof sufficient enough for
this Court to consider.
If petitioners believe that they have been prejudiced, then they only have
themselves to blame, for not offering sufficient proof to prove their case.
For their blunder, they may not expect this Court to resort to unnecessary
factual nitpicking in an attempt to forestall the effects of an adverse
judgment.
The Petition is DENIED.

Topic: Illegal Dismissal

Ponente: Martin S. Villarama, Jr.

St. Lukes Medical Center v. Quebral, G.R. No. 193324, July 23, 2014

Facts: As part of its customer service, petitioner provides free and/or

discounted parking privileges to its patients. Wellness Center Assistants,
such as Respondent Quebral, are tasked with claiming pre-approved parking
tickets from the hospitals Information and Concierge Section on behalf of the
patients.

Quebrals parking records show that he used the discounted parking

privilege reserved for patients and their representatives for his personal use
at least 20 times. The Employee and Labor Relations Department (ELRD)
issued a Notice to Explain and Invitation to Conference to Quebral. Quebral
stated that he did not know that employees and staff were prohibited to get
a validation ticket and all that he knew was that, to be able to get a discount
on their expensive parking, he needed to get a validation.

The ELRD rendered a decision terminating Quebrals employment. Quebral,

through SLMCEA-AFW, appealed his dismissal. Thus, as part ofthe auxiliary
review, the management looked into the finer details of Quebrals
performance for the past 12 months preceding his dismissal and noted other
violations he committed. Petitioner reply stated that these incidents are
already indicators that the Management has already extended its utmost
consideration to Quebral not only on one occasion but in several incidents
and thus, Quebrals dismissal is final and irrevocable.

Issue: Whether Quebral was illegally dismissed.

Ruling: NO.
Quebral cannot feign ignorance of the policy limiting to patients the privilege
of the use of validated parking tickets. First, it is written on the parking ticket
itself. It was incumbent upon him to read the terms and conditions stated
thereon. And second, even assuming he was not able to read said policy, this
only serves as a testament of his inefficiency in his job as he is not aware of
his employers policies despite being employed for 7 years. Moreover, as
Wellness Center Assistant whose task is to extend all needed assistance to
the ECU patients, it is expected that he is aware of all matters relating to
patient rights and privileges.

The CAs conclusion that he has been a dependable and reliable employee
and thus deserving of petitioners compassion is without basis. The auxiliary
review of Quebrals employment record revealed violations of company rules
he committed for the preceding twelve months prior to his dismissal. And for
said violations, petitioner extended consideration to Quebral by lowering the
penalty imposed on him. Had Quebral valued the considerations extended to
him by his employer in the past, he would have have been more careful in
his actions. Moreover, this Court recognizes the prerogative of an employer
to prescribe rules and regulations in its business operations and its right to
exact compliance with them by its employees.

The record of an employee is a relevant consideration in determining the

penalty that should be meted out on him. Thus, petitioner cannot be obliged
to disregard altogether Quebrals previous violations when determining the
penalty to be imposed on him for his latest offense as if it was the first time
he violated company rules. Quebral has no vested right to petitioners
compassion. Just because petitioner was compassionate to him numerous
times in the past when he violated company rules does not give him the right
to demand the same compassion this time on the ground of social justice.
Social justice and equity are not magical formulas to erase the unjust acts
committed by the employee against his employer.

Also, respondents failed to prove that the violation of the policy on validation
of tickets is tolerated by petitioner as they failed to present any evidence
that other employees were being issued validated tickets.

A company has the right to dismiss its employees as a measure of selfprotection. It need not wait for it to suffer actual damage or loss before it can
rightfully dismiss an employee who it has already found to have been
dishonest. The fact that petitioner did not suffer losses from the dishonesty
of the respondent does not excuse the latter from any culpability. Whether
he has already settled the amount he was supposed to pay for parking if not
for the validated parking tickets is of no consequence. The fact remains that
he was dishonest in the performance of his duties which is a valid ground for
termination of employment.

The petition is GRANTED.

Topic: Reinstatement, Quitclaim

Ponente: Lucas P. Bersamin

Castro v. Ateneo de Naga University, G.R. No. 175293, July 23, 2014

Facts: Petitioner was a regular and full-time faculty member of the

University's Accountancy Department in the College of Commerce. The
University President informed him that his contract would no longer be
renewed. Thus, he brought this complaint for illegal dismissal.

The Labor Arbiter (LA) ruled that the dismissal of complainant is illegal, and
ordered respondents to reinstate complainant and to pay his money claims.

Respondents appealed to the NLRC. Simultaneously, they submitted a

manifestation stating that neither actual nor payroll reinstatement of the
petitioner could be effected because he had meanwhile been employed as a
Presidential Assistant for Southern Luzon Affairs with the position of
Undersecretary; and that his reinstatement would result in dual employment
and double compensation which were prohibited by existing civil service
rules and regulations.

Petitioner elevated the matter to the CA. In the interim, petitioner executed a
receipt and quitclaim in favor of the University respecting his claim for
benefits. Meanwhile, the NLRC rendered its decision affirming with
modification the ruling of the LA. On motion for reconsideration, the NLRC
reversed its ruling. In justifying its reversal of its decision, the NLRC held that
his execution of the receipt and quitclaim respecting his benefits under the

Plan estopped the petitioner from pursuing other claims arising from his
employer-employee relationship with the University.

The CA dismissed the petitioner's petition for certiorari on the ground of its
having been rendered moot and academic by the decision of the NLRC.

Issue:
1. Whether the petitioner's claim for the payment of accrued salaries and
benefits for the period that he was not reinstated was rendered moot
and academic by his receipt of the retirement benefits and execution
of the corresponding receipt and quitclaim in favor of the respondents;

2. Whether the petitioner's claim for accrued salaries from the time of the
issuance of the order of reinstatement by the LA until his actual
reinstatement was rendered moot and academic by the reversal of the
decision of the LA.

Ruling:
1. NO.
The execution of the receipt and quitclaim was not a settlement of the
petitioner's claim for accrued salaries. The payment petitioner had
received in protest pertained only to his retirement benefits. The text of
the receipt and quitclaim was clear and straightforward, and it was to the
effect that the sum received by the petitioner represented ''full payment
of benefits ... pursuant to the Employee's retirement plan." As such, both
the NLRC and the CA should have easily seen that the quitclaim related
only to the settlement of the retirement benefits, which benefits could not
be confused with the reliefs related to the complaint for illegal dismissal.

Retirement is of a different species from the reliefs awarded to an illegally

dismissed employee. Retirement is a form of reward for an employee's
loyalty and service to the employer, and is intended to help the employee
enjoy the remaining years of his life, and to lessen the burden of worrying
about his financial support or upkeep. In contrast, the reliefs awarded to
an illegally dismissed employee are in recognition of the continuing
employer-employee relationship that has been severed by the employer
without just or authorized cause, or without compliance with due process.

Article 279 of the Labor Code, as amended, entitles an illegally dismissed

employee to reinstatement. In Pioneer Texturizing Corporation v. National
Labor Relations Commission:

x x x The provision of Article 223 is clear that an award for

reinstatement shall be immediately executory even pending appeal
and the posting of a bond by the employer shall not stay the execution
for reinstatement. To require the application for and issuance of a wit of
execution as prerequisites for the execution of a reinstatement award
would betray and run counter to the very object and intent of Article
223. The reason is simple. An application for a writ of execution and its
issuance could be delayed for numerous reasons. A mere continuance
of postponement of a scheduled hearing, for instance, or an inaction on
the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and
noble purpose envisioned by Article 223. If the requirements of Article
224 were to govern, then the executory nature of a reinstatement
order or award contemplated by Article 223 will be unduly
circumscribed and rendered ineffectual. In enacting the law, the
legislature is presumed to have ordained a valid and sensible law, one
which operates no further than may be necessary to achieve its
specific purpose.

Furthermore, the rule is that all doubts in the interpretation and

implementation of labor laws should be resolved in favor of labor.
Henceforth, we rule that an award or order for reinstatement is self-

executory. After receipt of the decision or resolution ordering the

employee's reinstatement, the employer has the right to choose whether
to re-admit the employee to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate the employee in the payroll.
In either instance, the employer has to inform the employee of his choice.
The notification is based on practical considerations for without notice,
the employee has no way of knowing if he has to report for work or not.

Hence, for as long as the employer continuously fails to actually

implement the reinstatement aspect of the decision of the LA, the
employer's obligation to the employee for his accrued backwages and
other benefits continues to accumulate.

2. NO. The order of reinstatement of the petitioner was not rendered moot
and academic. He remained entitled to accrued salaries from notice of the
LA's order of reinstatement until reversal thereof. In Islriz Trading v.
Capada, the employee could be barred from claiming accrued salaries
only when the failure to reinstate him was without the fault of the
employer.

Considering that the respondents reinstated the petitioner only in

November 2002, and that their inability to reinstate him was without valid
ground, they were liable to pay his salaries accruing from the time of the
decision of the LA (September 3, 2001) until his reinstatement in
November 2002. It did not matter that the respondents had yet to
exercise their option to choose between actual or payroll reinstatement at
that point because the order of reinstatement was immediately executory.

Topic: claim for death benefits

Ponente: Reyes, J.
Esmarialino v. Employees Compensation Commission, G.R. No.
192352, July 23, 2014
Facts: Rosemaries husband, Edwin C. Esmarialino , with SS No. 33-1555504,
worked as a Security Guard for Jimenez Protective and Security Agency since
May, 1993. For the years 2002, 2003 and 2004, Edwin was assigned at the
Mercury Drug Store-Gagalangin Branch.
In May, 2004, Edwin was diagnosed through biopsy with Acute Myelogenous
Leukemiaat the Chinese General Hospital. In September, 2004, Edwin was
also admitted at the Jose Reyes Memorial Hospital because of persistent
petechial rash, malaise and anorexia. In October, 2004, he was again
hospitalized at the Chinese General Hospital. On March 20, 2005, he
succumbed to Sepsis secondary to Pneumonia. Edwins death certificate
indicates that the immediate cause of his death is Cardiopulmonary Arrest.
Antecedent cause is Sepsis secondary to Pneumonia and the underlying
cause of which is Pneumonia. Other significant condition contributing to his
death is Acute Myelogenous Leukemia.

Edwin made his last premium contribution in May, 2004. On account of his
ailment, Edwin was granted the following medical benefits under the SSS
law: a) SSS Temporary Total Disability (TTD) benefits of 120 days effective
September 19, 2004; b) SSS Permanent Partial Disability (PPD) benefits of
twenty-three (23) months effective February 11, 2005; and c) SSS Death with
Funeral Benefits effective March 20, 2005 granted to his beneficiaries.
The SSS, however, denied the claim for EC death benefits on the ground that
"there is no causal relationship between Acute Myelogenous Leukemiato the
members job as a security guard." Rosemarie appealed the SSS decision to
the ECC. The ECC likewise dismissed the claim.
Thereafter, Rosemarie filed before the CA a petition for review under Rule 43
of the Rules of Court. Rosemarie ascribed grave error on the part of the ECC
when it concluded that leukemia, which significantly contributed to Edwins
death, had no causal relation with the work of a security guard. On
November 10, 2009, the CA rendered a Decision affirming the ECCs ruling.
Rosemarie filed a Motion for Reconsideration, but it was denied.
Hence, this petition.
Issues: Did the Ca err in sustaining the Decision of the ECC which denied
the claim for Edwins death benefits? Is the illness which caused the death of
Edwin work related?
Ruling:
It is settled that Rule 45 limits the Court to the review of questions of law
raised against the assailed CA decision. The Court is generally bound by the
CAs factual findings, except only in some instances, among which is, when
the said findings are contrary to those of the trial court or administrative
body exercising quasi-judicial functions from which the action originated.
In the case at bar, the issues are beyond the ambit of a petition filed under
Rule 45 of the Rules of Court since they are factual in nature, essentially
revolving on the alleged increased risk for Edwin to contract leukemia as a
result of hardships incidental to his employment as a security guard. The CA,
ECC and SSS uniformly found that Rosemarie cannot be granted death
benefits as she had failed to offer substantial evidence to prove her claims.
Besides, even if this Court were to exercise leniency and resort to re-

evaluating the factual findings below, still, the instant petition is susceptible
to denial. The SSS, ECC and CA decisions are amply supported, hence, the
Court finds no compelling reason to order their reversal.
The law, as it now stands requires the claimant to prove a positive thing the
illness was caused by employment and the risk of contracting the disease is
increased by the working conditions. To say that since the proof is not
available, therefore, the trust fund has the obligation to pay is contrary to
the legal requirement that proof must be adduced. The existence of
otherwise non-existent proof cannot be presumed.
It is well to stress that the principles of "presumption of compensability" and
"aggravation" found in the old Workmens Compensation Act is expressly
discarded under the present compensation scheme. As illustrated in the said
Raro case, the new principle being applied is a system based on social
security principle; thus, the introduction of "proof of increased risk." As
further declared therein:
The present system is also administered by social insurance agencies - the
Government Service Insurance System and Social Security System - under
the Employees Compensation Commission. The intent was to restore a
sensible equilibrium between the employer's obligation to pay workmen's
compensation and the employee's right to receive reparation for workconnected death or disability.
Compassion for the victims of diseases not covered by the law ignores the
need to show a greater concern for the trust fund to which the tens of
millions of workers and their families look to for compensation whenever
covered accidents, diseases and deaths occur.
It is worth noting that in an attempt to prove that Edwin's employment
increased his chances of contracting leukemia, Rosemarie presented copies
of her husband's daily time records. However, even if the Court were to corelate these to the medical abstract submitted by Rosemarie, there is
nothing in the documents from which the Court can infer or conclude that
indeed, Edwin's risk of contracting leukemia increased by reason of his work
conditions.

Topic: certification election

Ponente: Bersamin, J.
The Heritage Hotel Manila v. Secretary of Labor, G.R. No. 172132,
July 23, 2014
Facts:
On October 11, 1995, respondent National Union of Workers in Hotel
Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter
(NUWHRAIN-HHMSC) filed a petition for certification election, seeking to
represent all the supervisory employees of Heritage Hotel Manila. The
petitioner filed its opposition, but the opposition was deemed denied on
February 14, 1996 when Med-Arbiter Napoleon V. Fernando issued his order
for
the
conduct
of
the
certification
election.
The petitioner appealed the order of Med-Arbiter Fernando, but the appeal
was also denied. A pre-election conference was then scheduled. On February
20, 1998, however, the pre-election conference was suspended until further
notice because of the repeated non-appearance of NUWHRAIN-HHMSC.
On January 29, 2000, NUWHRAIN-HHMSC moved for the conduct of the preelection conference. The petitioner primarily filed its comment on the list of
employees submitted by NUWHRAIN-HHMSC, and simultaneously sought the
exclusion of some from the list of employees for occupying either
confidential or managerial positions. The petitioner filed a motion to dismiss
on April 17, 2000,raising the prolonged lack of interest of NUWHRAIN-HHMSC
to
pursue
its
petition
for
certification
election.
On May 12, 2000, the petitioner filed a petition for the cancellation of
NUWHRAIN-HHMSCs registration as a labor union for failing to submit its
annual financial reports and an updated list of members as required by
Article 238 and Article 239 of the Labor Code, docketed as Case No. NCR-OD0005-004-IRD entitled The Heritage Hotel Manila, acting through its owner,
Grand Plaza Hotel Corporation v. National Union of Workers in the Hotel,
Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter
(NUWHRAIN-HHSMC). It filed another motion on June 1, 2000 to seek either
the dismissal or the suspension of the proceedings on the basis of its
pending
petition
for
the
cancellation
of
union
registration.
The following day, however, the Department of Labor and Employment
(DOLE) issued a notice scheduling the certification elections on June 23,
2000.
Dissatisfied, the petitioner commenced in the CA on June 14, 2000 a special
civil action forcertiorari, alleging that the DOLE gravely abused its discretion
in not suspending the certification election proceedings. On June 23, 2000,

the CA dismissed
administrative

the

petition

for certiorari for

non-exhaustion of
remedies.

The certification election proceeded as scheduled, and NUWHRAIN-HHMSC

obtained the majority vote of the bargaining unit. The petitioner filed a
protest (with motion to defer the certification of the election results and the
winner), insisting on the illegitimacy of NUWHRAIN-HHMSC.
The Med Arbiter ruled that the petition for the cancellation of union
registration was not a bar to the holding of the certification election.
An appeal was then filed before the DOLE Secretary. The DOLE Secretary
denied the appeal and affirmed the ruling of the med arbiter. A motion for
reconsideration was filed but the same was denied. The DOLE Secretary
declared that the mixture or co-mingling of employees in a union was not a
ground for dismissing a petition for the certification election under Section
11, par. II, Rule XI of Department Order No. 9; that the appropriate remedy
was to exclude the ineligible employees from the bargaining unit during the
inclusion-exclusion proceedings; that the dismissal of the petition for the
certification election based on the legitimacy of the petitioning union would
be inappropriate because it would effectively allow a collateral attack against
the unions legal personality; and that a collateral attack against the
personality of the labor organization was prohibited under Section 5, Rule V
of Department Order No. 9, Series of 1997.
The matter was elevated before the CA. The CA dismissed the petition. The
fact that the cancellation proceeding has not yet been resolved makes it
obvious that the legal personality of the respondent union is still very much
in force. The DOLE has thus every reason to proceed with the certification
election and commits no grave abuse of discretion in allowing it to prosper
because the right to be certified as collective bargaining agent is one of the
legitimate privileges of a registered union. It is for the petitioner to expedite
the cancellation case if it wants to put an end to the certification case, but it
cannot place the issue of the unions legitimacy in the certification case, for
that would be tantamount to making the collateral attack the DOLE has
staunchly
argued
to
be
impermissible.
Hence, this petition.
Issue: Will the certification election prosper?
Ruling: YES.
Basic in the realm of labor union rights is that the certification election is the
sole concern of the workers, and the employer is deemed an intruder as far

as the certification election is concerned. Thus, the petitioner lacked the

legal personality to assail the proceedings for the certification election, and
should stand aside as a mere bystander who could not oppose the petition,
or even appeal the Med-Arbiters orders relative to the conduct of the
certification election.
Except when it is requested to bargain collectively, an employer is a mere
bystander to any petition for certification election; such proceeding is nonadversarial and merely investigative, for the purpose thereof is to determine
which organization will represent the employees in their collective bargaining
with the employer. The choice of their representative is the exclusive concern
of the employees; the employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process by filing a motion to
dismiss or an appeal from it; not even a mere allegation that some
employees participating in a petition for certification election are actually
managerial employees will lend an employer legal personality to block the
certification election. The employer's only right in the proceeding is to be
notified or informed thereof.
The petitioners meddling in the conduct of the certification election among
its employees unduly gave rise to the suspicion that it intended to establish
a company union. For that reason, the challenges it posed against the
certification
election
proceedings
were
rightly
denied.
Under the long established rule, too, the filing of the petition for the
cancellation of NUWHRAIN-HHMSCs registration should not bar the
conduct of the certification election. In that respect, only a final
order for the cancellation of the registration would have prevented
NUWHRAIN-HHMSC from continuing to enjoy all the rights conferred
on it as a legitimate labor union, including the right to the petition
for the certification election. This rule is now enshrined in Article 238-A of
the Labor Code, as amended by Republic Act No. 9481,which reads:
Article 238-A. Effect of a Petition for Cancellation of Registration. A
petition for cancellation of union registration shall not suspend the
proceedings for certification election nor shall it prevent the filing of a
petition
for
certification
election.
Thus, R.A. No. 9481 amended Article 239 to read:
ART. 239. Grounds for Cancellation of Union Registration.--The
following may constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in

the

ratification;

(b) Misrepresentation, false statements or fraud in connection with the

election of officers, minutes of the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides:
ART. 242-A. Reportorial Requirements.--The following are documents
required to be submitted to the Bureau by the legitimate labor organization
concerned:
(a) Its constitution and by-laws, or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification of the
constitution and by-laws within thirty (30) days from adoption or ratification
of
the
constitution
and
by-laws
or
amendments
thereto;
(b) Its list of officers, minutes of the election of officers, and list of voters
within
thirty
(30)
days
from
election;
(c) Its annual financial report within thirty (30) days after the close of every
fiscal
year;
and
(d) Its list of members at least once a year or whenever required by the
Bureau.
Failure to comply with the above requirements shall not be a ground
for cancellation of union registration but shall subject the erring
officers or members to suspension, expulsion from membership, or
any
appropriate
penalty.
The ruling thereby wrote finis to the challenge being posed by the petitioner
against
the
illegitimacy
of
NUWHRAIN-HHMSC.

Topic: Service Charges, Negotiated Contracts, Special Rates

Ponente: Justice Arturo D. Brion
NATIONAL UNION OF WORKERS IN HOTEL RESTAURANT AND ALLIED
INDUSTRIES (NUWHRAIN-APL-IUF), PHILIPPINE PLAZA CHAPTER v.
PHILIPPINE PLAZA HOLDINGS, INC., G.R. No. 177524, July 23, 2014
Facts:The Union is the collective bargaining agent of the rank-and-file
employees of respondent Philippine Plaza Holdings, Inc. (PPHI). The PPHI and
the Union executed the Third Rank-and-File Collective Bargaining
Agreement as Amended (CBA). The CBA provided, among others, for the
collection, by the PPHI, of a ten percent (10%) service charge on the sale of
food, beverage, transportation, laundry and rooms. The CBA provisions
merely reiterated similar provisions found in the PPHI-Unions earlier
collective bargaining agreement executed.
The Unions Service Charge Committee informed the Union President,
through an audit report (1st audit report), of uncollected service charges for
the last quarter of 1998 amounting to P2,952,467.61. Specifically, the audit
report referred to the service charges from the following items: (1) Journal
Vouchers; (2) Banquet Other Revenue; and (3) Staff and Promo. The
Union presented this audit report to the PPHIs management during the
Labor Management Cooperation Meeting (LMCM). The PPHIs management
responded that the Hotel Financial Controller would need to verify the audit
report.
Through a letter, the PPHI admitted liability for P80,063.88 out of the
P2,952,467.61 that the Union claimed as uncollected service charges. The
PPHI denied the rest of the Unions claims because: (1) they were exempted
from the service charge being revenues from special promotions (revenue
from the Westin Gold Card sales) or negotiated contracts (alleged revenue
from the Maxi-Media contract); (2) the revenues did not belong to the PPHI

but to third-party suppliers; and (3) no revenue was realized from these
transactions as they were actually expenses incurred for the benefit of
executives or by way of good-will to clients and government officials.
During the LMCM, the Union maintained its position on uncollected service
charges so that a deadlock on the issue ensued. The parties agreed to refer
the matter to a third party for the solution. They considered two options
voluntary arbitration or court action and promised to get back to each
other on their chosen option. In its formal reply (to the PPHIs letter) (2nd
audit report), the Union modified its claims. It claimed uncollected service
charges from: (1) Journal Vouchers - Westin Gold Revenue and Maxi-Media
(F&B and Rooms Barter); (2) Banquet and Other Revenue; and (3) Staff
and Promo.
The Unions Service Charge Committee made another service charge audit
report for the years 1997, 1998 and 1999 (3rd audit report). This 3rd audit
report reflected total uncollected service charges of P5,566,007.62 from the
following entries: (1) Journal Vouchers; (2) Guaranteed No Show; (3)
Promotions; and (4) F & B Revenue. The Union President presented the
3rd audit report to the PPHI.
When the parties failed to reach an agreement, the Union, filed before the LA
(Regional Arbitration Branch of the NLRC) a complaint for non-payment of
specified service charges and unfair labor practice. LA dismissed the Unions
complaint for lack of merit. NLRC reversed the LAs decision and considered
the specified entries/transactions as service chargeable. The PHHI went to
the CA on a petition for certiorari after the NLRC denied its motion for
reconsideration. The CA granted the PPHIs petition. It affirmed the LAs
decision. The Union filed the present petition after the CA denied its motion
for reconsideration in the CAs resolution.
Issue: Whether or not service charges should have been collected (and
distributed to the covered employees) for the specified entries/transactions.
Ruling: No.
No service charges were due from the specified entries/transactions; they
either fall within the CBA-excepted Negotiated Contracts and Special
Rates or did not involve a sale of food, beverage, etc.
The Union anchors its claim for services charges on Sections 68 and 69
of the CBA, in relation with Article 96 of the Labor Code. Section 68
states that the sale of food, beverage, transportation, laundry and rooms are
subject to service charge at the rate of ten percent (10%).Excepted
from the coverage of the 10% service charge are the so-called negotiated
contracts and special rates.

Following the wordings of Section 68 of the CBA, three requisites must be

present for the provisions on service charges to operate: (1) the transaction
from which service charge is sought to be collected is a sale; (2) the sale
transaction covers food, beverage, transportation, laundry and rooms;and (3)
the sale does not result from negotiated contracts and/or at special rates.
In plain terms, all transactions involving a sale of food, beverage,
transportation, laundry and rooms are generally covered.
Excepted from the coverage are, first, non-sale transactions or transactions
that do not involve any sale even though they involve food, beverage, etc.
Second, transactions that involve a sale but do not involve food, beverage,
etc. And third, transactions involving negotiated contracts and special
rates i.e., a sale of food, beverage, etc. resulting from negotiated
contracts or at special rates; non-sale transactions involving food,
beverage, etc. resulting from negotiated contracts and/or special rates;
and sale transactions, but not involving food, beverage, etc., resulting from
negotiated contracts and special rates.
Notably, the CBA does not specifically define the terms negotiated
contracts and special rates. Nonetheless, the CBA likewise does not
explicitly limit the use of these terms to specified transactions. With
particular reference to negotiated contracts, the CBA does not confine its
application to airline contracts as argued by the Union. Thus, as correctly
declared by the CA, the term negotiated contracts should be read as
applying to all types of negotiated contracts and not to airlines contracts
only. This is in line with the basic rule of construction that when the terms
are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall prevail. A
constricted interpretation of this term, i.e., as applicable to airlines
contracts only, must be positively shown either by the wordings of the CBA
or by sufficient evidence of the parties intention to limit its application. The
Union completely failed to provide support for its constricted
reading of the term negotiated contracts, either from the wordings of
the CBA or from the evidence.
In reversing the NLRCs ruling and denying the Unions claim, the CA found
the specified entries/transactions as either falling under the excepted
negotiated contracts and/or special rates or not involving a sale of food,
beverage, etc. Specifically, it considered the entries Westin Gold Cards
Revenue and Maxi Media Barter to be negotiated contracts or contracts
under special rates, and the entries Business Promotions and Gift
Certificates as contracts that did not involve a sale of food, beverage, etc.
The CA also found no factual and evidentiary basis to support the Unions
claim for service charges on the entries Guaranteed No show and F & B
Revenue.

Topic: Entitlement to Death Benefits

Ponente: Chief Justice Maria Lourdes P.A. Sereno
JORAINA DRAGON TALOSIG v. UNITED PHILIPPINE LINES, INC., G.R.
No. 198388, July 28, 2014
Facts: Petitioner is the widow of Vladimir Talosig, a seafarer hired as an
assistant butcher in the ship MS Zuiderdam. The vessel is owned by
respondent Holland American Line Wastours, Inc. through its local manning
agent, United Philippine Line, Inc. Talosig and respondent executed a
Contract of Employment incorporating the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean-Going
Vessels (Standard Employment Contract) as prescribed by the Philippine
Overseas Employment Administration (POEA). The duration of the contract
was twelve (12) months. Talosig underwent the required Pre-Employment
Medical Examination (PEME) prior to his deployment. He passed the PEME
and was declared "fit to work." He boarded MS Zuiderdamon 26 August
2005.

During his employment with respondent, he was confined in the South Miami
Hospital sometime after suffering a month of rectal bleeding and lower
abdominal pain. He was then diagnosed with a "malignant neoplasm
infiltrating colonic mucosa." Subsequently, he was medically repatriated.
Upon arrival in the Philippines, he was immediately confined at the Asian
Hospital. There he was diagnosed to be suffering from Stage IV colon cancer.
Thereafter, he passed away as a result of cardiopulmonary arrest secondary
to sepsis and multiple organ failure secondary to colon cancer, Stage IV
(bone metastasis).
Petitioner thereafter filed a Complaint with the NLRC for death benefits,
damages and attorneys fees. The labor arbiter rendered a Decision in favor
of petitioner and ordered respondents to pay USD 50,000 as death benefits,
USD 7,000 as entitlement of one minorchild, and USD 1,000 as burial
benefits. The LA held that petitioner had failed to establish that Talosigs
death was reasonably connected to his work; however, it took judicial notice
of the fact that the diet of the ships crew seldomcontained vegetables and
high-fiber foods, likely contributing to the worsening of petitioners condition.
Upon appeal, the NLRC reversed the ruling of the LA. It ruled that the LA
erred when it formed its own scenarios, surmises and conclusions on what
could have caused petitioners colon cancer on board the vessel.
Furthermore, the NLRC found that his death occurred after the termination of
his contract, a fact that should have been the ground for the outright
dismissal of petitioners claim.
A Petition for Certiorari was filed by petitioner with the CA. The appellate
court affirmed the NLRC and held that the death of a seafarer is
compensable only if it occurs during the term of his contract of employment.
Upon Talosigs medical repatriation, the obligation to pay the death benefits
ceased in accordance with the partiesemployment contract. The CA further
held that Talosigs illness was not one of the occupational diseases
enumeratedin the POEA Standard Employment Contract for seafarers. It also
stated that petitioner failed to provide sufficient proof that the illness was
reasonably connected to Talosigs work, or that colon cancer was an
accepted occupational disease.
Issue: Whether or not the petitioner is entitled to the death benefits as
claimed.
Ruling: No. Petitioner is not entitled to the death benefits based on two
grounds: (1) that at the time of his death, Talosig was no longer under the
employment of respondents; and (2) that there was neither any showing that
the cause of his death was one of those covered by the POEA Standard
Employment Contract, nor was there any proof that it was work-related. It is

undeniable that the death of a seafarer must have occurred during the term
of his contract of employment for it to be compensable.
Records show that the contract of Talosig was for the duration of 12 months
commencing on the date of his actual departure from point of hire. He was,
however, repatriated for medical reasons on 24 December 2005. The CA
ruled that upon his repatriation, his employment was effectively terminated
pursuant to Section 18 B(1)of the POEA Standard Employment Contract.
Colon cancer is not one of those types of cancer that are compensable under
Section 32 of the POEA Standard Employment Contract. Under Section 32-A
of the POEA Standard Contract, only two types of cancers are listed as
occupational diseases (1) Cancer of the epithelial lining of the bladder
(papilloma of the bladder); and (2) cancer, epithellematous or ulceration
ofthe skin or of the corneal surface of the eye due to tar, pitch, bitumen,
mineral oil or paraffin, or compound products or residues of these
substances. Section 20 of the same Contract also states that those illnesses
not listed under Section 32 are disputably presumed as work-related. Section
20 should, however, be read together with Section 32-A on the conditions to
be satisfied for an illness to be compensable.
For an occupational disease and the resulting disability or death to be
compensable, all the following conditions must be established:
1. The seafarers work must involve the risk described herein;
2. The disease was contracted as a result of the seafarers exposure to the
described risks;
3. The disease was contracted within a period of exposure and under such
other factors necessary to contract it;
4. There was no notorious negligence on the part of the seafarer.
Further, the claimant must not merely rely on the disputable presumption,
but must be able to present no less than substantial evidence to support her
claim. Substantial evidence ismore than a mere scintilla. It must reach the
level of relevant evidence that a reasonable mind might accept as sufficient
to support a conclusion. The petitioner did not present any proof of a causal
connection or at least a work relation between the employment of Talosig
and his colon cancer. Petitioner merely relied on presumption of causality.
She failed either to establish or even to mention the risks that could have
caused or, at the very least,contributed to the disease contracted by Talosig.
Absent of any substantial proof of the causal connection between the disease
of Talosig and his work, the Court cannot grant death benefits to his heirs
based on mere presumptions.

Topic: Valid / Just Cause for Dismissal

Ponente: Diosdado M. Peralta, J.
FLP ENTERPRISES INC. - FRANCESCO SHOES v. MA. JOERALYN D.
DELA CRUZ and VILMA MALUNES, G.R. No. 198093, July 28, 2014

Facts: Petitioner FLPE hired respondent Dela Cruz in 1991 and respondent
Malunes in 1998 as sales ladies and assigned them both at its Alabang Town
Center store in Muntinlupa City. Because of the several previous incidents of
theft in its retail outlets, petitioner formulated a policy requiring its sales staff
to keep the sales proceeds in the stockroom instead of the cash register.
Petitioner alleged that said policy was properly announced, posted, and
implemented in all its retail outlets, particularly in Alabang Town Center.
On March 10, 2008, it was discovered that the stores sales proceeds for
March 7 to March 9, 2008, amounting to 26,372.75, were missing. The
investigating authorities found that it resulted from an "inside job" since the
cash register remained closed and there was no indication of forced entry
into the store. FLPE thus required respondents to explain in writing why they
should not be terminated. It contended that respondents clearly violated its
company policy prohibiting sales proceeds from being stored in the cash
register. Accordingly, Dela Cruz and Malunes submitted their respective
written explanations. They both denied the existence of such company policy
and having knowledge thereof.
FLPE thereafter removed respondents from service. Aggrieved, respondents
filed a complaint for illegal dismissal with money claims against the
company. The LA dismissed respondents claim and held that FLPE was able
to sufficiently prove that respondents were guilty of habitually violating the
company standard procedure on safekeeping of cash collection.
Upon appeal, the NLRC affirmed the LA Decision in its entirety. Subsequently,
respondents elevated the case to the CA, imputing grave abuse of discretion
on the NLRCs part. The CA set aside the NLRC ruling and pronounced
respondents as having been illegally dismissed by FLPE.
Issue: Whether or not Dela Cruz and Malunes were illegally dismissed by
FLPE.
Ruling: Yes. It is a fundamental rule that an employee can be discharged
from employment only for a valid cause. Here, both the LA and the NLRC
found that respondents have been validly terminated for gross and habitual
neglect of duties, constituting just cause for termination under Article 282 of
the Labor Code. As a valid ground for dismissal under said provision, neglect
of duty must be both gross and habitual. Gross negligence entails want of
care in the performance of ones duties, while habitual neglect imparts
repeated failure to perform such duties for a period of time, depending on
the circumstances.
Substantial evidence is also necessary for an employer to effectuate any
dismissal. Uncorroborated assertions and accusations by the employer would

not suffice, otherwise, the constitutional guaranty of security of tenure would

be put in jeopardy. In this case, as the CA correctly ruled, in order to sustain
herein respondents dismissal, FLPE must show, by substantial evidence, that
the following are extant:
1) the existence of the subject company policy;
2) the dismissed employee must have been properly informed of said policy;
3) actions or omissions on the part of the dismissed employee manifesting
deliberate refusal or wilfuldisregard of said company policy; and
4) such actions or omissions have occurred repeatedly.
FLPE claims that its company policy that requires its sales managers and
staff to keep the sales proceeds in a shoebox in the stockroom and not inside
the cash register, have been in existence since October 23, 2003. However,
FLPE failed to establish that such a company policy actually exists, and if it
does truly exist, that it was, in fact, posted and/or disseminated accordingly.
Neither is there anything in the records which reveals that the dismissed
respondents were informed of said policy. The company vehemently insists
that it posted, announced, and implemented the subject Safekeeping Policy
in all its retail stores, especially the one in Alabang Town Center. It, however,
failed to substantiate said claim. It could have easily produced a copy of said
memorandum bearing the signatures of Dela Cruz and Malunes to show that,
indeed, they have been notified of the existence of said company rule and
that they have received, read, and understood the same. FLPE could likewise
have simply called some of its employees to testify on the rules existence,
dissemination, and strict implementation. But aside from its self-serving and
uncorroborated declaration, and a copy of the supposed policy, FLPE
adduced nothing more.
In termination cases, the burden of proof rests on the employer to show that
the dismissal is for a just cause. The one who alleges a fact has the burden of
proving it; thus, FLPE should prove its allegation that it terminated
respondents for a valid and just cause. It must be stressed that the evidence
to prove this fact must be clear, positive, and convincing. When there is no
showing of a clear, valid, and legal cause for the termination of employment,
the law considers the matter a case of illegal dismissal. Unfortunately, FLPE
miserably failed to discharge this burden. To rule otherwise and simply allow
the presumption as to the existence and dissemination of the supposed
company policy would lead to a proliferation of fabricated notices, and entice
further abuse by unscrupulous persons. Workers could then be arbitrarily
terminated without much of an effort, running afoul of the States clear duty
to show compassion and afford the utmost protection to laborers.

True, an employer has the discretion to regulate all aspects of employment

and the workers have the corresponding obligation to obey company rules
and regulations. Deliberately disregarding or disobeying the rules cannot be
countenanced, and any justification that the disobedient employee might put
forth is deemed inconsequential. However, the Court must emphasize that
the prerogative of an employer to dismiss an employee on the ground of
willful disobedience to company policies must be exercised in good faith and
with due regard to the rights of labor
For lack of any clear, valid, and just cause in terminating respondents'
employment, FLPE is indubitably guilty of illegal dismissal.

Topic: Existence of Employer - Employee Relationship

Ponente: Mariano C. del Castillo, J.
ROYALE HOMES MARKETING CORPORATION v. FIDEL P. ALCANTARA,
G.R. No. 195190 July 28, 2014
Facts: Royale Homes, a corporation engaged in marketing real estates,
appointed Alcantara as its Marketing Director for a fixed period of one year.
His work consisted mainly of marketing Royale Homes real estate
inventories on an exclusive basis. Royale Homes reappointed him for several
consecutive years, the last of which covered the period January 1 to
December 31, 2003 where he held the position of Division 5 Vice-PresidentSales.
Alcantara filed a Complaint for Illegal Dismissal against Royale Homes and its
Executives. Alcantara alleged that he is a regular employee of Royale Homes
since he is performing tasks that are necessary and desirable to its business;
and that the acts of the executive officers of Royale Homes amounted to his
dismissal from work without any valid or just cause and in gross disregard of
the proper procedure for dismissing employees. He prayed to be reinstated
to his former position without loss of seniority rights and other privileges, as
well as to be paid backwages, moral and exemplary damages.
Royale Homes, on the other hand, vehemently denied that Alcantara is its
employee. It argued that the appointment paper of Alcantara is clear that it
engaged his services as an independent sales contractor for a fixed term of
one year only. He never received any salary, 13th month pay, overtime pay
or holiday pay from Royale Homes as he was paid purely on commission
basis. In addition, Royale Homes had no control on how Alcantara would
accomplish his tasks and responsibilities as he was free to solicit sales at any
time and by any manner which he may deem appropriate and necessary. He
is even free to recruit his own sales personnel to assist him in pursuance of
his sales target.
The Labor Arbiter rendered a Decision holding that Alcantara is an employee
of Royale Homes with a fixed-term employment period from January 1 to
December 31, 2003 and that the pre-termination of his contract was against
the law.
Upon appeal, the NLRC ruled that Alcantara is not an employee but a mere
independent contractor of Royale Homes. It based its ruling mainly on the
contract which does not require Alcantara to observe regular working hours.
He was also free to adopt the selling methods he deemed most effective and
can even recruit sales agents to assist him in marketing the inventories of

Royale Homes. The NLRC also considered the fact that Alcantara was not
receiving monthly salary, but was being paid on commission basis as
stipulated in the contract. Being an independent contractor, the NLRC
concluded that Alcantaras Complaint is cognizable by the regular courts.
Alcantara thus filed a Petition for Certiorari with the CA which granted said
petition and reversed the NLRCs Decision. Applying the four-fold and
economic reality tests, it held that Alcantara is an employee of Royale
Homes. Royale Homes exercised some degree of control over Alcantara since
his job, as observed by the CA, is subject to company rules, regulations, and
periodic evaluations. He was also bound by the company code of ethics.
Issue: Whether or not Alcantara is an employee of Royale Homes.
Ruling: No. Alcantara is not an employee of Royale Homes, but a mere
independent contractor. The determination of whether a party who renders
services to another is an employee or an independent contractor involves an
evaluation of factual matters which, ordinarily, is not within the province of
the Supreme Court. However, in view of the conflicting findings of the
tribunals below, the Court is constrained to go over the factual matters
involved in this case.
In determining the existence of an employer-employee relationship, the
Court has generally relied on the four-fold test, to wit: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employers power to control the employee with respect
to the means and methods by which the work is to be accomplished. Among
the four, the most determinative factor in ascertaining the existence of
employer-employee relationship is the right of control test. It is deemed to
be such an important factor that the other requisites may even be
disregarded. This holds true where the issues to be resolved is whether a
person who performs work for another is the latters employee or is an
independent contractor, as in this case. For where the person for whom the
services are performed reserves the right to control not only the end to be
achieved, but also the means by which such end is reached, employeremployee relationship is deemed to exist.
However, not every form of control is indicative of employer-employee
relationship. A person who performs work for another and is subjected to its
rules, regulations, and code of ethics does not necessarily become an
employee. As long as the level of control does not interfere with the means
and methods of accomplishing the assigned tasks, the rules imposed by the
hiring party on the hired party do not amount to the labor law concept of
control that is indicative of employer-employee relationship.

The primary evidence of the nature of the parties relationship in this case is
the written contract that they signed and executed in pursuance of their
mutual agreement. While the existence of employer-employee relationship is
a matter of law, the characterization made by the parties in their contract as
to the nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties written contract unequivocally
states their intention at the time they entered into it.
In Tongko v. The Manufacturers Life Insurance Co. (Phils.), Inc., it was held
that: "To be sure, the Agreements legal characterization of the nature of the
relationship cannot be conclusive and binding on the courts; x xx the
characterization of the juridical relationship the Agreement embodied is a
matter of law that is for the courts to determine. At the same time, though,
the characterization the parties gave to their relationship in the Agreement
cannot simply be brushed aside because it embodies their intent at the time
they entered the Agreement, and they were governed by this understanding
throughout their relationship. At the very least, the provision on the absence
of employer-employee relationship between the parties can be an aid in
considering the Agreement and its implementation, and in appreciating the
other evidence on record."
In this case, the contract, duly signed and not disputed by the parties,
conspicuously provides that no employer-employee relationship exists
between Royale Homes and Alcantara, as well as his sales agents. It is clear
that they did not want to be bound by employer-employee relationship at the
time of the signing of the contract.
Likewise, the repeated hiring of Alcantara does not prove the existence of
employer-employee relationship. The absence of control over the means and
methods disproves employer-employee relationship. The continuous rehiring
of Alcantara simply signifies the renewal of his contract with Royale Homes,
and highlights his satisfactory services warranting the renewal of such
contract.
The element of payment of wages is also absent in this case. As provided in
the contract, Alcantaras remunerations consist only of commission override
of 0.5%, budget allocation, sales incentive and other forms of company
support. There is no proof that he received fixed monthly salary.

Topic: Termination due to trust and confidence

Ponente: PRESBITERO J. VELASCO, JR.
Wesleyan University-Philippines v. Nowella Reyes G.R. No. 208321,
July 30, 2014
Facts: On March 16, 2004, respondent Nowella Reyes was appointed as
WUP's University Treasurer on probationary basis. A little over a year after,
she was appointed as full time University Treasurer. A new WUP Board of
Trustees was constituted. Among its first acts was to engage the services of
Nepomuceno Suner & Associates Accounting Firm (External Auditor) to
investigate circulating rumors on alleged anomalies in the contracts entered
into by petitioner and in its finances.
Discovered following an audit were irregularities in the handling of
petitioners finances, mainly, the encashment by its Treasury Department of
checks issued to WUP personnel, a practice purportedly in violation of the
imprest system of cash management, and the encashment of various
crossed checks payable to the University Treasurer by Chinabank despite
managements intention to merely have the funds covered thereby
transferred from one of petitioners bank accounts to another. Respondent
submitted her Explanation. Following which, WUPs Human Resources
Development Office (HRDO) conducted an investigation. Finding
respondents Explanation unsatisfactory, the HRDO, submitted an
Investigation Report to the University President containing its findings and
recommending respondents dismissal as University Treasurer.

Upon receipt of her notice of termination, respondent post-haste filed a

complaint for illegal dismissal with the Arbitration Branch of the National
Labor Relations Commission. She contended that her dismissal was illegal,
void and unjust. Labor Arbiter Reynaldo V. Abdon rendered a Decision finding
that complainant was illegally dismissed by respondent Wesleyan University
Philippines. Petitioner filed an appeal with the National Labor Relations
Commission (NLRC) which was granted in the tribunals Decision, declaring
that respondent was legally dismissed. The CA, through its assailed Decision
found the NLRCs ruling tainted with grave abuse of discretion and reinstated
the Decision of the Labor Arbiter. Hence, the instant petition.

Issue: Whether respondent Nowella Reyes' termination as University

Treasurer of petitioner Wesleyan University - Philippines (WUP) on the ground
of loss of trust and confidence was valid.

Ruling: Yes.

Article 282. Termination by employer. An employer may terminate an

employment for any of the following causes:
xxxx

c. Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

The first requisite is that the employee concerned must be one holding a
position of trust and confidence, thus, one who is either: (1) a managerial
employee; or (2) a fiduciary rank-and-file employee, who, in the normal
exercise of his or her functions, regularly handles significant amounts of
money or property of the employer. The second requisite is that the loss of
confidence must be based on a willful breach of trust and founded on clearly
established facts.

The presence of the first requisite is certain. So is as regards the second

requisite. Indeed, the Court finds that petitioner adequately proved
respondents dismissal was for a just cause, based on a willful breach of trust
and founded on clearly established facts as required by jurisprudence. At the
end of the day, the question of whether she was a managerial or rank-and
file employee does not matter in this case because not only is there basis for
believing that she breached the trust of her employer, her involvement in the
irregularities attending to petitioners finances has also been proved.

Here, there was an admitted, actual and real breach of duty committed by
respondent, which translates into a breach of trust and confidence in her. As
it were, respondent did not deny, in fact admitted, the encashment of the
three hundred thousand peso (PhP 300,000) crossed check payable to the
University Treasurer which covered the total amount of the "love gift" for
administrative and academic officials of WUP.

Jurisprudence has pronounced that the crossing of a check means that the
check may not be encashed but only deposited in the bank. As Treasurer,
respondent knew or is at least expected to be aware of and abide by this
basic banking practice and commercial custom. Clearly, the issuance of a
crossed check reflects managements intention to safeguard the funds
covered thereby, its special instruction to have the same deposited to
another account and its restriction on its encashment.

Here, respondent, as aptly detailed in the auditors report, disregarded

managements intentions and ignored the measures in place to secure the
handling of WUPs funds. By encashing the crossed checks, respondent put
the funds covered thereby under the risk of being lost, stolen, co-mingled
with other funds or spent for other purposes. Furthermore, the
accommodation and encashment by the Treasury Department of checks
issued to WUP personnel were highly irregular. First, WUP, not being a bank,
had no business encashing the checks of its personnel. More importantly, in
encashing the said checks, the Treasury Department made disbursements

contrary to the wishes of management because, in issuing said checks,

management has made clear its intention that monies therefor would be
sourced from petitioners deposit with Chinabank, under a specific account,
and not from the cash available in the Treasury Department.

That the encashment of crossed checks and payment of checks directly to

WUP personnel had been the practice of the previous and present
administration of petitioner is of no moment. This was simply respondents
convenient excuse, a poorly disguised afterthought, when her unbecoming
carelessness in managing WUPs finances was exposed. Moreover, the
prevalence of this practice could have been contained if only respondent
consistently observed the regular procedure for encashing crossed checks
and properly handled requests for accommodation of checks issued to the
WUP personnel.

In employer cannot be compelled to retain an employee who is guilty of acts

inimical to the interests of the employer. A company has the right to dismiss
its employees if only as a measure of self-protection. This is all the more true
in the case of supervisors or personnel occupying positions of
responsibility. In this case, let it be remembered that respondent was not an
ordinary rank-and-file employee as she was no less the Treasurer who was in
charge of the coffers of the University. It would be oppressive to require
petitioner to retain in their management an officer who has admitted to
knowingly and intentionally committing acts which jeopardized its finances
and who was untrustworthy in the handling and custody of University funds.

Topic: Grievance Procedure

Ponente: ANTONIO T. CARPIO
University of Santo Tomas Faculty Union v. University of Sto. Tomas,
G.R. No. 203957, July 30, 2014
Facts: In a letter dated February 6, 2007, University of Santo Tomas Faculty
Union (USTFU) demanded from University of Sto. Tomas (UST), through its
Rector, Fr. Ernesto M. Arceo, O.P. ("Fr. Arceo"), remittance of the total amount
of P65,000,000.00 plus legal interest thereon, representing deficiency in its
contribution to the medical and hospitalization fund ("fund") of USTs faculty
members. USTFU also sent UST a letter accompanied by a summary of its
claims pursuant to their 1996-2001 CBA.
Fr. Arceo informed USTFU that the aforesaid benefits were not meant to be
given annually but rather as a one-time allocation or contribution to the fund.
USTFU then sent UST another demand letter reiterating its position that UST
is obliged to remit to the fund, its contributions not only for the years 19961997 but also for the subsequent years, but to no avail. Thus, USTFU filed
against UST, a complaint for unfair labor practice before the arbitration
branch of the NLRC.
UST sought the dismissal of the complaint on the ground of lack of
jurisdiction. It contended that the case falls within the exclusive jurisdiction
of the voluntary arbitrator or panel of voluntary arbitrators because it
involves the interpretation and implementation of the provisions of the CBA;
and the conflict between the herein parties must be resolved as grievance
under the CBA and not as unfair labor practice. USTs motion to dismiss was

denied by the LA in its August 8, 2008 order. UST appealed the Order to the
NLRC. The NLRC Seventh Division, however, dismissed the appeal and
remanded the case to the LA.
The LA ruled in favor of USTFU. The NLRC granted USTFUs appeal and
denied USTs appeal for lack of merit. UST filed a motion for reconsideration
of the NLRC decision. UST again claimed that the Voluntary Arbitrator, and
not LA, had jurisdiction over the interpretation of the CBA;
the P80,000,000.00 award had no basis; and the fund should be remitted to
the Hospital and Medical Benefits Committee, not to USTFU, as stated in the
CBA.
In a Resolution, the NLRC denied USTs motion for reconsideration for lack of
merit. The CA disposed of the present case by agreeing with USTs argument
that the LA and the NLRC did not have jurisdiction to hear and decide the
present case. The CA stated that since USTFUs ultimate objective is to clarify
the relevant items in the CBA, then USTFUs complaint should have been
filed with the voluntary arbitrator or panel of voluntary arbitrators.
Issue: Whether the Court of Appeals departed from the usual course of
judicial proceedings in holding that the Labor Arbiter and the NLRC have no
jurisdiction over the complaint for unfair labor practice (ULP) filed by USTFU.
Ruling: No.
The SC affirmed with modification the ruling of the CA. The Labor Arbiter has
no jurisdiction over the present case. We see that UST and USTFUs
misunderstanding arose solely from their differing interpretations of the
CBAs provisions on economic benefits, specifically those concerning the
fund. Therefore, it was clearly error for the LA to assume jurisdiction over the
present case. The case should have been resolved through the voluntary
arbitrator or panel of voluntary arbitrators.
Article 217(c) of the Labor Code provides that the Labor Arbiter shall refer to
the grievance machinery and voluntary arbitration as provided in the CBA
those cases that involve the interpretation of said agreements. Article 261 of
the Labor Code further provides that all unresolved grievances arising from
the interpretation or implementation of the CBA, including violations of said
agreement, are under the original and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators. Excluded from this original and
exclusive jurisdiction is gross violation of the CBA, which is defined in Article
261 as "flagrant and/or malicious refusal to comply with the economic
provisions" of the CBA.
Despite the allegation that UST refused to comply with the economic
provisions of the 1996-2001 CBA, we cannot characterize USTs refusal as

"flagrant and/or malicious." Indeed, USTs literal interpretation of the CBA

was, in fact, what led USTFU to file its complaint. To our mind, USTFU actually
went beyond the text of the 1996-2001 CBA when it claimed that the
integrated tuition fee increase as described in Section 1D(2) is the basis for
USTs alleged deficiency.
We cannot subscribe to USTFUs view that the 1996-2001 CBAs Article X:
Grievance Machinery is not applicable to the present case. When the issue is
about the grievance procedure, USTFU insists on a literal interpretation of
the 1996-2001 CBA. Indeed, the present case falls under Section 1s
definition of grievance:"any misunderstanding concerning policies and
practices directly affecting faculty members covered by this collective
bargaining agreement or their working conditions in the UNIVERSITY or any
dispute arising as to the meaning, application or violation of any provisions
of this Agreement or any complaint that a covered faculty member may have
against the UNIVERSITY." Section 2 excludes only termination and preventive
suspension from the grievance procedure.
USTFUs focus is on the 1996-2001 CBAs provisions about the grievance
process rather than the provision about the subject matters covered by the
grievance process. Despite USTs alleged violation of the economic
provisions of the CBA by its insufficient remittances to the fund, a dispute
arising as to the meaning, application or violation of the CBA, USTFU used
Step I in Section 3, and ignored Steps III and IV, to rule out any referral to
voluntary arbitration. USTFU concludes that the 1996-2001 CBAs provisions
on grievance machinery only refer to a grievance of a faculty member
against UST, and that said provisions do not contemplate a situation where
USTFU itself has a grievance against UST.
USTFU argues that the PUUC is the proper forum to resolve the issue, and
that the filing of a complaint before the LA is proper in the absence of a
voluntary arbitration clause in the 1996-2001 CBAs Article XXII: Permanent
University-Union Committee. However, as provided in the 1996-2001 CBA,
PUUC is established for "continuing problems and irritants which will require
the continuing attention" of UST and USTFU. Clearly, the PUUC addresses
matters not covered by the CBA. USTFUs adamant refusal to consider
voluntary arbitration ignores Articles 261 to 262-A of the Labor Code, as well
as Steps III and IV of Section 3 of the 1996-2001 CBA.

Topic: Permanent disability benefits and sickness allowance

Ponente: BIENVENIDO L. REYES
Status Maritime Corp. v. Spouses Delalamon G.R. No. 198097, July
30, 2014
Facts: Margarito was hired by Status Maritime Corporation (Status
Maritime), for and in behalf of its principal, Fairdeal Group Management S.A.
(Fairdeal), as Chief Engineer with a monthly basic salary of US$1,300.00. The
employment contract was originally for a period of nine (9) months from July

26, 2005 to April 26, 2006 but Margarito later on requested for, and was
granted, extension until October 2006.
Margarito left Manila to join the vessel, M/T Fair Jolly, on July 26, 2005 and
forthwith discharged his duties. In September 2006, while the vessel was in
United Arab Emirates (UAE), Margarito complained of loss of appetite. He
was sent to the National Medical Center at the Port of Fujairah, UAE, for
diagnosis and treatment. In a Medical Report, Margarito was diagnosed with
"Renal Insufficiency: Diabetes Mellitus; IHD Blood+CBC+Anemia." He was
medically repatriated.
Margarito and his wife Priscila (respondents) filed a complaint before the
Labor Arbiter (LA) for the payment of permanent disability benefits, sickness
allowance, damages and attorneys fees against Fairdeal, M/T Fair Jolly,
Status Maritime and its President, Loma B. Aguiman (petitioners). According
to the respondents, Margarito was physically weak when he arrived in the
Philippines. He thus sought to rest athome and failed to report to the
petitioners. Priscilla nonetheless notified the petitioners of Margaritos
condition through a certain Allan Lopez.
When Margaritos medical condition worsened, he was brought to Las Pias
Doctors Hospital where he underwent a series of clinical and laboratory
tests. He was again hospitalized. Based on the medical certificate issued by
Dr. Elizabeth B. Salazar-Montemayor dated January 17, 2007, Margarito was
found to be sufferingfrom "End Stage Renal Disease 2 Diabetic Nephropathy."
The respondents averred that the petitioners failed to provide any medical
assistance the entire time that Margarito was undergoing medical treatments
for an illness he acquired while in their employ.
According to the petitioners, Margaritos illness is not compensable based on
the medical report dated May 17, 2007 of Dr. Wilanie Romero Dacanay of the
Marine Medical Services of Metropolitan Medical Center stating that "Chronic
Kidney Disease secondary to Diabetic Nephropathy" is NOT work-related.
Based thereon, the petitioners argued that Margarito concealed his illness
when he was subjected to a Pre-Employment Medical Examination (PEME)
hence disqualified from claiming disability benefits.
Pending the decision of the LA, Margarito died on September 11, 2007. His
cause of death was "CVA" or Cardiovascular Accident. The LA found no merit
in the respondents complaint for the reason that Margaritos illness is not
work-related. The NLRC affirmed the LAs ruling and added that Margarito did

not even bother to comply with the mandatory requirement of reporting to

the petitioners office within three (3) days from his disembarkation for postemployment medical examination pursuant to Section 20 (B)[3] of the POEASEC.
The respondents elevated the case to the CA and, in support of their position
that Margaritos illness is work-related by a medical evaluation. The CA
reversed the findings of the labor tribunals. The CA held that Margarito was
exempt from complying with the 3-day mandatory reporting requirement
because when he arrived in the Philippines, his physical condition was
already deteriorating and was in need of urgent medical attention. Thus, it
could not be expected of him to prioritize the reporting requirement before
attending to his medical needs. Also, his wife actually notified the petitioners
of his medical condition, through Allan Lopez. The petitioners moved for
reconsideration but the motion was denied in the CA Resolution. Hence, the
present appeal.
Issue: Whether the CA erred in finding grave abuse of discretion on the part
of the NLRC when the latter affirmed the LA's dismissal of Margarito's
complaint for permanent disability benefits and sickness allowance
Ruling: Yes.
SECTION 20. COMPENSATION AND BENEFITS
xxxx
E. A seafarer who knowingly conceals and does not disclose past medical
condition, disability and history in the pre-employment medical examination
constitutes fraudulent misrepresentation and shall disqualify him from any
compensation and benefits. This may also be a valid ground for termination
of employment and imposition of the appropriate administrative and legal
sanctions. (Emphasis ours)
The fact that Margarito passed his PEME cannot excuse his willful
concealment nor can it preclude the petitioners from rejecting his disability
claims. PEME is not exploratory and does not allow the employer to discover
any and all pre-existing medical condition with which the seafarer is suffering
and for which he may be presently taking medication. The PEME is nothing
more than a summary examination of the seafarers physiological
condition; it merely determines whether one is "fit to work" at sea or "fit for

sea service" and it does not state the real state of health of an applicant. The
"fit to work" declaration in the PEME cannot be a conclusive proof to show
that he was free from any ailment prior to his deployment.
Thus, for knowingly concealing his diabetes during the PEME, Margarito
committed fraudulent misrepresentation which under the POEA-SEC
unconditionally barred his right to receive any disability compensation or
illness benefit.
This finding renders any issue on work-relatedness irrelevant since the
premise
which
bars
disability
compensation
is
the
fraudulent
misrepresentation of a pre-existing disease and not the fact that it was preexisting. Even if we were to disregard Margaritos fraudulent
misrepresentation, his claim will still fail.
It is evident from the foregoing medical reports of Drs. Dacanay and Vicaldo
that when Margarito applied for and was given employment by the
petitioners on July 26, 2005, he was already afflicted with diabetes. This
means that he did not acquire his illness while working in the petitioners
vessel and thus his diabetes is not work-related.
Disability compensation cannot rest on mere allegations couched in
conjectures and baseless inferences from which work aggravation or
relatedness cannot be presumed. "[B]are allegations do not suffice to
discharge the required quantum of proof of compensability. Awards of
compensation cannot rest on speculations or presumptions. The beneficiaries
must present evidence to prove a positive proposition."
In as much as we commiserate with Margarito's widow, the Court's
commitment to the cause of labor is not a lopsided undertaking. It cannot
and does not prevent us from sustaining the employer when it is in the right.
The constitutional policy to provide full protection to labor is not meant to be
a sword to oppress employers. Justice, is, in every case for the deserving,
and it must be dispensed with in the light of established facts, the applicable
law, and existing jurisprudence.

