\ G.R. No.

182018 October 10, 2012

NORKIS TRADING CORPORATION, Petitioner, vs. JOAQUIN BUENA VISTA, HENRY FABROA, RICARDO CAPE, BERTULDO TULOD, WILLY DONDOY ANO and GLEN VILLARASA, Respondents. DECISION REYES, J.: Before us is a Petition for Review on Certiorari filed by petitioner Norkis Trading Corporation (Norkis Trading) to assail the Decision1 dated May 7, 2007 and Resolution2 dated March 4, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 84041. The Facts The petition stems from an amended complaint for illegal suspension, illegal dismissal, unfair labor practice and other monetary claims filed with the National Labor Relations Commission (NLRC) by herein respondents Joaquin Buenavista (Buenavista), Henry Fabroa (Fabroa), Ricardo Cape (Cape), Bertuldo Tulod (Tulod), Willy Dondoyano (Dondoyano) and Glen Villariasa (Villariasa) against Norkis Trading and Panaghiusa sa Kauswagan Multi-Purpose Cooperative (PASAKA). The complaint was docketed as NLRC-RAB-VII Case No. 09-1402-99. During the proceedings a quo, herein respondents submitted the following averments: The respondents were hired by Norkis Trading, a domestic corporation engaged in the business of manufacturing and marketing of Yamaha motorcycles and multi-purpose vehicles, on separate dates and for various positions, particularly: Name Joaquin Buenavista Henry Fabroa Ricardo Cape Bertuldo Tulod Willy Dondoyano Glen Villariasa Date of Hiring March 14, 1994 January 5, 1993 January 1993 November 13, 1994 January 1993 February 1993 Position Operator Welder Welder/Operator Welder/Assistant Operator Welder Welder3

Although they worked for Norkis Trading as skilled workers assigned in the operation of industrial and welding machines owned and used by Norkis Trading for its business, they were not treated as regular employees by Norkis Trading. Instead, they were regarded by Norkis Trading as members of PASAKA, a cooperative organized under the Cooperative Code of the Philippines, and which was deemed an independent contractor that merely deployed the respondents to render services for Norkis Trading.4 The respondents nonetheless believed that they were regular employees of Norkis Trading, citing in their Position Paper5 the following circumstances that allegedly characterized their employment with the company: The work of the operators involves operating industrial machines, such as, press machine, hydraulic machine, and spotweld machine. On the other hand, the welders used the welding machines. The machines used by complainants herein respondents in their work are all owned by respondent Norkis Trading herein petitioner and these are installed and located in the working area of the complainants inside the companys premises. The complainants produced steel crates which are exported directly by respondent Norkis Trading to Japan. These crates are used as containers of motorcycle machines and are shipped from Japan back to respondent Norkis Trading. The materials and supplies used by complainants in their work are supplied by respondent Norkis Trading through Benjamin Gulbin, the companys Stockman, upon the request of Tirso Maslog, a Leadman also employed by respondent Norkis Trading. Respondent Norkis Trading gave instructions and supervised the work of complainants through Edwin Ponce and Kiven Alilin, who are both Leadmen, and Rico Cabanas, who is the Production Supervisor, of the former. The salaries of complainants are paid inside the premises of respondent Norkis Trading by Dalia Rojo and Belen Rubio, who are also employees of the said company assigned at the accounting office. Despite having served respondent Norkis Trading for many years and performing the same functions as regular employees, complainants were not accorded regular status. It was made to appear that complainants are not employees of said company but that of respondent PASAKA.6 Against the foregoing scenario, the respondents, together with several other complainants,7 filed on June 9, 1999 with the Department of Labor and Employment (DOLE) a complaint against Norkis Trading and PASAKA for labor-only contracting and non-payment of minimum wage and overtime pay. The complaint was docketed as LSED Case No. RO700-9906-CI-CS-168. The filing of the complaint for labor-only contracting allegedly led to the suspension of the respondents membership with PASAKA. On July 22, 1999, they were served by PASAKA with memoranda charging them with a violation of the rule against commission of acts injurious or prejudicial to the interest or welfare of the cooperative. The memoranda cited that the respondents filing of a case against Norkis Trading had greatly prejudiced the interest and welfare of the cooperative.8 In their answer9 to the memoranda, the respondents explained that

they merely wanted to be recognized as regular employees of Norkis Trading. The case records include copies of the memoranda sent to respondents Buenavista, Fabroa and Dondoyano.10 On August 16, 1999, the respondents received another set of memoranda from PASAKA, now charging them with the following violations of the cooperatives rules and regulations: (1) serious misconduct or willful disobedience of superiors instructions or orders; (2) gross and habitual neglect of duties by abandoning work without permission; (3) absences without filing leave of absence; and (4) wasting time or loitering on companys time or leaving their post temporarily without permission during office hours.11 Copies of the memoranda12 sent to Fabroa and Cape form part of the records. On August 26, 1999, PASAKA informed the respondents of the cooperatives decision to suspend them for fifteen (15) working days, to be effective from September 1 to 21, 1999, for violation of PASAKA rules. The records include copies of the memoranda13 sent to Fabroa and Cape. The suspension prompted the respondents to file with the NLRC the complaint for illegal suspension against Norkis Trading and PASAKA. The 15-day suspension of the respondents was extended for another period of 15 days, from September 22, 1999 to October 12, 1999.14 Copies of PASAKAs separate letters15 to Buenavista, Fabroa, Cape and Dondoyano on the cooperatives decision to extend the suspension form part of the records. On October 13, 1999, the respondents were to report back to work but during the hearing in their NLRC case, they were informed by PASAKA that they would be transferred to Norkis Tradings sister company, Porta Coeli Industrial Corporation (Porta Coeli), as washers of Multicab vehicles. The respondents opposed the transfer as it would allegedly result in a change of employers, from Norkis Trading to Porta Coeli. The respondents also believed that the transfer would result in a demotion since from being skilled workers in Norkis Trading, they would be reduced to being utility workers.These circumstances made the respondents amend their complaint for illegal suspension, to include the charges of unfair labor practice, illegal dismissal, damages and attorneys fees. For their part, both Norkis Trading and PASAKA claimed that the respondents were not employees of Norkis Trading. They insisted that the respondents were members of PASAKA, which served as an independent contractor that merely supplied services to Norkis International Co., Inc. (Norkis International) pursuant to a job contract16 which PASAKA and Norkis International executed on January 14, 1999 for 121,500 pieces of F/GF-Series Reinforcement Production. After PASAKA received reports from its coordinator at Norkis International of the respondents low efficiency and violation of the cooperatives rules, and after giving said respondents the chance to present their side, a penalty of suspension was imposed upon them by the cooperative. The illegal suspension being complained of was then not linked to the respondents employment, but to their membership with PASAKA.

Norkis Trading stressed that the respondents were deployed by PASAKA to Norkis International, a company that is entirely separate and distinct from Norkis Trading. The Ruling of the Labor Arbiter On June 1, 2000, Labor Arbiter Jose G. Gutierrez (LA Gutierrez) dismissed the complaint via a Decision17 with decretal portion that reads: WHEREFORE, the foregoing premises considered, judgment is hereby rendered DISMISSING this case for lack of merit. Complainants herein respondents are however directed to report back to respondent PASAKA for work assignment within ten (10) days from receipt of this decision. Likewise, respondent PASAKA is directed to accept the complainants back for work. SO ORDERED.18 LA Gutierrez sustained the suspension imposed by PASAKA upon the respondents, taking into account the offenses that the said respondents were found to have committed. He likewise rejected the respondents claim of illegal dismissal. He ruled that to begin with, the respondents had failed to prove with convincing evidence that they were dismissed from employment. The Decision reads in part: Before the legality or illegality of a dismissal can be put in issue, the fact of dismissal itself must, first, be clearly established. In the instant case, We find that complainants herein respondents failed to prove with convincing evidence the fact that they were dismissed from employment. This observation is derived from their very own allegation in their position paper. The first paragraph of page 5 of the complainants position paper clearly shows that they were not yet dismissed from their employment. The said paragraph states: "Convinced that the company is bent on terminating their services, complainants amended their complaint to include the charges of unfair labor practice, illegal dismissal, damages and attorneys fees." The truth, as the record would show is that, complainants were only offered another post in order to save the contractual relations between their cooperative and Norkis Trading as the latter finds the complainants performance not satisfactory. The complainants took this offer as a demotion amounting to dismissal. We do not however, agree as their transfer to another post was only the best option available in order to save the contractual relations between their cooperative (PASAKA) and Norkis Trading.19 The allegation of unfair labor practice and claim for monetary awards were likewise rejected by the LA. Feeling aggrieved, the respondents appealed from the decision of the LA to the NLRC. In the meantime, DOLE Regional Director Melencio Q. Balanag (Regional Director Balanag) issued on August 22, 2000 his Order20 in LSED Case No. RO700-9906-CI-CS-168. Regional Director Balanag ruled that PASAKA was engaged in labor-only contracting.21 The other findings in his Order that are significant to this case are as follows: (1) PASAKA had failed to

prove that it had substantial capital;22 (2) the machineries, equipment and supplies used by the respondents in the performance of their duties were all owned by Norkis Trading and not by PASAKA;23 (3) the respondents membership with PASAKA as a cooperative was inconsequential to their employment with Norkis Trading;24 (4) Norkis Trading and PASAKA failed to prove that their sub-contracting arrangements were covered by any of the conditions set forth in Section 6 of Department Order No. 10, Series of 1997;25 (5) Norkis Trading and PASAKA failed to dispute the respondents claim that their work was supervised by leadmen and production supervisors of Norkis Trading;26 and (6) Norkis Trading and PASAKA failed to dispute the respondents allegation that their salaries were paid by employees of Norkis Trading.27 Norkis Trading and PASAKA were then declared solidarily liable for the monetary claims of therein complainants, as provided in the dispositive portion of Regional Director Balanags Order, to wit: WHEREFORE, respondent PANAGHIUSA SA KAUSWAGAN MULTIPURPOSE COOPERATIVE and/or NORKIS TRADING CORPORATION are hereby ORDERED to pay solidarily the amount of THREE HUNDRED THIRTEEN THOUSAND THREE HUNDRED FIFTY-FOUR AND 50/100 ([P]313,354.50) PESOS, Philippine Currency, within ten (10) calendar days from receipt hereof to herein complainants x x x: xxxx SO ORDERED.28 The respondents informed the NLRC of Regional Director Balanags Order by filing a Manifestation29 dated September 11, 2000, attaching thereto a copy of the Order dated August 22, 2000. It bears mentioning that Regional Director Balanags Order was later affirmed by then DOLE Secretary Patricia Sto. Tomas (Sec. Sto. Tomas) in her Orders dated February 7, 2002 and October 14, 2002.30 When the rulings of the DOLE Secretary were appealed before the CA via the petitions for certiorari docketed as CA-G.R. SP No. 73880 and CA-G.R. SP No. 74619, the CA affirmed the Orders of the DOLE Secretary.31 A motion for reconsideration of the CA decision was denied in a Resolution32 dated October 9, 2007. The two petitions docketed as G.R. Nos. 180078-79, which were brought before this Court to question the CAs rulings, were later denied with finality by this Court in the Resolutions dated December 5, 200733 and April 14, 2008.34 The Ruling of the NLRC On April 18, 2002, the NLRC rendered its Decision35 affirming with modification the decision of LA Gutierrez. It held that the respondents were not illegally suspended from work, as it was their membership in the cooperative that was suspended after they were found to have violated the cooperatives rules and regulations. It also declared that the respondents dismissal was not established by substantial evidence. The NLRC however declared that the LA had no jurisdiction over the dispute because the respondents were not employees, but members of PASAKA. The suspension of the respondents as members of PASAKA for alleged violation of the cooperatives

rules and regulations was not a labor dispute, but an intra-corporate dispute.36 The complaint was also declared to have been filed against the wrong party because the respondents were found by the NLRC to have been deployed by PASAKA to Norkis International pursuant to a job contract. The dispositive portion of the NLRCs Decision reads: WHEREFORE, the Decision dated June 1, 2000 of the Labor Arbiter is AFFIRMED, with respect to the DISMISSAL of the complainants herein respondents for lack of merit [sic], but deleting the portion directing the complainants to report back to respondent PASAKA for work assignment and to accept them back to work being an internal concern of PASAKA. SO ORDERED.37 The respondents motion for reconsideration was denied by the NLRC in a Resolution38 dated December 18, 2003. Undaunted, the respondents questioned the NLRCs rulings before the CA via a petition for certiorari. The Ruling of the CA Finding merit in the petition for certiorari, the CA rendered its decision reversing and setting aside the decision and resolution of the NLRC. The dispositive portion of its Decision dated May 7, 2007 reads: WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the NLRC, are hereby REVERSED and SET ASIDE, and a new judgment is hereby rendered ordering the private respondents to: (1) Reinstate petitioners to their former positions without loss of seniority rights, and to pay full backwages inclusive of allowances and their other benefits or their monetary equivalent computed from the time of illegal dismissal to the time of actual reinstatement; and (2) Alternatively, if reinstatement is not possible, to pay full backwages inclusive of other benefits or their monetary equivalent from the time of illegal dismissal until the same is paid in full, and pay petitioners separation pay equivalent to one months salary for every year of service. SO ORDERED.39 The CA rejected the argument of PASAKA and Norkis Trading that by virtue of a job contract executed on January 14, 1999, the respondents were deployed to Norkis International and not to Norkis Trading. The CA held: We are not convinced. Private respondents among them, herein petitioner own evidence belie their claim.

In its Comment, NORKIS TRADING attached the Payroll Registers for PANAGHIUSA SA KAUSWAGAN (PASAKA) MULTIPURPOSE COOPERATIVE-NICI Tin Plate covering the payroll periods "12/28/98-01/07/99" and "01/08/99-01/14/99". Included among the payees therein were the petitioners herein respondents. x x x Why were petitioners included in said payrolls for said payroll periods when the supposed Contract with NORKIS INTERNATIONAL was not yet executed? Apparently, private respondents slipped. Thus, we hold that the much ballyhooed January 14, 1999 Contract between PASAKA and NORKIS INTERNATIONAL, is but a mere afterthought, a concoction designed by private respondents to evade their obligations to petitioners.40 (Citations omitted and emphasis supplied) The CA also considered Regional Director Balanags finding in LSED Case No. RO700-9906CI-CS-168 that PASAKA was engaged in labor-only contracting. In ruling that the respondents were illegally dismissed, the CA held that Norkis Tradings refusal to accept the respondents back to their former positions, offering them instead to accept a new assignment as washers of vehicles in its sister company, was a demotion that amounted to a constructive dismissal. Norkis Tradings motion for reconsideration was denied by the CA in its Resolution41 dated March 4, 2008. Hence, this petition. The Present Petition The petition is founded on the following grounds: 1) THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT MADE ITS OWN FACTUAL FINDINGS AND DISREGARDED THE UNIFORM AND CONSISTENT FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC, WHICH MUST BE ACCORDED GREAT WEIGHT, RESPECT AND EVEN FINALITY. IN SO DOING, THE COURT OF APPEALS EXCEEDED ITS AUTHORITY ON CERTIORARI UNDER RULE 65 OF THE RULES OF COURT BECAUSE SUCH FACTUAL FINDINGS WERE BASED ON SPECULATIONS AND NOT ON OTHER EVIDENCES [SIC] ON RECORD. 2) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN ALLEGEDLY IGNORING THE RULING OF THE REGIONAL DIRECTOR. 3) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT PETITIONER IS THE EMPLOYER OF RESPONDENTS. 4) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT THE RESPONDENTS WERE CONSTRUCTIVELY DISMISSED CONTRARY TO THE FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC AND WITHOUT SHOWING ANY EVIDENCE TO OVERTURN SUCH FINDING OF FACT.42

The respondents oppose these grounds in their Comment.43 In support of their arguments, the respondents submit with their Comment copies of the CAs Decision44 and Resolution45 in CAG.R. SP No. 73880 and CA-G.R. SP No. 74619, and this Courts Resolutions46 in G.R. Nos. 180078-79. This Courts Ruling The Court resolves to deny the petition. Factual findings of labor officials may be examined by the courts when there is a showing that they were arrived at arbitrarily or in disregard of evidence on record. As regards the first ground, the petitioner questions the CAs reversal of LA Gutierrezs and the NLRCs rulings, and argues that said rulings should have been accorded great weight and finality by the appellate court as these were allegedly supported by substantial evidence. On this matter, the settled rule is that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion. We emphasize, nonetheless, that these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. The CA can then grant a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, has made a factual finding that is not supported by substantial evidence. It is within the jurisdiction of the CA, whose jurisdiction over labor cases has been expanded to review the findings of the NLRC.47 We have thus explained in Cocomangas Hotel Beach Resort v. Visca48 that the CA can take cognizance of a petition for certiorari if it finds that the NLRC committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence which are material to or decisive of the controversy. The CA cannot make this determination without looking into the evidence presented by the parties. The appellate court needs to evaluate the materiality or significance of the evidence, which are alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record. This case falls within the exception to the general rule that findings of fact of labor officials are to be accorded respect and finality on appeal. As our discussions in the other grounds that are raised in this petition will demonstrate, the CA has correctly held that the NLRC has disregarded facts and evidence that are material to the outcome of the respondents case. No error can be ascribed to the appellate court for making its own assessment of the facts that are significant to the case to determine the presence or absence of grave abuse of discretion on the part of the NLRC, even if the CAs findings turn out to be different from the factual findings of both the LA and NLRC.

Norkis Trading is the principal employer of the respondents, considering that PASAKA is a mere labor-only contractor. The second and third grounds, being interrelated as they both pertain to the CAs finding that an employer-employee relationship existed between the petitioner and the respondents, shall be discussed jointly. In its decision, the CA cited the findings of the Regional Director in LSED Case No. RO700-9906-CI-CS-168 and declared that the NLRC committed a grave abuse of discretion when it ignored said findings. The issue of whether or not the respondents shall be regarded as employees of the petitioner hinges mainly on the question of whether or not PASAKA is a labor-only contractor. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In laboronly contracting, the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (b) the employees recruited, supplied or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal. These differentiate it from permissible or legitimate job contracting or subcontracting, which refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion 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. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) the contractor carries on a distinct and independent business and partakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal and the contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.49 We emphasize that the petitioners arguments against the respondents claim that PASAKA is a labor-only contractor, which is thus to be regarded as a mere agent of Norkis Trading for which the respondents rendered service, are already mooted by the finality of this Courts Resolutions dated December 5, 2007 and April 14, 2008 in G.R. Nos. 180078-79, which stems from the CAs and the DOLE Secretarys review of the DOLE Regional Directors Order dated August 22, 2000 in LSED Case No. RO700-9906-CI-CS-168. To recapitulate, Regional Director Balanag issued on August 22, 2000 its Order50 in LSED Case No. RO700-9906-CI-CS-168 and declared PASAKA as a mere labor-only contractor, and Norkis Trading as the true employer of herein respondents. He explained that PASAKA failed to prove during the conduct of a summary investigation that the cooperative had substantial capital or investment sufficient to enable it to perform the functions of an independent contractor. The

respondents claim that the machinery, equipment and supplies they used to perform their duties were owned by Norkis Trading, and not by PASAKA, was undisputed. While PASAKA reflected in its Statement of Financial Condition for the year 1996 property and equipment net of accumulated depreciation at P 344,273.02, there was no showing that the properties covered thereby were actually and directly used in the conduct of PASAKAs business.51 The DOLE Regional Director explained: Herein respondents among them, herein petitioner failed to prove that their sub-contracting arrangements fall under any of the conditions set forth in Sec. 6 of D.O. # 10 S. 1997 to qualify as permissible contracting or subcontracting as provided for as follows: Sec. 6. Permissible contracting or subcontracting. Subject to conditions set forth in Sec. 4 (d) and (e) and Section 5 hereof, the principal may engage the services of a contractor or subcontractor for the performance of any of the following: a.) Works or services temporarily or occasionally needed to meet abnormal increase in the demand of products or services... b) Works or services temporarily or occasionally needed by the principal for undertakings requiring expert or highly technical personnel to improve the management or operations of an enterprise; c) Services temporarily needed for the introduction or promotion of new products...; d) Works or services not directly related or not integral to main business or operation of the principal including casual work, janitorial, security, landscaping and messengerial services and work not related to manufacturing processes in manufacturing establishments. e) Services involving the public display of manufacturers products...; f) Specialized works involving the use of some particular, unusual or peculiar skills... and g) Unless a reliever system is in place among the regular workforce, substitute services for absent regular employees... It is therefore evident that herein respondents are engaged in "labor-only" contracting as defined in Art. 106 of the Labor Code. Furthermore, such contracting/sub-contracting arrangement not only falls under labor-only contracting but also fails to qualify as legitimate subcontracting as defined under Sec. 4 par. e of D.O. #10 S. 1997, to wit: "Sec. 4. Definition of terms. d) Subject to the provisions of Sections 6, 7 and 8 of this Rule, contracting or subcontracting shall be legitimate if the following circumstances concur:

i) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except to the results thereof; ii) The contractor or subcontractor has substantial capital or investment; and iii) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational and safety and health standards, free exercise of the right to self-organization, security of tenure and social and welfare benefits."52 (Emphasis supplied) Together with his finding that PASAKA evidently lacked substantial capital or investment required from legitimate job contractors, Regional Director Balanag ruled that the cooperative failed to dispute the respondents allegation that officers of Norkis Trading supervised their work and paid their salaries. In conclusion, PASAKA and Norkis Trading were declared solidarily liable for the monetary awards made in favor of therein claimants-employees, which included herein respondents. A motion for reconsideration of the Order was denied by the Regional Director. Upon appeal, then DOLE Sec. Sto. Tomas affirmed the rulings of Regional Director Balanag. Both Norkis Trading and PASAKA filed their separate appeals from the orders of the DOLE Secretary to the CA via the petitions for certiorari docketed as CA-G.R. SP Nos. 73880 and 74619, but said petitions were dismissed for lack of merit by the CA in its Decision dated May 7, 2007 and Resolution dated October 9, 2007. The CA held: This Court agrees with the finding of the DOLE Regional Director, as affirmed by the Secretary of Labor in her assailed Order, that petitioners among them, herein petitioner were engaged in labor-only contracting. First. PASAKA failed to prove that it has substantial capitalization or investment in the form of tools, equipment, machineries, work premises, among others, to qualify as an independent contractor. PASAKAs claim that it has machineries and equipment worth P 344,273.02 as reflected in its Financial Statements and Supplementary Schedules is belied by private respondents among them, herein respondents evidence which consisted of pictures showing machineries and equipment which were owned by and located at the premises of petitioner NORKIS TRADING (as earlier noted, some of the pictures showed some of the private respondents operating said machines). Indeed it makes one wonder why, if PASAKA indeed had such machineries and equipment worth P 344,273.02, private respondents were using machineries and equipment owned by and located at the premises of NORKIS TRADING. Even granting that indeed PASAKA had machineries and equipment worth P 344,273.02, it was not shown that said machineries and equipment were actually used in the performance or completion of the job, work, or service that it was contracted to render under its supposed job contract.