Topic: Inconsistent Positions

Ponente: Justice Mariano C. Castillo
Nahas, doing business under the name and style Personnel
Employment and Technical Recruitment Agency v. Olarte, G.R. No.
169247, June 2, 2014
Facts: On August 27, 1999, Olarte was deployed as a domestic helper to
Saudi Arabia for a contract term of two years. Per her employment
contract, she was to serve her employer, Fahad, on the other hand, Fajads
information sheet provides that there are two adults and three children living
in his household and that no disabled or sick person is to be put under
Olartes care. Respondent Nahas interviewed complainant and in all
probability furnished her the entire requisites for her deployment. Nahas
represented to be the owner of and was connected with both PETRA and
Royal Dream to facilitate her deployment. In fact complainant was
successfully deployed by Royal Dream as represented to by Nahas.
Upon arriving in Fahads home, Olarte was surprised that there were four
children with one suffering from serious disability. This notwithstanding,
Olarte served Fahads family diligently. However, she was not paid her
salaries. It was only in December 1999 that she was given US$200.00 which
was the only pay she received for the whole duration that she worked for
Fahad.

In the succeeding months, Olarte had to be operated on due to water

retention in her leg bones. She was later diagnosed to be suffering from
ostro-arthritis. Because of her condition, Olarte requested Fahad to just allow
her go home to the Philippines. But her pleas fell on deaf ears. At that point,
Fahad was already frequently maltreating her since she could no longer
accomplish all the household chores due to her illness.
Olarte was able to escape from the abusive hands of his employer thereafter
sought refuge at the Philippine Embassy. Several months after her return to
the Philippines, Olarte filed a Complaint for illegal dismissal, damages,
attorneys fees and refund of placement fees against her foreign employer
Fahad and Nahas/PETRA/Royal Dream.
The Labor Arbiter ruled that PETRA/Royal Dream/Nahas failed to discharge
the burden of proving that Olartes termination and repatriation were for just
cause; and also rejected their claim against liability after giving weight to the
fact that Nahas admitted to have interviewed Olarte but failed to
substantiate the claim that the latter withdrew her application.

The NLRC denied her appeal because Nahas recanted her earlier admission
that Olarte went to PETRA as a walk-in applicant, claiming that the same was
a mistake. Also, the fact that complainant was deployed thru the intercession
of Nahas with the aid of both respondent agencies, recognized of the
formers authority.
CA found nothing capricious or whimsical with the NLRCs finding and thus
affirm Nahas liability.
Issue: Whether or not Nahas act of recanting her earlier admission is
admissible
Ruling: No.
Well-settled is the rule that the Court is not a trier of facts and this doctrine
applies with greater force in labor cases. Questions of fact are for the labor
tribunals to resolve. Only errors of law are generally reviewed in petitions for
review on certiorari criticizing decisions of the CA." Also "settled is the rule
that the findings of the Labor Arbiter, when affirmed by the NLRC and the CA,

are binding on the Supreme Court, unless patently erroneous." In this case,
the Labor Arbiter, the NLRC, and the CA are one in their factual conclusion
that Nahas, acting for and in behalf of PETRA and Royal Dream, interviewed
Olarte, caused her to sign an employment contract, and facilitated and made
possible her deployment abroad. The Court is, therefore, not duty-bound to
inquire into the accuracy of this factual finding, particularly in this case
where there is no showing that it was arbitrary and bereft of any rational
basis.
Before the Labor Arbiter, she admitted that Olarte indeed applied with PETRA
and was interviewed by her. However, in her Memorandum of Appeal with
the NLRC, Nahas repudiated her earlier admission and averred that Olarte
did not at all apply with PETRA. While still maintaining that she interviewed
Olarte, she now claimed to have done so when she was still connected with
Royal Dream as a mere employee. It is quite obvious that Nahas started
singing a different song, so to speak, after the Labor Arbiter did not buy her
claim that Olarte withdrew her application with PETRA due to her utter failure
to support the same.
Clearly, Nahas vacillating from one story to another and not being able to
support them is nothing but a mere ruse to evade the lawful claims of Olarte.
This cannot be tolerated. It has been held that "a party will not be allowed to
make a mockery of justice by taking inconsistent positions which, if allowed,
would result in brazen deception." Inconsistent and unsupported as they are,
the labor tribunals and the CA correctly rejected the contentions of Nahas.

Topic: Illegal Recruitment in Large Scale

Ponente: Justice Teresita J. Leonardo-De Castro
People v. Daud, G.R. No. 197539, June 2, 2014

Facts: Angelita I. Daud (Daud), Hanelita M. Gallemit (Hanelita) and

appellant Roderick Gallemit were charged before the RTC with illegal
recruitment in large scale. Only appellant was apprehended, while his coaccused Daud and Hanelita eluded arrest and remained at large.
The prosecution offered as evidence the Philippine Overseas Employment
Administration (POEA) Certification stating that Green Pasture Worldwide
Tour and Consultancy, was set up and operated by appellant and his coaccused, was not licensed to recruit workers for overseas employment.
Of all the private complainants, only De Guzman, Decena, and Poserio
testified against Gallemit. All three complainants positively identified
appellant in court.
The presentation of a POEA representative was dispensed with after the
defense admitted the due execution and genuineness of the POEA
Certification.
Evidence for the defense consisted solely of appellants testimony. He denied
owning the agency, undertaking any recruitment act or receiving any
amount from the complainants considering that his name did not appear in
the receipts. He admitted that he is married to co-accused Hanelita and that
co-accused Daud, his mother-in-law. He knew private complainants De
Guzman and Poserio are Dauds business partner and applicant for a job
abroad respectively. He also claimed that he was not employed since they
were applying for a job abroad.
He was aware that Daud was a recruiter and owned an agency named Green
Pasture Worldwide Travel and Tours which she operated in the same
apartment. He claimed that Daud has only one employee, a certain Badjong,
who processed documents. At first he did not apply with Daud because her
business was still new. He applied with her when she convinced him that she
could process his passport and papers to Korea. He denied he was present
when the complainants gave their payments to Daud. He insisted that he
was not involved with Dauds business and that he was always out of the
house as he would often go to Cavite to ask for financial help from his
siblings.
RTC rendered its Decision dated January 15, 2007 finding appellant guilty of
Illegal Recruitment in Large Scale and Estafa on three counts.
CA affirmed appellants conviction by the RTC, but modified the
indeterminate penalties imposed on appellant for the three counts of estafa.

Issue: Whether or not Roderick Gallemit committed large-scale illegal

recruitment and estafa
Ruling: Yes.
Article 13(b) of the Labor Code defines recruitment and placement as
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers; and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not. In
the simplest terms, illegal recruitment is committed by persons who, without
authority from the government, give the impression that they have the
power to send workers abroad for employment purposes.
Section 6 of Republic Act No. 8042 defined illegal recruitment as follows:
SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines: Provided, That any such non-licensee or
non-holder who, in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so engaged. It shall likewise
include the following acts, whether committed by any person, whether a nonlicensee,
non-holder,
licensee
or
holder
of
authority:
x

(m) Failure to reimburse expenses incurred by the worker in connection with

his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the workers
fault. Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if committed against three
(3) or more persons individually or as a group.
To constitute illegal recruitment in large scale, three elements must concur:
(a) the offender has no valid license or authority required by law to enable
him to lawfully engage in recruitment and placement of workers; (b) the
offender undertakes any of the activities within the meaning of recruitment
and placement under Article 13(b) of the Labor Code, or any of the
prohibited practices enumerated under Article 34 of the said Code (now

Section 6 of Republic Act No. 8042); and (c) the offender committed the
same against three or more persons, individually or as a group.

The three elements are present in the case.

First, neither the agency Green Pastures World Wide Tours and
Consultancy nor appellant himself had a valid license or authority to engage
in the recruitment and placement of workers. This was established by the
POEA certification stating that the said agency located in that apartment was
not licensed to recruit employees for abroad. A license is a document issued
by the Department of Labor and Employment (DOLE) authorizing a person or
entity to operate a private employment agency, while an authority is a
document issued by the DOLE authorizing a person or association to engage
in recruitment and placement activities as a private recruitment entity. It is
the lack of the necessary license or authority that renders the recruitment
activity, as in this case, unlawful or criminal.
Second, despite not having such authority, appellant, along with his coaccused, nevertheless engaged in recruitment activities, offering and
promising jobs to private complainants and collecting from them various
amounts as placement fees. This is substantiated by the respective
testimonies of the three private complainants who fell victim to their illegal
activities.
Lastly, the testimonies of the complainants on the matter are affirmative in
nature and sufficiently corroborative of each other to be less than credible. It
would be contrary to human nature and experience for several persons to
conspire and accuse appellant of a crime and send him to prison just to
appease their feeling of rejection and vindicate the frustration of their
dreams to work abroad if all he did was just to reside in the same apartment
where Daud operated her recruitment agency. It is in this light that. The
Court found inconsistencies that accused-appellant harp on in the
testimonies of the complainants to be inconsequential. What is important is
that they have positively identified accused-appellant as one of those who
enticed them to part with their money in exchange for promised jobs abroad.
The crime of illegal recruitment, according to the Supreme Court is
committed when, among other things, a person, who without being duly
authorized according to law, represents or gives the distinct impression that
he or she has the power or the ability to provide work abroad convincing
those to whom the representation is made or to whom the impression is
given to thereupon part with their money in order to be assured of that
employment. Contrary to appellants mistaken notion, it is not the issuance
or signing of receipts for the placement fees that makes a case for illegal
recruitment, but rather the undertaking of recruitment activities without the
necessary license or authority. The absence of receipts to evidence payment

is not necessarily fatal to the prosecutions cause. A person charged with

the illegal recruitment may be convicted on the strength of the testimony of
the complainants, if found to be credible and convincing.
When there is conspiracy, the act of one is the act of all. It is not essential
that there be actual proof that all the conspirators took a direct part in every
act. It is sufficient that they acted in concert pursuant to the same objective.

It is settled that a person may be charged and convicted separately of illegal

recruitment under Republic Act No. 8042, in relation to the Labor Code, and
estafa under Article 315, paragraph 2(a) of the Revised Penal Code. As
explained in People v. Cortez and Yabut:
In this jurisdiction, it is settled that a person who commits illegal recruitment
may be charged and convicted separately of illegal recruitment under the
Labor Code and estafa under par. 2(a) of Art. 315 of the Revised Penal Code.
The offense of illegal recruitment is malum prohibitum where the criminal
intent of the accused is not necessary for conviction, while estafa
is malum in se where the criminal intent of the accused is crucial for
conviction. Conviction for offenses under the Labor Code does not bar
conviction for offenses punishable by other laws. Conversely, conviction for
estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a
conviction for illegal recruitment under the Labor Code. It follows that ones
acquittal of the crime of estafa will not necessarily result in his acquittal of
the crime of illegal recruitment in large scale, and vice versa.

Topic: Rule against the execution of a penalty of removal pending

appeal to CSC
Ponente: Chief Justice Maria Lourder P.A. Sereno
Edilberto Barcelona v. Dan Joel Lim and Richard Tan, G.R. No.
189171, June 3, 2014
Facts: Respondent, the owner of Top Gun Billiards, filed a sworn statement
with the National Bureau of Investigation. Lim claimed that his employees
were influenced by petitioner, then an NLRC officer, to file a labor complaint
against. Petitioner allegedly demanded P 20,000 for the settlement of the
labor case filed against Lim. The NBI organized an entrapment operation
against petitioner.
Petitioner was arrested by the NBI right when he was about to put the
marked money in his bag. After being duly informed of his constitutional
rights, petitioner was brought to the NBI office where he was booked,
photographed, and fingerprinted. Thereafter, he underwent ultraviolet light
examination which confirmed his fingerprints on the money.
The NBI Director recommended the prosecution of petitioner for robbery
under Article 293 of the Revised Penal Code and violation of Republic Act No.
3019 or the Anti-Graft and Corrupt Practices Act. The NBI filed the Complaint.
Finding probable cause, the City Prosecutor filed with the Regional Trial Court
against petitioner for the crime of robbery. It was further discovered that
while the inquest papers were being prepared by the NBI, Richard Tan, owner
of Tai Hing Glass Supply, had filed a similar extortion Complaint against
petitioner.
Reports of the circumstances leading to the arrest and filing of the
Complaints against petitioner were submitted by Tan and Lim to Chairperson
Seeres. Finding a prima facie case against petitioner, Chairperson Seeres
issued an administrative order, formally charging him with dishonesty and
grave misconduct. The order created a panel (the Board) to look into the
present case; require petitioner to file an answer to the charges; conduct an
investigation; and thereafter submit its report/recommendation. The Order

also placed petitioner under a 90-day preventive suspension upon receipt

thereof.
The Board issued summons directing petitioner to answer the charges
against him. Both the order and the summons were served on him, but he
refused to receive them. He never filed an answer. Lim, Tan, and the NBI
agents involved in the entrapment operations appeared at the preliminary
investigation conducted by the in order to confirm their accusations against
petitioner.
The Board conducted a hearing attended by petitioner with three of his
lawyers. He manifested therein that he was not subjecting himself to its
jurisdiction. Thus, he left without receiving copies of the Order and other
documents pertinent to the case.

The Board resolved the administrative case ex parte. It found him guilty of
dishonesty and grave misconduct. Upon approval of this recommendation by
NLRC Chairperson Seeres, petitioner was dismissed from service.
Petitioner appealed to the CSC. In his Appeal Memorandum, he presented his
side of the story. Six years after petitioner had filed his Appeal Memorandum,
the CSC dismissed it. Petitioner filed a Petition for Review before the CA, but
it was dismissed. A Motion for Reconsideration with Motion for Voluntary
Inhibition of Justice Veloso was then filed by petitioner. CA denied the motion
for reconsideration but Justice Veloso still signed the herein questioned
Resolution to signify his concurrence.
Issue: Whether the NLRC violated the Civil Service Rules provision, which
allows the execution of a penalty of removal decreed by a bureau or office
head, pending appeal thereof to the CSC, only when the penalty has been
confirmed by the Secretary of the department concerned
Ruling: No.
On 7 February 2007, the CSC issued Resolution No. 07-0244, which amended
the aforementioned provision of the Civil Service Rules:
Section 43. Filing of Appeals:
Decisions of heads of department, agencies, provinces, cities, municipalities
and other instrumentalities imposing a penalty exceeding thirty (30)days
suspension or fine in an amount exceeding thirty days salary, may be

appealed to the Commission Proper within a period of fifteen (15) days from
receipt thereof.
In case the decision rendered by a bureau or office head is appealable to the
Commission, the same may be initially appealed to the department head and
finally to the Commission Proper. Pending appeal, the same shall be
executory except where the penalty is removal, in which case the same shall
be executory only after confirmation by the Secretary concerned.
Unless otherwise provided by law, the decision of the head of an attached
agency imposing a penalty exceeding thirty (30) days suspension or fine in
an amount exceeding thirty days' salary, demotion in rank or salary or
transfer, removal or dismissal from office is appealable directly to the
Commission Proper within a period of fifteen (15) days from receipt thereof.
Pending appeal, the penalty imposed shall be executory, including the
penalty of removal from the service without need for the confirmation by the
department secretary to which the agency is attached.
A notice of appeal including the appeal memorandum shall be filed with the
appellate authority, copy furnished the disciplining office. The later shall
submit the records of the case, which shall be systematically and
chronologically arranged, paged and securely bound to prevent loss, with its
comment, within fifteen (15) days, to the appellate authority.
It appears that Section 43 of the Civil Service Rules is self-contradicting.
While the second paragraph provides that a penalty of removal "shall be
executory only after confirmation by the Secretary concerned," the third
paragraph states: "Pending appeal, the penalty imposed shall be executory,
including the penalty of removal from the service without need for the
confirmation by the department secretary to which the agency is attached.
Resolution No. 07-0244 became effective 15 days after 21 March 2007, the
day it was published, or a few months before the CSC denied petitioners
Motion for Reconsideration. This Court cannot declare that the amendment of
the Civil Service Rules while the case of petitioner was pending proves the
lack of impartiality on the CSCs part as petitioner claims. However, it can
and does now declare that the CSC had no right to retroactively apply the
amended provision to petitioners case.
Laws shall have no retroactive effect, unless the contrary is provided. When
petitioner was dismissed, the old Section 43 of the Civil Service Rules was

still in effect. The aforecited provision clearly states that the penalty of
removal is not executory, pending appeal, unless the penalty is confirmed by
Secretary of the Department where the dismissed employee works.
The Court is convinced that petitioner was never actually barred from
returning to work after the 90-day period lapsed. The records disclose that he
made no attempt to return to work after the expiration of the suspension
period. Thus, he was never prevented from returning to workhe just chose
not to go back.
The moment the preventive suspension expired, petitioner was automatically
reinstated in the service. This rule is clear in Section 20 of the Civil Service
Rules, which reads thus:
SECTION 20. Duration of Preventive Suspension. When the
administrative case against an officer or employee under preventive
suspension is not finally decided by the disciplining authority within the
period of ninety (90) days after the date of his preventive suspension, unless
otherwise provided by special law, he shall be automatically reinstated in the
service; provided that, when the delay in the disposition of the case is due to
the fault, negligence or petition of the respondent, the period of delay should
not be included in the counting of the 90 calendar days period of preventive
suspension. Provided further that should the respondent be on
Maternity/Paternity leave, said preventive suspension shall be deferred or
interrupted until such time that said leave has been fully enjoyed.
Petitioner refused to receive the Order dated 1 September 2001
implementing his 90-day preventive suspension. He was allowed to go to
work until 27 September 2000the day he was supposedly barred from
entering the office. Thus, his actual suspension from work began on the
latter date and expired 90 days thereafter, specifically on 25 December
2000.
By virtue of Section 20 of the Civil Service Rules, petitioner was
automatically reinstated on 26 December 2000the day after the preventive
suspension period expired. Since he never attempted to resume the
performance of his duties after the expiration of the preventive suspension,
he cannot now claim that the penalty of removal was executed, pending his
appeal to the CSC, without the confirmation of the Secretary of Labor. Had it
been shown that he was prevented from returning to his post after the
expiration of the legally sanctioned preventive suspension, he would have

been entitled to the payment of his back salaries from the moment the
suspension expired up to the time his dismissal would have been
implemented.
He has never rendered any service to government that would authorize him
to collect backwages is beyond cavil. He was never prevented from returning
to work after his suspension, thus he is not entitled to any back salary.
The preventive suspension of civil service employees charged with
dishonesty, oppression or grave misconduct, or neglect of duty is authorized
by the Civil Service Law. It cannot, therefore, be considered "unjustified,"
even if later the charges are dismissed so as to justify the payment of
salaries to the employee concerned. It is one of those sacrifices which
holding a public office requires for the public good. For this reason, it is
limited to ninety (90) days unless the delay in the conclusion of the
investigation is due to the employee concerned. After that period, even if the
investigation is not finished, the law provides that the employee shall be
automatically reinstated.

Topic: Seeking disability and other benefits

Ponente: Justice Jose Catral Mendoza
APQ Shipmanagement vs. Caseas, G.R. No. 197303, June 4, 2014
Facts:
Casenas was hired by APQ, acting for and in behalf of its principal, Crew
Management, as Chief Mate for vessel MV Perseverance for a period of eight
(8) months starting from June 16, 2004 to February 16, 2005.
Casenas alleged that on June 16, 2004, he left Manila to join his assigned
vessel in Miami, Florida, USA, though the vessel could not leave the Florida
port because of its incomplete documents for operation. Consequently, he
was transferred to another vessel, MV HAITIEN PRIDE, which was in Haiti,
although again because of incomplete documents, the vessel could not leave
the port and remained at Cap Haitien. Their salaries were not given and they
suffered extreme anxiety.
He further alleged that his employment contract was extended by APQ from
the original eight (8) months to twenty-six (26) months and the vessel
eventually left for Bahamas; that he felt he became weaker and got tired
easily; that despite his unpaid wages and weakened condition, he performed
his duties as Chief Mate diligently.
In August 2006, he began to suffer shortness of breath, headache and chest
pains. He was then brought to the Grand Bahamas Health Services and was
diagnosed with hypertension and was given medicines. He was then
repatriated due to his condition and he arrived in the Philippines on August
30, 2006.
Caseas immediately reported to APQ for the required post-employment
medical examination upon his return to the Philippines. He was referred to
the company-designated physician, who diagnosed him to be suffering from
Ischemic Heart Disease, which was a manifestation of organ damage.
Caseas likewise consulted two (2) other physicians who certified him to be
suffering from Essential Hypertension aside from Ischemic Heart Disease.
From the time of Caseas diagnosis by the company-designated physician,
he was under the state of temporary total disability, which lasted for at least
120 days as provided by law.
APQ refused to provide him further medical attention, thus, he incurred
medical expenses in the amount of 6,390.00 by November 2006. He
demanded payment of permanent total disability benefits, sickness
allowance and medical expenses to which he was entitled under the POEA
Standard Employment Contract (POEA-SEC), but APQ refused to pay. He,

together with other crew members, sent a series of letters and e-mails to the
representatives of the ship owners regarding their unpaid wages, but despite
efforts, APQ still refused to pay their salaries; that demands for payment
were also made to the president of APQ, but the same were refused; and that
ultimately, he was compelled to seek redress and filed a complaint for
permanent total disability benefits, reimbursement of medical expenses,
sickness allowance, non-payment of salaries representing the extended
portion of the employment contract, damages, and attorney's fees.
APQ denied the allegations of the respondent. It claimed that he refused to
return in the Philippines and extended its contract which the petitioner did
not consent. Also, he suffered the illness after the 8-months contract.
Labor Arbiter (LA) rendered the Decision dismissing Caseas' complaint.
NLRC resolved the appeal by reversing and setting aside the LA decision.
Caseas moved for reconsideration, but the NLRC denied his motion.
Caseas filed a petition for certiorari under Rule 65 before the CA. The CA
granted the petition and nullified and set aside the questioned NLRC decision
and resolution. Hence this petition.

Issue: Whether or not the employment contract of Caseas was extended

with the consent of APQ/Crew Management, thus he is entitled to disability
benefits

Ruling: Yes.
Employment contracts of seafarers on board foreign ocean-going vessels are
not ordinary contracts. They are regulated and an imprimatur by the State is
necessary. While the seafarer and his employer are governed by their mutual
agreement, the POEA Rules and Regulations require that the POEA-SEC be
integrated in every seafarers contract.15 In this case, there is no dispute
that Caseas employment contract was duly approved by the POEA and that
it incorporated the provisions of the POEA-SEC.
As to his claim for medical and other benefits, there is no dispute that the
symptoms of Caseas illness began to manifest during the term of his
employment contract. The fact that the manifestations of the illness only
came about in August 2006 will not bar a conclusion that he contracted the
ailment while the contract was subsisting. The overall state and condition
that he was exposed to over time was the very cause of his illness. Thus, the
CA was correct in reinstating the NLRC resolution awarding sickness
allowance as well as disability benefits in favor of Caseas.

Topic: Cancellation of Union Registration

Ponente: Justice Diosdado M. Mendoza
Takata vs. Bureau of Labor Relations, G.R. No. 196276, June 4, 2014

Facts:
The Petitioner Takata Corporation Philippines filed with the Department of
Labor and Employment (DOLE) Regional Office a Petition3 for Cancellation of
the
Certificate
of
Union
Registration
of
Respondent
SamahangLakasManggagawangTakata (SALAMA1) on the groundthat the
latter is guilty of misrepresentation, false statement and fraud with respect
to the number of those who participated in the organizational meeting, the
adoption and ratification of its Constitution and By-Laws, and in the election
of its officers. It contended that the said respondent did not met the 20%
requirement, and had only 17%.
Respondent denied the charge and claimed that the 119 union members
were more than the 20% requirement for union registration. The document
"Sama-SamangPahayagngPagsapisaUnyon" which it presented in its petition
for certification election supported their claim of 119 members. Respondent
also contended that petitioner was estopped from assailing its legal
personality as it agreed to a certification election and actively participated in
the pre-election conference of the certification election proceedings.
Respondent argued that the union members were informed of the contents
of the documents they signed and that the 68 attendees to the
organizational meeting constituted more than 50% of the total union
membership, hence, a quorumexisted for the conduct of the said meeting.
DOLE Regional Director, Atty. Ricardo S. Martinez, Sr., issued a Decision
granting the petition for cancellation of respondent's certificate of
registration.
Dissatisfied, respondent, through BukluranngManggagawang Pilipino (BMP)
Paralegal Officer, Domingo P. Mole, filed a Notice and Memorandum of Appeal

with the Bureau of Labor Relations (BLR). The appeal was granted and the
decision of the Regional Director was reversed and set aside.
Petitioner filed a motion for reconsideration, which was denied by the BLR.
Petitioner went to the CA via a petition for certiorari under Rule 65. The CA
rendered its assailed decision which denied the petition and affirmed the
decision of the BLR. Petitioner's motionfor reconsideration was denied. Hence
this petition.
Issue: Whether or not the registration of the union should be cancelled.

Ruling: No
The bare fact that two signatures appeared twice on the list of those who
participated in the organizational meeting would not, to our mind, provide a
valid reason to cancel respondents certificate of registration. The
cancellation of a unions registration doubtless has an impairing dimension
on the right of labor to self-organization. For fraud and misrepresentation to
be grounds for cancellation of union registration under the Labor Code, the
nature of the fraud and misrepresentation must be grave and compelling
enough to vitiate the consent of a majority of union members.
In this case, we agree with the BLR and the CA that respondent could not
have possibly committed misrepresentation, fraud, or false statements. The
alleged failure of respondent to indicate with mathematical precision the
total number of employees in the bargaining unit is of no moment, especially
as it was able to comply with the 20% minimum membership requirement.
Even if the total number of rank-and-file employees of petitioner is 528,
while respondent declared that it should only be 455, it still cannot be denied
that the latter would have more than complied with the registration
requirement.

Topic: Liability based on fraudulent scheme or arrangement, or

reprocessing; Liability based on Contract Substitution
Ponente: Brion, J.
Princess Joy Placement and General Services, Inc. v. German Binalla,
G.R. No. 197005, June 4, 2014
Facts: Binalla, a registered nurse, alleged that in April 2002, he applied for
employment with Princess Joy who referred him to Reginaldo Paguio and
Cynthia Latea for processing of his papers. After completing his documentary
requirements, he was told that he would be deployed to Al Adwani. On April
12, 2002, he signed a four-year contract with Al Adwani as staff nurse.
Binalla further alleged that on the day of his departure, Paguio met him at
the airport and gave him a copy of his employment contract, plane ticket,
passport, a copy of his Overseas Employment Certificate from the Philippine
Overseas Employment Administration (POEA) and other documents. It was
only after boarding his Saudi Arabia Airlines plane that he examined his
papers and discovered that CBM was his deploying agency. Under the
contract certified by the POEA, his salary was supposed to be US$550.00 for
twenty-four (24) months or for two years.
Binalla also saw that under the four-year contract he signed, his monthly
salary was only 1,500 Saudi Riyals (SR) equivalent to $400. Left with no
choice as he was then already bound for Saudi Arabia, he worked under his
contract for only two years and returned to the Philippines.

Upon his return to the Philippines, Binalla verified his employment contract
with the POEA. He learned that the POEA indeed certified a different contract
for him, with CBM as his recruiting or deploying agency. He disowned the
contract, claiming that his supposed signature appearing in the document
was a forgery. Out of frustration, he opted not to return to Saudi Arabia to
complete his four-year contract.
On August 9, 2004, respondent German A. Binalla filed a complaint against
local manning agent CBM Business Management and Manpower Services
(CBM)and/or Princess Joy/Al Adwani General Hospital (Al Adwani) for various
money claims arising from his employment with Al Adwani, in Taif, Saudi
Arabia.
Issue: Is Princess Joy liable under the complaint?

Ruling: Yes.
After an examination of the facts, substantial evidence showied that Binalla
was employed by Al Adwani in Saudi Arabia through a fraudulent scheme or
arrangement, called "reprocessing" or otherwise, participated in by Princess
Joy and CBM, as well as by Paguio and Lateo (who worked on the processing
and documentation of Binallas deployment papers to Al Adwani). Although
the scheme enabled Binalla to be employed overseas, his two-year
employment was marred from the start by violations of the law on overseas
employment.
First. Binalla was a victim of contract substitution. Under Article 34 (i) of the
Labor Code on prohibited practices, "it shall be unlawful for any individual,
entity, licensee, or holder of authority to substitute or alter employment
contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties up to and
including the periods of expiration of the same without the approval of the
Secretary of Labor." Further, contract substitution constitutes "illegal
recruitment" under Article 38 (I) of the Code.

Under the circumstances, Princess Joy is as liable as CBM and Al Adwani for
the contract substitution, no matter how it tries to avoid liability by
disclaiming any participation in the recruitment and deployment of Binalla to
Al Adwani. Before the laborarbiter, Princess Joy claimed that Paguio and
Lateowerenot its employees/representatives or that the principal piece of
evidence relied upon by the labor arbiter, the "ticket/telegram/advise
(sic)" handed to BinallabyPaguio had no probative value as it was merely an
unsigned and unauthenticated printout or that the four-year employment
contract was signed only by Binalla and there was no showing that it was the
contract implemented by Al Adwani.
In the instant case, however, it was fortunate that the complainant was able
to hold onto the ticket telegram/advise handed to him by Reginaldo Paguio.
Clearly shown thereat, it carried the names "PRINCESS JOY" and "REGIE." It
would not be an unreasonable presumption that indeed Princess Joy recruited
complainant and that the latter had been transacting with Reginaldo Paguio.
Second. The substitution of Binallas contract imposed upon him terms and
conditions of employment inferior to those provided in the POEA certified
contract, especially in relation to his monthly salary and the term of his
contract. This should be rectified. There were also Binallas claims of nonpayment or withholding of contractual employee benefits by Al Adwani and
imposition of unreasonable financial burden or obligations in the course of
his two-year employment. These claims, it bears stressing, had not been
disproved by Princess Joy, CBM or Al Adwani. The claims should be satisfied.

Topic: Constructive DIsmissal

Ponente: Peralta, J.
MCMER Corporation, Inc. et al v. NLRC, G.R. No. 193421, June 4,
2014
Facts: Private respondent was employed by petitioner McMer Corporation,
Inc. on August 5, 1999 as Legal Assistant and was eventually promoted as

Head of Legal Department, and concurrently, as Officer-in-Charge of

petitioner McMer' s Legal and Administrative Department.
According to private respondent, for quite some time, he and petitioners,
specifically Macario D. Roque, Jr. and Cecilia R. Alvestir,McMers General
Manager and President, respectively, have been on a cold war brought often
by the disagreement in the design and implementation of company policies
and procedures.However, the subsisting rift between him and petitioners
heightened on July 10, 2007 when petitioner McMer started verbally and
maliciously imputing against Ms. Ginalita C. Guiao, Department Head III,
Logistics Department, and another officer of the Logistics Departmentcertain
unfounded score of inefficient performance of duty.
At around noon on July 20, 2007, petitioner Roque gave an immediate
summon upon private respondent to proceed to his office to discuss
administrative matters, including but not limited to the alleged absence and
tardiness of private respondent.
Private respondent, sensing some unusual development in the attitude of
petitioner Roque, instead of responding to the summon, he then requested
for petitioner Alvestir to go to petitioner Roques office instead, of which
petitioner Alvestir conceded. Moments later, petitioner Roque, at the height
of anger, confronted private respondent and commanded him to proceed to
his office. At this juncture, private respondent was too scared to confront
Roque as the latter may inflict physical harm on him.
As a consequence of the foregoing, private respondent elected to
discontinue work that afternoon and immediately proceeded to the
Valenzuela Police Headquarters to report on the incident in the police blotter.
Private respondent did not report for work from July 21, 2007 up to July 30,
2007. Because of this, petitioner McMer, through petitioner Alvestir, issued a
Memorandum dated July 30, 2007 directing private respondent to explain
within five (5) days why no disciplinary action should be imposed upon him
for being in absence without official leave (AWOL).
On August 6, 2007, private respondent Feliciano C. Libunao, Jr. filed a
complaint for unfair labor practices, constructive illegal dismissal,
nonpayment of 13th month pay and separation pay, moral and exemplary
damages, as well as attorneys fees, against petitioners McMer Corporation,
Inc., Roque, and Alvestir.

Issue: Was there a constructive dismissal?

Ruling: Yes.
The test of constructive dismissal is whether a reasonable person in the
employees position would have felt compelled to give up his position under
the circumstances. It is an act amounting to dismissal but made to appear as
if it were not. Constructive dismissal is, therefore, a dismissal in disguise. As
such, the law recognizes and resolves this situation in favor of employees in
order to protect their rights and interests from the coercive acts of the
employer. In fact, the employee who is constructively dismissed may be
allowed to keep on coming to work.
After a careful consideration of the evidence and records at hand, it is clear
that there was constructive dismissal because of the following acts
committed by petitioners against private respondent, to wit:
1. About noon of July 20, 2007, petitioner Roque went to private
respondents office at the height of his anger with threat to inflict
physical harm, shouted a command for private respondent to proceed
to petitioners office;
2. Private respondent was approached sarcastically with commanding
voice by petitioner Roque even in front of some officers and rank-and
file employees and newly-hired employees; and
3. Private respondents professional ethic or moral belief was
compromised due to certain business practices of petitioner McMer
that were never exposed due to the employees fear of reprisal, as
shown in private respondents Position Paper.
The sworn statement of Guiao is not only relevant and material evidence, the
same is likewise reliable and competent given that Guiao was physically
present at petitioner Alvestirs office when the incident happened, and has
therefore personal knowledge of what transpired therein. Further, we find her
description of petitioner Roques disposition adequate to support a
conclusion that private respondent was caught in the state of humiliation and
embarrassment in the presence of his co-employees as a result thereof.

Topic: Labor-only Contractor; Employer-employee Relationship

Ponente: Del Castillo, J.
Avelino Alilin et al v. Petron Corporation, G.R. No. 177592, June 9,
2014
Facts: Petron is a domestic corporation engaged in the oil business. It owns
several bulk plants in the country for receiving, storing and distributing its
petroleum products.
In 1968, Romualdo D. Gindang Contractor, which was owned and operated
by Romualdo D. Gindang, started recruiting laborers for fielding to Petrons
Mandaue Bulk Plant. When Romualdo died in1989, his son Romeo D.
Gindang, through Romeo D. Gindang Services(RDG), took over the business
and continued to provide manpower services to Petron. Petitioners were
among those recruited by Romualdo D. Gindang Contractor and RDG to work
in the premises of the said bulk plant.
On June 1, 2000, Petron and RDG entered into a Contract for Services for the
period from June 1, 2000 to May 31, 2002, whereby RDG undertook to
provide Petron with janitorial, maintenance, tanker receiving, packaging and
other utility services in its Mandaue Bulk Plant. This contract was extended
on July 31, 2002 and further extended until September 30, 2002. Upon
expiration thereof, no further renewal of the service contract was done.
Alleging that they were barred fromcontinuing their services on October 16,
2002, petitioners Alilin, Calesa, Hindang, Gindang, Sungahid, Lee, Morato
and Gabilan filed a Complaint for illegal dismissal, underpayment of wages,
damages and attorneys fees against Petron and RDG.
Petitioners did not deny that RDG hired them and paid their salaries. They,
however, claimed that the latter is a labor-only contractor, which merely
acted as an agent of Petron, their true employer. They asseverated that their
jobs, which are directly related to Petrons business, entailed them to work
inside the premises of Petron using the required equipment and tools
furnished by it and that they were subject to Petrons supervision. Claiming

to be regular employees, petitioners thus asserted that their dismissal

allegedly in view of the expiration of the service contract between Petron and
RDG is illegal.
Petron, on the other hand, maintained that RDG is an independent contractor
and the real employer of the petitioners.
Hence, this petition.
Issue: Is RDG a labor only contractor?
Ruling: Yes.

Permissible job contracting or subcontracting refers to an arrangement

whereby a principal agrees to farm out with a contractor or subcontractor the
performance of a specific job, work, or service within a definite or
predetermined period, regardless of whether such job, work or, service is to
be performed or completed within or outside the premises of the principal.
Labor-only contracting, on the other hand, is a prohibited act, defined as
"supplying workers to an employer who does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises,
among others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal business of
such employer."
In distinguishing between prohibited labor-only contracting and permissible
job contracting, the totality of the facts and the surrounding circumstances of
the case shall be considered. Generally, the contractor is presumed to be a
labor-only contractor, unless such contractor overcomes the burden of
proving that it has the substantial capital, investment, tools and the like.
However, where the principal is the one claiming that the contractor is a
legitimate contractor, as in the present case, said principal has the burden of
proving that supposed status.
Petron failed to discharge the burden of proving that RDG is a legitimate
contractor. Hence, the presumption that RDG is a labor-only contractor
stands.
Petrons power of control over petitioners exists in this case.
"[A] finding that a contractor is a labor-only contractor is equivalent to
declaring that there is an employer-employee relationship between the
principal and the employees of the supposed contractor."

It was held in Orozco v. The Fifth Division of the Hon. Court of

Appeals that:This Court has constantly adhered to the "four-fold test" to
determine whether there exists an employer-employee relationship between
the parties. The four elements of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the power to control the employees conduct.
Hence, the facts that petitioners were hired by Romeo or his father and that
their salaries were paid by them do not detract from the conclusion that
there exists an employer-employee relationship between the parties due to
Petrons power of control over the petitioners. One manifestation of the
power of control is the power to transfer employees from one work
assignment to another. Here, Petron could order petitioners to do work
outside of their regular "maintenance/utility" job.
In sum, the Court finds that RDG is a labor-only contractor. As such, it is
considered merely as an agent of Petron. Consequently, the employeremployee relationship which the Court finds to exist in this case is between
petitioners as employees and Petron as their employer. Petron therefore,
being the principal employer and RDG, being the labor-only contractor, are
solidarily liable for petitioners' illegal dismissal and monetary claims.

Topic: Regular Employee; Illegal Dismissal

Ponente: Mendoza, J.
Dionarto Noblejas v. Italian Maritime Academy Phils, Inc. et al, G.R.
No. 207888, June 9, 2014
Facts: Petitioner Dionarto Q. Noblejasfiled a complaint for illegal dismissal,
tax refund, moral and exemplary damages, non-payment of 13th month pay,
food, gasoline and schooling allowances, health insurance, monetized leave,
and attorney's fees, against Italian Maritime Academy Phils., Inc. (IMAPI),
Capt. Nicolo S. Terrei (Capt. Terrei), Raceli S. Ferrez (Ferrez), and Ma. Teresa
R. Mendoza (Mendoza).
IMAPI was a training center for seamen and an assessment center for
determination of the qualifications and competency of seamen and officers
for possible promotion. Capt. Terrei was the Managing Director of IMAPI while
Ferrez was his secretary. Mendoza was the companys Administrative
Manager.
Record shows that Procerfina SA. Terrei, IMAPI President, wrote a Letter to
Noblejas informing him that he had been appointed as training
instructor/assessor of the company on a contractual basis for a period of
three (3) months effective May 20,2009. After the expiration of the 3-month

period, IMAPI hired Noblejas anew as training instructor/assessor with the

same salary rate, but no written contract was drawn for his rehiring.
The absence of a written contract to cover the renewal of his employment
became Noblejas major concern. To address all his apprehensions, he wrote
Capt. Terrei a letter, dated March 9, 2010, requesting that a new contract be
executed to reflect the following provisions that they had allegedly agreed
upon during their conversation on May 19, 2009.
Noblejas averred that the company did not act on his letter-request, so he
sought an audience with Capt. Terrei on March 16, 2010. During the meeting,
an altercation between them ensued. He claimed that after that incident,
Capt. Terrei instructed Ferrez to dismiss him from employment.
In their position paper, respondents submitted that they could not be
adjudged guilty of illegal dismissal because there was no positive and overt
act of dismissing Noblejas from employment.
Issues: Whether or not petitioner is a regular employee
Whether or not petitioner was illegally dismissed

Ruling: The Court finds Noblejas to be a regular employee of IMAPI.

Pursuant to Article 280 of the Labor Code, there are two kinds of regular
employees, namely: (1) those who are engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activities in which they are
employed.
Regular employees are further classified into (1) regular employees - by
nature of work and (2) regular employees - by years of service.The former
refers to those employees who perform a particular function which is
necessary or desirable in the usual business or trade of the employer,
regardless of their length of service; while the latter refers to those
employees who have been performing the job, regardless of its nature
thereof, for at least a year.

In the case at bench, Noblejas was employed by IMAPI as a training

instructor/assessor for a period of three (3) months effective May 20, 2009.
After the end of the 3-month period, he was rehired by IMAPI for the same
position and continued to work as such until March 16, 2010. There is no
dispute that the work of Noblejas was necessary or desirable in the business
or trade of IMAPI, a training and assessment center for seamen and officers
of vessels. Taken in this light, Noblejas had indeed attained the status of a
regular employee at the time he ceased to report for work on March 17,
2010.
There was, however, no illegal dismissal.
Fair evidentiary rule dictates that before employers are burdened to prove
that they did not commit illegal dismissal, it is incumbent upon the employee
to first establish by substantial evidence the fact of his or her dismissal. The
Court is not unmindful of the rule in labor cases that the employer has the
burden of proving that the termination was for a valid or authorized cause. It
is likewise incumbent upon the employees, however, that they should first
establish by competent evidence the fact of their dismissal from
employment. It is an age-old rule that the one who alleges a fact has the
burden of proving it and the proof should be clear, positive and
convincing. Mere allegation is not evidence.
Aside from his mere assertion, no corroborative and competent evidence was
adduced by Noblejas to substantiate his claim that he was dismissed from
employment. The record is bereft of any indication that he was prevented
from returning to work or otherwise deprived of any work assignment. It is
also noted that no evidence was submitted to show that respondent Ferrez,
the secretary of Capt. Terrei, was actually authorized by IMAPI to terminate
the employment of the companys employees or that Ferrez was indeed
instructed by Capt. Terrei to dismiss him from employment.
The Court finds it odd that, instead of clarifying from Capt. Terrei what he
heard from Ferrez, Noblejas immediately instituted an illegal dismissal case
against the respondents the day following the alleged incident and never
reported back for work since then.

Topic: Regular/Probationary Employee; Illegal Dismissal

Ponente: Mendoza, J.
Philippine Spring Water Resources Inc./DaniloLua v. CA, G.R. No.
205278 , June 11, 2014
Facts: Petitioner Philippine Spring Water Resources, Inc. (PSWRI), engaged in
the business of manufacturing, selling and distributing bottled mineral water,
hired Mahilum as Vice-President for Sales and Marketing for the BulacanSouth Luzon Area.
Sometime in November 2004, the inauguration of PSWRIs Bulacan plant
would be celebrated at the same time with the companys Christmas party.
Mahilum was designated as over-all chairman of the affair to be held on
December 19, 2004. A few days after his designation, Mahilum called all
committee chairpersons to a meeting for the program of action and budget
plan. The meeting, however, was reset to the following day as some visitors
arrived without prior appointment. Mahilum and his guests discussed
sensitive legal issues relative to PSWRIs water drilling inside the plant over
the protest of nearby residents and the local water district.
The next day, Mahilum requested Ms. Vicky Evangelista (Evangelista), VicePresident for Administration and Finance, to take charge of the meeting for
the inauguration shouldhe fail to come back on time. He attended a prior
appointment with major clients in Makati City. Later, Mahilum learned that
Evangelista postponed the meetings because she accompanied the daughter
of petitioner DaniloLua (Lua), President and Chief Executive Officer (CEO), to
Bulacan.
Thereafter, meetings on the program of activities for the inauguration and
Christmas party were conducted without Mahilums presence. Evangelista
took charge and assumed the lead role until the day of the affair.
On the inaugural day, Mahilum was not seen around to supervise the
program proper as he entertained some visitors of the company. According to
him, he delegated the task to Evangelista.
Mahilums attention was, however, called when Lua got furious because he
was not recognized during the program. At the same time, he was placed
under preventive suspension for thirty (30) days. Mahilum submitted his
written explanation. Subsequently, an investigation was conducted.

When his 30-day suspension ended, Mahilum reported for work but was
prevented from entering the workplace. Sometime in the first week of March
2005, he received a copy of the Memorandum, dated January 31, 2005,
terminating his services effective the next day or on February 1, 2005. On
February 9, 2005, a clearance certificate was issued to Mahilum. He received
the amount of P43,998.56 and was made to execute the Release, Waiver and
Quitclaim in favor of the company and Lua.
Mahilum filed a complaint for illegal dismissal with prayer for reinstatement,
payment of back wages and damages.
Issue: Whether Mahilum is a regular or probationary employee
Whether or not there was illegal dismissal
Ruling: Mahilum is a regular employee.
Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has
been engaged on a probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a probationary
period shall be considered a regular employee.
A probationary employee, like a regular employee, enjoys security of tenure.
In cases of probationary employment, however, aside from just or authorized
causes of termination, an additional ground is provided under Article 281 of
the Labor Code, that is, the probationary employee may also be terminated
for failure to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of the
engagement. Thus, the services of an employee who has been engaged on
probationary basis may be terminated for any of the following: (1) a just or
(2) an authorized cause and (3) when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the
employer.
In this case, it is clear that the primary cause of Mahilums dismissal from his
employment was borne out of his alleged lapses as chairman for the
inauguration of the Bulacan plant companys Christmas party. In fact, the

termination letter to him cited "loss of trust and confidence" as a ground for
his dismissal. Under the circumstances, the petitioners may not be permitted
to belatedly harp on its choice not to extend his alleged probationary status
to regular employment as a ground for his dismissal. Besides, having been
allowed to work after the lapse of the probationary period, Mahilum became
a regular employee. He was hired in June 2004 and was dismissed on
February 5, 2005. Thus, he served the company for eight (8) months.
Mahilum was illegally dismissed
The Court finds no reason to depart from the finding that Mahilums failure to
effectively discharge his assignment as the over-all chairman of the
festivities was due to mere inadvertence and the mistaken belief that he had
properly delegated the details of the program to another officer.
Further, his designation as the chairman of the whole affair did not form part
of his duty as a supervisor. Mahilum was engaged to supervise the sales and
marketing aspects of PSWRIs Bulacan Plant. Verily, the charge of loss of
trust and confidence had no leg tost and on, as the act complained of was
not work-related. Simply put, the petitioners were not able to prove that
Mahilum was unfit to continue working for the company.

Topic: Entitlement of Sales Commissions

Ponente: Associate Justice Lucas P. Bersamin
Mega Magazine Publications, Inc., et.al vs. Margaret A. Defensor,
G.R. No. 162021; June 16, 2014
Facts:
Mega Magazine Publications, Inc. (MMPI) employed Margaret
Defensor as an Associate Publisher in 1996, and later promoted her as a
Group Publisher with a monthly salary of P60,000.00. Respondent proposed
to MMPIs Executive Vice-President Sarita V. Yap year-end commissions for
herself and a special incentive plan for the Sales Department. Yap made
marginal notes of her counter-proposals about respondent's proposal
crossing out some of the proposed items (MMPI Total revenue at P28-P29 M
0.05% outright commission and MMPI Total revenue at P30-P34 M 0.075%
outright commission), and proposing instead that outright commissions be at
0.1% of P35-P38 million. Respondent sent another memorandum setting out
the 1999 advertisement sales, target and commissions, and proposing that
the schedule of her outright commissions should start at .05% of P34.5
million total revenue, and that the special incentives be given when total
revenues reached P35-P38 million.
Respondent tendered her letter of resignation effective at the end of
December 1999. Yap accepted the resignation and responded with a
"formalization" of her approval of the 1999 special incentive scheme
proposed by the respondent through her memorandum
revising the
schedule by starting commissions at .05% of P35-P38 million gross
advertising revenue , and the proposed special incentives at P35-P38 million
with P8,500.00 bonus.

After respondent left the company, she filed a complaint for payment of
bonus and incentive compensation with damages, specifically demanding the
payment ofP271,264.68 as sales commissions and P8,500.00 as her share in
the incentive scheme for the advertising and sales staff.
Issue: Whether the respondent is entitled to the outright commissions and
special incentive bonus for the sales staff being claimed
Ruling: Yes
Respondent, Margaret Defensor, was entitled to her 0.05% outright
commissions and to the special incentive bonus of P8,500.00 based on MMPI
having reached the minimum target of P35 million in gross revenues paid in
"bartered goods and cash in direct proportion to percentage of cash and
bartered goods revenue for the year".
The grant of a bonus or special incentive, being a management prerogative,
is not a demandable and enforceable obligation, except when the bonus or
special incentive is made part of the wage, salary or compensation of the
employee, or is promised by the employer and expressly agreed upon by the
parties. By its very definition, bonus is a gratuity or act of liberality of the
giver, and cannot be considered part of an employees wages if it is paid only
when profits are realized or a certain amount of productivity is achieved. If
the desired goal of production or actual work is not accomplished, the bonus
does not accrue.
Due to the nature of the bonus or special incentive being a gratuity or act of
liberality on the part of the giver, the respondent could not validly insist on
the schedule proposed in her memorandum of April 5, 1999 considering that
the grant of the bonus or special incentive remained a management
prerogative. However, the Supreme Court agrees with the CAs ruling that
the petitioners had already exercised the management prerogative to grant
the bonus or special incentive. At no instance did Yap flatly refuse or reject
the respondents request for commissions and the bonus or incentive. This is
plain from the fact that Yap even "bargained" with the respondent on the
schedule of the rates and the revenues on which the bonus or incentive
would be pegged. What remained contested was only the schedule of the
rates and the revenues. In her initial memorandum of February 25, 1999, the
respondent had suggested the following schedule: (a) 0.05% outright
commission on total revenue of P28-P29 million; (b) 0.075% on P30-P34
million; (c) 0.1% on P35-P38 million; (d) 0.1% on P39-P41 million pesos; and
(f) 0.1% on P41 million or higher, but Yap had countered by revising the
schedule to start at 0.1% as outright commissions on a total revenue of P35P38 million, and the special incentive bonus to start at revenues of P35-P38
million. Moreover, on December 8, 1999, Yap sent to the respondent a
memorandum entitled Re: Formalization of my handwritten approval of 1999

Incentive scheme dated 25 February 1999. Such actuations and actions by

Yap indicated that the petitioners had already acceded to the grant of the
special incentive bonus.

Topic: Immutability of Final Judgments

Ponente: Associate Justice Arturo Brion
Florencio Libongcogon, et.al vs. Phimco Industries, Inc., G.R. No.
203332; June 18, 2014
Facts: The Phimco Industries, Inc. (PHIMCO) is a domestic corporation
engaged in the production of matches. The Phimco Labor Association (PILA)
is the exclusive collective bargaining representative of the PHIMCO regular
rank-and-file employees. Due to a bargaining deadlock with PHIMCO, PILA
staged a strike on April 21, 1995. NLRC issued a temporary restraining order
but the strike continued, with the strikers blocking the company's points of
ingress and egress. Three days later, PHIMCO served dismissal notices on the
strikers for the alleged illegal acts they committed during the strike.
Consequently, PILA filed a complaint for illegal dismissal and unfair labor
practice against PHIMCO. On the other hand, PHIMCO, for its part, filed a
petition to declare the strike illegal.
Then Acting Secretary Jose Brillantes of DOLE assumed jurisdiction over the

strike and issued a return-to-work order. PILA ended its strike and PHIMCO
resumed its operations. Later, PHIMCO laid off 21 of its employees and
implemented a retirement program covering 53 other employees. Twentytwo out of the 53 questioned the legality of their retirement. PILA then filed a
complaint against PHIMCO with the following causes of action: (1) the illegal
dismissal of the 7 employees; (2) the forced retirement of 53 employees; and
(3) the lay-off of 21 employees.
Labor Arbiter Pati dismissed the complaint. PILA filed an appeal which the
NLRC dismissed. CA Special 12th Division, on appeal, partly granted the
petition. It found the 7 employees to have been illegally dismissed. CA
denied the petition and upheld the NLRC rulings on the ground that the
decision of its Special 12th Division became final and executory; thus, there
is nothing more left to be done but to enforce it. Invoking the Court's ruling in
David v. CA, the CA held that while the judgment sought to be enforced by
the challenged NLRC resolutions had attained finality, there were facts and/or
events which transpired after the judgment was issued, which presented a
supervening cause that rendered the final and executory decision no longer
enforceable.
Issue: Whether the Court of Appeals contravened the doctrine of
immutability of final judgments when it issued its amended decision
nullifying the final and executory decision of its Special 12th Division
declaring petitioners' dismissal illegal.
Ruling: No.
The fact that the decision has become final does not necessarily preclude its
modification or alteration; even with the finality of judgment, when its
execution becomes impossible or unjust due to supervening facts, it may be
modified or altered to harmonize it with demands of justice and the altered
material circumstances not existing when the decision was originally issued.
The doctrine of immutability of final judgments admits of certain exceptions
as explained in Hulst v. PR Builders, Inc. One recognized exception is the
existence of a supervening cause or event which renders the enforcement of
a final and executory decision unjust and inequitable. In this particular case,
a supervening event transpired, which must be considered in the execution
of the CA decision in the illegal strike case in order not to create an injustice
to or an inequitable treatment of workers who, like the petitioners,
participated in a strike where the Court found the commission of illegal acts
by the strikers.
As the CA pointed out in its amended decision, the evidence in the illegal
strike case clearly identified the petitioners as among the union members
who, in concert with the other identified union members, blocked the points
of ingress and egress of PHIMCO through a human blockade and the

mounting of physical obstructions in front of the company's main gate. This

is a prohibited act under the law. "For participating in illegally blocking
ingress to and egress from company premises, this Court's 3rd Division
declared in the illegal strike case these union members dismissed for their
illegal acts in the conduct of the union's strike." Considering that the
petitioners had been positively identified to be among the union members
who committed illegal acts during the strike, these petitioners were therefore
validly dismissed.
Considering the substantial financial losses suffered by the company on
account of the strike, it would indeed be unjust to the company and the
dismissed union members to allow the reinstatement of the petitioners and
to reward them with backwages and other monetary benefits. The Court
finds no reversible error or grave abuse of discretion in the CA amended
decision.
A strike is a concerted union action for purposes of collective bargaining or
for the workers' mutual benefit and protection. It is manifested in a work
stoppage whose main objective is to paralyze the operations of the employer
establishment. Because of its potential adverse consequences to the striking
workers and the employer, as well as the community, a strike enjoys
recognition and respect only when it complies with the conditions laid down
by law. One of these conditions, as far as union members are concerned, is
the avoidance of illegal acts during the strike such as those committed by
the petitioners, in concert with the other union members, during the PHIMCO
strike in 1995.

Topic: Dismissal from service / Waiver of right to return to work

Ponente: Associate Justice ARTURO D. BRION
Ruben C. Jordan, petitioner, vs. Grandeur Security & Services,Inc.,
G.R. No. 206716; June 18, 2014

Facts: Ruben Jordan, together with his co-employees, Valentino Galache and
Ireneo Esguerra filed individual complaints for money claims against Nicolas
Pablo and respondent Grandeur Security and Services Corp. They alleged
that Grandeur Security did not pay them minimum wages, holiday, premium,
service incentive leave, and thirteenth month pays as well as the cost of
living allowance. They likewise claimed that Grandeur Security illegally
deducted from their wages the amount of five hundred pesos per annum as
premiums of their insurance policies. Jordan amended his complaint and
included illegal dismissal as his additional cause of action. In defense,
Grandeur Security denied that it terminated Jordan from employment. It
claimed that it merely issued Jordan a memorandum reassigning him from
Quezon City7 to Taguig City. It further insisted that Jordan abandoned his
work and opted to file an illegal dismissal case against it instead of
complying with the memorandum. Grandeur Security also denied nonpayment of money claims to the complainants.
The Labor Arbiter held that Jordan had merely been transferred to another
workplace. The LA also ruled that Jordans immediate filing of illegal
dismissal case after the issuance of the subject memorandum belied
Grandeur Securitys claim of abandonment. Thus, the LA ordered Grandeur
Security to "reinstate" Jordan in employment and awarded the complainants
monetary claims for Grandeur Securitys failure to adduce evidence of
payment. Grandeur Security partially appealed the decision before the NLRC
with respect to the grant of monetary awards. However, it did not contest the
"reinstatement order" as it allegedly mailed Jordan a return to work order.
Jordan also appealed before the NLRC and insisted that he did not receive
the letter.
Issue: Whether
the complainant Ruben C. Jordan has been illegally
dismissed from service.
Ruling: No.
The records clearly show that respondent never dismissed complainant
Jordan from the service neither did they intend to do so in the first place for
in spite of the serious offenses said complainant had committed in the early
years of his employment with respondent such as sleeping while on duty,
said respondents never attempted to rid themselves of said complainants
services. It appears on record that complainant Jordan was merely relieved of
his duty and was being transferred to another client of respondents, the
Cacho Construction located at Taguig City for guarding duties. Nothing on the
memorandum sent to him indicated his termination of employment. Instead
of reporting to respondents office to effect his transfer of assignment he
filed the instant complaint. Thus, respondents intimation that complainant
had abandoned his job has been rendered untenable under this
circumstance, "a charge of abandonment is totally inconsistent with the

immediate filing for illegal dismissal: (Icawat vs. NLRC, 334 SCRA 75, June 20,
2000). Thus, complainant Jordan resented his relief and subsequent reassignment to another post for guarding duty.
This being the case, there could be no illegal dismissal in this case nor
abandonment of job to speak of. The Court also find no justification
whatsoever for complainant Jordans allegation of strained relations between
him and respondents to warrant the grant of separation pay as prayed for by
him. Hence, pursuant to law and jurisprudence and under the circumstances
obtaining in this case, complainant Ruben C. Jordan should be as he is hereby
ordered to return to his position as security guard with respondents and the
latter in like manner, hereby ordered to accept him back without any
backwages."
Whether Jordan received Grandeur Securitys letter directing him to report to
work is irrelevant in determining his waiver of employment in Grandeur
Security. In labor cases, rules of procedure should not be applied in a very
rigid and technical sense because they are merely tools designed to facilitate
the attainment of justice. That Jordan was actually informed of the return to
work order and that Grandeur Security never prohibited him from reporting
for work are sufficient compliance with the LA's return to work order.
Abandonment is a matter of intention and cannot lightly be presumed from
certain equivocal acts. To constitute abandonment, there must be clear proof
of deliberate and unjustified intent to sever the employer-employee
relationship. The operative act is still the employee's ultimate act of putting
an end to his employment. In the present case, Jordan's filing of a complaint
for illegal dismissal in the form of a "memorandum of appeal" before the
NLRC is inconsistent with abandonment of employment. The filing of this
complaint is a proof of his desire to return to work, effectively negating any
suggestion of abandonment.
As a general rule, a tribunal has no jurisdiction to substantially alter a final
and executory judgment. Even assuming that the NLRC has jurisdiction over
Jordans "memorandum of appeal", the Supreme Court agree with the CA
that the NLRC gravely abused its discretion in substantively altering the
dispositive part of the May 27, 2008 decision. While tribunals and courts may
correct clerical errors in a judgment that has attained finality, its final and
executory character precludes these bodies from substantively altering its
dispositive part, except: (1) in cases of void judgments, and (2) whenever
circumstances transpire after the finality of the decision rendering its
execution unjust and inequitable. As a rule, a definitive final judgment,
however erroneous, is no longer subject to substantial change or revision.

Topic: Authorized cause to dismiss an employee from service

Ponente: Associate Justice ARTURO D. BRION
Marlo A. Deoferio v. Intel Technology Philippines, Inc. and/orMike
Wentling, G.R. No. 202996, June 18, 2014
Facts: Intel Technology Philippines, Inc. employed Deoferio as a product
quality and reliability engineer with a monthly salary of P9,000. In July 2001,
Intel assigned him to the United States as a validation engineer for an
agreed period of two years and with a monthly salary of US$3,000. Deoferio
was repatriated to the Philippines after being confined at Providence St.
Vincent Medical Center for major depression with psychosis. In the
Philippines, he worked as a product engineer with a monthly salary of
P23,000.
Deoferio underwent a series of medical and psychiatric treatment at Intels
expense after his confinement in the United States. In 2002, Dr. Elizabeth
Rondain of Makati Medical Center diagnosed him to be suffering from mood
disorder, major depression, and auditory hallucination. He was also referred
to Dr. Norieta Balderrama, Intels forensic psychologist, and to a certain Dr.
Cynthia Leynes who both confirmed his mental condition. Dr. Paul Lee, a
consultant psychiatrist of the Philippine General Hospital, concluded that
Deoferio was suffering from schizophrenia. After several consultations, Dr.
Lee issued a psychiatric report concluding and stating that Deoferios
psychotic symptoms are not curable within a period of six months and "will
negatively affect his work and social relation with his co-workers." Pursuant
to these findings, Intel issued Deoferio a notice of termination.
Deoferio filed a complaint for illegal dismissal with prayer for money claims
against respondents Intel and Mike Wentling. He denied that he ever had
mental illness and insisted that he satisfactorily performed his duties as a
product engineer. He argued that Intel violated his statutory right to
procedural due process when it summarily issued a notice of termination. In
defense, the respondents argued that Deoferios dismissal was based on Dr.
Lees certification that his schizophrenia was not curable within a period of
six months even with proper medical treatment; and that his continued
employment would be prejudicial to his and to the other employees health.
Issue: Whether Marlo Deoferio was illegally dismissed from service due to
his disease.

Ruling: No.
Intel had an authorized cause to dismiss Deoferio from employment.
Concomitant to the employers right to freely select and engage an
employee is the employers right to discharge the employee for just and/or
authorized causes. To validly effect terminations of employment, the
discharge must be for a valid cause in the manner required by law. The
purpose of these two-pronged qualifications is to protect the working class
from the employers arbitrary and unreasonable exercise of its right to
dismiss. Thus, in termination cases, the law places the burden of proof upon
the employer to show by substantial evidence that the termination was for a
lawful cause and in the manner required by law.
In concrete terms, these qualifications embody the due process requirement
in labor cases, substantive and procedural due process. Substantive due
process means that the termination must be based on just and/or authorized
causes of dismissal. On the other hand, procedural due process requires the
employer to effect the dismissal in a manner specified in the Labor Code and
its IRR.
The present case involves termination due to disease which is an authorized
cause for dismissal under Article 284 of the Labor Code. As substantive
requirements, the Labor Code and its IRR require the presence of the
following elements: (1) An employer has been found to be suffering from any
disease; (2) His continued employment is prohibited by law or prejudicial to
his health, as well as to the health of his co-employees; (3) A competent
public health authority certifies that the disease is of such nature or at such
a stage that it cannot be cured within a period of six months even with
proper medical treatment.
With respect to the first and second elements, the Court liberally construed
the phrase "prejudicial to his health as well as to the health of his coemployees" to mean "prejudicial to his health or to the health of his coemployees." The Court does not limit the scope of this phrase to contagious
diseases for the reason that this phrase is preceded by the phrase "any
disease" under Article 284 of the Labor Code.
Art. 284. Disease as ground for termination. An employer may terminate
the services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one month
salary or to one-half month salary for every year of service, whichever is
greater, a fraction of at least six months being considered as one whole year.
The certification from a competent public health authority is precisely the

substantial evidence required by law to prove the existence of the disease

itself, its non-curability within a period of six months even with proper
medical treatment, and the prejudice that it would cause to the health of the
sick employee and to those of his co-employees. Dr. Lees psychiatric report
substantially proves that Deoferio was suffering from schizophrenia, that his
disease was not curable within a period of six months even with proper
medical treatment, and that his continued employment would be prejudicial
to his mental health. This conclusion is further substantiated by the unusual
and bizarre acts that Deoferio committed while at Intels employ.
Deoferio is entitled to nominal damages for violation of his right to statutory
procedural due process. Intels violation of Deoferios right to statutory
procedural due process warrants the payment of indemnity in the form of
nominal damages. In Jaka Food Processing Corp. v. Pacot, the Court
distinguished between terminations based on Article 282 of the Labor Code
and dismissals under Article 283 of the Labor Code. Nominal damages are
pegged at P30,000 if the dismissal is based on a just cause but the employer
failed to comply with the twin-notice requirement. On the other hand,
nominal damages are pegged at P50,000 if the dismissal is due to an
authorized cause under Article 283 of the Labor Code but the employer failed
to comply with the notice requirement. The reason is that dismissals for just
cause imply that the employee has committed a violation against the
employer, while terminations under Article 283 of the Labor Code are
initiated by the employer in the exercise of his management prerogative.
With respect to Article 284 of the Labor Code, terminations due to disease do
not entail any wrongdoing on the part of the employee. It also does not
purely involve the employers willful and voluntary exercise of management
prerogative, a function associated with the employer's inherent right to
control and effectively manage its enterprise. Terminations due to disease
are occasioned by matters generally beyond the worker and the employer's
control.

Topic: Entitlement of Sales Commissions (in Foreign Currency)

Ponente: Associate Justice LUCAS P. BERSAMIN
Netlink Computer Inc. vs. Eric Delmo;
2014

G.R. No. 160827;

June 18,

Facts: Netlink Computer, Inc. Products and Services hired Eric S. Delmo as
account manager tasked to canvass and source clients and convince them to
purchase the products and services of Netlink. Delmo worked in the field
most of the time. He and his fellow account managers were not required to
accomplish time cards to record their personal presence in the office of
Netlink. He was able to generate sales worth P35,000,000 from which he
earned commissions amounting to P993,558.89 and US$7,588.30. He then
requested payment of his commissions, but Netlink refused and only gave
him partial cash advances chargeable to his commissions. Later on, Netlink
began to nitpick and fault find, like stressing his supposed absences and
tardiness. In order to force him to resign, Netlink issued several memoranda
detailing his supposed infractions of the companys attendance policy.
Despite the memoranda, Delmo continued to generate huge sales for
Netlink.
Delmo was shocked when he was refused entry into the company premises
by the security guard pursuant to a memorandum to that effect. His personal
belongings were still inside the company premises and he sought their return
to him. This prompted Delmo to file a complaint for illegal dismissal. Netlink
countered that there were guidelines regarding company working time and
its utilization and how the employees time would be recorded. Allegedly, all

personnel were required to use the bundy clock to punch in and out in the
morning, and in and out in the afternoon. Excepted from the rules were the
company officers, and the authorized personnel in the field project
assignments. Netlink claimed that it would be losing on the business
transactions closed by Delmo due to the high costs of equipment, and in fact
his biggest client had not yet paid. Netlink pointed out that Delmo had
become very lax in his obligations, with the other account managers
eventually having outperformed him. Netlink asserted that warning,
reprimand, and suspension memoranda were given to employees who
violated company rules and regulations, but such actions were considered as
a necessary management tool to instill discipline.
Labor Arbiter ruled against Netlink and in favor of Delmo ordering his
reinstatement to his former position without loss of seniority rights with full
backwages and other benefits On appeal, NLRC modified the decision of the
Labor Arbiter by setting aside the backwages and reinstatement decreed by
the Labor Arbiter due to the existence of valid and just causes for the
termination of Delmos employment.
Issue: Whether Eric Delmo is entitled for the payment of his sales
commissions in US currency.

Ruling: Yes.
As a general rule, all obligations shall be paid in Philippine currency.
However, the contracting parties may stipulate that foreign currencies may
be used for settling obligations. This is pursuant to Section 1 of the Republic
Act No. 8183 which provides that "All monetary obligations shall be settled in
the Philippine currency which is legal tender in the Philippines. However, the
parties may agree that the obligation ortransaction shall be settled in any
other currency at the time of payment".
In the case of C.F. Sharp & Co. v. Northwest Airlines, Inc. that the repeal of
Republic Act No. 529 had the effect of removing the prohibition on the
stipulation of currency other than Philippine currency, such that obligations
or transactions could already be paid in the currency agreed upon by the
parties. However, both Republic Act No. 529 and Republic Act No. 8183 did
not stipulate the applicable rate of exchange for the conversion of foreign
currency-incurred obligations to their peso equivalent. It follows, therefore,
that the jurisprudence established under Republic Act No. 529 with regard to
the rate of conversion remains applicable. In C.F. Sharp, the Court cited Asia
World Recruitment,Inc. v. NLRC, to the effect that the real value of the foreign
exchange-incurred obligation up to the date of itspayment should be
preserved.

There was no written contract between Netlink and Delmo stipulating that
the latters commissions would be paid in US dollars. Despite the absence of
any contractual stipulation, Netlink was still liable to pay Delmo in US dollars
because the practice of paying its sales agents in US dollars for their US
dollar-denominatedsales had become a company policy. This was impliedly
admitted by Netlink when it did not refute the allegation that the
commissions earned by Delmo and its other sales agents had been paid in
US dollars. Instead of denying the allegation, Netlink only sought a
declaration that the US dollar commissions be paid using the exchange rate
at the time of sale. The principle of non-diminution of benefits, which has
been incorporated in Article 10013 of the Labor Code, forbade Netlink from
unilaterally reducing, diminishing, discontinuing or eliminating the practice.
Verily, the phrase "supplements, or other employee benefits" in Article 100 is
construed to mean the compensation and privileges received by an
employee aside from regular salaries or wages.
With regard to the length of time the company practice should have been
observed to constitute a voluntary employer practice that cannot be
unilaterally reduced, diminished, discontinued or eliminated by the
employer, the Court finds that jurisprudence has not laid down any rule
requiring a specific mmimum number of years. With the payment of US dollar
commissions having ripened into a company practice, the commissions due
to Delmo were to be paid in US dollars or their equivalent in Philippine
currency determined at the time of the sales. To rule otherwise would be to
cause an unjust diminution of the commissions due and owing to Delmo.

Topic: Permanent disability and sickness allowance

Ponente: Reyes, J.

Teekay Shipping Philippines, Inc. v. Jarin, G.R. No. 195598, June 25,
2014

Facts: Teekay Phils. is a domestic corporation engaged in the recruitment of

maritime personnel for its foreign principal, Teekay Ltd. Verchez is the
president of Teekay Phils.

After passing the standard Pre-Employment Medical Examination, the

petitioners hired Jarin as Chief Cook on July 6, 2006. He was deployed on July
9, 2006 onboard M.T. Erik Spirit, a crude oil tanker. During the third week of
February 2007, M.T. Erik Spirit was in Canada when Jarin complained of
swelling in the joints of his two elbows. Jarin was taken to a Canadian
hospital where he was diagnosed with rheumatoid arthritis. Steroid-based
medications were administered to him and they caused him the side effects
of puffiness of the face and edema. Despite of this, however, Jarin was able
to complete his employment contract.

Upon arrival in the Philippines, Jarin immediately reported to the petitioners

and was referred to company-designated physician whose Post-Medical
Report showed that Jarin has "moon facies and bipedal edema secondary to
steroid intake, rheumatoid arthritis, resolving and upper respiratory tract
infection." Jarin was later referred to another company-designated physician
for further assessment under the care of Dr. Dacanay.

Dr. Dacanay opined in a medical report that Jarins rheumatoid arthritis was
not work-related because it is "an auto-immune disease in which joints,
usually those of hands and feet, are symmetrically affected, resulting in
swelling, pain and often eventual destruction of the joints interior." Jarins
cushingnoid features was also declared as not work-related since it is
"secondary to prednisone intake as medical management for his rheumatoid
arthritis."

Jarin underwent laboratory tests and was advised to come back on

September 17, 2007. The following day, Dr. Balbon stated that rheumatoid
arthritis is a chronic illness "which can become progressive that has the

potential to cause joint destruction and functional disability." Jarin was "no
longer recommended for further sea duties."

Jarin received a call on September 10, 2007 from Teekay Phils. directing him
to report at Pandiman Phils., Inc. (Pandiman) at Intramuros, Manila. On the
following day, Jarin was informed that his illness is not work-related and that
Teekay Phils. stopped paying for his medical treatments. Jarin asked for a
medical report supporting such conclusion but he was not furnished any.

Issues:
1) Whether Jarin suffered a work-related disability.
2) Whether Jarin should be awarded sickness allowance despite not being
medically repatriated.

Ruling:

1) Yes.

Under the 2000 POEA-SEC, a work-related illness is "any sickness resulting

to disability or death as a result of an occupational disease listed under
Section 32-A with the conditions set therein satisfied."

However, that the enumeration in Section 32-A does not preclude other
illnesses/diseases not so listed from being compensable. The POEA-SEC
cannot be presumed to contain all the possible injuries that render a seafarer
unfit for further sea duties. This is in view of Section 20(B)(4) of the
POEA-SEC which states that "those illnesses not listed in Section 32 of this
Contract are disputably presumed as work-related." Concomitant with such

presumption is the burden placed upon the claimant to present substantial

evidence that his working conditions caused or at least increased the risk of
contracting the disease. "It is not sufficient to establish that the seafarers
illness or injury has rendered him permanently or partially disabled; it must
also be shown that there is a causal connection between the seafarers
illness or injury and the work for which he had been contracted."

Substantial evidence consists of such relevant evidence which a reasonable

mind might accept as adequate to justify a conclusion that there is a causal
connection between the nature of his employment and his illness, or that the
risk of contracting the illness was increased by his working conditions. Only a
reasonable proof of work-connection, not direct causal relation is required to
establish compensability of a non-occupational disease.

In the case at bar, Jarin was able to prove that his rheumatoid arthritis was
contracted out of his daily duties as Chief Cook onboard M.T. Erik Spirit. The
narration of facts in his position paper detailed the nature of his work as
Chief Cook and the daily working conditions on sea duty.

2) Yes.

The petitioners failed to present any evidence showing that they paid Jarin's
sickness allowance. The petitioners cannot escape such liability on the mere
fact that Jarin finished his contract and was not medically repatriated. It must
be borne in mind that when Jarin arrived in the Philippines, he was still
suffering from rheumatoid arthritis, moon facies and bipedal edema and
upper respiratory track infection, as confirmed by the petitioners' physician.

Topic: Illegal recruitment committed in large scale amounting to

economic sabotage
Ponente: Bersamin, J.
People v. Velasco, G.R. No. 195668, June 25, 2014
Facts: In its assailed decision, the CA affirmed the entire findings of fact of
the RTC, stating:
The essential elements of illegal recruitment committed in large scale are:
(1) that the accused engaged in acts of recruitment and placement of
workers as defined under Article 13(b) of the Labor Code, or in any
prohibited activities under Article 34 of the same Code;
(2) that the accused had not complied with the guidelines issued by the
Secretary of Labor and Employment with respect to the requirement
to secure a license or authority to recruit and deploy workers; and
(3) that the accused committed the unlawful acts against 3 or more
persons.
In simplest terms, illegal recruitment is committed by persons who, without
authority from the government, give the impression that they have the
power to send workers abroad for employment purposes. The following were
made by Inovero:
First, private complainants Baful and Brizuela commonly testified that
Inovero was the one who conducted orientations/briefings on them;
informed them, among others, on how much their salary would be as
caregivers in Japan; and what to wear when they finally will be
deployed.
Second, when Diala introduced Inovero to private complainant Amoyo
as one of the owners of HARVEL, Inovero did not bother to correct said
representation. Inoveros silence is clearly an implied acquiescence to
said representation.
Third, Inovero, while conducting orientation on private complainant
Brizuela, represented herself as the one expediting the release of
applicants working visa for Japan.

Fourth, in a Certification issued and attested to by POEAs Versoza

Inovero had no license nor authority to recruit for overseas
employment.
Issue: Whether Inovero committed illegal recruitment in large scale.
Ruling: Yes.
The Court upholds the CAs affirmance of the factual findings by the trial
court. Inovero gave private complainants the impression that she can send
them abroad for employment purposes, despite the fact that she had no
license or authority to do so.
All that Inoveros appeal has offered was her denial of complicity in the illegal
recruitment of the complainants. But the complainants credibly described
and affirmed her specific acts during the commission of the crime of illegal
recruitment. Their positive assertions were far trustworthier than her mere
denial.
Strong and positive evidence demonstrated beyond reasonable doubt her
having conspired with her co-accused in the recruitment of the complainants.
The decision of the CA amply recounted her overt part in the conspiracy.
Under the law, there is a conspiracy when two or more persons come to an
agreement concerning the commission of a felony, and decide to commit it.
The complainants paid varying sums for placement, training and processing
fees. It is a basic tenet of our criminal law that every person criminally liable
is also civilly liable. Considering that the crime of illegal recruitment, when it
involves the transfer of funds from the victims to the accused, is inherently in
fraud of the former, civil liability should include the return of the amounts
paid as placement, training and processing fees. Hence, Inovero and her coaccused were liable to indemnify the complainants for all the sums paid.

Topic: Due process; Nominal damages

Ponente: Del Castillo, J.

Libcap Marketing Corp. v. Baquial, G.R. No. 192011, June 30, 2014

Facts: Libcap is engaged in the freight forwarding business. Respondent

Baquial was employed by Libcap as accounting clerk for Libcaps Super
Express branch in Cagayan de Oro City.

In March 2003, an audit of Libcaps Super Express branch in Cagayan de Oro

City was conducted, and the resulting audit report showed that respondent
made a double reporting of a single deposit made on April 2,2001.

Respondent was required to explain in writing why the cash sales

ofP1,437.00 each for March 31, 2001 and April 1, 2001 were covered by a
single April 2, 2001 validated bank deposit slip for only P1,437.00.
Meanwhile, the amount of P1,437.00 was deducted from respondents salary
each payday on a staggered basis.

On July 26, 2003, respondent received a Notice of Administrative

Investigation requiring her to attend a July 28, 2003 investigation at Libcaps

Iloilo office. Respondent was unable to attend due to lack of financial

resources. She received a 2nd Notice of Administrative Investigation but
again, she failed to attend.

Respondent was placed on preventive suspension from July 29, 2003 to

August 12, 2003. On August 16, 2003, respondent received a Notice of
Termination dated August 9, 2003, stating that she was terminated from
employment effective August 12, 2003 for dishonesty, embezzlement,
inefficiency, and for commission of acts inconsistent with Libcaps work
standards.

Issues:
1) Whether respondent was denied due process.
2) Whether respondent should be awarded nominal damages.

Ruling:

1) Yes.

Respondents case has been pre-judged even prior to the start of the
investigation. This is evident from the fact that the amount of P1,437.00
the amount which petitioners claim was embezzled was peremptorily
deducted each payday from respondents salary on a staggered basis,
culminating one month prior to the scheduled investigation. In doing so,
petitioners have made it clear that they considered respondent as the
individual responsible for the embezzlement; thus, in petitioners eyes,
respondent was adjudged guilty even before she could be tried the payroll
deductions being her penalty and recompense.

By pre-judging respondents case, petitioners clearly violated her right to due

process from the very beginning, and from then on it could not be expected
that she would obtain a fair resolution of her case.

2) Yes.

The law and jurisprudence allow the award of nominal damages in favor of
an employee in a case where a valid cause for dismissal exists but the
employer fails to observe due process in dismissing the employee. Financial
assistance is granted as a measure of equity or social justice, and is in the
nature or takes the place of severance compensation.

Though the Court is given the latitude to determine the amount of nominal
damages to be awarded to an employee who was validly dismissed but
whose due process rights were violated, a distinction should be made
between a valid dismissal due to just causes under Article 282 of the Labor
Code and those based on authorized causes, under Article 283.

Accordingly, it is wise to hold that:

(1)if the dismissal is based on a just cause under Article 282 but the
employer failed to comply with the notice requirement, the sanction to be
imposed upon him should be tempered because the dismissal process
was, in effect, initiated by an act imputable to the employee; and
(2)if the dismissal is based on an authorized cause under Article 283 but the
employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the
employers exercise of his management prerogative.

Prescinding from the foregoing, it is necessary to reduce the amount of

nominal damages the CA awarded. Nominal damages are awarded for the
purpose of vindicating or recognizing a right and not for indemnifying a loss.
Hence, the CA should have limited the justification of the award of nominal
damages to petitioners violation of respondents right to due process in
effecting her termination. It should not have considered the claimed unpaid
overtime pay.

After all, the Labor Arbiter had already denied the same. Thus, it cannot be
invoked again as a justification to increase the award of nominal damages.

Topic: Termination of an OFW

Ponente: LEONEN, J.
EN BANC
G.R. No. 170139

August 5, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, vs. JOY C.

CABILES, Respondent.
Facts:
Petitioner, Sameer Overseas Placement Agency, Inc., is a
recruitment and placement agency.5 Responding to an ad it published,
respondent, Joy C. Cabiles, submitted her application for a quality control job
in Taiwan.
Joys application was accepted. Joy was later asked to sign a one year
employment contract for a monthly salary of NT$15,360.00.8 She alleged
that Sameer Overseas Agency required her to pay a placement fee of
P70,000.00 when she signed the employment contract.

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June
26, 1997. She alleged that in her employment contract, she agreed to work
as quality control for one year. In Taiwan, she was asked to work as a cutter.
Sameer Overseas Placement Agency claims that on July 14, 1997, a
certain Mr. Huwang from Wacoal informed Joy, without prior notice, that she
was terminated and that "she should immediately report to their office to get
her salary and passport."13 She was asked to "prepare for immediate
repatriation."
Joy claims that she was told that from June 26 to July 14, 1997, she
only earned a total of NT$9,000.15 According to her, Wacoal deducted
NT$3,000 to cover her plane ticket to Manila.
On October 15, 1997, Joy filed a complaint with the National Labor
Relations Commission against petitioner and Wacoal. She claimed that she
was illegally dismissed. She asked for the return of her placement fee, the
withheld amount for repatriation costs, payment of her salary for 23 months
as well as moral and exemplary damages. She identified Wacoal as Sameer
Overseas Placement Agencys foreign principal.
Sameer Overseas Placement Agency alleged that respondent's
termination was due to her inefficiency, negligence in her duties, and her
"failure to comply with the work requirements of her foreign employer. The
agency also claimed that it did not ask for a placement fee of P70,000.00.
Petitioner added that Wacoal's accreditation with petitioner had already been
transferred to the Pacific Manpower & Management Services, Inc. (Pacific).
Thus, petitioner asserts that it was already substituted by Pacific Manpower.
Issues:
1. Whether or not Joy was illegally dismissed.
2. Whether or not Joy is entitled to her salaries corresponding to the
unexpired term of her contract.
3. How should the interest rate be computed?
4. Who is liable for the illegal dismissal of Joy?
Ruling:
1. Yes.
Employees are not stripped of their security of tenure when they move
to work in a different jurisdiction. With respect to the rights of overseas
Filipino workers, we follow the principle of lex loci contractus.

Lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. There is no question that the contract of
employment in this case was perfected here in the Philippines. Therefore, the
Labor Code, its implementing rules and regulations, and other laws affecting
labor apply in this case. The Constitution itself, in Article XIII, Section 3,
guarantees the special protection of workers. This public policy should be
borne in mind in this case because to allow foreign employers to determine
for and by themselves whether an overseas contract worker may be
dismissed on the ground of illness would encourage illegal or arbitrary
pretermination of employment contracts.
By our laws, overseas Filipino workers (OFWs) may only be terminated
for a just or authorized cause and after compliance with procedural due
process requirements.
To show that dismissal resulting from inefficiency in work is valid, it
must be shown that:
1) the employer has set standards of conduct and workmanship
against which the employee will be judged; 2) the standards of conduct and
workmanship must have been communicated to the employee; and 3) the
communication was made at a reasonable time prior to the employees
performance assessment.
This is similar to the law and jurisprudence on probationary employees,
which allow termination of the employee only when there is "just cause or
when [the probationary employee] fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the
employee at the time of his [or her] engagement."
This can be applied also to regular employment. The regular employee
must constantly attempt to prove to his or her employer that he or she
meets all the standards for employment. This time, however, the standards
to be met are set for the purpose of retaining employment or promotion
In this case, petitioner merely alleged that respondent failed to comply
with her foreign employers work requirements and was inefficient in her
work. No evidence was shown to support such allegations. Petitioner did not
even bother to specify what requirements were not met, what efficiency
standards were violated, or what particular acts of respondent constituted
inefficiency.

There was also no showing that respondent was sufficiently informed of

the standards against which her work efficiency and performance were
judged. The parties conflict as to the position held by respondent showed
that even the matter as basic as the job title was not clear.
Respondents dismissal less than one year from hiring and her
repatriation on the same day show not only failure on the part of petitioner
to comply with the requirement of the existence of just cause for
termination. They patently show that the employers did not comply with the
due process requirement.
A valid dismissal requires both a valid cause and adherence to the
valid procedure of dismissal. The employer is required to give the charged
employee at least two written notices before termination. One of the written
notices must inform the employee of the particular acts that may cause his
or her dismissal. The other notice must "inform the employee of the
employers decision." Aside from the notice requirement, the employee must
also be given "an opportunity to be heard."
Petitioner failed to comply with the twin notices and hearing
requirements. Respondent started working on June 26, 1997. She was told
that she was terminated on July 14, 1997 effective on the same day and
barely a month from her first workday. She was also repatriated on the same
day that she was informed of her termination.
2. Yes.
Respondent Joy Cabiles, having been illegally dismissed, is entitled to
her salary for the unexpired portion of the employment contract that was
violated together with attorneys fees and reimbursement of amounts
withheld from her salary.
Section 10 of Republic Act No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of1995, states that overseas workers who
were terminated without just, valid, or authorized cause "shall be entitled to
the full reimbursement of his placement fee with interest of twelve (12%) per
annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term,
whichever is less."
Section 15 of Republic Act No. 8042 states that "repatriation of the
worker and the transport of his [or her] personal belongings shall be the
primary responsibility of the agency which recruited or deployed the worker

overseas." The exception is when "termination of employment is due solely

to the fault of the worker," which as we have established, is not the case.
The Labor Code also entitles the employee to 10% of the amount of
withheld wages as attorneys fees when the withholding is unlawful.
Respondent is entitled to all of these awards. The award of the
three-month equivalent of respondents salary should, however, be
increased to the amount equivalent to the unexpired term of the
employment contract.
The Court reiterated its finding in Serrano v. Gallant Maritime that
limiting wages that should be recovered by an illegally dismissed overseas
worker to three months is both a violation of due process and the equal
protection clauses of the Constitution.
Overseas workers regardless of their classifications are entitled to
security of tenure, at least for the period agreed upon in their contracts. This
means that they cannot be dismissed before the end of their contract terms
without due process. If they were illegally dismissed, the workers right to
security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally
terminated are neither greater than nor less than the rights violated when a
fixed-period overseas worker is illegally terminated. It is state policy to
protect the rights of workers without qualification as to the place of
employment. In both cases, the workers are deprived of their expected
salary, which they could have earned had they not been illegally dismissed.
For both workers, this deprivation translates to economic insecurity and
disparity. The same is true for the distinctions between overseas workers
with an employment contract of less than one year and overseas workers
with at least one year of employment contract, and between overseas
workers with at least a year left in their contracts and overseas workers with
less than a year left in their contracts when they were illegally dismissed.
For this reason, the Court cannot subscribe to the argument that
overseas workers are contractual employees who can never acquire regular
employment status, unlike local workers because it already justifies
differentiated treatment.
3. On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June
21, 2013, which revised the interest rate for loan or forbearance from 12% to
6% in the absence of stipulation, applies in this case.

In Nacar v. Gallery Frames:

II. With regard particularly to an award of interest in the concept of
actual and compensatory damages, the rate of interest, as well as the
accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a
sum of money, i.e., a loan or forbearance of money, the interest due should
be that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money,
is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated claims or damages,
except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty
cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have
been reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged. 3. When the
judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph
1 or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to
a forbearance of credit.
And, in addition to the above, judgments that have become final and
executory prior to July 1, 2013, shall not be disturbed and shall continue to
be implemented applying the rate of interest fixed therein.
Circular No. 799 is applicable only in loans and forbearance of
money, goods, or credits, and in judgments when there is no
stipulation on the applicable interest rate. Further, it is only
applicable if the judgment did not become final and executory
before July 1, 2013.

Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or
limit interest rates, these interest rates do not apply when the law provides
that a different interest rate shall be applied. "A Central Bank Circular cannot
repeal a law. Only a law can repeal another law."
Section 10 of Republic Act No. 8042 provides that unlawfully
terminated overseas workers are entitled to the reimbursement of his or her
placement fee with an interest of 12% per annum. Since Bangko Sentral ng
Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of
Circular No. 799 does not have the effect of changing the interest on awards
for reimbursement of placement fees from 12% to 6%. This is despite Section
1 of Circular No. 799, which provides that the 6% interest rate applies even
to judgments.
The same cannot be said for awards of salary for the unexpired portion
of the employment contract under Republic Act No. 8042. These awards are
covered by Circular No. 799 because the law does not provide for a specific
interest rate that should apply.
If judgment did not become final and executory before July 1, 2013 and
there was no stipulation in the contract providing for a different interest rate,
other money claims under Section 10 of Republic Act No. 8042 shall be
subject to the 6% interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per
annum on her money claims from the finality of this judgment.
4. The Court clarified the liabilities of Wacoal as principal and petitioner as the
employment agency that facilitated respondents overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995
provides that the foreign employer and the local employment agency are
jointly and severally liable for money claims including claims arising out of an
employer-employee relationship and/or damages. This section also provides
that the performance bond filed by the local agency shall be answerable for
such money claims or damages if they were awarded to the employee.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that
overseas workers have recourse in law despite the circumstances of their
employment. By providing that the liability of the foreign employer may be
"enforced to the full extent"139 against the local agent, the overseas worker
is assured of immediate and sufficient payment of what is due them.

Corollary to the assurance of immediate recourse in law, the provision

on joint and several liability in the Migrant Workers and Overseas Filipinos
Act of 1995 shifts the burden of going after the foreign employer from the
overseas worker to the local employment agency. However, it must be
emphasized that the local agency that is held to answer for the overseas
workers money claims is not left without remedy. The law does not preclude
it from going after the foreign employer for reimbursement of whatever
payment it has made to the employee to answer for the money claims
against the foreign employer.
With the present state of the pleadings, it is not possible to determine
whether there was indeed a transfer of obligations from petitioner to Pacific.
This should not be an obstacle for the respondent overseas worker to
proceed with the enforcement of this judgment. Petitioner is possessed with
the resources to determine the proper legal remedies to enforce its rights
against Pacific, if any.

Topic: Jurisdiction
Ponente: Peralta, J.
G.R. No. 171212

August 4, 2014

INDOPHIL TEXTILE MILLS, INC., Petitioner, vs. ENGR. SALVADOR

ADVIENTO, Respondents.
Facts:
Petitioner Indophil Textile Mills, Inc. is a domestic corporation
engaged in the business of manufacturing thread for weaving. On August 21,
1990, petitioner hired respondent Engr. Salvador Adviento as Civil Engineer
to maintain its facilities in Lambakin, Marilao, Bulacan.4 On August 7, 2002,
respondent consulted a physician due to recurring weakness and dizziness.5
Few days later, he was diagnosed with Chronic Poly Sinusitis, and thereafter,
with moderate, severe and persistent Allergic Rhinitis.6 Accordingly,
respondent was advised by his doctor to totally avoid house dust mite and
textile dust as it will transmute into health problems.
Distressed, respondent filed a complaint against petitioner with the
National Labor Relations Commission (NLRC), San Fernando, Pampanga, for
alleged illegal dismissal and for the payment of backwages, separation pay,
actual damages and attorneys fees.
Subsequently, respondent filed another Complaint9 with the Regional
Trial Court (RTC) of Aparri, Cagayan, alleging that he contracted such
occupational disease by reason of the gross negligence of petitioner to
provide him with a safe, healthy and workable environment.
In his Complaint, respondent alleged that as part of his job description,
he conducts regular maintenance check on petitioners facilities including its
dye house area, which is very hot and emits foul chemical odor with no
adequate safety measures introduced by petitioner.
Respondent averred that, being the only breadwinner in the family, he
made several attempts to apply for a new job, but to his dismay and
frustration, employers who knew ofhis present health condition discriminated
against him and turned down his application. By reason thereof, respondent

suffered intense moral suffering, mental anguish, serious anxiety and

wounded feelings, praying for the recovery of the following: (1) Five Million
Pesos (P5,000,000.00) asmoral damages; (2) Two Million Pesos
(P2,000,000.00) as exemplary damages; and (3) Seven Million Three
Thousand and Eight Pesos (P7,003,008.00) as compensatory damages.20
Claiming to be a pauper litigant, respondent was not required to pay any
filing fee.
Issue:

Who has jurisdiction over the case?

Ruling:

Regular courts of law.

Not all claims involving employees can be resolved solely by our labor
courts, specifically when the law provides otherwise.36 For this reason, we
have formulated the "reasonable causal connection rule," wherein if there is
a reasonable causal connection between the claim asserted and the
employer-employee relations, then the case is within the jurisdiction of the
labor courts; and in the absence thereof, it is the regular courts that have
jurisdiction.
Upon the facts and issues involved, jurisdiction over the present
controversy must be held to belong to the civil Courts. While seemingly
petitioner's claim for damages arises from employer-employee relations, and
the latest amendment to Article 217 of the Labor Code under PD No. 1691
and BP Blg. 130 provides that all other claims arising from employeremployee relationship are cognizable by Labor Arbiters [citation omitted], in
essence, petitioner's claim for damages is grounded on the "wanton failure
and refusal" without just cause of private respondent Cruz to report for duty
despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the further
averment that Cruz "maliciously and with bad faith" violated the terms and
conditions of the conversion training course agreement to the damage of
petitioner removes the present controversy from the coverage of the Labor
Code and brings it within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per se
by private respondent Cruz of his jobas the latter was not required in the
Complaint to report back to workbut on the manner and consequent
effects of such abandonment of work translated in terms of the damages
which petitioner had to suffer.

In the case at bar, respondent alleges that due to the continued and
prolonged exposure to textile dust seriously inimical to his health, he
suffered work-contracted disease which is now irreversible and incurable,
and deprived him of job opportunities. Clearly, injury and damages were
allegedly suffered by respondent, an element of quasi-delict. Secondly, the
previous contract of employment between petitioner and respondent cannot
be used to counter the element of "no pre-existing contractual relation" since
petitioners alleged gross negligence in maintaining a hazardous work
environment cannot be considered a mere breach of such contract of
employment, but falls squarely within the elements of quasi-delict under
Article 2176 of the Civil Code since the negligence is direct, substantive and
independent.53 Hence, we ruled in Yusen Air and Sea Services Phils., Inc. v.
Villamor54 that:
When, as here, the cause of action is based on a quasi-delict or tort,
which has no reasonable causal connection with any of the claims provided
for in Article 217, jurisdiction over the action is with the regular courts.
It also bears stressing that respondent is not praying for any relief
under the Labor Code of the Philippines. He neither claims for reinstatement
nor backwages or separation pay resulting from an illegal termination. It
merely seeks to recover damages based on the parties' contract of
employment as redress for respondent's breach thereof. Such cause of action
is within the realm of Civil Law, and jurisdiction over the controversy belongs
to the regular courts

Topic: Backwages and Other Monetary Benefits; Legal Interest

Ponente: MENDOZA, J.
G.R. No. 201483

August 4, 2014

CONRADO A. LIM, Petitioner, vs. HMR PHILIPPINES, INC., TERESA

SANTOS-CASTRO,
HENRY
BUNAG
and
NELSON
CAMILLER,
Respondents.
Facts:
On February 8, 200I, petitioner Conrado A. Lim (Lim) filed a case
for illegal dismissal and money claims against respondents, HMR Philippines,
Inc. (HMR) and its officers, Teresa G. Santos-Castro, Henry G. Bunag and
Nelson S. Camiller.
The Labor Arbiter (LA) dismissed the complaint for lack of merit. On
April 11, 2003, the National Labor Relations Commission (NLRC) reversed the
LA and declared Lim to have been illegally dismissed. The dispositive portion
of the NLRC decision reads:

Both Lim and HMR filed their respective petitions for certiorari before
the CA, Pending resolution of the petitions, the CA issued the Temporary
Restraining Order (TRO) enjoining the execution of the NLRC decision.
The CA affirmed the NLRC decision with modification as follows:
WHEREFORE, the Decision of the National Labor Relations Commission is
AFFIRMED, with MODIFICATION.
On February 7, 2007, this Court, in G.R. No. 175950-51, dismissed the
petition for certiorari filed by HMR assailing the November 15, 2005 CA
decision. Entry of judgment was ordered on July 27, 2007.5
On September 24, 2007, Lim moved for execution. On November 28,
2007, the Computation and Research Unit (CRU) of the NLRC computed the
total award to amount to P2,020,053.46,7 which computed the backwages
from February 3, 2001, the date of the illegal dismissal, up to October 31,
2007, the date of actual reinstatement.
HMR opposed the computation arguing that the backwages should be
computed until April 11, 2003 only, the date of promulgation of the NLRC
decision, as stated in the dispositive portion of the NLRC decision.
The LA issued the order10 granting the motion for execution filed by
Lim. Holding thatthe backwages should be reckoned until April 11, 2003 only
in accordance with the NLRC decision.
Lim filed his "Motion Ad Cautelam for Reconsideration or
Recomputation and Partial Execution of Monetary Award," Insisting that his
backwages should be computed up to his actual reinstatement. The NLRC
treated the motion as an appeal and sustained the computation of the LA.
Aggrieved, petitioner filed a petition for certiorari before the CA, which was
dismissed.
Issues:
1. Whether the computation of backwages should be reckoned until
actual reinstatement?
2. Whether the petitioner is entitled to the 10% annual salary increase
after the year 2000?
3. Whether the petitioner is entitled to holiday pay?
4. Whether the petitioner is entitled to sick leave pay?
5. Whether the respondents should beheld jointly and severally liable for
additional moral and exemplary damages?

6. Whether the interest in accordance with Eastern Shipping should be

awarded?
Ruling:
1. Yes.
Article 279 of the Labor Code is clear in providing that an illegally
dismissed employee is entitled to his full backwages computed from the time
his compensation was withheld up to the time of his actual reinstatement, to
wit:
Art. 279. Security of tenure. In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or
when authorized by this Title. 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 from him up to the time of his actual
reinstatement.
In accordance with this provision, the body of the April 11, 2003 NLRC
decision expressly recognizes that Lim is entitled to his full backwages until
his actual reinstatement.
Considering that the judgment decreeing the computation of
backwages up to the promulgation of the NLRC decision has long become
final and executory, the key question is whether a recomputation of
backwages up to the date of the actual reinstatement of Lim would violate
the principle of immutability of judgments.
The rule is that it is the dispositive portion that categorically states the
rights and obligations of the parties to the dispute as against each other.
Thus, it is the dispositive portion that must be enforced to ensure the validity
of the execution. That a judgment should be implemented according to the
terms of its dispositive portion is a long and well-established rule. A
companion to this rule is the principle of immutability of final judgments.
Save for recognized exceptions, a final judgment may no longer be altered,
amended or modified, even if the alteration, amendment or modification is
meant to correct what is perceived to be an erroneous conclusion of fact or
law and regardless of what court renders it. Any attempt to insert, change or
add matters not clearly contemplated in the dispositive portion violates the
rule on immutability of judgments.

Under the terms of the decision under execution, no essential change

is made by a re-computation as this step is a necessary consequence that
flows from the nature of the illegality of dismissal declared in that decision. A
re-computation (or an original computation, if no previous computation has
been made) is a part of the law specifically, Article 279 of the Labor Code
and the established jurisprudence on this provision that is read into the
decision. By the nature of an illegal dismissal case, the reliefs continue to
add on until full satisfaction, as expressed under Article 279 of the Labor
Code. The re-computation of the consequences of illegal dismissal upon
execution of the decision does not constitute an alteration or amendment of
the final decision being implemented. The illegal dismissal ruling stands; only
the computation of monetary consequences of this dismissal is affected and
this is not a violation of the principle of immutability of final judgments.
The nature of an illegal dismissal case requires that backwages
continue to add on until full satisfaction. The computation required to reflect
full satisfaction does not constitute an alteration or amendment of the final
decision being implemented as the illegal dismissal ruling stands. Thus, in
the present case, a computation of backwages until actual reinstatement is
not a violation of the principle of immutability of final judgments.
The respondents aver that the recoverable backwages cannot go
beyond December 26, 2007, the date HMR offered to reinstate Lim, who
allegedly refused to be reinstated and abandoned his job. However,
petitioner cannot be deemed to have refused reinstatement or to have
abandoned his job. HMRs offer of reinstatement appeared superficial and
insincere considering that it never replied to the petitioners letter. It did not
make any further attempt to reinstate the petitioner either. The recoverable
backwages, thus, continue to run, and must be reckoned up until the
petitioners actual reinstatement.
2. No.
The applicable base rate for the computation of the petitioners
backwages from the time he was illegally dismissed on February 3, 2001
should be P15,125.00. Lim cannot, however, insist that the 10% annual
salary increase be applied to his backwages past the year 2000 up to his
actual reinstatement. In Equitable Banking Corporation v. Sadac, the Court
held that although Article 279 of the Labor Code mandates that an
employees full backwages be inclusive of allowances and other benefits,
salary increases cannot be interpreted as either an allowance or a benefit, as

allowances and benefits are separate from salary, while a salary increase is
added to salary as an increment thereto. It was further held therein that the
base figure to be used in the computation of backwages was pegged at the
wage rate at the time of the employees dismissal, inclusive of regular
allowances that the employee had been receiving such as the emergency
living allowances and the 13th month pay mandated by law. The award of
salary differentials was not allowed, the rule being that upon reinstatement,
illegally dismissed employees were to be paid their backwages without
deduction and qualification as to any wage increases or other benefits that
might have been received by their co-workers who were not dismissed.
It must be noted that the NLRC did not err in awarding the unpaid
salary increase for the years 1998-2000 as such did not constitute
backwages as a consequence of the petitioners illegal dismissal, but was
earned and owing to the petitioner before he was illegally terminated.

3. Whether or not holiday pay is included in the monthly salary of an employee,

may be gleaned from the divisors used by the company in the computation
of overtime pay and employees absences. To illustrate, if all nonworking
days are paid, the divisor of the monthly salary to obtain daily rate should be
365. If nonworking days are not paid, the divisor is 251, which is a result of
subtracting all Saturdays, Sundays, and the ten legal holidays. Hence, if the
petitioners base pay does not yet include holiday pay, it must be added to
his monetary award.
This matter is clearly for the LA to determine being the labor official
charged with the implementation of decision and concomitant computations.
4. Yes.
The LA found that that the petitioner was not entitled to have his sick
leaves converted to cash because such was subject to the discretion of
management in accordance with company policy. The pertinent provision on
sick leave conversion in the Personnel Policy handbook of HMR reads:
d) Accumulated days of unused sick leave may be converted into cash, timeoff or vacation allowance at the end of the calendar year, any of these upon
the discretion of the General Manager.
It is clear from the above that the provision does not give HMR the
absolute discretion to decide whether ornot to grant sick leave conversion.

The discretion of the general manager only pertains to what form the sick
leave conversion may take, and not to whether or not sick leave conversion
will be granted at all. An HMR employee is, therefore, entitled to conversion
of unused sick leave, subject only to the general managers discretion as to
the form it will take, namely cash, time-off, or vacation allowance.
Considering that the conversion options of time-off and vacation allowance
are no longer feasible because the petitioner was illegally dismissed, he is
now entitled to have his unused sick leaves converted to cash.
5. No.
Petitioner Lim prays that the respondents be made to pay, jointly and
severally, additional moral and exemplary damages on account of their bad
faith in delaying the payment and his reinstatement.
There appears, however, no basis to award additional damages
considering that the respondents simply availed of the remedies available to
them under the law in good faith.
6. Yes.
The respondents counter that interest may no longer be added
considering that such was not included in the any of the courts decisions
before the judgment became final and executory.
In some recent cases, no interest was expressly awarded before the
judgments became final and executory, the Court, nonetheless, awarded
legal interest. The decision had become a judgment for money from which
another consequence flowed, namely, the payment of interest in case of
delay in accordance with Eastern Shipping Lines v. Court of Appeals. It was
held therein that when the judgment of the court awarding a sum of money
became final and executory, the rate of legal interest, should be 12% per
annumfrom finality until satisfaction.
The rules on legal interest in Eastern Shipping have, however, been
recently modified in accordance with Bangko Sentral ng Pilipinas Monetary
Board (BSP-MB) Circular No. 799, which became effective on July 1, 2013.
Pertinently, it amended the rate of legal interest in judgments from 12% to
6% per annum, with the qualification that the new rate be applied
prospectively. Thus, the 12% per annum legal interest in judgments under
Eastern Shipping shall apply only until June 30, 2013, and the new rate of 6%
per annum shall be applied from July 1, 2013 onwards.

Petitioner also prays that he be awarded interest at a rate of 6% per

annum on the amounts awarded from the time they became legally due him
until entry of judgment.
The interest of 6% per annum for obligations not constituting a loan or
forbearance of money is one that may be imposed at the discretion of the
court. This form of interest is not mandatory but discretionary in nature and
therefore, not necessarily owing to the petitioner in the present case.

Topic: Disability benefits

Ponente: Brion, J.
G.R. No. 198367

August 6, 2014

OSG
SHIPMANAGEMENT
MANILA,
INC.,
MERCEDES
M.
RAVANOPOLOUS, OSG SHIPMANAGEMENT (UK) LTD. & M/T
DELPHINA, Petitioners, vs. JOSELITO B. PELLAZAR, Respondent.
Facts:
In September 2006, the respondent Joselito B. Pellazar (Pellazar),
an oiler in the vessel MIT Delphina, filed a complaint for permanent total
disability benefits and damages against the petitioners. The petitioners
manifested that the Philippine OverseasEmployment Administration (POEA)
accreditation of the M/T Delphina had been transferred to OSG Ship
Management Manila, Inc. (OSG Manila) and, that in accordance with POEA
procedures, OSG Manila assumed full responsibility for all contractual
obligations to seafarers incurred by C.F. Sharp.
Pellazar was deployed to the M/T Delphinaon July 3, 2005 under an
employment contract for eight months. On November 12, 2005, while he was
on duty onboard the vessel, his right hand was injured after it was struck by
a solid iron pipe. He was given medical attention in a hospital in Brazil. On
November 26, 2005, he was medically repatriated.
Upon his arrival in Manila, Pellazar reported to OSG Manila and was
referred on November 29, 2005 to the company-designated physicians, Dr.
Pedro S. De Guzman (Dr. De Guzman) and Dr. Raymond C. Banaga (Dr.
Banaga) of the Physicians Diagnostic Services Center, Inc. Dr. De Guzman
was also the Medical Directorof the Center while Dr. Banaga was Pellazars
attendingphysician. Pellazars working diagnosis was "complete fracture,
distal part of 5th finger, right hand post-casting." He continued to report
tothe company-designated physicians until August 14, 20065 for evaluation
and treatment.
The company-designated physicians gave Pellazar a Grade 10 disability
rating7 for "loss of grasping power for large objects between fingers and
palm of one hand."

On September 30, 2006, Pellazar consulted a physician of his choice,

Dr. Raul F. Sabado (Dr. Sabado) of the Dagupan Orthopedic Center in
Dagupan City, who diagnosed him with "loss of grasping power of 5th finger,
loss of opposition between finger and thumb (r) and ankylosis of the 5th
finger (r)," and certified that he was "permanently unfit for any sea duty." In
addition to Dr. Sabados certification, Pellazar claimed that despite the lapse
of 120 days, and the fact that he had already undergone maximum
medicalcare, he was still unfit for sea work; thus, the complaint for disability
benefits under the Collective Bargaining Agreement (CBA).
The petitioners argued that Pellazar was not entitled to disability
compensation higher than what was provided under a Grade 10 disability
rating as that was the companydesignated physicians assessment ofhis
disability. A Grade 10 disability is compensated US$10,075.00 under the
POEA Standard Employment Contract (POEA-SEC).
Issues:
1. Whether mere lapse of the 120 day period not warrant payment of
permanent total disability benefits.
2. Whether or not the NLRCs reliance on the findings of companydesignated physician is tainted with grave abuse of discretion on two
grounds:
3. Whether or not Pellazar is entitled to full disability benefits.
Ruling:
1. No.
Entitlement to disability benefits by seamen on overseas work is a
matter governed, not only by medical findings but, by Philippine law and by
the contract between the parties.
The material statutory provisions are Articles 191 to 193 under Chapter
VI (Disability Benefits) of the Labor Code, in relation with Rule X of the Rules
and Regulations Implementing Book IV of the Labor Code.
By contract, Department Order No. 4, series of 2000 of the Department
of Labor and Employment (the POEA Standard Employment Contract) and
the parties' CBA bind the seaman and his employer to each other. The terms
under the POEA-SEC are to be read in accordance with what the Philippine
law provides.

The mere lapse of the 120-day period itself does not automatically
warrant the payment of permanent total disability benefits. Under the CBA
and the POEA-SEC, it is the company-designated physician who shall
determine a seafarers disability or his fitness to work. In granting Pellazar a
Grade 10 disability rating in accordance with the finding of the company
designated physician, the NLRC simply observed the provisions of the
parties POEA-SEC.
2. No.
Under the POEA-SEC and the AMOSUP/IMEC TCCC CBA, the degree of
disability arising from a work-connected injury or illness of a seafarer or his
fitness to work shall be assessed by the company- designated physician to
make the employer liable. Section 20(B) 3 of the POEA-SEC provides:
Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is
declared fit to work or the degree of permanent disability has been assessed
by the company-designated physician but in no case shall this period exceed
one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a
postemployment medical examination by a company-designated physician
within three working days upon his return except when he is physically
incapacitated to do so, in which case a written notice to the agency within
the same period is deemed as compliance. Failure of the seafarer to comply
with the mandatory reporting requirement shall result in his forfeiture of the
right to claim the above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a
third doctor may be agreed jointly between the Employer and the seafarer.
The third doctors decision shall be final and binding on both parties.
The parties CBA, on the other hand, states:
The degree of disability which the Employer, subject to this agreement, is
liable to pay shall be determined by a doctor appointed by the Employer. If
the doctor appointed by the seafarer and his union disagrees with the
assessment, a third doctor may agree jointly between the Employer and the
Seafarer and his Union, and the third doctors decision shall be final and
binding on both parties.

After Pellazar was medically repatriated because of his injury, he

immediately reported to the company-designated physicians, as required by
the POEA-SEC, led by Dr. De Guzman. He then underwent evaluation and
treatment under the management of Dr. Banaga. This treatment started
immediately upon his referral to the two doctors on November 29, 2005 and
lasted for several months until August 14, 2006. Eventually, the companydesignated physicians granted him a Grade 10 disability.
Controversy arose, however, when Pellazar consulted a physician of his
choice, whose findings are in conflict with those of the company designated
physicians.
Since there is a conflict in the assessment of the company-designated
physicians and Dr. Sabados certification in relation to Pellazars fitness or
unfitness to work, the matter should have been referred to a third doctor for
final determination as required by the POEA-SEC and the parties CBA. Since
Pellazar was responsible for the non-referral to the third doctor because of
his failure to inform the manning agency that he would be consulting Dr.
Sabado, he should suffer the consequences of the absence of a binding third
opinion. Thus, the NLRC was well within the bounds of its jurisdiction, in
upholding the disability assessment of Drs. De Guzman and Banaga as
against Pellazars physician of choice.
By recognizing that a disagreement between the company designated
physicians and the physician chosen by the seafarer may exist, the POEASEC itself impliedly recognizesthe seafarers right to request a second
medical opinion from a physician of his own choice. That the seafarer should
not be prevented from seeking an independent medical opinion proceeds
from the theory that a company-designated physician, naturally, may
downplay the compensation due to the seafarer because that is what the
employer, after all, expects of him.
Accordingly, the Court observed that labor tribunals and the courts are
not bound by the medical findings of the company-designated physician and
that the inherent merits of its medical findings will be weighed and duly
considered.
However, even on this context, the NLRCs ruling awarding Pellazar
disability benefits based on the Grade 10 rating of Drs. De Guzman and
Banaga can fully withstand a Rule 65 challenge since the Grade 10 rating
had ample basis in the extensive evaluation and treatment of Pellazar by

these two company doctors, including an orthopedic specialist and a

physiatrist.
Dr. Sabado,Pellazars chosen physician, examined him only once and
could have treated him for a few hours only, considering as the petitioners
point out, that Pellazar came all the way from Antipolo, where he resides, to
Dagupan City, where Dr. Sabado is practicing his profession.27 It is as if, the
petitioners aver, Pellazar sought out Dr. Sabado inDagupan City for a
favorable certification.
While Dr. Sabados diagnosis was consistent with that of the companydesignated physicians (which centered on the injury in Pellazars 5th right
finger and the resulting loss of grasping power of said fifth finger), Dr.
Sabado certified Pellazar to be permanently unfit for sea service.
Notwithstanding Dr. Sabados unfit-to-work certification (which the LA relied
uponin ruling in Pellazarsfavor), the NLRC gave more credence to the Grade
10 disability rating of Pellazar than the assessment of Dr. Sabado.
3. No.
Since the company-designated physicians gave Pellazar only a Grade
10 disability - and not a permanent total disability - he cannot be entitled to
the full disability benefits of US$75,000.00 under the AMOSUP-IMEC TCCC
CBA. Section 20.1.5 of the CBA on Permanent Medical Unfitness provides:
A seafarer whose disability is assessed at 50% or more under the POEA
Employment Contract shall, for the purpose of this paragraph as regarded
(sic) as permanently unfit for further sea service in any capacity and entitled
to 100% compensation, i.e. US$125,000 for senior officers, US$100,000 for
junior officers and US$75,000 for ratings. Furthermore, any seafarer assessed
at less than 50% disability under the contract but certified as permanently
unfit for further sea service in any capacity by the company doctor, shall be
entitled to 100% compensation.

Topic: Payment of Separation Benefits Despite Closure of Business

Due to Serious Losses
Ponente: PERLAS-BERNABE, J.
G.R. No. 200746

August 6, 2014

BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP and/or VILMA

GENON, EDISA HORTELANO, LOURDES ARANAS, TONY FORMENTERA,
RENEBOY LEYSON, MA. ALONA ACALDO, MA. CONCEPCION ABAO,
TERESITA CALINAWAN, NICIFORO CABANSAG, STELLA BARONGO,
MARILYN POTOT, WELMER ABANID, LORENZO ALIA, LINO PARADERO,
DIOSDADO ANDALES, LUCENA ABESIA, and ARMANDO YBAEZ,
Petitioners, vs. BENSON INDUSTRIES, INC., Respondent.

Facts:
Respondent Benson Industries, Inc. (Benson) is a domestic
corporation engaged in the manufacturing of greencoils with the brand name
Lion-Tiger Mosquito Killer. On February 12, 2008, Benson sent its employees,
including herein petitioners, a notice5 informing them of their intended
termination from employment, to be effected on March 15, 2008 on the
ground of closure and/or cessation of business operations.
Petitioners proffered a claim for the payment of additional separation
pay at the rate of four (4) days for every year of service. As basis, petitioners
invoked Section 1, Article VIII of the existing collective bargaining agreement
(CBA) executed by and between the Union and Benson which states that
"Benson shall pay to any employee/laborer who is terminated from the
service without any fault attributable to him, a Separation Pay equivalent to
not less than nineteen (19) days pay for every year of service based upon
the latest rate of pay of the employee/laborer concerned."10 Benson
opposed petitioners claim, averring that the separation pay already paid to
them was already more than what the law requires. Reaching an impasse on
the conflict, the parties referred the issue to voluntary arbitration, wherein
the validity of Bensons closure was brought up as well.
Issue:
benefits.

Whether or not petitioners are entitled to said separation

Ruling:

Yes.

In closure of business, there is a complete cessation of business

operations and/or an actual locking-up of the doors of the establishment,
usually due to financial losses. Under the Labor Code, it is treated as an
authorized cause for termination, aimed at preventing further financial drain
upon an employer who cannot anymore pay its employees since business
has already stopped. As a form of recompense, the employer is
required to pay its employees separation benefits, except when the
closure is due to serious business losses.
While serious business losses generally exempt the employer from
paying separation benefits, it must be pointed that the exemption only
pertains to the obligation of the employer under (new) Article 297 of the
Labor Code.
When the obligation to pay separation benefits, however, is not
sourced from law (particularly, Article297 of the Labor Code), but from
contract, such as an existing collective bargaining agreement between the

employer and its employees, an examination of the latters provisions

becomes necessary in order to determine the governing parameters for the
said obligation.
A collective bargaining agreement refers to the negotiated contract
between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a
bargaining unit. As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs, public order or
public policy. Thus, where the CBA is clear and unambiguous, it becomes the
law between the parties and compliance therewith is mandated by the
express policy of the law.
In this case, it is undisputed that a CBA was forged by the employer,
Benson, and its employees, through the Union, to govern their relations
effective July 1, 2005 to June 30, 2010. It is equally undisputed that Benson
agreed to and was thus obligated under the CBA to pay its employees who
had been terminated without any fault attributable to them separation
benefits at the rate of 19 days for every year of service.
As may be gleaned from the following whereas clauses in a
Memorandum of Agreement30 dated November 20, 2003 between the
parties, Benson had been fully aware of its distressed financial condition
even at the time of the previous CBA.
The postulation that Benson had closed its establishment and ceased
operations due to serious business losses cannot be accepted as an excuse
to clear itself of any liability since the ground of serious business losses is
not, unlike Article 297 of the Labor Code, considered as an exculpatory
parameter under the aforementioned CBA. Clearly, Benson, with full
knowledge of its financial situation, freely and voluntarily entered into such
agreement with petitioners.

A reading of the provision of the CBA reveals that the same provides
for the giving of a "Christmas gift package/bonus" without qualification. Terse
and clear, the said provision did not state that the Christmas package shall
be made to depend on the petitioners financial standing. The records are
also bereft of any showing that the petitioner made it clear during the CBA
negotiations that the bonus was dependent on any condition. Indeed, if the

petitioner and respondent Association intended that the 3,000.00 bonus

would be dependent on the company earnings, such intention should have
been expressed in the CBA.
From the foregoing, petitioner cannot insist on business losses as a
basis for disregarding its undertaking. Business losses are a feeble ground for
petitioner to repudiate its obligation under the CBA. The rule is settled 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 benefits is founded on the constitutional
mandate to protect the rights of workers and to promote their

Topic: Facilities v. Supplements

Ponente: BRION, J.
G.R. No. 204651

August 6, 2014

OUR HAUS REALTY DEVELOPMENT CORPORATION, Petitioner, vs.

ALEXANDER PARIAN, JAY C. ERINCO, ALEXANDER CANLAS, BERNARD
TENEDERO and JERRY SABULAO, Respondents.
Facts:
Respondents Alexander Parian, Jay Erinco, Alexander Canlas,
Jerry Sabulao and Bernardo Tenederowere all laborers working for petitioner
Our Haus Realty Development Corporation (Our Haus), a company engaged
in the construction business.
Sometime in May 2010, Our Haus experienced financial distress. To
alleviate its condition, Our Haus suspended some of its construction projects
and asked the affected workers, including the respondents, to take vacation
leaves.
Eventually, the respondents were asked to report back to work but
instead of doing so, they filed with the LA a complaint for underpayment of
their daily wages. They claimed that except for respondent Bernardo N.
Tenedero, their wages were below the minimum rates prescribed in the
following wage orders from 2007 to 2010.
The respondents also alleged that Our Haus failed to pay them their
holiday, service incentive leave (SIL), 13th month and overtime pays.
Our Haus argues that it complied with the requirements for
deductibility of the value of the facilities. First, the five kasunduans executed
by the respondents constitute the written authorization for the inclusion of
the board and lodgings values to their wages. Second, Our Haus only
withheld the amount of P290.00 which represents the foods raw value; the
weekly cooking cost (cooks wage, LPG, water) at P239.40 per person is a
separate expense that Our Haus did not withhold from the respondents
wages.
Issue:
1. Whether or not Our Haus complied with the requirements for the
deductibility of facilities.
2. Whether or not respondent are entitled to payment of their holiday,
service incentive leave (SIL), 13th month and overtime pays.