xxxx Second. PASAKA likewise did not carry out an independent business from NORKIS TRADING. While PASAKA was issued its Certificate of Registration on July 18, 1991, all it could show to prove that it carried out an independent business as a job contractor were the Project Contract dated January 2, 1998 with NORKIS TRADING, and the Project Contract dated December 18, 1998 with NORKIS INTERNATIONAL. However, as earlier discussed, the Project Contract dated December 18, 1998 with NORKIS INTERNATIONAL is nothing more than an afterthought by the petitioners to confuse its workers and defeat their rightful claims. The same can be said of the Project Contract with WICKER and VINE, INC., considering that it was executed only on February 1, 2000. Verily, said contract was submitted only to strengthen PASAKAs claim that it is a legitimate job contractor. Third. Private respondents performed activities directly related to the principal business of NORKIS TRADING. They worked as welders and machine operators engaged in the production of steel crates which were sent to Japan for use as containers of motorcycles that are then sent back to NORKIS TRADING. Private respondents functions therefore are directly related and vital to NORKIS TRADINGs business of manufacturing of Yamaha motorcycles. All the foregoing considerations affirm by more than substantial evidence that NORKIS TRADING and PASAKA engaged in labor-only contracting.53 (Citations omitted and emphasis supplied) When the case was brought before this Court via the petitions for review on certiorari docketed as G.R. Nos. 180078-79, we resolved to issue on December 5, 2007 our Resolution dismissing the appeal for, among other grounds, the failure of Norkis Trading to sufficiently show any reversible error in the the CA decision. In our Resolution dated April 14, 2008, we denied with finality Norkis Tradings motion for reconsideration on the ground that no substantial argument and compelling reason was adduced to warrant a reconsideration of our dismissal of the petition. This Courts resolutions, affirming the findings of the CA, had then become final and executory. Applying the doctrine of res judicata, all matters that have been fully resolved with finality by this Courts dismissal of the appeal that stemmed from Regional Director Balanags Order dated August 22, 2000 in LSED Case No. RO700-9906-CI-CS-168 are already conclusive between the parties. Res judicata is defined as a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment. Under this doctrine, an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. To state simply, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and matters determined in the former suit.54

Res judicata has two aspects: bar by prior judgment and conclusiveness of judgment as provided under Section 47(b) and (c), Rule 39, respectively, of the Rules of Court.55 Under the doctrine of conclusiveness of judgment, facts and issues actually and directly resolved in a former suit cannot be raised in any future case between the same parties, even if the latter suit may involve a different cause of action.56 Clearly, res judicata in the concept of conclusiveness of judgment has set in. In the proceedings before the Regional Director and the LA, there were identity of parties and identity of issues, although the causes of action in the two actions were different. First, herein respondents on the one hand, and Norkis Trading on the other hand, were all parties in the two cases, being therein complainants and respondent, respectively. As to the second requisite, the issue of whether PASAKA was a labor-only contractor which would make Norkis Trading the true employer of the respondents was the main issue in the two cases, especially since Norkis Trading had been arguing in both proceedings that it could not be regarded as the herein respondents employer, harping on the defense that PASAKA was a legitimate job contractor. Similarly, in Dole Philippines, Inc. v. Esteva,57 we held that the finding of the DOLE Regional Director, which had been affirmed by the Undersecretary of Labor, by authority of the Secretary of Labor, in an Order that has reached finality and which provided that the cooperative Cannery Multi-Purpose Cooperative (CAMPCO) was engaged in labor-only contracting should bind the NLRC in a case for illegal dismissal. We ruled: While the causes of action in the proceedings before the DOLE and the NLRC differ, they are, in fact, very closely related. The DOLE Regional Office conducted an investigation to determine whether CAMPCO was violating labor laws, particularly, those on labor-only contracting. Subsequently, it ruled that CAMPCO was indeed engaging in labor-only contracting activities, and thereafter ordered to cease and desist from doing so. x x x The matter of whether CAMPCO was a labor-only contractor was already settled and determined in the DOLE proceedings, which should be conclusive and binding upon the NLRC. What were left for the determination of the NLRC were the issues on whether there was illegal dismissal and whether respondents should be regularized. x x x For the NLRC to ignore the findings of DOLE Regional Director Parel and DOLE Undersecretary Trajano is an unmistakable and serious undermining of the DOLE officials authority.58 The rule on conclusiveness of judgment then now precludes this Court from re-opening the issues that were already settled with finality in G.R. Nos. 180078-79, which effectively affirmed the CAs findings that PASAKA was engaged in labor-only contracting, and that Norkis Trading shall be treated as the employer of the respondents. In the present petition, Norkis Trading still argues that the NLRC committed no grave abuse of discretion in ignoring the findings of Regional Director Balanag considering that his Order had not yet reached finality at the time the NLRC resolved the appeal from the decision of the LA. This notwithstanding, this Court holds that the CA still committed no error in finding grave abuse of discretion on the part of the NLRC by the latters utter disregard of the findings of the

Regional Director that Norkis Trading should be considered the employer of herein respondents. As correctly observed by the CA in the assailed Decision dated May 7, 2007: Surprisingly, the NLRC failed to consider or even make reference to the said August 22, 2000 Order of the DOLE Regional Director. Considering the significance of the DOLE Regional Directors findings, the same cannot just be perfunctorily rejected. For the NLRC to ignore the findings of DOLE Regional Director is to undermine or disregard of [sic] the visitorial and enforcement power of the DOLE Secretary and his authorized representatives under Article 128 of the Labor Code, as amended. It was grave abuse of discretion then on the part of the NLRC to ignore or simply sweep under the rug the findings of the DOLE Regional Director.59 (Citation omitted and emphasis ours) A reading of the NLRCs Resolution60 dated December 18, 2003 indicates that while it was confronted with opposing findings of the Regional Director and the LA on the material issue of labor-only contracting, it failed to even attempt to review thoroughly the matter, look into the records, reconcile the differing judgments and make its own appreciation of the evidence presented by the parties. Instead, it simply brushed aside the rulings of the Regional Director, without due consideration of the circumstance that said labor official had the jurisdiction to rule on the issue pursuant to the visitorial and enforcement powers of the DOLE Secretary and his duly authorized representatives under Article 12861 of the Labor Code. The rule in appeals in labor cases provides that the CA can grant a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically or arbitrarily disregarding evidence which is material or decisive of the controversy.62 Significantly, the Secretary of Labor had already affirmed Regional Director Balanags Order when the appeal from the LAs rulings was resolved. In the NLRC Resolution dated December 18, 2003, the Commission nonetheless merely held: The photocopies of the Order of the Honorable Secretary of the Department of Labor and Employment dated February 7, 2002 and the Order of the Regional Director of the Regional Office of the Department of Labor and Employment finding the existence of labor-only contracting between respondent NORKIS [Trading] and respondent PASAKA do not provide sufficient basis to disturb Our Decision. We are not convinced that the facts and evidence, which are totally distinct from this case and which were presented in a separate proceedings and before another Office, would be a sufficient and valid basis to divest the Labor Arbiter a quo of his authority which undoubtedly the law vests upon him as his exclusive jurisdiction. The jurisdiction conferred by Article 217 of the Labor Code upon the Labor Arbiter is "original and exclusive", and his authority to hear and decide case[s] vested upon him is to the exclusion of any other court or quasi-judicial body. By reason of their training, experience, and expertise, Labor Arbiters are in a better position to resolve controversies, for which they are conferred original and exclusive jurisdiction by law. Even Article 218 of the Labor Code does not empower the Regional Director of the Department of Labor and Employment to share original and exclusive jurisdiction conferred on the Labor Arbiter by Article 217 x x x.63 Such utter disregard by the NLRC of the findings of the Regional Director and DOLE Secretary amounts to grave abuse of discretion amounting to lack or excess of jurisdiction. As this Courts

review of the records would confirm, a judicious study of the evidence presented by the parties would have supported the finding that Norkis Trading should be treated as the respondents true employer, with PASAKA being merely an agent of said employer. PASAKA failed to sufficiently show that it had substantial capital or investment in the form of tools, equipment, machineries and work premises required from legitimate job contractors. The work required from the respondents, being welders and/or operators of industrial machines, were also directly related to Norkis Tradings principal business of manufacturing. The job contract supposedly executed by and between PASAKA and Norkis International in 1999 deserved nil consideration given that the respondents had claimed early on that they began working for Norkis Trading on various dates from 1993 to 1994. Moreover, the records confirm that Norkis Trading was still among the clients of PASAKA as of July 1999, as clearly indicated in the memoranda it sent to respondents Buenavista, Fabroa and Dondoyano on July 22, 1999, which provide: Please take note that the recent action you have done in filing a case against one of our clients, Norkis Trading Co., Inc., has greatly prejudiced the interest and welfare of the Cooperative.64 (Emphasis ours) This categorical statement of PASAKA that Norkis Trading was among its clients at the time the memoranda were issued only further bolsters the respondents claim, and Regional Director Balanags finding, that said respondents were deployed by PASAKA to Norkis Trading. This also contradicts petitioners argument that its contract with PASAKA had ended in 1998.65 Finally, contrary to the insinuations of Norkis Trading, the fact that PASAKA was a dulyregistered cooperative did not preclude the possibility that it was engaged in labor-only contracting, as confirmed by the findings of the Regional Director. An entity is characterized as a labor-only contractor based on the elements and guidelines established by law and jurisprudence, judging primarily on the relationship that the said entity has with the company to which the workers are deployed, and not on any special arrangement that the entity has with said workers. Termination of an employment for no just or authorized cause amounts to an illegal dismissal. As to the issue of whether the respondents were illegally dismissed by Norkis Trading, we answer in the affirmative, although not by constructive dismissal as declared by the CA, but by actual dismissal. Where an entity is declared to be a labor-only contractor, the employees supplied by said contractor to the principal employer become regular employees of the latter. Having gained regular status, the employees are entitled to security of tenure and can only be dismissed for just or authorized causes and after they had been afforded due process.66 Termination of employment without just or authorized cause and without observing procedural due process is illegal.1wphi1 In claiming that they were illegally dismissed from their employment, the respondents alleged having been informed by PASAKA that they would be transferred, upon the behest of Norkis Trading, as Multicab washers or utility workers to Porta Coeli, a sister company of Norkis

Trading. Norkis Trading does not dispute that such job transfer was relayed by PASAKA unto the respondents, although the company contends that the transfer was merely an "offer" that did not constitute a dismissal. It bears mentioning, however, that the respondents were not given any other option by PASAKA and Norkis Trading but to accede to said transfer. In fact, there is no showing that Norkis Trading would still willingly accept the respondents to work for the company. Worse, it still vehemently denies that the respondents had ever worked for it. Again, all defenses of Norkis Trading that anchor on the alleged lack of employer-employee relationship between it and the respondents no longer merit any consideration, given that this Courts findings in G.R. Nos. 180078-79 have become conclusive. Thus, the respondents transfer to Porta Coeli, although relayed to the respondents by PASAKA was effectively an act of Norkis Trading. Where labor-only contracting exists, the Labor Code itself establishes an employeremployee relationship between the employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.67 No further evidence or document should then be required from the respondents to prove such fact of dismissal, especially since Norkis Trading maintains that it has no duty to admit and treat said respondents as its employees. Considering that Porta Coeli is an entity separate and distinct from Norkis Trading, the respondents employment with Norkis Trading was necessarily severed by the change in work assignment. It then did not even matter whether or not the transfer involved a demotion in the respondents rank and work functions; the intention to dismiss, and the actual dismissal of the respondents were sufficiently established. In the absence of a clear showing that the respondents dismissal was for just or authorized causes, the termination of the respondents employment was illegal. What may be reasonably deduced from the records was that Norkis Trading decided on the transfer, after the respondents had earlier filed their complaint for labor-only contracting against the company. Even Norkis Tradings contention that the transfer may be deemed a valid exercise of management prerogative is misplaced. First, the exercise of management prerogative presupposes that the transfer is only for positions within the business establishment. Second, the exercise of management prerogative by employers is not absolute, as it is limited by law and the general principles of fair play and justice. WHEREFORE, premises considered, the petition is DENIED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 176985 April 1, 2013

RICARDO E. VERGARA, JR., Petitioner, vs. COCA-COLA BOTTLERS PHILIPPINES, INC., Respondent. DECISION PERALTA, J.: Before Us is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure assailing the January 9, 2007 Decision1 and March 6, 2007 Resolution2 of the Court of Appeals (CA) in CA .. G.R. SP No. 94622, which affirmed the January 31, 2006 Decision3 and March 8, 2006 Resolution4 of the National Labor Relations Commission (NLRC) modifying the September 30, 2003 Decision5 of the Labor Arbiter (LA) by deleting the sales management incentives in the computation of petitioner's retirement benefits. Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Pias City, Metro Manila. As stipulated in respondents existing Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the total performance incentive earned during the year immediately preceding 12 months) No. of Years in Service.6 Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI)7 and to the amount of PhP496,016.67 which respondent allegedly deducted illegally, representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary Damages, and Attorneys Fees."8 After a series of mandatory conference, both parties partially settled with regard the issue of merit increase and length of service.9 Subsequently, they filed their respective Position Paper and Reply thereto dealing on the two remaining issues of SMI entitlement and illegal deduction. On September 30, 2003, the LA rendered a Decision10 in favor of petitioner, directing respondent to reimburse the amount illegally deducted from petitioners retirement package and to integrate therein his SMI privilege. Upon appeal of respondent, however, the NLRC modified the award and deleted the payment of SMI.

Petitioner then moved to partially execute the reimbursement of illegal deduction, which the LA granted despite respondents opposition.11 Later, without prejudice to the pendency of petitioners petition for certiorari before the CA, the parties executed a Compromise Agreement12 on October 4, 2006, whereby petitioner acknowledged full payment by respondent of the amount of PhP496,016.67 covering the amount illegally deducted. The CA dismissed petitioners case on January 9, 2007 and denied his motion for reconsideration two months thereafter. Hence, this present petition to resolve the singular issue of whether the SMI should be included in the computation of petitioners retirement benefits on the ground of consistent company practice. Petitioner insistently avers that many DSSs who retired without achieving the sales and collection targets were given the average SMI in their retirement package. We deny. This case does not fall within any of the recognized exceptions to the rule that only questions of law are proper in a petition for review on certiorari under Rule 45 of the Rules of Court. Settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence.13 Certainly, it is not Our function to assess and evaluate the evidence all over again, particularly where the findings of both the CA and the NLRC coincide. In any event, even if this Court would evaluate petitioner's arguments on its supposed merits, We still find no reason to disturb the CA ruling that affirmed the NLRC. The findings and conclusions of the CA show that the evidence and the arguments of the parties had all been carefully considered and passed upon. There are no relevant and compelling facts to justify a different resolution which the CA failed to consider as well as no factual conflict between the CA and the NLRC decisions. Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer.14 Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer.15 The principle of nondiminution of benefits is actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare, and to afford them full protection.16 In turn, said mandate is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be rendered in favor of labor."17 There is diminution of benefits when the following requisites are present: (1) the grant or benefit is founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.18

To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately.19 Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice.20 The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time.21 It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof.22 In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.23 Upon review of the entire case records, We find no substantial evidence to prove that the grant of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice. Despite more than sufficient opportunity given him while his case was pending before the NLRC, the CA, and even to this Court, petitioner utterly failed to adduce proof to establish his allegation that SMI has been consistently, deliberately and voluntarily granted to all retired DSSs without any qualification or conditions whatsoever. The only two pieces of evidence that he stubbornly presented throughout the entirety of this case are the sworn statements of Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998, respectively. They claimed that the SMI was included in their retirement package even if they did not meet the sales and collection qualifiers.24 However, juxtaposing these with the evidence presented by respondent would reveal the frailty of their statements. The declarations of Hidalgo and Velazquez were sufficiently countered by respondent through the affidavits executed by Norman R. Biola (Biola), Moises D. Escasura (Escasura), and Ma. Vanessa R. Balles (Balles).25 Biola pointed out the various stop-gap measures undertaken by respondent beginning 1999 in order to arrest the deterioration of its accounts receivables balance, two of which relate to the policies on the grant of SMI and to the change in the management structure of respondent upon its re-acquisition by San Miguel Corporation. Escasura represented that he has personal knowledge of the circumstances behind the retirement of Hidalgo and Velazquez. He attested that contrary to petitioners claim, Hidalgo was in fact qualified for the SMI. As for Velazquez, Escasura asserted that even if he (Velazquez) did not qualify for the SMI, respondents General Manager in its Calamba plant still granted his (Velazquez) request, along with other numerous concessions, to achieve industrial peace in the plant which was then experiencing labor relations problems. Lastly, Balles confirmed that petitioner failed to meet the trade receivable qualifiers of the SMI. She also cited the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez (Gutierrez), both DSSs of respondent who retired on January 31, 2002 and December 30, 2002, respectively. She noted that, unlike Valencia, Gutierrez also did not receive the SMI as part of his retirement pay, since he failed to qualify under the policy guidelines. The verity of all these statements and representations stands and holds true to Us, considering that petitioner did not present any iota of proof to debunk the same.1wphi1 Therefore, respondent's isolated act of including the SMI in the retirement package of Velazquez could hardly be classified as a company practice that may be considered an enforceable obligation. To repeat, the principle against diminution of benefits is applicable only if the grant

or benefit is founded on an express policy or has ripened into a practice over a long period of time which is consistent and deliberate; it presupposes that a company practice, policy and tradition favorable to the employees has been clearly established; and that the payments made by the company pursuant to it have ripened into benefits enjoyed by them.26 Certainly, a practice or custom is, as a general rule, not a source of a legally demandable or enforceable right.27 Company practice, just like any other fact, habits, customs, usage or patterns of conduct, must be proven by the offering party who must allege and establish specific, repetitive conduct that might constitute evidence of habit or company practice.28 To close, We rule that petitioner could have salvaged his case had he step up to disprove respondents contention that he miserably failed to meet the collection qualifiers of the SMI. Respondent argues that An examination of the Companys aged trial balance reveals that petitioner did not meet the trade receivable qualifier. On the contrary, the said trial balance reveals that petitioner had a large amount of uncollected overdue accounts. For the year 2001, his percentage collection efficiency for current issuance was at an average of 13.5% a month as against the required 70%. For the same, petitioners collection efficiency was at an average of 60.25% per month for receivables aged 1-30 days, which is again, way below the required 90%. For receivables aged 31-60 days during said year, petitioners collection efficiency was at an average of 56.17% per month, which is approximately half of the required 100%. Worse, for receivables over 60 days old, petitioners average collection efficiency per month was a reprehensively low 14.10% as against the required 100%.29 The above data was repeatedly raised by respondent in its Rejoinder (To Complainants Reply) before the LA,30 Memorandum of Appeal31 and Opposition (To Complainant-Appellees Motion for Reconsideration)32 before the NLRC, and Comment (On the Petition),33 Memorandum (For the Private Respondent),34 and Comment (On the Motion for Reconsideration)35 before the CA. Instead of frontally rebutting the data, petitioner treated them with deafening silence; thus, reasonably and logically implying lack of evidence to support the contrary. WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and March 6, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 94622, which affirmed the January 31, 2006 Decision and March 8, 2006 Resolution of the NLRC deleting the LA's inclusion of sales management incentives in the computation of petitioner's retirement benefits, is hereby AFFIRMED. SO ORDERED.