Ruling:
1. No.
To justify its non-compliance with the requirements for the deductibility
of a facility:
a. proof must be shown that such facilities are customarily furnished by the
trade;
b. the provision of deductible facilities must be voluntarily accepted in
writing by the employee; and
c. The facilities must be charged at fair and reasonable value.
The facility must be customarily furnished by the trade

One of the badges to show that a facility is customarily furnished by

the trade is the existence of a company policy or guideline showing that
provisions for a facility were designated as part of the employees salaries. To
comply with this, Our Haus presented in its motion for reconsideration with
the NLRC the joint sinumpaang salaysay of four of its alleged employees.
These employees averred that they were recipients of free lodging,
electricity and water, as well as subsidized meals from Our Haus. The Court
agreed with the NLRCs finding that the sinumpaang salaysay statements
submitted by Our Haus are self-serving.
For one, Our Haus only produced the documents when the NLRC had
already earlier determined that Our Haus failed to prove that it was
traditionally giving the respondents their board and lodging. This document
did not state whether these benefits had been consistently enjoyed by the
rest of Our Haus employees. Moreover, the records reveal that the board
and lodging were given on a per project basis. Our Haus did not show if these
benefits were also provided in its other construction projects, thus negating
its claimed customary nature. Even assuming the sinumpaang salaysay to be
true, this document would still work against Our Haus case. If Our Haus
really had the practice of freely giving lodging, electricity and water
provisions to its employees, then Our Haus should not deduct its values from
the respondents wages. Otherwise, this will run contrary to the affiants
claim that these benefits were traditionally given free of charge.

Apart from company policy, the employer may also prove compliance
with the first requirement by showing the existence of an industry-wide
practice of furnishing the benefits in question among enterprises engaged in
the same line of business. If it were customary among construction
companies to provide board and lodging to their workers and treat their
values as part of their wages, we would have more reason to conclude that
these benefits were really facilities.
However, Our Haus could not really be expected to prove compliance
with the first requirement since the living accommodation of workers in the
construction industry is not simply a matter of business practice. Peculiar to
the construction business are the occupational safety and health (OSH)
services which the law itself mandates employers to provide to their workers.
This is to ensure the humane working conditions of construction employees
despite their constant exposure to hazardous working environments. Under
Section 16 of DOLE Department Order (DO) No. 13, series of 1998 employers
engaged in the construction business are required to provide the following
welfare amenities:
16.1 Adequate supply of safe drinking water
16.2 Adequate sanitary and washing facilities
16.3 Suitable living accommodation for workers, and as may be applicable,
for their families
16.4 Separate sanitary, washing and sleeping facilities for men and women
workers.
Moreover, DOLE DO No. 56, series of 2005, which sets out the
guidelines for the implementation of DOLE DO No. 13, mandates that the
cost of the implementation of the requirements for the construction safety
and health of workers, shall be integrated to the overall project cost. The
rationale behind this is to ensure that the living accommodation of the
workers is not substandard and is strictly compliant with the DOLEs OSH
criteria.
As part of the project cost that construction companies already charge
to their clients, the value of the housing of their workers cannot be charged
again to their employees salaries. Our Haus cannot pass the burden of the
OSH costs of its construction projects to its employees by deducting it as
facilities. This is Our Haus obligation under the law.

Purpose Test. Lastly, even if a benefit is customarily provided by the

trade, it must still pass the purpose test set by jurisprudence. Under this test,
if a benefit or privilege granted to the employee is clearly for the
employers convenience, it will not be considered as a facility but a
supplement. Here, careful consideration is given to the nature of the
employers business in relation to the work performed by the employee. This
test is used to address inequitable situations wherein employers consider a
benefit deductible from the wages even if the factual circumstances show
that it clearly redounds to the employers greater advantage.
While the rules serve as the initial test in characterizing a benefit as a
facility, the purpose test additionally recognizes that the employer and the
employee do not stand at the same bargaining positions on benefits that
must or must not form part of an employees wage. In the ultimate analysis,
the purpose test seeks to prevent a circumvention of the minimum wage law.
The purpose test in jurisprudence
Under the law, only the value of the facilities may be deducted from
the employees wages but not the value of supplements.
The law also prescribes that the computation of wages shall exclude
whatever benefits, supplements or allowances given to employees.
In the present case, the board and lodging provided by Our
Haus cannot be categorized as facilities but as supplements.
Facilities vs. Supplements. "Supplements constitute extra
remuneration or special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages. "Facilities", on
the other hand, are items of expense necessary for the laborer's and his
family's existence and subsistence so that by express provision of law (Sec.
2[g]), they form part of the wage and when furnished by the employer are
deductible therefrom, since if they are not so furnished, the laborer would
spend and pay for them just the same.
The distinction lies not so much in the kind of benefit or item (food,
lodging, bonus or sick leave) given, but in the purpose for which it is given. If
its provision is mainly for the employers advantage, then it is a supplement.
Under the purpose test, substantial consideration must be
given to the nature of the employers business in relation to the
character or type of work performed by the employees involved.

Our Haus is engaged in the construction business, a labor intensive

enterprise. The success of its projects is largely a function of the physical
strength, vitality and efficiency of its laborers. Its business will be jeopardized
if its workers are weak, sickly, and lack the required energy to perform
strenuous physical activities. Thus, by ensuring that the workers are
adequately and well fed, the employer is actually investing on its business.
Moreover, in the construction business, contractors are usually faced
with the problem of meeting target deadlines. More often than not, work is
performed continuously, day and night, in order to finish the project on the
designated turn-over date. Thus, it will be more convenient to the employer
if its workers are housed near the construction site to ensure their ready
availability during urgent or emergency circumstances. Also, productivity
issues like tardiness and unexpected absences would be minimized. This
observation strongly bears in the present case since three of the respondents
are not residents of the National Capital Region. The board and lodging
provision might have been a substantial consideration in their acceptance of
employment in a place distant from their provincial residences.
Under the purpose test, the subsidized meals and free lodging
provided by Our Haus are actually supplements. Accordingly, their
values cannot be considered in computing the total amount of the
respondents wages. Under the circumstances, the daily wages paid
to the respondents are clearly below the prescribed minimum wage
rates in the years 2007-2010.
The provision of deductible facilities must be voluntarily accepted in
writing by the employee
As it diminishes the take-home pay of an employee, the deduction
must be with his express consent.
Our Haus belatedly submitted five kasunduans, supposedly executed
by the respondents, containing their conformity to the inclusion of the values
of the meals and housing to their total wages. Oddly, Our Haus only offered
these documents when the NLRC had already ruled that respondents did not
accomplish any written authorization, to allow deduction from their wages.
These five kasunduans were also undated, making us wonder if they had
really been executed when respondents first assumed their jobs.

Moreover, in the earlier sinumpaang salaysay by Our Haus four

employees, it was not mentioned that they also executed a kasunduan for
their board and lodging benefits
The facility must be charged at a fair and reasonable value
Our Haus admitted that it deducted the amount of P290.00 per week
from each of the respondents for their meals. But it now submits that it did
not actually withhold the entire amount as it did not figure in the
computation the money it expended for the salary of the cook, the water,
and the LPG used for cooking, which amounts to P249.40 per week per
person. From these, it appears that the total meal expense per week for each
person is P529.40, making Our Haus P290.00 deduction within the 70%
ceiling prescribed by the rules.
However, Our Haus valuation cannot be plucked out of thin air. The
valuation of a facility must be supported by relevant documents such as
receipts and company records for it to be considered as fair and reasonable.
In the present case, Our Haus never explained how it came up with the
valuesit assigned for the benefits it provided; it merely listed its supposed
expenses without any supporting document. Since Our Haus is using these
additional expenses (cooks salary, water and LPG) to support its claim that it
did not withhold the full amount of the meals value, Our Haus is burdened to
present evidence to corroborate its claim. The records however, are bereft of
any evidence to support Our Haus meal expense computation. Even the
value it assigned for the respondents living accommodations was not
supported by any documentary evidence. Without any corroborative
evidence, it cannot be said that Our Haus complied with this third requisite.
2. Yes.
The burden of proving payment of monetary claims rests on the
employer on the reasoning that the pertinent personnel files, payrolls,
records, remittances and other similar documents which will show that
overtime, differentials, service incentive leave and other claims of workers
have been paid are not in the possession of the worker but in the custody
and absolute control of the employer.
Unfortunately, records will disclose the absence of any credible
document which will show that respondents had been paid their 13th month
pay, holiday and SIL pays. Our Haus merely presented a handwritten
certification from its administrative officer that its employees automatically

become entitled to five days of service incentive leave as soon as they pass
probation. This certification was not even subscribed under oath. Our Haus
could have at least submitted its payroll or copies of the pay slips of
respondents to show payment of these benefits. However, it failed to do so.

Topic: Just Cause for Termination of Employment

Ponente: PEREZ, J.
G.R. No. 189629

August 6, 2014

DR. PHYLIS C. RIO, Petitioner, vs. COLEGIO DE STA. ROSAMAKATI

and/or SR. MARILYN B. GUSTILO, Respondents.
Facts:
Petitioner was hired by respondent Colegio De Sta. Rosa-Makati
as a part-time school physician in June 1993. Respondent Sr. Marilyn Gustilo
charged petitioner and Mrs. Neneth Alonzo (Alonzo), the school nurse, of
"grave misconduct, dishonesty and/or gross neglect of duty detrimental not
only to the school but, principally, to the health and well-being of the pupils
based on the Manual of Regulations for Private Schools and Section 94 (a)
and (b) and Article 282 (a), (b) and (c) of the Labor Code." In the same letter,

petitioner and Alonzo were preventively suspended for a period of thirty (30)
days, effective 30 July 2002.
Petitioner was made to answer for the following: (1) nine (9) students
have medical records for school years during which they were not in the
school yet, thus could not have been the subject of medical
examination/evaluation; (2) seventy-nine (79) students of several
classes/sections during certain school years were not given any
medical/health evaluation/examination; and (3) failure to conduct
medical/health examination on all students of several classes of different
grade levels for the school year 2001-2002.3
Petitioner denied the charges through a letter to respondent on 2
August 2002. On 9 August 2002 petitioner filed a complaint for constructive
dismissal and illegal suspension against respondents Colegio de Sta. Rosa
Makati and Gustilo before the Labor Arbiter.
Issue:

Whether or not petitioner was illegally dismissed.

Ruling:

No.

Based on Article 282 of the Labor Code, in relation to Section 94 of the

1992 Manual of Regulations for Private Schools, petitioner was legally
dismissed on the ground of gross inefficiency and incompetence, and
negligence in the keeping of school or student records, or tampering with or
falsification of records.
Gross inefficiency is closely related to gross neglect because both
involve specific acts of omission resulting in damage to another. Gross
neglect of duty or gross negligence refers to negligence characterized by the
want of even slight care, acting or omitting to act in a situation where there
is a duty to act, not inadvertently but willfully and intentionally, with a
conscious indifference to consequences insofar as other persons may be
affected.
As borne by the records, petitioners actions fall within the purview of
the above-definitions. Petitioner failed to diligently perform her duties. It was
unrefuted that: (1) there were dates when a medical examination was
supposed to have been conducted and yet the dates fell on weekends; (2)
failure to conduct medical examination on all students for two (2) to five (5)
consecutive years; (3) lack of medical records on all students; and (4)
students having medical records prior to their enrollment.

As her defense, petitioner maintains that the discrepancies were due to

the loss of the cabinet key, which was misplaced by Sr. Zenaida, the
personin-charge. Because the cabinet, which contains the official medical
records, could not be opened, Alonzo had to record the medical examinations
temporarily. Due to pressure and time constraints, Alonzo erroneously
transferred the entries of the medical examinations to the official records.
However, petitioner waited for two (2) years to finally have the cabinet
opened.
Even assuming that petit10ner was telling the truth, the fact remains
that she had been grossly inefficient and negligent for failing to provide a
proper system of maintaining and updating the students' medical records
over the years of her employment with respondent." Indeed, petitioner was
grossly inefficient and negligent in performing her duties.

Topic: Death Benefits

Ponente: PERALTA, J.
G.R. No. 192993

August 11, 2014

WALLEM MARITIME SERVICES, INC., and REGINALDO OBEN/WALLEM

SHIPMANAGEMENT LIMITED, Petitioners, vs. DONNABELLE PEDRAJAS
and SEAN JADE PEDRAJAS, Respondnets.
Facts:
Petitioner Wallem Maritime Services, Inc. is a domestic
corporation licensed to engage in the manning business. In 2004, petitioner
Wallem Maritime Services, Inc. and Hernani Pedrajas (Hernani) entered into a
contract of employment wherein Hernani was hired as Engine Boy on board
the M/V Crown Jade.
In March 2005, during the effectivity of his employment contract and
while the vessel was in Italy, Hernani was found hanging on the Upper Deck
B of the vessel with a rope tied to his neck. Hernani's spouse and herein
respondent, Donnabelle Pedrajas (Donnabelle), was informed that Hernani
hanged himself and was found dead in the vessel. She was also informed
that investigations were being conducted by the Italian Government relative
to Hernani's death. His body was repatriated back to the Philippines in April
2005.
Suspecting foul play, Donnabelle sought the assistance of the
Philippine National Police (PNP) Crime Laboratory to conduct a forensic
examination on the remains of Hernani and to investigate the cause of his
death. Donnabelle also requested the National Bureau of Investigation (NBI)
to investigate the incident. After the investigation, the PNP Crime Laboratory
and the NBI concluded that homicide cannot be totally ruled out. Due to the
foregoing, in June 2005, Donnabelle, as beneficiary of Hernani, filed a claim
for death compensation benefits under the POEA Standard Employment
Contract and the Associates Marine Officer's and Seafarer's Union of the
Philippines Collective Bargaining Agreement (AMOSUPCBA). She also
demanded attorney's fees, moral, and exemplary damages.
Petitioners claim that they have no obligation to pay death benefits to
the heirs of Hernani because the latter's death was self-inflicted and
therefore exempted from the coverage of death benefits under the Philippine
Overseas Employment Agency-Standard Employment Contract (POEASEC)
and the AMOSUP-CBA.
Issue:
Whether Hernani committed suicide during the term of his
employment contract which would exempt petitioners from paying Hernani's
death compensation benefits to his beneficiaries.
Ruling:

Yes.

Section 20 (D) of the POEA-SEC provides:

No compensation and benefits shall be payable in respect of any injury,
incapacity, disability or death of a seafarer resulting from his willful or
criminal act or intentional breach of his duties x x x.
The death of a seaman during the term of his employment makes the
employer liable to the former's heirs for death compensation benefits. This
rule, however, is not absolute. The employer may be exempt from liability if
it can successfully prove that the seaman's death was caused by an
injury directly attributable to his deliberate or willful act. Hence,
respondents' entitlement to any death benefit depends on whether
petitioners' evidence suffices to prove that Hernani committed suicide, and
the burden of proof rests on his employer.
In the case at bar, the Italian Medical Examiner found that:
During the necroscopic investigation, no other forms of injuries were
noted on the body of Pedrajas and his viscera; thisallows us to retain that
Pedrajas suffered no physical violence before the hanging and that he hung
himself, in order to commit suicide, of his own accord. The presence of flakes
of white paint on the palms of both hands, the same as on the gangway, the
banister and the pipe where the rope was fixed, is an element which goes to
confirm - even if of lesser value - the theory that Pedrajas himself tied the
rope to the metal pipe.
xxxx
Therefore no elements at all have emerged such as would lead us to
believe that third parties may have intervened in causing the death, and the
way inwhich Mr. Pedrajas died, as described, conforms to suicide.
The Italian Medical Examiner further concluded that:
x x x There are no elements which may lead one to suppose/assume the
direct intervention of third parties in causing the death of the young seaman.
In other words, beyond all reasonable doubt, everything points to
Pedrajas having hung himself in order to commit suicide.
In the case at bar, the CA did not give credit to the report and findings
made by the Medical Examiner appointed by the Italian Court who conducted
the autopsy on the body of Hernani. The CA held that the Forensic Report of
the Public Prosecutors Office of Livorno, Italy was "weakened" by the

findings of the PNP Crime Laboratory and the NBI. The PNP Crime Laboratory,
in its report, stated thus:

Unfortunately, my knowledge of the case is limited by the fact that I

have no police report and autopsy report done in Italy. I have no pictures of
the following: crime scene, cord/rope, type of knot, position of the body when
it was found. Inthis case, I only have the body and the verbal information
disclosed to me by the wife and sister of the victim. x x x
To be able to determine if the strangulation is "suicide or homicide," it
should not be only limited to the autopsy, but it must be based on several
aspects like knowledge of the "crime scene, victims behavior and other
things related to it. x x x
xxxx
Based on the following information and physical findings, we cannot
totally rule-out homicide.
The NBI, on the other hand, did not conduct any autopsy of the body of
Hernani and just based their opinion on documents submitted to them and
information coming solely from his relatives. The Medico-Legal Officer of the
NBI found that:
In view of the above facts and observations, it is the opinion of the
undersigned that HOMICIDE cannot be totally ruled out.
This compliance was merely to render an opinion and should not be
construed as judgment.16 From the foregoing, it is more logical to rely on the
findings of the Italian Medical examiner. In Maritime Factors, Inc. v.
Hindang,17 the Court gave credence to the medical report made by the
Saudi Arabian doctor, who immediately conducted an autopsy on the
seafarer's body upon his death. The Court reasoned, thus:
We give credence to Dr. Hameed's medical report establishing that
Danilo committed suicide bychanging himself.1wphi1 Dr. Hameed
conducted the autopsy of Danilo's remains immediately after the latter's
death. He saw first-hand the condition of Danilo's body, which upon his
examination led him to conclude that Danilo died by hanging himself. His
report was comprehensive and more detailed. He, likewise, noted, that there

were no signs of violence or resistance, or any external injuries except a very

slight and artificial injury of nearly 5 cm among the toes of Danilo's right leg.
Here, it should be noted that the Medical Examiner appointed by the
Italian Court was not merely limited to the autopsy of the remains of Hernani.
The findings of the Italian Medical Examiner were made after he personally
and carefully examined the place immediately after the incident. The
medical examiner had the luxury ofinvestigating the crime scene, the rope
used for hanging, type of knot, temperature and position of the body when
found. As aptly found by the LA: Moreover, this Office is more than convinced
that the death of the seafarer is due to his hanging himself which would
disqualify his heirs from entitlement to death benefits under the POEA
Contract and the CBA. The forensic report issued by the Italian authorities
proves this fact. In said forensic report issued by the Italian Medical Examiner
from the Public Prosecutor's Office, it was found that the (sic) based on the
evidence that he personally examined everything points to Mr. Pedrajas
hanging himself to commit suicide. As sufficiently argued by the respondents
(petitioners herein) the findings of the Medical Examiner appointed by the
Italian Court was made after he personally and carefully examined the place
of the incident immediately after the body of Mr. Pedrajas was found. x x x
The report of the Italian Medical Examiner, which stated that Hernani
committed suicide is more categorical and definite than the uncertain
findings of the PNP Crime Laboratory and the NBI that homicide cannot be
totally ruled out. Hence, the Court agrees with the findings of the LA and his
judgment to give weight and credence to the evidence submitted by the
petitioners proving that Hernani committed suicide.
Moreover, the credibility and authenticity of Hemani's suicide notes are
also beyond doubt. In fact, the statements contained in the notes led to the
investigation and arrest of Deck Boy Harder, who confessed as to his
participation in the drug operations which eventually led the Italian
authorities to where the remaining cocaine and proceeds thereof were being
hidden on-board the vessel. Since the information in the notes proved to be
informative and useful to the Italian authorities, it would only lend more
credence to its genuineness and truthfulness. Verily, it could only lead to the
conclusion that the notes were written by no other person except Hemani.
Since. the petitioners were able to prove that Hemani committed
suicide, Hemani' s death is not compensable and his heirs are not entitled to
any compensation or benefits. It is settled that when the death of a seaman

resulted from a deliberate or willful act on his own life, and it is directly
attributable to the seaman, such death is not compensable.

Topic: Prescriptive Period of Money Claims

Ponente: LEONEN, J.
G.R. No. 175689

August 13, 2014

GEORGE A. ARRIOLA, Petitioner, vs. PILIPINO STAR .NGAYON, INC.

and/or MIGUEL G. BELMONTE, Respondents.
Facts:
In July 1986, Pilipino Star Ngayon, Inc. employed George A.
Arriola as correspondent assigned in Olongapo Cityand Zambales. Arriola had
held various positions in Pilipino Star Ngayon, Inc. before becoming a section
editor and writer of its newspaper. He wrote "Tinig ng Pamilyang OFWs" until
his column was removed from publication on November 15, 1999. Since
then, Arriola never returned for work.
On November 15, 2002, Arriola filed a complaint4 for illegal dismissal,
non-payment of salaries/wages, moral and exemplary damages, actual
damages, attorney's fees, and full backwages with the National Labor
Relations Commission. In his position paper, Arriola alleged that Pilipino Star
Ngayon, Inc. "arbitrarily dismissed"6 him on November 15, 1999. Arguing
that he was a regular employee, Arriola contended that his rights to security
of tenure and due process were violated when Pilipino Star Ngayon, Inc.
illegally dismissed him.
Pilipino Star Ngayon, Inc. and Miguel G. Belmonte denied Arriolas
allegations. In their position paper, they alleged that around the third week
of November 1999, Arriola suddenly absented himself from work and never

returned despite Belmontes phone callsand beeper messages. After a few

months, they learned that Arriola transferred to a rival newspaper publisher,
Imbestigador, to write "Boses ng Pamilyang OFWs."
Arriola denied that he abandoned his employment. He maintained that
Pilipino Star Ngayon, Inc. ordered him to stop reporting for work and to claim
his separation pay.To prove his allegation, Arriola presented a statement of
account allegedly faxed to him by Pilipino Star Ngayon, Inc.s accounting
head. This statement of account showed a computation of his separation pay
as of November 30, 1999.
The Labor Arbiter, NLRC and CA ruled that the action of Arriola has
already prescribed under Art. 291 of the Labor Code.
Issues:
1. Whether Arriolas money claims have prescribed.
2. Whether Pilipino Star Ngayon,Inc. illegally dismissed Arriola.
Ruling:
1. No
Article 291 of the Labor Code does not cover "money claims"
consequent to an illegal dismissal such as backwages. It also does not cover
claims for damages due to illegal dismissal. These claims are governed by
Article 1146 of the Civil Code of the Philippines, which provides:
Art. 1146. The following actions must be instituted within four years:
(1) Upon injury to the rights of the plaintiff.
Article 1146 of the Civil Code of the Philippines governs complaints for
illegal dismissal. Under Article 1146, an action based upon an injury to the
rights of a plaintiff must be filed within four years. This court explained:
. . . when one is arbitrarily and unjustly deprived of his job or means of
livelihood, the action instituted to contest the legality of one's dismissal from
employment constitutes, in essence, an action predicated "upon an injury to
the rights of the plaintiff," as contemplated under Art. 1146 of the New Civil
Code, which must be brought within four [4] years.
This four-year prescriptive period applies to claims for
backwages, not the three-year prescriptive period under Article 291
of the Labor Code. A claim for backwages, according to this court,

may be a money claim "by reason of its practical effect." Legally,

however, an award of backwages "is merely one of the reliefs which an
illegally dismissed employee prays the labor arbiter and the NLRC to render
in his favor as a consequence of the unlawful act committed by the
employer." Though it results "in the enrichment of the individual illegally
dismissed, the award of backwages is not in redress of a private right, but,
rather, is in the nature of a command upon the employer to make
public reparation for his violation of the Labor Code."
Actions for damages due to illegal dismissal are likewise actions "upon
an injury to the rights of the plaintiff." Article 1146 of the Civil Code of the
Philippines, therefore, governs these actions.
Arriolas claims for backwages, damages, and attorneys fees arising
from his claim of illegal dismissal have not yet prescribed when he filed his
complaint with the Regional Arbitration Branch for the National Capital
Region ofthe National Labor Relations Commission. The prescriptive period
for filing an illegal dismissal complaint is four years from the time the cause
of action accrued. Since an award of backwages is merely consequent to a
declaration of illegal dismissal, a claim for backwages likewise prescribes in
four years.
2. No.
Arriola abandoned his employment with Pilipino Star Ngayon, Inc.
Abandonment is the "clear, deliberate and unjustified refusal of an employee
to continue his employment, without any intention of returning."
It has two elements: first, the failure to report for work or absence
without valid or justifiable reason and, second, a clear intention to sever
employer-employee relations exists. The second element is "the more
determinative factor and is manifested by overt acts from which it may be
deduced that the employee has no more intention to work." Assuming that
Arriola started writing for Imbestigador only on February 17, 2003, he
nonetheless failed to report for work at Pilipino Star Ngayon, Inc. after
November 15, 1999 and only filed his illegal dismissal complaint on
November 15, 2002. He took three years and one day to remedy his
dismissal. This shows his clear intention to sever his employment with
Pilipino Star Ngayon, Inc.

Topic: Remedies
Ponente: PERLAS-BERNABE, J.
G.R. No. 205870

August 13, 2014

LEI SHERYLL FERNANDEZ, Petitioner, vs.

represented by GUADALUPE JOSE, Respondent.

BOTICA

CLAUDIO

Facts:
Fernandez filed a cases of illegal dismissal, among others,
against Jose. Jose denied the foregoing allegations, and contended that
Fernandezs dismissal was valid.
The LA held that while just cause attended Fernandezs dismissal from
work based on the finding that she went on AWOL, the same was
nonetheless effected without procedural due process.
Dissatisfied with the LAs ruling, Fernandez filed a Notice of Appeal
with Memorandum of Appeal on February 8, 2008 before the NLRC. Copies of

the same were purportedly sent by registered mail to one "Atty. Ramon E.
Solis, Jr., Counsel for respondents, No. 5 Sto. Nino St., SFDM, 1100 Quezon
City."
On March 15, 2010, the NLRC rendered a Resolution granting
Fernandezs appeal, and thereby reversing the LAs ruling.
On June 1, 2010, an Entry of Judgment24 was issued by the NLRC,
declaring its Resolution to have become final and executory on May 18,
2010. Consequently, the LA issued an Order dated August 17, 2010 (LA
Order) granting Fernandezs motion for execution.
Without disclosing the date when the foregoing resolution was
received, Jose filed a motion for reconsideration dated January 20, 2011
before the NLRC. Despite the fact that the NLRC had yet to act on the
aforesaid motion for reconsideration, Jose filed a second motion for
reconsideration28 dated February 2, 2011 before the same tribunal.
Notwithstanding the pendency of the aforesaid motions for
reconsideration, Jose filed a petition for certiorari before the CA, claiming to
have secured a copy of the NLRC Resolution and LA Order only upon personal
verification on February 8, 201031 and filed a motion for reconsideration
therefrom on April 12, 2011,32 referring to her second motion for
reconsideration dated February 2, 2011. The CA gave due course to the
petition.
Issue:
Whether or not the CA erred in holding that the NLRC gravely
abused its discretion in giving due course to Fernandezs appeal.
Ruling: Yes.
The CA gravely abused its discretion in giving due course to
respondents Rule 65 certiorari petition despite its finding that the latter still
had a pending motion for reconsideration from the Decision dated March 15,
2010 before the NLRC. It is settled that the filing of a motion for
reconsideration from the order, resolution or decision of the NLRC is
an indispensable condition before an aggrieved party can avail of a
petition for certiorari. This is to afford the NLRC an opportunity to rectify
its perceived errors or mistakes, if any.
Hence, the more prudent recourse for respondent should have been to
move for the immediate resolution of its motion for reconsideration before
the NLRC instead of filing a petition for certiorari before the CA. Having failed

to do so, her petition for certiorari was prematurely filed, and the CA should
have dismissed the same.
2. The CA erred in declaring that the failure of Fernandez to furnish Jose with
copies of her notice of appeal and memorandum of appeal before the NLRC
deprived the latter of her right to due process.
While Article 223 of the Labor Code and Section 3(a), Rule VI of the
then New Rules of Procedure of the NLRC require the party intending to
appeal from the LAs ruling to furnish the other party a copy of his
memorandum of appeal, the Court has held that the mere failure to serve
the same upon the opposing party does not bar the NLRC from giving due
course to an appeal. Such failure is only treated as a formal lapse, an
excusable neglect, and, hence, not a jurisdictional defect warranting
the dismissal of an appeal. Instead, the NLRC should require the
appellant to provide the opposing party copies of the notice of
appeal and memorandum of appeal.
In this case, however, the NLRC could not be expected to require
compliance from Fernandez, the appellant, since it was not aware that the
opposing party, Jose, was not notified of her appeal. Hence, it cannot be
faulted in relying on Fernandezs representation that she had sent Jose,
through her counsel, a copy of her memorandum of appeal by registered
mail.
Jose eventually participated in the appeal proceedings by filing not
only one but two motions for reconsideration from the NLRC Resolution,
thereby negating any supposed denial of due process on her part. As held in
the case of Angeles v. Fernandez, the availment of the opportunity to
seek reconsideration of the action or ruling complained of in labor
cases amounts to due process. After all, the essence of due process is
simply the opportunity to be heard or as applied in administrative
proceedings, an opportunity to explain ones side or an opportunity to seek a
reconsideration of the action or ruling complained of. What the law prohibits
is absolute absence of the opportunity to be heard, thus, an aggrieved party
cannot feign denial of due process where he had been afforded the
opportunity to ventilate his side, as Jose was in this case.
Topic: Death Benefits
Ponente: PERALTA, J.
G.R. No. 198342

August 13, 2014

REMEDIOS O. YAP, Petitioner, vs. ROVER MARITIME SERVICES

CORPORATION,
MR.
RUEL
BENISANO
and/or
UCO
MARINE
CONTRACTING W.L.L., Respondents.
Facts:
The deceased, Dovee M. Yap, was a seafarer who had been
employed by respondents Rover Maritime Services Corporation, its foreign
principal, UCO-Marine Contracting W. L. L., and Ruel Benisano, in various
capacities under different contracts of employment continuously for a period
of ten (10) years. In his last contract with respondents, dated July 15, 2005,
he was hired as Third Mate on board vessel UCO for a period of one (1) year
with a basic monthly salary of Six Hundred Dollars (US$600.00). He boarded
the vessel on July 23, 2005.
On July 23, 2006, the last day of Dovee Yaps contract, he met an
accident. While inspecting a lifeboat, he slipped and hit his back on the steel
lifeboat ladder.7 He was brought to a hospital in Bahrain and was confined
thereat for two (2) weeks.
On August 17, 2006, Dovee Yap was repatriated to the Philippines. On
August 19, 2006, he was admitted at the Doctors Medical Center in Iloilo City
for three (3) weeks for further treatment. Sometime later, Dovee Yap was
again confined at the (Iloilo) Western Visayas Medical Center, with the
diagnosis of "squamous cell carcinoma of the lungs with metastasis to the
spine and probably the brain."
On July 17, 2007, Dovee Yap filed against respondents a complaint for
permanent disability benefits, sickwages, reimbursement of hospital,
medical, and doctors expenses, actual, moral and exemplary damages, and
attorneys fees.10
During the pendency of the case, Dovee Yap died of "Multiple Organ
Failure Secondary To Pulmonary Squamous Cell CA With Distant Metastasis
(Brain and Bone) And Obstructive Pneumonia Secondary To Electrolyte
Imbalance Secondary To Gastric Ulcer Secondary To S/P Radio Therapy." His
widow, Remedios O. Yap, substituted him as party-complainant and the claim
for disability benefits was then converted into a claim for death benefits.
Issue:
Whether or not the petitioner is entitled to compensation for the
death of her husband, Dovee Yap.
Ruling:

No.

The terms and conditions of a seafarers employment, including claims

for death and disability benefits, is a matter governed, not only by medical
findings, but by the contract he entered into with his employer and the law
which is deemed integrated therein.
Paragraph 2 of the Contract of Employment between petitioners
husband and respondents states that the terms and conditions of
Department of Labor and Employment (DOLE) Order No. 4, Series of 2000, as
amended by Philippine Overseas Employment Administration (POEA)
Memorandum Circular No. 9, Series of 2000, entitled the Standard Terms and
Conditions Governing the Employment of Filipino Seafarers On Board OceanGoing Vessels (POEA Standard Employment Contract), shall be strictly and
faithfully observed. Said issuances provide a set of minimum requirements
acceptable to the government for the employment of Filipino seafarers on
board ocean-going vessels.
Petitioner failed to prove by substantial evidence that the
death of her husband occurred during the term of his employment
contract and that the cause of death was work-related.
First, it is clear from the evidence presented that petitioners husband
did not pass away during the term of his employment. His contract of
employment with respondents expired on July 23,2006 whereas his death
occurred more than a year thereafter or on August 19, 2007.
Second, petitioner failed to adduce proof that the death of Dovee Yap
was work-related. Unless there is substantial evidence showing that:
(a) the cause of the seamans death was reasonably connected to
his work; or (b) the sickness/ailment for which he died is an
accepted occupational disease; or (c) his working conditions
increased the risk of contracting the disease for which he died,
death compensation benefits cannot be awarded.
Petitioner failed to establish the link connecting Dovee Yaps accidental
slip to the lung cancer and pneumonia that killed him.
Moreover, as the CA noted, Dovee Yap did not even submit himself to
the mandatory post-employment medical examination within three (3) days
from his arrival in the Philippines. Neither was there any indication that he
was physically incapacitated to do so. To ignore this mandatory rule would
certainly be unfair to the employer who would have difficulty determining the
cause of a claimants illness considering the passage of time.

Neither can it be said that Dovee Yaps working conditions increased

the risk of contracting the disease for which he died. No evidence on record
nor allegation in the pleadings showing how Dovee Yaps working conditions
involved exposure to the risks of contracting cancer of the lungs or
pneumonia.
In addition, while Dovee Yaps pneumonia may be listed as an
occupational disease under Section 32-A of the POEA Standard
Employment Contract. Petitioner failed to comply with its conditions, thus,
the award of death compensation benefits are barred. basis of Section 32-A.
We are not persuaded. The mere fact that Dovee Yap was declared fit
to work in his pre-medical examinationsfor the past ten (10) years of his
employment does not necessarily follow that his pulmonary illness and
cancer of the lungs was brought about by the accident he encountered. Preemployment merely determines whether one is "fit to work" at sea
or "fit for sea service," and does not reveal the real state of health
of an applicant.

Topic: Agrarian Reform; Just Compensation

Ponente: PERLAS-BERNABE, J.
G.R. No. 184982

August 20, 2014

LAND BANK OF THE PHILIPPINES, Petitioner, vs. JOSE T. LAJOM,

represented by PORFIRIO RODRIGUEZ, FLORENCIA LAJOM GARCIADIAZ,
FRANCISCO
LAJOM
GARCIA,
JR.,
FERNANDO
LAJOM
RODRIGUEZ, TOMAS ATAYDE, AUGUSTO MIRANDA, JOSEFINA ATAYDE
FRANCISCO, RAMON L. ATAYDE, and BLESILDA ATAYDE RIOS,
Respondents.
Facts:
Jose T. Lajom (Lajom) and his mother Vicenta Vda. De Lajom
(Vda. De Lajom) were the registered owners of several parcels of land in
Nueva Ecija.
Sometime in 1991, a 24-ha., more or less, portion of the subject land
(subject portion) was placed under the government's Operation Land
Transfer Program pursuant to Presidential Decree No. (PD) 27, otherwise
known as the "Tenants Emancipation Decree," as amended. Accordingly, the
Department of Agrarian Reform (DAR), through the Land Bank of the
Philippines (LBP), offered to pay Lajom the following amounts as just
compensation for the following constitutive areas of the subject portion: (a)
19,434.00 for 11.3060 has.; (b) 17,505.65 for 2.4173 has.; and (c) 80,733.45
for 10.3949 has. (DAR valuation).
Records show, however, that despite non-payment of the offered just
compensation, DAR granted twelve (12) Emancipation Patents between 1994
and 1998 in favor of the 10 farmer-beneficiaries.
Lajom rejected the DAR valuation and, instead, filed an amended
Petition for determination of just compensation and cancellation of land
transfers against the DAR, the LBP, and the said farmer-beneficiaries. He
alleged, inter alia, that in computing the amount of just compensation, the
DAR erroneously applied the provisions of PD 27 and Executive Order No.

(EO) 228, Series of 1997, that have been repealed by Section 17 of Republic
Act No. (RA) 6657,2 otherwise known as the "Comprehensive Agrarian
Reform Law of 1988," which took effect on June 15, 1988.
Thus, he asserted that the value of the subject portion should be
computed based on the provisions of RA 6657, and not of PD 27 and/or EO
228. He likewise claimed that the Barrio Committee on Land Production
(BCLP) resolution which fixed the average gross production (AGP) per ha.
per year at 120 cavans of palay, and which the DAR used in arriving at its
valuation was falsified and therefore cannot validly serve as basis for
determining the value of the land. In sum, Lajom stressed that the DAR
valuation was arrived at without due process, highly prejudicial and inimical
to his and his heirs property rights.

For its part, the LBP agreed with the DAR valuation and insisted that PD
27 and EO 228, on which the DAR valuation was based, were never
abrogated by the passage of RA 6657,contrary to Lajoms stance.
Issues:
1. Whether or not just compensation should be determined and the
process concluded under RA 6657.
2. When should just compensation be determined?
3. Whether the RTC, sitting as a Special Agrarian Court, should make the
final determination of just compensation in the exercise of its judicial
function.
Ruling:
1. Yes.
When the agrarian reform process under PD 27 remains incomplete
and is overtaken by RA 6657, such as when the just compensation due the
landowner has yet to be settled, as in this case, such just compensation
should be determined and the process concluded under RA 6657,
with PD 27 and EO 228 applying only suppletorily. Hence, where RA
6657 is sufficient, PD27 and EO 228 are superseded.
Even before Lajom filed a petition for the judicial
determination of just compensation in May 1993, RA 6657 had
already taken effect on June 15, 1988. Similarly, the emancipation
patents had been issued in favor of the farmer-beneficiaries prior to

the filing of the said petition, and both the taking and the valuation
of the subject portion occurred after the passage of RA 6657. The
matters pertaining to the correct just compensation award for the subject
portion were still in contention at the time RA 6657 took effect; thus, its
provisions should have been applied, with PD 27 and EO 228 applying only
suppletorily.
2. Just compensation should be determined at the time of the propertys taking.
Taking may be deemed to occur, for instance, at the time emancipation
patents are issued by the government. As enunciated in LBP v. Heirs of Angel
T. Domingo:
The date of taking of the subject land for purposes of
computing just compensation should be reckoned from the issuance
dates of the emancipation patents. An emancipation patent constitutes
the conclusive authority for the issuance of a Transfer Certificate of Title in
the name of the grantee. It is from the issuance of an emancipation
patent that the grantee can acquire the vested right of ownership in
the landholding, subject to the payment of just compensation to the
landowner.
Since the emancipation patents in this case had been issued between
the years 1994 and 1998, the just compensation for the subject portion
should then be reckoned therefrom, being considered the "time of taking"
or the time when the landowner was deprived of the use and
benefit of his property.
3. Yes.
While the LBP is charged with the initial responsibility of determining
the value of lands placed under the land reform and, accordingly, the just
compensation therefor, its valuation is considered only as an initial
determination and, thus, not conclusive. Verily, it is well-settled that it is
the RTC, sitting as a Special Agrarian Court, which should make the final
determination of just compensation in the exercise of its judicial function. In
this respect, the RTC is required to consider the factors enumerated in
Section 17 of RA 6657, as amended, viz.:
SEC. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by government

assessors shall be considered. The social and economic benefits contributed

by the farmers and the farmworkers and by the Government to the property
as well as the non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors
to determine its valuation.
Guidelines in Determining Proper Just Compensation
1. Just compensation must be valued at the time of the taking, or the
"time when the landowner was deprived of the use and benefit of his
property" which, in this case, is reckoned from the date of the issuance
of the emancipation patents. Hence, the valuation of the subject
portion must be based on evidence showing the values prevalent on
such time of taking for like agricultural lands.
2. The evidence must conform to Section 17 of RA 6657, as amended,
prior to its amendment by RA 9700. While RA 9700 took effect on July
1, 2009, which amended further certain provisions of RA 6657, as
amended, among them Section 17, declaring "that all previously
acquired lands wherein valuation is subject to challenge by landowners
shall be completed and finally resolved pursuant to Section 17 of [RA
6657], as amended," the law should NOT be applied retroactively to
pending cases. Considering that the present consolidated petitions had
been filed before the effectivity of RA 9700, , Section 17 of RA 6657, as
amended, prior to its further amendment by RA 9700, should therefore
apply.
3. With respect to the commonly raised issue on interest, the RTC may
impose the same on the just compensation award as may be justified
by the circumstances of the case and in accordance with prevailing
jurisprudence. The Court has previously allowed the grant of legal
interest in expropriation cases where there was delay in the payment
of just compensation, deeming the same to be an effective
forbearance on the part of the State. To clarify, this incremental
interest is not granted on the computed just compensation; rather, it
is a penalty imposed for damages incurred by the landowner
due tothe delay in its payment. Thus, legal interest shall be pegged
at the rate of 12% p.a. from the time of taking until June 30, 2013.
Thereafter, or beginning July 1, 2013, until fully paid, just
compensation shall earn interest at the new legal rate of 6% p.a.,
conformably with the modification on the rules respecting interest
rates introduced by Bangko Sentral ng Pilipinas Monetary Board
Circular No. 799, Series of 2013.

4. The RTC, sitting as a Special Agrarian Court, is reminded that while it

should take into account the various formulae created by the DAR in
arriving at the just compensation for the subject land, it is not strictly
bound thereby if the situations before it do not warrant their
application. The RTC, in the exercise of its judicial function of
determining just compensation, cannot be restrained or delimited in
the performance thereof. The determination of just compensation
is a judicial function.

Topic: Illegal Dismissal; Regular Employment

Ponente: PERLAS-BERNABE, J.
G.R. No. 207253

August 20, 2014

CRISPIN B. LOPEZ, Petitioner, vs. IRVINE CONSTRUCTION CORP. and

TOMAS SY SANTOS, Respondents.

Facts:
Respondent Irvine Construction Corp. (Irvine) is a construction
firm. It initially hired Lopez as laborer in November 1994 and, thereafter,
designated him as a guard at its warehouse in Dasmarinias, Cavite in the
year 2000, with a salary of P238.00 per day and working hours from 7 o'clock
in the morning until 4 o'clock in the afternoon, without any rest day.
On December 18, 2005, Lopez was purportedly terminated from his
employment, whereupon he was told "Ikaw ay lay-off muna." Thus, on
January 10, 2006, he filed a complaint for illegal dismissal with prayer for the
payment of separation benefits against Irvine.
For its part, Irvine denied Lopez's claims, alleging that he was
employed only as a laborer who, however, sometimes doubled as a guard. As
evidenced by an Establishment Termination Report dated December 28,
2005 which Irvine previously submitted before the Department of Labor and
Employment (DOLE), Lopez was, however, temporarily laid-off on December
27, 2005 after the Cavite project was finished. Eventually, Lopez was asked
to return to work through a letter (return to work order), allegedly sent to
him within the six (6) month period under Article 286 of the Labor Code
which pertinently provides that "the bona-fide suspension of the operation of
a business or undertaking for a period not exceeding six (6) months x x x
shall not terminate employment." As such, Irvine argued that Lopez's filing of
the complaint for illegal dismissal was premature.
Issue:
1. Whether or not Lopes was a regular employee.
2. Whether or not Lopez was illegally dismissed.
Ruling:
1. Yes.
The principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular
employees," is whether or not the "project employees" were assigned
to carry out a "specific project or undertaking," the duration and
scope of which were specified at the time the employees were
engaged for that project.
The project could either be:

(1) a particular job or undertaking that is within the regular or usual

business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or
(2) a particular job or undertaking that is not within the regular
business of the corporation.
In order to safeguard the rights of workers against the arbitrary use of
the word "project" to prevent employees from attaining the status of regular
employees, employers claiming that their workers are project employees
should not only prove that the duration and scope of the employment was
specified at the time they were engaged, but also that there was indeed
a project.
2. Yes.
Lopez was not a project but a regular employee. Lopez had been
employed by Irvine since November 1994, or more than 10 years from the
time he was laid off on December 27, 2005. Article 280 of the Labor Code
provides that any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be
considered a regular employee.
As a regular employee, Lopez is entitled to security of tenure, and,
hence, dismissible only if a just or authorized cause exists. The continuation
of his engagement with Irvine, either in Cavite, or possibly, in any of its
business locations, should not have been affected by the culmination of the
Cavite project alone. In light of the well-entrenched rule that the burden to
prove the validity and legality of the termination of employment falls on the
employer, Irvine should have established the bona fide suspension of
its business operations or undertaking that would have resulted in
the temporary lay-off of its employees for a period not exceeding
six (6) months in accordance with Article 286 of the Labor Code. As
enunciated in Nasipit Lumber Co. v. National Organization of Workingmen
(NOWM), citing Somerville Stainless Steel Corporation v. NLRC:
The burden of proving, with sufficient and convincing evidence, that
such closure or suspension is bona fide falls upon the employer. Not every
loss incurred or expected to be incurred by a company will justify
retrenchment. The losses must be substantial and the retrenchment
must be reasonably necessary to avert such losses.

In this case, Irvine failed to prove compliance with the parameters of

Article 286 of the Labor Code. As the records would show, it merely
completed one of its numerous construction projects which does not, by
and of itself, amount to a bona fide suspension of business
operations or undertaking. The employer should be able to prove that it is
faced with a clear and compelling economic reason which
reasonably forces it to temporarily shut down its business
operations or a particular undertaking, incidentally resulting to the
temporary lay-off of its employees.
Case law states that the employer should also bear the burden of
proving that there are no posts available to which the employee
temporarily out of work can be assigned.
Thus, in the case of Mobile Protective & Detective Agency v. Ompad,
the Court found that the security guards therein were constructively
dismissed considering that their employer was not able to show any dire
exigency justifying the latter's failure to give said employees any further
assignment. Again, petitioners only alleged that respondent's last
assignment was with VVCC for the period of September 29 to October 31,
1997. He was not given further assignment as he allegedly went on AWOL
and lost interest to work.

Topic: Retirement Pay

Ponente: PERLAS-BERNABE, J.
G.R. No. 177845

August 20, 2014

GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR.

JAMES TAN, Petitioner, vs. FILIPINAS A. LAVANDERA, Respondent.
Facts: Filipinas was employed by petitioner Grace Christian High School
(GCHS) as high school teacher since June1977, with a monthly salary of
18,662.00 as of May 31, 2001.
On August 30, 2001,5 Filipinas filed a complaint for illegal
(constructive) dismissal, non-payment of service incentive leave (SIL) pay,
separation pay, service allowance, damages, and attorneys fees against
GCHS6 and/or its principal, Dr. James Tan.
She alleged that on May 11, 2001, she was informed that her services
were to be terminated effective May 31, 2001, pursuant to GCHS retirement
plan which gives the school the option to retire a teacher who has rendered
at least 20 years of service, regardless of age, with a retirement pay of onehalf () month for every year of service. At that time, Filipinas was only 58
years old and still physically fit to work. She pleaded with GCHS to allow her
to continue teaching but her services were terminated, contrary to the
provisions of Republic Act No. (RA) 7641, otherwise known as the
"Retirement Pay Law."
For their part, GCHS denied that they illegally dismissed Filipinas. They
asserted that the latter was considered retired on May 31, 1997 after having
rendered 20 years of service pursuant to GCHS retirement plan and that she
was duly advised that her retirement benefits in the amount of 136,210.00
based on her salary at the time of retirement, i.e., 13,621.00, had been
deposited to the trustee-bank in her name. Nonetheless, her services were
retained on a yearly basis until May 11, 2001 when she was informed that
her year-to-year contract would no longer be renewed.

Issue:

How should the retirement pay be computed?

Ruling:
RA 7641, which was enacted on December 9, 1992, amended
Article 287 of the Labor Code, providing for the rules on retirement pay
to qualified private sector employees in the absence of any
retirement plan in the establishment. The said law states that "an
employees retirement benefits under any collective bargaining [agreement
(CBA)] and other agreements shall not be less than those provided" under
the same that is, at least onehalf (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole
year and that "unless the parties provide for broader inclusions, the term
one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash equivalent of not more than five
(5) days of service incentive leaves."
The foregoing provision is applicable where:
(a) there is no CBA or other applicable agreement providing for
retirement benefits to employees; or
(b) there is a CBA or other applicable agreement providing for
retirement benefits but it is below the requirement set by law.
In the present case, GCHS has a retirement plan for its faculty and nonfaculty members, which gives it the option to retire a teacher who has
rendered at least 20 years of service, regardless of age, with a retirement
pay of one-half (1/2) month for every year of service. Considering, however,
that GCHS computed Filipinas retirement pay without including onetwelfth (1/12) of her 13th month pay and the cash equivalent of her
five (5) days SIL, Filipinas retirement benefits should be computed
in accordance withArticle 287 of the Labor Code, as amended by RA
7641, being the more beneficent retirement scheme.
The Court, in the case of Elegir v. Philippine Airlines,Inc., has recently
affirmed that "one-half (1/2) month salary means 22.5 days: 15 days
plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the
remaining 5 days for SIL." The Court sees no reason to depart from this
interpretation.
Section 5.2, Rule II38 of the Implementing Rules of Book VI of the Labor
Code, as amended, promulgated to implement RA 7641, further clarifies
what comprises the " month salary" due a retiring employee, to wit: For the

purpose of determining the minimum retirement pay due an employee under

this Rule, the term "one-half month salary" shall include all the following:
(a) Fifteen (15) days salary of the employee based on his latest salary
rate. As used herein, the term "salary" includes all remunerations paid
by an employer to his employees for services rendered during normal
working days and hours, whether such payments are fixed or ascertained on
a time, task, piece or commission basis, or other method of calculating the
same, and includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of food, lodging or other facilities
customarily furnished by the employer to his employees. The term does not
include cost of living allowance, profit-sharing payments and other
monetary benefits which are not considered as part of or integrated into the
regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive
leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that
should be included in the computation of the employees retirement pay.
The foregoing rules are, thus, clear that the whole 5 days of SIL are
included in the computation of a retiring employees pay.
As to the legal interest, the Court finds that the award of legal interest
at the rate of 6% per annum on the amount of P68,150.00 representing the
retirement pay differentials due Filipinas should be reckoned from the
rendition of the LA's Decision on March 26, 2002. It is only from the date of
the LA's Decision that GCHS' obligation to pay Filipinas her retirement pay
differentials may be deemed to have been reasonably ascertained and its
payment legally adjudged to be due, although the actual base for the
computation of legal interest shall be on the amount finally adjudged.

Topic: Illegal Dismissal

Ponente: BRION, J.:
TEMIC AUTOMOTIVE (PHILIPPINES), INC. v. RENATO M. CANTOS, G.R.
No. 200729, September 29, 2014
Facts: Sometime in 1998, respondent was appointed Purchasing Manager of
the petitioner and, on December 1, 2007, he was named Warehouse &
Import-Export Manager (Wimpex Manager). A team from the head office was
assigned to audit the petitioners operations and found out that there were
irregularities. Such irregularities were pointed to the respondent. He was
issued a suspension and later on was dismissed on the ground of loss of trust
and confidence for deliberately violating the company procedures for the
procurement of services and materials by allowing the proliferation of
Process Deviation Temporary Authority (PDTA).
Issue: Is the dismissal valid?
Ruling: No. The petitioner did not commit any act which was dishonest or
deceitful. He did not use his authority as the Purchasing Manager to
misappropriate company property and derive benefits therein nor did he
abuse the trust reposed in him by Temic with respect to his responsibilities.
There was no demonstration of moral perverseness that would justify the
claimed loss of trust and confidence attendant to [the] petitioner's job. Temic
failed to adduce any proof that [the] petitioner ever profited from the
transactions involved in the purchase orders. The supplies described in the

purchase orders are still with the company even up to the time when
petitioner's services were terminated. And neither was there evidence shown
that the same deviates from the specifications of the company or has no
more use to the company.

Topic: Floating Status

Ponente: VELASCO JR., J.
EXOCET SECURITY AND ALLIED SERVICES CORPORATION AND/OR MA.
TERESA MARCELO v. ARMANDO D. SERRANO,G.R. No. 198538,
September 29, 2014
Facts: Exocet Security and Allied Services Corporation (Exocet) is engaged
in the provision of security personnel to its various clients or principals.
Exocet assigned respondent Armando D. Serrano as close-insecurity
personnel for one of JG Summits corporate officers, Johnson Robert L.
Go. After eight years, Serrano was re-assigned as close-in security for Lance
Gokongwei, and then to his wife, Mary Joyce Gokongwei.On August 15, 2006,
Serrano was relieved by JG Summit from his duties. For more than six months
after he reported back to Exocet, Serrano was without any reassignment. He
was offered a position as a general security but he declined instead he filed a
case for illegal dismissal.
Issue: Was Serrano constructively dismissed?
Ruling: No. An employee has the right to security of tenure, but this does
not give him such a vested right in his position as would deprive the

company of its prerogative to change his assignment or transfer him where

his service, as security guard, will be most beneficial to the client. Temporary
off-detail or the period of time security guards are made to wait until they
are transferred or assigned to a new post or client does not constitute
constructive dismissal as their assignments primarily depend on the
contracts entered into by the security agencies with third parties.Indeed, the
Court has repeatedly recognized that off-detailing is not equivalent to
dismissal, so long as such status does not continue beyond a reasonable
time;when such a floating status lasts for more than six months; the
employee may be considered to have been constructively dismissed.
Thus, it is manifestly unfair and unacceptable to immediately declare the
mere lapse of the six-month period of floating status as a case of
constructive dismissal, without looking into the peculiar circumstances that
resulted in the security guards failure to assume another post. This is
especially true in the present case where the security guards own refusal to
accept a non-VIP detail was the reason that he was not given an assignment
within the six-month period. The security agency, Exocet, should not then be
held liable.

Topic: Death Benefits from GSIS

Ponente: BRION, J.
GOVERNMENT
SERVICE
INSURANCE
SYSTEM
CAPACITE, G.R. No. 199780, September 24, 2014

v. JOSE

M.

Facts: Elma Capacite (Elma) was an employee in the Department of

Agrarian
Reform
(DAR).
On July 16, 2009, Elma died due to Respiratory Failure secondary to
Metastatic Cancer to the lungs; Bowel cancer with Hepatic and
Intraperitoneal Seeding and Ovarian cancer.On May 13, 2009, Elmas
surviving spouse, Jose, filed a claim for ECC death benefits before the
Government Service Insurance System (GSIS), alleging that Elmas stressful
working condition caused the cancer that eventually led to her death.The
GSIS, however, denied Joses claim. It opined that Jose had failed to present
direct evidence to prove a causal connection between Elmas illness and her
work in order for the claimant to be entitled to the ECC death benefits.

Issue: Is the illness of Elma work related?

Ruling: No. For sickness and the resulting death of an employee to be
compensable, the claimant must show either: (1) that it is a result of an
occupational disease listed under Annex "A" of the Amended Rules on
Employees' Compensation with the conditions set therein satisfied; or (2) if
not so listed, that the risk of contracting the disease was increased by the
working conditions.
While item 17, Annex A of the Amended Rules of Employees Compensation
considers lung cancer to be a compensable occupational disease, it likewise
provides that the employee should be employed as a vinyl chloride worker or
a plastic worker. In this case, however, Elma did not work in an environment
involving the manufacture of chlorine or plastic, for her lung cancer to be
considered an occupational disease.
Further, Jose failed to prove that the risk of contracting the disease was
increased by the working conditions. He merely alleged that throughout
Elmas 27-year service at the DAR, she had a very demanding job; that she
rose from the ranks as a Junior Statistician, until she reached the position of
Accountant I. Jose also explained that Elma had to examine various financial
statements for accuracy; perform complex accounting reports; and prepare
financial statements. She also had to constantly render overtime work, even
during weekends, in order to study, analyze, balance, formulate and finalize
reports. All these involved prolonged sitting, exposure to cold room
temperature at the office, physical effort and mental exertion, making her
highly susceptible to physical and mental fatigue, stress and strain.
Aside from Joses general allegations proving the stressful duties of his late
wife, no reasonable proof exists to support the claim that her respiratory
disease, which is similar to lung cancer, was aggravated by her working
conditions. The records do not support the contention that she had been
exposed to voluminous and dusty records, nor do they provide any definite
picture of her working environment.
The Court cannot, under this evidentiary situation, grant death compensation
benefits solely on the assumption that she might have been exposed to
deleterious substances while working as bookkeeper and accountant. It
cannot likewise award compensation benefits on the basis of stress and
fatigue, which are general consequences of working in practically all kinds of
human activity; otherwise, we would unreasonably open the floodgates of
compensability and render the purposes of a system like GSIS meaningless.

Topic: Retrenchment and the Right to Self-Organize

Ponente: REYES, J.
MOUNT CARMEL COLLEGE EMPLOYEES UNION (MCCEU)/RUMOLO S.
BASCAR, MARIBEL TESALUNA, ROLANDO TESALUNA, KENNETH
BENIGNOS, MARILYN MANGULABNAN, EMELINA I. NACIONAL,
JODELYN REBOTON, EVERSITA S. BASCAR, MAE BAYLEN, ERNA E.
MAHILUM, EVELYN R. ANTONES v. MOUNT CARMEL COLLEGE,
INCORPORATED,G.R. No. 187621, September 24, 2014

Facts: The petitioners were elementary and high school academic and nonacademic personnel employed by Mount Carmel College. In April 1999, the
petitioners were informed of their retrenchment by the respondent due to
the closure of the elementary and high school departments of the school
because of financial losses it suffered as result of a decline in its enrolment;
that the expenses for its academic and non-academic personnel were
already eating into its budget portion allocated for capital and administrative
development, and that the teachers demand for increased salaries and
benefits, coupled with the decline in the enrolment, left the school with no
choice but to close down its grade school and high school departments. The
petitioners, on the other hand, contend that such closure was merely a
subterfuge of their termination due to the formation of their union. The
petitioners alleged that such closure was motivated by ill-will just to get rid
of the petitioners who were all union members because in June 2001, the
school re-opened its elementary and high school departments with newlyhired teachers.
Issue: Is the dismissal of the petitioners valid?
Ruling: No.
Retrenchment is an authorized cause for a valid dismissal. However,
standards have been laid down by the Court in order to prevent its abuse by
an employer, to wit:
(1) That retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably
imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to
the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay
equivalent to one (1) month pay or at least one-half () month pay for
every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in
good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees,
such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.
In the present case, the respondents justification for implementing the
retrenchment of the petitioners was due to the alleged closure or cessation

of its elementary and high school departments. According to them, the

continued operations of these departments was an exercise of management
prerogative to protect its business and it was no longer viable to maintain
the two departments as it was already being subsidized by the college
department. As proof thereof, the respondent submitted its audited Financial
Statements for the years 1997, 1998 and 1999. Respondent also alleged
that such closure was recognized by the Tuition Fee Law, which mandates
that 70% of the tuition incremental proceeds should be allocated for salaries,
wages and other benefits of its personnel. Respondent claimed that in its
case, personnel benefits are already eating into the portion of the budget
allocated for capital and administrative development, and faced further with
the demands of the employees of additional increase in salaries and benefits,
it had no choice but to close down.
The employer bears the burden of proving the existence or the imminence of
substantial losses with clear and satisfactory evidence that there are
legitimate business reasons justifying a retrenchment. Should the employer
fail to do so, the dismissal shall be deemed unjustified.
The respondent must establish by substantial and convincing evidence that
the impending losses it expected to incur, based on such allocation, were
imminent and that the retrenchment it conducted was necessary to prevent
such losses. Another factor that militates against the respondents reason
was that it re-opened after two years, due to the clamor for its re-opening.
This is contrary to the respondents perceived impending loss considering
that there was actually a demand for its educational services. While
enrolment may have declined, the Court is not convinced that the closure of
the elementary and high school departments was a reasonable necessity,
especially in the absence of any showing on the part of the respondent that
it explored other less drastic and/or cost-saving measures to avoid serious
financial or economic problems.