G.R. No. 198501

January 30, 2013

KESTREL SHIPPING CO., INC./ CAPT. AMADOR P. SERVILLON and ATLANTIC MANNING LTD., Petitioners, vs. FRANCISCO D. MUNAR, Respondent. DECISION REYES, J.: This is a petition for review on certiorari assailing the Decision1 dated January 28, 2011 and Resolution2 dated September 6, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 110878. The facts leading to the filing of this petition are undisputed. On March 23, 2006, petitioner Kestrel Shipping, Inc. (Kestrel), on behalf of its principal, petitioner Atlantic Manning, Ltd., and respondent Francisco Munar (Munar) forged a six (6)month employment contract designating Munar as pump man for M/V Southern Unity. As pump man, his duties include: (a) operating, maintaining and repairing power-driven pumps, valves and related machinery; (b) transferring materials to and from vessels and terminal storages; (c) transferring liquids by siphoning; (d) installing hoses and pipes between pumps and containers that require filling or emptying; (e) maintenance of pump rooms and similar spaces; (f) assisting in the cleaning of tanks, crude oil washing, gas inerting, purging of tanks and wage sampling of cargo; (g) checking and recording cargo temperature; and (h) operating tank heating equipment.3 On October 12, 2006, after Munar assisted in manually lifting the ships anchor windlass motor that weighs about 350 kilograms, he started to limp and experience severe pain in his lumbar region. On October 18, 2006, Munar was admitted at the Entabeni Hospital in Durban, South Africa. According to his attending physician, Dr. Soma T. Govender (Dr. Govender), the x-ray and magnetic resonant image (MRI) of Munars lumbar spine showed degenerative changes, which required him to take pain medication, use pelvic traction, and undergo physiotherapy. In his medical report4 dated October 19, 2006, Dr. Govender stated that: I arranged for him to have lumbar spine x-rays and this showed that he had degenerative changes especially of the lower lumbar spine in the L3/4 and L5/S1 region with degenerative changes noted bilaterally. I proceeded to do a MRI of the lumbar spine to exclude an acute prolapsed disc and this confirmed degenerative changes of the lumbar spine extending from the L2/3 region and L3/4 and the worst affected levels appeared to be L4/5 and L5/S1. xxxx I have admitted him for a course on intensive conservative management in hospital. He has been commenced on pelvic traction and been given pain medication, which includes Narcotic analgesia, muscle relaxants, and anti-inflammatories. I have also commenced him on a course of

physiotherapy and hopefully with this conservative mode of treatment he should show sufficient improvement to obviate any spinal surgery.5 On October 24, 2006, Dr. Govender issued another medical report6 where he stated that while Munars improved condition allowed him to travel, he would require assistance in carrying his things and should be lying down for the entire duration of the trip. Munar should undergo further treatment and management in a spine rehabilitation facility but if he would not register a positive response thereto, he must undergo surgery. Specifically: Mr. Munar is currently recovered from the acute pain syndrome that he first presented with. Although he has not recuperated completely he has progressed to the state were he will be able to travel back to the Phillipines (sic) with assistance. He will require assistance with regard to his baggage transfers and he should also be accommodated on the aircraft so that he can lie down, as this would minimize the amount of pressure on his lumbar inter-vertebral disc and minimize the nerve root compression. It is reasonable to assume that the heavy lifting that forms part of his daily work duties has contributed significantly to the abnormalities demonstrated on his lumbar spine MRI scans. x x x. Mr. Munar will require further treatment and management in the Philippines. I would recommend a further course of conservative treatment for a few more weeks. If this does not settle he may then require surgical intervention with decompression of the areas of stenosis (narrowing) and removal of the disc fragments that are compressing the nerve roots and a possible fusion of his lower back. However, this will depend on the response to the conservative treatment and his recovery after such surgery may take up to 3 months.7 Dr. Govender also declared Munar unfit to perform his usual sea duties: Whether he has further surgery or not, it will not be possible for Mr. Munar to continue performing the "heavy manual duties" that hisjob requires any longer, as this could exacerbate his lumbar spine problem. From this perspective he is medically unfit to continue such duties. x x x8 On October 28, 2006, Munar was repatriated. On October 30, 2006, Munar was admitted at the Chinese General Hospital. For two (2) weeks, he underwent intensive physiotherapy and was attended to by the following doctors: Dr. Tiong Sam Lim (Dr. Lim), a spine surgeon; Dr. Antonio Periquet (Dr. Periquet), a specialist on physical rehabilitation medicine; and Dr. Fidel Chua (Dr. Chua) of Trans Global Health Systems, Inc. to whom Kestrel referred his case for evaluation.9 On November 17, 2006, Dr. Chua issued a medical report,10 stating that Munar did not respond positively to the treatment and recommending that he undergo laminectomy and dissectomy, procedures which would entail a recovery period from four (4) to six (6) months: The above patient had 2 weeks intensitive (sic) physiotherapy but no improvement. I had conference with Dr. Tiong Sam Lim (spinal surgeon) and Dr. Antonio Periquet (rehabilitation

medicine) and strongly suggest patient to undergo Laminectomy & dissectomy which will approximately cost PHP 120,000.00 to PHP 150,000.00 barring complication. Recuperation will take 4-6 months from date of operation.11 On December 2, 2006, Munar had surgical intervention. On December 20, 2006, he was discharged from the hospital. In his medical report12 of even date, Dr. Chua diagnosed Munar as suffering from herniated disc and that while the surgery was successful, Munar should continue physiotherapy: The above patient discharged today from Chinese General Hospital. He underwent Laminectomy and Dissectomy last December 2, 2006. Since he is from La Union, he may continue his physiotherapy in his hometown. At present, the prognosis is good and recuperation will take 4-6 months from date of operation.13 Munar continued his physiotherapy sessions at Lorma Medical Center at Carlatan, San Fernando City, La Union.14 On February 27, 2007, Munar was physically examined by Dr. Lim and Dr. Periquet. The following observations were noted in the medical report Dr. Chua issued: Patient was re-evaluated by Dr. Tiong Sam Lim with finding of right lower extremities has improved but there is still pain on straight leg raise of left and weak extensor hallis longes. He was also evaluated by Dr. Antonio Periquet with following finding 1. there is a decrease in pain 2. tenderness lumbar paravertebral 3. weakness left lower extremity 4. decrease in sensation from T 10 down 5. SLR 30o left; full right 6. decrease ankle jerk left 7. pain on all trunk motion15 On April 11 and 12, 2007, Munar was once again examined by Dr. Periquet and Dr. Lim, respectively. On May 3, 2007, Dr. Chua issued a medical report16 where he enumerated the findings of Dr. Periquet and Dr. Lim and rated Munars impediment as Grade 8.

The above patient was re-evaluated by Dr. Antonio Periquet on April 11, 2007 with report of pain level is 5/10 - SLR-45o bilateral, weakness left foot muscle, decrease sensation below mid-thigh - Tenderness-lumbo sacral process and left lumbar area - Pain on side bending and forward flexion He is advised to continue physiotherapy. He was also seen by Dr. Tiong Sam Lim on April 12, 2007 and advised to continue physiotherapy and recommended disability assessment. After thorough evaluation, the report of Dr. Antonio Periquet; Dr. Tiong Sam Lim and Dr. Edward Lingayo, patient will take a long time to fully recovered. Therefore, he may be given disability. Based on Amended POEA Contract Section 32-CHEST-TRUNK-SPINE # 5-disability grade 8.17 Meantime, on April 17, 2007, Munar filed a complaint for total and permanent disability benefits. His complaint was docketed as NLRC-NCR Case No. OFW-07-04-00970-00 and raffled to Labor Arbiter Veneranda Guerrero (LA Guerrero). Munar claimed that the mere fact that his medical condition, which incapacitated him to engage in any gainful employment, persisted for more than 120 days automatically entitles him to total and permanent disability benefits. During the mandatory mediation and conciliation conferences, petitioners invoked Dr. Chuas assessment per his medical report dated May 3, 2007 and offered to pay Munar the benefit corresponding to Grade 8 disabilities or $16,795.00. Munar rejected petitioners offer and maintained that his disability should be rated as Grade 1. Munar relied on the following assessment made by Dr. Edward L. Chiu (Dr. Chiu), an orthopedic surgeon at Lorma Medical Center, in a medical certificate18 the latter issued on May 21, 2007: At present, he could tolerate walking for short distances due to his low back pain. There is weakness of his left foot. Due to his back injury and pain, he could not go back to work. He could not tolerate stren[u]ous physical activities.19 In a Decision20 dated May 30, 2008, LA Guerrero awarded Munar with total and permanent disability benefits in the amount of US$60,000.00 and attorneys fees equivalent to ten percent (10%) of the former. As between the assessment of Dr. Chua and that of Dr. Chiu, LA Guerrero gave more weight to the latter:

Assessing the parties respective averments and documents adduced in support thereof, this Office finds that the complainant is entitled to the maximum compensation benefit as provided under the POEA Standard Employment Contract in the amount of US$60,000.00. The medical certificate issued by Dr. Edward L. Chiu dated May 21, 2007 categorically states that complainant cannot go back to work due to his back injury and that he cannot tolerate strenuous physical activities. Given the nature of his shipboard employment, it is logical to conclude that the complainant cannot resume shipboard employment. This conclusion is borne out by the respondents own medical certificate showing that after the complainant underwent surgery in December, 2006 he was expected to recuperate for a period of 4-6 months, and on May 3, 2007 the respondents designated physician determined that the complainant "will take a long time to fully recovered (sic)". And, while he was assessed with Impediment Grade 8, the assessment is not accompanied by any justification, other than the vague qualification on the length of time of recovery. Evidently, such ambiguous assessment, vis--vis that made by the complainants independent physician who had taken over the complainants therapy, cannot be a basis for the grant of the assessed disability grading. The determination of the company designated physician cannot prevail over the specific assessment made by the independent physician. Verily the illness sustained by the complainant has rendered him unfit to continue his employment as seafarer. Accordingly, he is entitled to the maximum compensation benefit of US$60,000.00. It is well-settled 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. It does not mean absolute helplessness. In disability compensation, We likewise held, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of ones earning capacity." (Philippine Transmarine, Inc., vs. NLRC 353 SCRA 47)21 On appeal by petitioners, the National Labor Relations Commission (NLRC) affirmed LA Guerreros Decision dated May 30, 2008. In a Decision22 dated June 30, 2009, the NLRC ruled that Dr. Chius categorical and definite assessment should prevail over that of Dr. Chua, which failed to approximate the period needed by Munar to fully recover and lacked clear basis. Given the report of the company-designated physician who is unsure how much time complainant needs in order to fully recover, and the report of complainants physician who is certain in his own findings that complainant cannot go back to work given his present condition, this Commission has no other obvious choice than to place its confidence and accordingly uphold the findings of complainants physician.23

The NLRC denied petitioners motion for reconsideration in a Resolution24 dated August 28, 2009. Petitioners filed a petition for certiorari25 with the CA, alleging that the NLRC acted with grave abuse of discretion in characterizing Munars disability as total and permanent. The NLRC should have upheld Dr. Chuas findings over those of Dr. Chiu whose knowledge of Munars case is questionable. Apart from the fact that it is Dr. Chua, being the company designated physician, who is tasked under the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC) to determine the nature and degree of a seafarers disability or his fitness to perform sea duties, the reliability of his assessment springs from his undisputed familiarity with Munars medical condition. As one of Munars attending physicians from the time he was repatriated, Dr. Chua is in a position to give a more accurate appraisal of Munars disability. Moreover, Dr. Chuas assessment is based on the findings of Dr. Lim and Dr. Periquet who are both specialists in the treatment and management of spine injuries. Furthermore, under the POEA-SEC, herniated disc is not one of the disabilities that are classified as Grade 1. Munars herniated or slipped disc only resulted to partial loss of motion of his lower extremities, which is classified as Grade 8 impediment under Section 32 of the POEA-SEC. Petitioners claim that for a spine injury to be considered as Grade 1 disability, it should have brought forth incontinence or rendered walking impossible even with the aid of crutches. By way of the assailed decision, the CA found no grave abuse of discretion on the part of the NLRC and ruled that Munars continued inability to perform his usual sea duties, which is attributable to his medical condition that is work-related, despite surgery and seven (7) months of physical therapy, conclusively indicate that he is totally and permanently disabled. The CA noted that while the company-designated doctors did not categorically state that Munar is unfit for sea duties, this is easily inferable from their statement that he continues to experience pain, weakness and tenderness and would take a long time to recover. In the case at bar, despite his having undergone surgeries, treatment and physical therapy of more than seven months from the injury, Munar is still found by all physicians involved to continue to suffer from weakness, tenderness and pain that prevent him from doing strenuous activities. In fact, Kestrels own designated physicians have stated this in their last report and found that Munar was entitled to disability benefits as he "(would) take a long time to fully recover." Though they did not state it, it is clear from these findings that Munar is still unable to return to his customary work as a seafarer in an ocean-going vessel, due to the strenuous nature of the work demanded by it. No profit-motivated ship owner will employ Munar because of his condition. Munars private physicians statement of this fact in his own report merely confirms what is already obvious. Should he even try, Munar is certain to get disqualified as seafarer since such an employment will require him to undergo rigorous physical examinations which he is sure to fail because of the sorry state of his physical health. Thus, it is not even necessary to address Kestrel et al.s arguments as to the persuasive or binding nature of the findings of the company-designated physicians since, as earlier stated, they have been ruled to be not binding nor conclusive on the courts. In fact, the findings of Kestrels company-designated doctors themselves do not categorically state that Munar is fit to return to work; on the contrary, they state that Munar still suffers from weakness, tenderness and pain and

is entitled to disability benefits. Thus, the only issue left for resolution is the amount of disability payments due to Munar.26 (Citations omitted) Nonetheless, while the CA agreed with the NLRC that Munars spine injury is a Grade 1 disability, it deemed proper to reduce the amount of attorneys fees to two percent (2%) of his disability benefits. We find, however, that the grant by public respondent of 10% of $60,000 as attorneys fees is exorbitant and without any stated basis, since it was not proven that Kestrel[,] et al. acted in gross and evident bad faith in denying Munars claim of Impediment Grade 1 compensation. The records bear that Kestrel in fact offered to pay Impediment Grade 8 compensation, or $16,795.00, to Munar in good faith, which the latter refused. But since the instant case is an action for recovery of compensation by a laborer, attorneys fees are still due based on Article 2208(8) of the Civil Code, albeit on a reduced amount of two percent (2%) of the main award, which We deem to be the reasonable fee under the circumstances.27 In a Resolution28 dated September 6, 2011, the CA denied petitioners motion for reconsideration. Issue There is no dispute that Munars spine injury is work-related and that he is entitled to disability benefits. The bone of contention is how to classify such injury in order to determine the amount of benefits due to him. There is a conflict between the disability ratings made by the companydesignated physician and Munars doctor-of-choice and petitioners claim that holding the latters determination to be more credible is contrary to the provisions of the POEA-SEC and prevailing jurisprudence. Absent any substantial challenge to the competence and skill of the companydesignated doctors, there is no reason why their assessment should not be given due credence. Petitioners insist on the correctness of the grade assigned by their doctors on Munars disability. According to petitioners, Munars herniated disc is not a Grade 1 impediment as it did not disable him from walking or rendered him incontinent. Munar suffers from "moderate rigidity or two thirds (2/3) loss of motion or lifting power of the trunk" and under Section 32 of the POEASEC, this is a Grade 8 and not a Grade 1 impediment. Munar cannot claim, petitioners further posit, that he is totally and permanently disabled and claim the benefits corresponding to Grade 1 disabilities simply because he has not yet fully recovered after the lapse of 120 days from the time he signed-off from M/V Southern Unity. The nature of disability and the benefits attached thereto are determined by the manner they are graded or classified under the POEA and not by the number of days that a seafarer is under treatment. If a seafarer has an injury or medical condition that is not considered a Grade 1 impediment under the POEA-SEC, then he cannot claim that he is totally or permanently disabled. To allow the contrary would render naught the schedule of disabilities under the POEA-SEC. Our Ruling

This Court resolves to DENY the petition. Indeed, under Section 3229 of the POEA-SEC, only those injuries or disabilities that are classified as Grade 1 may be considered as total and permanent. However, if those injuries or disabilities with a disability grading from 2 to 14, hence, partial and permanent, would incapacitate a seafarer from performing his usual sea duties for a period of more than 120 or 240 days, depending on the need for further medical treatment, then he is, under legal contemplation, totally and permanently disabled. In other words, an impediment should be characterized as partial and permanent not only under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so under the relevant provisions of the Labor Code and the Amended Rules on Employee Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the seafarer is partially injured or disabled, he is not precluded from earning doing the same work he had before his injury or disability or that he is accustomed or trained to do. Otherwise, if his illness or injury prevents him from engaging in gainful employment for more than 120 or 240 days, as the case may be, he shall be deemed totally and permanently disabled. Moreover, the company-designated physician is expected to arrive at a definite assessment of the seafarers fitness to work or permanent disability within the period of 120 or 240 days. That should he fail to do so and the seafarers medical condition remains unresolved, the seafarer shall be deemed totally and permanently disabled. It is settled that the provisions of the Labor Code and AREC on disabilities are applicable to the case of seafarers such that the POEA-SEC is not the sole issuance that governs their rights in the event of work-related death, injury or illness. As ruled in Remigio v. NLRC:30 Second. Is the Labor Codes concept of permanent total disability applicable to the case at bar? Petitioner claims to have suffered from permanent total disability as defined under Article 192(c)(1) of the Labor Code, viz: Art. 192 (c). 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 in the Rules; x x x Petitioner likewise cites Vicente v. ECC and Abaya, Jr. v. ECC, both of which were decided applying the Labor Code provisions on disability benefits. Private respondents, on the other hand, contend that petitioner erred in applying the definition of "permanent total disability" under the Labor Code and cases decided under the ECC as the instant case involves a contractual claim under the 1996 POEA SEC. Again, we rule for petitioner. The standard employment contract for seafarers was formulated by the POEA pursuant to its mandate under E.O. No. 247 to "secure the best terms and conditions of employment of Filipino contract workers and ensure compliance therewith" and to "promote and protect the well-being of Filipino workers overseas." Section 29 of the 1996 POEA SEC itself provides that "all rights

and obligations of the parties to the Contract, including the annexes thereof, shall be governed by the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory." Even without this provision, a contract of labor is so impressed with public interest that the New Civil Code expressly subjects it to "the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects." Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. In Philippine Transmarine Carriers v. NLRC, seaman Carlos Nietes was found to be suffering from congestive heart failure and cardiomyopathy and was declared as unfit to work by the company-accredited physician. The Court affirmed the award of disability benefits to the seaman, citing ECC v. Sanico, GSIS v. CA, and Bejerano v. ECC 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 hismentality and attainment could do. It does not mean absolute helplessness." It likewise cited Bejerano v. ECC, that in a disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of ones earning capacity.31 (Citations omitted) In Vergara v. Hammonia Maritime Services, Inc.,32 this Court read the POEA-SEC in harmony with the Labor Code and the AREC in interpreting in holding 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. Quoted below are the relevant portions of this Courts Decision dated October 6, 2008: In real terms, this means that the shipowneran employer operating outside Philippine
jurisdictiondoes not subject itself to Philippine laws, except to the extent that it concedes the coverage and application of these laws under the POEA Standard Employment Contract. On the matter of disability, the employer is not subject to Philippine jurisdiction in terms of being compelled to contribute to the State Insurance Fund that, under the Labor Code, Philippine employers are obliged to support. (This Fund, administered by the Employees Compensation Commission, is the source of work -related compensation payments for work-related deaths, injuries, and illnesses.) Instead, the POEA Standard Employment Contract provides its own system of disability compensation that approximates (and even exceeds) the benefits provided under Philippine law. The standard terms agreed upon, as above pointed out, are intended 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. In this respect and in the context of the present case, Article 192(c)(1) of the Labor Code provides that: xxxx

The rule referred to Rule X, Section 2 of the Rules and Regulations implementing Book IV of the Labor Code states: xxxx These provisions are to be read hand in hand with the POEA Standard Employment Contract whose Section 20 (3) states: xxxx As these provisions operate, 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 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. xxxx As we outlined above, a temporary total disability only becomes permanent when so declared by the company physician within the periods he is allowed to do so, or upon the expiration of the maximum 240day medical treatment period without a declaration of either fitness to work or the existence of a permanent disability. In the present case, while the initial 120-day treatment or temporary total disability period was exceeded, the company-designated doctor duly made a declaration well within the extended 240-day period that the petitioner was fit to work. Viewed from this perspective, both the NLRC and CA were legally correct when they refused to recognize any disability because the petitioner had already been declared fit to resume his duties. In the absence of any disability after his temporary total disability was addressed, any further discussion of permanent partial and total disability, their existence, 33 distinctions and consequences, becomes a surplusage that serves no useful purpose. (Citations omitted) Consequently, if after the lapse of the stated periods, the seafarer is still incapacitated to perform his usual sea duties and the company-designated physician had not yet declared him fit to work or permanently disabled, whether total or permanent, the conclusive presumption that the latter is totally and permanently disabled arises. On the other hand, if the company-designated physician declares the seaman fit to work within the said periods, such declaration should be respected unless the physician chosen by the seaman and the doctor selected by both the seaman and his employer declare otherwise. As provided under Section 20-B(3) of the POEA-SEC, a seafarer may consult another doctor and in case the latters findings differ from those of the company-designated physician, the opinion of a third doctor chosen by both parties may be secured and such shall be final and binding. The same procedure should be observed in case a seafarer, believing that he is totally and permanently disabled, disagrees with the declaration of the company-designated physician that he is partially and permanently disabled. In Vergara, as between the determinations made by the company-designated physician and the doctor appointed by the seaman, the former should prevail absent any indication that the above procedure was complied with: The POEA Standard Employment Contract and the CBA clearly provide that when a seafarer sustains a work-related illness or injury while on board the vessel, his fitness or unfitness for work shall be

determined by the company-designated physician. If the physician appointed by the seafarer disagrees with the company-designated physicians assessment, the opinion of a third doctor may be agreed jointly between the employer and the seafarer to be the decision final and binding on them. Thus, while petitioner had the right to seek a second and even a third opinion, the final determination of whose decision must prevail must be done in accordance with an agreed procedure. Unfortunately, the petitioner did not avail of this procedure; hence, we have no option but to declare that the company34 designated doctors certification is the final determination that must prevail. x x x. (Citation omitted) In this case, the following are undisputed: (a) when Munar filed a complaint for total and permanent disability benefits on April 17, 2007, 181 days had lapsed from the time he signed-off from M/V Southern Unity on October 18, 2006; (b) Dr. Chua issued a disability grading on May 3, 2007 or after the lapse of 197 days; and (c) Munar secured the opinion of Dr. Chiu on May 21, 2007; (d) no third doctor was consulted by the parties; and (e) Munar did not question the competence and skill of the companydesignated physicians and their familiarity with his medical condition. It may be argued that these provide sufficient grounds for the dismissal of Munars complaint. Considering that the 240-day period had not yet lapsed when the NLRC was asked to intervene, Munars complaint is premature and no cause of action for total and permanent disability benefits had set in. While beyond the 120-day period, Dr. Chuas medical report dated May 3, 2007 was issued within the 240 -day period. Moreover, Munar did not contest Dr. Chuas findings using the procedure outlined under Section 20 -B(3) of the POEA-SEC. For being Munars attending physicians from the time he was repatriated and given their specialization in spine injuries, the findings of Dr. Periquet and Dr. Lim constitute sufficient bases for Dr. Chuas disability grading. As Munar did not allege, much less, prove the contrary, there exists no reason why Dr. Chius assessment should be preferred over that of Dr. Chua. It must be noted, however, that when Munar filed his complaint, Dr. Chua had not yet determined the nature and extent of Munars disability. Also, Munar was still undergoing physical therapy and his spine injury had yet been fully addressed. Furthermore, when Munar filed a claim for total and permanent disability benefits, more than 120 days had gone by and the prevailing rule then was that enunciated by 35 this Court in Crystal Shipping, Inc. v. Natividad that total and permanent disability refers to the seafarers incapacity to perform his customary sea duties for more than 120 days. Particularly: Permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. As gleaned from the records, respondent was unable to work from August 18, 1998 to February 22, 1999, at the least, or more than 120 days, due to his medical treatment. This clearly shows that his disability was permanent. Total disability, on the other hand, means the disablement of an employee to earn wages in the same kind of 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 attainments could do. It does not mean absolute helplessness. In disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of ones earning capacity. xxxx Petitioners tried to contest the above findings by showing that respondent was able to work again as a chief mate in March 2001. Nonetheless, this information does not alter the fact that as a result of his illness, respondent was unable to work as a chief mate for almost three years. It is of no consequence that respondent was cured after a couple of years. The law does not require that the illness should be incurable. What is important is that he was unable to perform his customary work for more than 120 days which constitutes permanent total disability. An award of a total and permanent disability benefit would be germane to the purpose of the benefit, which is to help the employee in making ends meet at the time 36 when he is unable to work. (Citations omitted and emphasis supplied)

Consequently, that after the expiration of the 120-day period, Dr. Chua had not yet made any declaration as to Munars fitness to work and Munar had not yet fully recovered and was still incapacitated to work sufficed to entitle the latter to total and permanent disability benefits. In addition, that it was by operation of law that brought forth the conclusive presumption that Munar is totally and permanently disabled, there is no legal compulsion for him to observe the procedure prescribed under Section 20-B(3) of the POEA-SEC. A seafarers compliance with such procedure presupposes that the company-designated physician came up with an assessment as to his fitness or unfitness to work before the expiration of the 120-day or 240-day periods. Alternatively put, absent a certification from the company-designated physician, the seafarer had nothing to contest and the law steps in to conclusively characterize his disability as total and permanent. This Courts pronouncements in Vergara presented a restraint against the indiscriminate reliance on Crystal Shipping such that a seafarer is immediately catapulted into filing a complaint for total and permanent disability benefits after the expiration of 120 days from the time he signed-off from the vessel to which he was assigned. Particularly, a seafarers inability to work and the failure of the companydesignated physician to determine fitness or unfitness to work despite the lapse of 120 days will not automatically bring about a shift in the seafarers state from total and temporary to total and permanent, considering that the condition of total and temporary disability may be extended up to a maximum of 240 days. Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years from the time Munar filed his complaint and observance of the principle of prospectivity dictates that Vergara should not operate to strip Munar of his cause of action for total and permanent disability that had already accrued as a result of his continued inability to perform his customary work and the failure of the companydesignated physician to issue a final assessment. WHEREFORE, premises considered, the petition is DENIED. The Decision dated January 28, 2011 and Resolution dated September 6, 2011 of the Court of Appeals in CA-G.R. SP No. 110878 are AFFIRMED. SO ORDERED

IBARRA P. ORTEGA, petitioner, vs. SOCIAL SECURITY COMMISSION, and SOCIAL SECURITY SYSTEM, respondents. DECISION CARPIO MORALES, J.: Petitioner Ibarra P. Ortega assails the Court of Appeals August 7, 2006 Decision1 dismissing his petition for review and upholding the denial by respondent Social Security Commission (SSC) of his application for total permanent disability benefits, and the Resolution2 of January 16, 2007 denying his motions for reconsideration and inhibition. Petitioner, a member of respondent Social Security System (SSS), filed claims for partial permanent disability benefits on account of his condition of Generalized Arthritis and Partial Ankylosis,3 which claims the SSS granted for a total monthly pension of 23 months.4 After the expiration of his disability pension, petitioner filed with the SSS Malabon Branch Office on April 26, 2000 a claim for total permanent disability benefits.5 His application, docketed as BO-0000-1755, was denied, however, on the ground that he was already granted disability benefits for the same illness and physical examination showed no progression of illness.6 Dr. Juanillo Descalzo III, SSS Malabon Branch senior physician, observed that petitioner merely had a "slight limitation of grasping movement for both hands."7 Aggrieved, petitioner filed before the SSC an unverified Petition of June 19, 2000,8 alleging that the SSS denied his application despite the fact that his attending physician, Dr. Rafael Recto, Jr., diagnosed him to be suffering from Trigger finger 4th (L) and thumb (L)9 while another private medical practitioner, Dr. Flo dela Cruz, diagnosed him to be also suffering from Bronchial Asthma, Hypertension and Gastro-Esophageal Reflux Disease.10 Further claiming to be afflicted with rheumatoid arthritis of both hands affecting all fingers and both palms,11 petitioner contended that the medical opinion of the SSS physician who interviewed him for less than three minutes cannot prevail over the findings of his physicians who have been treating him over a long period of time. Before taking cognizance of his appeal, the SSC directed the exhaustion of administrative remedies, by letter of June 30, 2000. The matter was thus referred to the SSS Office of the Medical Program Director for review of petitioners disability claim.12 Meanwhile, by letter of July 17, 2000, the SSS Legal Department denied a reconsideration of the denial of his claim,13 prompting petitioner to submit a letter-opposition of August 15, 2000.14 Upon referral of the SSC, the SSS Medical Program Department, through Dr. Carlota A. CruzTutaan and Dr. Jesus S. Tan, confirmed that, upon examination of petitioner, there was no

progression of his illness,15 prompting petitioner to submit a letter-opposition of November 11, 2000 charging the SSS medical officers of issuing fraudulent medical findings.16 Unperturbed, the SSS Medical Program Department stood its ground and denied with finality petitioners claim, by letter of November 22, 2000.17 On January 29, 2001, SSC finally docketed petitioners June 19, 2000 petition as SSC Case No. 1-15115-2001,18 after petitioner complied with SSCs directives19 to verify the petition and submit certain document-annexes. SSS then filed its Answer of May 31, 2001,20 to which petitioner submitted a Reply of June 25, 2001.21 After the August 10, 2001 pre-hearing conference,22 the SSS filed its Position Paper of September 7, 2001 while petitioner submitted his Reply of October 19, 2001. By Resolution of April 3, 2002,23 the SSC denied petitioners claim for entitlement to total permanent disability for lack of merit. And it opined that, considering that he had reached the retirement age of 60, on March 19, 1998, with 41 contributions to his name, petitioner may opt: (a) [t]o continue paying to the SSS monthly contributions (including employers share) on his own to complete the required 120 monthly contributions in order to avail of the retirement pension benefit; (b) [to] leave his monthly contributions with the SSS for his and his familys future benefits; or (c) [to a]vail of the lump sum retirement benefit.24 Petitioner moved for reconsideration of the Resolution. The SSC thus directed the SSS to file its comment25 and, by a subsequent order, to conduct a domiciliary visit and physical examination on petitioner to ascertain whether he could already qualify for such benefit.26 In compliance therewith, Dr. Rebecca Sison, SSS senior physician, examined petitioner on August 29, 2002 and found no sufficient basis to warrant the granting of total permanent disability benefits to him.27 Petitioners motion for reconsideration having been denied by Order28 of January 29, 2003, petitioner appealed via Rule 43 to the Court of Appeals29 which promulgated in CA-G.R. SP No. 75653 the assailed issuances affirming in toto the SSC Resolution and Order. There is at the outset a need to thresh out procedural issues attending the petition drafted by petitioner himself, apparently without the aid of counsel. While the petition was admittedly filed as a petition for certiorari under Rule 65, it contains a rider averring that it was filed also as a petition for review on certiorari under Rule 45.30 In not granting imprimatur to this type of unorthodox strategy, the Court ruled, in a similar case,31 that a party should not join both petitions in one pleading. A petition cannot be subsumed simultaneously under Rule 45 and Rule 65 of the Rules of Court, nor may it delegate upon the court the task of determining under which rule the petition should fall.32 It is a firm judicial policy that the remedies of appeal and certiorari are mutually exclusive and not alternative or successive.33

Palpably, petitioner crafted this unconventional two-headed petition under no other pretext but to second-guess at the appropriate remedy. His apparent bewilderment led him to later rectify a supposed typographical error in the caption such that instead of "petition for review," the title be read as a "petition for certiorari."34 The subsequent filing of the Correction of Clerical Errors served no redeeming purpose as it only evinced petitioners decision to consider the petition as a special civil action for certiorari, which is an improper remedy. It bears stressing that Rule 45 and Rule 65 pertain to different remedies and have distinct applications.35 It is axiomatic that the remedy of certiorari is not available where the petitioner has the remedy of appeal or some other plain, speedy and adequate remedy in the course of law.36 The petition for review under Rule 45 covers the mode of appeal from a judgment, final order, resolution or one which completely disposes of the case, like the herein assailed Decision and Resolution of the appellate court. There being already a final judgment at the time of the filing of the petition, a petition for review under Rule 45 is the appropriate remedy. Petitioner failed to carve out an exception to this rule, as he did not and could not illustrate the inadequacy of an appeal as a remedy that could promptly relieve him from the injurious effects of the assailed judgment.37 In fact, by seeking the same kind of reliefs via two remedies rolled into one pleading, he implicitly admits that an appeal suffices. Moreover, the probability of divergent rulings, a scenario transpiring in G & S Transport Corp. v. CA,38 is far from obtaining in this case since the assailed issuances emanated from only one court and cannot be elevated separately in different fora. While the Court may dismiss a petition outright for being an improper remedy,39 it may, in certain instances where a petition was filed on time both under Rules 45 and 65 and in the interest of justice, proceed to review the substance of the petition and treat it as having been filed under Rule 45.40 Either way, however, the present petition just the same merits dismissal since it puts to issue questions of fact rather than questions of law which are appropriate for review under a Rule 45 petition. It is settled that the Court is not a trier of facts and accords great weight to the factual findings of lower courts or agencies whose function is to resolve factual matters.41 It is not for the Court to weigh evidence all over again.42 Moreover, findings of fact of administrative agencies and quasijudicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect but finality when affirmed by the Court of Appeals.43 The requisite quantum of proof in cases filed before administrative or quasi-judicial bodies is neither proof beyond reasonable doubt nor preponderance of evidence. In this type of cases, a fact may be deemed established if it is supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.44 In this case, substantial evidence abounds. The conclusion that petitioner is not entitled to total permanent disability benefits under the Social Security Law was reached after petitioner was examined not just by one but four SSS

physicians, namely, Dr. Juanillo Descalzo III, Dr. Carlota A. Cruz-Tutaan, Dr. Jesus S. Tan and Dr. Rebecca Sison. The initial physical examination and interview revealed that petitioner had slight limitation of grasping movement for both hands. According to Dr. Descalzo, this finding was not enough to grant an extension of benefit since petitioner had already received benefits equivalent to 30% of the body. Responding to the allegation that the April 2000 physical examination was performed in a short period of time, the doctor credibly explained that petitioners movements were already being monitored and evaluated from a distance as part of the examination of his extremities in order to minimize malingering and overacting.45 Meanwhile, the medical findings of Dr. Carlota A. Cruz-Tutaan and Dr. Jesus S. Tan in August and September 2000 were summarized as follows: Heart: - manifest regular rhythm - no murmurs Lungs: - on ausculation showed no evidence of wheezing - breath sounds are normal and; - he is not in a state of respiratory distress Hypertension: - Blood Pressure is 140/80, hence, under control Extremities: (Hands) - No deformities noted except for the right small finger, the distal interphalangeal joint is bent at about 30. No abnormal limitation of movement noted on all the fingers, grasping has improved.46 Contrary to petitioners asseverations, the SSC did not ignore the certifications of petitioners attending physicians as, in fact, it ordered the SSS in June 2001 to conduct an investigation as to the medical findings and final diagnosis by his attending physicians.47 It was surfaced that petitioners medical records in the custody of Dr. Flo dela Cruz could not be found as they were allegedly destroyed by inundation.48 And it was found that the July 10, 2001 letter-certification by Dr. Rafael Recto, Jr. only narrated the recurring condition of petitioners trigger finger, the administration to him of local steroid injections, and the performance of surgical release on his

left 4th trigger finger on June 16, 1998; and that he was diagnosed on August 28, 2000 with mallet finger (R, 5th), for which he was advised to undergo reconstructive surgery.49 Adopting a liberal attitude and exercising sound discretion, the SSC even directed the conduct of another physical examination on petitioner to judiciously resolve his motion for reconsideration. Pursuant thereto, Dr. Sison physically examined petitioner in August 2002, the results of which were reflected in a medical report, viz: Physical Examination: General Survey: well nourished, well developed, conscious, coherent but talks with sarcasm and arrogance. EENT: normocephalic, pinkish conjunctiva, anicteric sclerae; negative tonsillopharyngeal congestion C/L: clear breath sounds, no wheezes; (-) dyspnea Heart: normal rate, regular rhythm. Abdomen: negative tenderness Extremeties: no neurological and sensory deficit no gross deformity, (+) scar, 4th finger (L) no loss of grasping power for large and small objects no loss of opposition between thumb and forefingers can bend fully to reach toes can bend both knees fully without pain or difficulty can raise both arms above shoulder level without pain and difficulty can bend both elbows without limitation The member was requested to submit recent ECG, x-rays and other laboratory work-up results but he could not locate them during visit and would still look for the said medical documents and mail them to SSS. He was then advised to come to SSS, Diliman Branch for ECG and x-ray, however he refused.

He also refused to affix his signature on the medical field service form to confirm the visit of our Medical Officer. Based on these recent physical examination findings and functional assessment and the medical certificate (Form MMD 102) with final diagnosis of Trigger Finger, there is no sufficient basis that warrants the granting of Total Permanent disability.50 (Underscoring supplied) Dr. Sison subsequently noted that petitioners Electrocardiograph, Chest X-ray, Kidney and Urinary Bladder Ultrasound indicated his condition as normal,51 which conclusion was arrived at by going through the same medical documents presented by petitioner following a series of tests conducted on him by hospitals of his choice. From the foregoing recital of petitioners medical history, the SSC concluded that petitioner is not entitled to total permanent disability benefits under the Social Security Law, the pertinent provisions of which read: xxxx (d) The following disabilities shall be deemed permanent total: 1. Complete loss of sight of both eyes; 2. Loss of two limbs at or above the ankle or wrists; 3. Permanent complete paralysis of two limbs; 4. Brain injury resulting to incurable imbecility or insanity; and 5. Such cases as determined and approved by the SSS. xxxx (f) If the disability is permanent partial and such disability occurs after thirty-six (36) monthly contributions have been paid prior to the semester of disability, the benefit shall be the monthly pension for permanent total disability payable not longer than the period designated in the following schedule: COMPLETE AND PERMANENT LOSS OF USE OF One thumb One index finger One middle finger One ring finger NUMBER OF MONTHS 10 8 6 5

One little finger One big toe One hand One arm One foot One leg One ear Both ears Hearing of one ear Hearing of both ears Sight of one eye

3 6 39 50 31 46 10 20 10 50 25

(g) The percentage degree of disability which is equivalent to the ratio that the designated number of months of compensability bears to seventy-five (75), rounded to the next higher integer, shall not be additive for distinct, separate and unrelated permanent partial disabilities, but shall be additive for deteriorating and related permanent partial disabilities to a maximum of one hundred percent (100%), in which case, the member shall be deemed as permanently totally disabled.52 Indeed, the evidence indicates that petitioners condition at the time material to the case does not fall under the enumeration in the above-quoted provisions of the Social Security Law. Moreover, as correctly held by the appellate court, the proviso of such provisions on the percentage degree of disability applies when there is a related deterioration of the illness previously considered as partial permanent disability. In this case, there is dearth of evidence on the proposition that petitioners array of illnesses is related to Generalized Arthritis and Partial Ankylosis of the specific body parts. Petitioners reliance on jurisprudence53 on work-connected disability claims insofar as it relates to a demonstration of disability to perform his trade and profession54 is misplaced. Claims under the Labor Code for compensation and under the Social Security Law for benefits are not the same as to their nature and purpose. On the one hand, the pertinent provisions of the Labor Code govern compensability of work-related disabilities or when there is loss of income due to work-connected or work-aggravated injury or illness.55 On the other hand, the benefits under the Social Security Law are intended to provide insurance or protection against the hazards or risks of disability, sickness, old age or death, inter alia, irrespective of whether they arose from or in the course of the employment.56 And unlike under the Social Security Law, a disability is total and permanent under the Labor Code if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days regardless of whether he loses the use of any of his body parts.57 The Court notes that the main issue petitioner proffers is whether he is entitled to total permanent disability benefits from the SSS given his "angioplasty operation of the heart, coronary artery

disease, ischemic heart disease, severe hypertension and a host of other serious illnesses filed with the SSS[.]"58 A perusal of the records shows that when the case was already submitted for decision before the appellate court, petitioner manifested that he suffered a heart attack on February 25, 2004,59 for which he claimed to have undergone a coronary angiogram on March 9, 2005 and a coronary angioplasty on September 27, 2005 at the Philippine Heart Center.60 Unfortunate as these events were, the appellate court correctly ruled that it could not consider such allegation of subsequent events since "a factual question may not be raised for the first time on appeal[,] and documents forming no part of the proofs before the appellate court will not be considered in disposing of the issues of an action."61 The issues in every case are limited to those presented in the pleadings. The object of the pleadings is to draw the lines of battle between the litigants and to indicate fairly the nature of the claims or defenses of both parties.62 A change of theory on appeal is not allowed.63 In this case, the matter of petitioners serious heart condition was not raised in his application before the SSS or in his June 19, 2000 petition before the SSC. Fair play dictates that the SSS be afforded the opportunity to properly meet the issue64 with respect to the new ailments besetting petitioner, in line with the actual practice that only qualified government physicians, by virtue of their oath as civil service officials, are competent to examine persons and issue medical certificates which will be used by the government for a specific official purpose.65 This holds greater significance where there exist differences or doubts as to the medical condition of the person. In this case, the SSS medical examiners are tasked by law to analyze the extent of personal incapacity resulting from disease or injury. Oftentimes, a physician who is adequately versed in the knowledge of anatomy and physiology will find himself deficient when called upon to express an opinion on the permanent changes resulting from a disability. Unlike the general practitioner who merely concerns himself with the examination of his patient for purposes of diagnosis and treatment, the medical examiner has to consider varied factors and ascertain the claimants related history and subjective complaints.66 The members of this Court cannot strip their judicial robe and don the physicians gown, so to speak, in a pretense to correlate variances in medical findings. Finding no cogent reason to discuss the ancillary issues, the Court dismisses the petition, without prejudice to the filing of a new application by petitioner who is not left without any recourse in his legal bout respecting his supervening claims anchored mainly on Coronary Artery Disease 1VD and Diabetes Mellitus Type 2, these illnesses having been found to be dissimilar from the subject matter of the present action.67 WHEREFORE, the petition is, in light of the foregoing disquisitions, DENIED.

G.R. No. 192034

January 13, 2014

ALPHA SHIP MANAGEMENT CORPORATION/JUNEL M CHAN and/or CHUOKAIUN COMPANY, LIMITED, Petitioners, vs. ELEOSIS V. CALO, Respondent. DECISION DEL CASTILLO, J.: An employee s disability becomes permanent and total when so declared by the companydesignated 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 employee s 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 employee s fitness or disability. Assailed in this Petition for Review on Certiorari1 are the December 17, 2009 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 105550 which reversed and set aside the March 31, 2008 Decision3 of the National Labor Relations Commission (NLRC) and reinstated the March 30, 2007 Decision4 of the Labor Arbiter, and its April 26, 2010 Resolution5 denying reconsideration thereof. Factual Antecedents Respondent Eleosis V. Calo worked for petitioners Alpha Ship Management Corporation, Junel M. Chan and their foreign principal, Chuo-Kaiun Company Limited (CKCL) since 1998 under seven employment contracts. On February 17, 2004, respondent was once more hired by petitioners as Chief Cook on board CKCLs vessel, MV Iris. Respondent commenced his duties as Chief Cook aboard MV Iris on March 5, 2004. On July 13, 2004, while MV Iris was in Shanghai, China, respondent suffered back pain on the lower part of his lumbar region and urinated with solid particles. On checkup, the doctor found him suffering from urinary tract infection and renal colic, and was given antibiotics. When respondents condition did not improve, he consulted another doctor in Chile sometime in August 2004, and was found to have kidney problems and urinary tract infection but was declared fit for work on a "light duty" basis.6 On September 19, 2004, respondent suffered an attack of severe pain in his loin area below the ribs radiating to his groin. At the Honmoku Hospital in Yokohama, Japan, respondent was diagnosed with suspected renal and/or ureter calculus.7 He was declared "unfit for work" and advised to be sent home and undergo further detailed examination and treatment.8 Respondent was thus repatriated on October 12, 2004 and was referred by petitioners to Dr. Nicomedes G. Cruz (Dr. Cruz), the company-designated physician.

On October 20, 2004, Dr. Cruz examined respondent, and thereafter, in his Medical Report,9 Dr. Cruz wrote: The patient was seen today in our clinic. The IVP x-ray showed mild prostate enlargement with signs suggestive of cystitis. He was seen by our urologist and repeat urinalysis was requested. DIAGNOSIS: To consider Ureterolithiasis, right MEDICATION: Buscopan Advised to come back on November 10, 200410 Respondent was examined once more on November 10, 2004, and his Medical Report11 for such examination reads as follows: The patient was seen today in our clinic. The urinalysis done was normal. He complains of right lumbosacral pain which is probably secondary to lumbosacral muscular strain. He was seen by our urologist and ultrasound of the KUB-P was requested. DIAGNOSIS: To consider Ureterolithiasis, right MEDICATION: Mobic Advised to come back on November 17, 2004 Respondent returned to Dr. Cruz for check-up on November 17, 2004. His Medical Report12 for such appointment states: The patient was seen today in our clinic. The ultrasound of the KUB showed the following 1) small, mild calyceal non-obstructing stone his [sic] left kidney 2) cortical cyst at the inferior pole of the left kidney 3) small parenchymal calcification in the mid portion of the right kidney and 4) mild prostatic enlargement with concretion. Our urologist recommended medical dissolution of the left kidney stone since it is small. However, he recommended lumbosacral x-ray of the back to evaluate the right lower back pain. DIAGNOSIS: Ureterolithiasis, left MEDICATION: Sambong Acalka Macrodantin

Advised to come back on December 15, 200413 On December 15, 2004, respondent returned to Dr. Cruz for check-up, and in his Medical Report14 he wrote: The patient was seen today in our clinic. There is occasional low back pain. The xray showed mild lumbar osteophytes. He is for urinalysis and ultrasound of the kidneys. DIAGNOSIS: Ureterolithiasis, left MEDICATION: Sambong Acalka Macrodantin Advised to come back on January 5, 200515 Dr. Cruzs Medical Report16 for January 5, 2005 reads as follows: The patient was seen today in our clinic. The latest ultrasound of the kidneys showed the persistence of non-obstructing calculus located at the middle calyx of the left kidney. The right kidney is normal. The urinalysis showed microhematuria. Clinically, he still has occasional low back pain. Our urologist recommended KUB x-ray with bowel preparation. DIAGNOS Nephrolithiasis, left MEDICATION: Sambong Acalka Macrodantin Advised to come back on January 12, 200517 Further Medical Reports18 indicate that respondent returned to Dr. Cruz for additional check-ups on January 12 and 17, 2005; February 7, 14 and 18, 2005; March 4, 9 and 30, 2005; April 4, 20 and 27, 2005; May 11 and 18, 2005; June 8, 20 and 27, 2005; July 18, 25 and 27, 2005; August 3, 22 and 31, 2005; September 14, 2005; and October 5 and 14, 2005. Meanwhile, on July 28, 2005, respondent who felt that his condition has not improved consulted another specialist in internal medicine, Dr. Efren R. Vicaldo (Dr. Vicaldo), who issued the following diagnosis contained in a two-page Medical Certificate:19 July 28, 2005

TO WHOM IT MAY CONCERN: This is to certify that Eleosis V. Calo, 57 years of age, of Paraaque City was examined and treated as out-patient/confined in this hospital on/from July 28, 2005 with the following findings and/or diagnosis/ diagnoses: Hypertension I Nephrolithiasis, left Impediment Grade X (20.15%) (signed) EFREN R. VICALDO, M.D. JUSTIFICATION OF IMPEDIMENT GRADE X (20.15%) FOR SEAMAN ELEOSIS V. CALO

This patient/seaman presented with a history of passing sandy material in the urine noted sometime August of 2004. He had a check up in Shanghai and he was diagnosed [with] UTI. He had another check up in Peru with the same diagnosis of urinary tract infection. He had episodes of lumbar pain, cold sweats and abdominal pain for which he had a check up in Japan in September, 2004. He underwent abdominal ultrasound, urinalysis and Xray of the KUB. He was subsequently repatriated [in] October, 2004 and he underwent several laboratory work up. He was diagnosed [with] hypertension and nephrolithiasis, left. When seen at the clinic, his blood pressure was elevated at 130/90 mmHg; the rest of his PE findings were unremarkable. He is now unfit to resume work as seaman in any capacity. His illness is considered work aggravated/related. He requires maintenance medication to control his hypertension to prevent other cardiovascular complications such as coronary artery disease, stroke and renal insufficiency. With his nephrolithiasis, he is prone to develop ascending urinary tract infection so that he has to monitor his urinalysis and be treated for any signs of infection. He may require intervention in the form of lithotripsy or surgery to remove his nephrolithiasis. His renal colic may be a recurrent discomfort impairing his quality of life. He is not expected to land a gainful employment given his medical background.