Topic: Illegal Dismissal

Ponente: Peralta, J.:

Hacienda leddy/Ricardo Gamboa, Jr., v. Paquito Villegas, G.R. No.
179654, September 22, 2014
Facts: Villegas is an employee at the Hacienda Leddy as early as 1960,
when it was still named Hacienda Teresa. Later on named Hacienda Leddy
owned by Ricardo Gamboa Sr., the same was succeeded by his son Ricardo
Gamboa, Jr. During his employment up to the time of his dismissal, Villegas
performed sugar farming job 8 hours a day, 6 days a week work,
continuously for not less than 302 days a year, and for which services he was
paid P45.00 per day. He likewise worked in petitioner's coconut lumber
business where he was paid P34.00 a day for 8 hours work.
On June 9, 1993, Gamboa went to Villegas' house and told him that his
services were no longer needed without prior notice or valid reason. Hence,
Villegas filed the instant complaint for illegal dismissal.The Labor Arbiter
found that there was illegal dismissal. the NLRC set aside and vacated the
Labor Arbiter's decision.
The Court of Appeals granted the petition and annulled and set aside the
NLRC Decision. In his petition before the Supreme Court, petitioner disputed
that there exists an employer-employee relationship between him and
Villegas. He claimed that respondent was paid on a piece-rate basis without
supervision.12 Petitioner added that since his job was not necessary or
desirable in the usual business or trade of the hacienda, he cannot be
considered as a regular employee. Petitioner insisted that it was Villegas who
has stopped working in the hacienda and that he was not dismissed.
Issue: Whether or not there was illegal dismissal
Ruling: Yes
In the instant case, if we are to follow the length of time that Villegas had
worked with the Gamboas, it should be more than 20 years of service. Even
Gamboa admitted that by act of generosity and compassion, Villegas was
given a privilege of erecting his house inside the hacienda during his
employment. While it may indeed be an act of good will on the part of the
Gamboas, still, such act is usually done by the employer either out of
gratitude for the employees service or for the employer's convenience as
the nature of the work calls for it. Indeed, petitioner's length of service is an
indication of the regularity of his employment. Even assuming that he was
doing odd jobs around the farm, such long period of doing said odd jobs is
indicative that the same was either necessary or desirable to petitioner's

trade or business. Owing to the length of service alone, he became a regular

employee, by operation of law, one year after he was employed.
Article 280 of the Labor Code, describes a regular employee as one who is
either (1) engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer; and (2) those casual employees
who have rendered at least one year of service, whether continuous or
broken, with respect to the activity in which he is employed.
While length of time may not be the controlling test to determine if Villegas
is indeed a regular employee, it is vital in establishing if he was hired to
perform tasks which are necessary and indispensable to the usual business
or trade of the employer. If it was true that Villegas worked in the hacienda
only in the year 1993, specifically February 9, 1993 and February 11, 1993,
why would then he be given the benefit to construct his house in the
hacienda? More significantly, petitioner admitted that Villegas had worked in
the hacienda until his father's demise. Clearly, even assuming that Villegas'
employment was only for a specific duration, the fact that he was repeatedly
re-hired over a long period of time shows that his job is necessary and
indispensable to the usual business or trade of the employer.
Gamboa likewise argued that Villegas was paid on a piece-rate
basis. However, payment on a piece-rate basis does not negate regular
employment. The term wage is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission
basis. Payment by the piece is just a method of compensation and does not
define
the
essence
of
the
relations.cralawlawlibrary
Morover, considering that he was employed with the Gamboas for more than
20 years and was even given a place to call his home, it does not make
sense why Villegas would suddenly stop working therein for no apparent
reason. To justify a finding of abandonment of work, there must be proof of a
deliberate and unjustified refusal on the part of an employee to resume his
employment. The burden of proof is on the employer to show an unequivocal
intent on the part of the employee to discontinue employment. Mere
absence is not sufficient. It must be accompanied by manifest acts unerringly
pointing to the fact that the employee simply does not want to work
anymore.
cralawlawlibrary
As a regular worker, Villegas is entitled to security of tenure under Article
279 of the Labor Code and can only be removed for cause. We found no valid
cause attending to his dismissal and found also that his dismissal was
without
due
process.
Article 277(b) of the Labor Code provides that:chanRoblesvirtualLawlibrary

x x x Subject to the constitutional right of workers to security of tenure and

their right to be protected against dismissal except for a just and authorized
cause and without prejudice to the requirement of notice under Article 283 of
this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be
heard and to defend himself with the assistance of his representative if he so
desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. x x
x
The failure of the petitioner to comply with these procedural guidelines
renders its dismissal of Villegas illegal. An illegally dismissed employee
should be entitled to either reinstatement if viable, or separation pay if
reinstatement is no longer viable, plus backwages in either instance.
Considering that reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay should be
granted. The basis for computing separation pay is usually the length of the
employees past service, while that for backwages is the actual period when
the employee was unlawfully prevented from working. It should be
emphasized, however, that the finality of the illegal dismissal decision
becomes the reckoning point. In allowing separation pay, the final decision
effectively declares that the employment relationship ended so that
separation pay and backwages are to be computed up to that point. The
decision also becomes a judgment for money from which another
consequence flows the payment of interest in case of delay.c
ralawlawlibrary

Topic: Disability Benefits

Ponente: Reyes, J.:
Pedro Libang, Jr. v. Indochina Ship Management Inc., Mr. Miguel
Santos and Majestic Carriers, inc., G.r. No. 189863, September 17,
2014
Facts: Pedro Libang entered into an employment contract with Indochina
Ship Management, Inc (ISMI), a domestic manning agency that acted for and
in behalf of its foreign shipping company, Majestic Carriers, Inc., (Majestic).
Libang was engaged as a Cook 1 for the vessel M/V Baltimar Orion. While
Libang was on board M/V Baltimar Orion, he experienced numbness on the
left side of his face, difficulty in hearing from his left ear, blurred vision of his
left eye and speech problem. Libang then obtained medical attention and
was admitted for three days in a hospital in Dominican Republic, where he
was found to be suffering from high blood pressure at 180/110 mmHg. He
also had high blood sugar, with normal hepatic and cardiac enzymes.
Given his health condition, Libang was eventually repatriated in the
Philippines. Later, he reported to ISMI and was endorsed for medical
attention to the company-designated physician, Dr. Robert Lim (Dr. Lim) of
the Marine Medical Services in Metropolitan Hospital. Dr. Lim issued to Libang
a medical certificate indicating only therein that the illness may have been
pre-existing. Considering Dr. Lims failure to assess Libangs disability despite
his health status, the latter sought medical attention and assessment from
another doctor, Dr. Efren R. Vicaldo (Dr. Vicaldo) of the Philippine Heart
Center.
After such consultation, Libang filed with the National Labor Relations
Commission (NLRC) National Capital Region Arbitration Branch a
Complaint for disability benefit, damages and attorneys fees against ISMI
and Santos. The respondents in the labor complaint disputed any liability by
arguing that the disability benefit being claimed pertained to a pre-existing
illness that was concealed by Libang during a pre-employment medical
examination for his deployment. The Labor arbiter and NLRC granted the

claim for disabiltiy benefits. The CA denied the same contending that the
Philippine Overseas Employment Administration-Standard Employment
Contract (POEA-SEC) requires the company-designated physician to be the
one to make a disability assessment of a seafarer.
Issue: Whether or not Libang is entitiled to disability benefits
Ruling: Yes.
There was no dispute that Libang suffered from hypertension, diabetes
mellitus type 2 and small pontine infarct, as this was indicated in the medical
certificates that were issued by the company-designated physician, Dr. Lim.
But rather than making a full assessment of Libangs health condition,
disability or fitness, Dr. Lim only reasoned in his medical certificate that
[Libangs] hypertension could be pre-existing and that it [was] difficult to
say whether [his diabetes mellitus and small pontine infarct] are pre-existing
or not.His assessment was evidently uncertain and the extent of his
examination for a proper medical diagnosis was incomplete. The alleged
concealment by Libang of his hypertension during his pre-employment
medical examination was also unsubstantiated, but was a mere hearsay
purportedly relayed to Dr. Lim by one Dr. Aileen Corbilla, his co-attending
physician. A categorical statement from Dr. Lim that Libangs illnesses were
pre-existing and non-work-related was made only in his affidavit after the
subject labor complaint had been filed. Still, Dr. Lim gave no explanation for
his statement that Libangs illnesses were not work-related.
Section 20(B) of the POEA-SEC provides:chanRoblesvirtualLawlibrary
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
The liabilities of the employer when the seafarer suffers work-related injury
or
illness
during
the
term
of
his
contract
are
as
follows:chanRoblesvirtualLawlibrary
xxxx
Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-employment
medical examination by a company-designated physician within three
working days upon his return except when he is physically incapacitated to
do so, in which case, a written notice to the agency within the same period is
deemed as compliance. Failure of the seafarer to comply with the mandatory
reporting requirement shall result in his forfeiture of the right to claim the

above

benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third

doctor may be agreed jointly between the Employer and the seafarer. The
third doctors decision shall be final and binding on both parties.
xxxx
Clearly, there was a breach by Dr. Lim of his obligation as the companydesignated physician.
Given the failure of Dr. Lim to fully evaluate Libangs illness, disability or
fitness to work, the seafarer was justified in seeking the medical expertise of
his physician of choice. The NLRC did not commit grave abuse of discretion in
considering Dr. Vicaldos assessment. As against an incomplete evaluation by
Dr. Lim, the medical certificate issued by Dr. Vicaldo included a
determination of the disability grade that applied to Libangs condition.
Libang was diagnosed to have both Hypertensive Cardiovascular Disease and
Diabetes Mellitus with an Impediment Grade VI. He was declared to be unfit
to resume to work as a seafarer in any capacity. The alleged severity of
Libangs illnesses could be linked with Dr. Lims statement that Libangs
hypertension was severe and that he ha[d] been under the care of [a]
cardiologist, neurologist and endocrinologist. Dr. Lim had not declared
Libang to be fit to work or covered by any disability grade. It is then clear
that the finding of Dr. Vicaldo did not contradict any opposing view from Dr.
Lim on disability grade or fitness.
In denying Libangs claim, the CA relied solely on Section 32-A (20) of the
POEA-SEC which requires that a finding of essential hypertension be
substantiated by diagnostic and laboratory reports. Section 32-A (20) was,
however, never invoked by the respondents during the proceedings before
the LA, NLRC and the CA. Moreover, it is settled that strict rules of evidence
are not applicable in claims for compensation and disability benefits. The
respondents could not be allowed to benefit from their physicians inaction or
refusal to disclose the results of the diagnostic tests performed upon Libang,
the extent of the patients illnesses, and the effect of the severity of these
illnesses on his fitness or disability. The respondents even failed to
sufficiently dispute the finding of the LA and NLRC that Libangs illnesses had
resulted in a Grade VI disability.

TOPIC: Disability Benefits

PONENTE: Del Castillo, J.:
Interorient Maritime Enterprises, Inc., v. Victor M. Creer III, G.R.
No. 181921, September 17, 2014
Facts: InterOrient hired Victor as Galley Boy on board the vessel M/V MYRTO
owned by Calidero Shipping Company, Ltd. (Calidero). Victor commenced his
employment on board the vessel where he performed the duties and
responsibilities as Galley Boy/2nd Cook.Ch
anRoblesVirtualawlibrary
As 2nd Cook, Victor was tasked to get provisions from the cold storage which
is kept at its coldest temperature to maintain freshness of the food stored
therein. He would do this either immediately before or after his exposure to
intense heat in the galley. Victor alleged that when he was about to get
provisions from the cold storage he felt a sudden pain in his chest that
radiated to his back. Since then, he experienced incessant cough, nasal
congestion, difficulty in breathing, physical weakness, chills and extreme
apprehension. According to him, this condition persisted until the expiration
of his contract.

When Victor arrived in Manila, he reported to the office of InterOrient and

informed the company about the pain he experienced while he was on
board. Victor averred that InterOrient merely advised him to consult a doctor
without giving him any doctors referral. He did, however, sign a Receipt and
Release where he acknowledged receipt of the full payment of his monetary
entitlements under the employment contract.
Thereafter, Victor claimed that he underwent medical examination at the
Fatima Medical Clinic where he shouldered all expenses. Although he
reported his condition to InterOrient, he was still not given any medical
assistance. Instead, he was merely told to continue medication and
consultation.
Victor went to the Heart and Lung Diagnostic Center where his attending
physician, Dr. Fernando G. Ayuyao (Dr. Ayuyao), found Victor to be suffering
from Community-Acquired Pneumonia 1 and Bronchial Asthma. But when he
consulted another doctor, a certain Dr. Purugganan from Citihealth
Diagnostic Center it was found out that he had far-advanced pulmonary
tuberculosis.rVictor consulted another physician, Dr. Efren R. Vicaldo (Dr.
Vicaldo), at the Philippine Heart Center. After conducting a medical
examination and evaluation, Dr. Vicaldo issued a medical certificate
indicating that Victor was diagnosed with Hypertension, Stage II, and
Pulmonary Tuberculosis. He gave Victor an impediment grade VIII (33.59%)
and further declared him unfit to resume work as a seaman in any capacity,
and that his illness was considered work-aggravated.
cralawred
Victor contended that during the course of his treatment, he regularly
informed InterOrient of his sickness. However, he was neither apprised of his
rights to nor paid sickness allowance as mandated in the Philippine Overseas
Employment Agency (POEA) 2000 Amended Standard Terms and Conditions
of Employment Contract Governing Seafarers (POEA Contract). And as his
requests for payment of the said allowance were consistently ignored, he
filed with the Labor Arbiter a Complaint for permanent disability benefits.
InterOrient negated argued that his discharge from the vessel was not
occasioned by any illness or injury sustained or contracted on board but was
simply due to completion or expiration of his contract; that he voluntarily
executed a Receipt and Release document wherein he acknowledged that he
had not contracted any illness while on board; that he was released in good
and perfect health; and that there is no clear evidence that shows his
entitlement
to
the
benefits
or
damages
being
claimed.
Issue: Wheter or not Victor is entitled to disability benefits
Ruling: No.

For a seamans claim for disability to prosper, it is mandatory that within

three days from his repatriation, he is examined by a company-designated
physician. Non-compliance with this mandatory requirement results in the
forfeiture of the right to claim for compensation and disability benefits.
Such is not present in the case at bar. On the contrary, the records show that
when he reported to InterOrient immediately after his repatriation, he signed
a Receipt and Release stating that he has not contracted or suffered any
illness or injury from work and that he was discharged in good and perfect
health. Moreover if indeed Victor needed medical services, he opted to
consult several doctors other than the company-designated physician. He
offered no explanation for this. The rationale for the rule [on mandatory postemployment medical examination within three days from repatriation by a
company-designated physician] is that reporting the illness or injury within
three days from repatriation fairly makes it easier for a physician to
determine the cause of the illness or injury. Ascertaining the real cause of
the illness or injury beyond the period may prove difficult. To ignore the rule
might set a precedent with negative repercussions, like opening floodgates
to a limitless number of seafarers claiming disability benefits, or causing
unfairness to the employer who would have difficulty determining the cause
of a claimants illness because of the passage of time. The employer would
then have no protection against unrelated disability claims.
cralawred
Even if the mandatory three-day rule on post-employment medical
examination by the company-designated physician is disregarded, Victors
claim for disability benefits must still fail for not being compensable. For an
illness to be compensable, Section 20(B)(6) of the 2000 Amended Standard
Terms and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean-Going Vessels (2000 Amended Standard Terms and Conditions),
deemed incorporated in the POEA Contract, requires the concurrence of two
elements: first, that the illness must be work-related; and second, that the
work-related illness must have existed during the term of the seafarers
employment contract. This are not present in this case. As already
mentioned, the reason for Victors repatriation was the completion/expiration
of his contract and not because of any sickness. Also, Victor failed to show
that his illness is work-related.
Work-related illness is defined under the 2000 Amended Standard Terms
and Condition as any sickness resulting in disability or death due to an
occupational disease listed under Section 32-A of [the said] contract[,] with
the conditions set therein satisfied. There is no question that Pulmonary
Tuberculosis is listed as an occupational disease under Section 32-A(18). But
while pulmonary tuberculosis is listed as an occupational disease, the Court
is not convinced that Victors pulmonary tuberculosis is work-acquired or
work-aggravated because if it were so, then at the outset, Victor should have
already been diagnosed with pulmonary tuberculosis when he sought
medical help one month from his repatriation. No evidence on record shows

how Victors working conditions caused or aggravated his TB. On the

contrary, Victor himself acknowledged that he worked under normal
conditions while on board the vessel.
The Court cannot over-emphasize that self-serving and unsubstantiated
declarations are insufficient to establish a case x x x where the quantum of
evidence required to establish as fact is substantial evidence.
cralawred

Topic: Disability Benefits

Ponente: Brion, J.:

Jebsen Maritime Inc., Apex Maritime Ship Management Co. LLC.,

and/or Estanislao Santiago, v.Wilfredo E. Ravena, G.R. No. 200566,
September 17, 2014
Facts: On September 6, 2006, Ravena entered into a contract of
employment with petitioner Jebsen Maritime Inc. and its principal, Apex
Maritime Ship Management Co., LLC. Ravena was employed as 4th Engineer
on board the vessel "M/V Tate J" .
Sometime in May 2007, and while on board M/V Tate J, Ravena suffered
extreme abdominal discomfort and pain, accompanied by chills, diarrhea,
general feeling of weakness and muscle spasms. He was repatriated to the
Philippines on May 12, 2007. Upon arrival, Ravena went directly to his
hometown in Iloilo.
On May 15, 2007, Ravena went to the St. Paul's Hospital in Iloilo City. The
doctors found a mass in his ampullary area and he underwent a series of
tests. On May 17, 2007, he informed the petitioners that he had to
undergo Whipple surgery. Ravena and the petitioners agreed that the former
shall shoulder the medical expenses for the surgery, subject to
reimbursement by the latter. Ravena underwent the surgery on May 21,
2007;
he
was
subsequently
diagnosed
to
be
suffering
from adenocarcinoma or cancer of the ampullary area.
On June 18, 2007, Ravena reported at Jebsen's office in Manila; he was
referred to Dr. Nicomedes Cruz, a cancer surgeon and the companydesignated physician. After examination and the review of Ravenas records
and his illness, Dr. Cruz opined that Ravena's illness was not work-related.
The petitioners denied Ravena's claim for disability benefits. Ravena filed his
complaint for disability benefits with the LA.
Issue: Wheter or not Ravena is entitled to diability benefits
Ruling: No.
In situations where the seafarer seeks to claim the compensation and
benefits that Section 20-B grants to him, the law requires the seafarer to
prove that: (1) he suffered an illness; (2) he suffered this illness during the
term of his employment contract; (3) he complied with the procedures
prescribed under Section 20-B; (4) his illness is one of the enumerated
occupational disease or that his illness or injury is otherwise work-related;
and (5) he complied with the four conditions enumerated under Section 32-A
for an occupational disease or a disputably-presumed work-related disease
to be compensable. Under these considerations, Ravena's claim must
obviously fail; he failed to substantially satisfy the prescribed requirements
to be entitled to disability benefits.

First, Ravena failed to comply with the procedural requirements of Section

20-B of the POEA-SEC. Under Section 20-B(3), paragraph 2, a seafarer who
was repatriated for medical reasons must, within three working days from his
disembarkation,
submit
himself
to
a
post-employment
medical
examination (PEME) to be conducted by the company-designated physician.
Failure of the seafarer to comply with this three-day mandatory reporting
requirement shall result in the forfeiture of his right to claim the POEA-SEC
granted
benefits.
In this case, the records show that Ravena was repatriated on May 12, 2007;
he reported to Jebsen only on June 18, 2007 or more than one (1) month
from the time of his disembarkation. Without doubt, therefore, Ravena failed
to comply with his three-day reporting duty under the POEA-SEC.
The reporting requirement, of course, is not absolute as we have allowed, in
certain exceptional circumstances, a seafarer's claim despite his nonreporting within the mandated three-day period, i.e., when the seafarer is
physically incapacitated to comply with the reporting requirement, provided,
he gives, within the same three-day period, a written notice of his incapacity
to the manning agency. The facts of this case, unfortunately, do not support
a disregard of the three-day reporting rule.
Under Section 20-B(3), the company-designated physician initially
determines either the fitness-to-work or the degree of the permanent
disability (total or partial) of the seafarer who suffered and was repatriated
for work-related illness or injury. The seafarer, of course, is not irretrievably
bound by such determination. Should he disagree with the determination of
the company-designated physician, the POEA-SEC allows him to seek a
second opinion from an independent physician of his choice. If the
assessment of his chosen physician conflicts with those of the companydesignated physician, the seafarer and the employer may agree on a third
doctor whose determination shall be final and binding on them.
In this case, neither Dr. Cruz nor Ravena's chosen physician made any
determination of Ravena's disability. In fact, we note that Ravena's physician
did not even certify that he was no longer fit-to-work, or at the very least
determine the appropriate disability grading; he simply stated that he must
not be away from a treatment area for an indefinite period of time. On the
other hand, Dr. Cruz certified that Ravena's illness is not at all work-related.
Second, Ampullary cancer is not an occupational disease. Section 32-A of the
POEA-SEC considers only two types of cancers as compensable occupational
disease: (1) cancer of the epithelial lining of the bladder; and (2) cancer,
epitheliomatous or ulceration of the skin or of the corneal surface of the eye
due
to
certain
chemicals.cralawlawlibrary

The LA and the CA may have correctly afforded Ravena the benefit of the
legal presumption of work-relatedness. The legal correctness of the CA's
appreciation of Ravena's claim, however, ends here for as we pointed out
above, Section 20-B(4) affords only a disputable presumption that should be
read together with the conditions specified by Section 32-A of the POEA-SEC.
Under Section 32-A, for the disputably-presumed disease resulting in
disability to be compensable, all of the following conditions must be
satisfied:chanRoblesvirtualLawlibrary
1. The seafarer's work must involve the risks describe therein;
2. The disease was contracted as a result of the seafarer's exposure to
the described risks;
3. The disease was contracted within a period of exposure and under
such factors necessary to contract it; and
4. There was no notorious negligence on the part of the seafarer.
Ravena failed to prove the work-relatedness of his ampullary cancer as he
failed to satisfy these conditions. To be exact, he simply claimed that "his
assignment had always been on (sic) the engine room" and that "exposure to
various substances over the years caused his disease." These bare
allegations, however, are not the equivalent of the substantial evidence that
the law requires of Ravena to adduce for the grant of his disability benefits
claim.
No reasonable conclusion of work-relatedness can also be inferred in this
case given the nature of ampullary cancer vis--vis the duties of and the
occupational hazards that a ship engineer encounters. The cause
of ampullary cancer is medically unknown, although certain risk factors are
believed to contribute to its development, i.e., genetic factors, like patients
with familial adenomatous polyposis, and certain genetic alterations;
smoking; and certain diseases such as diabetes milletus. Ampullary cancer
is a rare condition and experts are not certain what preventive steps, if any,
may be taken, although it is known to be more prevalent in men than
women. Having no substantial evidence presented, the claim must be
denied.

Topic: Vacation and Sick Leave/habitual absenteeism

Ponente: Per Curiam
Office of the Court Administrator v. Edgar S. Cruz, Clerk III, Regional
Trial Court, Branch 52, Guagua, Pampanga, . A.M. No. P-14-3260
(Formerly A.M. No. 12-2-38- RTC ), September 16, 2014
Facts: A report submitted by the Chief of the Leave Division, Office of
Administrative Services (OAS), Office of the Court Administrator (OCA) on 6
February 2012 indicated that Edgar S. Cruz (Cruz), Clerk III, Branch 52,
Regional Trial Court (RTC), Guagua, Pampanga, incurred three (3)
unauthorized absences in November and four (4) unauthorized absences in
December 2011. The OCA required Cruz to comment on the report submitted
by the Leave Division, OAS, OCA. In his letter, Cruz explained that he was
forced to skip work during the dates reported because of circumstances
beyond his control. He explained that since his wife works overseas, he had
to attend to the needs of their children first before reporting for work. He
added that he often got sick and, as proof, he submitted medical certificates
showing that he was diagnosed and treated for systemic viral infection on 3
November 2011, acute gastro-enteritis on 8 November 2011, and an infected
wound on 14 November 2011. The OCA found sufficient evidence to hold
Cruz and recommended that he be dismissed from the service.
Issue: Whether or not Cruz should be dismissed from service
Ruling: Yes.
Cruz admitted skipping work without filing the corresponding leave
applications during the dates mentioned in the report of the Leave Division,
OAS, OCA. In his comment, Cruz could only present medical certificates to
substantiate his explanation that he fell sick during the subject dates. He,

however, failed to submit any duly accomplished and approved leave

applications from his executive/presiding judge.
The Omnibus Rules Implementing Book V of Executive Order No. 292 and
Other Pertinent Civil Service Laws (Civil Service Rules) mandate that an
employee must submit an application for both sick and vacation leaves, viz:
Rule XVI
Leave of Absence

Section 16. All applications for sick leave of absence for one full day or more
shall be on the prescribed form and shall be filed immediately upon the
employees return from such leave. Notice of absence, however, should be
sent to the immediate supervisor and/or to the office head. Application for
sick leave in excess of five days shall be accompanied by a proper medical
certificate.
Section 20. Leave of absence for any reason other than illness of an officer or
employee or of any member of his immediate family must be contingent
upon the needs of the service. Hence, the grant of vacation leave shall be at
the discretion of the head of department/agency.
Under the Civil Service Rules, an employee should submit in advance,
whenever possible, an application for vacation leave of absence for action by
the proper chief of agency prior to the effective date of the leave. In case of
sick leave of absence, the application should be filed immediately upon the
employees return. In the instant case, it is clear from respondent Cruzs
own admission that he failed to file or acquire the necessary leave permits
for
his
absences.
Under Administrative Circular No. 14-2002 (Re: Reiterating the Civil Service
Commissions Policy on Habitual Absenteeism), [a]n officer or employee in
the civil service shall be considered habitually absent if he incurs
unauthorized absences exceeding the allowable 2.5 days monthly leave
credit under the law for at least three (3) months in a semester or at least
three (3) consecutive months during the year[.]
Although strictly speaking respondent Cruz may not yet be considered
habitually absent on the basis of his unauthorized absences in November
and December 2011, he should still be penalized because his omissions
clearly caused inefficiency and hampered public service. In Re: Unauthorized
Absences of Karen R. Cuenca, Clerk II, Property Division-Office of
Administrative Services, this Court held that under Administrative Circular
No. 2-99, which took effect on 1 February 1999, [a]bsenteeism and
tardiness, even if such do not qualify as habitual or frequent under Civil
Service Commission Memorandum Circular No. 04, Series of 1991, shall be
dealt with severely[.]

An evaluation of his record with the Employees Leave Division, OAS, OCA
revealed that Cruz has the propensity of not reporting for work. From
January to April 2012 alone, Cruz incurred thirty (30) absences. It is evident
that Cruz can be held administratively liable for being habitually absent. In
fact, his habitual absenteeism has caused inefficiency in the performance of
his functions which seriously compromised efficiency and prejudiced public
service.

Topic: Just and valid causes for the dismissal of an employee

Ponente: Associate Justice Lucas P. Bersamin

Northwest Airlines, Inc. vs. Ma. Concepcion M. Del Rosario, G.R. No.
157633, September 10, 2014

Facts: Petitioner Northwest Airlines, Inc. employed respondent Ma.

Concepcion M. Del Rosario on December 10, 1994 as one of its Manila based
flight attendants. On May 18, 1998, Del Rosario was assigned at the Business
Class Section of Northwest Flight NW 26 bound for Japan. During the
boarding preparations, Kathleen Gamboa, another flight attendant assigned
at the First Class, needed to borrow a wine bottle opener because her wine
bottle opener was dull. Vivien Francisco, Gamboas runner, went to the
Business Class Section to borrow a wine bottle opener from Del Rosario, but
the latter remarked that any flight attendant who could not bring a wine
bottle opener had no business working in the First Class.

Upon hearing this, Aliza Ann Escao, another flight attendant, offered her
wine bottle opener to Francisco. Apparently, Gamboa overheard Del Rosarios
remarks, and later on verbally confronted her. Their confrontation escalated
into a heated argument. Escao intervened but the two ignored her,
prompting her to rush outside the aircraft to get Maria Rosario D. Morales,
the Assistant Base Manager, to pacify them.

The parties differed on what happened thereafter. Del Rosario claimed that
only an animated discussion had transpired between her and Gamboa, but
Morales insisted that it was more than an animated discussion, recalling that
Del Rosario had even challenged Gamboa to a brawl (sabunutan). Morales
asserted that she had tried to pacify Del Rosario and Gamboa, but the two
did not stop. Because of that, she ordered them out of the plane and transfer
to another nearby Northwest aircraft.

She inquired from them about what had happened, and even asked if they
were willing to fly on the condition that they would have to stay away from
each other during the entire flight, because Del Rosario was not willing to
commit herself to do so, she decided not to allow both of them on Flight NW
26, and furnished them a Notice of Removal from Service (effectively
informing Del Rosario of her dismissal from the service pending an
investigation of the fighting incident between her and Gamboa).

Morales sent a letter to Del Rosario telling her that Northwest would conduct
an investigation of the incident involving her and Gamboa. On June 19, 1998,
Del Rosario was informed of her termination from the service. Northwest
stated that based on the results of the investigation, Del Rosario and
Gamboa had engaged in a fight on board the aircraft, even if there had been
no actual physical contact between them. Northwest considered her
dismissal from the service justified and in accordance with the Rules of
Conduct for Employees. Del Rosario subsequently filed her complaint for
illegal dismissal against Northwest.

In her decision the Labor Arbiter Teresita D. Castillon-Lora ruled in favor of

Northwest, holding that the dismissal of Del Rosario had been justified and
valid upon taking into account that Northwest had been engaged in the
airline business in which a good public image had been demanded, and in
which flight attendants had been expected to maintain an image of
sweetness and amiability.

Upon appeal, the NLRC reversed the decision of the Labor Arbiter, and ruled
in favor of Del Rosario, declaring that the incident between her and Gamboa
could not be considered as synonymous with fighting as the activity
prohibited by Northwests Rules of Conduct. The CA sustained the NLRC
decision.

Issue: Whether Del Rosarios dismissal from the service is valid?

Ruling: No.

As provided in Article 282 of the Labor Code, an employer may

terminate an employee for a just cause, to wit:

Art. 282. TERMINATION BY EMPLOYER

An employer may terminate an employee for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his
duly authorized representative; and
(e) Other causes analogous to the foregoing.

Northwest argues that Del Rosario was dismissed on the grounds of serious
misconduct and willful disobedience. Misconduct refers to the improper or
wrong conduct that transgresses some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. But misconduct or improper
behavior, to be a just cause for termination of employment, must: (a) be
serious; (b) relate to the performance of the employees duties; and (c) show
that the employee has become unfit to continue working for the employer.

There is no doubt that the last two elements of misconduct were present in
the case of Del Rosario. The cause of her dismissal related to the
performance of her duties as a flight attendant, and she became unfit to
continue working for Northwest. Remaining to be determined is, therefore,
whether the misconduct was serious as to merit Del Rosarios dismissal. In
that respect, the fight between her and Gamboa should be so serious that it
entailed the termination of her employment even if it was her first offense.

Based on the foregoing, the incident involving Del Rosario and Gamboa could
not be justly considered as akin to the fight contemplated by Northwest. In
the eyes of the NLRC, Del Rosario and Gamboa were arguing but not fighting.
The understanding of fight as one that required physical combat was absent
during the incident of May 18, 1998. Moreover, the claim of Morales that Del
Rosario challenged Gamboa to a brawl (sabunutan) could not be given
credence by virtue of its being self-serving in favor of Northwest, and of its
being an apparent afterthought on the part of Morales during the

investigation of the incident, without Del Rosario having the opportunity to

contest Morales' statement.

Moreover, even assuming arguendo that the incident was the kind of fight
prohibited by Northwest's Rules of Conduct, the same could not be
considered as of such seriousness as to warrant Del Rosario's dismissal from
the service. The gravity of the fight, which was not more than a verbal
argument between them, was not enough to tarnish or diminish Northwest's
public image.

Topic: Just and valid causes for the dismissal of an employee

Ponente: Associate Justice Lucas P. Bersamin

Rosalie
L.
Gargoles vs. Reylita
158583, September 10, 2014

S.

Del

Rosario,

G.R.

No.

Facts: On February 20, 1992, the petitioner started working as an "allaround employee" acting as "cashier, sales clerk, xerox operator, janitress,
photo printer, and messenger/delivery person" at Jay-Anne's One Hour Photo
Shop, the proprietress of which was respondent Reylita S. Del Rosario. On
March 28, 1998, the petitioner received a letter terminating her employment
for dishonesty. As a result, she lodged a complaint for illegal dismissal,
seeking her reinstatement and backwages.

To answer the complaint for illegal dismissal, Del Rosario laid out the reason
for the termination of the petitioner in her position paper, as follows: Through
incisive sleuthing, records inspection and investigation in the second week of
March, 1998, it was discovered that complainant, tampered with the daily
printer's production reports/sales which, as consequence thereof, the total
number of prints made for the day was podded and erroneously reported
thru double entries of the same job envelope and one (1) twin check number
for every fresh role [sic] of film for photo-developing and printing or even
recopying; it was on the same entry with two (2) twin check numbers instead
of just one (1) number of the same job envelope that complainant pocketed
and appropriated for her own benefit and gain the cash value or cash
equivalent of the excessive or padded daily total of number of prints made
and erroneously reported to the respondent store damage and prejudice
amounting to P11,305.00 computed at 2,207 prints.

In his decision, Labor Arbiter Cresencio G. Ramos, Jr. dismissed the

petitioners complaint for lack of merit. The National Labor Relations
Commission (NLRC) promulgated its resolution affirming the decision of the
Labor Arbiter. The petitioner sought reconsideration, but the NLRC denied her
motion to that effect. On July 23, 2001, the petitioner commenced her
special civil action for certiorari in the Court of Appeals (CA), alleging in her
petition that the NLRC had committed grave abuse of discretion. On
September 27, 2002, the CA promulgated its decision that the judgment

appealed from is hereby affirmed and that the petitioner was dismissed from
employment with a just cause.

Issue: Whether the CA erred in finding her dismissal from employment to

have been upon just cause.

Ruling: No.

The just and valid causes for the dismissal of an employee, as

enumerated in Article 282 of the Labor Code, include: (a) serious
misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with her work; (b) gross and
habitual neglect by the employee of her duties; (c) fraud or willful breach by
the employee of the trust reposed in her by her employer or duly authorized
representative; (d) commission of a crime or offense by the employee
against the person of her employer or any immediate member of her family
or her duly authorized representative; and (e) other causes analogous to the
foregoing. In his decision, which the NLRC affirmed for being correct, the
Labor Arbiter relevantly concluded as follows:

After going over the evidence adduced by the respondent in support of its
averments and principal defense, this Office finds the same to be reasonably
sufficient to arrive at the conclusion that complainant was indeed guilty of
the act(s) of dishonesty imputed upon her. Certainly, the aforesaid dishonest
act(s) committed by the complainant logically triggered an erosion of the
trust reposed upon him by his employer and jurisprudence is explicit on the
point that when an employee has been guilty of breach of trust or his
employer has ample reason to distrust him, a labor tribunal cannot deny the
employer the authority to dismiss him.

The dishonesty imputed to the petitioner included the making of double

entries in the production reports and thereby enriching herself by pocketing
the extra cash generated from the double entries. Contrary to her assertion
that there was no substantial evidence to justify her dismissal, the
production reports containing the double entries were presented as
evidence; and her double entries were confirmed in the affidavit executed by
Redelito Caranay, Jr., her co-employee. As such, the finding of the just cause
for her dismissal did not emanate from mere speculation, suspicion or
assumption.

Furthermore, the respondent had presented to the Labor Arbiter as Annex 2

of her position paper the respondents letter requiring the petitioner to
submit her explanation. The bottom of the letter contained the handwritten
annotation refused to sign, an indication of the refusal to receive and sign for
the letter on the part of the petitioner. Such refusal to receive the letter
containing the notice for her to explain, coupled with her failure to submit
her explanation within the time given in the letter, implied that she waived
her right to contest the contents of the letter, thereby forfeiting her right to
respond to the charge against her and to rebut the evidence thereon.

It further appears that on March 28, 1998 the respondent sent another letter
to the petitioner informing her of the termination of her services, but the
latter again refused to sign in acknowledgment of the letter. Under the
circumstances, the two-notice rule was evidently complied with by the
respondent, thereby negating any denial of due process to the petitioner.

Topic: Illegally suspended employees are entitled to moral and

exemplary damages and attorneys fees.

Ponente: Associate Justice Marvic M.V.F. Leonen

Nancy
S.
Montinola vs. Court
198656, September 8, 2014

of

Appeals,

G.R.

No.

Facts: Petitioner Nancy S. Montinola (Montinola) was employed as a flight

attendant of Philippine Airlines (PAL) since 1996. On January 29, 2008,
Montinola and other flight crew members were subjected to custom searches
in Honolulu, Hawaii, USA. Items from the airline were recovered from the
flight crew by customs officials. Nancy Graham (Graham), US Customs and
Border Protection Supervisor, sent an email to PAL regarding the search.
Seven of the 10 crew members had items removed from the aircraft on their
possession. No bonded items were found but crew removed food items.

PAL conducted an investigation. Montinola was among those implicated

because she was mentioned in Grahams email. PALs Cabin Services SubDepartment required Montinola to comment on the incident. She gave a
handwritten explanation three days after, stating that she did not take
anything from the aircraft. PALs International Cabin Crew Division Manager,
Jaime Roberto A. Narciso furnished Montinola the emails from the Honolulu
customs official. This was followed by a notice of administrative charge and a
clarificatory hearing followed. Despite her counsels objections, Montinola
allowed the clarificatory hearings to proceed because she "wanted to extend
her full cooperation in the investigations." During the hearing, Montinola
admitted that in Honolulu, US customs personnel conducted a search of her
person. At that time, she had in her possession only the following food items:
cooked camote, 3-in-1 coffee packs, and Cadbury hot chocolate. PAL found
Montinola guilty of 11 Violations of the companys Code of Discipline and
Government Regulation. She was meted with suspension for one (1) year
without pay.

Montinola brought the matter before the Labor Arbiter. The Labor Arbiter
found her suspension illegal, finding that PAL never presented evidence that
showed Montinola as the one responsible for any of the illegally taken airline
items. The Labor Arbiter ordered Montinolas reinstatement with backwages,

inclusive of allowances and benefits. PAL appealed the Labor Arbiters

decision to the NLRC. Through the resolution NLRC affirmed the decision of
the Labor Arbiter. The Court of Appeals affirmed the decisions of the LA and
NLRC in finding the suspension illegal. However, the Court of Appeals deleted
the moral and exemplary damages and attorneys fees.

Issue: Whether Montinolas illegal suspension entitled her to an award of

moral and exemplary damages and attorneys fees.

Ruling: Yes.

Montinola is entitled to moral and exemplary damages. She is also

entitled to attorneys fees.
Under the Labor Code, Labor Arbiters are authorized by law to
award moral and exemplary damages:

Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide within thirty (30) calendar days
after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural: 4. Claims for
actual, moral, exemplary and other forms of damages arising from the
employer-employee relations.

The nature of moral damages is defined under our Civil Code. Article 2220
states that "willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where
the defendant acted fraudulently or in bad faith." The employee is entitled to

moral damages when the employer acted a) in bad faith or fraud; b) in a

manner oppressive to labor; or c) in a manner contrary to morals, good
customs, or public policy.

Bad faith "implies a conscious and intentional design to do a wrongful act for
a dishonest purpose or moral obliquity." Here, there was clear and convincing
evidence of bad faith adduced in the lower tribunals. PALs actions in
implicating Montinola and penalizing her for no clear reason show bad faith.
PALs denial of her request to clarify the charges against her shows its intent
to do a wrongful act for moral obliquity. If it were acting in good faith, it
would have gathered more evidence from its contact in Honolulu or from
other employees before it started pointing fingers. PAL should not have
haphazardly implicated Montinola and denied her livelihood even for a
moment.

Moral damages are, thus, appropriate. This is also true for the case of
suspension. Suspension is temporary unemployment. During the year of her
suspension, Montinola and her family had to survive without her usual salary.
The deprivation of economic compensation caused mental anguish, fright,
serious anxiety, besmirched reputation, and wounded feelings. All these are
grounds for an award of moral damages under the Civil Code.

Montinola is also entitled to exemplary damages. Under Article 2229 of the

Civil Code, "exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages." As this court has stated in
the past: "Exemplary damages are designed by our civil law to permit the
courts to reshape behavior that is socially deleterious in its consequence by
creating negative incentives or deterrents against such behavior."

It is socially deleterious for PAL to suspend Montinola without just cause in

the manner suffered by her. Hence, exemplary damages are necessary to
deter future employers from committing the same acts.

Montinola is also entitled to attorneys fees. Article 2208 of the Civil Code
enumerates the instances when attorneys fees can be awarded: ART. 2208.
In the absence of stipulation, attorneys fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiffs plainly valid, just and demandable
claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers
and skilled workers;
(8) In actions for indemnity under workmens compensation and
employers liability laws;
(9) In a separate civil action to recover civil liability arising from a
crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered.

In all cases, the attorneys fees and expenses of litigation must be

reasonable. This case qualifies for the first, second, and seventh reasons why
attorneys fees are awarded under the Civil Code.

Topic: Project employees and Regular employees.

Ponente: Associate Justice Estela M. Perlas-Bernabe
Omni
Hauling
Services,
199388, September 3, 2014

Inc. v.

Bernardo

Bon,

G.R.

No.

Facts: Petitioner Omni Hauling Services, Inc. (Omni), a company owned by

petitioners Lolita and Aniceto Franco, was awarded a one (1) year service
contract by the local government of Quezon City to provide garbage hauling
services for the period July 1, 2002 to June 30, 2003. For this purpose, Omni
hired respondents as garbage truck drivers and paleros who were then paid
on a per trip basis.

When the service contract was renewed for another year, or for the period
July 1, 2003 to June 30, 2004, petitioners required each of the respondents to
sign employment contracts which provided that they will be "re-hired" only
for the duration of the same period. However, respondents refused to sign
the employment contracts, claiming that they were regular employees since

they were engaged to perform activities which were necessary and desirable
to Omnis usual business or trade. For this reason, Omni terminated the
employment of respondents which resulted in the filing of cases for illegal
dismissal. During the mandatory conference before the Labor Arbiter (LA),
Omni offered to re-employ respondents on the condition that they sign the
employment contracts but respondents refused such offer.

The LA ruled in favor of petitioners, finding that respondents were not

illegally dismissed. The LA found that respondents, at the time of their
engagement, were informed that their employment will be limited for a
specific period of one year and was co-terminus with the service contract
with the Quezon City government. Thus, respondents were merely project
employees whose hiring was solely dependent on the service contract. The
NLRC affirmed the LAs ruling in toto.

The CA reversed and set aside the NLRCs earlier pronouncements. It held
that the NLRC failed to consider the glaring fact that no contract of
employment exists to support petitioners allegation that respondents are
fixed-term project employees. Aggrieved, petitioners filed a motion for
reconsideration which was denied by the CA. Hence, this petition.

Issue: Whether or not the CA erred in granting respondents petition for

certiorari, thereby setting aside the NLRCs Decision holding that
respondents were project employees.

Ruling: The Court finds that the CA correctly granted respondents certiorari
petition since the NLRC gravely abused its discretion when it held that
respondents were project employees despite petitioners failure to establish
their project employment status through substantial evidence.

Article 280 of the Labor Code distinguishes a "project employee"

from a "regular employee" in this wise: Art. 280. Regular and casual
employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season.

A project employee is assigned to a project which begins and ends at

determined or determinable times. Unlike regular employees who may only
be dismissed for just and/or authorized causes under the Labor Code, the
services of employees who are hired as "project employees" may be lawfully
terminated at the completion of the project.

According to jurisprudence, the principal test for determining whether

particular employees are properly characterized as "project employees" as
distinguished from "regular employees" is whether or not the employees
were assigned to carry out a "specific project or undertaking," the duration
(and scope) of which were specified at the time they were engaged for that
project. The project could either be (1) a particular job or undertaking that is
within the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings
of the company; or (2) a particular job or undertaking that is not within the
regular business of the corporation. In order to safeguard the rights of
workers against the arbitrary use of the word "project" to prevent employees
from attaining a regular status, employers claiming that their workers are
project employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also that
there was indeed a project. Even though the absence of a written contract
does not by itself grant regular status to respondents, such a contract is
evidence that respondents were informed of the duration and scope of their
work and their status as project employees.

In this case, records are bereft of any evidence to show that respondents
were made to sign employment contracts explicitly stating that they were
going to be hired as project employees, with the period of their employment
to be co-terminus with the original period of Omnis service contract with the
Quezon City government. Neither is petitioners allegation that respondents
were duly apprised of the project-based nature of their employment
supported by any other evidentiary proof. Thus, the logical conclusion is that
respondents were not clearly and knowingly informed of their employment
status as mere project employees, with the duration and scope of the project
specified at the time they were engaged.

As such, the presumption of regular employment should be accorded in their

favor pursuant to Article 280 of the Labor Code which provides that
"[employees] who have rendered at least one year of service, whether such
service is continuous or broken [ as respondents in this case ] shall be
considered as [regular employees] with respect to the activity in which [they]
are employed and [their] employment shall continue while such activity
actually exists." Add to this the obvious fact that respondents have been
engaged to perform activities which are usually necessary or desirable in the
usual business or trade of Omni, i.e., garbage hauling, thereby confirming
the strength of the aforesaid conclusion.

Topic: Appeal from the LAs ruling to the NLRC

Ponente: Perlas Bernabe, J.

Philippine Touristers, Inc. v. Mas Transit Workers Union Anhlo KMU, G.R. No. 201237, September 3, 2014

Facts: On June 14, 2000, respondent Samahan ng Manggagawa sa Mas

Transit-Anglo-KMU (the Union) a union organized through the affiliation of
certain MTI bus drivers/conductors with the Alliance of Nationalist and
Genuine Labor Organizations filed a petition for certification election before

the DOLE NCR. The DOLE granted the Unions petition, prompting MTI to file
a motion for reconsideration which was, however, denied.
On September 15, 2000, MTI decided to sell its passenger buses together
with its Certificate of Public Convenience (CPC) issued by the LTFRB to PTI for
a total consideration of 98,345,834.43. Records disclose that the sale of 50
passenger buses together with MTIs CPC was approved by the LTFRB in a
Decision dated December 28, 2000. As such, PTI was issued a new CPC
authorizing it to operate the service on the Baclaran-Malabon via EDSA route
using the passenger buses that were sold.
In light of the foregoing, MTI issued a "Patalastas" apprising all of its
employees of the sale and transfer of its operations to PTI and the formers
intention to pay them separation benefits in accordance with law and based
on the resources available. The employees were also advised to apply anew
with PTI should they be interested to transfer. Thereafter, MTI sent each of
the individual respondents a Memorandum informing them of their
termination from work, effective on said date, in line with the cessation of its
business operations caused by the sale of the passenger buses to the new
owners.
Claiming that the sale was intended to frustrate their right to self
organization and that there was no actual transfer of ownership of the
passenger buses as the stockholders of MTI and PTI are one and the same,
the Union, on behalf of its 98 members filed a complaint for illegal dismissal,
unfair labor practice, i.e., illegal lock out, and damages against MTI and/or
Tomas Alvarez (Alvarez), and PTI and Yague (petitioners), before the NLRC.
The LA ruled in favor of the respondents. It held that MTIs closure of
business and cessation of operations, allegedly due to serious financial
reverses, were actually made to subvert the right of its employees to selforganization.
Dissatisfied, petitioners appealed before the NLRC. The NLRC dismissed the
appeal for petitioners failure to post the required bond equal to the full
judgment award within the ten (10)-day reglementary period prescribed
under the NLRC Rules of Procedure. It also pointed out that the partial bond
petitioners posted was invalid since it was not signed by an authorized
signatory of the insurance company as advised by the NLRC in a
Memorandum dated January 5, 2004, and that the ground relied upon for the
reduction of the bond was not substantiated.

On MR, the NLRC reinstated the appeal. Thereafter, the NLRC dismissed the
complaint against the petitioners. The modification was brought about by the
NLRCs finding that there were no factual and legal bases to hold petitioners
jointly and severally liable with MTI as the two corporations are separate and
distinct juridical entities with different stockholders and owners. To this end,
it ruled that the individual respondents were employees of MTI and not PTI,
and that the sale of the passenger buses to PTI was not simulated or
fictitious since the deed evidencing said sale was duly notarized and
approved by the LTFRB in a Decision dated December 28, 2000.
When the case reached CA, the CA reversed the ruling of the NLRC finding
the latter to have acted with grave abuse of discretion in applying a liberal
interpretation of the rules on perfection of appeal. It held that PTIs alleged
liquidity problems cannot be considered as a meritorious ground to reduce
the bond as there was no showing that they were incapable of posting at
least a surety bond equivalent to the full judgment award.
Hence, this petition.
Issue: Is the NLRC guilty of grave abuse of discretion?
Ruling: NO.
For an appeal from the LAs ruling to the NLRC to be perfected, Article 223
(now Article 229) of the Labor Code requires the posting of a cash or surety
bond in an amount equivalent to the monetary award in the judgment
appealed from, viz.:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions, awards,
or orders. Such appeal may be entertained only on any of the following
grounds:
1. If there is a prima facie evidence of abuse of discretion on the part
of the Labor Arbiter;
2. If the decision, order or award was secured through fraud or
coercion, including graft and corruption;
3. If made purely on questions of law; and

4. If serious errors in the findings of facts are raised which would cause
grave or irreparable damage or injury to the appellant.
In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission
in the amount equivalent to the monetary award in the judgment appealed
from.
While it has been settled that the posting of a cash or surety bond is
indispensable to the perfection of an appeal in cases involving monetary
awards from the decision of the LA, the Rules of Procedure of the NLRC,
particularly Section 6, Rule VI thereof, nonetheless allows the reduction of
the bond upon a showing of (a) the existence of a meritorious ground for
reduction, and (b) the posting of a bond in a reasonable amount in relation to
the monetary
SEC. 6. BOND. In case the decision of the Labor Arbiter or the Regional
Director involves a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond. The appeal bond
shall either be in cash or surety in an amount equivalent to the monetary
award, exclusive of damages and attorneys fees.
No motion to reduce bond shall be entertained except on meritorious
grounds and upon the posting of a bond in a reasonable amount in relation to
the monetary award.
The filing of the motion to reduce bond without compliance with the
requisites in the preceding paragraph shall not stop the running of the period
to perfect an appeal.
In this regard, it bears stressing that the reduction of the bond provided
thereunder is not a matter of right on the part of the movant and its grant
still lies within the sound discretion of the NLRC upon a showing of
meritorious grounds and the reasonableness of the bond tendered under the
circumstances.
Here, it is not disputed that petitioners filed an appeal memorandum and
complied with the other requirements for perfecting an appeal, save for the
posting of the full amount equivalent to the monetary award
of P12,833,210.00. Instead, petitioners filed a motion to reduce bond

claiming that they were suffering from liquidity problems and, in support of
their claim, submitted PTIs AFS which showed a deficit in income. Since this
claim was not amply controverted by respondents, and considering further
the significance of petitioners argument raised in their appeal, i.e., that
there exists no employer-employee relationship between PTI and the
individual respondents, on the basis of which lies their non-liability, the Court
deems that the NLRC did not gravely abuse its discretion in deciding that
these circumstances constitute meritorious grounds for the reduction of the
bond.

Topic: entitlement of the seafarers beneficiaries to death benefits

Ponente: Perlas Bernabe, J.

Canuel v. Magsaysay
October 13,, 2014

Maritime

Corporation,

G.R.

No.

190161,

Facts: On July 14, 2006, Nancing R. Canuel (Nancing) was hired by

respondent Magsaysay Maritime Corporation (Magsaysay) as Third Assistant
Engineer for its foreign principal, respondent Kotani Shipmanagement
Limited (Kotani), to be deployed on board the vessel M/V North Sea (vessel)
for a period of twelve (12) months, with a basic salary of US$640.00 a
month. He underwent the required pre-employment medical examination,
and was declared fit to work by the company-designated physician.
Thereafter, he joined the vessel and commenced his work on July 19, 2006.
On February 20, 2007, Nancing figured in an accident while in the
performance of his duties on board the vessel, and, as a result, injured the
right side of his body. On March 5, 2007, he was brought to Shanghai

Seamens Hospital in Shanghai, China where he was diagnosed to have

suffered bilateral closed traumatic hemothorax. On March 12, 2007,
Nancing informed his wife, herein petitioner Anita N. Canuel (Anita), about
the accident and his confinement. On March 24, 2007, he was medically
repatriated and immediately admitted to the Manila Doctors Hospital under
the care of a team of medical doctors led by Dr. Benigno A. Agbayani, Jr.,
Magsaysays Medical Coordinator.Due to his worsening condition, Nancing
was placed at the hospitals intensive care unit on April 8, 2007. He
eventually died on April 25, 2007. Nancings death certificate indicated the
immediate cause of his death as acute respiratory failure, with lung
metastasis and r/o bone cancer as antecedent cause and underlying cause,
respectively.
On May 23, 2007, Anita, for herself and on behalf of their children,
Charmaine, Charlene, and Charl Smith, all surnamed Canuel (petitioners)
filed a complaint against Magsaysay and Kotani, as well as Magsaysays
Manager/President, Eduardo U. Manese (respondents), before the NLRC
seeking to recover death benefits, death compensation of minor children,
burial allowance, damages, and attorneys fees.
In their defense, respondents denied any liability and contended that while
Nancing died of acute respiratory failure, the real cause of his death, as
shown in the autopsy conducted by the National Bureau of Investigation, was
moderately differentiated andenocarcinoma, pneumonia and pulmonary
edema, lung tissue or lung cancer. The said illness is not work-related per
advise of their company doctor, Dr. Marie Cherry Lyn Samson-Fernando,
hence, not compensable.
The Labor Arbiter ruled in favor of petitioners. The LA found that Nancings
death on April 25, 2007 occurred during the term of his twelve-month
employment contract. Moreover, the evidence on record supports the
conclusion that his demise was caused by the injury he sustained in an
accident while performing his job on board the vessel. Hence, his death was
the result of a work-related injury that occurred during the term of his
employment.
The respondents appeal was denied by the NLRC. The NLRC ruled that while
respondents correctly argued that Nancings death did not occur during the
term of his employment pursuant to Section 18 of the Philippine Overseas
Employment Administration Standard Employment Contract (POEA-SEC) as
his employment was deemed terminated after his medical repatriation, still,
it cannot be doubted that his death was brought about by the same or
similar cause or illness which caused him to be repatriated.

The CA dismissed the petitioners complaint for death benefits. Citing the
case of Klaveness Maritime Agency, Inc. v. Beneficiaries of the Late Second
Officer Anthony S. Allas (Klaveness), it held that the death of the seafarer
after the termination of his contract is not compensable, even if the death is
caused by the same illness which prompted the repatriation of the seafarer
and the termination of his contract.
Hence, this petition.
Issue: Is the dismissal of the complaint for death benefits proper?
Ruling:
The terms and conditions of a seafarers employment are governed by the
provisions of the contract he signs with the employer at the time of his
hiring. Deemed integrated in his employment contract is a set of standard
provisions determined and implemented by the POEA, called the Standard
Terms and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean-Going Vessels, which provisions are considered to be the
minimum requirements acceptable to the government for the employment of
Filipino
seafarers
on
board
foreign
ocean-going
vessels.
The provisions currently governing the entitlement of the seafarers
beneficiaries to death benefits are found in Section 20 of the 2000 POEASEC.
Part A (1) thereof states that the seafarers beneficiaries may successfully
claim death benefits if they are able to establish that the seafarers death is
(a) work-related, and (b) had occurred during the term of his employment
contract.
First Requirement: The Seafarers Death Should Be Work-Related.
While the 2000 POEA-SEC does not expressly define what a work-related
death means, it is palpable from Part A (4) as above-cited that the said
term refers to the seafarers death resulting from a work-related
injury or illness. This denotation complements the definitions accorded to
the terms work-related injury and work-related illness under the 2000
POEA-SEC as follows:

Work-Related Injury injury resulting in disability or death arising

out of and in the course of employment.

Work-Related Illness any sickness resulting to disability or death as

a result of an occupational disease listed under Section 32-A of this
contract with the conditions set therein satisfied.

Given that the seafarers death in this case resulted from a work-related
injury as defined in the 2000 POEA-SEC above, it is clear that the first
requirement
for
death
compensability
is
present.
Second Requirement: The Seafarers Death Should Occur During the
Term Of Employment.
With respect to the second requirement for death compensability, the Court
takes this opportunity to clarify that while the general rule is that the
seafarers death should occur during the term of his employment, the
seafarers death occurring after the termination of his employment due to his
medical repatriation on account of a work-related injury or illness constitutes
an exception thereto. This is based on a liberal construction of the 2000
POEA-SEC as impelled by the plight of the bereaved heirs who stand to be
deprived of a just and reasonable compensation for the seafarers death,
notwithstanding its evident work-connection.
Here, Nancings repatriation occurred during the eighth (8th) month of his
one (1) year employment contract. Were it not for his injury, which had been
earlier established as work-related, he would not have been repatriated for
medical reasons and his contract consequently terminated pursuant to Part 1
of Section 18 (B) of the 2000 POEA-SEC as hereunder quoted:
SECTION 18. TERMINATION OF EMPLOYMENT
B. The employment of the seafarer is also terminated when the
seafarer arrives at the point of hire for any of the following
reasons:
1. when the seafarer signs-off and is disembarked for
medical reasons pursuant to Section 20 (B)[5] of this
Contract.