Thank you. (signed) Efren R. Vicaldo, M.D.20 Respondent underwent surgery for his nephrolithiasis on August 31, 2005. On September 12, 2005, respondent took an x-ray examination which registered the following results:

ROENTGENOLOGICAL FINDINGS: Previous film not available for comparison. Plain radiograph of the KUB shows gas and fecal-filled bowel loops which partially obscure both renal shadows. No opaque lithiasis noted. Spur formations are noted on the lumbar vertebrae. IMPRESSION: DEGENERATIVE OSSEOUS CHANGES OF THE LUMBAR VERTEBRAE21 Respondent filed a claim for disability benefits with petitioners, but the claim was denied. Thus, on October 18, 2005, respondent filed against the petitioners a Complaint22 for the recovery of total permanent disability benefits, illness allowance, reimbursement of medical expenses, damages and attorneys fees. On July 3, 2006, respondent returned to Dr. Cruz and underwent urinalysis, ultrasound and x-ray. On July 18, 2006, Dr. Cruz issued his final Medical Report,23 stating thus: He (respondent) was repatriated because of right flank pain and gross hematuria. The IVP done showed mild prostatic enlargement with signs of cystitis. Ultrasound of the KUB done revealed small mild calyseal non-obstructing stone on the left side. The recent x-ray showed neither opacity nor filling defect. The IVP showed pyelitis (inflammation of the kidney). The repeat ultrasound showed decrease in the size of the echogenic focus and cyst in the upper pole of the left kidney. The right kidney is normal. Last August 31, 2005, he underwent ESWL. He was last seen in our clinic last October 14, 2005 and was advised to come back on November 07, 2005 but failed to do so. At present, the repeat urinalysis is normal. The ultrasound of the KUB showed left renal cortical cyst and enlarged prostate gland with concretions. Our urologist opined that Mr. Calo is now stone free and normal. He is now fit to work as a seafarer on account of the [absence of kidney stones]. DIAGNOSIS: Nephrolithiasis, left, treated RECOMMENDATION: He is fit to work.24 Ruling of the Labor Arbiter On March 30, 2007, the Labor Arbiter issued his Decision25 which decreed as follows:

WHEREFORE, both respondent companies are ordered to pay, jointly and severally, the complainant, the amount of US$60,000.00 or its peso equivalent at the time of payment as disability compensation and US$6,000.00 or its peso equivalent at the time of payment, as attorneys fees. Other claims are DISMISSED for lack of merit. SO ORDERED.26 The Labor Arbiter granted permanent total disability benefits and attorneys fees to respondent, but denied his claim for moral and exemplary damages. The Labor Arbiter held that respondent suffered permanent disability as a result of his inability to work despite undergoing treatment and medication by the company-designated physician for more than 120 days, or from October 15, 2004 through July 18, 2006; the company-designated physicians July 18, 2006 "fit to work" declaration was irrelevant and belated as it was made long after the expiration of the continuous 120-day period during which respondent was unable to work, which thus entitles the latter to permanent total disability benefits under the law. The Labor Arbiter cited United Philippine Lines, Inc. and/or Holland America Line, Inc. v. Beseril,27 which held: Notatu dignum is the correct observation of the appellate court in its above-quoted portion of its decision that it was only after respondent had filed a claim for permanent disability that Doctors Abaya and Hill declared him fit for sea duty. But even in the absence of an official finding by the company-designated physicians that respondent is unfit for sea duty, respondent is deemed to have suffered permanent disability. Permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether he loses the use of any part of his body. It is undisputed that from the time respondent suffered a heart attack on December 5, 1997, he was unable to work for more than 120 days, his cardiac rehabilitation and physical therapy having ended only on May 28, 1998. That respondent was found to be "fit to return to work" by Clinica Manila (where he underwent regular cardiac rehabilitation program and physical therapy from January 15 to May 28, 1998 under UPLs account) on September 22, 1998 or a few months after his rehabilitation does not matter. Crystal Shipping Inc. v. Natividad teaches: Petitioners tried to contest the above findings by showing that respondent was able to work again as a chief mate in March 2001. Nonetheless, this information does not alter the fact that as a result of his illness, respondent was unable to work as a chief mate for almost three years. It is of no consequence that respondent was cured after a couple of years. The law does not require that the illness should be incurable. What is important is that he was unable to perform his customary work for more than 120 days which constitutes permanent total disability. An award of a total and permanent disability benefit would be germane to the purpose of the benefit, which is to help the employee in making ends meet at the time when he is unable to work.28 (Underscoring supplied)

Ruling of the National Labor Relations Commission Petitioners appealed to the NLRC. On March 31, 2008, the NLRC rendered its Decision29 granting petitioners appeal and reversing the Labor Arbiters March 30, 2007 Decision, thus: WHEREFORE, the appeal is GRANTED. The decision of the Labor Arbiter dated March 30, 2007 is VACATED and SET ASIDE and a new one entered dismissing the complaint for lack of merit. SO ORDERED.30 In a Resolution31 dated June 30, 2008 respondents Motion for Reconsideration was denied. Essentially, the NLRC held that for purposes of claiming disability benefits under the Philippine Overseas Employment Administration (POEA) Standard Employment Contract, it is the company-designated physician, Dr. Cruz and not respondents physician Dr. Vicaldo who should make the corresponding proclamation or finding that respondent suffered permanent total or partial disability. Thus, Dr. Cruzs July 18, 2006 Medical Report declaring respondent as fit to work prevails over Dr. Vicaldos July 28, 2005 Medical Certificate declaring respondent unfit to resume work as seaman in any capacity. The NLRC added that while the July 18, 2006 certification of fitness was issued more than one year following respondents disembarkation, its belated issuance is not sufficient to establish petitioners liability for disability compensation, especially where respondent was to blame for his failure to report to Dr. Cruz and continue treatment. The NLRC was referring to respondents failure to return for further treatment by Dr. Cruz, as directed, after October 14, 2005. It held that as a result, respondents Complaint was prematurely filed since his treatment was still ongoing at the time of its filing, and that he is guilty of unjustified abandonment of treatment. Ruling of the Court of Appeals In a Petition for Certiorari32 filed with the CA, respondent sought a reversal of the Decision of the NLRC, arguing that the latter committed grave abuse of discretion and gross error in upholding Dr. Cruzs July 18, 2006 Medical Report; in disregarding the 120-day rule which entitles the employee to permanent disability benefits in the event of continuous inability to perform his work for more than 120 days; and in ordering the dismissal of his Complaint. On December 17, 2009, the CA issued the assailed Decision which contained the following decretal portion: WHEREFORE, premises considered, the March 31, 2008 Decision and June 30, 2008 Resolution of public respondent National Labor Relations Commission are REVERSED and SET ASIDE. Accordingly, the March 30, 2007 Decision of the Labor Arbiter is REINSTATED. SO ORDERED.33

The CA held that the company-designated physicians findings are not conclusive and binding on the issue of the employees state of health, disability, or fitness to resume work. It held, thus: In fine, therefore, the better view is this: While it is mandatory for the seafarer to be examined first by the company-designated physician, the latters findings, however, should not be conclusive and binding upon the former nor upon the courts or labor tribunals. The seafarers right to seek the opinion of his own doctor should be recognized. In case of disagreement between the findings of his doctor and those of the company physician, the parties may jointly seek the opinion of a third, independent doctor, whose decision shall be final and binding upon them. In the absence, however, of the opinion of a third, independent doctor as in this case, the findings of the company-designated physician and the seafarers physician should be duly evaluated and weighed against each other based on their inherent merits. The foregoing, to Our mind, is more in accord with the spirit of the law and jurisprudence, not to mention the policy of social justice.34 The CA found incredible Dr. Cruzs findings in his July 18, 2006 Medical Report, which it held were self-serving and hearsay as they were based on the opinion of an unnamed urologist, whose opinion was not backed by the appropriate separate medical certificate. The CA added that the NLRC gravely erred in not considering that respondent had already been under medical treatment and incapacitated to work for more than 120 days, or even 240 days which is the maximum allowable period of treatment pursuant to Rule X, Section 2 of the Amended Rules on Employees Compensation35 and the pronouncement in Vergara v. Hammonia Maritime Services, Inc.36 which held that if the 120-day period elapsed and no declaration of disability or fitness is made because the employee required further medical treatment, then treatment should continue 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; a temporary total disability only becomes permanent when so declared by the companydesignated physician within the period allowed, or upon expiration of the maximum 240-day medical treatment period in case of absence of a declaration of fitness or permanent disability. The CA held that herein respondent was repatriated on October 12, 2004, and his last medical examination was conducted on October 14, 2005; clearly, more than 240 days have elapsed without respondent having been declared either fit to work or permanently disabled. He was declared fit to work only on July 18, 2006, or long after his labor Complaint was filed and almost two years from his repatriation; respondent is thus deemed permanently disabled. Finally, the CA declared that respondents permanent disability was total, considering that both his personal physician Dr. Vicaldo and the company-designated physician Dr. Cruz declared him "unfit to work as seaman in any capacity" and "is not expected to land a gainful employment given his medical background," and that there was persistence of the left kidney stone "located inside the diverticulum and it is impossible to pass out the stone thru his urine." It held that for total disability to exist, it is not required that the employee be absolutely disabled or totally paralyzed; it is merely necessary that the injury or illness be such that the employee cannot pursue his/her usual work and earn therefrom. And to be permanent, a total disability should last continuously for more than 120 days or 240 days, per the Vergara ruling.

Petitioners filed a Motion for Reconsideration,37 but the CA denied the same in its April 26, 2010 Resolution. Hence, the present Petition. Issues Petitioners submit the following issues for resolution: 1. Whether x x x respondent is entitled to disability benefits under the POEA Standard Employment Contract for Seafarers despite the fact that he was declared fit to work. 2. Whether x x x respondent is entitled to attorneys fees.38 Petitioners Arguments Praying that the assailed CA dispositions be set aside and that a pronouncement be made denying respondent the adjudged disability benefits and attorneys fees, petitioners maintain that respondent is not entitled to disability benefits and attorneys fees; and even granting without admitting that respondent is entitled to disability benefits, the same should be limited to US$10,075.00 in view of the Grade 10 disability rating given by Dr. Vicaldo, respondents personal physician. With regard to disability benefits, petitioners argue that although respondent was subjected to treatment for one year and nine months (or from October 20, 2004, respondents first examination by Dr. Cruz, up to July 3, 2006, respondents last visit to the latter) and that Dr. Cruzs July 18, 2006 Medical Report cum declaration of fitness to work was issued later, the prolonged treatment should be blamed on respondent as he failed to report to Dr. Cruz when required; instead, he sought treatment from his personal physician and abandoned treatment being made by Dr. Cruz. Petitioners insist further that as between Dr. Cruz and Dr. Vicaldo, the formers opinion and diagnosis as the company-designated physician should prevail, pursuant to the provisions of the employment contract, law, and jurisprudence. Petitioners add that respondents own personal physician, Dr. Vicaldo, did not declare respondent to be suffering from permanent total disability; in fact, Dr. Vicaldo diagnosed him as suffering from a mere Grade 10 disability which, under his employment contract, entitles respondent to receive only US$10,075.00, and not the adjudged US$60,000.00. In other words, respondents illness nephrolithiasis is not a Grade 1 disability which entitles him to the maximum disability compensation. On the issue of attorneys fees, petitioners claim that as a necessary result of the fact that respondent is not entitled to disability compensation, no attorneys fees may be awarded to him as well. They add that they were not amiss in their obligations toward respondent, and saw to it that he was given appropriate treatment and medication until he was finally declared fit to work; and that they acted in good faith and shouldered all of respondents expenses in obtaining

treatment for his condition. In view of their good faith and the faithful observance of their obligations under the law, respondent has no right to recover attorneys fees. Respondents Argument In his Comment,39 respondent counters that the CA was correct in ruling that the companydesignated physicians findings are not conclusive and binding; that Dr. Cruzs findings in his July 18, 2006 Medical Report were self-serving and hearsay as they were based on the opinion of an unnamed urologist and not of his personal knowledge; and that the said July 18, 2006 Medical Report is self-serving for having been issued only after his Complaint was filed. Respondent adds that he is not guilty of abandonment of treatment, stating that he has been under treatment by the company-designated physician for over eight months, without improvement in his condition, which thus gave him the right to consult another physician. On the issue of the adjudged disability benefit, respondent argues that he is entitled to the full US$60,000.00, and not merely the lower amount of US$10,075.00 advanced by petitioners. Citing Oriental Shipmanagement Co., Inc. v. Bastol,40 he contends that "permanent disability" is defined as the inability of a worker to perform his job for more than 120 days, without regard to the loss of any part of his body; thus, his inability to perform his usual work as Chief Cook on board an ocean-going vessel for more than 120 days due to his illness makes his disability total and permanent and entitles him to full disability benefits under the law. Finally, respondent insists on the correctness of the award of attorneys fees, arguing that petitioners unjustified failure/refusal to satisfy his claim for disability benefits compelled him to litigate to protect his rights and interests, for which he is entitled to attorneys fees equivalent to 10% of the monetary award. Our Ruling The Court denies the Petition. Article 192(c)(1) of the Labor Code provides that: Art. 192. Permanent total disability. x x x (c) 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 120-day period may be extended up to 240 days, under Rule X, Section 2 of the Amended Rules on Employees Compensation and pursuant to the pronouncement in Vergara v. Hammonia Maritime Services, Inc.41 stating that a temporary total disability becomes permanent when so declared by the company-designated physician within the period allowed, or upon expiration of

the maximum 240-day medical treatment period in case of absence of a declaration of fitness or permanent disability. It is settled that the above provisions of the Labor Code and the Amended Rules on Employees Compensation on disabilities apply to seafarers;42 the POEA Standard Employment Contract, which respondent holds, is not the sole basis for determining their rights in the event of workrelated injury, illness or death. It may likewise be true that under respondents POEA Standard Employment Contract, only those injuries or disabilities that are classified as Grade 1 are considered total and permanent. However, the Court has made it clear, in Kestrel Shipping Co., Inc. v. Munar,43 that x x x if those injuries or disabilities with a disability grading from 2 to 14, hence, partial and permanent, would incapacitate a seafarer from performing his usual sea duties for a period of more than 120 or 240 days, depending on the need for further medical treatment, then he is, under legal contemplation, totally or permanently disabled. In other words, an impediment should be characterized as partial and permanent not only under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so under the relevant provisions of the Labor Code and the Amended Rules on Employee[s] Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the seafarer is partially injured or disabled, he is not precluded from earning doing [sic] the same work he had before his injury or disability or that he is accustomed or trained to do. Otherwise, if his illness or injury prevents him from engaging in gainful employment for more than 120 or 240 days, as the case may be, he shall be deemed totally and permanently disabled. Moreover, the company-designated physician is expected to arrive at a definite assessment of the seafarers fitness to work or permanent disability within the period of 120 or 240 days. That should he fail to do so and the seafarers medical condition remains unresolved, the seafarer shall be deemed totally or permanently disabled.1wphi1 xxxx Consequently, if after the lapse of the stated periods, the seafarer is still incapacitated to perform his usual sea duties and the company-designated physician had not yet declared him fit to work or permanently disabled, whether total or permanent, the conclusive presumption that the latter is totally and permanently disabled arises.44 (Emphasis supplied) Thus, from the above, it can be said that 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 24045-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. This is true "regardless of whether the employee loses the use of any part of his body."46 Respondent was repatriated on October 12, 2004 and underwent treatment by the companydesignated physician, Dr. Cruz, until October 14, 2005, or for a continuous period of over one

year or for more than the statutory 120-day47 or even 240-day48 period. During said treatment period, Dr. Cruz did not arrive at a definite assessment of respondents fitness or disability; thus, respondents medical condition remained unresolved. It was only on July 18, 2006 that respondent was declared fit to work by Dr. Cruz. Such declaration, however, became irrelevant, for by then, respondent had been under medical treatment and unable to engage in gainful employment for more than 240 days. Pursuant to the doctrine in Kestrel, the conclusive presumption that the respondent is totally and permanently disabled thus arose. The CA is therefore correct in declaring that respondent suffered permanent total disability. In the same manner, the issue of which among the two diagnoses or opinions should prevail that of Dr. Cruz or Dr. Vicaldo is rendered irrelevant in view of the lapse of the said 240-day period. As far as the parties are concerned, respondents medical treatment and disability continued for more than 240 days without any finding or diagnosis by the company-designated physician that he was fit to resume work. Thus, consonant with law and jurisprudence, respondent is entitled to a declaration of permanent total disability, as well as the corresponding benefit attached thereto in the amount of US$60,000.00. The Court likewise notes the CAs finding that while respondent was given an Impediment Grade 10 (20.15%) by his physician, he was nevertheless deemed unfit to work as seaman in any capacity and not expected to land gainful employment given his medical background. Moreover, it has been found that surgical intervention may be required to remove respondents nephrolithiasis; if not, he is prone to develop ascending urinary tract infection. It must be remembered that in August 2004, while respondent was still on ship duty, he was diagnosed with urinary tract infection by a company-approved physician and declared fit to work, but only on a "light duty" basis; and when the same infection recurred with his kidney stones, he was declared unfit to work by the physician at Honmoku Hospital in Japan. If respondents nephrolithiasis is not cured, certainly he cannot be expected to return to work under his condition. With respect to attorneys fees, it is clear that respondent was compelled to litigate due to petitioners failure to satisfy his valid claim. Where an employee is forced to litigate and incur expenses to protect his rights and interest, he is entitled to an award of attorneys fees equivalent to ten percent (10%) of the total award at the time of actual payment.49 Lastly, while the Labor Arbiters March 30, 2007 Decision is correct and should be reinstated, a modification thereof is in order, in that the awards therein should be paid in no other form than in Philippine pesos.50 WHEREFORE, the Petition is DENIED. The assailed December 17, 2009 Decision and April 26, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 105550 are AFFIRMED, and the March 30, 2007 Decision of the Labor Arbiter is REINSTATED, with the MODIFICATION that petitioners Alpha Ship Management Corporation, Junel M. Chan and/or Chuo-Kaiun Company Limited are ordered to jointly and severally pay respondent Eleosis V. Calo the amounts of US$60,000.00 as disability compensation and US$6,000.00 as attorneys fees in Philippine pesos, computed at the exchange rate prevailing at the time of payment. SO ORDERED.

G.R. No. 179532

May 30, 2011

CLAUDIO S. YAP, Petitioner, vs. THENAMARIS SHIP'S MANAGEMENT and INTERMARE MARITIME AGENCIES, INC., Respondents. DECISION NACHURA, J.: Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision2 dated February 28, 2007, which affirmed with modification the National Labor Relations Commission (NLRC) resolution3 dated April 20, 2005. The undisputed facts, as found by the CA, are as follows: [Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. The contract of employment entered into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. The Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December 2001 in a letter signed by Capt. Adviento. Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold and will be scrapped. They were also informed about the Advisory sent by Capt. Constatinou, which states, among others: " PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE TRANSFERRED TO OTHER VESSELS AFTER VESSEL S DELIVERY (GREEK VIA ATHENS-PHILIPINOS VIA MANILA FOR CREW NOT WISH TRANSFER TO DECLARE THEIR PROSPECTED TIME FOR REEMBARKATION IN ORDER TO SCHEDULE THEM ACCLY" Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus. However, with respect to the payment of his wage, he refused to accept the payment of onemonth basic wage. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he opted for immediate transfer but none was made. [Respondents], for their part, contended that Yap was not illegally dismissed. They alleged that following the sale of the M/T SEASCOUT, Yap signed off from the vessel on 10 November 2001 and was paid his wages corresponding to the months he worked or until 10 November 2001 plus his seniority bonus, vacation bonus and extra bonus. They further alleged that Yaps

employment contract was validly terminated due to the sale of the vessel and no arrangement was made for Yaps transfer to Thenamaris other vessels.4 Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorneys Fees before the Labor Arbiter (LA). Petitioner claimed that he was entitled to the salaries corresponding to the unexpired portion of his contract. Subsequently, he filed an amended complaint, impleading Captain Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare) and Thenamaris Ships Management (respondents), together with C.J. Martionos, Interseas Trading and Financing Corporation, and Vulture Shipping Limited/Stejo Shipping Limited. On July 26, 2004, the LA rendered a decision5 in favor of petitioner, finding the latter to have been constructively and illegally dismissed by respondents. Moreover, the LA found that respondents acted in bad faith when they assured petitioner of re-embarkation and required him to produce an electrician certificate during the period of his contract, but actually he was not able to board one despite of respondents numerous vessels. Petitioner made several follow-ups for his re-embarkation but respondents failed to heed his plea; thus, petitioner was forced to litigate in order to vindicate his rights. Lastly, the LA opined that since the unexpired portion of petitioners contract was less than one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine months. The LA disposed, as follows: WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring complainant to have been constructively dismissed. Accordingly, respondents Intermare Maritime Agency Incorporated, Thenamaris Ships Mgt., and Vulture Shipping Limited are ordered to pay jointly and severally complainant Claudio S. Yap the sum of $12,870.00 or its peso equivalent at the time of payment. In addition, moral damages of ONE HUNDRED THOUSAND PESOS (P100,000.00) and exemplary damages of FIFTY THOUSAND PESOS (P50,000.00) are awarded plus ten percent (10%) of the total award as attorneys fees. Other money claims are DISMISSED for lack of merit. SO ORDERED.6 Aggrieved, respondents sought recourse from the NLRC. In its decision7 dated January 14, 2005, the NLRC affirmed the LAs findings that petitioner was indeed constructively and illegally dismissed; that respondents bad faith was evident on their wilful failure to transfer petitioner to another vessel; and that the award of attorneys fees was warranted. However, the NLRC held that instead of an award of salaries corresponding to nine months, petitioner was only entitled to salaries for three months as provided under Section 108 of Republic Act (R.A.) No. 8042,9 as enunciated in our ruling in Marsaman Manning Agency, Inc. v. National Labor Relations Commission.10 Hence, the NLRC ruled in this wise: WHEREFORE, premises considered, the decision of the Labor Arbiter finding the termination of complainant illegal is hereby AFFIRMED with a MODIFICATION. Complainant[s] salary for the unexpired portion of his contract should only be limited to three (3) months basic salary.

Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping Limited and Thenamaris Ship Management are hereby ordered to jointly and severally pay complainant, the following: 1. Three (3) months basic salary US$4,290.00 or its peso equivalent at the time of actual payment. 2. Moral damages P100,000.00 3. Exemplary damages P50,000.00 4. Attorneys fees equivalent to 10% of the total monetary award. SO ORDERED.11 Respondents filed a Motion for Partial Reconsideration,12 praying for the reversal and setting aside of the NLRC decision, and that a new one be rendered dismissing the complaint. Petitioner, on the other hand, filed his own Motion for Partial Reconsideration,13 praying that he be paid the nine (9)-month basic salary, as awarded by the LA. On April 20, 2005, a resolution14 was rendered by the NLRC, affirming the findings of Illegal Dismissal and respondents failure to transfer petitioner to another vessel. However, finding merit in petitioners arguments, the NLRC reversed its earlier Decision, holding that "there can be no choice to grant only three (3) months salary for every year of the unexpired term because there is no full year of unexpired term which this can be applied." Hence WHEREFORE, premises considered, complainants Motion for Partial Reconsideration is hereby granted. The award of three (3) months basic salary in the sum of US$4,290.00 is hereby modified in that complainant is entitled to his salary for the unexpired portion of employment contract in the sum of US$12,870.00 or its peso equivalent at the time of actual payment. All aspect of our January 14, 2005 Decision STANDS. SO ORDERED.15 Respondents filed a Motion for Reconsideration, which the NLRC denied. Undaunted, respondents filed a petition for certiorari16 under Rule 65 of the Rules of Civil Procedure before the CA. On February 28, 2007, the CA affirmed the findings and ruling of the LA and the NLRC that petitioner was constructively and illegally dismissed. The CA held that respondents failed to show that the NLRC acted without statutory authority and that its findings were not supported by law, jurisprudence, and evidence on record. Likewise, the CA affirmed the lower agencies findings that the advisory of Captain Constantinou, taken together with the other documents and additional requirements imposed on petitioner, only meant that the latter should have been re-embarked. In the same token, the CA upheld the lower agencies unanimous finding of bad faith, warranting the imposition of moral and exemplary damages and attorneys fees. However, the CA ruled that the NLRC erred in sustaining the LAs interpretation of Section

10 of R.A. No. 8042. In this regard, the CA relied on the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 and held: In the present case, the employment contract concerned has a term of one year or 12 months which commenced on August 14, 2001. However, it was preterminated without a valid cause. [Petitioner] was paid his wages for the corresponding months he worked until the 10th of November. Pursuant to the provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of "three months for every year of the unexpired term" is applicable.17 Thus, the CA provided, to wit: WHEREFORE, premises considered, this Petition for Certiorari is DENIED. The Decision dated January 14, 2005, and Resolutions, dated April 20, 2005 and July 29, 2005, respectively, of public respondent National Labor Relations Commission-Fourth Division, Cebu City, in NLRC No. V-000038-04 (RAB VIII (OFW)-04-01-0006) are hereby AFFIRMED with the MODIFICATION that private respondent is entitled to three (3) months of basic salary computed at US$4,290.00 or its peso equivalent at the time of actual payment. Costs against Petitioners.18 Both parties filed their respective motions for reconsideration, which the CA, however, denied in its Resolution19 dated August 30, 2007. Unyielding, petitioner filed this petition, raising the following issues: 1) Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit of "salaries for [the] unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less" is constitutional; and 2) Assuming that it is, whether or not the Court of Appeals gravely erred in granting petitioner only three (3) months backwages when his unexpired term of 9 months is far short of the "every year of the unexpired term" threshold.20 In the meantime, while this case was pending before this Court, we declared as unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime Services, Inc.21 on March 24, 2009. Apparently, unaware of our ruling in Serrano, petitioner claims that the 5th paragraph of Section 10, R.A. No. 8042, is violative of Section 1,22 Article III and Section 3,23 Article XIII of the Constitution to the extent that it gives an erring employer the option to pay an illegally dismissed migrant worker only three months for every year of the unexpired term of his contract; that said provision of law has long been a source of abuse by callous employers against migrant workers; and that said provision violates the equal protection clause under the Constitution because, while

illegally dismissed local workers are guaranteed under the Labor Code of reinstatement with full backwages computed from the time compensation was withheld from them up to their actual reinstatement, migrant workers, by virtue of Section 10 of R.A. No. 8042, have to waive nine months of their collectible backwages every time they have a year of unexpired term of contract to reckon with. Finally, petitioner posits that, assuming said provision of law is constitutional, the CA gravely abused its discretion when it reduced petitioners backwages from nine months to three months as his nine-month unexpired term cannot accommodate the lesser relief of three months for every year of the unexpired term.24 On the other hand, respondents, aware of our ruling in Serrano, aver that our pronouncement of unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in Serrano should not apply in this case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations of the parties in case of Illegal Dismissal of a migrant worker and is not merely procedural in character. Thus, pursuant to the Civil Code, there should be no retroactive application of the law in this case. Moreover, respondents asseverate that petitioners tanker allowance of US$130.00 should not be included in the computation of the award as petitioners basic salary, as provided under his contract, was only US$1,300.00. Respondents submit that the CA erred in its computation since it included the said tanker allowance. Respondents opine that petitioner should be entitled only to US$3,900.00 and not to US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the tanker allowance should be excluded from the definition of the term "salary." Also, respondents manifest that the full sum of P878,914.47 in Intermares bank account was garnished and subsequently withdrawn and deposited with the NLRC Cashier of Tacloban City on February 14, 2007. On February 16, 2007, while this case was pending before the CA, the LA issued an Order releasing the amount of P781,870.03 to petitioner as his award, together with the sum of P86,744.44 to petitioners former lawyer as attorneys fees, and the amount of P3,570.00 as execution and deposit fees. Thus, respondents pray that the instant petition be denied and that petitioner be directed to return to Intermare the sum of US$8,970.00 or its peso equivalent.25 On this note, petitioner counters that this new issue as to the inclusion of the tanker allowance in the computation of the award was not raised by respondents before the LA, the NLRC and the CA, nor was it raised in respondents pleadings other than in their Memorandum before this Court, which should not be allowed under the circumstances.26 The petition is impressed with merit. Prefatorily, it bears emphasis that the unanimous finding of the LA, the NLRC and the CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the tribunals unanimous finding of bad faith on the part of respondents, thus, warranting the award of moral and exemplary damages and attorneys fees. What remains in issue, therefore, is the constitutionality of the 5th paragraph of Section 10 of R.A. No. 8042 and, necessarily, the proper computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.

Verily, we have already declared in Serrano that the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. In an exhaustive discussion of the intricacies and ramifications of the said clause, this Court, in Serrano, pertinently held: The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.27 Moreover, this Court held therein that the subject clause does not state or imply any definitive governmental purpose; hence, the same violates not just therein petitioners right to equal protection, but also his right to substantive due process under Section 1, Article III of the Constitution.28 Consequently, petitioner therein was accorded his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042. We have already spoken. Thus, this case should not be different from Serrano. As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all. The general rule is supported by Article 7 of the Civil Code, which provides: Art. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary. The doctrine of operative fact serves as an exception to the aforementioned general rule. In Planters Products, Inc. v. Fertiphil Corporation,29 we held: The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it.30 Following Serrano, we hold that this case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be iniquitous to petitioner and

other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs security of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law. In the same vein, we cannot subscribe to respondents postulation that the tanker allowance of US$130.00 should not be included in the computation of the lump-sum salary to be awarded to petitioner. First. It is only at this late stage, more particularly in their Memorandum, that respondents are raising this issue. It was not raised before the LA, the NLRC, and the CA. They did not even assail the award accorded by the CA, which computed the lump-sum salary of petitioner at the basic salary of US$1,430.00, and which clearly included the US$130.00 tanker allowance. Hence, fair play, justice, and due process dictate that this Court cannot now, for the first time on appeal, pass upon this question. Matters not taken up below cannot be raised for the first time on appeal. They must be raised seasonably in the proceedings before the lower tribunals. Questions raised on appeal must be within the issues framed by the parties; consequently, issues not raised before the lower tribunals cannot be raised for the first time on appeal.311avvphi1 Second. Respondents invocation of Serrano is unavailing. Indeed, we made the following pronouncements in Serrano, to wit: The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days and holidays.32 A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. Respondents themselves in their petition for certiorari before the CA averred that petitioners basic salary, pursuant to the contract, was "US$1,300.00 + US$130.00 tanker allowance."33 If respondents intended it differently, the contract per se should have indicated that said allowance does not form part of the basic salary or, simply, the contract should have separated it from the basic salary clause. A final note. We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte v. Nayona,34 this Court held that: Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of our society. Their profile shows they live in suffocating slums, trapped in an environment of crimes. Hardly literate and in ill health, their only hope lies in jobs they find with difficulty in our country. Their unfortunate circumstance makes them easy prey to avaricious

employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to protect them with our laws. WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated February 28, 2007 and Resolution dated August 30, 2007 are hereby MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine months computed at the rate of US$1,430.00 per month. All other awards are hereby AFFIRMED. No costs. SO ORDERED

SECOND DIVISION G.R. No. 162419 July 10, 2007

PAUL V. SANTIAGO, petitioner, vs. CF SHARP CREW MANAGEMENT, INC., respondent. DECISION TINGA, J.: At the heart of this case involving a contract between a seafarer, on one hand, and the manning agent and the foreign principal, on the other, is this erstwhile unsettled legal quandary: whether the seafarer, who was prevented from leaving the port of Manila and refused deployment without valid reason but whose POEA-approved employment contract provides that the employeremployee relationship shall commence only upon the seafarers actual departure from the port in the point of hire, is entitled to relief? This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision and Resolution of the Court of Appeals dated 16 October 2003 and 19 February 2004, respectively, in CA-G.R. SP No. 68404.1 Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years.2 On 3 February 1998, petitioner signed a new contract of employment with respondent, with the duration of nine (9) months. He was assured of a monthly salary of US$515.00, overtime pay and other benefits. The following day or on 4 February 1998, the contract was approved by the Philippine Overseas Employment Administration (POEA). Petitioner was to be deployed on board the "MSV Seaspread" which was scheduled to leave the port of Manila for Canada on 13 February 1998. A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondents Vice President, sent a facsimile message to the captain of "MSV Seaspread," which reads: I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband to MSV Seaspread anymore. Other callers who did not reveal their identity gave me some feedbacks that Paul Santiago this time if allowed to depart will jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu, Japan last December, 1997. We do not want this to happen again and have the vessel penalized like the C.S. Nexus in Japan. Forewarned is forearmed like his brother when his brother when he was applying he behaved like a Saint but in his heart he was a serpent. If you agree with me then we will send his replacement.

Kindly advise.3 To this message the captain of "MSV Seaspread" replied: Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to return to Seaspread.4 On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that he might be considered for deployment at some future date. Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal, Cable and Wireless (Marine) Ltd.5 The case was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that the employment contract remained valid but had not commenced since petitioner was not deployed. According to her, respondent violated the rules and regulations governing overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00. The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January 1999 reads: WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant actual damages in the amount of US$7,209.00 plus 10% attorney's fees, payable in Philippine peso at the rate of exchange prevailing at the time of payment. All the other claims are hereby DISMISSED for lack of merit. SO ORDERED.6 On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no employer-employee relationship between petitioner and respondent because under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the employment contract shall commence upon actual departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence of an employer-employee relationship between the parties, the claims for illegal dismissal, actual damages, and attorneys fees should be dismissed.7 On the other hand, the NLRC found respondents decision not to deploy petitioner to be a valid exercise of its management prerogative.8 The NLRC disposed of the appeal in this wise: WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29, 1999 is hereby AFFIRMED in so far as other claims are concerned and with MODIFICATION by VACATING the award of actual damages and attorneys fees as well as excluding Pacifico Fernandez as party respondent. SO ORDERED.9

Petitioner moved for the reconsideration of the NLRCs Decision but his motion was denied for lack of merit.10 He elevated the case to the Court of Appeals through a petition for certiorari. In its Decision11 dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in the NLRCs Decision when it affirmed with modification the labor arbiters Decision, because by the very modification introduced by the Commission (vacating the award of actual damages and attorneys fees), there is nothing more left in the labor arbiters Decision to affirm.12 According to the appellate court, petitioner is not entitled to actual damages because damages are not recoverable by a worker who was not deployed by his agency within the period prescribed in the POEA Rules.13 It agreed with the NLRCs finding that petitioners non-deployment was a valid exercise of respondents management prerogative.14 It added that since petitioner had not departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against the so-called employer could have no leg to stand on.15 Petitioners subsequent motion for reconsideration was denied on 19 February 2004.16 The present petition is anchored on two grounds, to wit: A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042 otherwise known as the Migrant Workers Act of 1995 as well as Section 29 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated under the petitioners POEA approved Employment Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a contract fall within the jurisdiction of the Labor Arbiter of the NLRC. B. The Honorable Court of Appeals committed a serious error when it disregarded the required quantum of proof in labor cases, which is substantial evidence, thus a total departure from established jurisprudence on the matter.17 Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it failed to deploy him within thirty (30) calendar days without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of the POEA- approved contract. Since it prevented his deployment without valid basis, said deployment being a condition to the consummation of the POEA contract, the contract is deemed consummated, and therefore he should be awarded actual damages, consisting of the stipulated salary and fixed overtime pay.18 Petitioner adds that since the contract is deemed consummated, he should be considered an employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of his claims.19 Petitioner additionally claims that he should be considered a regular employee, having worked for five (5) years on board the same vessel owned by the same principal and manned by the same local agent. He argues that respondents act of not deploying him was a scheme designed to prevent him from attaining the status of a regular employee.20

Petitioner submits that respondent had no valid and sufficient cause to abandon the employment contract, as it merely relied upon alleged phone calls from his wife and other unnamed callers in arriving at the conclusion that he would jump ship like his brother. He points out that his wife had executed an affidavit21 strongly denying having called respondent, and that the other alleged callers did not even disclose their identities to respondent.22 Thus, it was error for the Court of Appeals to adopt the unfounded conclusion of the NLRC, as the same was not based on substantial evidence.23 On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioners monetary claims. His employment with respondent did not commence because his deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC cannot entertain adjudication of petitioners case much less award damages to him. The controversy involves a breach of contractual obligations and as such is cognizable by civil courts.24 On another matter, respondent claims that the second issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction of this Court.25 There is some merit in the petition. There is no question that the parties entered into an employment contract on 3 February 1998, whereby petitioner was contracted by respondent to render services on board "MSV Seaspread" for the consideration of US$515.00 per month for nine (9) months, plus overtime pay. However, respondent failed to deploy petitioner from the port of Manila to Canada. Considering that petitioner was not able to depart from the airport or seaport in the point of hire, the employment contract did not commence, and no employer-employee relationship was created between the parties.26 However, a distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages. Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason. Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes a breach of contract, giving rise to petitioners cause of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and must therefore answer for the actual damages he suffered.

We take exception to the Court of Appeals conclusion that damages are not recoverable by a worker who was not deployed by his agency. The fact that the POEA Rules27 are silent as to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him. The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for damages and money claims recoverable by aggrieved employees because it is not the POEA, but the NLRC, which has jurisdiction over such matters. Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC has jurisdiction over petitioners complaint. The jurisdiction of labor arbiters is not limited to claims arising from employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that: Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x [Emphasis supplied] Since the present petition involves the employment contract entered into by petitioner for overseas employment, his claims are cognizable by the labor arbiters of the NLRC. Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months worth of salary as provided in the contract. He is not, however, entitled to overtime pay. While the contract indicated a fixed overtime pay, it is not a guarantee that he would receive said amount regardless of whether or not he rendered overtime work. Even though petitioner was "prevented without valid reason from rendering regular much less overtime service,"28 the fact remains that there is no certainty that petitioner will perform overtime work had he been allowed to board the vessel. The amount of US$286.00 stipulated in the contract will be paid only if and when the employee rendered overtime work. This has been the tenor of our rulings in the case of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission29 where we discussed the matter in this light: The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic

monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eighthour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable.30 The Court also holds that petitioner is entitled to attorneys fees in the concept of damages and expenses of litigation. Attorney's fees are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest.31 We note that respondents basis for not deploying petitioner is the belief that he will jump ship just like his brother, a mere suspicion that is based on alleged phone calls of several persons whose identities were not even confirmed. Time and again, this Court has upheld management prerogatives so long as they are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.32 Respondents failure to deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. The award of attorneys fees is thus warranted. However, moral damages cannot be awarded in this case. While respondents failure to deploy petitioner seems baseless and unreasonable, we cannot qualify such action as being tainted with bad faith, or done deliberately to defeat petitioners rights, as to justify the award of moral damages. At most, respondent was being overzealous in protecting its interest when it became too hasty in making its conclusion that petitioner will jump ship like his brother. We likewise do not see respondents failure to deploy petitioner as an act designed to prevent the latter from attaining the status of a regular employee. Even if petitioner was able to depart the port of Manila, he still cannot be considered a regular employee, regardless of his previous contracts of employment with respondent. In Millares v. National Labor Relations Commission,33 the Court ruled that seafarers are considered contractual employees and cannot be considered as regular employees under the Labor Code. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. The exigencies of their work necessitates that they be employed on a contractual basis.34 WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the Resolution dated 19 February 2004 of the Court of Appeals are REVERSED and SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January 1999 is REINSTATED with the MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to pay actual or compensatory damages in the amount of US$4,635.00 representing salary for nine (9) months as stated in the contract, and attorneys fees at the reasonable rate of 10% of the recoverable amount. SO ORDERED.

G.R. No. 179652

May 8, 2009

PEOPLE'S BROADCASTING (BOMBO RADYO PHILS., INC.), Petitioner, vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Respondents. DECISION TINGA, J.: The present controversy concerns a matter of first impression, requiring as it does the determination of the demarcation line between the prerogative of the Department of Labor and Employment (DOLE) Secretary and his duly authorized representatives, on the one hand, and the jurisdiction of the National Labor Relations Commission, on the other, under Article 128 (b) of the Labor Code in an instance where the employer has challenged the jurisdiction of the DOLE at the very first level on the ground that no employer-employee relationship ever existed between the parties. I. The instant petition for certiorari under Rule 65 assails the decision and the resolution of the Court of Appeals dated 26 October 2006 and 26 June 2007, respectively, in C.A. G.R. CEB-SP No. 00855.1 The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent) against Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAGIBIG and Philhealth before the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City.2 On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the Inspection Report Form,3 the Labor Inspector wrote under the heading "Findings/Recommendations" "non-diminution of benefits" and "Note: Respondent deny employer-employee relationship with the complainant- see Notice of Inspection results." In the Notice of Inspection Results4 also bearing the date 23 September 2003, the Labor Inspector made the following notations: Management representative informed that complainant is a drama talent hired on a per drama " participation basis" hence no employer-employeeship [sic] existed between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking (a contract between the talent director & the complainant), summary of billing of drama production etc. They (mgt.) has [sic] not control of the talent if he ventures into another contract w/ other broadcasting industries.

On the other hand, complainant Juezans alleged violation of non-diminution of benefits is computed as follows: @ P 2,000/15 days + 1.5 mos = P 6,000 (August 1/03 to Sept 15/03) Note: Recommend for summary investigation or whatever action deem proper.5 Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers.6 In his Order dated 27 February 2004,7 DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee of petitioner, and that the former is entitled to his money claims amounting to P203,726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave credence to the documents offered by respondent without examining the originals, but at the same time he missed or failed to consider petitioners evidence. Petitioners motion for reconsideration was denied.8 On appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit.9 Petitioner elevated the case to the Court of Appeals, claiming that it was denied due process when the DOLE Secretary disregarded the evidence it presented and failed to give it the opportunity to refute the claims of respondent. Petitioner maintained that there is no employeremployee relationship had ever existed between it and respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter because respondents claim exceeded P5,000.00. The Court of Appeals held that petitioner was not deprived of due process as the essence thereof is only an opportunity to be heard, which petitioner had when it filed a motion for reconsideration with the DOLE Secretary. It further ruled that the latter had the power to order and enforce compliance with labor standard laws irrespective of the amount of individual claims because the limitation imposed by Article 29 of the Labor Code had been repealed by Republic Act No. 7730.10 Petitioner sought reconsideration of the decision but its motion was denied.11 Before this Court, petitioner argues that the National Labor Relations Commission (NLRC), and not the DOLE Secretary, has jurisdiction over respondents claim, in view of Articles 217 and 128 of the Labor Code.12 It adds that the Court of Appeals committed grave abuse of discretion when it dismissed petitioners appeal without delving on the issues raised therein, particularly the claim that no employer-employee relationship had ever existed between petitioner and respondent. Finally, petitioner avers that there is no appeal, or any plain, speedy and adequate remedy in the ordinary course of law available to it.