Concordant with the States avowed policy to give maximum aid and full
protection to labor as enshrined in Article XIII of the 1987 Philippine
Constitution, contracts of labor, such as the 2000 POEA-SEC, are deemed to

be so impressed with public interest that the more beneficial conditions must
be endeavoured in favor of the laborer. The rule therefore is one of liberal
construction. As enunciated in the case of Philippine Transmarine
Carriers, Inc. v. NLRC:
The POEA Standard Employment Contract for Seamen is designed primarily
for the protection and benefit of Filipino seamen in the pursuit of their
employment on board ocean-going vessels. Its provisions must therefore
be construed and applied fairly, reasonably and liberally in their
favor as it is only then can its beneficent provisions be fully carried
into effect.
Applying the rule on liberal construction, the Court is thus brought to the
recognition that medical repatriation cases should be considered as an
exception to Section 20 of the 2000 POEA-SEC. Accordingly, the phrase
work-related death of the seafarer, during the term of his
employment contract under Part A (1) of the said provision should not be
strictly and literally construed to mean that the seafarers work-related death
should have precisely occurred during the term of his employment. Rather, it
is enough that the seafarers work-related injury or illness
which eventually causes his death should have occurred during the
term of his employment. Taking all things into account, the Court reckons
that it is by this method of construction that undue prejudice to the laborer
and his heirs may be obviated and the State policy on labor protection be
championed.
Thus, considering the constitutional mandate on labor as well as relative
jurisprudential context, the rule, restated for a final time, should be as
follows: if the seafarers work-related injury or illness (that
eventually causes his medical repatriation and, thereafter, his
death, as in this case) occurs during the term of his employment,
then the employer becomes liable for death compensation benefits
under Section 20 (A) of the 2000 POEA-SEC. The provision cannot be
construed otherwise for to do so would not only transgress prevailing
constitutional policy and deride the bearings of relevant case law but also
result in a travesty of fairness and an indifference to social justice.

Topic: Compensability of Heart Illnesses; Claim for CBA Benefits

Ponente: Del Castillo, J.

Magsaysay Mitsui OSK Marine, Inc. and/or MOL Tankship

Management (Asia) PTE Ltd v. Juanito G. Bengson, G.R. No. 198528,
October 13, 2014

Facts: Juanito G. Bengson was hired as third mate and this was his 22nd
contract with Magsaysay Inc. In the course of his employment, he suddenly
experienced difficulty in breathing and numbness on half of his body
prompting him to ask for assistance. Bengson was brought to a hospital
where he was confined for three days. Bengson had partial paralysis of the
right hand and a minor partial paralysis of the right leg. The CT Scan of his
head showed a "small hematoma in the left part of the crane". Afterwhich,
Bengsons immediate repatriation was arranged.

Upon Bengsons arrival in the Philippines, he was immediately brought to the

hospital under the supervision of company-designated-physician. Medical
examination revealed that he had other sicknesses. Upon Bengsons
discharge the Discharge Summary showed that he had a stroke. The
company-designated doctor opined that the illness of "hematoma in the
cranium" was not work-related. Thus, no further disability assessment was
issued.

Bengson, on the other hand, continuously took medications and was unable
to return to his work as a seaman due to the severity of his disability. He then
filed a claim for disability compensation.

The Labor Arbiter ruled in favor of the seafarer and awarded $137,500
representing 100% compensation benefits under CBA. The Labor Arbiter
declared that seafarers hematoma in the left part of his cranium is related to
his work as Third Mate, and the strenuous nature of his work and the
conditions he was subjected to while working on board companys vessel
caused his illness. The Labor Arbiter also added that the companydesignated doctors opinion that seafarers illness is not work-related cannot
be given credence, as it has been shown that prior to boarding he was
declared fit to work by the companys own physicians, and if he contracted
heart disease while on board the ship, it can only be caused by his work and
the conditions he was subjected to during his employment.

The NLRC reversed the decision of the Labor Arbiter and held that the CBA is
relevant only in cases of permanent disability arising from accident which is
not the case for the seafarer, who contracted illness; thus, the provisions of
the POEA-SEC will apply instead. It added that under the POEA-SEC,
hematoma is not included in the list of compensable illnesses. Seafarer
should have proved that such illness was work-related and compensable, and
it is not enough for him to claim or show that it was contracted during his
employment with the company. Having failed to do so, the companydesignated doctors findings that his illness is not work-related should
prevail. It held further that since seafarers illness is not work-related, his
inability to work for more than 120 days is therefore irrelevant and does not
entitle him to permanent total disability benefits.
The Court of Appeals reinstated the decision of the Labor Arbiter with
modification. The court awarded $60,000.00 (instead of $137,000)
representing full disability benefits under POEA-SEC. The appellate court held
that seafarers exposure to different hazards on the companys vessel, the
performance of his functions as third mate, and the extraordinary physical
and mental strain required by his position caused him to suffer his present
illness. The appellate court also added that in the course of performing his
duties, he suffered a stroke or cerebro-vascular accident (CVA), which means

that a blood vessel within or about his brain burst which caused cerebral or
intracranial hemorrhage; that such illness is an occupational disease under
Section 32-A (12) of the POEA-SEC; that according to the companydesignated physicians Cerebrovascular Investigation Form, the seafarer
suffered from stroke, hypertension, carotid bruit, Transient Ischemic Attack,
Hemiplegia, and Amaurosis Fugax; that the disease being work-related, The
company-designated physician should have made a declaration either of
fitness or disability, which he failed to do; that the failure to make a
declaration entitles seafarer to permanent total disability benefits in the
amount of US$60,000.00 in accordance with the POEA-SEC. However, the
Court of Appeals disallowed the benefits claimed under the CBA of $137,000
stating that the disability did not arise from an accident. The Court only
awarded $60,000.

Issue: Whether or not Bengsons illness (hypertensive cardio-vascular

disease) is an occupational disease and thus compensable.

Ruling: Yes.

The Supreme Court affirmed the decision of the Court of Appeals. In the past,
the Court has held that cardiovascular disease, coronary artery disease, and
other heart ailments are compensable.

In the present case, the company flatly claims that Bengsons hypertensive
cardio-vascular disease is not compensable on the sole basis of its companydesignated physicians declaration that such illness is not work-related.

However, the Court found that seafarer's illness is work-related.

The
undisputed facts indicate that Bengson has been working for petitioners as
third mate for twelve years; and that as third mate, he was saddled with

heavy responsibilities relative to navigation of the vessel, ship safety and

management of emergencies.

It is beyond doubt that Bengson was subjected to physical and mental stress
and strain. His responsibilities have been heavy burdens on respondent's
shoulders all these years, and certainly contributed to the development of
his illness. Besides, it is already recognized that any kind of work or labor
produces stress and strain normally resulting in wear and tear of the human
body. 'Notably, it is a matter of judicial notice that an overseas worker,
having to ward off homesickness by reason of being physically separated
from his family for the entire duration of his contract, bears a great degree of
emotional strain while making an effort to perform his work well. The strain is
even greater in the case of a seaman who is constantly subjected to the
perils of the sea while at work abroad and away from his family.

Having worked for the company under several employment contracts that
were continuously renewed, it can be said that respondent spent much of his
productive years with the company; his years of service certainly took a toll
on his body, and he could not have contracted his illness elsewhere except
while working for the company.

The Court ruled that the list of illnesses/diseases in the POEA-SEC does not
preclude other illnesses/diseases not so listed from being compensable. The
POEA-SEC cannot be presumed to contain all the possible illnesses / injuries
that render a seafarer unfit for further sea duties. And equally significant, it
is not the injury which is compensated, but rather it is the incapacity to work
resulting in the impairment of one's earning capacity. Respondent's illness,
which has likewise been diagnosed as intracerebral hemorrhage or
hemorrhagic stroke, is a serious condition and could be deadly.

In one case the Court held that an employee's disability becomes permanent
and total when so declared by the company-designated physician, or, in case

of absence of such a declaration either of fitness or permanent total

disability, upon the lapse of the 120 or 240-day treatment period.

The company-designated doctor did not make a definite assessment of

seafarer's fitness or disability, even up to this day and the latters medical
condition remains unresolved. In the meantime, seafarers medical condition
persists, and the company did not renew or continue with respondent's
employment; nor was he able to work for other employers.
Quite
understandably, seafarer's condition remains delicate given that his illness is
serious and could be fatal. Thus, as Bengson is deemed totally and
permanently disabled, he is entitled to the corresponding benefit under the
POEA-SEC in the peso equivalent of US$60,000.00.

Benefits under the CBA of US$137,000 was not awarded as there was no
accident.

Topic: Illegal Dismissal

Ponente: Brion, J.

FVR Skills and Services Exponents, Inc. (SKILLEX), Fulgencio V. Rana

and Monina R. Burgos v. Jovert Sev A et. al., G.R. No. 200857,
October 22, 2014

Facts: The twenty-eight (28) respondents in this case were employees of

petitioner FVR Skills and Services Exponents, Inc. (petitioner), an
independent contractor engaged in the business of providing janitorial and
other manpower services to its clients.

On April 21, 2008, the petitioner entered into a Contract of Janitorial Service
(service contract) with Robinsons Land Corporation (Robinsons). Both agreed
that the petitioner shall supply janitorial, manpower and sanitation services
to Robinsons Place Ermita Mall for a period of one year - from January 1,
2008 to December 31, 2008. Pursuant to this, the respondents were
deployed to Robinsons.

Halfway through the service contract, the petitioner asked the respondents
to execute individual contracts which stipulated that their respective
employments shall end on December 31, 2008, unless earlier terminated.

The petitioner and Robinsons no longer extended their contract of janitorial

services. Consequently, the petitioner dismissed the respondents as they
were project employees whose duration of employment was dependent on
the petitioner's service contract with Robinsons.
The respondents responded to the termination of their employment by filing
a complaint for illegal dismissal with the NLRC. They argued that they were
not project employees; they were regular employees who may only be
dismissed for just or authorized causes.

The LA ruled in the petitioner's favor. He held that the respondents were not
regular employees. They were project employees whose employment was
dependent on the petitioner's service contract with Robinsons.

The NLRC reversed the LA's ruling and held that they were regular
employees. The NLRC considered that the respondents had been under the
petitioner's employ for more than a year already, some of them as early as
1998.

The CA dismissed the petitioner's certiorari petition and affirmed the NLRC's
decision.

Issue: Whether or not the respondents have been illegally dismissed.

Ruling: Yes.

The respondents are regular employees, not project employees. Under

Article 280 (now Article 294) of the Labor Code, there are two kinds of
regular employees, namely, (1) those who wereengaged to perform activities
which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those casual employees who became regular after one
year of service, whether continuous or broken, but only with respect to the
activity for which they have been hired. The primary standard in determining
regular employment is the reasonable connection between the particular
activity performed by the employee and the employers business or trade.
This connection can be ascertained by considering the nature of the work
performed and its relation to the scheme of the particular business or the
trade in its entirety.

Guided by this test, the Supreme Court, in the case at bar, concluded that
respondents work as janitors, service crews and sanitation aides, are
necessary or desirable to the petitioners business of providing janitorial and
manpower services to its clients as an independent contractor. Although the
respondents were assigned as contractual employees to the petitioners
various clients, under the law, they remain to be the petitioners regular
employees, who are entitled to all the rights and benefits of regular
employment, i.e., (a) safe and healthful working conditions; (b) labor
standards such as service incentive leave, rest days, overtime pay, holiday
pay, 13th month pay and separation pay; (c) social security and welfare
benefits; (d) self-organization, collective bargaining and peaceful concerted
action; and (e) security of tenure.

The respondents were illegally dismissed. To be valid, an employee's

dismissal must comply with the substantive and procedural requirements of
due process. Substantively, a dismissal should be supported by a just or
authorized cause. Procedurally, the employer must observe the twin notice
and hearing requirements in carrying out an employee's dismissal. Having
already determined that the respondents are regular employees and not
project employees, and that the respondents' belated employment contracts
could not be given any binding effect for being signed under duress, we hold
that illegal dismissal took place when the petitioner failed to comply with the
substantive and procedural due process requirements of the law.

Topic: Labor Law Project Employees

Ponente: MENDOZA, J.
JEANETTE V. MANALO, VILMA P. BARRIOS, LOURDES LYNN MICHELLE
FERNANDEZ AND LEILA B. TAIO, Petitioners, v. TNS PHILIPPINES INC.,
AND GARY OCAMPO, Respondents.
G.R. No. 208567, November 26, 2014
Facts:
TNS Philippines Inc. (TNS), a company engaged primarily in the business of
marketing research and information, hired the petitioners as field personnel
on a project-to-project basis, as evidenced by a project-to-project
employment contract. Thereafter, TNS submits termination report with the
DOLE-Regional Office. Petitioners were also given office-based tasks which
were not on a per project basis, not evidenced by any contract, and not
reported to the DOLE either. In August 2008, they were assigned in the
tracking projects with pulling-out scheme, which prompted them to file a
consolidated complaint for regularization before the LA. On October 21,
2008, petitioners were advised by TNS not to report for work anymore
because they were being pulled out from their current assignments and that
they were not being lined up for any continuing or incoming projects because
it no longer needed their services. They were also asked to surrender their
company IDs.Petitioners, thereafter, filed a complaint for illegal dismissal,
overtime pay, damages, and attorneys fees against TNS. Later, the labor
cases for regularization and illegal dismissal were consolidated.
The LA rendered a decision, dismissing the complaint on the ground that
petitioners were found to be project employees who knew the nature of their
positions as such at the time of their employment and who agreed with full
understanding that the contracts would lapse upon completion of the project
stated in their respective contracts. The NLRC reversed said decision and
held that in the absence of proof that the subsequent employment of the
complainants continued to be on a project-to-project basis under a contract
of employment, complainants are considered to have become regular
employees after November 30, 2007. The failure to present contract of
project employment means that the employees are regular. The NLRC further
ruled that, being regular employees, petitioners were illegally dismissed
because TNS, who had the burden of proving legality in dismissal cases,
failed to show how and why the employment of petitioners was terminated
on October 21, 2008. On appeal, the CA ruled in favor of TNS. Hence, this
petition.
Issue:
1. Whether or not the petitioners were merely project employees.
2. Whether or not there was abuse of discretion

Held:
1. No. Article 280 of the Labor Code, as amended, clearly defined a project
employee as one whose employment has been fixed for a specific
project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season. Additionally, a project
employee is one whose termination of his employment contract is reported
to the DOLE everytime the project for which he was engaged has been
completed.
The reports belatedly submitted by TNS failed to show the corresponding
project employment contracts of petitioners covering the period indicated in
the said termination reports. In the absence of proof that the subsequent
employment of petitioners continued to be on a project-to-project basis
under a contract of employment, petitioners were considered to have
become regular employees.
In Maraguinot, Jr. v. NLRC, the Court held that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, rehired
by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade of
the employer, then the employee must be deemed a regular employee.
Here, Petitioners successive re-engagement in order to perform the same
kind of work firmly manifested the necessity and desirability of their work in
the usual business of TNS as a market research facility.
Petitioners were rehired not intermittently, but continuously, contract after
contract, month after month, involving the very same tasks. Ultimately, the
functions they performed were indeed vital and necessary to the very
business or trade of TNS. In sum, petitioners are deemed to have become
regular employees. Hence, their dismissal is deemed illegal.

Topic: Labor Law Reinstatement Salaries

Ponente: REYES, J.
PHILIPPINE
AIRLINES,
INC., Petitioner, v. REYNALDO
PAZ, Respondent.
G.R. No. 192924, November 26, 2014

V.

Facts:
Reynaldo V. Paz was a former commercial pilot of PAL and a member of the
Airlines Pilots Association of the Philippines (ALPAP), the sole and exclusive
bargaining representative of all the pilots in PAL. On December 9, 1997,
ALPAP filed a notice of strike with the NCMB of DOLE. The DOLE Secretary
enjoined the parties from committing acts which will further exacerbate the
situation. On June 5, 1998, the ALPAP officers and members staged a strike
and picketed at the PALs premises. To control the situation, the DOLE
Secretary issued a return-to-work order on June 7, 1998, directing all the
striking officers and members of ALPAP to return to work within 24 hours
from notice of the order but to no avail. On June 25, 1998, Atty. Joji Antonio,
the counsel for ALPAP, informed the members of the union that she has just
received a copy of the return-to-work order and that they have until the
following day within which to comply. Then, PAL filed a petition for approval
of rehabilitation plan and for appointment of a rehabilitation receiver with the
Securities and Exchange Commission (SEC), claiming serious financial
distress brought about by the strike. Subsequently, on June 23, 1998, the
SEC appointed a rehabilitation receiver for PAL and declared the suspension
of all claims against it. On June 1, 1999, the DOLE Secretary resolved the
motions for reconsideration filed by both parties and declared the strike
staged by ALPAP illegal and that the participants thereof are deemed to have
lost their employment.
On June 25, 1999, the respondent filed a complaint for illegal dismissal
against PAL for not accepting him back to work, claiming non-participation in
the illegal strike. The Labor Arbiter (LA) rendered a Decision, holding that
the respondent was illegally dismissed and ordered that he be reinstated to
his former position without loss of seniority rights and other privileges and
paid his full backwages inclusive of allowances and other benefits computed
from June 12, 1998 up to his actual reinstatement. The respondent pursued
his move for the issuance of a writ of execution, claiming that he was

entitled to reinstatement salaries which he supposedly earned during the

pendency of the appeal to the NLRC.
Issue:
1. Whether or not the award of reinstatement salaries to the respondent is
proper.
2. Whether or not the respondent is entitled to the payment of reinstatement
salaries.
Held:
1. Yes. In the case of Garcia v. Philippine Airlines, Inc., the Court deliberated
on the application of Paragraph 3, Article 223 of the Labor Code in light of
the apparent divergence in its interpretation, specifically on the
contemplation of the reinstatement aspect of the LA decision. Thus:
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned,
shall immediately be executory, pending appeal . The employee shall
either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or,at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the
2. No. The rule is that the employee is entitled to reinstatement salaries
notwithstanding the reversal of the LA decision granting him said relief.
In Garcia, the Court relaxed the rule by taking into consideration the cause of
delay in executing the order of reinstatement of the LA. It was declared, thus:
After the labor arbiters decision is reversed by a higher tribunal, the
employee may be barred from collecting the accrued wages, if it is shown
that the delay in enforcing the reinstatement pending appeal was without
fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order
of reinstatement pending appeal was not executed prior to its reversal; and
(2) the delay must not be due to the employers unjustified act or omission. If
the delay is due to the employers unjustified refusal, the employer may still
be required to pay the salaries notwithstanding the reversal of the Labor
Arbiters decision.
It is clear from the records that PAL failed to reinstate the respondent
pending appeal of the LA decision to the NLRC. It can be recalled that the LA
rendered the decision ordering the reinstatement of the respondent on March
5, 2001. And, despite the self-executory nature of the order of reinstatement,
the respondent nonetheless secured a partial writ of execution on May 25,
2001. Even then, the respondent was not reinstated to his former position or
even through payroll. A scrutiny of the circumstances, however, will show
that the delay in reinstating the respondent was not due to the unjustified

refusal of PAL to abide by the order but because of the constraints of

corporate rehabilitation. The inopportune event of PALs entering
rehabilitation receivership justifies the delay or failure to comply with the
reinstatement order of the LA.

Topic: Illegal dismissal

LEONEN, J.:
Stanley Fine Furniture, Elena and Carlos Wang vs. Victor T. Gallano
and EnriquitoSiarez
G.R. No. 190486
November 26, 2014
Facts:
Stanley Fine Furniture (Stanley Fine), through its owners Elena and Carlos
Wang, hired respondents Victor T. Gallano and EnriquitoSiarez in 1995 as
painters/carpenters. Victor and Enriquito each received 215.00 basic salary
per day.
On May 26, 2005, Victor and Enriquito filed a labor complaintfor
underpayment/non-payment of salaries, wages, Emergency Cost of Living
Allowance (ECOLA), and 13th month pay. They indicated in the complaint
form that they were "still working"for Stanley Fine.
Victor and Enriquito filed an amended complaint on May 31, 2005, for actual
illegal dismissal, underpayment/non-payment of overtime pay, holiday pay,
premium for holiday pay, service incentive leave pay, 13th month pay,
ECOLA, and Social Security System (SSS) benefit. In the amended complaint,
Victor and Enriqui to claimed that they were dismissed on May 26,

2005.Victor and Enriquito were allegedly scolded for filing a complaint for
money claims. Later on, they were not allowed to work.
The Labor Arbiter resolved these contradictory statements in the following
manner:
WHEREFORE, premises considered, respondents are hereby declared guilty
of illegal dismissal. As a consequence, they are ORDERED to reinstate
complainant to their former position and pay jointly and severally
complainants full backwages from date of dismissal until actual
reinstatement
On appeal, the National Labor Relations Commission reversed the Labor
Arbiters decision, ruling that the Labor Arbiter erred in considering the
statement, "due to the filing ofan unmeritorious labor case," as an admission
against interest.
Issue:
Whether the Court of Appeals erred when it agreed with the Labor Arbiter
that the statement, "filing of an unmeritorious labor case," is an admission
against interest and binding against Stanley Fine Furniture.

Held:
There was no just cause in the dismissal of respondents
The Court of Appeals found grave abuse of discretion on the part of the
National Labor Relations Commission when it reversed the Labor Arbiters
decision. The Court of Appeals held that respondents were illegally dismissed
because no valid cause for dismissal was shown. Also, there was no
compliance with the two-notice requirement.
Elena admitted that no notices of dismissal were issued to respondents.
However, memoranda were given to respondents, requiring them to explain
their absences. She claimed that the notices to explain disprove
respondents allegation that there was intent to dismiss them.
Grounds for termination of employment are provided under the Labor
Code. Just causes for termination ofan employee are provided under
Article 282 of the Labor Code: ARTICLE 282. Termination by employer.- An
employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.
Although abandonment of work is not included in the enumeration, this court
has held that "abandonment is a form of neglect of duty." To prove
abandonment, two elements must concur:
1. Failure to report for work orabsence without valid or justifiable reason; and
2. A clear intention to sever the employer-employee relationship.
In Hodieng Concrete Products v. Emilia,this court held that:
Absence must be accompanied by overt acts unerringly pointing to the fact
that the employee simply does not want to work anymore. And the burden of
proof to show that there was unjustified refusal to go back to work rests on
the employer.
The Court of Appeals ruled that the alleged abandonment of work is negated
by the immediate filing of the complaint for illegal dismissal on May 31,
2005. The Court of Appeals further stated that:
Long standing is the rule that the filing of the complaint for illegal dismissal
negates the allegation of abandonment. Human experience dictates that no
employee in his right mind would go through the trouble of filing a case
unless the employer had indeed terminated the services of the employee.

Topic: Entitlement to the benefit of ECP by the parent

Ponente: Velasco, Jr., J.
Bernardina P. Bartolome v. Social Security System and Scanmar
Maritime Services, Inc., G.R. No. 192531, November 12, 2014
Facts: John Colcol was employed as electrician by Scanmar Maritime
Services, Inc., on board the vessel Maersk Danville, since February 2008. As
such, he was enrolled under the government's Employees' Compensation
Program (ECP). Unfortunately, on June 2, 2008, an accident occurred on
board the vessel whereby steel plates fell on John, which led to his untimely
death the following day.
John was, at the time of his death, childless and unmarried. Thus, petitioner
Bernardina P. Bartolome, Johns biological mother and, allegedly, sole
remaining beneficiary, filed a claim for death benefits under PD 626 with the
Social Security System (SSS) at San Fernando City, La Union. However, the
SSS La Union office denied the claim, stating they cannot give due course to

the claim because petitioner is no longer considered as the parent of JOHN

COLCOL as he was legally adopted by CORNELIO COLCOL based on
documents submitted to it.
The denial was appealed to the Employees Compensation Commission
(ECC), which affirmed the ruling of the SSS La Union Branch
In denying the claim, both the SSS La Union branch and the ECC ruled
against petitioners entitlement to the death benefits sought after under PD
626 on the ground she can no longer be considered Johns primary
beneficiary. As culled from the records, John and his sister Elizabeth were
adopted by their great grandfather, petitioners grandfather, Cornelio Colcol
(Cornelio), by virtue of the Decision in Spec. Proc. No. 8220-XII of the
Regional Trial Court in Laoag City dated February 4, 1985, which decree of
adoption attained finality. Consequently, as argued by the agencies, it is
Cornelio who qualifies as Johns primary beneficiary, not petitioner. Neither,
the ECC reasoned, would petitioner qualify as Johns secondary beneficiary
even if it were proven that Cornelio has already passed away. As the ECC
ratiocinated:
The dependent parent referred to by Article 167 (j) of P.D. 626, as amended
relates to the legitimate parent of the covered member, as provided for by
Rule XV, Section 1 (c) (1) of the Amended Rules on Employees
Compensation. This Commission believes that the appellant is not considered
a legitimate parent of the deceased, having given up the latter for adoption
to Mr. Cornelio C. Colcol. Thus, in effect, the adoption divested her of the
status as the legitimate parent of the deceased.
Aggrieved, petitioner filed a Motion for Reconsideration, which was likewise
denied by the ECC. Hence, the instant petition.
Issue: Whether the biological parents of the covered, but legally adopted,
employee are considered secondary beneficiaries and, thus, entitled, in
appropriate cases, to receive the benefits under the ECP.
SC: Yes.
The petition is meritorious.
The ECCs factual findings are not consistent with the evidence on record. To
recall, one of the primary reasons why the ECC denied petitioners claim for
death benefits is that even though she is Johns biological mother, it was
allegedly not proven that his adoptive parent, Cornelio, was no longer alive.
The court disagreed with the factual finding of the ECC on this point.

Generally, findings of fact by administrative agencies are generally accorded

great respect, if not finality, by the courts by reason of the special knowledge
and expertise of said administrative agenciesover matters falling under their
jurisdiction. However, in the extant case, the ECC had overlooked a
crucial piece of evidence offered by the petitioner Cornelios death
certificate.
Based on Cornelios death certificate, it appears that Johns adoptive father
died on October 26, 1987, or only less than three (3) years since the decree
of adoption on February 4, 1985, which attained finality. As such, it was error
for the ECC to have ruled that it was not duly proven that the adoptive
parent, Cornelio, has already passed away.
The rule limiting death benefits claims to the legitimate parents is
contrary to law
This brings us to the question of whether or not petitioner is entitled to the
death benefits claim in view of Johns work-related demise. The pertinent
provision, in this regard, is Article 167 (j) of the Labor Code, as amended.
Rule XV, Sec. 1(c)(1) of the Amended Rules on Employees
Compensation deviates from the clear language of Art. 167 (j) of the
Labor Code, as amended
Examining the Amended Rules on Employees Compensation in light of the
Labor Code, as amended, it is at once apparent that the ECC indulged in an
unauthorized administrative legislation. In net effect, the ECC read into Art.
167 of the Code an interpretation not contemplated by the provision.
Rule XV of the Amended Rules on Employees Compensation is patently a
wayward restriction of and a substantial deviation from Article 167 (j) of the
Labor Code when it interpreted the phrase "dependent parents" to refer to
"legitimate parents."
The term "parents" in the phrase "dependent parents" in the aforequoted Article 167 (j) of the Labor Code is used and ought to be taken in
its general sense and cannot be unduly limited to "legitimate
parents" as what the ECC did. The phrase "dependent parents" should,
therefore, include all parents, whether legitimate or illegitimate and
whether by nature or by adoption. When the law does not distinguish,

one should not distinguish. Plainly, "dependent parents" are parents,

whether legitimate or illegitimate, biological or by adoption, who are in need
of support or assistance.
Moreover, the same Article 167 (j),as couched, clearly shows that Congress
did not intend to limit the phrase "dependent parents" to solely
legitimate parents. At the risk of being repetitive, Article 167 provides that
"in their absence, the dependent parents and subject to the restrictions
imposed on dependent children, the illegitimate children and legitimate
descendants who are secondary beneficiaries." Had the lawmakers
contemplated "dependent parents" to mean legitimate parents, then it would
have simply said descendants and not "legitimate descendants." The manner
by which the provision in question was crafted undeniably show that the
phrase "dependent parents" was intended to cover all parents legitimate,
illegitimate or parents by nature or adoption.
Rule XV, Section 1(c)(1) of the Amended Rules on Employees
Compensation is in contravention of the equal protection clause
To insist that the ECC validly interpreted the Labor Code provision is an
affront to the Constitutional guarantee of equal protection under the laws for
the rule, as worded, prevents the parents of an illegitimate child from
claiming benefits under Art. 167 (j) of the Labor Code, as amended by PD
626. To Our mind, such postulation cannot be countenanced.
As jurisprudence elucidates, equal protection simply requires that all persons
or things similarly situated should be treated alike, both as to rights
conferred and responsibilities imposed. It requires public bodies and
institutions to treat similarly situated individuals in a similar manner. In other
words, the concept of equal justice under the law requires the state to
govern impartially, and it may not draw distinctions between individuals
solely on differences that are irrelevant to a legitimate governmental
objective.
The concept of equal protection, however, does not require the universal
application of the laws to all persons or things without distinction. What it
simply requires is equality among equals as determined according to a valid
classification. Indeed, the equal protection clause permits classification. Such
classification, however, to be valid must pass the test of reasonableness. The
test has four requisites: (1) The classification rests on substantial

distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to
existing conditions only; and (4) It applies equally to all members of the
same class. "Superficial differences do not make for a valid classification."
In the instant case, there is no compelling reasonable basis to
discriminate against illegitimate parents. Simply put, the above-cited
rule promulgated by the ECC that limits the claim of benefits to the
legitimate parents miserably failed the test of reasonableness since the
classification is not germane to the law being implemented.
There being no justification for limiting secondary parent beneficiaries to the
legitimate ones, there can be no other course of action to take other than to
strike down as unconstitutional the phrase "illegitimate" as appearing in Rule
XV, Section 1(c)(1) of the Amended Rules on Employees Compensation.

Topic: Retirement and separation pay; Absence of an express or

implied prohibition against it, collection of both retirement benefits
and separation pay upon severance from employment
Ponente: Del Castillo, J.
Goodyear Philippines, Inc. and Remigio M. Ramos v. Marina L.
Angus, G.R. No. 185449, November 12, 2014

Facts: Angus was employed by Goodyear on November 16, 1966 and

occupied the position of Secretary to the Manager of Quality and Technology.
In order to maintain the viability of its operations in the midst of economic
reversals, Goodyear implemented cost-saving measures which included the
streamlining of its workforce. Consequently, on September 19, 2001, Angus
received from Ramos, the Human Resources Director of Goodyear, a letter
which stated that her service is no longer necessary because her office is
abolished and is redundant.
As Company practice, termination due to redundancy or retrenchment is paid
at 45 days' pay per year of service. Considering, that you have rendered
34.92 years of service to the Company as of October 18, 2001, and have
reached the required minimum age of 55 to qualify for early retirement,
Management has decided to grant you early retirement benefit at 47 days'
per year of service.
Angus accepted the early retirement but did not agree with terms thereof.
She accepted the checks which covered payment of her retirement benefits
computed at 4 7 days' pay per year of service and other company benefits.
However, she placed an annotation that she received it under protest.
Due to protest and refusal of Angus to sign quit claims, petitioners took back
the checks given to her.
On complaint, LA upheld the validity of Angus termination. NLRC affirmed
the decision. CA rendered a Decision partially granting Angus' Petition. While
it found her dismissal valid in both substance and procedural aspects, it
declared Angus entitled to separation pay in addition to the retirement pay
she already received.
Issue: Whether Angus is entitled to both separation pay and early retirement
benefit due to the absence of a specific provision in the CEA prohibiting
recovery of both.
SC: Yes.
Petitioners allege that there is a provision in the last CBA against the
recovery of both retirement benefits and separation pay. To support their
claim, petitioners submitted a copy of what appears to be a portion of the
company CBA entitled "Retirement Plan, Life Insurance, Physical Disability
Pay and Resignation Pay." Section 1, Article XI thereof provides that the
availment of retirement benefits precludes entitlement to any separation
pay. The same, however, can hardly be considered as substantial evidence
because it does not appear to be an integral part of Goodyear's CBA. Even

assuming that it is, it would still not suffice as there is no showing if the CBA
under which the said provision is found was the one in force at the time
material to this case. On the other hand, Angus presented the parties' 20012004 CBA and upon examination of the same, the Court agrees with her that
it does not contain any restriction on the availment of benefits under the
company's Retirement Plan and of separation pay. Indeed, the Labor Arbiter
and the NLRC erred in ignoring this material piece of evidence which is
decisive of the issue presented before them. The CA, thus, committed no
error in reversing the Decisions of the labor tribunals when it ruled in favor of
Angus' entitlement to both retirement benefits and separation pay.
Moreover, the Court agrees with the CA that the amount Angus received
from petitioners represented only her retirement pay and not separation pay.
A cursory reading of petitioners' September 18, 2001 letter notifying Angus
of her termination from employment shows that they granted her early
retirement benefits pegged at 4 7 days' pay per year of service. This rate
was arrived at after petitioners considered respondent's length of service
with the company, as well as her age which qualified her for early retirement.
In fact, petitioners were even explicit in stating in the said letter that the
amount she was to receive would come from the company's Pension Fund,
which, as correctly asserted by Angus, was created to cover retirement
benefit payment of employees. In addition, the document showing a detailed
account of Angus' termination benefits speaks for itself as the same is
entitled "Summary of Retirement Pay and other Company Benefits." In view
therefore of the clear showing that what petitioners decided to grant Angus
was her early retirement benefits, they cannot now be permitted to deny
having paid such benefit.
Petitioners further argue that Angus is not entitled to retirement pay because
she does not meet the requirements enumerated in the Retirement Plan
provision of the CBA. The Court disagrees. While it is obvious that Angus is
not entitled to compulsory retirement as she has not yet reached the age of
60, there is no denying, however, that she is qualified for early retirement.
Under the provision of the Retirement Plan of the CBA as earlier quoted, a
worker who is at least 50 years old and with at least 15 years of service, and
who has been recommended by the President of the Union for early
retirement and duly approved by the Human Resources Director, shall be
entitled to lump sum retirement benefits. At the time of her termination,
Angus was already 57 years of age and had been in the service for more
than 34 years. The exchange of correspondence between Angus and Ramos

also shows that the latter, as Goodyear's Human Resources Director, offered,
recommended and approved the grant of early retirement in favor of the
former. Clearly, all the requirements for Angus' availment of early retirement
under the Retirement Plan of CBA were substantially complied with.
It is worthy to mention at this point that retirement benefits and
separation pay are not mutually exclusive. Retirement benefits are a
form of reward for an employee's loyalty and service to an employer
and are earned under existing laws, CBAs, employment contracts
and company policies. On the other hand, separation pay is that
amount which an employee receives at the time of his severance
from employment, designed to provide the employee with the
wherewithal during the period that he is looking for another
employment and is recoverable only in instances enumerated under
Articles 283 and 284 of the Labor Code or in illegal dismissal cases
when reinstatement is not feasible. In the case at bar, Article 283 clearly
entitles Angus to separation pay apart from the retirement benefits she
received from petitioners.

Topic: Cash conversion of the unused gasoline allowance

Ponente: Velasco, Jr., J.
Honda Cars Philippines, Inc. v. Honda Cars Technical Specialists and
Supervisory Union, G.R. No. 204142, November 19, 2014
Facts: Petitioner Honda Cars Philippines, Inc. and respondent Honda Cars
Technical Specialists and Supervisory Union, the exclusive collective
bargaining representative of the companys supervisors and technical
specialists, entered into a CBA effective April 1, 2006 to March 31, 2011.
Prior to April 1, 2005, the union members were receiving a transportation
allowance of 3,300.00 a month. On September 3, 2005, the company and the
union entered into a MOA converting the transportation allowance into a
monthly gasoline allowance starting at 125 liters effective April 1, 2005. The
allowance answers for the gasoline consumed by the union members for
official business purposes and for home to office travel and vice-versa. The
company claimed that the grant of the gasoline allowance is tied up to a
similar company policy for managers and assistant vice-presidents (AVPs),
which provides that in the event the amount of gasoline is not fully
consumed, the gasoline not used may be converted into cash, subject to
whatever tax may be applicable. Since the cash conversion is paid in the
monthly payroll as an excess gas allowance, the company considers the
amount as part of the managers and AVPs compensation that is subject to
income tax on compensation.
Accordingly, the company deducted from the union members salaries the
withholding tax corresponding to the conversion to cash of their unused
gasoline allowance.
The union, on the other hand, argued that the gasoline allowance for its
members is a "negotiated item" under Article XV, Section 15 of the new CBA
on fringe benefits. It thus opposed the companys practice of treating the
gasoline allowance that, when converted into cash, is considered as
compensation income that is subject to withholding tax.
The disagreement between the company and the union on the matter
resulted in a grievance which they referred to the CBA grievance procedure
for resolution. As it remained unsettled there, they submitted the issue to a
panel of voluntary arbitrators as required by the CBA.
Panel of Voluntary Arbitrators rendered a decision/award declaring that the
cash conversion of the unused gasoline allowance enjoyed by the members

of the union is a fringe benefit subject to the fringe benefit tax, not to income
tax. The panel held that the deductions made by the company shall be
considered as advances subject to refund in future remittances of
withholding taxes.
CA Eight Division denied the petition and upheld with modification the
voluntary arbitration decision.
Issue: Whether the cash conversion of the gasoline allowance of the union
members is a fringe benefit or compensation income, for taxation purposes.
SC: The Voluntary Arbitrator has no jurisdiction to settle tax
matters.
The Labor Code vests the Voluntary Arbitrator original and exclusive
jurisdiction to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies. Upon agreement of the
parties, the Voluntary Arbitrator shall also hear and decide all other
labor disputes, including unfair labor practices and bargaining
deadlocks.
In short, the Voluntary Arbitrators jurisdiction is limited to labor
disputes. Labor dispute means "any controversy or matter
concerning terms and conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate
relation of employer and employee."
The Voluntary Arbitrator has no competence to rule on the taxability
of the gas allowance and on the propriety of the withholding of tax.
These issues are clearly tax matters, and do not involve labor disputes. To be
exact, they involve tax issues within a labor relations setting as they pertain
to questions of law on the application of Section 33 (A) of the NIRC. They do
not require the application of the Labor Code or the interpretation of the MOA
and/or company personnel policies. Furthermore, the company and the union
cannot agree or compromise on the taxability of the gas allowance. Taxation
is the States inherent power; its imposition cannot be subject to the will of
the parties.

Under paragraph 1, Section 4 of the NIRC, the CIR shall have the
exclusive and original jurisdiction to interpret the provisions of the NIRC and
other tax laws, subject to review by the Secretary of Finance. Consequently,
if the company and/or the union desire/s to seek clarification of these issues,
it/they should have requested for a tax ruling from the Bureau of Internal
Revenue (BIR). Any revocation, modification or reversal of the CIRs ruling
shall not be given retroactive application if the revocation, modification or
reversal will be prejudicial to the taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from
his return or any document required of him by the BIR;
(b) Where the facts subsequently gathered by the BIR are materially different
from the facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith.
On the other hand, if the union disputes the withholding of tax and desires a
refund of the withheld tax, it should have filed an administrative claim for
refund with the CIR. Paragraph 2, Section 4 of the NIRC expressly vests the
CIR original jurisdiction over refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other tax matters. The
union has no cause of action against the company
Under the withholding tax system, the employer as the withholding agent
acts as both the government and the taxpayers agent. Except in the case of
a minimum wage earner, every employer has the duty to deduct and
withhold upon the employees wages a tax determined in accordance with
the rules and regulations to be prescribed by the Secretary of Finance, upon
the CIRs recommendation. As the Governments agent, the employer
collects tax and serves as the payee by fiction of law. As the employees
agent, the employer files the necessary income tax return and remits the tax
to the Government.
Based on these considerations, the union has no cause of action against the
company. The company merely performed its statutory duty to withhold tax
based on its interpretation of the NIRC, albeit that interpretation may later be
found to be erroneous. The employer did not violate the employee's right by
the mere act of withholding the tax that may be due the government.
Moreover, the NIRC only holds the withholding agent personally liable for the
tax arising from the breach of his legal duty to withhold, as distinguished
from his duty to pay tax. Under Section 79 (B) of the NIRC, if the tax required
to be deducted and withheld is not collected from the employer, the

employer shall not be relieved from liability for any penalty or addition to the
unwithheld tax.
Thus, if the BIR illegally or erroneously collected tax, the recourse of the
taxpayer, and in proper cases, the withholding agent, is against the BIR, and
not against the withholding agent. The union's cause of action for the refund
or non-withholding of tax is against the taxing authority, and not against the
employer. Section 229 of the NIRC provides:
Sec. 229. Recovery of Tax Erroneously or Illegally Collected. - No
suit or proceeding shall be maintained in any court for the
recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of
any penalty claimed to have been collected without authority, or
of any sum alleged to have been excessively or in any manner
wrongfully collected, until a claim for refund or credit has been
duly filed with the Commissioner; but such suit or proceeding
may be maintained, whether or not such tax, penalty, or sum has
been paid under protest or duress.
Topic: Entitlement to disability benefits for failure to perform his
pre-injury duties as seaman for more than 120 days
Ponente: Mendoza, J.
New Filipino Maritime Agencies Inc., St. Paul Maritime Corp., and
Angelina T. Rivera, v. Michael D. Despabeladeras, G.R. No. 209201,
November 19, 2014
Facts: Respondent Michael was hired by petitioner New Filipino Maritime
Agencies Inc., for and in behalf of its principal, St. Paul Maritime Corp.
(petitioners), as Wiper to work on board the vessel M/V ATHENS HIGHWAY
for a period of nine (9) months, with a basic monthly salary of US$415.00.
Prior to embarkation, Michael underwent the required Pre-Employment
Medical Examination (PEME) and was declared Fit for Sea Service by the
company doctor. On April 26, 2009, Michael joined the assigned vessel. On
August 20, 2009, while going down the stairs of the vessel to get some tools
to be used for dismantling the engines piston, Michael slipped and fractured
his left hand. A few days after the incident, Michael experienced severe pain
and swelling in his left wrist. He was brought to the nearest hospital in
Brunswick, Georgia, where he was diagnosed with Ulna Styloid Fracture, Left
Wrist. Michael was repatriated to the Philippines for better medical
treatment and management. Upon arrival in Manila on August 31, 2009, he

was referred to the company-designated physician, Dr. Nicomedes G. Cruz

(Dr. Cruz). Later on, Dr. Cruz endorsed Michael to an orthopedic surgeon.
Michaels medical treatment was supervised by Dr. Cruz from August 2009
until February 10, 2010. Despite continuous treatment under the care of Dr.
Cruz, Michael alleged that his medical condition did not improve. This
prompted him to consult another physician, Dr. Rogelio C. Catapang, Jr. (Dr.
Catapang), who declared him unfit to resume his duties as a seaman on
January
16,
2010.
Michaels check-up with the orthopedic surgeon on February 3, 2010 showed
minimal pain on the left hand, but he was advised to continue with his
medical therapy. Michael went back for his check-up on February 10, 2010,
and he was asked to return for a follow-up check up on February 17, 2010.
He failed to return on the said date. Instead, he demanded that he be paid
disability benefits.
After his demand for payment of disability benefits was refused, Michael filed
a complaint for disability compensation and other monetary claims before
the National Labor Relations Commission (NLRC).
Issue: Whether Michael is entitled to disability benefits for failure to perform
his pre-injury duties as seaman for more than 120 days.
SC: No.
Under Section 31 of the POEA-SEC, in case of any unresolved dispute, claim
or grievance arising out of or in connection with the contract, the matter
shall be governed by Philippine laws, as well as international conventions,
treaties and covenants where the Philippines is a signatory. This signifies that
the terms agreed upon by the parties pursuant to the POEA-SEC are to be
read and understood in accordance with Philippine laws, particularly, Articles
191 to 193 of the Labor Code and the applicable implementing rules and
regulations in case of any dispute, claim or grievance. Article 192(3) of the
Labor Code which deals with the period of disability states that:
The following disabilities shall be deemed total and permanent:
1. Temporary total disability lasting continuously for more than one hundred
twenty days, except as otherwise provided for in the Rules.

The rule adverted to is Section 2, Rule X of the Rules and Regulations

implementing Book IV of the Labor Code which provides:
Sec. 2. Period of entitlement. (a) The income benefit shall be paid
beginning on the first day of such disability. If caused by an injury or sickness
it shall not be paid longer than 120 consecutive days except where such
injury or sickness still requires medical attendance beyond 120 days but not
to exceed 240 days from onset of disability in which case benefit for
temporary total disability shall be paid. However, the System may declare
the total and permanent status at any time after 120 days of continuous
temporary total disability as may be warranted by the degree of actual loss
or impairment of physical or mental functions as determined by the System.
The above provisions must be read together with Section 20(B)(3) of the
POEA-SEC which states as follows:
Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is
declared fit to work or the degree of permanent disability has been assessed
by the company-designated physician but in no case shall this period exceed
one hundred twenty (120) days.
The seafarer, upon sign-off from his vessel, must report to the companydesignated physician within three (3) days from arrival for diagnosis and
treatment. For the duration of the treatment but in no case to exceed 120
days, the seaman is on temporary total disability as he is totally unable to
work. He receives his basic wage during this period until he is declared fit to
work or his temporary disability is acknowledged by the company to be
permanent, either partially or totally, as his condition is defined under the
POEA Standard Employment Contract and by applicable Philippine laws. If
the 120 days initial period is exceeded and no such declaration is made
because the seafarer requires further medical attention, then the temporary
total disability period may be extended up to a maximum of 240 days,
subject to the right of the employer to declare within this period that a
partial or total disability already exists. The seaman may of course also be
declared fit to work at any time such declaration is justified by his medical
condition
As recited earlier, upon Michaels return to the country, he underwent
medical treatment in accordance with the terms of the POEA SEC. Upon his
repatriation on August 28, 2009, he was given medical attention supervised

by Dr. Cruz, the company-designated physician. He was later on endorsed to

an orthopedic surgeon. The company-designated specialist recommended
that he continue with his physical therapy sessions. During his visit on
February 10, 2010, he was required to return for a follow-up checkup on
February 17, 2010. For unknown reasons, he failed to return on the said date.
It should be noted that on February 10, 2010 when Michael last visited the
company-designated orthopedic surgeon, it had been 166 days since he was
referred to the company-designated physician upon his repatriation on
August 28, 2009. During this time, Michael was under temporary total
disability inasmuch as the 240-day period provided under the aforecited
Rules had not yet lapsed. The CA, therefore, erred when it ruled that
Michaels disability was permanent and total. There being no assessment,
Michaels condition cannot be considered a permanent total disability.
Temporary total disability only becomes permanent when declared by the
company physician within the period he is allowed to do so, or upon the
expiration of the maximum 240-day medical treatment period without a
declaration of either fitness to work or permanent disability.
On the issue of abandonment, the Court agrees with petitioners stance that
Michael was indeed guilty of medical abandonment for his failure to
complete his treatment even before the lapse of the 240 days period. Due to
his willful discontinuance of medical treatment with Dr. Cruz, the latter could
not
declare
him
fit
to
work
or
assess
his
disability.
The failure of Michael to observe the procedure under the POEA SEC provided
a sufficient ground for the denial of his claim for permanent total disability
benefits. Considering, however, that he was still under treatment by the
company doctors even after the lapse of 120 days but within the 240-day
extended period allowed by the rules, he remained to be under temporary
total disability and entitled to temporary total disability benefits under the
same rules.
Topic: Constructive Dismissal
Ponente: Del Castillo, J.:
Peak Ventures Corporation and/or El Tigre Security and
Investigation Agency v. Heirs of Nestor B. Villareal, G.R. No.
184618, November 19, 2014

Facts:
On June 16, 1989, Peak Ventures, the owner/operator of El Tigre,
hired Villareal as security guard and assigned him at East Greenhills Village.
On May 14, 2002, however, he was relieved from duty without any apparent
reason. Villareal was later informed by the management that he would no
longer be given any assignment because of his age. At that time, he was 42.
His repeated requests for a new posting during the months of June and July
of 2002 were likewise declined.
Due to his prolonged lack of assignmentand dwindling resources, Villareal
was constrained to claim his security bond deposits from petitioners.
However, he was advised to first tender a letter of resignation before the
samecould be released to him. Out of sheer necessity, Villareal submitted a
letter of resignation. He stated therein that he was constrained to resign
effective July 31, 2002 since he cannot expect to be given any assignment
for another one and a half months and that he can no longer afford the fare
going to petitioners office. Villareal alleged that the tenor of his resignation
letter was not acceptable to petitioners, who required him to submit another
one stating that his resignation is voluntary. In the first week of August 2002,
petitioners released to Villareal his security bond deposits.
Villareal filed before the Labor Arbiter a Complaint for illegal dismissal with
prayer for reinstatement, backwages, 13th month pay, holiday pay, service
incentive leave pay, moral and exemplary damages and attorneys fees
against petitioners. He asserted that petitioners have no valid and authorized
cause to relieve him from duty and place him on floating status. For one, he
had dedicated almost 14 years of outstanding work performance to
petitioners as shown by his commendation and award. For another,
petitioners still had an existing security services contract with East Greenhills
Village at the time he was relieved from his post. Villareal averred that the
dire financial strait brought about by his unjustified relief from duty had
made it unbearable for him to continue his employment with petitioners.
Further, his illegal dismissal was effected without due p The Labor Arbiter, in
a Decision dated July 30, 2003, concluded that there was no valid and
effective resignation on the part of Villareal; that he was constructively
dismissed by petitioners; and that his dismissal was carried out without due
process of law. Petitioners were ordered to reinstate immediately Villareal to
his former position without loss of seniority rights and other privileges and
pay Villareal his backwages for the period from July 3, 2002 up to July 4,
2003, in the amount of P100,800.00, subject to further adjustment or
computation up to the reinstatement of Villareal or the finality of this

decision, as the case may be plus attorneys fees. The NLRC agreed with the
Labor Arbiters findings and conclusion.
On December 1, 2005, Villareal died. The CA, in a Resolution dated August
22, 2007, required Villareals counsel of record, Atty. Alex B. Carpela, Jr. (Atty.
Carpela) to cause the substitution of Villareals heirs as respondents.
However, per Manifestation of Atty. Carpela, the said heirs cannot be located.
Nevertheless, the CA proceeded to resolve the case. On March 28, 2008, it
rendered a Decision upholding the NLRC ruling that it is a clear case of
constructive dismissal.
Issue: Whether Villareal was constructively dismissed.
SC: Yes.
The Court subscribes to the uniform rulings of the Labor Arbiter, the NLRC
and the CA that Villareal was constructively and illegally dismissed.
Petitioners anchor their claim of voluntary resignation on Villareals
resignation letter, the Talaan ng Pakikipagpanayam sa Pagbibitiw(exit
interview form) accomplished by him, and his notarized clearance. However,
the circumstances surrounding the execution of these documents prove
otherwise. When Villareal was relieved from duty, he was placed on floating
status. "A floating status requires the dire exigency of the employers bona
fide suspension of operation, business or undertaking." "It takes place when
the security agencys clients decide not to renew their contracts with the
agency x x x" and also "in instances where contracts for security services
stipulate that the client may request the agency for the replacement of the
guards assigned to it x x x." In the latter case, the employer should prove
that there are no posts available to which the employee temporarily out of
work can be assigned.
As pointed out by the labor tribunals, petitioners failed to discharge the
burden of proving that there were no other posts available for Villareal after
his recall from his last assignment. Worse, no sufficient reason was given for
his relief and continued denial of a new assignment. And because of the dire
financial straits brought about by these unjustified acts of petitioners,
Villareal was forced to resign and execute documents in a manner as
directed by petitioners in order to claim his security bond deposits. From
these circumstances, petitioners claim of voluntary resignation is untenable.
What is clear instead is that Villareal was constructively dismissed. There is

constructive dismissal when an act of clear discrimination, insensitivity or

disdain on the part of the employer has become so unbearable as to leave
an employee with no choice but to forego continued employment.
"Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank and a diminution in pay." Moreover,
Villareals immediate filing of a Complaint for illegal dismissal to ask for
reinstatement negates the fact of voluntary resignation.

Topic: Disability benefits; Employment contract

Ponente: Justice Marvic Mario Victor F. Leonen

Joel B. Monana v. MEC Global Ship Management and Manning Corp.,

G.R. No. 196122, November 12, 2014

Facts: MEC Global employed Monana as an ordinary seafarer for a six-month

duration on board M/V Bellavia. Monana boarded and performed his tasks
that "included cleaning, chipping, painting, and assisting in deck work."
Monana felt dizzy with blurring of vision and body weakness associated with
slurred speech and numbness of the right side of the face. The ship doctor
prescribed oral anti-hypertensive medication. Monana was airlifted to
Honolulu Medical Center the next day where he was treated and diagnosed
to have suffered a stroke. He then transferred to a rehabilitation hospital
where he underwent physical therapy for two days. He was repatriated to the
Philippines and referred to the company designated physician and was
treated. MEC provided medical assistance to Monana. Monana claimed
disability and illness allowance, which MEC refused.

Issue: Whether Monana is entitled to total and permanent disability benefits.

SC: NO. The POEA contract, deemed read and incorporated into Monanas
employment contract, governs her claims for disability benefits. It provides
for the liability of the employer when the seafarer suffers work related injury
or illness during the term of his contract.

Under the POEA contract, work-related illness must satisfy all the
following conditions:

a.

The seafarers work must involve the risks described herein;

b.
The disease was contracted as a result of the seafarers exposure
to the described risks;
c.
The disease was contracted within a period of exposure and
under such other factors necessary to contract it;
d.

There was no notorious negligence on the part of the seafarer.

In this case, there is no dispute that Monana suffered a stroke during

the term of his contract. Upon repatriation, he underwent extensive medical
treatment and therapy. He was provided physical therapy even in his
hometown. He was diagnosed with "hypertension Stage ASHD, CAD at risk
S/P stroke. However, he failed to discharge the burden of proving the
conditions set forth in Section 32-A particularly, that his work as ordinary
seaman involved the risks of having a stroke; that his hypertension was
contracted as a result of his exposure to his work; that the disease was
contracted within the period of exposure and such other factors necessary to
contract it and that there was no notorious negligence on his part.

Topic: Termination of Employee

Ponente: Reyes, J
P.J. Lhuillier, Inc. v. Velayo, G.R. No. 198620, November 12, 2014
Facts: A Labor Complaint was filed by Complainant Flordeliz Velayo for
illegal dismissal against her employer defendant P.J. Lhuillier, Inc (PLI).
Complainant was hired as an Accounting Clerk PLI. Sometime after her
employment, she was served with a Show Cause Memo ordering her to
explain her side against the charges. Therein, an overage amount of
P540.00 was allegedly not reported immediately by her to the supervisor nor
was it recorded at the end of that day.
Then, she sent a written reply admitting her inability to report the
overage as her supervisor was on leave and she was still tracing the
overage, and said that it was a simple mistake without intent to defraud the
company. After the investigation, the company dismissed her on grounds of
serious misconduct and breach of trust.
Issue: Whether there exists a valid dismissal
SC: These are the requirements to be complied in order that an employer
may invoke loss of trust and confidence in terminating an employee under
Article 282(c) of the Labor Code: (1) the employee must be holding a
position of trust and confidence; and (2) there must be an act that would
justify the loss of trust and confidence. While loss of trust and confidence
should be genuine, it does not require proof beyond reasonable doubt, it
being sufficient that there is some basis to believe that the employee
concerned is responsible for the misconduct and that the nature of the
employees participation therein rendered him unworthy of trust and
confidence demanded by his position.
Here, the employer was fully justified in claiming loss of trust and
confidence in the employee. While it is natural and understandable that the
respondent should feel apprehensive about Tulings reaction concerning her
cash overage, considering that it was their first time to be working together
in the same branch, we must keep in mind that the unaccounted cash can
only be imputed to the respondents own negligence in failing to keep track
of the transaction from which the money came. A subsequent branch audit
revealed that it came from a Pera Padala remittance, implying that although
the amount had been duly remitted to the consignee, the sending branch

failed to record the payment received from the consigning customer. For
days following the overage, the respondent tried but failed to reconcile her
records, and for this inept handling of a Pera Padala remittance, she already
deserved to be sanctioned.
Misappropriation of company funds, notwithstanding that the shortage
has been restituted, is a valid ground to terminate the services of an
employee for loss of trust and confidence. It should be pointed out that it is
immaterial what the respondents intent was concerning the missing fund,
for the undisputed fact is that cash which she held in trust for the company
was missing in her custody. At the very least, she was negligent and failed to
meet the degree of care and fidelity demanded of her as cashier. Her
excuses and failure to give a satisfactory explanation for the missing cash
only gave the petitioners sufficient reason to lose confidence in her.
Under the Article 282 of the Labor Code, an employer is allowed to
dismiss an employee for willful breach of trust or loss of confidence.
It has been held that a special and unique employment relationship exists
between a corporation and its cashier. Truly, more than most key positions,
that of a cashier calls for utmost trust and confidence, and it is the breach of
this trust that results in an employers loss of confidence in the employee.
In dismissing a cashier on the ground of loss of confidence, it is
sufficient that there is some basis for the same or that the employer has a
reasonable ground to believe that the employee is responsible for the
misconduct, thus making him unworthy of the trust and confidence reposed
in him. Therefore, if there is sufficient evidence to show that the employer
has ample reason to distrust the employee, the labor tribunal cannot justly
deny the employer the authority to dismiss him. Indeed, employers are
allowed wider latitude in dismissing an employee for loss of trust and
confidence it must also be stressed that only substantial evidence is
required in order to support a finding that an employers trust and
confidence accorded to its employee had been breached.

Topic: Award of Permanent Disability Compensation

Ponente: Perlas-Bernabe, First Division
Bahia Shipping Services, Inc., Fred Olsen Cruise Line, And Ms.
Cynthia C. Mendoza Vs.Joel P. Hipe, Jr, G.R. No. 204699, 12
November 2014
Facts: Hipe was employed by Bahia Shipping continuously under seven (7)
contracts and he was last employed as a plumber for the vessel vessel M/S
Braemar (vessel) under a six-month contract. Despite the lapse of the sixmonth contract on June 6, 2008, Hipe continued to work aboardthe vessel
without any new contract.
On June 22, 2008, in the course of his duties, he suffered back injury
because of the heavy equipment to be use in his plumbing job. He was
advised to rest and perform only light jobs, and was given the assurance that
he will be repatriated at the next convenient port. After one (1) month, he
claimed that his condition worsened and, upon his request, he was
repatriated to Manila on August 5, 2008. Upon arrival, he was immediately
examined and he went through rehabilitation and medications.
Thereafter, Hipe filed a complaint against Bahia Shipping and asking
for the permanent disability compensation and other benefits. On the other
hand, Bahia stated that Hipe is not etitled because of an expired contract.
The LA ruled in favor of HIpe and ordered Bahia to pay the benefits
sought for.
On appeal, the NLRC reversed and set aside the LA Ruling and
dismissed Hipes complaint for permanent disability compensation. The CA
dismissed the petition for certiorari, and thereby upheld the NLRC Ruling in
toto.
Issue: Whether or not the the seafarer can legally demand and claim
disability benefits from the employer/manning agency for an injury or illness
suffered
SC: The petition is meritorious.
In the present case, Hipe was made to continuously perform work
aboard the vessel beyond his six-month contract without the benefit of a
formal contract. Considering that any extension of his employment is
discretionary on the part of respondents and that the latter offered no

explanation why Hipe was not repatriated when his contract expired on June
5, 2008, the CA correctly ruled that he was still under the employ of
respondents when he sustained an injury on June 22, 2008. Consequently,
the injury suffered by Hipe was a work-related injury and his eventual
repatriation on August 5, 2008, for which he was treated or rehabilitated, can
only be considered as a medical repatriation.
Nonetheless, Hipe was subsequently declared fit to work by the
company-designated physician on October 9, 2008, or merely 65 days after
his repatriation, thus negating the existence of any
In light of the contrasting diagnoses of the company-designated
physician and Hipes personal doctor, Hipe filed his complaint before the
NLRC but prematurely did so without any regard to the conflict-resolution
procedure under Section 20 (B) (3) of the 2000 POEA-SEC. Thus, consistent
with Philippine Hammonia, the fit-to-work certification of the company
designated physician ought to be upheld.
In fine, given that Hipes permanent disability was not established
through substantial evidence for the reasons above-stated, the NLRC did not
gravely abuse its discretion in dismissing the complaint for permanent
disability benefits, thereby warranting the reversal of the CAs contrary
ruling. Verily, while the Court adheres to the principle of liberality in favor of
the seafarer in construing the POEA-SEC, when the evidence presented then
negates compensability, the claim for disability benefits must necessarily
fail, as in this case.
The petition was granted.