On the other hand, respondent posits that the Court of Appeals did not abuse its discretion. He invokes Republic Act No. 7730, which "removes the jurisdiction of the Secretary of Labor and Employment or his duly authorized representatives, from the effects of the restrictive provisions of Article 129 and 217 of the Labor Code, regarding the confinement of jurisdiction based on the amount of claims."13 Respondent also claims that petitioner was not denied due process since even when the case was with the Regional Director, a hearing was conducted and pieces of evidence were presented. Respondent stands by the propriety of the Court of Appeals ruling that there exists an employer-employee relationship between him and petitioner. Finally, respondent argues that the instant petition for certiorari is a wrong mode of appeal considering that petitioner had earlier filed a Petition for Certiorari, Mandamus and Prohibition with the Court of Appeals; petitioner, instead, should have filed a Petition for Review.14 II. The significance of this case may be reduced to one simple questiondoes the Secretary of Labor have the power to determine the existence of an employer-employee relationship? To resolve this pivotal issue, one must look into the extent of the visitorial and enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as amended by Republic Act 7730. It reads: Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. (emphasis supplied) xxx The provision is quite explicit that the visitorial and enforcement power of the DOLE comes into play only "in cases when the relationship of employer-employee still exists." It also underscores the avowed objective underlying the grant of power to the DOLE which is "to give effect to the labor standard provision of this Code and other labor legislation." Of course, a persons entitlement to labor standard benefits under the labor laws presupposes the existence of employer-employee relationship in the first place. The clause "in cases where the relationship of employer-employee still exists" signifies that the employer-employee relationship must have existed even before the emergence of the controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (a) where the employer-employee relationship has ceased; and (b) where no such relationship has ever existed.

The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of Labor Standards Cases15 issued by the DOLE Secretary. It reads: Rule II MONEY CLAIMS ARISING FROM COMPLAINT/ROUTINE INSPECTION Sec. 3. Complaints where no employer-employee relationship actually exists. Where employeremployee relationship no longer exists by reason of the fact that it has already been severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint, it can be ascertained that employeremployee relationship no longer exists, the case, whether accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the Regional Director to the appropriate branch of the National Labor Relations Commission (NLRC). In the recent case of Bay Haven, Inc. v. Abuan,16 this Court recognized the first situation and accordingly ruled that a complainants allegation of his illegal dismissal had deprived the DOLE of jurisdiction as per Article 217 of the Labor Code.17 In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in view of the termination of the employer-employee relationship. The same procedure has to be followed in the second situation since it is the NLRC that has jurisdiction in view of the absence of employer-employee relationship between the evidentiary parties from the start. Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationship demand that the level of scrutiny should be far above the cursory and the mechanical. While documents, particularly documents found in the employers office are the primary source materials, what may prove decisive are factors related to the history of the employers business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC. It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions. The determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. This is the meaning of the clause "in cases where the relationship of employeremployee still exists" in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire. The approach suggested by the dissent is frowned upon by common law. To wit: [I]t is a general rule, that no court of limited jurisdiction can give itself jurisdiction by a wrong decision on a point collateral to the merits of the case upon which the limit to its jurisdiction depends; and however its decision may be final on all particulars, making up together that subject matter which, if true, is within its jurisdiction, and however necessary in many cases it may be for it to make a preliminary inquiry, whether some collateral matter be or be not within the limits, yet, upon this preliminary question, its decision must always be open to inquiry in the superior court.18 A more liberal interpretative mode, "pragmatic or functional analysis," has also emerged in ascertaining the jurisdictional boundaries of administrative agencies whose jurisdiction is established by statute. Under this approach, the Court examines the intended function of the tribunal and decides whether a particular provision falls within or outside that function, rather than making the provision itself the determining centerpiece of the analysis.19 Yet even under this more expansive approach, the dissent fails. A reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto. Necessarily, the actual existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the employer as opposed to non-employees. Among these differentiated rights are those accorded by the "labor standards" provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor standards with respect to the non-employees is questionable. This decision should not be considered as placing an undue burden on the Secretary of Labor in the exercise of visitorial and enforcement powers, nor seen as an unprecedented diminution of the same, but rather a recognition of the statutory limitations thereon. A mere assertion of absence of employer-employee relationship does not deprive the DOLE of jurisdiction over the

claim under Article 128 of the Labor Code. At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power. The Secretary of Labor would not have been precluded from exercising the powers under Article 128 (b) over petitioner if another person with better-grounded claim of employment than that which respondent had. Respondent, especially if he were an employee, could have very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its aegis. Without a doubt, petitioner, since the inception of this case had been consistent in maintaining that respondent is not its employee. Certainly, a preliminary determination, based on the evidence offered, and noted by the Labor Inspector during the inspection as well as submitted during the proceedings before the Regional Director puts in genuine doubt the existence of employer-employee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to refer respondent to the NLRC for the proper dispensation of his claims. Furthermore, as discussed earlier, even the evidence relied on by the Regional Director in his order are mere self-serving declarations of respondent, and hence cannot be relied upon as proof of employer-employee relationship. III. Aside from lack of jurisdiction, there is another cogent reason to to set aside the Regional Directors 27 February 2004 Order. A careful study of the case reveals that the said Order, which found respondent as an employee of petitioner and directed the payment of respondents money claims, is not supported by substantial evidence, and was even made in disregard of the evidence on record. It is not enough that the evidence be simply considered. The standard is substantial evidence as in all other quasi-judicial agencies. The standard employed in the last sentence of Article 128(b) of the Labor Code that the documentary proofs be "considered in the course of inspection" does not apply. It applies only to issues other than the fundamental issue of existence of employeremployee relationship. A contrary rule would lead to controversies on the part of labor officials in resolving the issue of employer-employee relationship. The onset of arbitrariness is the advent of denial of substantive due process. As a general rule, the Supreme Court is not a trier of facts. This applies with greater force in cases before quasi-judicial agencies whose findings of fact are accorded great respect and even finality. To be sure, the same findings should be supported by substantial evidence from which the said tribunals can make its own independent evaluation of the facts. Likewise, it must not be rendered with grave abuse of discretion; otherwise, this Court will not uphold the tribunals conclusion.20 In the same manner, this Court will not hesitate to set aside the labor tribunals findings of fact when it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record or when there is showing of fraud or error of law.21 At the onset, it is the Courts considered view that the existence of employer- employee relationship could have been easily resolved, or at least prima facie determined by the labor inspector, during the inspection by looking at the records of petitioner which can be found in the

work premises. Nevertheless, even if the labor inspector had noted petitioners manifestation and documents in the Notice of Inspection Results, it is clear that he did not give much credence to said evidence, as he did not find the need to investigate the matter further. Considering that the documents shown by petitioner, namely: cash vouchers, checks and statements of account, summary billings evidencing payment to the alleged real employer of respondent, letter-contracts denominated as "Employment for a Specific Undertaking," prima facie negate the existence of employer-employee relationship, the labor inspector could have exerted a bit more effort and looked into petitioners payroll, for example, or its roll of employees, or interviewed other employees in the premises. After all, the labor inspector, as a labor regulation officer is given "access to employers records and premises at any time of day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations pursuant thereto."22 Despite these far-reaching powers of labor regulation officers, records reveal that no additional efforts were exerted in the course of the inspection. The Court further examined the records and discovered to its dismay that even the Regional Director turned a blind eye to the evidence presented by petitioner and relied instead on the selfserving claims of respondent. In his position paper, respondent claimed that he was hired by petitioner in September 1996 as a radio talent/spinner, working from 8:00 am until 5 p.m., six days a week, on a gross rate of P60.00 per script, earning an average of P15,0000.00 per month, payable on a semi-monthly basis. He added that the payment of wages was delayed; that he was not given any service incentive leave or its monetary commutation, or his 13th month pay; and that he was not made a member of the Social Security System (SSS), Pag-Ibig and PhilHealth. By January 2001, the number of radio programs of which respondent was a talent/spinner was reduced, resulting in the reduction of his monthly income from P15,000.00 to only P4,000.00, an amount he could barely live on. Anent the claim of petitioner that no employer-employee relationship ever existed, respondent argued that that he was hired by petitioner, his wages were paid under the payroll of the latter, he was under the control of petitioner and its agents, and it was petitioner who had the power to dismiss him from his employment.23 In support of his position paper, respondent attached a photocopy of an identification card purportedly issued by petitioner, bearing respondents picture and name with the designation "Spinner"; at the back of the I.D., the following is written: " This certifies that the card holder is a duly Authorized MEDIA Representative of BOMBO RADYO PHILIPPINES THE NO.1 Radio Network in the Country ***BASTA RADYO BOMBO***"24 Respondent likewise included a Certification which reads: This is to certify that MR. JANDELEON JUEZAN is a program employee of PEOPLES BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo Cebu) since 1990 up to the present. Furtherly certifies that Mr. Juezan is receiving a monthly salary of FIFTEEN THOUSAND (P15,000.00) PESOS.

This certification is issued upon the request of the above stated name to substantiate loan requirement. Given this 18th day of April 2000, Cebu City , Philippines. (signed) GREMAN B. SOLANTE Station Manager On the other hand, petitioner maintained in its position paper that respondent had never been its employee. Attached as annexes to its position paper are photocopies of cash vouchers it issued to drama producers, as well as letters of employment captioned "Employment for a Specific Undertaking", wherein respondent was appointed by different drama directors as spinner/narrator for specific radio programs.25 In his Order, the Regional Director merely made a passing remark on petitioners claim of lack of employer-employee relationshipa token paragraphand proceeded to a detailed recitation of respondents allegations. The documents introduced by petitioner in its position paper and even those presented during the inspection were not given an iota of credibility. Instead, full recognition and acceptance was accorded to the claims of respondentfrom the hours of work to his monthly salary, to his alleged actual duties, as well as to his alleged "evidence." In fact, the findings are anchored almost verbatim on the self-serving allegations of respondent. Furthermore, respondents pieces of evidencethe identification card and the certification issued by petitioners Greman Solante are not even determinative of an employer-employee relationship. The certification, issued upon the request of respondent, specifically stated that "MR. JANDELEON JUEZAN is a program employee of PEOPLES BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo Cebu)," it is not therefore "crystal clear that complainant is a station employee rather than a program employee hence entitled to all the benefits appurtenant thereto,"26 as found by the DOLE Regional Director. Respondent should be bound by his own evidence. Moreover, the classification as to whether one is a "station employee" and "program employee," as lifted from Policy Instruction No. 40,27 dividing the workers in the broadcast industry into only two groups is not binding on this Court, especially when the classification has no basis either in law or in fact.28 Even the identification card purportedly issued by petitioner is not proof of employer-employee relationship since it only identified respondent as an "Authorized Representative of Bombo Radyo," and not as an employee. The phrase gains significance when compared vis a vis the following notation in the sample identification cards presented by petitioner in its motion for reconsideration: 1. This is to certify that the person whose picture and signature appear hereon is an employee of Bombo Radio Philippines.

2. This ID must be worn at all times within Bombo Radyo Philippines premises for proper identification and security. Furthermore, this is the property of Bombo Radyo Philippines and must be surrendered upon separation from the company. HUMAN RESOURCE DEPARMENT (Signed) JENALIN D. PALER HRD HEAD Respondent tried to address the discrepancy between his identification card and the standard identification cards issued by petitioner to its employees by arguing that what he annexed to his position paper was the old identification card issued to him by petitioner. He then presented a photocopy of another "old" identification card, this time purportedly issued to one of the employees who was issued the new identification card presented by petitioner.29 Respondents argument does not convince. If it were true that he is an employee of petitioner, he would have been issued a new identification card similar to the ones presented by petitioner, and he should have presented a copy of such new identification card. His failure to show a new identification card merely demonstrates that what he has is only his "Media" ID, which does not constitute proof of his employment with petitioner. It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment on the existence of employer-employee relationship. Substantial evidence, which is the quantum of proof required in labor cases, is "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion."30 No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.31 Hence, while no particular form of evidence is required, a finding that such relationship exists must still rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects.32 In the instant case, save for respondents self-serving allegations and self-defeating evidence, there is no substantial basis to warrant the Regional Directors finding that respondent is an employee of petitioner. Interestingly, the Order of the Secretary of Labor denying petitioners appeal dated 27 January 2005, as well as the decision of the Court of Appeals dismissing the petition for certiorari, are silent on the issue of the existence of an employer-employee relationship, which further suggests that no real and proper determination the existence of such relationship was ever made by these tribunals. Even the dissent skirted away from the issue of the existence of employer-employee relationship and conveniently ignored the dearth of evidence presented by respondent. Although substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances of the instant case demand that something more should have been proffered.33 Had there been other proofs of employment, such as respondents inclusion in petitioners payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-employee relationship. The Regional Director, therefore, committed grievous error in

ordering petitioner to answer for respondents claims. Moreover, with the conclusion that no employer-employee relationship has ever existed between petitioner and respondent, it is crystalclear that the DOLE Regional Director had no jurisdiction over respondents complaint. Thus, the improvident exercise of power by the Secretary of Labor and the Regional Director behooves the court to subject their actions for review and to invalidate all the subsequent orders they issued. IV. The records show that petitioners appeal was denied because it had allegedly failed to post a cash or surety bond. What it attached instead to its appeal was the Letter Agreement34 executed by petitioner and its bank, the cash voucher,35 and the Deed of Assignment of Bank Deposits.36 According to the DOLE, these documents do not constitute the cash or surety bond contemplated by law; thus, it is as if no cash or surety bond was posted when it filed its appeal. The Court does not agree. The provision on appeals from the DOLE Regional Offices to the DOLE Secretary is in the last paragraph of Art. 128 (b) of the Labor Code, which reads: An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves 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 Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (emphasis supplied) While the requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business, the law does admit exceptions when warranted by the circumstances. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties.37 Thus, in some cases, the bond requirement on appeals involving monetary awards had been relaxed, such as when (i) there was substantial compliance with the Rules; (ii) the surrounding facts and circumstances constitute meritorious ground to reduce the bond; (iii) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or (iv) the appellants, at the very least exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.38 A review of the documents submitted by petitioner is called for to determine whether they should have been admitted as or in lieu of the surety or cash bond to sustain the appeal and serve the ends of substantial justice. The Deed of Assignment reads: DEED OF ASSIGNMENT OF BANK DEPOSIT WITH SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS: That I, GREMAN B. SOLANTE in my capacity as Station Manager of DYMF Cebu City, PEOPLES BROADCASTING SERVICES, INC., a corporation duly authorized and existing under and by virtue of the laws of the Philippines, for and in consideration of the sum of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY (P203,726.30) Phil. Currency, as CASH BOND GUARANTEE for the monetary award in favor to the Plaintiff in the Labor Case docketed as LSED Case No. R0700-2003-09-CI-09, now pending appeal. That Respondent-Appellant do hereby undertake to guarantee available and sufficient funds covered by Platinum Savings Deposit (PSD) No. 010-8-00038-4 of PEOPLES BROADCASTING SERVICES, INC. in the amount of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY (P203,726.30) payable to Plaintiff-Appellee/Department of Labor and Employment Regional Office VII at Queen City Development Bank, Cebu Branch, Sanciangko St. Cebu City. It is understood that the said bank has the full control of Platinum Savings Deposit (PSD) No. 010-8-00038-4 from and after this date and that said sum cannot be withdrawn by the PlaintiffAppellee/ Department of Labor and Employment Regional Office VII until such time that a Writ of Execution shall be ordered by the Appellate Office. FURTHER, this Deed of Assignment is limited to the principal amount of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY (P203,726.30) Phil. Currency, therefore, any interest to be earned from the said Deposit will be for the account holder. IN WITNESS WHEREOF, I have hereunto affixed my signature this 18th day if June, 2004, in the City of Cebu, Philippines. PEOPLES BROADCASTING SERVICES, INC. By: (Signed) GREMAN B. SOLANTE Station Manager As priorly mentioned, the Deed of Assignment was accompanied by a Letter Agreement between Queen City Development Bank and petitioner concerning Platinum Savings Deposit (PSD) No. 010-8-00038-4,39 and a Cash Voucher issued by petitioner showing the amount of P203,726.30 deposited at the said bank. Casting aside the technical imprecision and inaptness of words that mark the three documents, a liberal reading reveals the documents petitioner did assign, as cash bond for the monetary award in favor of respondent in LSED Case NO. RO700-2003-CI-09, the amount of P203,726.30

covered by petitioners PSD Account No. 010-8-00038-4 with the Queen City Development Bank at Sanciangko St. Cebu City, with the depositary bank authorized to remit the amount to, and upon withdrawal by respondent and or the Department of Labor and Employment Regional Office VII, on the basis of the proper writ of execution. The Court finds that the Deed of Assignment constitutes substantial compliance with the bond requirement. The purpose of an appeal bond is to ensure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment if subsequently affirmed.40 The Deed of Assignment in the instant case, like a cash or surety bond, serves the same purpose. First, the Deed of Assignment constitutes not just a partial amount, but rather the entire award in the appealed Order. Second, it is clear from the Deed of Assignment that the entire amount is under the full control of the bank, and not of petitioner, and is in fact payable to the DOLE Regional Office, to be withdrawn by the same office after it had issued a writ of execution. For all intents and purposes, the Deed of Assignment in tandem with the Letter Agreement and Cash Voucher is as good as cash. Third, the Court finds that the execution of the Deed of Assignment, the Letter Agreement and the Cash Voucher were made in good faith, and constituted clear manifestation of petitioners willingness to pay the judgment amount. The Deed of Assignment must be distinguished from the type of bank certification submitted by appellants in Cordova v. Keysas Boutique,41 wherein this Court found that such bank certification did not come close to the cash or surety bond required by law. The bank certification in Cordova merely stated that the employer maintains a depository account with a balance of P23,008.19, and that the certification was issued upon the depositors request for whatever legal purposes it may serve. There was no indication that the said deposit was made specifically for the pending appeal, as in the instant case. Thus, the Court ruled that the bank certification had not in any way ensured that the award would be paid should the appeal fail. Neither was the appellee in the case prevented from making withdrawals from the savings account. Finally, the amount deposited was measly compared to the total monetary award in the judgment.42 V. Another question of technicality was posed against the instant petition in the hope that it would not be given due course. Respondent asserts that petitioner pursued the wrong mode of appeal and thus the instant petition must be dismissed.1avvphi1.zw+ Once more, the Court is not convinced. A petition for certiorari is the proper remedy when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, nor any plain speedy, and adequate remedy at law. There is "grave abuse of discretion" when respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction.43 Respondent may have a point in asserting that in this case a Rule 65 petition is a wrong mode of appeal, as indeed the writ of certiorari is an extraordinary remedy, and certiorari jurisdiction is

not to be equated with appellate jurisdiction. Nevertheless, it is settled, as a general proposition, that the availability of an appeal does not foreclose recourse to the extraordinary remedies, such as certiorari and prohibition, where appeal is not adequate or equally beneficial, speedy and sufficient, as where the orders of the trial court were issued in excess of or without jurisdiction, or there is need to promptly relieve the aggrieved party from the injurious effects of the acts of an inferior court or tribunal, e.g., the court has authorized execution of the judgment.44 This Court has even recognized that a recourse to certiorari is proper not only where there is a clear deprivation of petitioners fundamental right to due process, but so also where other special circumstances warrant immediate and more direct action.45 In one case, it was held that the extraordinary writ of certiorari will lie if it is satisfactorily established that the tribunal acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy,46 and if it is shown that the refusal to allow a Rule 65 petition would result in the infliction of an injustice on a party by a judgment that evidently was rendered whimsically and capriciously, ignoring and disregarding uncontroverted facts and familiar legal principles without any valid cause whatsoever.47 It must be remembered that a wide breadth of discretion is granted a court of justice in certiorari proceedings.48 The Court has not too infrequently given due course to a petition for certiorari, even when the proper remedy would have been an appeal, where valid and compelling considerations would warrant such a recourse.49 Moreover, the Court allowed a Rule 65 petition, despite the availability of plain, speedy or adequate remedy, in view of the importance of the issues raised therein.50 The rules were also relaxed by the Court after considering the public interest involved in the case;51 when public welfare and the advancement of public policy dictates; when the broader interest of justice so requires; when the writs issued are null and void; or when the questioned order amounts to an oppressive exercise of judicial authority.52 "The peculiar circumstances of this case warrant, as we held in Republic v. Court of Appeals, 107 SCRA 504, 524, the exercise once more of our exclusive prerogative to suspend our own rules or to exempt a particular case from its operation as in x x Republic of the Philippines v. Court of Appeals, et al., (83 SCRA 453, 478-480 [1978]), thus: x x The Rules have been drafted with the primary objective of enhancing fair trials and expediting justice. As a corollary, if their applications and operation tend to subvert and defeat instead of promote and enhance it, their suspension is justified."53 The Regional Director fully relied on the self-serving allegations of respondent and misinterpreted the documents presented as evidence by respondent. To make matters worse, DOLE denied petitioners appeal based solely on petitioners alleged failure to file a cash or surety bond, without any discussion on the merits of the case. Since the petition for certiorari before the Court of Appeals sought the reversal of the two aforesaid orders, the appellate court necessarily had to examine the evidence anew to determine whether the conclusions of the DOLE were supported by the evidence presented. It appears, however, that the Court of Appeals did not even review the assailed orders and focused instead on a general discussion of due process and the jurisdiction of the Regional Director. Had the appellate court truly reviewed the

records of the case, it would have seen that there existed valid and sufficient grounds for finding grave abuse of discretion on the part of the DOLE Secretary as well the Regional Director. In ruling and acting as it did, the Court finds that the Court of Appeals may be properly subjected to its certiorari jurisdiction. After all, this Court has previously ruled that the extraordinary writ of certiorari will lie if it is satisfactorily1avvphi1 established that the tribunal had acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy.54 The most important consideration for the allowance of the instant petition is the opportunity for the Court not only to set the demarcation between the NLRCs jurisdiction and the DOLEs prerogative but also the procedure when the case involves the fundamental challenge on the DOLEs prerogative based on lack of employer-employee relationship. As exhaustively discussed here, the DOLEs prerogative hinges on the existence of employer-employee relationship, the issue is which is at the very heart of this case. And the evidence clearly indicates private respondent has never been petitioners employee. But the DOLE did not address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the instant petition on a technicality would deprive the Court of the opportunity to resolve the novel controversy.1avvphi1 WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET ASIDE. The Order of the then Acting Secretary of the Department of Labor and Employment dated 27 January 2005 denying petitioners appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004, respectively, are ANNULLED. The complaint against petitioner is DISMISSED. SO ORDERED.