Topic: Claim of Death Benefits

Ponente: Perlas-Bernabe, First Division
Conchita J. Racelis v. United Philippine Lines, Inc. And/Or Holland
America Lines, Inc.,* And Fernando T. Lising, G.R. No. 198408, 12
November 2014
Facts: Complainant Conchita J. Racelis, as the surviving spouse of Rodolfo L.
Racelis, initiated a claim for death benefits pursuant to the International
Transport Workers Federation-Collective Bargaining Agreement (ITWF-CBA),
of which her husband was a member. However, her claim was denied by the
employer on the ground that the death was not work-related as it was due to
Brainstem (pontine) Cavernous Malformation, which was congenital and it
had familiar strains according to a doctor. Thus, complainant instituted a
labor case against them.
Previously, Rodolfo L. Racelis was recruited and hired by respondent
United Philippine Lines, Inc. (UPL) for its principal, respondent Holland
America Lines, Inc. (HAL) to serve as Demi Chef De Partie on board the
vessel MS Prinsendam, with a basic monthly salary of US$799.55.5 The
Contract of Employment was for a term of four (4) months, extendible for
another two (2) months upon mutual consent. After complying with the
required pre-employment medical examination where he was declared fit to
work, Rodolfo joined the vessel on January 25, 2008. Prior thereto, Rodolfo
was repeatedly contracted by said respondents and was deployed under
various contracts since December 17, 1985.
On his last employment, Rodolfo experienced severe pain in his ears
and high blood pressure causing him to collapse while in the performance of
his duties. He consulted a doctor in Argentina and was medically repatriated
on February 20, 2008 for further medical treatment. Upon arrival in Manila,
he was immediately brought to Medical City, Pasig City, where he was seen
by a company-designated physician, Dr. Gerardo Legaspi, M.D. (Dr. Legaspi),
and was diagnosed to be suffering from Brainstem (pontine) Cavernous
Malformation. He underwent surgery twice for the said ailment but
developed complications and died on March 2, 2008.
Issue: Whether or not the CA erred in annulling the NLRCs grant of death
benefits to petitioner on certiorari
SC: The employer was held liable. Deemed incorporated in every seafarers
employent contract, denominated as the POEA-SEC or the Philippine

Overseas Employment Administration-Standard Employment Contract, is a

set of standard provisions determined and implemented by the POEA, called
the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean Going Vessels, which are considered to be the
minimum requirements acceptable to the government for the employment of
Filipino seafarers on board foreign ocean-going vessels.
In the 2000 POEA-SEC, it stipulates that the beneficiaries of a
deceased seafarer may be able to claim death benefits for as long as they
are able to establish that (a) the seafarers death is work-related, and (b)
such death had occurred during the term of his employment contract.
Under the 2000 POEA-SEC, work-related injury is defined as
injury(ies) resulting in disability or death arising out of and in the course of
employment. On the other hand, work-related illness is defined as any
sickness resulting to disability or death as a result of an occupational disease
listed under Section 32-A of this contract with the conditions set therein
satisfied.
Jurisprudence provides that [t]he words arising out of refer to the
origin or cause of the accident, and are descriptive of its character, while the
words in the course of refer to the time, place, and circumstances under
which the accident takes place. As a matter of general proposition, an injury
or accident is said to arise in the course of employment when it takes place
within the period of the employment, at a place where the employee
reasonably may be, and while he is fulfilling his duties or is engaged in doing
something incidental thereto.
Here, the death of the seafarer is evidently work-related. While it is
true that Brainstem (pontine) Cavernous Malformation is not listed as an
occupational disease under Section 32-A of the 2000 POEA-SEC, Section 20
(B) (4) of the same explicitly provides that [t[he liabilities of the employer
when the seafarer suffers work-related injury or illness during the term of his
contract are as follows: (t)hose illnesses not listed in Section 32 of this
Contract are dispuatbly presumed as work related. In other words, the 2000
POEA-SEC has created a disputable presumption in favor of
compensability[,] saying that those illnesses not listed in Section 32 are
disputably presumed as work-related. This means that even if the illness is
not listed under Section 32-A of the POEA-SEC as an occupational disease or
illness, it will still be presumed as work-related, and it becomes incumbent
on the employer to overcome the presumption. This presumption should be

overturned only when the employers refutation is found to be supported by

substantial evidence, which, as traditionally defined is such relevant
evidence as a reasonable mind might accept as sufficient to support a
conclusion.
Further, the seafarers death occurred during the term of employment.
While it is true that a medical repatriation has the effect of terminating the
seafarers contract of employment, it is, however, enough that the workrelated illness, which eventually becomes the proximate cause of death,
occurred while the contract was effective for recovery to be had.
The 1987 Constitution affords full protection to labor. Consistent with
the States avowed policy to afford full protection to labor as enshrined in
Article XIII of the 1987 Philippine Constitution, the POEA-SEC was designed
primarily for the protection and benefit of Filipino seafarers in the pursuit of
their employment on board ocean-going vessels. As such, it is a standing
principle that its provisions are to be construed and applied fairly,
reasonably, and liberally in their favor.
Guided by these principles, it has been held that a medical
repatriation case constitutes an exception to the second requirement under
Section 20 (A) (1) of the 2000 POEA-SEC, i.e., that the seafarers death had
occurred during the term of his employment, in view of the terminative
consequences of a medical repatriation under Section 18 (B) of the same. In
essence, the Court held that under such circumstance, the work-related
death need not precisely occur during the term of his employment as it is
enough that the seafarers work-related injury or illness which eventually
causes his death had occurred during the term of his employment.
As for the award, respondents never died and therefore admitted that
the late Rodolfos membership in the AMOSUP that had entered into a
collective bargaining agreement with HAL, or the ITWF-CBA is applicable. Its
provisions therefore must prevail over the standard terms and benefits
formulated by the POEA in its Standard Employment Contract. Hence, the
NLRCs award of US$60,000.00 as compensation for the death of Rodolfo in
accordance with Article 21.2.1 of the ITWF-CBA was in order. The same holds
true for the award of burial assistance in the amount of US$1,000.00 which is
provided under Section 20 (A) (4) (c) of the 2000 POEA-SEC. Moreover,
conformably with existing case law, the NLRCs grant of attorneys fees in the
amount of US$6,100.00 was called for since petitioner was forced to litigate
to protect her valid claim. Where an employee is forced to litigate and incur

expenses to protect his right and interest, he is entitled to an award of

attorneys fees equivalent to 10% of the award.

Topic: Illegal Dismissal

Ponente: Leonen, J.

Fuji Television, Inc. v. Arlene S. Espiritu, G.R. Nos. 204944-45,

December 3, 2014

Facts: In 2005, Arlene S. Espiritu was engaged by Fuji Television Network,

Inc. as a news correspondent/producer tasked to report Philippine news to
Fuji through its Manila Bureau field office. Arlenes employment contract
initially provided for a term of one (1) year but was successively renewed on
a yearly basis with salary adjustment upon every renewal.

Sometime in January 2009, Arlene was diagnosed with lung cancer. She
informed Fuji about her condition. In turn, the Chief of News Agency of Fuji,
Yoshiki Aoki, informed Arlene that the company will have a problem
renewing her contract since it would be difficult for her to perform her job.
She insisted that she was still fit to work as certified by her attending
physician.

After several verbal and written communications, Arlene and Fuji signed a
non-renewal contract on May 5, 2009 where it was stipulated that her
contract would no longer be renewed after its expiration on May 31, 2009.
The contract also provided that the parties release each other from liabilities
and responsibilities under the employment contract.

In consideration of the non-renewal contract, Arlene acknowledged receipt

of the total amount of US$18,050.00 representing her monthly salary from
March 2009 to May 2009, year-end bonus, mid-year bonus, and separation
pay. However, Arlene affixed her signature on the non-renewal contract with
the initials U.P. for under protest.

On May 6, 2009, the day after Arlene signed the non-renewal contract, she
filed a complaint for illegal dismissal and attorneys fees with the National
Capital Region Arbitration Branch of the National Labor Relations
Commission. She alleged that she was forced to sign the non-renewal
contract when Fuji came to know of her illness and that Fuji withheld her

salaries and other benefits for March and April 2009 when she refused to
sign.

The Labor Arbiter dismissed Arlenes complaint. Citing Sonza v. ABS-CBN and
applying the four-fold test, the Labor Arbiter held that Arlene was not Fujis
employee but an independent contractor.

The National Labor Relations Commission reversed the Labor Arbiters

decision. It held that Arlene was a regular employee with respect to the
activities for which she was employed since she continuously rendered
services that were deemed necessary and desirable to Fujis business.

Arlene and Fuji filed separate motions for reconsideration. Both motions were
denied by the National Labor Relations Commission for lack of merit. Both
parties filed separate petitions for certiorari before the Court of Appeals. The
Court of Appeals affirmed the National Labor Relations Commission with
some modifications. The Court of Appeals held that Arlene was a regular
employee.

Issue: Whether or not Arlene S. Espiritu was illegally dismissed.

Ruling: Yes.

The Supreme Court said that the Court of Appeals was correct in finding that
the successive renewals of Espiritus contract indicated the necessity and
desirability of her work in the usual course of Fujis business, thus making
her a regular employee, with the right to security of tenure.

The Court, citing the case of ABS-CBN Broadcasting Corporation v. Nazareno,

in determining whether an employment should be considered regular or
non-regular, said that the applicable test is the reasonable connection
between the particular activity performed by the employee in relation to the
usual business or trade of the employer.

It noted that Espiritu had to report for work in Fujis office in Manila from
Mondays to Fridays, eight hours per day. Likewise, Espiritu, having no
equipment, had to use the facilities of Fuji to accomplish her tasks.

Moreover, the Court held that Espiritus contract indicating a fixed term did
not automatically mean that she could never be a regular employee. This is
precisely what Article 280 [of the Labor Code] seeks to avoid. The ruling in
Brent remains as the exception rather than the general rule.

Citing Philips Semiconductors, Inc. v Fadriquela, where an employees

contract had been continuously extended or renewed to the same petition,
with the same duties and remained in the employ without any interruption,
then such employee is a regular employee. The continuous renewal is a
scheme to prevent regularization.

Likewise, the Supreme Court said, an employee can be a regular employee

with a fixed-term contract. The law does not preclude the possibility that a
regular employee may opt to have a fixed-term contract for valid reasons."

The Court agreed with the Court of Appeals which held that Espiritu was
entitled to security of tenure and could be dismissed only for just or
authorized causes and after the observance of due process. The expiration of
her contract does not negate the finding of illegal dismissal by Fuji.

The Court agreed with the Court of Appeals in holding that Sonza v. ABS-CBN
is not applicable because, Espiritu was not contracted on account of any
peculiar ability, special talent, or skill. The fact that everything used by
Arlene in her work was owned by Fuji negated the idea of job contracting.
The Court held that Espiritu had been illegally dismissed since Fuji failed to
comply with the requirements of substantive and procedural due process
necessary for her dismissal since she was a regular employee. Espiritu did
not sign the non-renewal contract voluntarily and it was a mere subterfuge
by Fuji to secure its position that it was her choice not to renew her contract.
For disease to be a valid ground for termination under the Labor Code, two
requirements must be complied with: (1) the employees disease cannot be
cured within six months and his continued employment is prohibited by law
or prejudicial to his health as well as to the health of his co-employees; and
(2) certification issued by a competent public health authority that even with
proper medical treatment, the disease cannot be cured within six months.

The burden of proving compliance with these requirements is on the

employer. Non-compliance leads to the conclusion that the dismissal was
illegal. In Espiritus case, the Court said that there was no evidence showing
that she was given due process considering she was not even given the
chance to present medical certificates.

Topic: Illegal Dismissal

Ponente: Perlas-Bernabe, J.

Montallana v. La Consolacion College Manila, et al., G.R. No. 208890,

December 8, 2014

Facts: Montallana was a faculty member of La Consolacions College of Arts

and Sciences. On January 16, 2009, Mrs. Nerissa D. Del Fierro-Juan (Juan), the
Assistant Dean of the College of Arts and Sciences and the immediate
superior of Montallana, filed a formal administrative complaint with La
Consolacion against Montallana, charging him of: (a) oral defamation (or
slander); (b) disorderly conduct in the school premises; and (c)
discourteous/indecent behavior or using profane or obscene language in
addressing co-employees, superiors, or anybody within the school premises.
Aside from this, Mrs. Juan also filed grave oral defamation against him before
the City Prosecutors Office.

The said complaint arose from an incident that occurred in the faculty room
on January 12, 2009 while Deans Secretary Ann Ruiz and student assistant
Kathlyn Saez were numbering the lockers, pursuant to a policy implemented
by Juan. At that time, Montallana was conversing with a co-faculty member,
Dr. Beatriz V. Pabito, when the latter asked Ruiz and Saez what they were
doing. Upon learning of the re-assignment of lockers of faculty members
through drawing of lots, Pabito commented, saying para naman tayong bata
nyan, to which Montallana followed suit and, in a loud voice, remarked oo
nga naman para tayong mga grade one nyan, anong kabubuhan ng grade
one yan. Juan heard Montallanas remark and confronted him, resulting in a
heated altercation that ended with the latter walking out of the room while
Juan was still talking to him.
After due investigation, La Consolacions fact-finding committee found
Montallana guilty of serious misconduct in making derogatory and insulting
remarks about his superior, aggravated by the fact that he made such
remarks in a loud voice so that Juan would hear them. While noting that the
foregoing may be considered as a just cause for Montallanas termination,
the committee observed that it was his first offense and stressed on the
reformative and redemptive facets of the case. Montallana meted the
penalty of suspension without pay for a period of two (2) months and
directed him to submit a written public apology to Juan.
In a letter dated April 22, 2009, Montallana sought reconsideration of his
suspension and explained that a written public apology was inappropriate at
that time in view of the pendency of a criminal complaint for grave oral
defamation filed by Juan against him before the City Prosecutors Office. The
request having been denied by La Consolacions President, Montallana filed a
complaint for illegal suspension and unfair labor practice, with prayer for
payment of salaries during the period of suspension, and moral and
exemplary damages against respondents.
The Labor Arbiter ruled in favor of Montallana, holding that his actions did
not constitute serious misconduct. Hence, Montallanas suspension from
employment was declared illegal. The NLRC disagreed with the findings of
the LA and found Montallanas acts to be constitutive of serious misconduct
and against the rule of honor and decency expected of any teacher.
Montallana no longer elevated the matter to the CA and the NLRCs decision
became final and executory on February 28, 2011.
In a letter dated June 9, 2011, Montallana begged for La Consolacions
indulgence, explaining that he had no intention of defying the directive to
submit a written public apology and that his inability to comply therewith
was, to reiterate, only in view of the pendency of the criminal case against
him. Finding Montallanas written explanation unsatisfactory, Manalili
terminated him from work on June 13, 2011. Asserting that his dismissal for

failure to submit a written public apology was unjustified, Montallana filed a

complaint for illegal dismissal with money claims against respondents
The Labor Arbiter dismissed Montallanas complaint, holding that his refusal
to apologize was tantamount to serious misconduct and, hence, warranted
his termination. The NLRC reversed and set aside the LAs verdict, and thus,
ordered respondents to reinstate Montallana and to pay him backwages from
the time he was illegally dismissed up to his reinstatement. However, the CA
gave due course to respondents petition and eventually reversed and set
aside the NLRCs Decision .It found that Montallana deliberately refused to
obey the directive of the respondents to apologize and that the pendency of
the criminal case against him was not sufficient justification to excuse him
from compliance.
Issue: Whether or not Montallana was illegally dismissed.

Ruling: Yes.

Willful disobedience by the employee of the lawful orders of his employer or

representative in connection with his work is one of the just causes to
terminate an employee under Article 296 (a) (formerly Article 282[a]) of the
Labor Code. In order for this ground to be properly invoked as a just cause
for dismissal, the conduct must be willful or intentional, willfulness being
characterized by a wrongful and perverse mental attitude.
In the case at bar, respondents failed to prove, by substantial evidence, that
Montallanas non-compliance with respondents directive to apologize was
willful or intentional. The Court finds itself in complete agreement with the
NLRC that the disobedience attributed to Montallana could not be justly
characterized as willful within the contemplation of Article 296 of the Labor
Code, in the sense above-described.
Since respondents failed to prove, by substantial evidence, that Montallanas
dismissal was based on a just or authorized cause under the Labor Code or
was clearly warranted under La Consolacions Administrative Affairs Manual,
the Court rules that the dismissal was illegal. Consequently, the NLRCs
identical ruling, which was erroneously reversed by the CA on certiorari,
must be reinstated with the modification, however, in that the order for
respondents Mora and Manalili to pay Montallana backwages should be
deleted. It is a rule that personal liability of corporate directors, trustees or
officers attaches only when: (a) they assent to a patently unlawful act of the

corporation, or when they are guilty of bad faith or gross negligence in

directing its affairs, or when there is a conflict of interest resulting in
damages to the corporation, its stockholders or other persons; (b) they
consent to the issuance of watered down stocks or when, having knowledge
of such issuance, do not forthwith file with the corporate secretary their
written objection; (c) they agree to hold themselves personally and solidarily
liable with the corporation; or (d) they are made by specific provision of law
personally answerable for their corporate action. None of these
circumstances, in so far as Mora and Manalili are concerned, were shown to
be present in this case; hence, there is no reason for them to be held liable
for Montallanas backwages.

Topic: Labor Procedure

Ponente: Leonen, J.

Philippine Electric Corporation (PHILEC) v. Court of Appeals, et al.,

G.R. No. 168612, December 10, 2014

Facts: Philippine Electric Corporation (PHILEC) is a domestic corporation

engaged in the manufacture and repairs of high voltage transformers.
Among its rank-and-file employees were Eleodoro V. Lipio (Lipio) and Emerlito
C. Ignacio, Sr. (Ignacio, Sr.), former members of the PHILEC Workers Union
(PWU). PWU is a legitimate labor organization and the exclusive bargaining
representative of PHILECs rank-and-file employees.
On August 18, 1997 and with the previous collective bargaining agreements
already expired, PHILEC selected Lipio for promotion from Machinist under
Pay Grade VIII to Foreman I under Pay Grade B.
On September 17, 1997, PHILEC and PWU entered into a new collective
bargaining agreement, effective retroactively on June 1, 1997 and expiring
on May 31, 1999.
Claiming that the schedule of training allowance stated in the memoranda
served on Lipio and Ignacio, Sr. did not conform to Article X, Section 4 of the
June 1, 1997 collective bargaining agreement, PWU submitted the grievance
to the grievance machinery. PWU and PHILEC failed to amicably settle their
grievance.
Voluntary Arbitrator Jimenez held that PHILEC violated its collective
bargaining agreement with PWU. On August 29, 2000, PHILEC filed a petition
for certiorari before the Court of Appeals, alleging that Voluntary Arbitrator
Jimenez gravely abused his discretion in rendering his decision. The Court of
Appeals affirmed Voluntary Arbitrator Jimenezs decision. In its decision, the
Court of Appeals denied due course and dismissed PHILECs petition for
certiorari for lack of merit.

Issue: Whether or not Voluntary Arbitrator Jimenez gravely abused his

discretion in directing PHILEC to pay Lipios and Ignacio, Sr.s training
allowance based on Article X, Section 4 of the June 1, 1997 rank-and-file
collective bargaining agreement.

Ruling: No.

The Voluntary Arbitrators decision dated August 13, 1999 is already final
and executory. The proper remedy to reverse or modify a Voluntary
Arbitrators or a panel of Voluntary Arbitrators decision or award is to appeal
the award or decision before the Court of Appeals.
Since the office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators is
considered a quasi-judicial agency, a decision or award rendered by a
Voluntary Arbitrator is appealable before the Court of Appeals.
There being no appeal seasonably filed in this case, Voluntary Arbitrator
Jimenezs decision became final and executory after 10 calendar days from
PHILECs receipt of the resolution denying its motion for partial
reconsideration. Voluntary Arbitrator Jimenezs decision is already beyond
the purview of this Court to act upon.
PHILEC must pay training allowance based on the step increases provided in
the June 1, 1997 collective bargaining agreement. The insurmountable
procedural issue notwithstanding, the case will also fail on its merits.
Voluntary Arbitrator Jimenez correctly awarded both Lipio and Ignacio, Sr.
training allowances based on the amounts and formula provided in the June
1, 1997 collective bargaining agreement.
A collective bargaining agreement is a contract executed upon the request
of either the employer or the exclusive bargaining representative of the
employees incorporating the agreement reached after negotiations with
respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions
arising under such agreement. A collective bargaining agreement being a
contract, its provisions constitute the law between the parties and must be
complied with in good faith.
Considering that Voluntary Arbitrator Jimenezs decision awarded sums of
money, Lipio and Ignacio, Sr. are entitled to legal interest on their training
allowances. Voluntary Arbitrator Jimenezs decision having become final and

executory on August 22, 2000, PHILEC is liable for legal interest equal to 12%
per annum from finality of the decision until full payment.

Topic: Permanent disability

Ponente: Jose C. MENDOZA
DARAUG v. KGJS FLEET MANAGEMENT MANILA, INC.
G.R. No. 211211, January 14, 2015
Facts: Petitioner was employed by KGJS Fleet Management Manila, Inc. for
the second time on December 7, 2007 to serve as motorman on board the
vessel M/V Fayal Cement. While petitioner was working in the storage room,
several steel plates fell and hit his leg. Specifically, it resulted in the fracture
of his right fibula and tibia. Dr. Lim and Dr. Chua concluded that petitioners
right leg was fully healed and that he was fit to work. On October 31, 2009,
while petitioner was working in the engine room, he accidentally slipped and
fell, injuring his right leg again. The doctors of Meyer Servicos Medicus Clinic
in Brazil found that he had sustained a severe bruise/hematoma on his right
leg and recommended that he disembark from the vessel and continue his
treatment in his home port. He was then medically repatriated on November
14, 2009. Concurring in the findings and recommendations of Dr. Lim, Dr.
Chua diagnosed petitioner to have suffered from contusion hematoma. Dr.
Lim found that petitioner had recovered from his injuries and declared him fit
to work. From the time he was repatriated until he was declared fit to work,
he was paid his sick wages. About two and a half months later, petitioner
filed a complaint against KGJS and KGJS AS, seeking permanent disability

benefits under the NSA/NMU-AMOSUP CBA, sick wages, damages, and

attorneys fees.
The LA rendered his decision granting petitioners claims. The NLRC reversed
the LA ruling. The CA opined, as the NLRC did, that the findings of Dr. Lim
and Dr. Chua should have been given credence. Hence, this petition.
Issue:Whether petitioner properly invoked his right to claim disability
compensation.
SC: No.
Jurisprudence instructs that the Department of Labor and Employment
(DOLE), through the POEA, has simplified the determination of liability for
work-related death, illness or injury in the case of Filipino seamen working on
foreign ocean-going vessels. Every seaman and the vessel owner (directly or
represented by a local manning agency) are required to execute the POEA
Standard Employment Contract (POEA-SEC) as a condition sine qua non prior
to the deployment of the seaman for overseas work. The POEA-SEC is
supplemented by the Collective Bargaining Agreement (CBA) between the
owner of the vessel and the covered seaman.
In this case, the parties entered into a contract of employment in
accordance with the POEA-SEC and they agreed to be bound by the
CBA.
Thus,
in
resolving
petitioners
claim
for
disability
compensation, the Court will be guided by the procedures laid down
in the POEA-SEC and in the CBA.
On this point, Section 20(B)(3) of the POEA-SEC provides:
Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a postemployment
medical examination by a company-designated physician within three
working days upon his return except when he is physically incapacitated to
so, in which case, a written notice to the agency within the same period is
deemed a compliance. Failure of the seafarer to comply with the mandatory
reporting requirement shall result in his forfeiture of the right to claim the
above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a third
doctor may be agreed jointly between the Employer and the seafarer. The
third doctors decision shall be final and binding on both parties.
On the other hand, the CBA between petitioner and the respondents states
that:
20.1.3.2 The degree of disability which the employer, subject to this
Agreement, is liable to pay shall be determined by a doctor appointed by the
Employer. If a doctor appointed by the seafarer and his Union disagrees with
the assessment, a third doctor may be agreed jointly between the Employer

and the Seafarer and his Union, and the third doctors decision shall be final
and binding on both parties. The copy/ies of the medical certificate and other
relevant medical reports shall be made available by the Company to the
seafarer.
There could be no claim since the conditions were not complied with.

Topic: Illegal Dismissal

Ponente: Marvic Mario Victor Leonen
Saudi Arabian Airlines (Saudia) and Brenda J. Betia vs. Ma. Jopette
M. Rebesencio Montassah B. Sacar-Adiong, et al.
G.R. No. 198587
January 14, 2015
Facts: Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation
established and existing under the laws of Jeddah, Kingdom of Saudi Arabia.
It has a Philippine office located at 4/F, Metro House Building, Sen. Gil J.
Puyat Avenue, Makati City.

Respondents (complainants before the Labor Arbiter) were recruited

and hired by Saudia as Temporary Flight Attendants with the accreditation
and approval of the Philippine Overseas Employment Administration.
Respondents continued their employment with Saudia until they were
separated from service on various dates in 2006.
Respondents contended that the termination of their employment was
illegal. They alleged that the termination was made solely because they were
pregnant.
As respondents alleged, they had informed Saudia of their respective
pregnancies and had gone through the necessary procedures to process their
maternity leaves. Initially, Saudia had given its approval but later on
informed respondents that its management in Jeddah, Saudi Arabia had
disapproved their maternity leaves. In addition, it required respondents to
file their resignation letters.
Respondents were told that if they did not resign, Saudia would
terminate them all the same. The threat of termination entailed the loss of
benefits, such as separation pay and ticket discount entitlements.
Saudia anchored its disapproval of respondents' maternity leaves and
demand for their resignation on its "Unified Employment Contract for Female
Cabin Attendants" (Unified Contract). Under the Unified Contract, the
employment of a Flight Attendant who becomes pregnant is rendered void.
In their Comment on the present Petition, respondents emphasized
that the Unified Contract took effect on September 23, 2006 (the first day of
Ramadan), well after they had filed and had their maternity leaves
approved.
Rather than comply and tender resignation letters, respondents filed
separate appeal letters that were all rejected.
Despite these initial rejections, respondents each received calls on the
morning of November 6, 2006 from Saudia's office secretary informing them
that their maternity leaves had been approved. Saudia, however, was quick
to renege on its approval. On the evening of November 6, 2006, respondents
again received calls informing them that it had received notification from
Jeddah, Saudi Arabia that their maternity leaves had been disapproved.
Faced with the dilemma of resigning or totally losing their benefits,
respondents executed handwritten resignation letters. In Montassah's and
Rouen Ruth's cases, their resignations were executed on Saudia's blank
letterheads that Saudia had provided. These letterheads already had the
word "RESIGNATION" typed on the subject portions of their headings when
these were handed to respondents.
On November 8, 2007, respondents filed a Complaint against Saudia
and its officers for illegal dismissal and for underpayment of salary, overtime
pay, premium pay for holiday, rest day, premium, service incentive leave
pay, 13th month pay, separation pay, night shift differentials, medical
expense reimbursements, retirement benefits, illegal deduction, lay-over
expense and allowances, moral and exemplary damages, and attorney's
fees.28

Saudia assailed the jurisdiction of the Labor Arbiter. It claimed that

respondents had no cause of action as they resigned voluntarily.
The Labor Arbiter dismissed the complaint, but this was reversed by
the National Labor Relations Commission.
Hence, this Appeal was filed.
Issue: Whether or not the respondents were legally dismissed.
SC: No.
Voluntary resignation has been defined as "the voluntary act of an
employee who is in a situation where one believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal
pronouncement or relinquishment of an office, with the intention of
relinquishing the office accompanied by the act of relinquishment." Thus,
essential to the act of resignation is voluntariness. It must be the
result of an employee's exercise of his or her own will.
A means for determining whether an employee resigned voluntarily
was also determined:
As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged
resignation must be considered in determining whether he or she, in fact,
intended, to sever his or her employment.
On the other hand, constructive dismissal has been defined as
"cessation of work because 'continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank or a
diminution in pay' and other benefits."
Applying the cited standards on resignation and constructive dismissal,
it is clear that respondents were constructively dismissed. Hence, their
termination was illegal.
The termination of respondents' employment happened when they
were pregnant and expecting to incur costs on account of child delivery and
infant rearing. As noted by the Court of Appeals, pregnancy is a time when
they need employment to sustain their families.108 Indeed, it goes against
normal and reasonable human behavior to abandon one's livelihood in a time
of great financial need.
It is clear that respondents intended to remain employed with
Saudia. All they did was avail of their maternity leaves. Evidently, the
very nature of a maternity leave means that a pregnant employee will not
report for work only temporarily and that she will resume the performance of
her duties as soon as the leave allowance expires.

It is also clear that respondents exerted all efforts to' remain

employed with Saudia. Each of them repeatedly filed appeal letters asking
Saudia to reconsider the ultimatum that they resign or be terminated along
with the forfeiture of their benefits. Some of them even went to Saudia's
office to personally seek reconsideration.
Saudia draws attention to how respondents' resignation letters were
supposedly made in their own handwriting. This minutia fails to surmount all
the other indications negating any voluntariness on respondents' part. If at
all, these same resignation letters are proof of how any supposed resignation
did not arise from respondents' own initiative. As earlier pointed out,
respondents' resignations were executed on Saudia's blank
letterheads that Saudia had provided. These letterheads already
had the word "RESIGNATION" typed on the subject portion of their
respective headings when these were handed to respondents.
"In termination cases, the burden of proving just or valid cause for
dismissing an employee rests on the employer." In this case, Saudia makes
much of how respondents supposedly completed their exit interviews,
executed quitclaims, received their separation pay, and took more than a
year to file their Complaint. If at all, however, these circumstances prove
only the fact of their occurrence, nothing more. The voluntariness of
respondents' departure from Saudia is non sequitur.
Mere compliance with standard procedures or processes, such as the
completion of their exit interviews, neither negates compulsion nor indicates
voluntariness.
As with respondent's resignation letters, their exit interview forms
even support their claim of illegal dismissal and militates against Saudia's
arguments.
Reliefs
Having been illegally and unjustly dismissed, respondents are entitled
to
a. full backwages and benefits from the time of their termination
until the finality of this Decision.
b. separation pay in the amount of one (1) month's salary for every
year of service until the fmality of this Decision, with a fraction of a year of at
least six (6) months being counted as one (1) whole year.
c. moral damages, because "[m]oral damages are awarded in
termination cases where the employee's dismissal was attended by bad
faith, malice or fraud, or where it constitutes an act oppressive to labor, or
where it was done in a manner contrary to morals, good customs or public
policy."
In this case, Saudia terminated respondents' employment in a manner
that is patently discriminatory and running afoul of the public interest that

underlies employer-employee relationships. As such, respondents are

entitled to moral damages.
d. exemplary damages, to provide an "example or correction for the
public good" as against such discriminatory and callous schemes.
In a long line of cases, this court awarded exemplary damages to
illegally dismissed employees whose "dismissal[s were] effected in a wanton,
oppressive or malevolent manner."
Respondents were dismissed for no other reason than simply that they
were pregnant. This is as wanton, oppressive, and tainted with bad faith as
any reason for termination of employment can be. This is no ordinary case of
illegal dismissal. This is a case of manifest gender discrimination. It is an
affront not only to our statutes and policies on employees' security of tenure,
but more so, to the Constitution's dictum of fundamental equality between
men and women.
The award of exemplary damages is, therefore, warranted, not only to
remind employers of the need to adhere to the requirements of procedural
and substantive due process in termination of employment, but more
importantly, to demonstrate that gender discrimination should in no case be
countenanced.
e. attorney's fees, in the amount of 10% of the total monetary
award, for having been compelled to litigate to seek reliefs for their illegal
and unjust dismissal.

Topic: Compromise Agreement

Ponente: Jose Portugal Perez
Sara Lee Philippines, Inc. vs. Emilinda D. Macatlang, et al./Aris
Philippines, Inc. vs. Emilinda D. Macatlang, et al/Sara Lee
Corporation vs. Emilinda
D.
Macatlang,
et
al./Cesar
C.
Cruz vs.Emilinda D. Macatlang, et al./Fashion Accessories Phils.
Inc. vs.Emilinda D. Macatlang, et al./Emelinda D. Macatlang, et
al. vs.NLRC, et al.
G.R. No. 180147/G.R. No. 180148/G.R. No. 180149/G.R. No.
180150/G.R. No. 180319 & G.R. No. 180685
January 14, 2015
Facts: Aris permanently ceased operations on 9 October 1995 displacing
5,984 rank-and-file employees. On 26 October 1995, FAPI was incorporated
prompting former Aris employees to file a case for illegal dismissal on the
allegations that FAPI was a continuing business of Aris. SLC, SLP and Cesar
Cruz were impleaded as defendants being major stockholders of FAPI and
officers of Aris, respectively.
On 30 October 2004, the Labor Arbiter found the dismissal of 5,984
Aris employees illegal and awarded them monetary benefits amounting to
P3,453,664,710.86. The judgment award is composed of separation pay of
one month for every year of service, backwages, moral and exemplary
damages and attorneys fees.
The Corporations filed a Notice of Appeal with Motion to Reduce Appeal
Bond. They posted a P4.5 Million bond. The NLRC granted the reduction of
the appeal bond and ordered the Corporations to post an additional P4.5
Million bond.
The 5,984 former Aris employees, represented by Emilinda Macatlang
(Macatlang petition), filed a petition for review before the Court of Appeals
insisting that the appeal was not perfected due to failure of the Corporations
to post the correct amount of the bond which is equivalent to the judgment
award.
While the case was pending before the appellate court, the NLRC
prematurely issued an order setting aside the decision of the Labor Arbiter
for being procedurally infirmed.
The Court of Appeals, on 26 March 2007, ordered the Corporations to
post an additional appeal bond of P1 Billion, which was later on modified by
the Supreme Court.

This present petition treats of the 1) Motion for Reconsideration with

Urgent Petition for the Courts Approval of the Pending "Motion for Leave of
Court to File and Admit Herein Statement and Confession of Judgment to
Buy Peace and/or Secure against any Possible Contingent Liability by Sara
Lee Corporation" filed by Sara Lee Philippines Inc. (SLPI),Aris Philippines Inc.
(Aris), Sara Lee Corporation (SLC) and Cesar C. Cruz, 2) Motion for
Reconsideration filed by Fashion Accessories Phils. Inc. (FAPI), and 3)
Manifestation of Conformity to the Motion for Leave of Court to File and
Admit Confession of Judgment to Buy Peace and/or to Secure against any
Possible Contingent Liability by Petitioner SLC.
Issue: Whether or not the compromise agreement (confession of judgment)
should be admitted.
SC: No.
The Corporations entered into a compromise with some of the former
Aris employees which they designate as Confession of Judgment. The
Corporations reason that a resort to judgment by confession is the
acceptable alternative to a compromise agreement because of the
impossibility to obtain the consent to a compromise of all the 5,984
complainants.
A confession of judgment is an acknowledgment that a debt is
justly due and cuts off all defenses and right of appeal. It is used as
a shortcut to a judgment in a case where the defendant concedes
liability. It is seen as the written authority of the debtor and a
direction for entry of judgment against the debtor.
Jurisprudence outlines the distinction between a compromise
agreement/judgment on consent and a confession of judgment/judgment by
confession, thus:
x x x a motion for judgment on consent is not to be equated with a
judgment by confession. The former is one the provisions and terms of which
are settled and a agreed upon by the parties to the action, and which is
entered in the record by the consent and sanction of the court, Hence, there
must be an unqualified agreement among the parties to be bound by the
judgment on consent before said judgment may be entered. The court does
not have the power to supply terms, provisions, or essential details not
previously agreed to by the parties x x x. On the other hand, a judgment by
confession is not a plea but an affirmative and voluntary act of the defendant
himself. Here, the court exercises a certain amount of supervision over the
entry of judgment, as well as equitable jurisdiction over their subsequent
status.
A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced. It is
an agreement between two or more persons, who, for preventing or putting
an end to a lawsuit, adjust their difficulties by mutual consent in the manner

which they agree on, and which everyone of them prefers to the hope of
gaining, balanced by the danger of losing.
A compromise must not be contrary to law, morals, good
customs and public policy; and must have been freely and
intelligently executed by and between the parties.
Article 227 of the Labor Code of the Philippines authorizes
compromise agreements voluntarily agreed upon by the parties, in
conformity with the basic policy of the State "to promote and emphasize the
primacy of free collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling labor or
industrial disputes."14 The provision reads:
ART. 227 Compromise Agreements. Any compromise settlement,
including those involving labor standard laws, voluntarily agreed upon by the
parties with the assistance of the Bureau or the regional office of the
Department of Labor, shall be final and binding upon the parties. The
National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of noncompliance
thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.
A compromise agreement is valid as long as the consideration is
reasonable and the employee signed the waiver voluntarily, with a full
understanding of what he was entering into.
A review of the compromise agreement shows a gross disparity
between the amount offered by the Corporations compared to the
judgment award. The judgment award is P3,453,664,710.86 or each
employee is slated to receive P577,149.85. On the other hand, the
P342,284,800.00 compromise is to be distributed among 5,984 employees
which would translate to only P57,200.00 per employee. From this amount,
P8,580.00 as attorneys fees will be deducted, leaving each employee with a
measly P48,620.00. In fact, the compromised amount roughly comprises only
10% of the judgment award.
In fine, the Court will not hesitate to strike down a compromise
agreement which is unconscionable and against public policy.

Topics: (1) Compensability of Death by Suicide under the POEA

Contract
(2) Jurisdiction of the Supreme Court
(3) Power of the NLRC to receive new evidence for the first
time on appeal
Ponente: Justice Diosdado M. Peralta
Unicol Management Services, Inc., et al., v. Delia Malipot., G.R. No.
206562, January 21, 2015
Facts: Glicerio Malipot was employed by Unicol Management Services and
Link Marine Pte. Ltd. for the vessel Heredia Sea as Chief Engineer Officer.
During the effectivity of his employment contract, Glicerio died while on
board the Heredia Sea. Investigations revealed that Glicerio committed
suicide by hanging himself.
Consequently, Glicerios surviving spouse, Delia Malipot, filed a Complaint
before the Labor Arbiter claiming death compensation under seaman
Glicerios POEA contract.

Issue: Whether or not death by suicide is compensable under the POEA

Contract.
SC: No.
Under Section 20 of the POEA Standard Terms and Conditions Governing
the Overseas Employment of Filipino Seafarers On-Board Ocean-Going
Ships, the employer is liable to pay the heirs of the deceased seafarer for
death benefits once it is established that he died during the effectivity of his
employment contract. However, the employer may be exempt from liability if
it can successfully prove that the seamans death was caused by an injury
directly attributable to his deliberate or willful act. Thus, since Glicerios
employers were able to substantially prove that seaman Glicerios death is
directly attributable to his deliberate act of hanging himself, his death,
therefore, is not compensable and his heirs not entitled to any compensation
or benefits.
The CA held that the Investigation Report, log book extracts, and
Masters Report were submitted for the first time on appeal to the
NLRC, and thus, should not have been admitted by the NLRC. Is the
CA correct? No. The NLRC may receive evidence submitted for the first time
on appeal on the ground that it may ascertain facts objectively and speedily
without regard to technicalities of law in the interest of substantial justice.
In Sasan, Sr. v. National Labor Relations Commission 4 th Division [590 Phil.
685 (2008)], the Court held that the submission of additional evidence before
the NLRC is not prohibited by its New Rules of Procedure considering that
rules of evidence prevailing in courts of law or equity are not controlling in
labor cases. The NLRC and Labor Arbiters are directed to use every and all
reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law and procedure all in the
interest of substantial justice. In keeping with this directive, it has been held
that the NLRC may consider evidence, such as documents and affidavits,
submitted by the parties for the first time on appeal.
Powers of the NLRC: Among the powers of the Commission as provided in
Section 218 of the Labor Code is that the Commission may issue subpoenas
requiring the attendance and testimony of witnesses or the production of
such books, papers, contracts, records, statement of accounts, agreements,
and others. In addition, the Commission may, among other things, conduct
investigation for the determination of a question, matter or controversy
within its jurisdiction, proceed to hear and determine the disputes in the
absence of any party thereto who has been summoned or served with notice
to appear, conduct its proceedings or any part thereof in public or in private,
adjourn its hearings to any time and place, refer technical matters or

accounts to an expert and to accept his report as evidence after hearing of

the parties upon due notice. Thus, it can be inferred that the NLRC can
receive evidence on cases appealed before the Commission, otherwise, its
factual conclusions would not have been given great respect, much weight,
and relevance when an adverse party assails the decision of the NLRC via
petition for certiorari under Rule 65 of the Rules of Court before the CA and
then to the Supreme Court via a petition for review under Rule 45.

Topic: Dismissal for Just cause

Ponente: Peralta
Basan v. Coca-Cola Bottlers Philippines, G.R. Nos. 174365-66,
February 04, 2015
Facts: On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime
L. Tumabiao, Jr., Roberto Dela Rama, Jr., Ricky S. Nicolas, Crispulo D. Donor,
Galo Falguera filed a complaint for illegal dismissal with money claims

against respondent Coca-Cola Bottlers Philippines, alleging that respondent

dismissed them without just cause and prior written notice required by law.
Respondent corporation, however, countered that it hired petitioners
as temporary route helpers to act as substitutes for its absent regular route
helpers merely for a fixed period in anticipation of the high volume of work in
its plants or sales offices. As such, petitioners claims have no basis for they
knew that their assignment as route helpers was temporary in duration.
Issue: Whether or not the petitioners in this case are regular employees.
SC: It must be noted that the same has already been resolved in Magsalin v.
National Organization of Working Men, wherein this Court has categorically
declared that the nature of work of route helpers hired by Coca Cola Bottlers
Philippines, Inc. is necessary and desirable in its usual business or trade
thereby qualifying them as regular employees, to wit
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest
manufacturers of softdrinks in the country. Respondent workers have long
been in the service of petitioner company. Respondent workers, when hired,
would go with route salesmen on board delivery trucks and undertake the
laborious task of loading and unloading softdrink products of petitioner
company to its various delivery points.
In determining whether an employment should be considered regular
or non-regular, the applicable test is the reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer. The standard, supplied by the law itself, is
whether the work undertaken is necessary or desirable in the usual business
or trade of the employer, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the general scheme under
which the business or trade is pursued in the usual course. It is distinguished
from a specific undertaking that is divorced from the normal activities
required in carrying on the particular business or trade. But, although the
work to be performed is only for a specific project or seasonal, where a
person thus engaged has been performing the job for at least one year, even
if the performance is not continuous or is merely intermittent, the law deems
the repeated and continuing need for its performance as being sufficient to
indicate the necessity or desirability of that activity to the business or trade
of the employer. The employment of such person is also then deemed to be
regular with respect to such activity and while such activity exists.
Petitioners, in this case, fall under the first kind of regular employee
above. As route helpers who are engaged in the service of loading and
unloading softdrink products of respondent company to its various delivery
points, which is necessary or desirable in its usual business or trade,
petitioners are considered as regular employees. That they merely rendered

services for periods of less than a year is of no moment since for as long as
they were performing activities necessary to the business of respondent,
they are deemed as regular employees under the Labor Code, irrespective of
the length of their service.

Topic: Fixing of Just Compensation

Ponente: Perlas=Bernabe, J.
Land Bank of the Philippines v. Heirs of Jesus Alsua, G.R. No.
211351, February 04, 2015
Facts: Jesus Alsua owned a parcel of unregistered agricultural land known as
Lot No. 8882. Respondents Heirs of Jesus Alsua and their representative
Bibiano C. Sabino voluntarily offered to sell the entire parcel of land to the
government under the Comprehensive Agrarian Reform Law of 1988, but
only 47.4535 has. thereof, consisting of 43.7158 has. of cocoland and 3.7377
has. of unirrigated riceland (subject lands), were acquired. Upon receipt from
the DAR of the Claim Folder, albeit containing incomplete documents,
petitioner Land Bank of the Philippines valued the subject lands at
P1,369,708.02. The necessary documents were completed only in September
2001, hence, the CF was considered to have been received only on the latter
date, and the LBPs valuation approved on September 25, 2001. The DAR
then offered to respondents the LBPs valuation as just compensation for the
lands, but the latter rejected the valuation. Thus, the LBP was prompted to
deposit the said amount in cash and in Agrarian Reform Bonds in
respondents name. After summary administrative proceedings for the
determination of just compensation, the Provincial Agrarian Reform
Adjudicator, fixed the value of the subject lands at P5,479,744.15. The LBP
moved for reconsideration but was denied. Dissatisfied with the PARADs
valuation, the LBP filed a petition for determination of just compensation
before the Regional Trial Court of Legazpi City averring that the PARADs
valuation was excessively high and is contrary to the legally prescribed
factors in determining just compensation. On the other hand, respondents
maintained the correctness of the PARADs valuation, insisting that it
considered all the factors that may be used as basis in order to arrive at a
just and equitable valuation of the subject lands, including their potential use
and corresponding increase in value.
In the interim, the Register of Deeds of Albay issued Original
Certificates of Title in the names of the agrarian reform beneficiaries. In a
Decision, the RTC rejected the valuation of both the LBP and the PARAD and
fixed the just compensation for the subject lands at P4,245,820.53. On
appeal, the CA affirmed the applicability of the provisions of DAR AO No. 5,
series of 1998 in the computation of the just compensation for the subject
lands but declared that the RTC erred in fixing the date of taking on June 30,
2009, i.e., the presumptive date of taking pursuant to DAR AO No. 1, series
of 2010. It pointed out that the taking of lands under the agrarian reform
program partakes of the nature of an expropriation proceeding; thus, just
compensation should be pegged at the price or value of the property at the
time it was taken from the owner and not its value at the time of rendition of

judgment or the filing of the complaint if the government takes possession of

the land before the institution of expropriation proceedings.
Issue: Whether or not the fixing of the just compensation for the subject
lands is correct.
SC: No. Settled is the rule that when the agrarian reform process is still
incomplete, such as in this case where the just compensation due the
landowner has yet to be settled, just compensation should be determined
and the process be concluded under RA 6657. For purposes of determining
just compensation, the fair market value of an expropriated property is
determined by its character and its price at the time of taking, or the time
when the landowner was deprived of the use and benefit of his property,
such as when title is transferred in the name of the beneficiaries, as in this
case. In addition, the factors enumerated under Section 17 of RA 6657, i.e.,
(a) the acquisition cost of the land, (b) the current value of like properties, (c)
the nature and actual use of the property and the income therefrom, (d) the
owners sworn valuation, (e) the tax declarations, (f) the assessment made
by government assessors, (g) the social and economic benefits contributed
by the farmers and the farmworkers, and by the government to the property,
and (h) the non-payment of taxes or loans secured from any government
financing institution on the said land, if any, must be equally considered.
The factors enumerated under Section 17 of RA 6657 must be
considered in computing just compensation. Accordingly, the Court finds a
need to remand Agrarian Case No. 04-02 to the RTC for the determination of
just compensation in accordance with these factors. Just compensation must
be valued at the time of taking, or the time when the landowner was
deprived of the use and benefit of his property, in this case, upon the
issuance of OCT Nos. C-27721 and 27722 in the names of the agrarian
reform beneficiaries on November 29, 2001.Hence, the evidence to be
presented by the parties before the trial court for the valuation of the subject
lands must be based on the values prevalent on such time of taking for like
agricultural lands.

Topic: Entitlement to Retirement Pay and Other Benefits

Ponente: Perlas-Bernabe, J.
Villena v. Batangas II Electric Cooperative, Inc. G.R. No. 205735,
February 04, 2015
Facts: Villena was hired by respondent Batangas II Electric Cooperative, Inc.
(BATELEC II) as bookkeeper in 1978. She rose from the ranks and was
promoted as Finance Manager in 1985. In 1994, she was demoted to the
position of Auditor, which caused her to file a complaint for constructive
dismissal before the Labor Arbiter. The LA dismissed the complaint
prompting her to seek recourse before the National Labor Relations
Commission. The ruling of the LA was reversed whereby the NLRC declared
Villena to have been illegally dismissed, and thus, ordered BATELEC II to
reinstate her to her former position as Finance Manager, or its equivalent,
and to pay her salary differentials. However, the NLRCs judgment was silent
on the payment of allowances, benefits, and attorneys fees. Hence, Villena
moved for reconsideration, but was denied. At odds with the verdict, she
elevated the matter to the CA via petition for certiorari. The CA modified the
NLRC Resolution and declared Villena to be entitled to the difference
between the salary of the Finance Manager and that of the auditor, plus
allowances and any other benefits pertaining to the position of Finance
Manager at the time she was removed therefrom up to the date of her actual
reinstatement. It also granted her attorneys fees in the amount of 10% of
the total monetary award. The case was then remanded to the NLRC for the
computation of the total amount due to Villena.
In the course thereof, the LA declared that Villena was entitled only to
salary differentials, 13thmonth pay, unused sick leave, leave of absence
amounting to P1,078,890.14 excluding from the computation claims for
bonus, representation allowance, transportation benefits, and attorneys
fees. Moreover, her claim for separation pay in lieu of reinstatement was
denied. While Villena received the amount of P1,078,890.14, she appealed to
the NLRC the exclusion of her other benefits as well as her claim for
separation pay. Meanwhile, on September 20, 2003, BATELEC II issued Policy
No. 03-003, which provided for retirement benefits to its regular employees.
The NLRC granted the appeal of Villena, holding that since reinstatement was
no longer possible, separation pay in lieu of reinstatement was justified.
BATELEC II moved for reconsideration, but the same was denied. With no
further action having been taken by BATELEC II, the NLRC Resolution attained
finality. Thus, Villena moved for its execution.
Issue: Whether or not retirement pay, and representation, transportation,
and cellular phone usage allowances constitutes other benefits that should
be awarded in favor of Villena.

SC: On retirement pay, no. As the Court sees it, the other benefits
mentioned in these rulings cannot be construed to include retirement pay for
the primary reason that they adjudged awards relative to Villenas illegal
dismissal complaint, which remains barren of a specific cause of action for
retirement pay. In order for her retirement pay claim to be considered,
Villenas complaint should have contained substantial allegations which
would show that she (a) had applied for the same, and (b) her application
squares with the requirements of entitlement under the terms of the
companys retirement plan, i.e., Policy No. 03-003, which, in fact, was issued
on September 20, 2003, or after the August 31, 2001 CA Decision had
already attained finality. However, based on the records, what she sought for
in her illegal dismissal complaint were the reliefs of reinstatement, payment
of salary differentials, all benefits and allowances that she may have
received as Finance Manager, attorneys fees, and damages. Thus, as the
matter left for determination is whether or not the aforesaid rulings, when
executed, should include retirement pay and representation, transportation,
and cellular phone usage allowances, the Court will harken back only to the
context of the illegal dismissal complaint from which such awards of other
benefits stemmed from.
Retirement pay and separation pay are not mutually exclusive unless
there is a specific prohibition in the collective bargaining agreement or
retirement plan against the payment of both benefits; however, with Villenas
entitlement to retirement pay not included as an issue in an illegal dismissal
case which had already been finally decided, it is quite absurd for Villena to
submit a contemporaneous44claim for retirement pay on the execution
phase of these proceedings. In fine, the plea to include retirement pay in the
execution of the final and executory August 31, 2001 CA Decision and March
22, 2007 NLRC Resolution, under the phrase other benefits, cannot be
granted.
On Transportation, Representation, and Cellular Phone Usage
Allowances, yes. On the matter of the claimed allowances, it is clear from
BATELEC IIs pleadings and submissions that representation allowance,
transportation allowance, and cellular phone usage allowance are given to
the Finance Manager/Department Manager as part of their benefits, unlike
the separate entitlement to retirement pay which may be recovered only
upon a meritorious subsequent application when the employee decides to
retire. Consequently, these allowances ought to be included in the other
benefits pertaining to the position of Finance Manager to which Villena is
entitled to and which were awarded to her under the final and executory CA
Decision and NLRC Resolution. With the award of the other benefits
pertaining to the position of Finance Manager made by the CA in its August
31, 2001 Decision lapsing into finality, the same had already become
immutable and unalterable; this means that they may no longer be modified

in any respect, even if the modification is meant to correct what is perceived

to be an erroneous conclusion of fact or law.

Topic: Rules on Posting an Appeal Bond for the Perfection of an

Appeal from the Labor Arbiters Monetary Award
Ponente: Perez, J.
Balite v. SS Ventures International, Inc., G.R. No. 195109, February
04, 2015
Facts: Respondent SS Ventures International, Inc. is a domestic corporation
duly engaged in the business of manufacturing footwear products for local
sales and export abroad. It is represented in this action by respondents Sung
Sik Lee and Evelyn Rayala. Petitioners Andy Balite, Monaliza Bihasa and
Delfin Anzaldo were regular employees of the respondent company until their
employments were severed for violation of various company policies.
Consequently, the three employees charged respondents with illegal
dismissal and recovery of backwages, 13th month pay and attorneys fees
before the Labor Arbiter. Respondents averred that petitioners were
separated from employment for just causes and after affording them
procedural due process of law.
The Labor Arbiter rendered a Decision in favor of petitioners and held
that respondents are liable for illegal dismissal for failing to comply with the
procedural and substantive requirements in terminating employment.
Aggrieved, respondents interposed an appeal but the NLRC dismissed the
same for non-perfection. The NLRC ruled that posting of an appeal bond
equivalent to the monetary award is indispensable for the perfection of the
appeal and the reduction of the appeal bond, absent any showing of
meritorious ground to justify the same, is not warranted in the instant case.
On certiorari, the Court of Appeals reversed the NLRC Decision and allowed
the relaxation of the rule on posting of the appeal bond. According to the
appellate court, there was substantial compliance with the rules for the
perfection of an appeal because respondents seasonably filed their
Memorandum of Appeal and posted an appeal bond in the amount of
P100,000.00. While the amount of the appeal bond posted was not
equivalent to the monetary award, the Court of Appeals ruled that
respondents were able to sufficiently prove their incapability to post the
required amount of bond. Hence, this petition.
Issue: Whether or not the posting of an appeal bond in full is a mandatory
and a jurisdictional requirement that must be complied with in order to
confer jurisdiction upon the NLRC.
SC: No. ART. 223 of the Labor Code provides that an appeal from the Labor
Arbiter to the NLRC must be perfected within ten calendar days from receipt
of such decisions, awards or orders of the Labor Arbiter. In a judgment
involving a monetary award, the appeal shall be perfected only upon (1)
proof of payment of the required appeal fee; (2) posting of a cash or surety

bond issued by a reputable bonding company; and (3) filing of a

memorandum of appeal. To ensure that the provisions of Section 6, Rule VI of
the NLRC Rules of Procedure that give parties the chance to seek a reduction
of the appeal bond are effectively carried out, without however defeating the
benefits of the bond requirement in favor of a winning litigant, all motions to
reduce bond that are to be filed with the NLRC shall be accompanied by the
posting of a cash or surety bond equivalent to 10% of the monetary award
that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellants motion
is pending resolution by the Commission. In conformity with the NLRC Rules,
the monetary award, for the purpose of computing the necessary appeal
bond, shall exclude damages and attorneys fees. Only after the posting of a
bond in the required percentage shall an appellants period to perfect an
appeal under the NLRC Rules be deemed suspended.
By reducing the amount of the appeal bond in this case, the employees
would still be assured of at least substantial compensation, in case a
judgment award is affirmed. On the other hand, management will not be
effectively denied of its statutory privilege of appeal. The Court holds that
the appeal bond posted by the respondent in the amount of P100,000.00
which is equivalent to around 20% of the total amount of monetary bond is
sufficient to perfect an appeal.

Topic: Withholding of Terminal Pay and Benefits

Ponente: Leonen, J.
Milan v. NLRC, G.R. No. 202961, February 04, 2015
Facts: Petitioners are the employees of respondent Solid Mills, Inc. They and
their families were allowed to occupy SMI Village, a property owned by the
employer. According to Solid Mills, this was out of liberality and for the
convenience of its employees on the condition that the employees would
vacate the premises anytime the Company deems fit. Petitioners were
informed that effective October 10, 2003, Solid Mills would cease its
operations due to serious business losses. The closure was recognized by the
collective bargaining agent of the employees in a memorandum of
agreement which provided for Solid Mills grant of separation pay less
accountabilities, accrued sick leave benefits, vacation leave benefits, and
13th month pay to the employees.
Solid Mills filed its Department of Labor and Employment termination
report. Solid Mills, through Alfredo Jingco, sent to petitioners individual
notices to vacate SMI Village. Petitioners were no longer allowed to report for
work by October 10, 2003. They were required to sign a memorandum of
agreement with release and quitclaim before the benefits would be released.
Petitioners refused to sign the documents and demanded to be paid. Hence,
petitioners filed complaints before the Labor Arbiter. The Labor Arbiter ruled
in favor of petitioners on the ground that Solid Mills illegally withheld
petitioners benefits and separation pay. According to the Labor Arbiter,
petitioners right to the payment of their benefits and separation pay was
vested by law and contract.
The memorandum of agreement stated no condition to the effect that
petitioners must vacate Solid Mills property before their benefits could be
given to them. Petitioners possession should not be construed as
petitionersaccountabilities that must be cleared first before the release of
benefits. Their possession is not by virtue of any employer-employee
relationship. It is a civil issue, which is outside the jurisdiction of the Labor
Arbiter. Solid Mills appealed to the National Labor Relations Commission
which ruled that, because of petitioners failure to vacate Solid Mills
property, Solid Mills was justified in withholding their benefits and separation
pay. Solid Mills granted the petitioners the privilege to occupy its property on
account of petitioners employment. It had the prerogative to terminate such
privilege. Petitioners filed a petition for certiorar before the Court of Appeals
which dismissed the same. Hence, this petition.
Issue: Whether or not the payment of monetary claims of petitioners should
be held in abeyance pending compliance of their accountabilities to

respondent Solid Mills by turning over the subject lots they occupy at SMI
Village.
SC: Yes. An employer is allowed to withhold terminal pay and benefits
pending the employees return of its properties. As a general rule, employers
are prohibited from withholding wages from employees and the elimination
or diminution of benefits is prohibited. However, the Labor Code supports the
employers institution of clearance procedures before the release of wages.
The Civil Code also provides that the employer is authorized to withhold
wages for debts due. Debt in this case refers to any obligation due from
the employee to the employer. It includes any accountability that the
employee may have to the employer. There is no reason to limit its scope to
uniforms and equipment, as petitioners would argue.
Petitioners do not categorically deny respondent Solid Mills ownership
of the property, and they do not claim superior right to it. What can be
gathered from the findings of the Labor Arbiter, National Labor Relations
Commission, and the Court of Appeals is that respondent Solid Mills allowed
the use of its property for the benefit of petitioners as its employees.
Petitioners were merely allowed to possess and use it out of respondent Solid
Mills liberality. The employer may, therefore, demand the property at will.
The return of the propertys possession became an obligation or liability on
the part of the employees when the employer-employee relationship ceased.
Thus, respondent Solid Mills has the right to withhold petitioners wages and
benefits because of this existing debt or liability.

Topic: Procedure in Procuring Permanent Total Disability Benefits;

Attorneys Fee
Ponente: Mendoza, J.
Veritas Maritime Corporation and/or Erickson Marquez v. Ramon A.
Gepanaga, Jr., G.R. No. 206285, February 04, 2015
Facts: On March 11, 2008, Gepanaga entered into a contract of employment
with Veritas, for and in behalf of St. Paul Maritime Corporation, to work on
board the vessel M.V. Melbourne Highway as Wiper Maintenance for six (6)
months. By executing the contract of employment, the parties agreed to be
bound by the provisions of Philippine Overseas Employment Administration
Standard Employment Contract (POEA-SEC), as well as the IBF-JSU AMOSUP
IMMAJ collective bargaining agreement (CBA).
As Gepanaga was able to complete his contract with no incident, the
parties mutually agreed to extend his tenure as Wiper Maintenance. On
November 28, 2008, while Gepanaga was doing maintenance work, his
middle finger got caught between the cast metal piston liners of the diesel
generator. He was then given first aid on board the vessel and was later
brought to a hospital in Omaezaki, Japan. In the hospital, Gepanaga was
diagnosed with open fracture of [the] distal phalanx, left middle finger. He
was repatriated on December 3, 2008.
On December 4, 2008, Gepanaga reported right away to the clinic of
Dr. Nicomedez G. Cruz (Dr. Cruz), the company-designated physician. After
Gepanaga was referred to the orthopedic surgeon of his clinic, Dr. Cruz
concurred in the initial findings of doctors in Japan that Gepanaga was
suffering from a crushing injuring with fracture distal phalanx left middle
finger. After a series of medical treatments, Dr. Cruz noted that Gepanaga
no longer suffered the pain in the affected area and that his grip is good and
functional. Dr. Cruz thus issued his medical report, dated March 4, 2009,
declaring that Gepanaga was cleared fit to go back to work.
Unconvinced that he had fully recovered from his injury, Gepanaga
filed a complaint against Veritas, Marquez and K Line Ship Management,
Inc., claiming that the latter is the foreign principal of Veritas and owner of
the M.V. Melbourne Highway.
The Labor Arbiter dismissed the complaint for lack of merit. Later, the
NLRC reversed the ruling of the Labor Arbiter. It opined that the assessment
of the company-designated physician should not be binding in determining
the true condition of Gepanaga, considering that he was chosen, engaged
and remunerated by Veritas and, as such, was likely to advance and serve its
interests. Dr. Villa, on the other hand, was a government physician, and the
NLRC gave credence to his medical assessment of Gepanagas condition.

Issue:
1. Whether Gepanaga is entitled to claim for permanent total disability
benefits because his personal physician established that he was not fit
to work.
2. Whether the award of attorneys fees was warranted as he was
compelled to litigate.
SC: The SC ruled that the evidentiary records favors the petitioners. In order
to provide a clear-cut set of rules in resolving the ubiquitous conflict between
the seafarer and his employer for claims of permanent disability benefits, the
Court in Vergara, stated that the Department of Labor and Employment
(DOLE), through the POEA, had simplified the determination of liability for
work-related death, illness or injury in the case of Filipino seamen working in
foreign ocean-going vessels. Every seaman and vessel owner (directly or
represented by a local manning agency) are required to execute the POEASEC as a condition sine qua non prior to the deployment of the seaman for
overseas work. The POEA-SEC is supplemented by the CBA between the
owner of the vessel and the covered seaman. In this case, when the parties
entered into a contract of employment in accordance with the POEA-SEC,
they also agreed to be bound by the CBA. Thus, in resolving whether
Gepanaga is entitled to disability compensation, the Court will be guided by
the procedures laid down in the POEA-SEC and the CBA.
Section 20(B)(3) of the POEA-SEC provides: Upon sign-off from the
vessel for medical treatment, the seafarer is entitled to sickness allowance
equivalent to his basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated
physician but in no case shall this period exceed one hundred twenty (120)
days.
For this purpose, the seafarer shall submit himself to a
postemployment medical examination by a company-designated physician
within three working days upon his return except when he is physically
incapacitated to so, in which case, a written notice to the agency within the
same period is deemed a compliance. Failure of the seafarer to comply with
the mandatory reporting requirement shall result in his forfeiture of the right
to claim the above benefits.
If a Doctor appointed by the seafarer disagrees with the assessment, a
third doctor may be agreed jointly between the Employer and the seafarer.
The third doctors decision shall be final and binding on both parties. The
CBA between the petitioners and the respondent also states that: If a doctor
appointed by the seafarer and his Union disagrees with the assessment, a
third doctor may be agreed jointly between the Employer and the Seafarer

and his Union, and the third doctors decision shall be final and binding on
both parties.
In this case however, for failure of Gepanaga to observe the
procedures laid down in the POEA-SEC and the CBA, the Court is left without
a choice but to uphold the certification issued by the company-designated
physician that the respondent was fit to go back to work. Gepanagas claim
for benefits was also premature because when he filed the complaint with
the arbitration office on March 25, 2009, he had yet to consult his own
physician, Dr. Villa. Indeed, the Court has observed that when Gepanaga filed
his complaint, he was armed only with the belief that he had yet to fully
recover from his injured finger because of the incident that occurred on
board the M.V. Melbourne Highway. It was only on June 9, 2009, a few days
before he filed his position paper on June 15, 2009, that Gepanaga sought
the services of Dr. Villa. Let it be stressed that the seafarers inability to
resume his work after the lapse of more than 120 days from the time he
suffered an injury and/or illness is not a magic wand that automatically
warrants the grant of total and permanent disability benefits in his favor.26
Both law and evidence must be on his side.
For these reasons, and without sufficient evidence to support the
respondents ancillary claims for sick wages, damages and attorneys fees,
the same are denied.

Topics: Power of the NLRC; Rule 45 in Labor Cases; Exceptions to the

general rule that the findings of fact of labor tribunals, as affirmed
by the Court of Appeals, are binding on the SC; Abandonment; Time
of filing the complaint for illegal dismissal; Filing of the complaint
does not constitutes abandonment of work; Beginning of
computation of backwages; Right to procedural due process
Ponente: Leonen, J.
Protective Maximum Security Agency, Inc. v. Fuentes, G.R. No.
169303, 11 February 2015
Facts: Protective Maximum Security Agency, Inc. (Protective) provides
security services for commercial, industrial and agricultural firms, and
personal residences.
Celso E. Fuentes (Fuentes) was hired as a security guard by Protective
sometime in November 1999. At the time of Fuentes employment, Protective
assigned him to Picop Resources, Inc. He was posted to a security checkpoint
designated as Post 33 in Upper New Visayas, Agusan del Sur.
On July 20, 2000, a group of armed persons ransacked Post 33 and
took five (5) M-16 rifles, three (3) carbine rifles, and one (1) Browning
Automatic Rifle, all with live ammunition and magazines. Agency-issued
uniforms and personal items were also taken. These armed persons inflicted
violence upon Fuentes and the other security guards present at Post 33,
namely: Francisco Dalacan, Rolando Gualberto Lindo, Jr. (Lindo, Jr.), Cempron
(Cempron), and Wilson Maravilles. Francisco Dalacan was employed by
Protective, while the others were employed by Meshim Security Agency.
On the same day of the incident, Fuentes and his fellow security
guards reported the raid to the Philippine National Police in Trento, Agusan
del Sur. When asked by the police, Fuentes reported that he and the other
security guards assigned to Post 33 were accosted at gunpoint by the New
Peoples Army.
After its initial investigation, the Philippine National Police found reason
to believe that Fuentes conspired and acted in consort with the New Peoples
Army. This was based on the two (2) affidavits executed by Lindo, Jr. and
Cempron, who were both present in the July 20, 2000 raid. In their affidavits,
Lindo, Jr. and Cempron stated that Fuentes should be prosecuted for criminal
acts done on July 20, 2000.
On July 24, 2000, the Philippine National Police, through Senior Police
Officer IV Benjamin Corda, Jr., filed the Complaint for robbery committed by a
band against Fuentes, a certain Mario Cabatlao, and others. This was filed
before the Second Municipal Circuit Trial Court of Trento Sta. Josefa-Veruela in

Trento, Agusan del Sur. The Complaint stated that Fuentes was a "cohort of
the NPA in the raid."
Immediately upon the filing of the Complaint, Fuentes was detained at
the Mangagoy Police Sub-Station, Mangagoy, Bislig, Surigao del Sur. During
his detention, he alleged that he was "mauled and tied up by the security
officers of [Protective]." To preserve proof of these claims, Fuentes had
pictures taken of his injuries while in custody and acquired a medical
certificate detailing his injuries.
In the Order dated August 1, 2000, Judge Particio Balite of the
Municipal Circuit Trial Court of Trento-Sta. Josefa-Veruela directed that
Fuentes be transferred from the Mangagoy Police Sub-Station to Trento
Municipal Jail in Trento, Agusan del Sur. In his return to this court order,
however, Police Inspector Ernesto Escartin Sr. (Inspector Escartin) reported:
Celso Fuentes is no longer in the custody of this station and he is never
detained in this station but requested that he will be put to custody for fear
of his life. He left this station on July 28, 2000 at around 2:45 in the afternoon
accompanied by his mother. The last known address of subject person is Sta.
Josefa, Trento, Agusan del Sur.
On August 15, 2001, the Office of the Provincial Prosecutor of Surigao
del Sur issued the Resolution dismissing the Complaint against Fuentes. It
found during preliminary investigation that there was no probable cause to
warrant the filing of an Information against Fuentes.
On March 14, 2002, Fuentes filed the Complaint "for illegal dismissal,
non-payment of salaries, overtime pay, premium pay for holiday and rest
day, 13th month pay, service incentive leave and damages against
[Protective], Picop [Resources, Inc.], Emie S. Dolina and Wilfredo Fuentes
before the National Labor Relations Commission Regional Arbitration Branch
XIII in Butuan City."
In his Position Paper, Fuentes claimed that "right after the criminal
complaint for robbery against him was dismissed, he demanded to return to
work but he was refused entry by a certain Mr. Espinosa on the ground that
Fuentes was a member of the NPA and that his position had already been
filled up by another security guard."
On the other hand, Protective claims that "as was usual and routine,
Fuentes should have reported to his Team Leader or Officer-in-Charge. Since
the incident of July 20, 2000, private respondent has not yet reported to his
Team Leader or to any of the officers of Protective."
Executive Labor Arbiter rendered his Decision in favor of Protective,
thus: As correctly pointed out by respondents PRI and/or Wilfredo Fuentes,

complainant was unable to perform his duties and responsibilities as security

guard due to the criminal charges filed against him, hence he was replaced
with another guard.
On appeal, the National Labor Relations Commission reversed the
Decision of Labor Arbiter Legaspi and found that Fuentes was illegally
dismissed.
Protective filed a Petition for Certiorari before the Court of Appeals
alleging grave abuse of discretion on the part of the National Labor Relations
Commission. The Court of Appeals dismissed the Petition. It held that
Protective failed to discharge its burden to prove a just cause for dismissal.
Further, the Court of Appeals found that Fuentes should have been afforded
his procedural due process rights.
Hence, this petition.
Issues:
1. Whether determination of facts of the Labor Arbiter must prevail over
the determination of facts of the National Labor Relations Commission.
2. What is the general rule regarding Rule 45 petition for review on
certiorari in labor cases.
3. Whether the exceptions to the general rule that the findings of fact of
labor tribunals, as affirmed by the Court of Appeals, are binding on this
court is present in this case.
4. Whether Fuentes was justifiably dismissed due to abandonment;
5. Whether the six-month period from the alleged date of dismissal by
petitioner to the date of filing of the complaint is justified.
6. Whether the filing of the complaint constitutes abandonment of
employment.
7. Whether the computation of backwages should only begin from the
date of the filing of the Complaint.
8. Whether the right to procedural due process was not observed.
SC:
1. No.
The National Labor Relations Commission has the power to overturn the
findings of fact of the Labor Arbiter.
Contrary to petitioners claims, the National Labor Relations Commission
is not bound by the findings of the Labor Arbiter. Article 223 of the Labor
Code reads: Article 223. Appeal. Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such decisions,

awards, or orders. Such appeal may be entertained only on any of the

following grounds:
1. If there is prima facie evidence of abuse of discretion on the part of the
Labor Arbiter;
2. If the decision, order or award was secured through fraud or coercion,
including graft and corruption;
3. If made purely on questions of law; and
4. If serious errors in the findings of facts are raised which would cause
grave or irreparable damage or injury to the appellant.
Article 223 provides that the decision of the Labor Arbiter is final and
executory, unless appealed to the National Labor Relations Commission
within ten (10) calendar days by any or both of the parties. The Labor Code
vests in the National Labor Relations Commission the authority to reverse the
decision of the Labor Arbiter, provided that the appellant can prove the
existence of one of the grounds in Article 223.
The errors in the findings of fact that will justify a modification or reversal
of the Labor Arbiters decision must be "serious" and, if left uncorrected,
would lead to "grave or irreparable damage or injury to the appellant."
Serious errors refer to inferences of facts without evidence, or mistakes in
the interpretation of the evidence that border on arbitrariness or similar
circumstances. Not only must the error be palpable, but there must also be a
showing that such error would cause grave and irreparable injury to the
appellant. It should affect the disposition of the cause of the appellant. The
error must impact on the main issues and not some tangential matter.
Evidently, a showing of bias on the part of the Labor Arbiter or a lack of due
regard for the procedural rights of the parties are indicia that serious errors
may be present.
In this case, the National Labor Relations Commission decided that there
was a serious error in the factual findings of Labor Arbiter Legaspi. Labor
Arbiter Legaspi found that respondent was charged by the Philippine National
Police in Trento, Agusan del Sur for allegedly conspiring and confederating
with the members of the New Peoples Army. Thus, respondent was detained
at the Mangagoy Police Sub-Station in Surigao del Sur. Labor Arbiter Legaspi
found that respondent was "unable to perform his duties and responsibilities
as security guard due to the criminal charges that were filed against him."
This led to petitioner replacing respondent with another security guard.
The National Labor Relations Commission found that petitioners claims
that respondent consorted with the New Peoples Army and committed
robbery on July 20, 2000 "were never substantiated at all." In fact, the
Complaint for robbery against respondent was dismissed after preliminary
investigation. Thus, the National Labor Relations Commission found that the

refusal to admit respondent to work based on the latters alleged conspiracy

with the New Peoples Army during the July 20, 2000 incident had no basis.
As for respondents absence from work, Labor Arbiter Legaspi found that
respondents whereabouts were unknown to petitioner. Labor Arbiter Legaspi
found that the notice for respondent to explain his involvement in the July
20, 2000 incident could not be properly served despite "diligent efforts."
Thus, he supported petitioners allegation that respondent "vanished" after
the July 20, 2000 incident at Post 33.
On appeal, the National Labor Relations Commission found that
petitioners claim that respondents whereabouts were unknown to the
former was "unbelievable." The National Labor Relations Commission found
that after the July 20, 2000 incident, respondent "was among those who
reported the assault to the police." Petitioner even submitted that
"respondents last known address was given to the investigating court by
Police Inspector Escartin in his report to the Municipal Circuit Trial Court."
Contrary to Labor Arbiter Legaspis findings, the National Labor Relations
Commission found that petitioner did not exert diligent efforts to locate
respondent and afford him his right to due process. It found that petitioner
feigned ignorance of the reason of respondents absence. It also found
petitioners claim that respondent had "vanished" to be "ridiculous, at best, a
sham defense."
Based on these premises, the National Labor Relations Commission found
that there was a serious error in the factual determination and conclusions of
Labor Arbiter Legaspi. The errors in the findings of fact directly would affect
the primary issues raised by the parties and their respective claims. If the
errors in the findings of fact were not corrected, respondents right to
security of tenure would have been violated. The National Labor Relations
Commission acted well within the discretion provided by Article 223 in
deciding appealed cases from the Labor Arbiter.
2. This courts power to decide a Rule 45 petition for review on certiorari,
particularly in labor cases, has its limits.
Petitioner prays that this court reverse the findings of fact of the National
Labor Relations Commission, which were affirmed by the Court of Appeals.
In St. Martin Funeral Home v. National Labor Relations Commission, this
court established the proper mode of appeal in labor cases: On this score we
add the further observations that there is a growing number of labor cases
being elevated to this Court which, not being a trier of fact, has at times
been constrained to remand the case to the NLRC for resolution of unclear or
ambiguous factual findings; that the Court of Appeals is procedurally

equipped for that purpose, aside from the increased number of its
component divisions; and that there is undeniably an imperative need for
expeditious action on labor cases as a major aspect of constitutional
protection to labor.
Therefore, all references in the amended Section 9 of B.P. No. 129 to
supposed appeals from the NLRC to the Supreme Court are interpreted and
hereby declared to mean and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should henceforth be initially filed in the
Court of Appeals in strict observance of the doctrine on the hierarchy of
courts as the appropriate forum for the relief desired.
In Bani Rural Bank, Inc. v. De Guzman, this court discussed the primary
issues to be addressed in a Rule 45 petition for review on certiorari in labor
cases: In question form, the question to ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling
on the case?
This manner of review was reiterated in Holy Child Catholic School v. Hon.
Patricia Sto. Tomas, etc., et al., where the Court limited its review under Rule
45 of the CAs decision in a labor case to the determination of whether the
CA correctly resolved the presence or absence of grave abuse of discretion in
the decision of the Secretary of Labor, and not on the basis of whether the
latter's decision on the merits of the case was strictly correct.
Grave abuse of discretion, amounting to lack or excess of jurisdiction, has
been defined as the capricious and whimsical exercise of judgment
amounting to or equivalent to lack of jurisdiction. There is grave abuse of
discretion when the power is exercised in an arbitrary or despotic manner by
reason of "passion or personal hostility, and must be so patent and so gross
as to amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law."
In Career Philippines Shipmanagement, Inc. v. Serna, this court elaborated
on its role to determine whether the Court of Appeals was correct in either
granting or dismissing the petition for certiorari: In a Rule 45 review, we
consider the correctness of the assailed CA decision, in contrast with the
review for jurisdictional error that we undertake under Rule 65. Furthermore,
Rule 45 limits us to the review of questions of law raised against the assailed
CA decision. In ruling for legal correctness, we have to view the CA decision
in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of
whether it correctly determined the presence or absence of grave abuse of
discretion in the NLRC decision before it, not on the basis of whether the
NLRC decision on the merits of the case was correct. In other words, we have
to be keenly aware that the CA undertook a Rule 65 review, not a review on

appeal, of the NLRC decision challenged before it. Accordingly, we do not reexamine conflicting evidence, reevaluate the credibility of witnesses, or
substitute the findings of fact of the NLRC, an administrative body that has
expertise in its specialized field. Nor do we substitute our "own judgment for
that of the tribunal in determining where the weight of evidence lies or what
evidence is credible." The factual findings of the NLRC, when affirmed by the
CA, are generally conclusive on this Court.
Applying these cases, the general rule is that in a Rule 45 petition for
review on certiorari, this court will not review the factual determination of
the administrative bodies governing labor, as well as the findings of fact by
the Court of Appeals. The Court of Appeals can conduct its own factual
determination to ascertain whether the National Labor Relations Commission
has committed grave abuse of discretion. "In the exercise of its power of
review, the findings of fact of the Court of Appeals are conclusive and
binding and consequently, it is not our function to analyze or weigh evidence
all over again."
3. No.
There are exceptions to the general rule that the findings of fact of labor
tribunals, as affirmed by the Court of Appeals, are binding on this court.
In Medina v. Asistio, Jr: It is a well-settled rule in this jurisdiction that only
questions of law may be raised in a petition for certiorari under Rule 45 of
the Rules of Court, this Court being bound by the findings of fact made by
the Court of Appeals. The rule, however, is not without exception. Thus,
findings of fact by the Court of Appeals may be passed upon and reviewed by
this Court in the following instances, none of which obtain in the instant
petition:
(1) When the conclusion is a finding grounded entirely on speculation,
surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]);
(2) When the inference made is manifestly mistaken, absurd or impossible
(Luna v. Linatok, 74 Phil.15 [1942]);
(3) Where there is a grave abuse of discretion (Buyco v.People, 95 Phil.
453 [1955]);
(4) When the judgment is based on a misapprehension of facts (Cruz v.
Sosing, L-4875, Nov. 27, 1953);
(5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590
Ap. 30, 1957; unrep.);
(6) When the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both
appellant and appellee (Evangelista v. Alto Suretyand Insurance Co., 103
Phil. 401 [1958]);

(7) The findings of the Court of Appeals are contrary to those of the trial
court (Garcia v. Court of Appeals, 33 SCRA 622 [1970]; Sacay v.
Sandiganbayan, 142 SCRA 593 [1986]);
(8) When the findings of fact are conclusions without citation of specific
evidence on which they are based (Ibid.,);
(9) When the facts set forth in the petition as well as in the petitioners
main and reply briefs are not disputed by the respondents (Ibid.,); and
(10) The finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by the evidence on record
(Salazar v. Gutierrez, 33 SCRA 242 [1970]).
In labor cases, if the petitioner before this court can show grave abuse of
discretion on the part of the National Labor Relations Commission, the
assailed Court of Appeals ruling (in the Rule 65 proceedings) will be reversed.
"Labor officials commit grave abuse of discretion when their factual findings
are arrived at arbitrarily or in disregard of the evidence." If the petitioner can
show that "the labor tribunal acted capriciously and whimsically or in total
disregard of evidence material to the controversy," the factual findings of the
National Labor Relations Commission may be subjected to review and
ultimately rejected.
In addition, if the findings of fact of the Labor Arbiter are in direct conflict
with the National Labor Relations Commission, this court may examine the
records of the case and the questioned findings in the exercise of its equity
jurisdiction.
It is the petitioners burden to justify the existence of one of the
exceptions to the general rule for this court to conduct a factual review. In
this case, we find that petitioner has failed to discharge this burden.
4. No.
The absence of respondent does not constitute abandonment.
Petitioner justifies its actions against respondent by maintaining that
respondent never reported to his supervising officer after the July 20, 2000
raid at Post 33. Thus, this alleged prolonged absence from work constituted
abandonment. Petitioner asserts that since respondent failed to report for
work after the raid, there was no "actual" dismissal of respondent.
Abandonment as a just cause for dismissal is based on Article 282(b) of
the Labor Code: Art. 282. Termination by employer. An employer may
terminate an employment for any of the following causes: (b) Gross and
habitual neglect by the employee of his duties.
Abandonment constitutes a just cause for dismissal because "the law in
protecting the rights of the laborer, authorizes neither oppression nor self-

destruction of the employer." The employer cannot be compelled to maintain

an employee who is remiss in fulfilling his duties to the employer, particularly
the fundamental task of reporting to work.
In Agabon v. National Labor Relations Commission, this court discussed
the concept of abandonment: Abandonment is the deliberate and unjustified
refusal of an employee to resume his employment. It is a form of neglect of
duty, hence, a just cause for termination of employment by the employer. For
a valid finding of abandonment, these two factors should be present: (1) the
failure to report for work or absence without valid or justifiable reason; and
(2) a clear intention to sever employer-employee relationship, with the
second as the more determinative factor which is manifested by overt acts
from which it may be deduced that the employees has [sic] no more
intention to work. The intent to discontinue the employment must be shown
by clear proof that it was deliberate and unjustified.89 (Citations omitted)
The burden to prove whether the employee abandoned his or her work
rests on the employer. Thus, it is incumbent upon petitioner to prove the two
(2) elements of abandonment. First, petitioner must provide evidence that
respondent failed to report to work for an unjustifiable reason. Second,
petitioner must prove respondents overt acts showing a clear intention to
sever his ties with petitioner as his employer.
There is no abandonment in this case.
The first element of abandonment is the failure of the employee to
report to work without a valid and justifiable reason. Petitioner asserts that
respondent failed to report for work immediately after his release from
prison. He also failed to abide by company procedure and report to his
immediate superior. According to petitioner, respondents actions constitute
a failure to report to work without a valid and justifiable reason.
The National Labor Relations Commission and the Court of Appeals
found that respondents failure to return to work was justified because of his
detention and its adverse effects. The Court of Appeals found that petitioner
did not refute the allegation that respondent, while in the custody of the
police, suffered physical violence in the hands of its employees. Thus, the
Court of Appeals gave credence to the report submitted by Inspector
Escartin, which stated that respondent was "so traumatized that he actually
asked to remain in the custody of the police because he feared for his life."
The Court of Appeals further found that respondent experienced intense fear,
"manifested by the fact that he left the custody of the police only when his
mother accompanied him."
Thus, the intervening period when respondent failed to report for work,
from respondents prison release to the time he actually reported for work,

was justified. Since there was a justifiable reason for respondents absence,
the first element of abandonment was not established.
The second element is the existence of overt acts which show that the
employee has no intention to return to work. Petitioner alleges that since
respondent "vanished" and failed to report immediately to work, he clearly
intended to sever ties with petitioner.
However, respondent reported for work after August 15, 2001, when
the criminal Complaint against him was dropped. Further, petitioner refused
to allow respondent to resume his employment because petitioner believed
that respondent was a member of the New Peoples Army and had already
hired a replacement.
Respondents act of reporting for work after being cleared of the
charges against him showed that he had no intention to sever ties with his
employer. He attempted to return to work after the dismissal of the
Complaint so that petitioner would not have any justifiable reason to deny
his request to resume his employment.
Thus, respondents actions showed that he intended to resume working
for petitioner. The second element of abandonment was not proven, as well.
Petitioner failed to discharge its burden to prove a just cause for
dismissal.
Based on the findings of the National Labor Relations Commission and
the Court of Appeals, petitioner was unable to prove the two (2) concurrent
elements necessary to constitute abandonment. Outside of the allegation
that respondent "simply vanished" and failed to report to petitioner, they
found that petitioner was unable to provide additional evidence that would
have justified its actions.
Taking all these into consideration, the Court of Appeals did not err in
affirming the findings of the National Labor Relations Commission.
The rule is well established that in termination cases, the burden of
proving just and valid cause for dismissing an employee rests on the
employer and his failure to do so shall result in a finding that the dismissal is
unjustified. The burden to prove a just cause for dismissal must be met by
the employer. Petitioner was unable to discharge its evidentiary burden
before the National Labor Relations Commission and the Court of Appeals.
Thus, the illegality of the dismissal stands.
5. Yes.

The six-month period from the alleged date of dismissal by petitioner

to the date of filing of the complaint is justified.
Article 291 covers claims for overtime pay, holiday pay, service
incentive leave pay, bonuses, salary differentials, and illegal deductions by
an employer. It also covers money claims arising from seafarer contracts.
The provision, however, does not cover "money claims" consequent to
an illegal dismissal such as backwages. It also does not cover claims for
damages due to illegal dismissal. These claims are governed by Article 1146
of the Civil Code of the Philippines, which provides: Art. 1146. The following
actions must be instituted within four years: (1) Upon injury to the rights of
the plaintiff. This four-year prescriptive period applies to claims for
backwages, not the three-year prescriptive period under Article 291 of the
Labor Code. A claim for backwages, according to this court, may be a money
claim "by reason of its practical effect." Legally, however, an award of
backwages "is merely one of the reliefs which an illegally dismissed
employee prays the labor arbiter and the NLRC to render in his favor as a
consequence of the unlawful act committed by the employer." Though it
results "in the enrichment of the individual illegally dismissed, the award of
backwages is not in redress of a private right, but, rather, is in the nature of
a command upon the employer to make public reparation for his violation of
the Labor Code." Actions for damages due to illegal dismissal are likewise
actions "upon an injury to the rights of the plaintiff." Article 1146 of the Civil
Code of the Philippines, therefore, governs these actions.
Petitioner admits that respondent filed the Complaint for illegal
dismissal six (6) months after the first time petitioner had refused to allow
respondent to work. This is well within the four-year prescriptive period
provided by Article 1146 of the Labor Code, as mentioned in Arriola.
In this case, the six-month period from the date of dismissal to the
filing of the Complaint was well within reason and cannot be considered
"inexcusable delay." The cases filed before the courts and administrative
tribunals originate from human experience. Thus, this court will give due
consideration to the established facts which would justify the gap of six (6)
months prior to the filing of the complaint.
First, respondent received a beating from petitioners employees at the
time of his detention. Even after the dismissal of the Complaint against him,
it would have been reasonable for him to take time to recover from the
physical and emotional trauma he received.
Second, after the charges against him were dropped, respondent
averred that he "repeatedly" asked petitioner if he could resume
employment. The Court of Appeals affirmed this finding. Prior to the filing of

the Complaint on March 14, 2002, respondent did not sleep on his right to
resume work.
Lastly, this court takes notice of the considerable distance between
respondents last known address at Sta.Josefa, Trento, Agusan del Sur and
Post 33 at Picop Resources, Inc., Upper New Visayas, Agusan del Sur. The
distance he had to travel to ask petitioner to resume work would have placed
an understandable constraint on respondents time and resources.
Respondent cannot be prejudiced by the six-month period. Petitioners
argument on this matter must fail.
6. No.
Indophil is not applicable as a defense against petitioners dismissal of
respondent. In Indophil, the employer gave the employee a letter requiring
him to report and explain his unauthorized absences. The employer gave the
employee three (3) days to respond to the letter. Instead, the employee filed
a complaint alleging illegal dismissal against the employer. This court held
that by failing to respond to the letter, the employee effectively resigned
from his employment. Thus, to begin with, there was no dismissal of the
employee. The employee in that case should have acted promptly in the
interest of protecting his employment.
In this case, the National Labor Relations Commission and the Court of
Appeals did not find evidence that petitioner afforded respondent the
opportunity to explain his failure or inability to report for work. They found
that petitioners allegation that respondent "simply vanished" did not
discharge its burden of proving that respondent was dismissed for a just
cause.
Unlike Indophil, illegal dismissal occurred in this case. Respondent was
illegally dismissed from the time petitioner refused to allow him to resume
work.
7. Yes.
Applying the doctrine of "no work, no pay," the computation of backwages
should only begin from the date of the filing of the Complaint.
In Republic v. Pacheo: If there is no work performed by the employee
there can be no wage or pay, unless of course the laborer was able, willing
and ready to work but was illegally locked out, dismissed or suspended. The
"No work, no pay" principle contemplates a "no work" situation where the
employees voluntarily absent themselves.

It would be unjust if petitioner were ordered to pay respondent for the

period of time that respondent could not and did not work.
In this case, the date of petitioners refusal to allow respondents return to
work was not established in the findings of fact of the labor tribunals and the
Court of Appeals. Petitioner alleged that the filing of the Complaint took
place six (6) months after the alleged date that respondents request to
return to work was refused. The date when the incident took place was not
specified.
Applying Standard Electric, respondent is not entitled to backwages from
August 15, 2001, the date of the Resolution dismissing the Complaint against
respondent. The facts do not categorically state that petitioner refused to
allow respondent to resume working on August 15, 2001.
Absent proof of the actual date that respondent first reported for work and
was refused by petitioner, the date of the filing of the Complaint should serve
as the basis from which the computation of backwages should begin. Thus,
this court finds that respondent is entitled to full backwages starting only on
March 14, 2002 until actual reinstatement.
8. Yes.
Respondents right to procedural due process was not observed.
The employer must always observe the employees right to due process.
In Agabon: Procedurally, if the dismissal is based on a just cause under
Article 282, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing
or opportunity to be heard, a notice of the decision to dismiss.
Due process under the Labor Code, like Constitutional due process, has
two aspects: substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal are
found in the Implementing Rules of P.D. 442, as amended, otherwise known
as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by
Department Order Nos. 9 and 10. Breaches of these due process
requirements violate the Labor Code. . . . Constitutional due process protects
the individual from the government and assures him of his rights in criminal,
civil or administrative proceedings; while statutory due process found in the
Labor Code and Implementing Rules protects employees from being unjustly
terminated without just cause after notice and hearing.

In this case, petitioner violated respondent's right to procedural due

process. The two-notice requirement was not followed. Petitioner sought to
excuse itself by claiming that there was no address where the proper notice
could have been served. However, petitioner admitted before the Court of
Appeals that "respondent's last known address was given to the investigating
court by Police Inspector Escartin.
There was no attempt from petitioner to serve the proper notice on
respondent at the address contained in its employment records. Respondent
was replaced without being given an opportunity to explain his absence.
In Agabon, this court awarded an amount as indemnity to the dismissed
employee due to the violation of the right to procedural due process. This
court deems it just to confer an additional award of P30,000.00 to
respondent.
Petitioner has violated respondent's right to security of tenure, as well as
his right to procedural due process. For these violations, petitioner must be
held accountable.

Topic: Seafarers injury - partial or permanent

Ponente: Reyes, J.
Maunlad Trans., Inc. v. Rodolfo M. Camoral G.R. No. 211454,
February 11, 2015
Facts:
For 18 years since 1991, Camoral was continuously deployed
overseas by Carnival Cruise Lines, Inc., a foreign shipping company, through
its local agent, Maunlad Trans., Inc. (petitioners). In April 2009, they took him
on board M/S Carnival Sensation as ice carver for a period of eight months,
the company doctors having declared him Fit for Sea Duty (Without
Restriction) after the requisite physical evaluations. As ice carver, Camorals
job required lifting and carrying heavy blocks of ice and using heavy
equipment and tools, working for hours inside the freezer in sub-zero
temperature. One day in September 2009 while at work, he suddenly felt
excruciating pain in his neck. The pain quickly radiated to his shoulder, chest
and hands. It became so intense that he dropped to the floor. Pain relievers
could not relieve the pain, and the ships doctor advised the Chief Chef that
Camoral was unfit for further duty on board. On advice of the company
doctor in Florida, United States of America, Dr. James E. Carter (Dr. Carter), a
Magnetic Resonance Imaging scan was performed on Camorals cervical
spine on September 25, 2009.
Camoral failed to get further financial assistance from the petitioners
for his subsequent treatment and medications, as well as total disability
benefits. He was instead offered $10,075.00 corresponding to Grade 10
disability the company gave him. With no income for more than 120 days
and having been declared unfit to return to his previous job due to loss of his
pre-injury capacity, he sued the petitioners before the LA for total disability
benefits of US$60,000.00, citing Philippine Overseas Employment
Administration Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on board Ocean-going Vessels (POEA SEC for brevity).
Issue:
Whether the disability grading provided by the petitioners for
Camorals impediment must control
SC: No. An employees disability becomes permanent and total when so
declared by the company-designated physician, or, in case of absence of
such a declaration either of fitness or permanent total disability, upon the
lapse of the 120- or 240-day treatment period, while the employees
disability continues and he is unable to engage in gainful employment during
such period, and the company-designated physician fails to arrive at a
definite assessment of the employees fitness or disability.
Significantly, the NLRC noted that the medical report and disability
assessment submitted by the petitioners after more than 120 days of

treatment and rehabilitation did not show how the partial permanent
disability assessment of Camoral was arrived at. It simply stated that he was
suffering from impediment Grade 10 disability, but without any evidence that
in fact only one-third limitation of motion of the neck or moderate stiffness
had affected Camoral. But even without this observation, it is not disputed
that Camoral has been declared unfit by both the petitioners and Camorals
doctors to return to his previous occupation. This, to the Court, is akin to a
declaration of permanent and total disability.

Topic: Retirement Pay

Ponente: Leonen, J.
Zenaida Paz v. Northern Tobacco Redrying Co., Inc., and/or Angelo
Ang, G.R. No. 199554 February 18, 2015
Facts:
Northern Tobacco Redrying Co., Inc. (NTRCI), a flue-curing and redrying
of tobacco leaves business, employs approximately 100 employees with
seasonal workers tasked to sort, process, store and transport tobacco
leaves during the tobacco season of March to September. NTRCI hired
Zenaida Paz (Paz) sometime in 1974 as a seasonal sorter, paid P185.00
daily. NTRCI regularly re-hired her every tobacco season since then. She
signed a seasonal job contract at the start of her employment and a proforma application letter prepared by NTRCI in order to qualify for the next
season.alOn May 18, 2003, Paz was 63 years old when NTRCI informed her
that she was considered retired under company policy. A year later, NTRCI
told her she would receive P12,000.00 as retirement pay. Paz, with two other
complainants, filed a Complaint for illegal dismissal against NTRCI on March
4, 2004.
NTRCI countered that no Collective Bargaining Agreement (CBA) existed
between NTRCI and its workers. Thus, it computed the retirement pay of its
seasonal workers based on Article 287 of the Labor Code. NTRCI raised the
requirement of at least six months of service a year for that year to be
considered in the retirement pay computation. It claimed that Paz only
worked for at least six months in 1995, 1999, and 2000 out of the 29 years
she rendered service. Thus, Pazs retirement pay amounted to P12,487.50
after multiplying her P185.00 daily salary by 22 working days in a month,
for three years.
The Labor Arbiter in his Decision confirmed that the correct retirement pay
of Zenaida M. Paz was P12,487.50.
The National Labor Relations
Commission in its Decision the Labor Arbiters Decision. Complainant
Appellant ZenaidaPazs retirement pay should be computed pursuant to RA

7641 and that all the months she was engaged to work for respondent for
the last twenty eight (28) years should be added and divide[d] by six (for a
fraction of six months is considered as one year) to get the number of years
[for] her retirement pay. The Court of Appeals in its Decision dated May 25,
2011 dismissed the Petition and modified the National Labor Relations
Commissions Decision in that financial assistance is awarded to . . .
Zenaida Paz in the amount of P60,356.25. The Court of Appeals found that
while applying the clear text of Article 287 resulted in the amount of
P12,487.50 as retirement pay, this amount was so meager that it could
hardly support . . . Paz, now that she is weak and old, unable to find
employment. It discussed jurisprudence on financial assistance and deemed
it appropriate to apply the formula: One-half-month pay multiplied by 29
years of service divided by two yielded P60,356.25 as Pazs retirement pay.
Issue: Whether the Court of Appeals properly computed the retirement pay
of Zenaida Paz.
SC: YES but with modification.
Primarily, respondent NTRCI engaged the services of petitioner Paz as a
seasonal sorter and had been regularly rehired from 1974, until she was
informed in 2003 that she was being retired under company policy. The
services petitioner Paz performed as a sorter were necessary and
indispensable to respondent NTRCIs business of flue-curing and redrying
tobacco leaves. She was also regularly rehired as a sorter during the
tobacco seasons for 29 years since 1974. These considerations taken
together allowed the conclusion that petitioner Paz was a regular seasonal
employee, entitled to rights under Article 279 Security of Tenure of the Labor
Code.
As regards to retirement benefits, an employer may provide for retirement
benefits in an agreement with its employees such as in a Collective
Bargaining Agreement. Otherwise, Article 287 of the Labor Code, as
amended, governs. Since respondent NTRCI failed to present a copy of a
Collective Bargaining Agreement on the alleged retirement policy, the Court
applies Article 287 of the Labor Code, as amended by Republic Act No. 7641.
This provides for the proper computation of retirement benefits in the
absence of a retirement plan or agreement:

In the absence of a retirement plan or agreement providing for retirement

benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one
whole
year.
Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13 th
month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.
Respondent NTRCI followed the formula in Article 287 and offered petitioner
Paz the amount of P12,487.50 as retirement pay based on the three years
she worked for at least six months in 1995, 1999, and 2000.
The Labor Arbiter agreed with respondent NTRCIs computation based on
these three years and reached the same amount as petitioner Pazs
retirement pay. On appeal, the National Labor Relations Commission found
that petitioner Paz became a regular seasonal employee by virtue of her
long years of service and the repetitive hiring of her services by respondent
NTRCI every season. It then considered her as having worked for every
tobacco season from 1974 to 2003 or for a total of 29 years. The Court of
Appeals found no positive proof o[n] the total number of months [petitioner
Paz] actually rendered work [for respondent NTRCI]. On the other hand,
both the Labor Arbiter and the Court of Appeals established from the records
that she rendered at least six months of service for 1995, 1999, and 2000
only.
Based on these factual findings, retirement pay pursuant to Article 287 of the
Labor Code was correctly computed at P12,487.50 and was awarded to
petitioner Paz.

Topic: Entitlement to disability benefits

Ponente: Reyes, J.
Sealanes Marine Services, Inc./Arklow Shipping Netherland and/or
Christopher Dumatol v. Arnel G. Dela Torre, G.R. No. 214132,
February 18, 2015
Facts: Respondent was hired by Sealanes Marine Services, Inc. (Sealanes), a
local manning agency, through its President, Christopher Dumatol (Dumatol),
in behalf of its foreign principal, Arklow Shipping Netherland (petitioners), as
an able seaman on board M/V Arklow Venture for a period of nine months at
a basic monthly salary of US$545.00. An overriding CBA between the
respondents union, Associated Marine Officers and Seamens Union of the
Philippines, and the Netherlands Maritime Employers Association, called
"CBA for Filipino Ratings on Board Netherlands Flag Vessels" (Dutch CBA),
also covered his contract.
Respondent Dela Torre embarked on January 21, 2010. On August 1, 2010,
during the crews rescue boat drill at the port of Leith, Scotland, he figured in
an accident and injured his lower back. An X-ray of his lumbosacral spine was
taken at a hospital at the port, but while according to his attending physician
he sustained no major injury, the pain in his back persisted and he was
repatriated. On August 4, 2010, the respondent was referred by Sealanes to
the Marine Medical Services of the Metropolitan Medical Center. On August 5,
2010, an X-ray of his lumbosacral spine showed, per the medical report, that
he sustained "lumbar spine degenerative changes with associated L1
compression fracture." The next day, a Magnetic Resonance Imaging scan of
his lumbar spine revealed an "acute compression fracture body of L1; right
paracentral disc protrusion at L5-S1 causing minimal canal compromise; L4L5 and L5-S1 disc dehydration." Again on December 16, 2010, an X-ray
showed "compression deformity of L1 vertebra; L2-L1 disc space is now
defined but slightly narrowed". On January 27, 2011, his fourth X-ray still
showed a "compression fracture, L1 with narrowed L2-L1 disc space; no
significant neural for aminal compromise."
Respondent underwent several physical therapy sessions, and finally on
March 10, 2011 the company-designated physician assessed him with a
Grade 11 disability for slight rigidity or one-third loss of motion or lifting
power of trunk. Nonetheless, he was informed of the assessment only in May
2011, or more than 240 days since the accident.

The LA rendered judgment awarding him US$80,000.00 in disability benefits

as provided in the Dutch CBA, plus 10% as attorneys fees for the reason that
such an award cannot be made to depend on the company-designated
physicians disability assessment which was issued more than 120 days after
the accident, especially if despite treatment for more than 240 days the
respondent was still unable to return to his accustomed work. Such decision
was affirmed by the NLRC
The CA ruled that the seafarers right to disability benefits is determined not
solely by the companys assessment of his impediment but also by law,
contract and medical findings. Citing Articles 191 to 193 of the Labor Code,
Section 2, Rule X of the AREC, the POEA SEC, the parties CBA, and the
employment contract between the parties, the appellate concurred that the
respondent was entitled to total permanent disability benefits.
Issue: Whether respondent is entitled to disability benefits.
SC: Yes.
Under Section 32 of the POEA SEC, only those injuries or disabilities classified
as Grade 1 are considered total and permanent. In Kestrel Shipping Co., Inc.
v. Munar, the Court read the POEA SEC in harmony with the Labor Code and
the AREC, and explained that: (a) the 120 days provided under Section 20(B)
(3) of the POEA SEC is the period given to the employer to determine fitness
to work and when the seafarer is deemed to be in a state of total and
temporary disability; (b) the 120 days of total and temporary disability may
be extended up to a maximum of 240 days should the seafarer require
further medical treatment; and (c) a total and temporary disability becomes
permanent when so declared by the company-designated physician within
120 or 240 days, as the case may be, or upon the expiration of the said
periods without a declaration of either fitness to work or permanent disability
and the seafarer is still unable to resume his regular seafaring duties.
The respondent was repatriated on August 4, 2010 and immediately
underwent treatment and rehabilitation at the company-designated facility,
Marine Medical Services of the Metropolitan Medical Center. It lasted until
July 20, 2011, exceeding the 240 days allowed to declare him either fit to
work or permanently disabled. Although he was given a Grade 11 disability
rating on March 10, 2011, the assessment may be deemed tentative

because he continued his physical therapy sessions beyond 240 days. Yet,
despite his long treatment and rehabilitation, he was eventually unable to go
back to work as a seafarer, which fact entitled him under the Dutch CBA to
maximum disability benefits.

Topic: Illegal Dismissal

Ponente: Perlas-Bernabe, J.
Maersk-Filipinas Crewing, Inc., A.P. Moller Singapore PTE. Limited,
and Jesus Agbayani v. Toribio C. Avestruz, G.R. No. 207010, February
18, 2015
Facts: Petitioner Maersk-Filipinas Crewing, Inc. (Maersk), on behalf of its
foreign principal, petitioner A.P. Moller Singapore Pte. Ltd., hired Avestruz as
Chief Cook on board the vessel M/V Nedlloyd Drake for a period of six (6)
months, with a basic monthly salary of US$698.00. Avestruz boarded the
vessel on May 4, 2011.
In the course of the weekly inspection of the vessels galley, there was a
commotion that took place regarding the job of Avestruz. On that same day
he was dismissed.
Subsequently, he filed a complaint for illegal dismissal, payment for the
unexpired portion of his contract, damages, and attorneys fees against
Maersk, A.P. Moller, and Jesus Agbayani (Agbayani), an officer of Maersk. He
alleged that no investigation or hearing was conducted nor was he given the
chance to defend himself before he was dismissed, and that Captain
Woodward failed to observe the provisions under Section 17 of the Philippine
Overseas Employment Administration (POEA) Standard Employment Contract
(POEA-SEC) on disciplinary procedures.
In their defense, Maersk, A.P. Moller, and Agbayani (petitioners) claimed that
during his stint on the vessel, Avestruz failed to attend to his tasks,
specifically to maintain the cleanliness of the galley, which prompted Captain
Woodward to issue weekly reminders. Unfortunately, despite the reminders,
Avestruz still failed to perform his duties properly.
Issue:

Whether Avestruz was illegally dismissed.

SC: Yes.
It is well-settled that the burden of proving that the termination of an
employee was for a just or authorized cause lies with the employer. If the
employer fails to meet this burden, the conclusion would be that the
dismissal was unjustified and, therefore, illegal. In order to discharge this

burden, the employer must present substantial evidence, which is defined as

that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion, and not based on mere surmises or
conjectures. Apart from Captain Woodwards e-mails, no other evidence was
presented by the petitioners to support their claims. While rules of evidence
are not strictly observed in proceedings before administrative
bodies, petitioners should have offered additional proof to corroborate the
statements described therein.

Topic: Illegal dismissal

Ponente: Perlas- Bernabe, J.
Vicente C. Tatel v. JLFP Investigation Security Agency, Inc., Jose Luis
F. Pamintuan, and/or Paolo C. Turno, G.R. No. 206942, February 25,
2015
Facts: On March 14, 1998, respondent JLFP Investigation Security Agency,
Inc. (JLFP), a business engaged as a security agency, hired Tatel as one of its
security guards. Tatel alleged that he was last posted at BaggerWerken
Decloedt En Zoon (BaggerWerken) located in Manila. He was required to work
twelve (12) hours everyday from Mondays through Sundays and received
only Pl2,400.00 as monthly salary; he then filed a complaint against JLFP for
underpayment of salaries and wages, non-payment of other benefits and
13th month pay. On October 24, 2009, Tatel was placed on "floating
status"; thus, on May 4, 2010, or after the lapse of six (6) months therefrom,
without having been given any assignments, he filed another complaint for
illegal dismissal; JLFP denied that Tatel was dismissed and averred that they
removed the latter from his post at BaggerWerken on August 24, 2009
because of several infractions he committed while on duty. LA dismissed
Tatel's illegal dismissal complaint for lack of merit.
The LA did not give credence to Tatel' s allegation of dismissal in light of the
inconsistent statements he made under oath in the two (2) labor complaints
he had filed against the respondents. NLRC reversed and set aside the LA's
Decision and found Tatel to have been illegally dismissed. Consequently, it
directed respondents to reinstate him to his last position without loss of
seniority or diminution of salary and other benefits.
CA, however, reversed and set aside the NLRC's February 9, 2011 Decision
and reinstated the LA's September 20, 2010 Decision dismissing the illegal
dismissal complaint filed by Tatel. Finding grave abuse of discretion on the
part of the NLRC in rendering its assailed Decision, the CA instead concurred
with the stance of the LA that Tatel' s inconsistent statements cannot be
given weight vis-a-vis the evidence presented by the respondents. In this
regard, the CA declared that if Tatel could not be truthful about the most
basic information or explain such inconsistencies, the same may hold true for
his claim for illegal dismissal.

Issue: Whether the CA erred in ruling that the NLRC gravely abused its
discretion in finding Tatel to have been illegally dismissed.
SC: Yes.
Tatel was constructively, not actually, dismissed after having been placed on
"floating status" for more than six ( 6) months, reckoned from October 24,
2009, the day following his removal from his last assignment with IPVG on
October 23, 2009, and not on August 24, 2009 as erroneously held by the
NLRC. Placing an employee on temporary "off-detail" is not equivalent to
dismissal provided that such temporary inactivity should continue only for a
period of six (6) months. In security agency parlance, being placed "offdetail" or on "floating status" means "waiting to be posted." Constructive
dismissal exists when an act of clear discrimination, insensibility, or disdain,
on the part of the employer has become so unbearable as to leave an
employee with no choice but to forego continued employment, or when there
is cessation of work because continued employment is rendered impossible,
unreasonable, or unlikely, as an offer involving a demotion in rank and a
diminution in pay. In this case, respondents themselves claimed that after
having removed Tatel from his post at BaggerWerken on August 24, 2009
due to several infractions committed thereat, they subsequently reassigned
him to SKI from September 16, 2009 to October 12, 2009 and then to IPVG
from October 21 to 23, 2009. Thereafter, and until Tatel filed the instant
complaint for illegal dismissal six (6) months later, or on May 4, 2010, he was
not given any other postings or assignments. While it may be true that
respondents summoned him back to work through the November 26, 2009
Memorandum, which Tatel acknowledged to have received on December 11,
2009, records are bereft of evidence to show that he was given another
detail or assignment. As the "off-detail" period had already lasted for more
than six ( 6) months, Tatel is therefore deemed to have been constructively
dismissed.

Topic: Retrenchment
Ponente: Peralta, J.
Cabaobas v. Pepsi Cola Products,Philippines, Inc., G.R. No. 176908,
March 25, 2015
Facts: Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic
corporation engaged in the manufacturing, bottling and distribution of soft
drink products, which operates plants all over the country, one of which is
the
Tanauan
Plant
in
Tanauan,
Leyte.
In 1999, PCPPIs Tanauan Plant allegedly incurred business losses in the total
amount of P29,167,390.00. To avert further losses, PCPPI implemented a
company-wide retrenchment program denominated as Corporate-wide
Rightsizing Program (CRP) from 1999 to 2000, and retrenched forty-seven
(47)
employees
of
its
Tanauan
Plant
on
July
31,
1999.
On September 24, 1999, twenty-seven (27) of said employees, led by Anecito
Molon, filed complaints for illegal dismissal before the NLRC which were
docketed as NLRC RAB Cases Nos. VIII-9-0432-99 to 9-0458-99, entitled
Molon,
et
al.
v.
Pepsi-Cola
Products,
Philippines,
Inc.
On January 15, 2000, petitioners, who are permanent and regular employees
of the Tanauan Plant, received their respective letters, informing them of the
cessation of their employment on February 15, 2000, pursuant to PCPPI's
CRP. Petitioners then filed their respective complaints for illegal dismissal
before the National Labor Relations Commission Regional Arbitration Branch
No. VIII in Tacloban City. Said complaints were docketed as NLRC RAB VIII-030246-00 to 03-0259-00, entitled Kempis, et al. v. Pepsi-Cola Products,
Philippines,
Inc.
In their Consolidated Position Paper, petitioners alleged that PCPPI was not
facing serious financial losses because after their termination, it regularized
four (4) employees and hired replacements for the forty-seven (47)

previously dismissed employees. They also alleged that PCPPI's CRP was just
designed to prevent their union, Leyte Pepsi-Cola Employees UnionAssociated Labor Union (LEPCEU-ALU), from becoming the certified
bargaining
agent
of
PCPPI's
rank-and-file
employees.
In its Position Paper, PCPPI countered that petitioners were dismissed
pursuant to its CRP to save the company from total bankruptcy and collapse;
thus, it sent notices of termination to them and to the Department of Labor
and Employment. In support of its argument that its CRP is a valid exercise of
management prerogative, PCPPI submitted audited financial statements
showing that it suffered financial reverses in 1998 in the total amount of
P27,000,000.00, of which was allegedly incurred in the Tanauan Plant in
1999.
On December 15, 2000, Labor Arbiter Vito C. Bose rendered a Decision
finding the dismissal of petitioners as illegal and ordering PCPPI to reinstate
them to their former positions without loss of seniority rights and to pay
them full backwages and other benefits reckoned from February 16, 2000
until they are actually reinstated, which as of date amounted to P947,558.32
inclusive
of
the
10%
attorney's
fees.
PCPPI appealed from the Decision of the Labor Arbiter to the Fourth Division
of the NLRC of Tacloban City. Meanwhile, the NLRC consolidated all other
cases
involving
PCPPI
and
its
dismissed
employees.
On September 11, 2002, the NLRC rendered a Consolidated Decision which
provides among others the nullification of the NLRC Consolidated Case No. V000071-01 (RAB VIII cases nos. 3-0246-2000 to 3-0258-2000; Kempis, et al.
vs. PCPPI), the Executive Labor Arbiter's Decisions dated December 15, 2000
and the dismissal of the complaints for illegal dismissal, and in its stead
DECLARING the retrenchment program of Pepsi Cola Products Phils., Inc.
pursuant to its CRP, a valid exercise of management prerogatives; further
ordering PCPPI to pay the complainants their package separation benefits of
1 & months salary for every year of service, plus commutation of all
vacation and sick leave credits.
Petitioners and PCPPI filed their respective motions for reconsideration of the
consolidated decision, which the NLRC denied in a Resolution dated
September
15,
2003.
Dissatisfied,
petitioners
filed
a
petition
for certiorari with the CA. On July 31, 2006, the CA rendered a Decision,
denying their petition and affirming the NLRC Decision dated September 11,
2002.
On February 21, 2007, the CA 18th Division issued a Resolution denying
petitioners'
motion
for
reconsideration.

In contrast, when Molon, et al. earlier questioned the consolidated decision

of the NLRC via a petition for certiorari the CA rendered on March 31, 2006 a
Decision granting their petition and reversing the same NLRC Decision dated
September 11, 2002. The decision provides that the strike conducted on July
23, 1999 as legal, it falling under the exception of Article 263, Labor Code;
that the corporate rightsizing program or retrenchment was effected by
PEPSI-COLA to be contrary to the prescribed rules and procedure; and that
the petitioners were illegally terminated.
Hence, this petition.
Issue: Is the dismissal of the petitioners pursuant to PCPPIs retrenchment
program valid?
Ruling: YES.
PCPPI had validly implemented its retrenchment program. Essentially, the
prerogative of an employer to retrench its employees must be
exercised only as a last resort, considering that it will lead to the loss of
the employees' livelihood. It is justified only when all other less drastic
means have been tried and found insufficient or inadequate. Corollary
thereto, the employer must prove the requirements for a valid
retrenchment by clear and convincing evidence; otherwise, said
ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning losses or reverses in their business
ventures in order to ease out employees. These requirements are:
1 That retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de
minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in
good faith by the employer;
2 That the employer served written notice both to the employees
and to the Department of Labor and Employment at least one
month prior to the intended date of retrenchment;
3 That the employer pays the retrenched employees separation pay
equivalent to one (1) month pay or at least one-half () month pay
for every year of service, whichever is higher;
4 That the employer exercises its prerogative to retrench employees
in good faith for the advancement of its interest and not to defeat
or circumvent the employees right to security of tenure; and
5 That the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the

employees, such as status, efficiency, seniority, physical fitness,

age, and financial hardship for certain workers.
In due regard of these requisites, the Court observes that Pepsi had validly
implemented its retrenchment program. Records disclose that both the CA
and the NLRC had already determined that Pepsi complied with the
requirements of substantial loss and due notice to both the DOLE and the
workers to be retrenched. Records also show that the respondents had
already been paid the requisite separation pay as evidenced by the
September 1999 quitclaims signed by them. Effectively, the said quitclaims
serve inter alia the purpose of acknowledging receipt of their respective
separation pays. Oppositely, respondents never questioned that separation
pay arising from their retrenchment was indeed paid by Pepsi to them. As
such, the foregoing fact is now deemed conclusive. Contrary to the CAs
observation that Pepsi had singled out members of the LEPCEU-ALU in
implementing its retrenchment program, records reveal that the members of
the company union (i.e., LEPCEU-UOEF#49) were likewise among those
retrenched. Also, as aptly pointed out by the NLRC, Pepsis Corporate
Rightsizing Program was a company-wide program which had already been
implemented in its other plants in Bacolod, Iloilo, Davao, General Santos and
Zamboanga. Consequently, given the general applicability of its
retrenchment program, Pepsi could not have intended to decimate LEPCEUALUs membership, much less impinge upon its right to self-organization,
when
it
employed
the
same.
Moreover, it must be underscored that Pepsis management exerted
conscious efforts to incorporate employee participation during the
implementation of its retrenchment program. Records indicate that Pepsi had
initiated sit-downs with its employees to review the criteria on which the
selection of who to be retrenched would be based.
Lastly, the allegation that the retrenchment program was a mere subterfuge
to dismiss the respondents considering Pepsis subsequent hiring of
replacement workers cannot be given credence for lack of sufficient evidence
to
support
the
same.
On the final requirement of fair and reasonable criteria for determining who
would or would not be dismissed, records indicate that Pepsi did proceed to
implement its rightsizing program based on fair and reasonable criteria
recommended
by
the
company
supervisors.
Therefore, as all the requisites for a valid retrenchment are extant,
the Court finds Pepsis rightsizing program and the consequent
dismissal of respondents in accord with law.
In view of the Court's ruling in Pepsi-Cola Products Philippines, Inc.

v. Molon, PCPPI contends that the petition for review

on certiorari should be denied and the CA decision should be
affirmed under the principle of stare decisis.
The doctrine of stare decisis embodies the legal maxim that a principle or
rule of law which has been established by the decision of a court of
controlling jurisdiction will be followed in other cases involving a similar
situation. It is founded on the necessity for securing certainty and stability in
the law and does not require identity of or privity of parties.
Guided by the jurisprudence on stare decisis, the remaining
question is whether the factual circumstances of this present case
are substantially the same as the Pepsi-Cola Products Philippines,
Inc.
v.
Molon
case.
The

Court

rules

in

the

affirmative.

There is no dispute that the issues, subject matters and causes of action
between the parties in Pepsi-Cola Products Philippines, Inc. v. Molon and the
present case are identical, namely, the validity of PCPPI's retrenchment
program, and the legality of its employees' termination. There is also
substantial identity of parties because there is a community of interest
between the parties in the first case and the parties in the second case, even
if the latter was not impleaded in the first case.
The respondents in Pepsi-Cola Products Philippines, Inc. v. Molon are
petitioners' former co-employees and co-union members of LEPCEU-ALU who
were also terminated pursuant to the PCPPI's retrenchment program. The
only difference between the two cases is the date of the employees'
termination, i.e., Molon, et al. belong to the first batch of employees
retrenched on July 31, 1999, while petitioners belong to the second
batch retrenched on February 15, 2000. That the validity of the same
PCPPI retrenchment program had already been passed upon and, thereafter,
sustained in the related case of Pepsi-Cola Products Philippines, Inc. v.
Molon, albeit involving different parties, impels the Court to accord a similar
disposition and uphold the legality of same program.
However, abandonment of the ruling in Pepsi-Cola Products Philippines, Inc.
v. Molon on the same issue of the validity of PCPPI's retrenchment program
must be based only on strong and compelling reasons. After a careful review
of the records, the Court finds no such reasons were shown to obtain in this
case.