G.R. No. 188949

July 26, 2010

CENTRAL AZUCARERA DE TARLAC, Petitioner, vs. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU, Respondent. DECISION NACHURA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision1 dated May 28, 2009, and the Resolution2 dated July 28, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 106657. The factual antecedents of the case are as follows: Petitioner is a domestic corporation engaged in the business of sugar manufacturing, while respondent is a legitimate labor organization which serves as the exclusive bargaining representative of petitioners rank-and-file employees. The controversy stems from the interpretation of the term "basic pay," essential in the computation of the 13th-month pay. The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) No. 851, petitioner granted its employees the mandatory thirteenth (13th) - month pay since 1975. The formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioners computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006.3 On November 6, 2004, respondent staged a strike. During the pendency of the strike, petitioner declared a temporary cessation of operations. In December 2005, all the striking union members were allowed to return to work. Subsequently, petitioner declared another temporary cessation of operations for the months of April and May 2006. The suspension of operation was lifted on June 2006, but the rank-and-file employees were allowed to report for work on a fifteen (15) day-per-month rotation basis that lasted until September 2006. In December 2006, petitioner gave the employees their 13th-month pay based on the employees total earnings during the year divided by 12.4 Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the 13th-month pay. It claimed that the divisor should have been eight (8) instead of 12, because the employees worked for only 8 months in 2006. It likewise asserted that petitioner did not observe the company practice of giving its employees the guaranteed amount equivalent to their one month pay, in instances where the computed 13th-month pay was less than their basic monthly pay.5

Petitioner and respondent tried to thresh out their differences in accordance with the grievance procedure as provided in their collective bargaining agreement. During the grievance meeting, the representative of petitioner explained that the change in the computation of the 13th-month pay was intended to rectify an error in the computation, particularly the concept of basic pay which should have included only the basic monthly pay of the employees.6 For failure of the parties to arrive at a settlement, respondent applied for preventive mediation before the National Conciliation and Mediation Board. However, despite four (4) conciliatory meetings, the parties still failed to settle the dispute. On March 29, 2007, respondent filed a complaint against petitioner for money claims based on the alleged diminution of benefits/erroneous computation of 13th-month pay before the Regional Arbitration Branch of the National Labor Relations Commission (NLRC).7 On October 31, 2007, the Labor Arbiter rendered a Decision8 dismissing the complaint and declaring that the petitioner had the right to rectify the error in the computation of the 13thmonth pay of its employees.9 The fallo of the Decision reads: WHEREFORE, premises considered, the complaint filed by the complainants against the respondents should be DISMISSED with prejudice for utter lack of merit. SO ORDERED.10 Respondents filed an appeal. On August 14, 2008, the NLRC rendered a Decision11 reversing the Labor Arbiter. The dispositive portion of the Decision reads: WHEREFORE, the decision appealed is reversed and set aside and respondent-appellee Central Azucarera de Tarlac is hereby ordered to adhere to its established practice of granting 13th[-] month pay on the basis of gross annual basic which includes basic pay, premium pay for work in rest days and special holidays, night shift differential and paid vacation and sick leaves for each year. Additionally, respondent-appellee is ordered to observe the guaranteed one[-]month pay by way of 13th month pay. SO ORDERED. 12 Petitioner filed a motion for reconsideration. However, the same was denied in a Resolution dated November 27, 2008. Petitioner then filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.13 On May 28, 2009, the CA rendered a Decision14 dismissing the petition, and affirming the decision and resolution of the NLRC, viz.: WHEREFORE, the foregoing considered, the petition is hereby DISMISSED and the assailed August 14, 2008 Decision and November 27, 2008 Resolution of the NLRC, are hereby AFFIRMED. No costs.

SO ORDERED.15 Aggrieved, petitioner filed the instant petition, alleging that the CA committed a reversible error in affirming the Decision of the NLRC, and praying that the Decision of the Labor Arbiter be reinstated. The petition is denied for lack of merit. The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on wage but not part of the wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. All rank-and-file employees, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month during the calendar year. If the employee worked for only a portion of the year, the 13thmonth pay is computed pro rata.16 Petitioner argues that there was an error in the computation of the 13th-month pay of its employees as a result of its mistake in implementing P.D. No. 851, an error that was discovered by the management only when respondent raised a question concerning the computation of the employees 13th-month pay for 2006. Admittedly, it was an error that was repeatedly committed for almost thirty (30) years. Petitioner insists that the length of time during which an employer has performed a certain act beneficial to the employees, does not prove that such an act was not done in error. It maintains that for the claim of mistake to be negated, there must be a clear showing that the employer had freely, voluntarily, and continuously performed the act, knowing that he is under no obligation to do so. Petitioner asserts that such voluntariness was absent in this case.17 The Rules and Regulations Implementing P.D. No. 851, promulgated on December 22, 1975, defines 13th-month pay and basic salary as follows: Sec. 2. Definition of certain terms. - As used in this issuance: (a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year; (b) "Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. On January 16, 1976, the Supplementary Rules and Regulations Implementing P.D. No. 851 was issued. The Supplementary Rules clarifies that overtime pay, earnings, and other remuneration that are not part of the basic salary shall not be included in the computation of the 13th-month pay.

On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-Month Pay Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13th-month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.1avvphi1 Furthermore, the term "basic salary" of an employee for the purpose of computing the 13thmonth pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is included in the term "basic salary" for purposes of computing the 13th-month pay of employees. From the inception of P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines have been issued to insure uniformity in the interpretation, application, and enforcement of the provisions of P.D. No. 851 and its implementing regulations. As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay based on the employees gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn. Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. 18 The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error.19 The argument of petitioner that the grant of the benefit was not voluntary and was due to error in the interpretation of what is included in the basic salary deserves scant consideration. No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees. Petitioner only changed the formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and employees erupted. This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith. Furthermore, petitioner cannot use the argument that it is suffering from financial losses to claim exemption from the coverage of the law on 13th-month pay, or to spare it from its erroneous

unilateral computation of the 13th-month pay of its employees. Under Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed employers shall qualify for exemption from the requirement of the Decree only upon prior authorization by the Secretary of Labor.20 In this case, no such prior authorization has been obtained by petitioner; thus, it is not entitled to claim such exemption. WHEREFORE, the Decision dated May 28, 2009 and the Resolution dated July 28, 2009 of the Court of Appeals in CA-G.R. SP No. 106657 are hereby AFFIRMED. Costs against petitioner. SO ORDERED.

G.R. No. 156367

May 16, 2005

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO BAUTISTA, respondent. DECISION CHICO-NAZARIO, J.: Before Us is a Petition for Review on Certiorari assailing the Decision1 and Resolution2 of the Court of Appeals affirming the Decision3 of the National Labor Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13th month pay and service incentive leave pay) by deleting the award of 13th month pay to respondent. THE FACTS Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis. On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning. Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondents pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus. Petitioner, on the other hand, maintained that respondents employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was involved.

Furthermore, petitioner avers that in the exercise of its management prerogative, respondents employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000. On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,4 the dispositive portion of which reads: WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED. However, still based on the above-discussed premises, the respondent must pay to the complainant the following: a. his 13th month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87; b. his service incentive leave pay for all the years he had been in service with the respondent, presently computed at P13,788.05. All other claims of both complainant and respondent are hereby dismissed for lack of merit.5 Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads: [T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides: "Section 3. Employers covered. The Decree shall apply to all employers except to: xxx xxx xxx

e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the time consumed in the performance thereof. xxx." Records show that complainant, in his position paper, admitted that he was paid on a commission basis. In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13th month pay to the complainant.

WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay. The other findings are AFFIRMED.6 In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001. Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads: WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.7 Hence, the instant petition. ISSUES 1. Whether or not respondent is entitled to service incentive leave; 2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondents claim of service incentive leave pay. RULING OF THE COURT The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides: Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Book III, Rule V: SERVICE INCENTIVE LEAVE SECTION 1. Coverage. This rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; . . .

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."8 The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.9 Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel. Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave just because he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel. According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association10 which states that: As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. [Emphasis ours] To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the employee in that, if the employees job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel. We are not persuaded. At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his

duties but also with the fact that the employees performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer. As observed by the Labor Arbiter and concurred in by the Court of Appeals: It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductors reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be considered a field personnel.11 We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioners business. Accordingly, respondent is entitled to the grant of service incentive leave. The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to. The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor Code is applicable to respondents claim of service incentive leave pay. Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred. In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period. It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation

on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.12 To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the threeyear prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.13 Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.14 It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year.15 Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:16 The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.17 [Italics supplied] Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment,

his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment. Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employees services, as the case may be. The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingmans welfare should be the primordial and paramount consideration.18 The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor.19 In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits. Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code. WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs. SO ORDERED

THIRD DIVISION G.R. No. 159026 February 11, 2008

MRS. ALBERTA YANSON/ Hacienda VALENTIN-BALABAG, petitioner, vs. THE HON. SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT (LEGAL SERVICE-MANILA), public respondent, MARDY CABIGO, MARIANO CABIGO, JORGE CABIGO, RAMONA CABIGO, RODOLFO VALDEZ, DEONELA VALDEZ, LYDIA TALIBONG**, GERMAN TALIBONG,*** EFREN MALUNES, DELMA ENRIQUEZ, REGIE ENRIQUEZ, LUCIA GERVACIO, ROGELIO GERVACIO, EDWIN ESPARAS, CONRADO ESPARAS, BERNALDA ALCANTARA, RONALDO ALCANTARA, RENALDO SENADRE,**** ANGELO SENADRE,***** JOSE ANTARAN, MORITA ANTARAN, JOHNNY ANTARAN, JOEMARIE ANTARAN, SENADOR TALIDONG, JONELSON TALIDONG, ANIOLINA OCSEN, RONITO LASQUETO, LORETO LASQUETO, BELCESAN LASQUETO, FELIZARDO DELOS REYES, AURELIO DELOS REYES, ORLANDO PADOL, PRECY CABAHOG, EMILIO CABAHOG, EDEN MALUNES, CARMELO ESMERALDA, DOLORES FLORES, RENATO FLORES, ELADIO ALCANTARA, INOCENCIO BERNAIZ, and RONILO LASQUETO, private respondents. DECISION AUSTRIA-MARTINEZ, J.: Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the October 30, 2002 Decision1 of the Court of Appeals (CA) which affirmed the September 21, 2001 Order2 of the Secretary of the Department of Labor and Employment (public respondent), and the May 22, 2003 CA Resolution3 which denied the motion for reconsideration. The facts are of record. On March 27, 1998, Mardy Cabigo and 40 other workers (private respondents) filed with the Department of Labor and Employment-Bacolod District Office (DOLE Bacolod) a request for payroll inspection4 of Hacienda Valentin Balabag owned by Alberta Yanson (petitioner). DOLE Bacolod conducted an inspection of petitioner's establishment on May 27, 1998, and issued a Notice of Inspection Report, finding petitioner liable for the following violations of labor standard laws: 1. Underpayment of salaries and wages (workers being paid a daily rate of Ninety Pesos [P90.00] since 1997 and Seventy Five Pesos [P75.00] prior to such year); 2. Non-payment of 13th month pay for two (2) years; 3. Non-payment of Social Amelioration Bonus (SAB) for two (2) years;

4. Non-payment of employer's 1/3 carabao share.5 and directing her to correct the same, thus: You are required to affect [sic] restitution and/or correction of the foregoing at the company or plant level within ten (10) calendar days from notice hereof. Any question of the above findings should be submitted to this Office within five (5) working days from notice hereof otherwise order of compliance shall be issued. This notice shall be posted conspicuously in the premises of the workplace, removal of which shall subject the establishment to a fine and/ or contempt proceedings. When there is a certified union, a copy of the notice shall be furnished said union.6 In addition, DOLE Bacolod scheduled a summary investigation and issued, by registered mail, notices of hearing7 as well as a subpoena duces tecum8 to the parties. Petitioner did not appear in any of the scheduled hearings, or present any pleading or document.9 In a Compliance Order10 dated August 12, 1998, DOLE Bacolod directed petitioner to pay, within five (5) days, P9,084.00 to each of the 41 respondents or a total of P372,444.00, and to submit proof of payment thereof. It also required petitioner to correct existing violations of occupational safety and health standards.11 Thereafter, DOLE Bacolod issued on December 17, 1998 a Writ of Execution of its August 12, 1998 Compliance Order, viz.: NOW, THEREFORE, you are hereby commanded to proceed to the premises of HAD. VALENTIN/BALABAG, MS. ALBERTA YANSON located at Brgy. Graneda or at Burgos St., Bacolod City and require the respondent to comply with the Order and pay the amount of THREE HUNDRED SEVENTY-TWO THOUSAND FOUR HUNDRED FORTY-FOUR (P372,444.00). You are to collect the above-stated amount from the respondent and deposit the same to the Cashier of this Office for appropriate disposition to herein workers and/;or the supervision of the Office of the Regional Director. Otherwise, you are to execute this Writ by attaching the goods and chattel of the respondent not exempt from execution or in case of insufficiency thereof, against the real or immovable property. You are further ordered to collect the Execution and/or Sheriff Fee in the amount of TWO THOUSAND ONE HUNDRED TWENTY-SEVEN (P2,127.00) PESOS. Return this Writ to this Office within sixty (60) days from receipt hereof together with your statement in writing of the proceeding that you shall have conducted by virtue hereof.12

On February 17, 1999, petitioner filed with DOLE Bacolod a Double Verified Special Appearance to Oppose "Writ of Execution" For Being a Blatant and Dangerous Violation of Due Process,13 claiming that she did not receive any form of communication, or participate in any proceeding relative to the subject matter of the writ of execution. Petitioner also impugned the validity of the August 12, 1998 Compliance Order subject of the writ of execution on the ground of lack of employment relationship between her and private respondents. DOLE Bacolod denied said motion in an Order14 dated March 11, 1999. Petitioner filed with public respondent a Verified Appeal15 and Supplement to the Verified Appeal,16 posting therewith an appeal bond of P1,000.00 in money order and attaching thereto a Motion to be Allowed to Post Minimal Bond with Motion for Reduction of Bond.17 Public respondent dismissed her appeal in an Order18 dated September 21, 2001. Petitioner filed a Petition for Certiorari19 which was denied due course and dismissed by the CA in its assailed October 30, 2002 Decision. Petitioner's motion for reconsideration was also denied. Hence, petitioner's present recourse on the following grounds: I. The Honorable Court of Appeals and the Honorable Secretary of Labor, with all due respect, deprived the herein petitioner-appellant of her constitutional right not to be deprived of property without due process of law, and of free access to courts and quasijudicial bodies by reason of poverty; II. The Honorable Labor Secretary in his assailed Decision, with all due respect, for some rather mysterious reason or the other, dismissed the appeal with utter disregard of the fact that her Regional Director, whose orders were appealed to her were never received by the Petitioner. Said orders assessing payments against the petitioner were issued without notice received by petitioner, and enforced without giving the petitioner a chance to controvert the atrocious figures, and two years after the petitioner's farm had ceased its operations; III. The Honorable Labor Secretary denied the petitioner of her right to seasonably raise the issue of lack of jurisdiction and the right [to] appeal; IV. There are very serious errors of fact and law in the assailed decision of the Honorable Labor Secretary, with all due respect; or that the assailed decision, with all due respect, is patently and blatantly contrary to law and jurisprudence.20 The petition lacks merit. The appeal which petitioner filed with public respondent ultimately questioned the August 12, 1998 Compliance Order in which DOLE Bacolod, in the exercise of its visitorial and enforcement power, awarded private respondents P9,084.00 each in labor standard benefits or the aggregate sum of P377,444.00.21 For its perfection, the appeal was therefore subject to the

requirements prescribed under Article 128 of the Labor Code, as amended by Republic Act No. 7730,22 viz.: Art. 128. Visitorial and Enforcement Power. - x x x (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves 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 Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (Emphasis ours) When petitioner filed her Verified Appeal and Supplement to the Verified Appeal, she posted a mere P1,000.00-appeal bond and attached a Motion to be Allowed to Post Minimal Bond with Motion for Reduction of Bond. Public respondent rejected said appeal for insufficiency of the appeal bond, viz.: We note and stress that there is no analogous application in the Office of the Secretary of the practice in the NLRC of reducing the appeal bond; the law applicable to the Office of the Secretary of Labor and Employment does not allow this practice. In other words, the respondent's request for the reduction of the required bond cannot be allowed for lack of legal basis. Hence, for lack of the required bond, the respondent's appeal was never duly perfected and must therefore be dismissed.23 (Emphasis ours) Citing Allied Investigation Bureau, Inc. v. Secretary of Labor and Employment,24 the CA held that public respondent did not commit grave abuse of discretion in holding that petitioner failed to perfect her appeal due to the insufficiency of her bond.25 Petitioner contends that the CA and public respondent denied her the right to appeal when they rejected her P1,000.00-appeal bond. She insists that her appeal bond cannot be based on the monetary award of P372,444.00 granted by DOLE Bacolod in its August 14, 1998 Order which, having been rendered without prior notice to her, was a patent nullity and completely without effect.26 She argues that her appeal bond should instead be based on her capacity to pay; otherwise, her right to free access to the courts as guaranteed under Article III, Section 2 of the Constitution would be set to naught merely because of her diminished financial capacity.

Our sympathy for petitioner cannot override our fidelity to the law. In Guico, Jr. v. Hon. Quisumbing,27 we held that the posting of the proper amount of the appeal bond under Article 128 (b) is mandatory for the perfection of an appeal from a monetary award in labor standard cases: The next issue is whether petitioner was able to perfect his appeal to the Secretary of Labor and Employment. Article 128 (b) of the Labor Code clearly provides that the appeal bond must be "in the amount equivalent to the monetary award in the order appealed from." The records show that petitioner failed to post the required amount of the appeal bond. His appeal was therefore not perfected.28 Just like the petitioner in the present case, the employer in Guico v. Secretary of Labor had also sought a reduction of the appeal bond due to financial losses arising from the shutdown of his business; yet, we did not temper the strict requirement of Article 128 (b) for him. The rationale behind the stringency of such requirement is that the employer-appellant may choose between a cash bond and a surety bond. Hence, limitations in his liquidity should pose no obstacle to his perfecting an appeal by posting a mere surety bond. Moreover, Article 128(b) deliberately employed the word "only" in reference to the requirements for perfection of an appeal in labor standards cases. "Only" commands a restrictive application,29 giving no room for modification of said requirements. Petitioner pointed out, however, that Article 22330 of the Labor Code prescribes similar requirements for perfection of appeals to the National Labor Relations Commission (NLRC); yet, the same has been applied with moderation in that a reduction of the appeal bond may be allowed.31 That is correct; but then, it should be borne in mind that reduction of bond in the NLRC is expressly authorized under the Rules implementing Article 223, viz.:32 RULE VI. APPEALS Section 6. Bond. - In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of damages and attorney's fees. The employer, his counsel, as well as the bonding company, shall submit a joint declaration under oath attesting that the surety bond posted is genuine. The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect appeal. (Emphasis supplied.)

No similar authority is given the DOLE Secretary in Department Order No. 18-02 (Implementing Rules), Series of 2002, amending Department Order No. 7-A, Series of 1995, implementing Article 128(b), thus: Rule X-A Section 8. Appeal. - (a) The Order of the Regional Director shall be final and executory unless appealed to the Secretary within ten (10) calendar days from receipt thereof. (b) The appeal shall be filed with the Regional Office where the case originated together with the memorandum of the appealing party. The appellee may file his answer within ten (10) calendar days from receipt of the appellants memorandum. Section 9. Cash or surety bond; when required. - In case the order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a duly accredited bonding company. The bond should be in the amount equivalent to the monetary award indicated in the order. Section 10. Writ of execution. - (a) If no appeal is perfected within the reglementary period, the Regional Director shall, motu propio or upon motion of any interested party, issue a writ of execution to enforce the order. In the enforcement of the writ, the assistance of the law enforcement authorities may be sought. (b) A writ of execution may be recalled subsequent to its issuance, if it is shown that an appeal has been perfected in accordance with this rule. (Emphasis ours) Under the foregoing Implementing Rules, it is plain that public respondent has no authority to accept an appeal under a reduced bond. Further applying the Implementing Rules, there is one other reason for holding that petitioner failed to perfect her appeal. It is of record that she received the August 12, 1998 Compliance Order issued by DOLE-Bacolod, as indicated in the registry return card marked Annex "I".33 Petitioner does not question this, except to point out that the registry return card does not indicate the date she received the order. That is of no consequence, for the fact remains that petitioner was put on actual notice not only of the existence of the August 12, 1998 Compliance Order but also of the summary investigation of her establishment. It behooves her to file a timely appeal to public respondent34 or object to the conduct of the investigation.35 Petitioner did neither, opting instead to sit idle and wait until the following year to question the investigation and resultant order, in the guise of opposing the writ of execution through a motion dubbed "Double Verified Special Appearance to Oppose 'Writ of Execution' For Being a Blatant and Dangerous Violation of Due Process."36 Such appeal already went beyond the ten-day period allowed under Section 8(b) of Rule X-B of the Implementing Rules. In fine, the CA was correct in holding that public respondent did not commit grave abuse of discretion in rejecting the appeal of petitioner due to the insufficiency of her appeal bond.

Even if we delve into its substance, her appeal would still not prosper. Petitioner questions the August 12, 1998 Compliance Order on the grounds that she was never notified of the proceedings leading to its issuance, and that as early as 1997, her employment relationship with the private respondents had already been severed. We dwell only on questions of law, not purely questions of fact, in petitions for review on certiorari under Rule 45 of the Rules of Court. The first issue which petitioner raised, that is, whether she was properly served the notices of hearing issued by DOLE-Bacolod, is purely factual.37 The determination made by DOLE-Bacolod on this matter binds us, especially as it was not reversed by public respondent and the CA. We therefore cannot supplant its factual finding with our own,38 moreso that petitioner's bare denial cannot outweigh the probative value of the registry return cards attached to the record which indicate that said notices were received by petitioner.39 Anent the second issue, the records do not sustain petitioner's claim. In a Collective Bargaining Agreement dated January 29, 1998,40 petitioner acknowledged under oath that she is the employer of private respondents Mardy Cabigo, et al., who are members of the union known as Commercial and Agro-Industrial Labor Organization. WHEREFORE, the petition is DENIED for lack of merit. No costs. SO ORDERED